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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-62875
PROSPECTUS
$7,500,000,000
[ASSOCIATES FIRST CAPITAL CORPORATION LOGO]
DEBT SECURITIES, PREFERRED STOCK,
CLASS A COMMON STOCK, WARRANTS,
STOCK PURCHASE CONTRACTS AND
STOCK PURCHASE UNITS
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ASSOCIATES FIRST CAPITAL TRUST I
ASSOCIATES FIRST CAPITAL TRUST II
ASSOCIATES FIRST CAPITAL TRUST III
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
ASSOCIATES FIRST CAPITAL CORPORATION
Associates First Capital Corporation, a Delaware corporation (the
"Company"), may offer and sell from time to time, together or separately, (i)
its unsecured debt securities ("Debt Securities"), which may be senior (the
"Senior Debt Securities"), subordinated (the "Subordinated Debt Securities"), or
junior subordinated (the "Junior Subordinated Debt Securities") in priority of
payment, (ii) shares of its preferred stock, par value $.01 per share, which may
be represented by depositary shares as described herein (the "Preferred Stock"),
(iii) shares of its Class A Common Stock, par value $.01 per share (the "Class A
Common Stock"), (iv) warrants (the "Warrants") to purchase any of the foregoing
Debt Securities, Preferred Stock or Class A Common Stock, (v) stock purchase
contracts ("Stock Purchase Contracts") to purchase shares of Class A Common
Stock or (vi) stock purchase units ("Stock Purchase Units"), each representing
ownership of a Stock Purchase Contract and any of (x) Debt Securities, (y) debt
obligations of third parties, including U.S. Treasury Securities, or (z)
Preferred Securities (as defined below) of an Associates Trust (as defined
below), securing the holder's obligation to purchase Class A Common Stock under
the Stock Purchase Contract. The Debt Securities, the Preferred Stock, the Class
A Common Stock, the Warrants, the Stock Purchase Contracts and the Stock
Purchase Units, together with the Preferred Securities and the related
Guarantees (as defined below), are collectively referred to herein as the
"Securities." The Securities may be offered in one or more separate classes or
series, in amounts, at prices and on terms to be determined at the time of the
offering thereof and to be set forth in a supplement or supplements to this
Prospectus (each, a "Prospectus Supplement"). The Securities may be sold for
U.S. dollars, foreign currencies or foreign currency units, and the Securities
may be payable in U.S. dollars, foreign currencies or foreign currency units.
Associates First Capital Trust I, Associates First Capital Trust II and
Associates First Capital Trust III, each a statutory business trust created
under the laws of the State of Delaware (each, an "Associates Trust," and
collectively, the "Associates Trusts"), may severally offer preferred securities
(the "Preferred Securities") representing undivided beneficial ownership
interests in the assets of such Associates Trust. The Company will be the owner
of the common securities (the "Common Securities," and, together with the
Preferred Securities, the "Trust Securities") of each Associates Trust. The
payment of periodic cash distributions ("Distributions") with respect to
Preferred Securities of each of the Associates Trusts out of monies held by the
Property Trustee (as defined herein) of such Associates Trusts and payments on
liquidation of such Associates Trust and on redemption of Preferred Securities
of such Associates Trust, will be guaranteed by the Company as and to the extent
described herein (each, a "Guarantee"). See "Description of Guarantees." The
Company's obligation under each Guarantee is an unsecured obligation of the
Company and will rank subordinate and junior in right of payment to all Senior
Indebtedness (as defined herein) and Subordinated Indebtedness (as defined
herein) of the Company. Except as otherwise provided in the applicable
Prospectus Supplement, (i) concurrently with the issuance by an Associates Trust
of its Preferred Securities, such Associates Trust will invest the proceeds
thereof and any contributions made in respect of the Common Securities in a
corresponding series of the Company's Junior Subordinated Debt Securities (the
"Corresponding Junior Subordinated Debt Securities") with terms directly
corresponding to the terms of that Associates Trust's Preferred Securities, (ii)
the Corresponding Junior Subordinated Debt Securities will be the sole assets of
each Associates Trust and (iii) payments under the Corresponding Junior
Subordinated Debt Securities will be the only revenue of each Associates Trust.
Unless otherwise specified in an applicable Prospectus Supplement, the Company
may redeem the Corresponding Junior Subordinated Debt Securities (and cause the
redemption of Trust Securities) or may dissolve each Associates Trust and, after
satisfaction of creditors of such Associates Trusts as provided by applicable
law, cause the Corresponding Junior Subordinated Debt Securities to be
distributed to the holders of Preferred Securities in liquidation of their
interests in the applicable Associates Trust. See "Description of Preferred
Securities -- Liquidation Distribution upon Dissolution."
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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.
------------------------
This Prospectus may not be used to consummate sales of Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is September 18, 1998.
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The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement or
Supplements, together with the terms of the offering of any such Securities, the
initial price thereof and the net proceeds from the sale thereof. The Prospectus
Supplement will also set forth with respect to the particular Securities
offered, certain terms thereof, including, where applicable, (i) in the case of
Debt Securities, the designation, aggregate principal amount, authorized
denominations and priority thereof, the currency, currencies or currency units
for which the Debt Securities may be purchased and the currency, currencies or
currency units in which the principal of and any interest on such Debt
Securities may be payable, the date on which such Debt Securities will mature,
the rate per annum at which such Debt Securities will bear interest, if any, or
the method of determination of such rate, the dates on which such interest, if
any, will be payable, the deferral of payment of any interest, any conversion or
exchange provisions, any redemption or sinking fund provisions and any
additional or other rights, preferences, privileges, limitations and
restrictions relating to such Debt Securities, (ii) in the case of Preferred
Stock, the specific designation, number of shares or fractional interests
therein and any dividend, liquidation, redemption, exchange, voting, conversion
and other rights, preferences and privileges, (iii) in the case of Class A
Common Stock, the aggregate number of shares offered and market price and
dividend information, (iv) in the case of the Warrants, the Debt Securities, the
Preferred Stock or Class A Common Stock, respectively, for which each such
Warrant is exercisable and the exercise price, duration, detachability and other
terms of the Warrants, (v) in the case of Stock Purchase Contracts, the
designation and number of shares of Class A Common Stock issuable thereunder,
the purchase price of the Class A Common Stock, the date or dates on which the
Class A Common Stock is required to be purchased by the holders of the Stock
Purchase Contracts and any periodic payments required to be made by the Company
to the holders of the Stock Purchase Contracts or vice versa, (vi) in the case
of Stock Purchase Units, the specific terms of the Stock Purchase Contracts and
any Debt Securities or debt obligations of third parties or Preferred Securities
of an Associates Trust securing the holders' obligation to purchase the Class A
Common Stock under the Stock Purchase Contracts, the ability of a holder of such
Stock Purchase Units to settle early the underlying Stock Purchase Contract by
delivering cash in exchange for the underlying collateral and, if applicable,
whether the Company will issue to such holder a Prepaid Security (as defined
herein) as a result of such early settlement and the specific terms of the
Prepaid Security and (vii) in the case of Preferred Securities of an Associates
Trust, the specific designation, number of securities, liquidation amount per
security, any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, voting rights, if any, terms for any
conversion or exchange into other securities, any redemption or sinking fund
provisions, any other rights, preferences, privileges, limitations or
restrictions relating to the Preferred Securities and the terms upon which the
proceeds of the sale of the Preferred Securities shall be used to purchase a
specific series of Corresponding Junior Subordinated Debt Securities of the
Company. The Prospectus Supplement will also contain information, where
applicable, about certain United States Federal income tax considerations
relating to the Securities described in the Prospectus Supplement. All or a
portion of the Securities may be issued in permanent or temporary global form
(each a "Global Security").
The aggregate initial offering price of all Securities shall not exceed
$7,500,000,000 (or, if any Securities are issued (i) with any initial offering
price denominated in a foreign currency or currency unit, such amount as shall
result in aggregate gross proceeds equivalent to $7,500,000,000 at the time of
initial offering or (ii) at an original issue discount, such greater amount as
shall result in aggregate gross proceeds of $7,500,000,000).
The Securities may be sold through underwriters or dealers or may be sold
by the Company and/or each Associates Trust directly or through agents
designated from time to time. The names of any underwriters or agents involved
in the sale of the Securities in respect to which this Prospectus is being
delivered and their compensation will be set forth in the Prospectus Supplement.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the offices of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison Street, Chicago, Illinois 60661; and
Seven World Trade Center, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, the
Commission maintains a Website that contains reports and other information
regarding registrants that file electronically, such as the Company. The address
of the Commission's Website is http://www.sec.gov. The Company's Class A Common
Stock is listed on the New York Stock Exchange (the "Exchange"), and the
aforementioned reports and other information concerning the Company may be
inspected at the offices of the Exchange, 20 Broad Street, New York, New York
10005.
The Company and the Associates Trusts have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement and the exhibits and the financial statements, notes
and schedules filed as a part thereof or incorporated by reference therein,
which may be inspected at the public reference facilities of the Commission at
the addresses set forth above. Statements made in this Prospectus concerning the
contents of any documents referred to herein are not necessarily complete, and
in each instance are qualified in all respects by reference to the copy of such
document filed as an exhibit to the Registration Statement.
No separate financial statements of the Associates Trusts have been
included herein. The Company and the Associates Trusts do not consider that such
financial statements would be material to holders of the Preferred Securities
because (i) all of the voting securities of the Associates Trusts will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) each Associates Trust is a newly formed special purpose entity, has no
operating history or independent operations and is not engaged in and does not
propose to engage in any activity other than holding as trust assets the
Corresponding Junior Subordinated Debt Securities of the Company and issuing the
Trust Securities and (iii) the Company's obligations described herein and in any
accompanying Prospectus Supplement, through the applicable Guarantee Agreement
(as defined herein), the applicable Trust Agreement (as defined herein), the
Corresponding Junior Subordinated Debt Securities, the Junior Subordinated
Indenture and any supplemental indentures thereto, taken together, constitute a
full, irrevocable and unconditional guarantee by the Company of payments due on
the Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Associates Trust's obligations under the Preferred Securities. See "The
Associates Trusts," "Description of Preferred Securities," "Description of the
Debt Securities -- Subordinated Debt Securities and Junior Subordinated Debt
Securities -- Subordination" and "Description of Guarantees."
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DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997, its Quarterly Reports on Form 10-Q for the periods ended March 31,
1998 and June 30, 1998, its Current Reports on Form 8-K dated January 20, 1998,
February 10, 1998, February 12, 1998, March 2, 1998, March 3, 1998, March 19,
1998, April 8, 1998, April 13, 1998, April 14, 1998, April 20, 1998, June 18,
1998, July 14, 1998, August 11, 1998 and August 31, 1998 and the description of
its Class A Common Stock in its Registration Statement on Form 8-A dated
February 23, 1996, filed with the Commission pursuant to the Exchange Act, are
hereby incorporated by reference. All documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the termination of the offering of the Securities offered hereby shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of filing such documents.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request by such person, a copy of
any or all of the documents described above, other than exhibits to such
documents. Requests should be addressed to: Associates First Capital
Corporation, P.O. Box 660237, Dallas, TX 75266-0237, Attention: Secretary (tel.
972-652-4000).
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Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$", "dollars" or
"U.S.$").
4
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THE COMPANY
Associates First Capital Corporation, a Delaware corporation (the
"Company"), is a leading, diversified consumer and commercial finance
organization which provides finance, leasing and related services to individual
consumers and businesses in the United States and internationally. Associates
Corporation of North America ("ACONA"), a wholly-owned subsidiary, is the
principal U.S.-based operating subsidiary of the Company. Unless the context
otherwise requires, reference to the Company includes the Company and all its
subsidiaries.
In October 1989, Ford Motor Company ("Ford") acquired the Company. In May
1996, the Company made an initial public offering of 67 million shares of its
Class A Common Stock, representing a 19.3% interest in the Company. In
connection with the initial public offering, the Company issued 23,603,669
shares of Class A Common Stock to Ford in consideration for the Company's
acquisition of the Company's foreign operations, which the Company had
previously managed but not owned. In addition, the Company recharacterized the
remaining shares of common stock Ford owned into 255,881,180 shares of Class B
Common Stock, par value $.01 per share (the "Class B Common Stock") (the Class A
Common Stock and the Class B Common Stock is collectively referred to herein as
the "Common Stock"). Ford continued to own this controlling interest in the
Company's Common Stock until April 1998, when Ford converted its holdings of
Class B Common Stock into Class A Common Stock and distributed its entire
interest in the Company in the form of a dividend to its stockholders (the "Spin
Off"). Accordingly, the Company is no longer a subsidiary of Ford.
The Company's consumer finance operations consist of a variety of
specialized consumer financing products and services, including home equity
lending, personal lending, retail sales finance and credit cards. The Company's
commercial finance operations primarily provide retail financing, leasing and
wholesale financing for heavy-duty and medium-duty trucks and truck trailers,
construction, material handling and other industrial and communications
equipment, manufactured housing, recreational vehicles and auto fleet leasing
and other commercial products and services. As part of its consumer finance and
commercial finance activities, the Company makes available to its customers
credit-related and other insurance products.
At December 31, 1997, the Company had aggregate net finance receivables of
$55.2 billion, approximately 91% of which were dispersed across the United
States and the remaining 9% of which were in foreign countries. The Company's
operations outside the United States are conducted principally in Canada and
Japan, but also include operations in the United Kingdom, Puerto Rico, Mexico,
Costa Rica and Taiwan.
At December 31, 1997, the Company had 2,265 offices worldwide. The
principal executive offices of the Company are located at 250 East Carpenter
Freeway, Irving, TX 75062-2729, and its mailing address is P.O. Box 660237,
Dallas, TX 75266-0237 (tel. 972-652-4000).
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Company for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30,
- -------------------------------- ----------------
1993 1994 1995 1996 1997 1998
- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1.57 1.61 1.55 1.57 1.59 1.59
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, the term
"earnings" represents earnings before provision for income taxes and cumulative
effect of changes in accounting principles, plus fixed charges. "Fixed charges"
represent interest expense and a portion of rentals representative of an
implicit interest factor for such rentals.
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THE ASSOCIATES TRUSTS
Each Associates Trust is a statutory business trust created under Delaware
law pursuant to (i) a trust agreement executed by the Company, as depositor of
such Associates Trust, and the Issuer Trustees (as defined herein) of such
Associates Trust and (ii) a certificate of trust filed with the Delaware
Secretary of State. Each trust agreement will be amended and restated in its
entirety (each, as so amended and restated, a "Trust Agreement") substantially
in the form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Each Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
Each Associates Trust exists for the exclusive purposes of (i) issuing and
selling its Trust Securities, (ii) using the proceeds from the sale of such
Trust Securities to acquire a series of Corresponding Junior Subordinated Debt
Securities issued by the Company and (iii) engaging in only those other
activities necessary, convenient or incidental thereto. Each of the Associates
Trusts is a separate legal entity, and the assets of one are not available to
satisfy the obligations of any of the others.
All of the Common Securities of each Associates Trust will be owned by the
Company. The Common Securities of an Associates Trust will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities of such
Associates Trust, except that upon the occurrence and continuance of a Trust
Event of Default (as defined herein) resulting from an Event of Default with
respect to Corresponding Junior Subordinated Debt Securities, the rights of the
Company as holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Preferred Securities of such
Associates Trust. See "Description of Preferred Securities -- Subordination of
Common Securities." The Company will acquire Common Securities in an aggregate
liquidation amount equal to not less than 3% of the total capital of each
Associates Trust.
Unless otherwise specified in the applicable Prospectus Supplement, each
Associates Trust has a term of approximately 50 years, but may dissolve earlier
as provided in the applicable Trust Agreement. Each Associates Trust's business
and affairs are conducted by its trustees, each appointed by the Company as
holder of the Common Securities. Unless otherwise specified in the applicable
Prospectus Supplement, the trustees for each Associates Trust will be The Chase
Manhattan Bank, as the Property Trustee (the "Property Trustee"), Chase
Manhattan Bank Delaware, as the Delaware Trustee (the "Delaware Trustee"), and
two individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with the Company (collectively, the "Issuer
Trustees"). The Chase Manhattan Bank, as Property Trustee, will act as sole
indenture trustee under each Trust Agreement for purposes of compliance with the
Trust Indenture Act. Unless otherwise specified in the applicable Prospectus
Supplement, The Chase Manhattan Bank will act as trustee under the Guarantee
Agreement and the Junior Subordinated Indenture (as defined herein). See
"Description of Guarantees" and "Description of Debt Securities -- Subordinated
Debt Securities and Junior Subordinated Debt Securities -- Subordination." The
holder of the Common Securities of an Associates Trust, or the holders of a
majority in liquidation amount of the outstanding related Preferred Securities
if a Trust Event of Default resulting from an Event of Default with respect to
Corresponding Junior Subordinated Debt Securities for such Associates Trust has
occurred and is continuing, will be entitled to appoint, remove or replace the
Property Trustee and/or the Delaware Trustee for such Associates Trust. In no
event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights are
vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the applicable Trust
Agreement. Pursuant to the applicable Junior Subordinated Indenture, the
Company, as borrower, will pay all fees and expenses related to each Associates
Trust and the offering of the Preferred Securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of each Associates
Trust.
The principal executive office of each Associates Trust is 250 East Carpenter
Freeway, Irving, Texas 75062 and its telephone number is (972) 652-4000.
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APPLICATION OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities (other than
Trust Securities) will be added to the general funds of the Company to be
applied to fund investments in, or extensions of credit to, its subsidiaries; to
reduce other outstanding indebtedness; to fund acquisitions by the Company and
its subsidiaries of other companies or finance receivables; or for such other
purposes as may be set forth in the Prospectus Supplement. Pending such
application, such net proceeds may be temporarily invested or applied to the
reduction of short-term debt. The Company expects from time to time to continue
to incur short-term and long-term debt and to effect other financings, the
amounts of which cannot now be determined. Each Associates Trust will use all
proceeds received from the sale of its Trust Securities to purchase the
applicable Corresponding Junior Subordinated Debt Securities.
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
GENERAL
The Debt Securities will constitute senior, subordinated or junior
subordinated debt of the Company. The Debt Securities will be issued under one
or more separate indentures described below for Senior Debt Securities (each, a
"Senior Indenture"), Subordinated Debt Securities (each, a "Subordinated
Indenture") or Junior Subordinated Debt Securities (each, a "Junior Subordinated
Indenture"), in each case between the Company and a banking institution
organized under the laws of the United States of America or of a State thereof
(each, an "Indenture Trustee"). The Senior Indentures, the Subordinated
Indentures and the Junior Subordinated Indentures are hereinafter collectively
referred to as the "Indentures." Certain terms and provisions referred to in
this Prospectus or an applicable Prospectus Supplement as being part of the
Junior Subordinated Indenture may instead be contained in the Corresponding
Junior Subordinated Debt Security, a form of which will be filed with the
Commission. The following summary of certain provisions of the Indentures does
not purport to be complete and is qualified in its entirety by reference to the
applicable Indenture, which is filed as an exhibit to the Registration
Statement. All article and section references appearing herein are to articles
and sections of the applicable Indenture, and all capitalized terms have the
meanings specified in such Indenture.
The Company is principally a holding company whose primary sources of funds
are cash received from subsidiaries in the form of dividends and other
intercompany transfers of funds. Dividend distributions to the Company from
ACONA are currently subject to a restriction contained in one public issue of
debt maturing on March 15, 1999, which generally limits payments of cash
dividends on ACONA's common stock in any year to not more than 50% of
consolidated net earnings for such year, subject to certain exceptions. As a
holding company, the rights of any creditors of the Company to participate in
the assets of any subsidiary upon the latter's liquidation or recapitalization
will be subject to the prior claims of the subsidiary's creditors, except to the
extent that the Company may itself be a creditor with recognized claims against
the subsidiary. Accordingly, all Debt Securities will effectively be
subordinated to all existing and future obligations of the Company's
subsidiaries. At June 30, 1998, such liabilities of the Company's subsidiaries
aggregated $51.9 billion, representing 95.1% of the aggregate indebtedness of
the Company and its consolidated subsidiaries. In addition, as of June 30, 1998,
approximately $5.6 billion of existing indebtedness of the Company would have
ranked pari passu with the Senior Debt Securities and senior to the Subordinated
Debt Securities and the Junior Subordinated Debt Securities and there was no
existing indebtedness of the Company that would have ranked pari passu with the
Subordinated Debt Securities and senior to the Junior Subordinated Debt
Securities.
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<PAGE> 8
None of the Indentures limits the amount of Debt Securities which may be
issued thereunder, and each Indenture provides that Debt Securities may be
issued thereunder up to the aggregate principal amount authorized from time to
time by the Company and may be denominated in any currency or currency unit
designated by the Company. The Indentures do not restrict the amount of debt
that may be incurred by the Company or any subsidiary. The Indentures do not
contain any covenant or other provision that is specifically intended to afford
any Holder special protection in the event of highly leveraged transactions or
any other transactions resulting in a decline in the ratings or credit quality
of the Company. Reference is made to the Prospectus Supplement which accompanies
this Prospectus for the following terms and other information to the extent
applicable with respect to the Debt Securities being offered thereby: (i) the
designation, aggregate principal amount, authorized denominations and priority
of such Debt Securities; (ii) the percentage of the principal amount at which
such Debt Securities will be issued; (iii) the currency, currencies or currency
units for which the Debt Securities may be purchased and the currency,
currencies or currency units in which the principal of and any interest on such
Debt Securities may be payable; (iv) the date on which such Debt Securities will
mature and any provisions giving the Company the right to extend or shorten the
maturity; (v) the rate per annum at which such Debt Securities will bear
interest, if any, or the method of determination of such rate; (vi) the dates on
which such interest, if any, will be payable; (vii) any provision relating to
the deferral of payment of any interest; (viii) any conversion or exchange
provisions; (ix) whether such Debt Securities are to be issued in whole or in
part in the form of one or more Global Securities and, if so, the identity of a
depositary (the "Depositary") for such Global Security or Securities; (x) any
redemption or sinking fund provisions; and (xi) any additional or other rights,
preferences, privileges, limitations and restrictions relating to such Debt
Securities.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Securities and such currencies or currency units
will be set forth in the Prospectus Supplement relating thereto.
The Debt Securities may be issued in fully registered form without coupons
("Fully Registered Securities"), a form registered as to principal only with
coupons or bearer form with coupons. Unless otherwise specified in the
applicable Prospectus Supplement, the Debt Securities will be only Fully
Registered Securities (sec.sec.3.01, 3.02). In addition, Debt Securities of a
series may be issuable in the form of one or more Global Securities, which will
be denominated in an amount equal to all or a portion of the aggregate principal
amount of such Debt Securities (sec.2.04). See "-- Global Debt Securities"
below.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. United States Federal
income tax consequences and special considerations applicable to any such series
will be described in the Prospectus Supplement relating thereto.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series will be
convertible into or exchangeable for Class A Common Stock, Preferred Stock,
Preferred Securities or other securities, property, cash or obligations or a
combination of any of the foregoing, will be summarized in the Prospectus
Supplement relating to such series. Such terms may include provisions for
conversion or exchange, either on a mandatory basis, at the option of the holder
or at the option of the Company. The number of shares of Class A Common Stock,
Preferred Stock, Preferred Securities or other securities or the property, cash
or obligations to be received by the holders of such Debt Securities upon
conversion or exchange, will be calculated according to the factors and at such
time as are summarized in the related Prospectus Supplement.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, the Depositary identified in the Prospectus Supplement
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relating to such series. Unless and until it is exchanged in whole or in part
for Debt Securities in individually certificated form, a Global Security may not
be transferred except as a whole to a nominee of the Depositary for such Global
Security, or by a nominee of such Depositary to such Depositary, or to a
successor of such Depositary or a nominee of such successor (sec.2.04).
For a description of the depositary arrangements, see "Book-Entry
Issuance." Any additional terms of the depositary arrangement with respect to
any series of Debt Securities and the rights of and limitations on owners of
beneficial interests in a Global Security representing all or a portion of a
series of Debt Securities may be described in the Prospectus Supplement relating
to such series.
CERTAIN RESTRICTIVE PROVISIONS
Except as described under "-- Certain Provisions Relating to Corresponding
Junior Subordinated Debt Securities -- Restrictions on Certain Payments," none
of the Indentures limits the amount of other debt which may be issued by the
Company or the amount of dividends or other payments which may be paid with
respect to, or the redemption or acquisition of, its equity securities by the
Company or its subsidiaries. However, each Indenture contains a covenant that
neither the Company nor any Finance Subsidiary or Insurance Subsidiary will
create or incur any mortgage, pledge, or charge of any kind on any of its
properties unless effective provision has been made for securing payments on the
Debt Securities equally and ratably with the obligations so secured, except for:
intercompany mortgages or pledges from subsidiary to parent corporation or to
any other Finance Subsidiary or Insurance Subsidiary; purchase money liens or
leases; acquisitions of subsidiaries, the physical properties or assets of which
are subject to liens; liens created in the ordinary course of business by
subsidiaries for money borrowed if such subsidiaries operate in foreign
countries or prior to becoming a subsidiary had borrowed on a secured basis;
sale and leaseback arrangements upon any real property; renewals or refundings
of any of the foregoing; and certain other minor exceptions. Notwithstanding the
foregoing, the Company or any such subsidiary may incur mortgages, pledges,
encumbrances, liens or charges on indebtedness that would be otherwise
prohibited if the aggregate amount of indebtedness secured by such mortgages,
pledges, encumbrances, liens or charges, together with all other indebtedness
of, or guaranteed by, the Company and any such subsidiaries existing at such
time and secured by mortgages, pledges, encumbrances, liens or charges not
expressly excepted, does not at the time exceed 15% of the Company's
consolidated net worth. Each Indenture also contains a covenant restricting
certain transactions by the Company or its subsidiaries with any Controlling
Person or Controlling Person Subsidiary (sec.6.02).
MODIFICATION OF INDENTURES
From time to time, the Company and the applicable Indenture Trustee may,
without the consent of the holders of any series of Debt Securities, amend or
supplement the relevant Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of any
series of Debt Securities or, in the case of Corresponding Junior Subordinated
Debt Securities, the holders of the related Preferred Securities as long as they
remain outstanding). Except as otherwise provided below, pursuant to each
Indenture, the rights and obligations of the Company and the rights of the
Holders may be modified with respect to one or more series of Debt Securities
issued under such Indenture with the consent of the Holders of not less than
66 2/3% in principal amount of the Outstanding Debt Securities of each such
series affected by the modification or amendment. No modification of the terms
of payment of principal or interest, and no modification reducing the percentage
required for modification is effective against any Holder without his consent.
No modification of the Senior Indentures subordinating the indebtedness
evidenced by any series of Senior Debt Securities issued thereunder to any other
indebtedness of the Company is effective against any Holder of a Senior Debt
Security issued thereunder without his consent, and no modification of the
Subordinated Indentures or the Junior Subordinated Indentures subordinating the
indebtedness evidenced by any series of Subordinated Debt Securities or Junior
Subordinated Debt Securities, as applicable, issued thereunder to any
indebtedness of the Company other than, in the case of Subordinated Debt
Securities, Senior Indebtedness or, in the case of Junior Subordinated Debt
Securities, Senior Indebtedness and/or Subordinated Indebtedness is effective
against any Holder of Subordinated Debt Securities or Junior Subordinated Debt
Securities, as applicable, without his consent. In addition, in the case of
Corresponding Junior Subordinated Debt Securities, so long as any of the related
Preferred Securities remain outstanding, no modification of the applicable
Junior
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Subordinated Indenture may be made that adversely affects the holders of such
Preferred Securities in any material respect, and no termination of such Junior
Subordinated Indenture may occur, and no waiver of any Event of Default with
respect to such Corresponding Junior Subordinated Debt Securities or compliance
with any covenant under the Junior Subordinated Indenture may be effective,
without the prior consent of not less than 66 2/3% (or, in the case of a waiver
of an Event of Default, a majority) of the aggregate liquidation amount of such
related Preferred Securities, provided, that where consent under the applicable
Junior Subordinated Indenture is not effective against any Holder without his
consent, no such consent shall be given by the Property Trustee without the
prior consent of each holder of related Preferred Securities. For the purpose of
these provisions, a holder of an unexpired Warrant to purchase Debt Securities
shall be deemed to be the Holder of the principal amount of Debt Securities
issuable upon exercise of such Warrant (sec.sec.6.03, 12.01). See "-- Certain
Provisions Relating to Corresponding Junior Subordinated Debt Securities."
EVENTS OF DEFAULT
Each Indenture provides that the following are Events of Default with
respect to any series of Debt Securities issued thereunder: default in the
payment of the principal of any Debt Security of such series when and as the
same shall be due and payable; default in making a sinking fund payment, if any,
when and as the same shall be due and payable by the terms of the Debt
Securities of such series; default for 30 days in the payment of any installment
of interest on any Debt Security of such series; default for 60 days after
notice in the performance of any other covenant in respect of the Debt
Securities of such series contained in the Indenture; certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Company or its property; default for 30 days in the
payment of any installment of interest on any evidence of indebtedness
(including any other series of Debt Securities issued under the same Indenture)
issued, assumed or guaranteed by the Company or default in the payment of any
principal of any such evidence of indebtedness; and any other Event of Default
provided in the applicable Board Resolution or supplemental indenture under
which such series of Debt Securities is issued (sec.8.01). An Event of Default
with respect to a particular series of Debt Securities issued under an Indenture
does not necessarily constitute an Event of Default with respect to any other
series of Debt Securities issued under such Indenture. The appropriate Indenture
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except in the payment of principal or
interest) if it considers such withholding in the interests of such Holders.
If an Event of Default with respect to any series of Debt Securities shall
have occurred and be continuing, the appropriate Indenture Trustee or the
Holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series may declare the principal, or in the case of
discounted Debt Securities, such portion thereof as may be described in the
Prospectus Supplement accompanying this Prospectus, of all the Debt Securities
of such series to be due and payable immediately, and, in the case of
Corresponding Junior Subordinated Debt Securities, should the Indenture Trustee
under the Junior Subordinated Indenture or such holders of such Corresponding
Junior Subordinated Debt Securities fail to make such declaration, the holders
of at least 25% in aggregate liquidation preference of the related Preferred
Securities shall have such right (sec.8.01). In certain circumstances, an Event
of Default with respect to the Debt Securities of a series (except defaults in
the payment of principal, premium, if any, or interest, if any), may be waived
by the Holders of a majority in aggregate principal amount of the Debt
Securities of such series (sec.8.01). In the case of Corresponding Junior
Subordinated Debt Securities of a series, should the Holders thereof fail to
waive such Event of Default, the holders of a majority in aggregate liquidation
amount of the related Preferred Securities shall have such right.
If an Event of Default with respect to any series of Corresponding Junior
Subordinated Debt Securities shall have occurred and be continuing, the Property
Trustee will have the right to declare the principal, or in the case of
discounted Corresponding Junior Subordinated Debt Securities, such portion
thereof as may be described in the applicable Prospectus Supplement, of all the
Debt Securities of such series to be due and payable immediately and to enforce
its other rights as a creditor with respect to such Corresponding Junior
Subordinated Debt Securities.
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Within four months after the close of each fiscal year, the Company must
file with each Indenture Trustee a certificate, signed by specified officers,
stating whether or not such officers have knowledge of any default, and, if so,
specifying each such default and the nature thereof (sec.6.02).
Subject to provisions relating to its duties in case of default, an
Indenture Trustee shall be under no obligation to exercise any of its rights or
powers under the applicable Indenture at the request, order or direction of any
Holders, unless such Holders shall have offered to such Indenture Trustee
reasonable indemnity (sec.9.03). Subject to such provisions for indemnification,
the Holders of a majority in principal amount of the Debt Securities of any
series may direct the time, method and place of conducting any proceeding for
any remedy available to the appropriate Indenture Trustee, or exercising any
trust or power conferred upon such Indenture Trustee, with respect to the Debt
Securities of such series (sec.8.06).
See "-- Certain Provisions Relating to Corresponding Junior Subordinated
Debt Securities."
PAYMENT AND TRANSFER
Principal of, premium, if any, and interest, if any, on Fully Registered
Securities are to be payable at the Corporate Trust Office of the Indenture
Trustee under the applicable Indenture or any other office maintained by the
Company for such purposes, provided that payment of interest, if any, will be
made, unless otherwise provided in the applicable Prospectus Supplement, by
check mailed to the persons in whose names such Securities are registered at the
close of business on the day or days specified in the Prospectus Supplement
accompanying this Prospectus (sec.sec.3.08, 3.11). The principal of, premium, if
any, and interest, if any, on Debt Securities in other forms will be payable in
such manner and at such place or places as may be designated by the Company and
specified in the applicable Prospectus Supplement (sec.3.11).
Fully Registered Securities may be transferred or exchanged at the
Corporate Trust Office of the Indenture Trustee under the applicable Indenture
or at any other office or agency maintained by the Company for such purposes,
subject to the limitations in the applicable Indenture, without the payment of
any service charge except for any tax or governmental charge incidental thereto.
Provisions with respect to the transfer and exchange of Debt Securities in other
forms will be set forth in the applicable Prospectus Supplement (sec.3.05).
SENIOR DEBT SECURITIES -- SENIOR INDEBTEDNESS
The Senior Debt Securities will constitute part of the Senior Indebtedness
of the Company and will rank pari passu with all outstanding senior debt.
The term "Senior Indebtedness" is defined to mean all Indebtedness of the
Company, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to Subordinated Indebtedness or Junior Subordinated
Indebtedness or to other Indebtedness of the Company which is pari passu with,
or subordinated to, Subordinated Indebtedness or Junior Subordinated
Indebtedness. The term, "Indebtedness" is defined to mean, with respect to a
Person, (i) the principal of and premium, if any, and interest, if any, on, (A)
indebtedness of such Person for money borrowed and (B) indebtedness evidenced by
securities, notes, debentures, bonds or other similar instruments issued by such
Person; (ii) all capital lease obligations of such Person; (iii) all obligations
of such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such Person and all obligations of such Person
under any conditional sale or title retention agreement (but excluding trade
accounts payable and accrued liabilities in the ordinary course of business);
(iv) all obligations, contingent or otherwise, of such Person in respect of any
letters of credit, banker's acceptance, security purchase facilities or similar
credit transactions; (v) all obligations in respect of interest rate swap, cap,
floor, collar or other agreements, interest rate future or option contracts,
currency swap agreements, currency future or option contracts and other similar
agreements; and (vi) all obligations of the type referred to in clauses (i)
through (v) of others for the payment of which such Person is responsible or
liable as obligor, guarantor or otherwise (sec. 1.01).
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SUBORDINATED DEBT SECURITIES AND JUNIOR SUBORDINATED DEBT
SECURITIES -- SUBORDINATION
The Subordinated Debt Securities will constitute part of the Subordinated
Indebtedness of the Company and will be subordinate and junior in right of
payment in all respects to all Senior Indebtedness of the Company and senior in
right of payment in all respects to all Junior Subordinated Indebtedness of the
Company, in each case whether outstanding at the date of the Subordinated
Indenture or incurred after such date.
The Junior Subordinated Debt Securities will constitute part of the Junior
Subordinated Indebtedness of the Company and will be subordinate and junior in
right of payment in all respects to all Senior Indebtedness and Subordinated
Indebtedness of the Company, in each case whether outstanding at the date of the
Junior Subordinated Indenture or incurred after such date.
"Subordinated Indebtedness" is defined to mean all Indebtedness of the
Company which is subordinate and junior in right of payment to Senior
Indebtedness, but does not include "Junior Subordinated Indebtedness," which is
defined to mean Indebtedness subordinate and junior in right of payment to
Subordinated Indebtedness and Senior Indebtedness (sec.1.01). At June 30, 1998,
Senior Indebtedness aggregated approximately $5.6 billion and there was no
Subordinated Indebtedness outstanding as of such date. The amount of additional
Senior Indebtedness and Subordinated Indebtedness which the Company may issue is
not subject to any limitation.
Upon any distribution of assets of the Company in connection with any
dissolution, winding up, liquidation or reorganization of the Company, the
holders of all Senior Indebtedness will first be entitled to receive payment in
full of principal of and premium, if any, and interest, if any, on such Senior
Indebtedness before the Holders of Subordinated Debt Securities are entitled to
receive any payment on Subordinated Debt Securities. In the event that any
Subordinated Debt Security is declared due and payable because of the occurrence
of an Event of Default, under circumstances when the provisions of the foregoing
sentence are not applicable, the Indenture Trustee under the Subordinated
Indenture or the Holders of Subordinated Debt Securities shall be entitled to
payment only after there shall first have been paid in full the Senior
Indebtedness outstanding at the time such Subordinated Debt Security so becomes
due and payable because of such Event of Default (Article Fifteen of the
Subordinated Indenture).
Similarly, upon any distribution of assets of the Company in connection
with any dissolution, winding up, liquidation or reorganization of the Company,
the holders of all Senior Indebtedness and Subordinated Indebtedness will first
be entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Senior Indebtedness and Subordinated Indebtedness
before the Holders of Junior Subordinated Debt Securities are entitled to
receive any payment on Junior Subordinated Debt Securities. In the event that
any Junior Subordinated Debt Security is declared due and payable because of the
occurrence of an Event of Default, under circumstances when the provisions of
the foregoing sentence are not applicable, the Indenture Trustee under the
Junior Subordinated Indenture or the Holders of Junior Subordinated Debt
Securities shall be entitled to payment only after there shall first have been
paid in full the Senior Indebtedness and the Subordinated Indebtedness
outstanding at the time such Junior Subordinated Debt Security so becomes due
and payable because of such Event of Default (Article Fifteen of the Junior
Subordinated Indenture).
CERTAIN PROVISIONS RELATING TO CORRESPONDING JUNIOR SUBORDINATED DEBT SECURITIES
General. The Corresponding Junior Subordinated Debt Securities may be
issued in one or more series of Junior Subordinated Debt Securities under the
Junior Subordinated Indenture with terms corresponding to the terms of a series
of related Preferred Securities. Concurrently with the issuance of each
Associates Trust's Preferred Securities, such Associates Trust will invest the
proceeds thereof and the consideration paid by the Company for the Common
Securities in a series of Corresponding Junior Subordinated Debt Securities
issued by the Company to such Associates Trust. Each series of Corresponding
Junior Subordinated Debt Securities will be in the principal amount equal to the
aggregate stated Liquidation Amount of the related Preferred Securities and the
Common Securities of such Associates Trust and will rank pari passu with all
other series of Junior Subordinated Debt Securities. Holders of the related
Preferred Securities for a series of Corresponding Junior Subordinated Debt
Securities will have the rights in connection with modifications to the Junior
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Subordinated Indenture or upon occurrence of a Trust Event of Default relating
to Corresponding Junior Subordinated Debt Securities described under
"-- Modification of Indentures," "-- Events of Default," and "-- Enforcement of
Certain Rights by Holders of Preferred Securities," unless provided otherwise in
the Prospectus Supplement for such related Preferred Securities.
The Company will covenant, as to each series of Corresponding Junior
Subordinated Debt Securities, (i) to maintain, directly or indirectly, 100%
ownership of the Common Securities of the Associates Trust to which
Corresponding Junior Subordinated Debt Securities have been issued, provided
that certain successors which are permitted pursuant to the Junior Subordinated
Indenture may succeed to the Company's ownership of the Common Securities, (ii)
not to voluntarily dissolve, wind-up or liquidate any Associates Trust, except
(a) in connection with a distribution of Corresponding Junior Subordinated Debt
Securities to the holders of the Preferred Securities in liquidation of such
Associates Trust or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the related Trust Agreement and (iii) to use its
reasonable efforts, consistent with the terms and provisions of the related
Trust Agreement, to cause such Associates Trust to remain classified as a
grantor trust and not as an association taxable as a corporation for United
States Federal income tax purposes. For additional covenants relating to payment
of certain expenses of the Associates Trusts see "Description of Preferred
Securities -- Payment of Expenses."
Option to Extend Interest Payment Date. If provided in the applicable
Prospectus Supplement, the Company shall have the right at any time and from
time to time during the term of any series of Corresponding Junior Subordinated
Debt Securities to defer payment of interest for such number of consecutive
interest payment periods as may be specified in the applicable Prospectus
Supplement (each, an "Extension Period"), subject to the terms, conditions and
covenants, if any, specified in such Prospectus Supplement, provided that such
Extension Period may not extend beyond the maturity date of such series of
Corresponding Junior Subordinated Debt Securities. Certain United States Federal
income tax consequences and special considerations applicable to any such
Corresponding Junior Subordinated Debt Securities will be described in the
applicable Prospectus Supplement.
Redemption. Unless otherwise indicated in the applicable Prospectus
Supplement, the Company may, at its option, redeem the Corresponding Junior
Subordinated Debt Securities of any series in whole at any time or in part from
time to time. Corresponding Junior Subordinated Debt Securities may be redeemed
in the denominations as set forth in the applicable Prospectus Supplement.
Except as otherwise specified in the applicable Prospectus Supplement, the
redemption price for any Corresponding Junior Subordinated Debt Security so
redeemed shall equal any accrued and unpaid interest thereon to the redemption
date, plus the principal amount thereof. Unless otherwise specified in the
applicable Prospectus Supplement, the Company may not redeem a series of
Corresponding Junior Subordinated Debt Securities in part unless all accrued and
unpaid interest has been paid in full on all outstanding Corresponding Junior
Subordinated Debt Securities of such series for all interest periods terminating
on or prior to the Redemption Date.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Junior Subordinated Debt Security Tax Event (as defined below) or an Investment
Company Event (as defined below) in respect of an Associates Trust shall occur
and be continuing, the Company may, at its option, redeem the Corresponding
Junior Subordinated Debt Securities held by such Associates Trust at any time
within 90 days of the occurrence of such Junior Subordinated Debt Security Tax
Event or Investment Company Event, in whole but not in part, subject to the
provisions of the Junior Subordinated Indenture. The redemption price for any
such Corresponding Junior Subordinated Debt Securities shall be equal to 100% of
the principal amount of such Corresponding Junior Subordinated Debt Securities
then outstanding plus accrued and unpaid interest to the date fixed for
redemption. For so long as the applicable Associates Trust is the holder of all
such outstanding Corresponding Junior Subordinated Debt Securities, the proceeds
of any such redemption will be used by the Associates Trust to redeem the
corresponding Trust Securities in accordance with their terms.
"Junior Subordinated Debt Security Tax Event" means the receipt by the
applicable Associates Trust of an opinion of counsel experienced in such matters
to the effect that, as a result of any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official
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administrative written decision, pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the applicable series of
Corresponding Junior Subordinated Debt Securities pursuant to the applicable
Junior Subordinated Indenture, there is more than an insubstantial risk that (i)
the applicable Associates Trust is, or will be within 90 days of the date of
such opinion, subject to United States Federal income tax with respect to income
received or accrued on the corresponding series of Corresponding Junior
Subordinated Debt Securities, (ii) interest payable by the Company on such
series of Corresponding Junior Subordinated Debt Securities is not, or within 90
days of the date of such opinion, will not be, deductible by the Company, in
whole or in part, for United States Federal income tax purposes or (iii) the
applicable Associates Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Investment Company Event" means the receipt by the applicable Associates
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in the Investment
Company Act"), the applicable Associates Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which Change in
the Investment Company Act becomes effective on or after the date of original
issuance of the series of Preferred Securities issued by the Associates Trust.
Restrictions on Certain Payments. The Company will, unless otherwise
provided in the applicable Prospectus Supplement, covenant, as to each series of
Corresponding Junior Subordinated Debt Securities, that it will not, and will
not permit any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company (including other Corresponding Junior
Subordinated Debt Securities) that rank pari passu with or junior in interest to
the Corresponding Junior Subordinated Debt Securities or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu or junior in
interest to the Corresponding Junior Subordinated Debt Securities (other than
(a) dividends or distributions in common stock of the Company, (b) redemptions
or purchases of any rights pursuant to the Company's Rights Agreement, or any
successor to such Rights Agreement, and the declaration of a dividend of such
rights or the issuance of stock under such plans in the future, (c) payments
under any Guarantee and (d) purchases of common stock related to the issuance of
common stock under any of the Company's benefit plans for its directors,
officers or employees) if at such time (A) there shall have occurred any event
of which the Company has actual knowledge (a) that with the giving of notice or
the lapse of time, or both, would constitute an Event of Default under the
Junior Subordinated Indenture with respect to the Corresponding Junior
Subordinated Debt Securities of such series and (b) in respect of which the
Company shall not have taken reasonable steps to cure, (B) if such Corresponding
Junior Subordinated Debt Securities are held by an Associates Trust which is the
issuer of a series of related Preferred Securities, the Company shall be in
default with respect to its payment of any obligations under the Guarantee
relating to such related Preferred Securities or (C) the Company shall have
given notice of its selection of an Extension Period as provided pursuant to the
Junior Subordinated Indenture with respect to the Corresponding Junior
Subordinated Debt Securities of such series and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be continuing.
Enforcement of Certain Rights by Holders of Preferred Securities. If an
Event of Default with respect to a series of Corresponding Junior Subordinated
Debt Securities has occurred and is continuing and such event is attributable to
the failure of the Company to pay principal of or premium, if any, or interest,
if any, on such series of Corresponding Junior Subordinated Debt Securities on
the date such interest, premium or principal is otherwise payable, a holder of
related Preferred Securities may institute a legal proceeding directly against
the Company for enforcement of payment to such holder of the principal of or
premium, if any, or interest, if any, on such Corresponding Junior Subordinated
Debt Securities having a principal amount equal to the aggregate
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Liquidation Amount of the related Preferred Securities of such holder (a "Direct
Action"). The Company may not amend the Junior Subordinated Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all of the Preferred Securities. If the right to bring a
Direct Action is removed, the applicable Associates Trust may become subject to
the reporting obligations under the Exchange Act. The Company shall have the
right pursuant to the Junior Subordinated Indenture to set-off any payment made
to such holder of Preferred Securities by the Company in connection with a
Direct Action. Unless otherwise specified in the applicable Prospectus
Supplement, the holders of the related Preferred Securities will not be able to
exercise directly any remedies other than those set forth in the preceding
paragraph available to the holders of the Corresponding Junior Subordinated Debt
Securities.
CONCERNING THE INDENTURE TRUSTEES
Business and other relationships (including other trusteeships), if any,
between the Company and its affiliates, on the one hand, and the Indenture
Trustee, on the other hand, under the Indenture pursuant to which the Debt
Securities are issued will be described in the Prospectus Supplement relating to
such Debt Securities.
In the event Debt Securities are issued pursuant to an Indenture with an
Indenture Trustee which is also an Indenture Trustee for any subordinate or
superior class of Debt Securities pursuant to an Indenture, the occurrence of
any default under either Indenture could create a conflicting interest for the
Indenture Trustee under the Trust Indenture Act. If such default has not been
cured or waived within 90 days after such Indenture Trustee has or acquires a
conflicting interest, such Indenture Trustee generally is required by the Trust
Indenture Act to eliminate such conflicting interest or resign as Indenture
Trustee with respect to the Debt Securities issued under one such Indenture. In
the event of the Indenture Trustee's resignation, the Company shall promptly
appoint a successor trustee with respect to the affected Debt Securities.
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES
The following statements with respect to Warrants to purchase Debt
Securities (the "Debt Warrants") are summaries of, and subject to, the detailed
provisions of a Debt Warrant Agreement (the "Debt Warrant Agreement") to be
entered into by the Company and a warrant agent to be selected at the time of
issue (the "Debt Warrant Agent"), a form of which will be filed with the
Commission.
GENERAL
The Debt Warrants, evidenced by Debt Warrant certificates (the "Debt
Warrant Certificates"), may be issued under the Debt Warrant Agreement
independently or together with any Securities offered by any Prospectus
Supplement and may be attached to or separate from such Securities. If Debt
Warrants are offered, the Prospectus Supplement will describe the terms of the
Debt Warrants, including the following: (i) the offering price, if any; (ii) the
designation, aggregate principal amount, and terms of the Debt Securities
purchasable upon exercise of the Debt Warrants; (iii) if applicable, the
designation and terms of the Securities with which the Debt Warrants are issued
and the number of Debt Warrants issued with each such Security; (iv) if
applicable, the date on and after which the Debt Warrants and the related Debt
Securities will be separately transferable; (v) the principal amount of Debt
Securities purchasable upon exercise of one Debt Warrant and the price at which
such principal amount of Debt Securities may be purchased upon such exercise;
(vi) the date on which the right to exercise the Debt Warrants shall commence
and the date on which such right shall expire; (vii) Federal income tax
consequences; (viii) whether the Debt Warrants represented by the Debt Warrant
Certificates will be issued in registered or bearer form; and (ix) any other
terms of the Debt Warrants.
Debt Warrant Certificates may be exchanged for new Debt Warrant
Certificates of different denominations and may (if in registered form) be
presented for registration of transfer at the corporate trust office of the Debt
Warrant Agent or any Co-Debt Warrant Agent, which will be identified in the
Prospectus Supplement, or at such other office as may be set forth therein.
Holders of Debt Warrants do not have any of the rights of Holders of Debt
Securities (except to the extent that the consent of holders of Debt Warrants
may be required
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for certain modifications of the terms of the Indenture and the series of Debt
Securities issuable upon exercise of the Debt Warrants) and are not entitled to
payments of principal of and interest, if any, on such Debt Securities.
EXERCISE OF WARRANTS TO PURCHASE DEBT SECURITIES
Debt Warrants may be exercised by surrendering the Debt Warrant Certificate
at the corporate trust office of the Debt Warrant Agent or at the corporate
trust office of the Co-Debt Warrant Agent, if any, with the form of election to
purchase on the reverse side of the Debt Warrant Certificate properly completed
and executed, and by payment in full of the exercise price, as set forth in the
Prospectus Supplement. Upon the exercise of Debt Warrants, the Debt Warrant
Agent or Co-Debt Warrant Agent, if any, will, as soon as practicable, deliver
the Debt Securities in authorized denominations in accordance with the
instructions of the holder exercising the Debt Warrant and at the sole cost and
risk of such holder. If less than all of the Debt Warrants evidenced by the Debt
Warrant Certificate are exercised, a new Debt Warrant Certificate will be issued
for the remaining amount of Debt Warrants.
DESCRIPTION OF THE PREFERRED STOCK
The following description is a summary of certain provisions of the
authorized Preferred Stock and does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the Company's bylaws, the
Company's Restated Certificate of Incorporation, as amended from time to time,
and the Certificate of Designations with respect to each series of Preferred
Stock adopted by the board of directors (or a duly authorized committee thereof)
of the Company, which will be filed with the Commission in connection with the
offering of such series of Preferred Stock. The Prospectus Supplement relating
to an offering of Preferred Stock (or securities convertible into Preferred
Stock) will describe terms relevant thereto including, without limitation, the
number of shares offered, the initial offering price and market price and
dividend information.
GENERAL
Pursuant to the Company's Restated Certificate of Incorporation, the
Company is authorized to issue up to 50,000,000 shares of Preferred Stock, of
which 49,650,000 shares are available for issuance as of the date of this
Prospectus. The Preferred Stock is issuable from time to time in one or more
series and with such designations and preferences for each series as shall be
stated in the Certificate of Designations providing for the designation and
issue of each such series adopted by the board of directors (or any authorized
Committee thereof) of the Company. The board of directors is authorized by the
Company's Restated Certificate of Incorporation to determine the voting,
dividend, redemption and liquidation preferences and limitations pertaining to
such series. The board of directors, without shareholder approval, may issue
Preferred Stock with voting and other rights that could adversely affect the
voting power of the holders of the Common Stock and could have certain
antitakeover effects. The ability of the board of directors to issue Preferred
Stock without stockholder approval could have the effect of delaying, deferring
or preventing a change in control of the Company or the removal of existing
management. See "Certain Matters That May Have an Anti-Takeover
Effect -- Provisions of the Company's Restated Certificate of Incorporation and
Bylaws" below.
Any Preferred Stock offered hereby will have the dividend, liquidation and
voting rights set forth below unless otherwise provided in the Certificate of
Designations, and described in the Prospectus Supplement, relating to a
particular series of Preferred Stock. Reference is made to the Prospectus
Supplement relating to the particular series of Preferred Stock offered thereby
for specific terms, including: (i) the designation and stated value per share of
such Preferred Stock and the number of shares offered; (ii) the amount of
liquidation preference per share; (iii) the price at which such Preferred Stock
will be issued; (iv) the dividend rate (or method of calculation), the dates on
which dividends will be payable, whether such dividends will be cumulative or
noncumulative and, if cumulative, the dates from which dividends will accrue;
(v) any redemption or sinking fund provisions; (vi) any conversion or exchange
provisions; and (vii) any additional or other rights, preferences, privileges,
limitations and restrictions relating to such series of Preferred Stock.
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As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer depositary shares ("Depositary Shares") evidenced by
depositary receipts ("Depositary Receipts"), each representing an interest (to
be specified in the Prospectus Supplement relating to the particular series of
the Preferred Stock) in a share of the particular series of the Preferred Stock
issued and deposited with a Preferred Stock Depositary (as defined below).
The Company does not currently have any shares of Preferred Stock
outstanding. However, the board of directors has reserved 350,000 shares of
Series A Preferred Stock for issuance in connection with the Rights Agreement
described below. See "Certain Matters That May Have an Anti-Takeover
Effect -- Rights Agreement." The Preferred Stock offered hereby will be issued
in one or more series. The holders of Preferred Stock will have no preemptive
rights. Preferred Stock will be fully paid and nonassessable upon issuance
against full payment of the purchase price therefor. Unless otherwise specified
in the Certificate of Designations, and described in the Prospectus Supplement,
relating to a particular series of Preferred Stock, each series of Preferred
Stock will, with respect to dividend rights and rights on liquidation,
dissolution and winding up of the Company, rank prior to the Common Stock (the
"Junior Stock") and on a parity with each other series of Preferred Stock
offered hereby (the "Parity Stock").
DIVIDEND RIGHTS
Holders of the Preferred Stock may be entitled to receive, when, as and if
declared by the board of directors (or a duly authorized committee thereof) of
the Company, out of funds legally available therefor, cash dividends at such
rates and on such dates as are set forth in the Certificate of Designations, and
described in the Prospectus Supplement, relating to such series of Preferred
Stock. Such rate may be fixed or variable or both. Each such dividend will be
payable to the holders of record as they appear on the stock record books of the
Company on such record dates as may be fixed by the board of directors (or a
duly authorized committee thereof) of the Company. Dividends on any series of
the Preferred Stock may be cumulative or noncumulative, as provided in the
Certificate of Designations, and described in the Prospectus Supplement,
relating thereto. If the board of directors of the Company fails to declare a
dividend payable on a dividend payment date on any series of Preferred Stock for
which dividends are noncumulative, then the right to receive a dividend in
respect of the dividend period ending on such dividend payment date will be
lost, and the Company will have no obligation to pay the dividend accrued for
such period, whether or not dividends on such series are declared for any future
period. Dividends on shares of each series of Preferred Stock for which
dividends are cumulative will accrue from the date set forth in the Certificate
of Designations, and described in the applicable Prospectus Supplement, relating
to such series.
The Preferred Stock of each series may include customary provisions (i)
restricting the payment of dividends or the making of other distributions on, or
the redemption, purchase or other acquisition of, Junior Stock unless full
dividends, including, in the case of cumulative Preferred Stock, accruals, if
any, in respect of prior dividend periods, on the shares of such series of
Preferred Stock have been paid and (ii) providing for the pro rata payment of
dividends on such series and other Parity Stock when dividends have not been
paid in full upon such series and other Parity Stock.
VOTING RIGHTS
The holders of Preferred Stock of a series offered hereby will not be
entitled to vote except as provided in the Certificate of Designations and
indicated in the Prospectus Supplement relating to such series of Preferred
Stock, or as required by applicable law.
REDEMPTION
The Company will have such rights, if any, to redeem shares of Preferred
Stock, and the holders of Preferred Stock will have such rights, if any, to
cause the Company to redeem shares of Preferred Stock, as may be set forth in
the Certificate of Designations, and described in the Prospectus Supplement,
relating to a series of Preferred Stock.
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CONVERSION OR EXCHANGE
The terms, if any, on which Preferred Stock of a series will be convertible
into or exchangeable for Class A Common Stock, other securities, property, cash
or obligations, or a combination of any of the foregoing, will be summarized in
the Prospectus Supplement relating to such series. Such terms may include
provisions for conversion or exchange, either on a mandatory basis, at the
option of the holder or at the option of the Company. The number of shares of
Class A Common Stock or other securities or the property, cash or obligations to
be received by the holders of a series of Preferred Stock upon conversion or
exchange will be calculated according to the factors and at such time as is
summarized in the related Prospectus Supplement.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of each series of Preferred Stock will be
entitled to receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of Junior
Stock, liquidating distributions in the amount set forth in the Certificate of
Designations, and described in the Prospectus Supplement relating to such series
of Preferred Stock plus an amount equal to accrued and unpaid dividends, if any.
If, upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, the amounts payable with respect to the Preferred Stock of any
series are not paid in full, the holders of the Preferred Stock of such series
will share ratably in any such distribution of assets of the Company in
proration to the full respective preferential amounts (which may include
accumulated dividends) to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of such series of Preferred Stock will have no right or claim to any of the
remaining assets of the Company. Neither the sale of all or a portion of the
Company's assets nor the merger or consolidation of the Company into or with any
other corporation shall be deemed to be a dissolution, liquidation or winding
up, voluntarily or involuntarily, of the Company.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts summarizes the material terms of the Deposit
Agreement and of the Depositary Shares and Depositary Receipts, and is qualified
in its entirety by reference to, the form of Deposit Agreement and form of
Depositary Receipts relating to each series of the Preferred Stock.
GENERAL
The Company may, at its option, elect to have shares of Preferred Stock be
represented by Depositary Shares. The shares of any series of the Preferred
Stock underlying the Depositary Shares will be deposited under a separate
deposit agreement (the "Deposit Agreement") between the Company and a bank or
trust company selected by the Company (the "Preferred Stock Depositary"). The
Prospectus Supplement relating to a series of Depositary Shares will set forth
the name and address of the Preferred Stock Depositary. Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled,
proportionately, to all the rights, preferences and privileges of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion,
exchange and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the Preferred Stock
described in the applicable Prospectus Supplement.
A holder of Depositary Shares will be entitled to receive the shares of
Preferred Stock (but only in whole shares of Preferred Stock) underlying such
Depositary Shares. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the whole number of shares of Preferred
Stock to be withdrawn, the Depositary will deliver to such holder at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares.
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DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions in respect to the Preferred Stock to the record holders of
Depositary Receipts in proportion, insofar as possible, to the number of
Depositary Shares owned by such holders.
In the event of a distribution other than in cash in respect to the
Preferred Stock, the Preferred Stock Depositary will distribute property
received by it to the record holders of Depositary Receipts in proportion,
insofar as possible, to the number of Depositary Shares owned by such holders,
unless the Preferred Stock Depositary determines that it is not feasible to make
such distribution, in which case the Preferred Stock Depositary may, with the
approval of the Company, adopt such method as it deems equitable and practicable
for the purpose of effecting such distribution, including sale (at public or
private sale) of such property and distribution of the net proceeds from such
sale to such holders.
The amount so distributed in any of the foregoing cases will be reduced by
any amount required to be withheld by the Company or the Preferred Stock
Depositary on account of taxes.
CONVERSION AND EXCHANGE
If any Preferred Stock underlying the Depositary Shares is subject to
provisions relating to its conversion or exchange as set forth in the Prospectus
Supplement relating thereto, each record holder of Depositary Shares will have
the right or obligation to convert or exchange such Depositary Shares pursuant
to the terms thereof.
REDEMPTION OF DEPOSITARY SHARES
If Preferred Stock underlying the Depositary Shares is subject to
redemption, the Depositary Shares will be redeemed from the proceeds received by
the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of the Preferred Stock held by the Preferred Stock Depositary. The
redemption price per Depositary Share will be equal to the aggregate redemption
price payable with respect to the number of shares of Preferred Stock underlying
the Depositary Shares. Whenever the Company redeems Preferred Stock from the
Preferred Stock Depositary, the Preferred Stock Depositary will redeem as of the
same redemption date a proportionate number of Depositary Shares representing
the shares of Preferred Stock that were redeemed. If less than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by lot or pro rata as may be determined by the Company.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by the Company with
the Preferred Stock Depositary for any Depositary Shares which the holders
thereof fail to redeem shall be returned to the Company after a period of two
years from the date such funds are so deposited.
VOTING
Upon receipt of notice of any meeting at which the holders of any shares of
Preferred Stock underlying the Depositary Shares are entitled to vote, the
Preferred Stock Depositary will mail the information contained in such notice to
the record holders of the Depositary Receipts. Each record holder of such
Depositary Receipts on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Preferred
Stock Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary Shares.
The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the number of shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting the Preferred Stock to the
extent it does not receive specific written instructions from holders of
Depositary Receipts representing such Preferred Stock.
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RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock,
or (ii) the Preferred Stock Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice, or of the mandatory conversion of or any
election on the part of the Company to call for the redemption of any Preferred
Stock, the Preferred Stock Depositary shall in each such instance fix a record
date (which shall be the same as the record date for the Preferred Stock) for
the determination of the holders of Depositary Receipts (x) who shall be
entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof or (y) who shall be entitled
to give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or of such redemption or conversion, subject to
the provisions of the Deposit Agreement.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Preferred
Stock Depositary. However, any amendment which imposes or increases any fees,
taxes or other charges payable by the holders of Depositary Receipts (other than
taxes and other governmental charges, fees and other expenses payable by such
holders as stated under "Charges of Preferred Stock Depositary"), or which
otherwise prejudices any substantial existing right of holders of Depositary
Receipts, will not take effect as to outstanding Depositary Receipts until the
expiration of 90 days after notice of such amendment has been mailed to the
record holders of outstanding Depositary Receipts.
Whenever so directed by the Company, the Preferred Stock Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
record holders of all Depositary Receipts then outstanding at least 30 days
prior to the date fixed in such notice for such termination. The Preferred Stock
Depositary may likewise terminate the Deposit Agreement if at any time 45 days
shall have expired after the Preferred Stock Depositary shall have delivered to
the Company a written notice of its election to resign and a successor
depositary shall not have been appointed and accepted its appointment. If any
Depositary Receipts remain outstanding after the date of termination, the
Preferred Stock Depositary thereafter will discontinue the transfer of
Depositary Receipts, will suspend the distribution of dividends to the holders
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the Preferred Stock Depositary will continue (i)
to collect dividends on the Preferred Stock and any other distributions with
respect thereto and (ii) to deliver the Preferred Stock together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges or other property, without liability for interest
thereon, in exchange for Depositary Receipts surrendered. At any time after the
expiration of two years from the date of termination, the Preferred Stock
Depositary may sell the Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability for interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all charges of the Preferred Stock Depositary
including charges in connection with the initial deposit of the Preferred Stock,
the initial issuance of the Depositary Receipts, the distribution of information
to the holders of Depositary Receipts with respect to matters on which Preferred
Stock is entitled to vote, withdrawals of the Preferred Stock by the holders of
Depositary Receipts or redemption or conversion of the Preferred Stock, except
for taxes (including transfer taxes, if any) and other governmental charges and
such other charges as are expressly provided in the Deposit Agreement to be at
the expense of holders of Depositary Receipts or persons depositing Preferred
Stock.
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MISCELLANEOUS
The Preferred Stock Depositary will make available for inspection by
holders of Depositary Receipts at its corporate office and its New York office,
all reports and communications from the Company which are delivered to the
Preferred Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Preferred Stock Depositary under the Deposit Agreement are limited to performing
its duties thereunder without negligence or bad faith. The obligations of the
Company under the Deposit Agreement are limited to performing its duties
thereunder in good faith. Neither the Company nor the Preferred Stock Depositary
is obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
The Company and the Preferred Stock Depositary are entitled to rely upon advice
of or information from counsel, accountants or other persons believed to be
competent and on documents believed to be genuine.
The Preferred Stock Depositary may resign at any time or be removed by the
Company, effective upon the acceptance by its successor of its appointment;
provided, that if a successor Preferred Stock Depositary has not been appointed
or accepted such appointment within 45 days after the Preferred Stock Depositary
has delivered a notice of election to resign to the Company, the Preferred Stock
Depositary may terminate the Deposit Agreement. See "-- Amendment and
Termination of Deposit Agreement" above.
DESCRIPTION OF THE COMMON STOCK
The following description is a summary of certain provisions of the Common
Stock and does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Company's bylaws and Amended and Restated
Certificate of Incorporation. The Prospectus Supplement relating to any offering
of Class A Common Stock (or securities convertible into Class A Common Stock)
will describe terms relevant thereto including, without limitation, the number
of shares offered, the initial offering price and market price and dividend
information.
CLASS A COMMON STOCK
Pursuant to the Company's Amended and Restated Certificate of
Incorporation, the Company is authorized to issue up to 1,150,000,000 shares of
Class A Common Stock. As of August 31, 1998, 346,385,617 shares of Class A
Common Stock were issued and outstanding. All shares of Class A Common Stock
currently outstanding are, and shares of Class A Common Stock to be issued in
connection with any offering will be, fully paid and nonassessable.
CLASS B COMMON STOCK
Pursuant to the Company's Amended and Restated Certificate of
Incorporation, the Company is authorized to issue up to 400,000,000 shares of
Class B Common Stock. Prior to the Spin-Off of the Company by Ford, Ford owned
255,881,180 shares of Class B Common Stock, constituting all of the outstanding
Class B Common Stock. Immediately prior to the Spin-Off, Ford converted all such
shares of Class B Common Stock into Class A Common Stock. Therefore, as of
August 31, 1998, no shares of Class B Common Stock were issued and outstanding.
The Company's Restated Certificate of Incorporation provides that the Company
may not reissue any shares of Class B Common Stock after such Class B Common
Stock has been converted into Class A Common Stock. Consequently, the Company
has 144,118,820 shares of Class B Common Stock available for issuance. The
Company has not registered any shares of Class B Common Stock for issuance under
this Prospectus.
VOTING RIGHTS
The holders of Class A Common Stock and Class B Common Stock generally have
identical rights except that holders of Class A Common Stock are entitled to one
vote per share while holders of Class B
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Common Stock are entitled to five votes per share on all matters to be voted on
by stockholders. Holders of shares of Class A Common Stock and Class B Common
Stock are not entitled to cumulate their votes in the election of directors.
Generally, all matters to be voted on by stockholders must be approved by a
majority (or, in the case of election of directors, by a plurality) of the votes
entitled to be cast by all shares of Class A Common Stock and Class B Common
Stock present in person or represented by proxy, voting together as a single
class, subject to any voting rights granted to holders of any Preferred Stock.
Except as otherwise provided by law, and subject to any voting rights granted to
holders of any outstanding Preferred Stock, amendments to the Company's Restated
Certificate of Incorporation must be approved by a majority of the combined
voting power of all of Class A Common Stock and Class B Common Stock, voting
together as a single class. However, amendments to the Company's Restated
Certificate of Incorporation that would alter or change the powers, preferences
or special rights of the Class A Common Stock or the Class B Common Stock so as
to affect them adversely also must be approved by a majority of the votes
entitled to be cast by the holders of the shares affected by the amendment,
voting as a separate class. Notwithstanding the foregoing, any amendment to the
Company's Restated Certificate of Incorporation to increase or decrease the
authorized shares of any class must be approved upon the affirmative vote of the
holders of a majority of the Class A Common Stock and Class B Common Stock,
voting together as a single class.
DIVIDENDS
Holders of Common Stock will share ratably in dividends when, as and if
declared by the board of directors out of funds legally available therefor,
subject to the rights of holders of any outstanding shares of Preferred Stock.
The Company has paid regular quarterly dividends on its Common Stock of $.10 per
share in each quarter since the completion of the initial public offering of the
Company's Common Stock in May 1996. There can be no assurance that the Company
will continue to pay quarterly dividends or that, if paid, the amount of any
dividend payments will not decrease.
OTHER RIGHTS
In the event of any merger or consolidation of the Company with or into
another company in connection with which shares of Common Stock are converted
into or exchangeable for shares of stock, other securities or property
(including cash), all holders of Common Stock, regardless of class, will be
entitled to receive the same kind and amount of shares of stock and other
securities and property (including cash).
On liquidation, dissolution or winding up of the Company, after payment in
full of the amounts required to be paid to holders of Preferred Stock, all
holders of Common Stock will be entitled to share ratably in any assets
available for distribution to holders of shares of Common Stock.
No shares of Common Stock are subject to redemption or have preemptive
rights to purchase additional shares of Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Class A Common Stock is First
Chicago Trust Company of New York.
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CERTAIN MATTERS THAT MAY HAVE AN ANTI-TAKEOVER EFFECT
PROVISIONS OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
Certain provisions of the Company's Restated Certificate of Incorporation
and bylaws summarized below may be deemed to have an anti-takeover effect and
may delay, deter or prevent a tender offer or takeover attempt that a holder of
Common Stock might consider to be in its best interest, including attempts that
might result in a premium being paid over the market price for shares held by
holders of Common Stock.
The Company's Restated Certificate of Incorporation and bylaws provide
that, subject to any rights of holders of Preferred Stock to elect additional
directors under specified circumstances, the number of directors of the Company
will not be more than 12 nor less than three, with the exact number of directors
of the Company to be fixed from time to time as provided in the bylaws. The
bylaws provide that, subject to the rights of holders of Preferred Stock to
elect additional directors under specified circumstances, the number of
directors will be fixed from time to time exclusively by resolution of the board
of directors adopted by the affirmative vote of directors constituting not less
than a majority of the total number of directors that the Company would have if
there were no vacancies on the Company's board of directors. In addition, the
Restated Certificate of Incorporation and bylaws provide that, subject to any
rights of holders of Preferred Stock, and unless the Company's board of
directors otherwise determines, any vacancies will be filled by the affirmative
vote of a majority of the remaining members of the board of directors, though
less than a quorum, or by a sole remaining director; except as otherwise
provided by law, and such vacancy may not be filled by the stockholders. As of
the date of this Prospectus, the Board of Directors has set the number of
directors at seven.
The Company's bylaws provide for an advance notice procedure for the
nomination, other than by or at the direction of the board of directors, of
candidates for election as directors as well as for other stockholder proposals
to be considered at annual meetings of stockholders. In general, notice of
intent to nominate a director or raise matters at such meetings will have to be
received in writing by the Company not less than 60 or more than 90 days prior
to the anniversary of the previous year's annual meeting of stockholders, and
must contain certain information concerning the person to be nominated or the
matters to be brought before the meeting and concerning the stockholder
submitting the proposal. The Company's Restated Certificate of Incorporation and
bylaws also provide that special meetings of stockholders may be called only by
certain specified officers of the Company or by any such officer at the request
in writing of a majority of the board of directors; special meetings of
stockholders cannot be called by stockholders. In addition, the Company's
Restated Certificate of Incorporation provides that any action required or
permitted to be taken by stockholders may be effected only at a duly called
annual or special meeting of stockholders and may not be effected by a written
consent by stockholders in lieu of such a meeting.
The Company's Restated Certificate of Incorporation also provides that the
affirmative vote of the holders of at least 75% of the voting power of all
classes of outstanding capital stock, voting together as a single class, is
required to amend, repeal or adopt any provision inconsistent with the
provisions of the Restated Certificate of Incorporation discussed above. The
Restated Certificate of Incorporation and bylaws further provide that the bylaws
may be altered, amended or repealed by the affirmative vote of directors
constituting not less than a majority of the entire board of directors (if
effected by action of the board of directors) or by the affirmative vote of the
holders of at least 75% of the total voting power of all classes of outstanding
capital stock, voting together as a single class.
RIGHTS PLAN
On April 8, 1998, the board of directors of the Company declared a dividend
of one preferred stock purchase right (a "Right") for each outstanding share of
Class A Common Stock. The Company paid the dividend on April 20, 1998 (the
"Record Date"), to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Series A Preferred Shares"), of the Company at a price of $400 per one
one-thousandth of a Series A Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the rights are set forth in a Rights
Agreement, dated as of April 13,
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<PAGE> 24
1998 (the "Rights Agreement"), between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Rights Agent"), a copy of which is
incorporated as an exhibit to the registration statement to which this
Prospectus forms a part.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 15% or more of the outstanding
Class A Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the board of directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding shares of Class
A Common Stock (the earlier of such dates being called the "Date of
Distribution"), the Rights will be evidenced, with respect to any of the Class A
Common Stock certificates outstanding as of the Record Date, by such Class A
Common Stock certificates together with a copy of the Summary of Rights to
Purchase Shares of Preferred Stock, a copy of which is attached as an exhibit to
the Rights Agreement ("Summary of Rights").
The Rights Agreement provides that, until the Date of Distribution (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the shares of Class A Common Stock. Until the Date of
Distribution (or earlier redemption or expiration of the Rights), new Class A
Common Stock certificates issued after the Record Date upon transfer or new
issuances of Class A Common Stock will contain a notation incorporating the
Rights Agreement by reference. Until the Date of Distribution (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Class A Common Stock outstanding as of the Record Date, even
without such notation or a copy of the Summary of Rights, will also constitute
the transfer of the Rights associated with the shares of Class A Common Stock
represented by such certificate. As soon as practicable following the Date of
Distribution, separate certificates evidencing the Rights ("Right Certificates")
will be mailed to holders of record of the Class A Common Stock as of the close
of business on the Date of Distribution and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Date of Distribution. The Rights
will expire on April 13, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
The Purchase Price payable, and the number of Series A Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series A
Preferred Shares, (ii) upon the grant to holders of the Series A Preferred
Shares of certain rights or warrants to subscribe for or purchase Series A
Preferred Shares at a price, or securities convertible into Series A Preferred
Shares with a conversion price, less than the then-current market price of the
Series A Preferred Shares or (iii) upon the distribution to holders of the
Series A Preferred Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Series A Preferred Shares) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights is also subject to adjustment in the event
of a stock split of the Class A Common Stock or a stock dividend on the Class A
Common Stock payable in Class A Common Stock or subdivisions, consolidations or
combinations of the Class A Common Stock occurring, in any such case, prior to
the Date of Distribution.
Series A Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled, when, as and if declared
to a minimum preferential quarterly dividend payment of $1 per share but will be
entitled to an aggregate dividend of 1,000 times the dividend declared per share
of Class A Common Stock. In the event of liquidation, the holders of the Series
A Preferred Shares will be entitled to a minimum preferential liquidation
payment of $1,000 per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 1,000 times the payment made per share of
Class A Common Stock. Each Series A Preferred Share will have 1,000 votes,
voting together with the Class A Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Class A Common
Stock are exchanged, each Series A Preferred Share will be entitled to receive
1,000 times
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the amount received per share of Class A Common Stock. These rights are
protected by customary antidilution provisions.
Because of the nature of the Series A Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
Series A Preferred Share purchasable upon exercise of each Right should
approximate the value of one share of Class A Common Stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, the Rights Agreement provides that proper provision
shall be made so that each holder of a Right (other than Rights beneficially
owned by the Acquiring Person, which will thereafter be void) will thereafter
have the right to receive upon exercise of the Right at the then current
exercise price of the Right, that number of shares of Class A Common Stock
having a market value of two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, the Rights
Agreement provides that proper provision will be made so that each holder of a
Right (other than Rights beneficially owned by an Acquiring Person or certain
other transferees, which will have become void) will thereafter have the right
to receive, upon the exercise thereof of the Right at the then current exercise
price of the Right, that number of shares of common stock of the person with
whom the Company has engaged in the foregoing transaction which number of shares
at the time of such transaction will have a market value of two times the
exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Class A Common Stock or the occurrence of any event described in the preceding
paragraph, the board of directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one share of Class A Common Stock, or one
one-thousandth of a Series A Preferred Share (or of a share of a class or series
of the Company's Preferred Stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Series A Preferred Shares will be issued
(other than fractions which are integral multiples of one one-thousandth of a
Series A Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Series A Preferred Shares on the
last trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the board
of directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
For so long as Rights are then redeemable, the Company may, except with
respect to the Redemption Price, amend the Rights in any manner. After the
Rights are no longer redeemable the Company may, except with respect to the
Redemption Price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
THE DELAWARE GENERAL CORPORATION LAW
The Company is a Delaware corporation subject to Section 203 of the
Delaware General Corporation Law (the "Delaware Law"). Section 203 provides
that, subject to certain exceptions specified therein, a corporation shall not
engage in any business combination with any "interested stockholder" for a
three-year
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<PAGE> 26
period following the date that such stockholder becomes an interested
stockholder unless (i) prior to such time, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares) or (iii) on or subsequent to such time, the
business combination is approved by the board of directors of the corporation
and by the affirmative vote of at least 66 2/3% of the outstanding voting stock
which is not owned by the interested stockholder. Except as specified in Section
203 of the Delaware Law, an interested stockholder is defined to include (x) any
person that is the owner of 15% or more of the outstanding voting stock of the
corporation, or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation, at any
time within three years immediately prior to the relevant date and (y) the
affiliates and associates of any such person. Under certain circumstances,
Section 203 of the Delaware Law makes it more difficult for an "interested
stockholder" to effect various business combinations with a corporation for a
three-year period, although the stockholders may elect to exclude a corporation
from the restrictions imposed thereunder.
REGULATORY MATTERS
Because of the nature of the businesses in which the Company operates, the
acquisition of various amounts of its equity securities may not be permitted
without regulatory approvals. While the information below is not meant to be
complete, below are certain principal regulatory thresholds.
The Company indirectly owns all of the capital stock of insurance companies
domiciled in the states of Delaware, Indiana, Nevada, Tennessee and Texas. The
respective insurance laws of these states require prior approval by the state's
insurance commissioner of any acquisition of control of a domestic insurance
company or of any company which controls a domestic insurance company. "Control"
is presumed to exist through the ownership of 10% or more of the voting
securities of a domestic insurance company or of any company which controls a
domestic insurance company. Therefore, any person owning 10% or more of the
value of the outstanding Common Stock may be presumed to have acquired control
of the Company's insurance subsidiaries unless the insurance commissioners of
Delaware, Indiana, Nevada, Tennessee and Texas, following application by such
purchaser in each such state, determine otherwise.
The United Kingdom's Insurance Companies Act 1982 requires the prior
approval by the Department of Trade and Industry of anyone proposing to become a
"controller" of an insurance company regulated under such Act. Any company or
individual that directly or indirectly exercises 10% or more of the voting power
at a general meeting of a regulated insurance company is considered a
"controller." Therefore, any person owning 10% or more of the value of the
outstanding Common Stock will be a controller of the Company's U.K.
subsidiaries, Cumberland Insurance Company Limited and Cumberland Life Insurance
Co. Limited.
The Company directly owns all of the capital stock of Associates National
Bank (Delaware) ("ANB") and indirectly owns all of the capital stock of
Associates Capital Bank, Inc. ("ACB") the deposits of which are insured by the
Federal Deposit Insurance Corporation. The Federal Change in Bank Control Act
and the regulations issued thereunder require that a person (including an
individual) file a notice with the appropriate federal bank regulatory agency
prior to acquiring 10% or more of any class of voting securities of a company
that controls an insured depository institution such as ANB or ACB.
The Company indirectly owns all of the shares of stock of licensed lenders
in the states of Georgia, Hawaii, Nevada, New York, Texas and Virginia and in
the Commonwealth of Puerto Rico. The lender licensing laws of these states and
Puerto Rico require approval by the appropriate regulatory agency prior to any
acquisition of control of any company which controls a license. "Control" is
presumed to exist through the ownership of 10% or more (25% in Georgia and
Virginia) of the voting securities of a licensee or a company that controls a
licensee. Therefore any person owning 10% or more (25% in Georgia and Virginia)
of the value of the outstanding Common Stock will be presumed to have acquired
control of the Company's licensed lenders in these jurisdictions unless the
appropriate regulatory agency determines otherwise.
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LIMITATIONS ON DIRECTORS' LIABILITY
The Company's Restated Certificate of Incorporation provides that no
director of the Company shall be liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases or (iv)
for any transaction from which the director derived an improper personal
benefit. The effect of these provisions will be to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from grossly
negligent behavior), except in the situations described above.
DESCRIPTION OF THE WARRANTS TO PURCHASE CLASS A
COMMON STOCK OR PREFERRED STOCK
The following statements with respect to the Warrants to purchase Class A
Common Stock or Preferred Stock (the "Stock Warrants") are summaries of, and
subject to, the detailed provisions of a Stock Warrant Agreement (the "Stock
Warrant Agreement") to be entered into by the Company and a warrant agent to be
selected at the time of issue (the "Stock Warrant Agent"), a form of which will
be filed with the Commission.
GENERAL
The Stock Warrants, evidenced by Stock Warrant certificates (the "Stock
Warrant Certificates"), may be issued under the Stock Warrant Agreement
independently or together with any Securities offered by any Prospectus
Supplement and may be attached to or separate from such Securities. If Stock
Warrants are offered, the Prospectus Supplement will describe the terms of the
Stock Warrants, including the following: (i) the offering price, if any; (ii)
the number of shares of Preferred Stock or Class A Common Stock purchasable upon
exercise of each Stock Warrant and the initial price at which such shares may be
purchased upon exercise; (iii) if applicable, the designation and terms of the
Securities with which the Stock Warrants are issued and the number of Stock
Warrants issued with each such Security; (iv) if applicable, the date on and
after which the Stock Warrants and the related Preferred Stock or Class A Common
Stock will be separately transferable; (v) the date on which the right to
exercise the Stock Warrants shall commence and the date on which such right
shall expire; (vi) federal income tax consequences;(vii) call provisions of such
Stock Warrants, if any; (viii) whether the Stock Warrants represented by the
Stock Warrant Certificates will be issued in registered or bearer form; and (ix)
any additional or other rights, preferences, privileges, limitations and
restrictions relating to the Stock Warrants. The shares of Preferred Stock or
Class A Common Stock issuable upon the exercise of the Stock Warrants will, when
issued in accordance with the Stock Warrant Agreement, be fully paid and
nonassessable.
Stock Warrant Certificates may be exchanged for new Stock Warrant
Certificates of different denominations and may (if in registered form) be
presented for registration of transfer at the corporate trust office of the
Stock Warrant Agent or any Co-Stock Warrant Agent, which will be identified in
the Prospectus Supplement, or at such other office as may be set forth therein.
Holders of Stock Warrants do not have any of the rights of holders of Class A
Common Stock or Preferred Stock (except to the extent that the consent of
holders of Stock Warrant may be required for certain modifications of the terms
of the Class A Common Stock or Preferred Stock issuable upon exercise of the
Stock Warrants) and are not entitled to dividend payments on the Class A Common
Stock or Preferred Stock purchasable upon such exercise.
EXERCISE OF STOCK WARRANTS
Stock Warrants may be exercised by surrendering the Stock Warrant
Certificate at the corporate trust office of the Stock Warrant Agent or at the
corporate trust office of the Co-Stock Warrant Agent, if any, with the form of
election to purchase on the reverse side of the Stock Warrant Certificate
properly completed and executed, and by payment in full of the exercise price,
as set forth in the Prospectus Supplement. Upon the exercise of Stock Warrants,
the Stock Warrant Agent or Co-Stock Warrant Agent, if any, will, as soon as
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<PAGE> 28
practicable, forward a certificate representing the number of shares of
Preferred Stock or Class A Common Stock purchasable upon such exercise in
accordance with the instructions of the holder exercising the Stock Warrant and
at the sole cost and risk of such holder. If less than all of the Stock Warrants
evidenced by the Stock Warrant Certificate are exercised, a new Stock Warrant
Certificate will be issued for the remaining amount of Stock Warrants.
ANTI-DILUTION PROVISIONS
Unless otherwise specified in the applicable Prospectus Supplement, the
exercise price payable and the number of shares purchasable upon the exercise of
each Stock Warrant will be subject to adjustment in certain events, including
(i) the issuance of a stock dividend to holders of Preferred Stock or Class A
Common Stock or a combination, subdivision or reclassification of the Preferred
Stock or Class A Common Stock; (ii) the issuance of rights, warrants or options
to all holders of Preferred Stock or Class A Common Stock entitling the holders
thereof to subscribe for or purchase Preferred Stock or Class A Common Stock for
an aggregate consideration per share less than the current market price per
share of the Preferred Stock or Class A Common Stock; or (iii) any distribution
by the Company to the holders of its Preferred Stock or Class A Common Stock of
evidences of indebtedness of the Company or of assets (excluding cash dividends
or distributions payable out of capital surplus and dividends and distributions
referred to in (i) above). No fractional shares will be issued upon exercise of
Stock Warrants, but the Company will pay the cash value of any fractional shares
otherwise issuable.
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth certain general terms and provisions
of the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms of the Preferred Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Preferred Securities so offered will be described in the Prospectus
Supplement relating to such Preferred Securities.
Pursuant to the terms of the Trust Agreement for each Associates Trust, the
Administrative Trustees, on behalf of such Associates Trust, are authorized to
issue the Preferred Securities and the Common Securities. The Preferred
Securities of a particular issue will represent beneficial ownership interests
in the assets of such Associates Trust, and the holders thereof will be entitled
to a preference in certain circumstances with respect to Distributions and
amounts payable on redemption or liquidation over the Common Securities of such
Associates Trust, as well as other benefits as described in the corresponding
Trust Agreement. This summary of certain provisions of the Preferred Securities
and each Trust Agreement does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of each Trust
Agreement, including the definitions therein of certain terms, and the Trust
Indenture Act. Wherever particular defined terms of a Trust Agreement (as
amended or supplemented from time to time) are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein by
reference. The form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Each of the
Associates Trusts is a legally separate entity, and the assets of one are not
available to satisfy the obligations of any of the others.
GENERAL
The Preferred Securities of an Associates Trust will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities of that
Associates Trust except as described under "-- Subordination of Common
Securities." Legal title to the Corresponding Junior Subordinated Debt
Securities will be held by the Property Trustee in trust for the benefit of the
holders of the related Preferred Securities and Common Securities. Each
Guarantee Agreement executed by the Company for the benefit of the holders of an
Associates Trust's Preferred Securities (each a "Guarantee Agreement") will be a
guarantee on a junior subordinated basis with respect to the related Preferred
Securities but will not guarantee payment of Distributions or amounts payable on
redemption or liquidation of such Preferred Securities when the related
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Associates Trust does not have funds on hand available to make such payments.
See "Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. Except as specified in the
applicable Prospectus Supplement, in the event that any date on which
Distributions are payable on the Preferred Securities is not a Business Day (as
defined below), payment of the Distribution 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 to any such delay), with the same force and effect as
if made on such date (each date on which Distributions are payable in accordance
with the foregoing, a "Distribution Date"). Except as specified in the
applicable Prospectus Supplement, a "Business Day" shall mean any day other than
a Saturday or a Sunday, or a day on which banking institutions in The City of
New York are authorized or required by law to remain closed or a day on which
the corporate trust office of the Property Trustee or the Indenture Trustee
under the Junior Subordinated Indenture is closed for business.
The Associates Trust's Preferred Securities represent beneficial ownership
interests in the assets of the applicable Associates Trust, and the
Distributions on each Preferred Security will be payable at a rate specified in
the Prospectus Supplement for such Preferred Securities. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months unless otherwise specified in the applicable
Prospectus Supplement. Distributions to which holders of Preferred Securities
are entitled will accumulate additional Distributions at the rate per annum if
and as specified in the applicable Prospectus Supplement. The term
"Distributions" as used herein includes any such additional Distributions unless
otherwise stated.
If provided in the applicable Prospectus Supplement, the Company shall have
the right at any time and from time to time during the term of any series of
Corresponding Junior Subordinated Debt Securities to defer payment of interest
for such number of consecutive interest payment periods as may be specified in
the applicable Prospectus Supplement (each, an "Extension Period"), subject to
the terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the
maturity date of such series of Corresponding Junior Subordinated Debt
Securities. Certain United States Federal income tax consequences and special
considerations applicable to any such Corresponding Junior Subordinated Debt
Securities will be described in the applicable Prospectus Supplement. As a
consequence of any such extension, Distributions on the related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Associates Trust which issued
such Preferred Securities during any such Extension Period.
If the Company shall have given notice of its selection of an Extension
Period as provided pursuant to the Junior Subordinated Indenture with respect to
the Corresponding Junior Subordinated Debt Securities of a series and shall not
have rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing, the Company may not, and may not permit any subsidiary of
the Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company (including other Corresponding Junior Subordinated Debt Securities) that
rank pari passu with or junior in interest to the Corresponding Junior
Subordinated Debt Securities of such series or make any guarantee payments with
respect to any guarantee by the Company of debt securities of any subsidiary of
the Company if such guarantee ranks pari passu or junior in interest to the
Corresponding Junior Subordinated Debt Securities of such series (other than (a)
dividends or distributions in common stock of the Company, (b) redemptions or
purchases of any rights pursuant to the Company's Rights Agreement, or any
successor to such Rights Agreement, and the declaration of a dividend of such
rights or the issuance of stock under such plans in the future, (c) payments
under any Guarantee and (d) purchases of common stock related to the issuance of
common stock under any of the Company's benefit plans for its directors,
officers or employees). For additional circumstances in which the Company is
restricted
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in making such payments, see "Description of the Debt Securities -- Certain
Provisions Relating to Corresponding Junior Subordinated Debt
Securities -- Restrictions on Certain Payments."
The revenue of each Associates Trust available for distribution to holders
of its Preferred Securities will be limited to payments under the Corresponding
Junior Subordinated Debt Securities in which the Associates Trust will invest
the proceeds from the issuance and sale of its Trust Securities. See
"Description of the Debt Securities -- Certain Provisions Relating to
Corresponding Junior Subordinated Debt Securities." If the Company does not make
interest payments on such Corresponding Junior Subordinated Debt Securities, the
Property Trustee will not have funds available to pay Distributions of the
related Preferred Securities. The payment of Distributions (if and to the extent
the Associates Trust has funds legally available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by the
Company on a limited basis as set forth herein under "Description of
Guarantees."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Associates Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
form, will be one Business Day prior to the relevant Distribution Date. Subject
to any applicable laws and regulations and the provisions of the applicable
Trust Agreement, each such payment will be made as described under "Book Entry
Issuance." In the event any Preferred Securities are not in book-entry form, the
relevant record date for such Preferred Securities shall be the date at least 15
days prior to the relevant Distribution Date, as specified in the applicable
Prospectus Supplement.
PAYMENT OF EXPENSES
Pursuant to each Junior Subordinated Indenture, the Company, as borrower,
has agreed to pay all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of the applicable Associates Trust
(including, but not limited to, all costs and expenses relating to the
organization of the applicable Associates Trust, the fees and expenses of the
Property Trustee, the Delaware Trustee and the Administrative Trustees and all
costs and expenses relating to the operation of the applicable Associates Trust
(other than with respect to the Trust Securities)) and to pay any and all taxes,
duties, assessments or other governmental charges of whatever nature (other than
United States withholding taxes) imposed by the United States or any other
taxing authority, so that the net amounts received and retained by the
applicable Associates Trust after paying such fees, expenses, debts and
obligations will be equal to the amounts the applicable Associates Trust would
have received and retained had no such fees, expenses, debts and obligations
been incurred by or imposed on the applicable Associates Trust. The foregoing
obligations of the Company are for the benefit of, and shall be enforceable by,
any person to whom such fees, expenses, debts and obligations are owed (each, a
"Creditor"), whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company, and the Company has agreed to irrevocably waive any right or remedy to
require that any such Creditor take any action against the applicable Associates
Trust or any other person before proceeding against the Company. The Company
shall execute such additional agreements as may be necessary to give full effect
to the foregoing.
REDEMPTION OR EXCHANGE
Upon the repayment or redemption, in whole or in part, of any Corresponding
Junior Subordinated Debt Securities, whether at maturity or upon earlier
redemption as provided in the applicable Junior Subordinated Indenture, the
proceeds from such repayment or redemption shall be applied by the Property
Trustee to redeem a Like Amount (as defined below) of the Trust Securities, upon
not less than 30 nor more than 60 days notice, at a redemption price (the
"Redemption Price") equal to the aggregate Liquidation Amount of such Trust
Securities plus accumulated but unpaid Distributions thereon to the date of
redemption (the "Redemption Date") and the related amount of the premium, if
any, paid by the Company upon the concurrent redemption of such Corresponding
Junior Subordinated Debt Securities. See "Description of the Debt
Securities -- Certain Provisions Relating to Corresponding Junior Subordinated
Debt Securities -- Redemption." If less than all of any series of Corresponding
Junior Subordinated Debt Securities are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the related Trust Securities. The amount of premium,
if any, paid by
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the Company upon the redemption of all or any part of any series of any
Corresponding Junior Subordinated Debt Securities to be repaid or redeemed on a
Redemption Date shall be allocated to the redemption pro rata of the related
Trust Securities.
The Company will have the right to redeem any series of Corresponding
Junior Subordinated Debt Securities (i) subject to the conditions described
under "Description of the Debt Securities -- Certain Provisions Relating to
Corresponding Junior Subordinated Debt Securities -- Redemption" or (ii) as may
be otherwise specified in the applicable Prospectus Supplement.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to that portion of the principal amount of Corresponding
Junior Subordinated Debt Securities to be contemporaneously redeemed in
accordance with the Junior Subordinated Indenture, allocated to the Common
Securities and to the Preferred Securities based upon the relative Liquidation
Amounts of such classes and the proceeds of which will be used to pay the
Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Corresponding Junior Subordinated Debt Securities to holders of
any series of Trust Securities in connection with a dissolution or liquidation
of the related Associates Trust, Corresponding Junior Subordinated Debt
Securities having a principal amount equal to the Liquidation Amount of the
Trust Securities of the holder to whom such Corresponding Junior Subordinated
Debt Securities are distributed. Unless otherwise specified in the applicable
Prospectus Supplement, "Liquidation Amount" means the stated amount per Trust
Security specified in the applicable Prospectus Supplement.
At any time, the Company has the right to dissolve an Associates Trust and,
after satisfaction of the liabilities of creditors of such Associates Trust as
provided by applicable law, cause the Corresponding Junior Subordinated Debt
Securities owned by such Associates Trust to be distributed to the holders of
the related Preferred Securities and Common Securities in liquidation of the
Associates Trust.
If provided in the applicable Prospectus Supplement, the Company shall have
the right to extend or shorten the maturity of any series of Corresponding
Junior Subordinated Debt Securities at the time that the Company exercises its
right to elect to dissolve the related Associates Trust and cause such
Corresponding Junior Subordinated Debt Securities to be distributed to the
holders of such related Preferred Securities and Common Securities in
liquidation of the Associates Trust, provided that it can extend the maturity
only if certain conditions specified in the applicable Prospectus Supplement are
met at the time such election is made and at the time of such extension.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debt Securities for any series of Preferred Securities (i)
such series of Preferred Securities will no longer be deemed to be outstanding,
(ii) The Depository Trust Company ("DTC") or its nominee, as the record holder
of such series of Preferred Securities, will receive a registered global
certificate or certificates representing the Corresponding Junior Subordinated
Debt Securities to be delivered upon such distribution and (iii) any
certificates representing such series of Preferred Securities not held by DTC or
its nominee will be deemed to represent the Corresponding Junior Subordinated
Debt Securities having a principal amount equal to the stated liquidation amount
of such series of Preferred Securities, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid Distributions on such series of
Preferred Securities until such certificates are presented to the Administrative
Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debt Securities that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of an Associates Trust were to occur. Accordingly, the Preferred
Securities that an investor may purchase, or the Corresponding Junior
Subordinated Debt Securities that an investor may receive on dissolution and
liquidation of an Associates Trust, may trade at a discount to the price that
the investor paid to purchase the Preferred Securities.
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REDEMPTION AND EXCHANGE PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Subordinated Debt Securities. Redemptions
of the Preferred Securities shall be made and the Redemption Price shall be
payable on each Redemption Date only to the extent that the related Associates
Trust has funds on hand available for the payment of such Redemption Price. See
"-- Subordination of Common Securities."
If an Associates Trust gives a notice of redemption in respect of its
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, the Property Trustee will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price and
will give DTC irrevocable instructions and authority to pay the Redemption Price
to the holders of such Preferred Securities. See "Book-Entry Issuance." If such
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for such Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
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, and such Preferred
Securities will cease to be outstanding. Except as specified in the applicable
Prospectus Supplement, 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). In
the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Associates Trust or by the Company pursuant to the Guarantee as
described under "Description of Guarantees," Distributions on such Preferred
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Associates Trust for such
Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
Federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debt Securities to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be a date at least 15 days prior to the
Redemption Date or liquidation date, as applicable, as specified in the
applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities issued
by an Associates Trust are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of such Preferred Securities and Common Securities
to be redeemed shall be allocated pro rata to the Preferred Securities and the
Common Securities based upon the relative Liquidation Amounts of such classes.
The particular Preferred Securities to be redeemed shall be selected on a pro
rata basis not more than 60 days prior to the Redemption Date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption. The Property Trustee shall promptly notify the trust registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of each Trust Agreement, unless the
context otherwise requires, all provisions
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relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Preferred Securities which has been or is
to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the Redemption Price on the Corresponding Junior Subordinated Debt Securities,
on and after the Redemption Date interest ceases to accrue on such Junior
Subordinated Debt Securities or portions thereof (and distributions cease to
accrue on the related Preferred Securities or portions thereof) called for
redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Associates
Trust's Preferred Securities and Common Securities, as applicable, shall be made
pro rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date an Event of Default with respect to any Junior Subordinated Debt Security
shall have occurred and be continuing, no payment of any Distribution on, or
Redemption Price of, any of the Associates Trust's Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
such Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the Associates Trust's
outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all of the Associates Trust's outstanding Preferred
Securities then called for redemption, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
Associates Trust's Preferred Securities then due and payable.
In the case of any Event of Default with respect to any Junior Subordinated
Debt Security, the Company as holder of such Associates Trust's Common
Securities will be deemed to have waived any right to act with respect to any
such Event of Default under the applicable Trust Agreement until the effect of
all such Events of Default with respect to such Preferred Securities has been
cured, waived or otherwise eliminated. Until any such Events of Default under
the applicable Trust Agreement with respect to the Preferred Securities have
been so cured, waived or otherwise eliminated, the Property Trustee shall act
solely on behalf of the holders of such Preferred Securities and not on behalf
of the Company as holder of the Associates Trust's Common Securities, and only
the holders of such Preferred Securities will have the right to direct the
Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to each Trust Agreement, each Associates Trust shall automatically
dissolve upon expiration of its term and shall dissolve on the first to occur
of: (i) certain events of bankruptcy, dissolution or liquidation of the Company;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debt Securities to the holders of its Trust Securities, if the Company, as
Depositor, has given written direction to the Property Trustee to dissolve such
Associates Trust (which direction is optional and wholly within the discretion
of the Company, as Depositor); (iii) the redemption of all of the Associates
Trust's Trust Securities; and (iv) the entry of an order for the dissolution of
such Associates Trust by a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Associates Trust shall be liquidated by the Issuer Trustees as
expeditiously as the Issuer Trustees determine to be possible by distributing,
after satisfaction of liabilities to creditors of such Associates Trust as
provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Corresponding Junior Subordinated Debt Securities, unless such
distribution is determined by the Property Trustee not to be practical, in which
event such holders will be entitled to receive out of the assets of the
Associates Trust available for distribution to holders, after satisfaction of
liabilities to creditors of such Associates Trust as provided by applicable law,
an
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amount equal to, in the case of holders of Preferred Securities, the aggregate
of the Liquidation Amount 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 such Associates Trust
has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by such Associates Trust on its
Preferred Securities shall be paid on a pro rata basis. The holder(s) of such
Associates Trust's Common Securities will be entitled to receive distributions
upon any such liquidation pro rata with the holders of its Preferred Securities,
except that if a Junior Subordinated Debt Security Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
each Trust Agreement (a "Trust Event of Default") with respect to the Preferred
Securities issued thereunder (whatever the reason for such Trust 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 with respect to a
Corresponding Junior Subordinated Debt Security under the Junior
Subordinated Indenture (see "Description of Debt Securities -- Events of
Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in such 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 the defaulting Issuer
Trustee or Trustees by the holders of at least 25% in aggregate liquidation
preference of the outstanding Preferred Securities of the applicable
Associates Trust, 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 such Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Trust Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Trust Event of Default to the holders of such Associates
Trust's Preferred Securities, the Administrative Trustees and the Company, as
Depositor, unless such Trust Event of Default shall have been cured or waived.
The Company, as Depositor, and the Administrative Trustees are required to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under
each Trust Agreement.
If an Event of Default with respect to a Corresponding Junior Subordinated
Debt Security has occurred and is continuing, the Preferred Securities shall
have a preference over the Common Securities upon termination of each Associates
Trust as described above. See "-- Liquidation Distribution upon Dissolution."
The existence of a Trust Event of Default does not entitle the holders of
Preferred Securities to cause the redemption of the Preferred Securities.
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REMOVAL OF ISSUER TRUSTEES
Unless an Event of Default with respect to a Corresponding Junior
Subordinated Debt Security shall have occurred and be continuing, any Issuer
Trustee may be removed at any time by the holder of the Common Securities. If a
Trust Event of Default resulting from an Event of Default with respect to a
Corresponding Junior Subordinated Debt Security has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of an Issuer Trustee and no appointment of
a successor trustee shall be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the applicable Trust
Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless a Trust Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Company, as the holder of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case an Event of
Default with respect to a Corresponding Junior Subordinated Debt Security has
occurred and is continuing, the Property Trustee alone shall have power to make
such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which 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 resulting
from any merger, conversion or consolidation to which such Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Trustee, shall be the successor of such Trustee under
each Trust Agreement, provided such corporation shall be otherwise qualified and
eligible.
MERGERS, CONSOLIDATIONS, CONVERSIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
ASSOCIATES TRUSTS
An Associates Trust may not merge with or into, consolidate, convert into,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other Person, except
as described below, as described in "-- Liquidation Distribution upon
Dissolution" or as described in the Prospectus Supplement with respect to the
Preferred Securities. An Associates Trust may, at the request of the Company,
with the consent of the Administrative Trustees and without the consent of the
holders of the Preferred Securities, merge with or into, consolidate, convert
into, amalgamate, or be replaced by or convey, transfer or lease its properties
and assets substantially as an entirety to a trust organized as such under the
laws of any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of such Associates Trust with respect to the
Preferred Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Preferred 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 Corresponding Junior Subordinated Debt
Securities, (iii) the 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, if any, (iv) such merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any successor securities) to be downgraded by any
nationally recognized
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statistical rating organization, (v) such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, (vi)
such successor entity has a purpose substantially similar to that of the
Associates Trust, (vii) prior to such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease, the Company has
received an opinion from independent counsel to the Associates Trust experienced
in such matters to the effect that (a) such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease, neither the Associates Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act and (viii) the Company or any permitted successor or
assignee owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, an Associates Trust shall not, except with the consent of holders of
100% in Liquidation Amount of the Preferred Securities, merge with or into,
consolidate, convert into, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease would cause the Associates Trust or the successor
entity to be classified as other than a grantor trust for United States Federal
income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust Agreement, which shall not be inconsistent
with the other provisions of such Trust Agreement or (ii) to modify, eliminate
or add to any provisions of such Trust Agreement to such extent as shall be
necessary to ensure that the Associates Trust will be classified for United
States Federal income tax purposes as a grantor trust at all times that any
Trust Securities are outstanding or to ensure that the Associates Trust will not
be required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of any holder of Trust
Securities, and any such amendments of such Trust Agreement shall become
effective when notice thereof is given to the holders of Trust Securities. Each
Trust Agreement may be amended by the Issuer Trustees and the Company with (i)
the consent of holders representing not less than a majority (based upon
Liquidation Amounts) of the outstanding Trust Securities and (ii) receipt by the
Issuer Trustees of an opinion of counsel experienced in such matters to the
effect that such amendment or the exercise of any power granted to the Issuer
Trustees in accordance with such amendment will not affect the Associates
Trust's status as a grantor trust for United States Federal income tax purposes
or the Associates Trust's exemption from status as an "investment company" under
the Investment Company Act, provided that without the consent of each holder of
Trust Securities, such 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 or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Corresponding Junior Subordinated Debt Securities are held
by the Property Trustee, the Issuer Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee under the Junior Subordinated Indenture, or executing any
trust or power conferred on the Property Trustee with respect to such
Corresponding Junior Subordinated Debt Securities,
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(ii) waive any past default that is waivable under Section 8.01 of the Junior
Subordinated Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Corresponding Junior Subordinated Debt
Securities shall be due and payable or (iv) consent to any amendment,
modification or termination of the Junior Subordinated Indenture or such
Corresponding Junior Subordinated Debt Securities, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities; provided, however, that where a consent under the Junior
Subordinated Indenture would require the consent of each holder of Corresponding
Junior Subordinated Debt Securities affected thereby, no such consent shall be
given by the Property Trustee without the prior consent of each holder of the
related Preferred Securities. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Preferred
Securities except by subsequent vote of the holders of the Preferred Securities.
The Property Trustee shall notify each holder of Preferred Securities of any
notice of default with respect to the Corresponding Junior Subordinated Debt
Securities. In addition to obtaining the foregoing approvals of the holders of
the Preferred Securities, prior to taking any of the foregoing actions, the
Issuer Trustees shall obtain an opinion of counsel to the effect that the
Associates Trust will not be classified as a corporation for United States
Federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee 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 each Trust
Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Associates Trust to redeem and cancel its Preferred Securities in
accordance with the applicable 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 Issuer Trustees or any affiliate
of the Company or any Issuer Trustees, shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
DTC will act as securities depositary for all of the Preferred Securities
and the Corresponding Junior Subordinated Debt Securities, unless otherwise
referred to in the Prospectus Supplement relating to an offering of Preferred
Securities and any Corresponding Junior Subordinated Debt Securities. The
Preferred Securities and the Corresponding Junior Subordinated Debt 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 Securities will
be issued for the Preferred Securities of each Associates Trust and the
Corresponding Junior Subordinated Debt Securities, representing in the aggregate
the total number of such Associates Trust's Preferred Securities or aggregate
principal balance of Corresponding Junior Subordinated Debt Securities,
respectively, and will be deposited with DTC.
For a description of such depositary arrangements, see "Book-Entry
Issuance." Any additional terms of the depositary arrangements with respect to a
series of Preferred Securities and any Corresponding Junior Subordinated Debt
Securities and the rights of and limitations on owners of beneficial interests
in Book-Entry Securities (as defined herein) representing all or a portion of a
series of Preferred Securities and any Corresponding Junior Subordinated Debt
Securities may be described in the Prospectus Supplement relating to such
series.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Associates Trust's Preferred Securities
are not held by the Depositary, such payments shall be made by check mailed to
the address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property
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Trustee and any co-paying agent chosen by the Property Trustee and acceptable to
the Administrative Trustees and the Company. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Company. In the event that the Property Trustee shall no longer be the
Paying Agent, the Administrative Trustees shall appoint a successor (which shall
be a bank or trust company acceptable to the Administrative Trustees and the
Company) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Associates Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Associates Trusts will not be required to register or cause to
be registered the transfer of their Preferred Securities after such Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of a
Trust Event of Default, undertakes to perform only such duties as are
specifically set forth in each Trust Agreement and, after such Trust Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the applicable Trust Agreement at the request of any
holder of Preferred Securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred thereby. If no Trust
Event of Default has occurred and is continuing and the Property Trustee is
required to decide between alternative causes of action, construe ambiguous
provisions in the applicable Trust Agreement or is unsure of the application of
any provision of the applicable Trust Agreement, and the matter is not one on
which holders of Preferred Securities are entitled under such Trust Agreement to
vote, then the Property Trustee shall take such action as is directed by the
Company and if not so directed, shall take such action as it deems advisable and
in the best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Associates Trusts in such a way that no Associates
Trust will be deemed to be an "investment company" required to be registered
under the Investment Company Act or classified as an association taxable as a
corporation for United States Federal income tax purposes and so that the
Corresponding Junior Subordinated Debt Securities will be treated as
indebtedness of the Company for United States Federal income tax purposes. In
this connection, the Company and the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
of each Associates Trust or each Trust Agreement, that the Company and the
Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the related Preferred
Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Associates Trust may borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF GUARANTEES
A Guarantee Agreement will be executed and delivered by the Company
concurrently with the issuance by each Associates Trust of its Preferred
Securities for the benefit of the holders from time to time of such Preferred
Securities. The Chase Manhattan Bank will act as indenture trustee ("Guarantee
Trustee") under each Guarantee for the purposes of compliance with the Trust
Indenture Act, and each Guarantee will be
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qualified as an indenture under the Trust Indenture Act. This summary of certain
provisions of the Guarantees does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of each
Guarantee Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. Reference in
this summary to Preferred Securities means that Associates Trust's Preferred
Securities to which a Guarantee relates. The Guarantee Trustee will hold each
Guarantee for the benefit of the holders of the related Associates Trust's
Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a junior subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that such Associates Trust may have or
assert other than the defense of payment. The following payments with respect to
the Preferred Securities, to the extent not paid by or on behalf of the related
Associates Trust (the "Guarantee Payments"), will be subject to the Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on such
Preferred Securities, to the extent that such Associates Trust has funds on hand
available therefor at such time, (ii) the Redemption Price with respect to any
Preferred Securities called for redemption to the extent that such Associates
Trust has funds on hand available therefor at such time or (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of such
Associates Trust (unless the Corresponding Junior Subordinated Debt Securities
are distributed to holders of such Preferred Securities), the lesser of (a) the
Liquidation Distribution and (b) the amount of assets of such Associates Trust
remaining available for distribution to holders of Preferred Securities. 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 applicable
Preferred Securities or by causing the Associates Trust to pay such amounts to
such holders.
Each Guarantee will be an irrevocable guarantee on a junior subordinated
basis of the related Associates Trust's obligations under the Preferred
Securities, but will apply only to the extent that such related Associates Trust
has funds sufficient to make such payments, and is not a guarantee of
collection.
If the Company does not make interest payments on the Corresponding Junior
Subordinated Debt Securities held by the Associates Trust, the Associates Trust
will not be able to pay Distributions on the Preferred Securities and will not
have funds legally available therefor. Each Guarantee will rank subordinate and
junior in right of payment to all Senior Indebtedness and Subordinated
Indebtedness of the Company. See "-- Status of the Guarantees." The majority of
the operating assets of the Company and its consolidated subsidiaries are owned
by such subsidiaries. The Company relies primarily on dividends from such
subsidiaries to meet its obligations for payment of principal and interest on
its outstanding debt obligations and corporate expenses. Accordingly, the
Company's obligations under the Guarantees will be effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and claimants
should look only to the assets of the Company for payments thereunder. See
"Description of Debt Securities -- General." Except as otherwise provided in the
applicable Prospectus Supplement, the Guarantees do not limit the incurrence or
issuance of other secured or unsecured debt of the Company, whether under the
Indenture, any other indenture that the Company may enter into in the future or
otherwise. See the Prospectus Supplement relating to any offering of Preferred
Securities.
The Company has also agreed to irrevocably and unconditionally guarantee
the obligations of the Associates Trusts with respect to the Common Securities
to the same extent as the Preferred Securities Guarantee, except that upon an
Event of Default with respect to a Junior Subordinated Debt Security, holders of
Preferred Securities shall have priority over holders of Common Securities with
respect to distributions and payments on liquidation, redemption or otherwise.
The Company's obligations described herein and in any accompanying
Prospectus Supplement, through the applicable Guarantee Agreement, the
applicable Trust Agreement, the Corresponding Junior Subordinated Debt
Securities, the Junior Subordinated Indenture and any supplemental indentures
thereto, taken together, constitute a full, irrevocable and unconditional
guarantee by the Company of payments due on the
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Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Associates Trust's obligations under the Preferred Securities. See "The
Associates Trusts," "Description of Preferred Securities," and "Description of
the Debt Securities -- Subordinated Securities and Junior Subordinated Debt
Securities."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
and Subordinated Indebtedness.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Company relating to Preferred Securities. Each Guarantee will constitute a
guarantee of payment and not of collection (i.e., the guaranteed party may
institute a legal proceeding directly against the Guarantor to enforce its
rights under the Guarantee without first instituting a legal proceeding against
any other person or entity). Each Guarantee will be held for the benefit of the
holders of the related Preferred Securities. Each Guarantee will not be
discharged except by payment of the Guarantee Payments in full to the extent not
paid by the Associates Trust or upon distribution to the holders of the
Preferred Securities of the Corresponding Junior Subordinated Debt Securities.
None of the Guarantees places a limitation on the amount of additional Senior
Indebtedness or Subordinated Indebtedness that may be incurred by the Company.
The Company expects from time to time to incur additional indebtedness
constituting Senior Indebtedness or Subordinated Indebtedness.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of the related Preferred Securities in any material respect (in which
case no vote will be required), no Guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate Liquidation
Amount of such outstanding Preferred Securities. The manner of obtaining any
such approval will be as set forth under "Description of the Preferred
Securities -- Voting Rights; Amendment of Each Trust Agreement." All guarantees
and agreements contained in each Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall inure
to the benefit of the holders of the related Preferred Securities then
outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee Agreement will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder. The holders of not less than a majority in aggregate Liquidation
Amount of the related Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of such Guarantee Agreement or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under such
Guarantee Agreement.
Any holder of the Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under such Guarantee
Agreement without first instituting a legal proceeding against the Associates
Trust, the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee Agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of any Guarantee, undertakes to perform
only such duties as are specifically set forth in each Guarantee Agreement and,
after default with respect to any Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this
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provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by any Guarantee Agreement at the request of any holder of
any Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Associates
Trust or upon distribution of Corresponding Junior Subordinated Debt Securities
to the holders of the related Preferred Securities. 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 Preferred Securities must restore payment of any sums paid
under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee Agreement will be governed by and construed in accordance
with the laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBT SECURITIES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the applicable Associates Trust has funds available for the
payment of such Distributions) are irrevocably guaranteed by the Company as and
to the extent set forth under "Description of Guarantees." Taken together, the
Company's obligations under each series of Corresponding Junior Subordinated
Debt Securities, the Junior Subordinated Indenture, the related Trust Agreement
and the related Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the related series of Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Associates Trust's obligations under the Preferred Securities. If and to the
extent that the Company does not make payments on any series of Corresponding
Junior Subordinated Debt Securities, such Associates Trust will not pay
Distributions or other amounts due on its Preferred Securities. The Guarantees
do not cover payment of Distributions when the related Associates Trust does not
have sufficient funds to pay such Distributions. In such event, the remedy of a
holder of a series of Preferred Securities is to institute a legal proceeding
directly against the Company for enforcement of payment of such Distributions to
such holder. The obligations of the Company under each Guarantee are subordinate
and junior in right of payment to all Senior Indebtedness and Subordinated
Indebtedness of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debt Securities, such payments
will be sufficient to cover Distributions and other payments due on the related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debt Securities will be equal
to the sum of the aggregate stated Liquidation Amount of the related Preferred
Securities and related Common Securities; (ii) the interest rate and interest
and other payment dates on each series of Corresponding Junior Subordinated Debt
Securities will match the Distribution rate and Distribution and other payment
dates for the related Preferred Securities; (iii) the Company, as borrower,
shall pay for all and any costs, expenses and liabilities of such Associates
Trust except the Associates Trust's obligations to holders of its Preferred
Securities under such
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Preferred Securities; and (iv) each Trust Agreement further provides that the
Associates Trust will not engage in any activity that is not consistent with the
limited purposes of such Associates Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder with and to the extent the Company has theretofore
made, or is concurrently on the date of such payment making, a payment under the
related Guarantee Agreement.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the related Guarantee
Agreement without first instituting a legal proceeding against the Guarantee
Trustee, the related Associates Trust or any other person or entity.
A default or event of default under any Senior Indebtedness or Subordinated
Indebtedness of the Company would not necessarily constitute a Trust Event of
Default. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness or Subordinated Indebtedness of the Company, the
subordination provisions of the Junior Subordinated Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated Debt
Securities until such Senior Indebtedness or Subordinated Indebtedness has been
paid in full or any payment default thereunder has been cured or waived. Failure
to make required payments on any series of Corresponding Junior Subordinated
Debt Securities would constitute a Trust Event of Default.
LIMITED PURPOSE OF ASSOCIATES TRUSTS
Each Associates Trust's Preferred Securities evidence undivided beneficial
ownership interests in the assets of such Associates Trust, and each Associates
Trust exists for the sole purposes of issuing its Preferred Securities and
Common Securities, investing the proceeds thereof in Corresponding Junior
Subordinated Debt Securities and engaging in only those other activities
necessary, convenient or incidental thereto. A principal difference between the
rights of a holder of a Preferred Security and a holder of a Corresponding
Junior Subordinated Debt Security is that a holder of a Corresponding Junior
Subordinated Debt Security is entitled to receive from the Company the principal
amount of and interest accrued on Corresponding Junior Subordinated Debt
Securities held, while a holder of Preferred Securities is entitled to receive
Distributions from such Associates Trust (or from the Company under the
applicable Guarantee Agreement) if and to the extent such Associates Trust has
funds available for the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of any Associates Trust
involving the liquidation of the Corresponding Junior Subordinated Debt
Securities, the holders of the related Preferred Securities will be entitled to
receive, out of assets held by such Associates Trust and, after satisfaction of
creditors of such Associates Trust as provided by applicable law, the
Liquidation Distribution in cash. See "Description of Preferred
Securities -- Liquidation Distribution upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Corresponding Junior Subordinated Debt Securities, would be a
junior subordinated creditor of the Company, subordinated in right of payment to
all Senior Indebtedness and Subordinated Indebtedness, but entitled to receive
payment in full of principal and interest, before any stockholders of the
Company receive payments or distributions. Since the Company is the guarantor
under each Guarantee Agreement and pursuant to the Junior Subordinated
Indenture, as borrower, has agreed to pay for all costs, expenses and
liabilities of each Associates Trust (other than the Associates Trust's
obligations to the holders of its Preferred Securities), the positions of a
holder of such Preferred Securities and a holder of such Corresponding Junior
Subordinated Debt Securities relative to other creditors and to stockholders of
the Company in the event of liquidation or bankruptcy of the Company are
expected to be substantially the same.
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DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, representing contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Class A Common Stock at a future date
or dates. The price per share of Class A Common Stock may be fixed at the time
the Stock Purchase Contracts are issued or may be determined by reference to a
specific formula set forth in the Stock Purchase Contracts. The Stock Purchase
Contracts may be issued separately or as a part of units ("Stock Purchase
Units") consisting of a Stock Purchase Contract and either (x) Senior Debt
Securities, Subordinated Debt Securities or Junior Subordinated Debt Securities,
(y) debt obligations of third parties, including U.S. Treasury securities, or
(z) Preferred Securities of an Associates Trust, securing the holder's
obligations to purchase the Class A Common Stock under the Stock Purchase
Contracts. The Stock Purchase Contracts may require the Company to make periodic
payments to the holders of the Stock Purchase Units or vice versa, and such
payments may be unsecured or prefunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner and in certain circumstances the Company may deliver newly
issued prepaid stock purchase contracts ("Prepaid Securities") upon release to a
holder of any collateral securing such holder's obligations under the original
Stock Purchase Contract.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units and, if applicable, Prepaid
Securities. The description in the Prospectus Supplement will not purport to be
complete and will be qualified in its entirety by reference to the Stock
Purchase Contracts, the collateral arrangements and depositary arrangements, if
applicable, relating to such Stock Purchase Contracts or Stock Purchase Units
and, if applicable, the Prepaid Securities and the document pursuant to which
such Prepaid Securities will be issued. Certain material United States Federal
income tax considerations applicable to the Stock Purchase Units and Stock
Purchase Contracts will be set forth in the Prospectus Supplement relating
thereto.
BOOK-ENTRY ISSUANCE
The Debt Securities, Preferred Securities and Corresponding Junior
Subordinated Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities that will be deposited with, or on
behalf of, the Depositary identified in the Prospectus Supplement relating to
such series (the "Book-Entry Securities"). Unless otherwise indicated in the
applicable Prospectus Supplement for such series, the Depositary will be DTC.
Book-Entry Securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Book-Entry Securities represented thereby, a Book-Entry
Security may not be transferred except as a whole by the Depositary for such
Book-Entry Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.
DTC has advised the Company as follows: 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 Exchange Act. DTC holds securities that its 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
New York Stock Exchange, Inc., 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 custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
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Purchases of Book-Entry Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Book-Entry
Securities on DTC's records. The ownership interest of each actual purchaser of
each Book-Entry Security ("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 Book-Entry
Securities. Transfers of ownership interests in the Book-Entry 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 Book-Entry Securities, except in the event that use
of the book-entry system is discontinued. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
To facilitate subsequent transfers, all Book-Entry Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Book-Entry Securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Book-Entry Securities; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Book-Entry 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.
The Company and the Associates Trusts expect that 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 and the voting rights of Direct Participants, Indirect
Participants and 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 Cede & Co. as the registered holder of
the Book-Entry Securities.
Although voting with respect to the Book-Entry Securities is limited to the
holders of record of the Book-Entry Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Book-Entry Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the relevant Trustee 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 such Book-Entry
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
As long as the Book-Entry Securities are held by DTC or its nominee and DTC
continues to make its same-day funds settlement system available to the Company,
all payments on the Book-Entry Securities (other than Preferred Securities or
Corresponding Junior Subordinated Debt Securities) will be made by the Company
in immediately available funds to DTC. Distribution payments on the Preferred
Securities or the Junior Subordinated Debt Securities will be made by the
relevant Trustee to DTC. The Company and the Associates Trusts have been advised
that 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 and will be the responsibility of
such Participant and not of DTC, the relevant Trustee, the Associates Trust (as
applicable) or the Company, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment on Book-Entry Securities to DTC
is the responsibility of the Company or the relevant Trustee (as applicable),
disbursement of such payments to Direct Participants is the responsibility of
DTC and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual
Preferred Securities of such series in exchange for the Global Security
representing such series of Preferred Securities.
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In addition, the Company may at any time and in its sole discretion, subject to
any limitations described in the Prospectus Supplement relating to such
Preferred Securities, determine not to have any Preferred Securities of such
series represented by one or more Global Securities and, in such event, will
issue individual Preferred Securities of such series in exchange for the Global
Security or Securities representing such series of Preferred Securities.
Further, if the Company so specifies with respect to the Preferred Securities of
a series, an owner of a beneficial interest in a Global Security representing
Preferred Securities of such series may, on terms acceptable to the Company, the
Property Trustee and the Depositary for such Global Security, receive individual
Preferred Securities of such series in exchange for such beneficial interests,
subject to any limitations described in the Prospectus Supplement relating to
such Preferred Securities. In any such instance, a Beneficial Owner in such
Global Security will be entitled to physical delivery of individual Preferred
Securities of the series represented by such Global Security equal in principal
amount to such beneficial interest and to have such Preferred Securities
registered in its name. Individual Preferred Securities of such series so issued
will be issued in such denominations as set forth in the accompanying Prospectus
Supplement.
DTC may discontinue providing its services as securities depositary with
respect to Debt Securities at any time by giving reasonable notice to the
Company or the Indenture Trustee. Under such circumstances, if a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual definitive Debt Securities in exchange for all the Global
Securities representing such Debt Securities. In addition, the Company may at
any time and in its sole discretion determine not to have the Debt Securities
represented by Global Securities and, in such event, will issue individual
definitive Debt Securities in exchange for all the Global Securities
representing the Debt Securities. Individual definitive Debt Securities so
issued will be issued in denominations of $1,000 and any larger amount that is
an integral multiple of $1,000 and registered in such names as DTC shall direct.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Associates Trusts and the Company
believe to be accurate, but the Associates Trusts and the Company assume no
responsibility for the accuracy thereof. Neither the Associates Trusts nor the
Company has any 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.
PLAN OF DISTRIBUTION
The Company and/or any Associates Trust may sell the Securities in any one
or more of the following ways from time to time: (i) to or through underwriters
or dealers; (ii) directly to one or more purchasers; or (iii) through agents.
The Prospectus Supplement with respect to the Securities being offered thereby
sets forth the terms of the offering of such Securities, including the name or
names of any underwriters, the purchase price of such Securities and the
proceeds to the Company and/or an Associates Trust from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers, and any securities exchange on which such
Securities may be listed. Only underwriters so named in the Prospectus
Supplement are deemed to be underwriters in connection with the Securities
offered thereby.
If underwriters are used in the sale, the 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. The
obligations of the underwriters to purchase such Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all the Securities of the series offered by the Company's and/or the applicable
Associates Trust's Prospectus Supplement if any of such Securities are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for the Company and/or an applicable Associates Trust. Any remarketing firm will
be identified and the terms of its
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agreement, if any, with the Company and its compensation will be described in
the Prospectus Supplement. Remarketing firms may be deemed to be underwriters in
connection with the Securities remarketed thereby.
Securities may also be sold directly by the Company and/or an Associates
Trust or through agents designated by the Company from time to time. Any agent
involved in the offering and sale of the Securities in respect of which this
Prospectus is delivered is named, and any commissions payable by the Company
and/or an Associates Trust to such agent are set forth, in the Prospectus
Supplement. Unless otherwise indicated in the Prospectus Supplement, any such
agent is acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company and/or an
Associates Trust will authorize agents, underwriters or dealers to solicit
offers by certain institutional investors to purchase Securities providing for
payment and delivery on a future date specified in the Prospectus Supplement.
There may be limitations on the minimum amount which may be purchased by any
such institutional investor or on the portion of the aggregate principal amount
of the particular Securities which may be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and such other
institutions as may be approved by the Company and/or an Associates Trust. The
obligations of any such purchasers pursuant to such delayed delivery and payment
arrangements will not be subject to any conditions except (i) the purchase by an
institution of the particular Securities shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject, and (ii) if the particular Securities are being sold to
underwriters, the Company and/or an Associates Trust shall have sold to such
underwriters the total principal amount of such Securities less the principal
amount thereof covered by such arrangements. Underwriters will not have any
responsibility in respect of the validity of such arrangements or the
performance of the Company or such institutional investors thereunder.
If any underwriter or any selling group member intends to engage in
stabilizing, syndicate short covering transactions, penalty bids or any other
transaction in connection with the offering of Securities that may stabilize,
maintain, or otherwise affect the price of such Securities, such intention and a
description of such transactions will be described in the Prospectus Supplement.
Agents and underwriters may be entitled under agreements entered into with
the Company and/or the applicable Associates Trust to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act of 1933, or to contribution with respect to payments which the
agents or underwriters may be required to make in respect thereof. Agents and
underwriters may engage in transactions with, or perform services for, the
Company and its subsidiaries in the ordinary course of business.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplements,
certain legal matters will be passed upon for the Company and the Associates
Trusts by Timothy M. Hayes or Frederic C. Liskow, each an Assistant General
Counsel of the Company, 250 East Carpenter Freeway, Irving, TX 75062-2729, for
the Associates Trusts by Richards, Layton & Finger, P.A., special Delaware
counsel to the Associates Trusts and the Company, One Rodney Square, Wilmington,
Delaware 19801 and for any underwriters by LeBoeuf, Lamb, Greene & MacRae,
L.L.P., a limited liability partnership including professional corporations, 125
West 55th Street, New York, New York 10019. Mr. Hayes and Mr. Liskow each own
shares of the Company's Class A Common Stock and have options to purchase
additional shares of such Class A Common Stock.
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of earnings, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
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