<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1998
REGISTRATION NO. 333-60253
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SECURITIES AND EXCHANGE COMMISSION
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DYNEGY INC. DYNEGY CAPITAL TRUST II
(Exact Name of Registrant as (Exact Name of Registrant as Specified in
Specified in its Charter) its Charter)
94-3248415 APPLIED FOR
(I.R.S. Employer Identification (I.R.S. Employer Identification No.)
No.)
DELAWARE
DELAWARE (State of organization)
(State of incorporation)
C/O DYNEGY INC.
1000 LOUISIANA, SUITE 5800 1000 LOUISIANA, SUITE 5800
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 507-6400 (713) 507-6400
(Address, including zip code, (Address, including zip code, and
and telephone number, telephone number,
including area code, of including area code, of Registrant's
Registrant's principal executive principal executive office)
office)
KENNETH E. RANDOLPH, ESQ.SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
1000 LOUISIANA, SUITE 5800
HOUSTON, TEXAS 77002
(713) 507-6400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies To:
VINSON & ELKINS L.L.P.
1001 FANNIN, SUITE 2300
HOUSTON, TEXAS 77002-6760
ATTN: KEITH R. FULLENWEIDER, ESQ.
(713) 758-2838
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PROSPECTUS
DYNEGY INC.
[LOGO] DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
SECURITIES WARRANTS
TRUST DEBENTURES
DYNEGY CAPITAL TRUST II
PREFERRED SECURITIES
GUARANTEED AS SET FORTH HEREIN BY
DYNEGY INC.
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Dynegy Inc. ("Dynegy" or the "Company") may offer and sell, from time to
time, (i) unsecured debt securities, in one or more series, consisting of
notes, debentures or other evidences of indebtedness (the "Debt Securities"),
(ii) shares of preferred stock, par value $0.01 per share, in one or more
series (the "Preferred Stock"), which may be issued in the form of depositary
shares evidenced by depositary receipts (the "Depositary Shares"), (iii) shares
of common stock, par value $0.01 per share (the "Common Stock"), (iv)
Securities Warrants ("Securities Warrants") to purchase Debt Securities,
Preferred Stock, Depositary Shares or Common Stock, and (v) in addition to the
Debt Securities, debentures (the "Trust Debentures") to be purchased by Dynegy
Capital Trust II, a statutory business trust created under the laws of the
State of Delaware (the "Trust") with the proceeds from the sale by the Trust of
preferred securities ("Preferred Securities") representing undivided beneficial
ownership interests in the assets of the Trust and (vi) a guaranty by the
Company of the Preferred Securities (the "Guarantee"). The Trust may offer its
Preferred Securities. The aggregate initial offering price of all of the Debt
Securities, Preferred Stock, Depositary Shares, Common Stock, Securities
Warrants and Preferred Securities (excluding the aggregate initial offering
price of the Trust Debentures) (collectively, including the Trust Debentures
and the Guarantee, the "Securities") which may be sold pursuant to this
Prospectus will not exceed $500,000,000 or, if applicable, the equivalent
thereof in any other currency.
The specific terms of the particular Securities to be issued, to the extent
such terms are not provided for in this Prospectus or to the extent that such
terms are inconsistent with the terms set forth in this Prospectus, will be set
forth in a supplement to this Prospectus (a "Prospectus Supplement"), which
will be delivered together with this Prospectus, including, as applicable, (i)
in the case of Debt Securities or Trust Debentures, the specific designation,
aggregate principal amount, ranking as senior or subordinated Debt Securities,
maturity, rate or rates (or method of determining the same) and time or times
for the payment of interest, if any, any exchangeability or conversion terms or
any terms for optional or mandatory redemption or repurchase, or payment of
additional amounts or any sinking fund provisions, (ii) in the case of
Preferred Stock, the specific designation, number of shares and liquidation
value thereof and the dividend, liquidation, redemption, voting and other
rights, including conversion or exchange rights, if any, and any other special
terms, as well as whether interests in the Preferred Stock will be represented
by Depositary Shares, (iii) in the case of Common Stock, the number of shares,
(iv) in the case of Securities Warrants, the number and terms thereof, the
designation and number or amount of Securities issuable upon their exercise,
the exercise price, the terms of the offering and sale thereof and, where
applicable, the duration and detachability thereof and (v) in the case of
Preferred Securities, the specific title, aggregate amount, stated liquidation
preference, number of securities, the rate of payment of periodic distributions
or method of calculating such rate, applicable extension period or distribution
deferral terms, if any, and any terms of redemption. The Prospectus Supplement
will also contain information regarding the initial public offering price, the
net proceeds to the Company and, where applicable, the United States Federal
income tax considerations relating to the Securities covered by the Prospectus
Supplement.
The Securities may be sold directly by the Company, or in the case of the
Preferred Securities, the Trust, to investors, through agents designated from
time to time or to or through underwriters or dealers. See "Plan of
Distribution." If any agents of the Company, or in the case of the Preferred
Securities, the Trust, or any underwriters are involved in the sale of any
Securities in respect of which this Prospectus is being delivered, the names of
such agents or underwriters and any applicable commissions or discounts will be
set forth in a Prospectus Supplement.
The Common Stock is listed on the New York Stock Exchange under the symbol
"DYN." Any Common Stock sold pursuant to a Prospectus Supplement will be listed
on such exchange, subject to official notice of issuance. The Prospectus
Supplement will state whether any other Securities offered thereby will be
listed on a securities exchange.
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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.
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THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
August 19, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the regional offices of the
Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at 7 World Trade Center, New York, New York 10048. Copies
of such material may be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains an Internet web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission (http://www.sec.gov).
The Common Stock of the Company is listed on the New York Stock Exchange.
Reports, proxy statements and other information concerning the Company can be
inspected and copied at the office of the New York Stock Exchange at 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (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 of the information set forth in such
Registration Statement. Reference is made to such Registration Statement and
to the exhibits thereto for further information with respect to the Company
and the Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the year ended December 31,
1997, (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998 and June 30, 1998, (iii) Current Reports on Form 8-K dated April 29, 1998
and May 20, 1998, and (iv) the description of the common stock contained in
the Registration Statement on Form 8-A as filed with the Commission on March
14, 1995 are each hereby incorporated by reference herein.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
shall be deemed to be incorporated herein by reference and to be a part hereof
from their respective dates of filing. Any statement contained herein or in a
document, all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein or in the Prospectus Supplement
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any
and all of the documents referred to above which have been incorporated in
this Prospectus by reference, other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents.
Requests for such copies should be directed to Dynegy Inc., 1000 Louisiana,
Suite 5800, Houston, Texas 77002, Attention: Investor Relations; (713) 507-
6400.
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UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This Prospectus, including any documents that are incorporated by reference
as set forth in "Incorporation of Certain Documents by Reference," contains
various forward-looking statements and information that are based on
management's beliefs as well as assumptions made by and information currently
available to management. When used in this document, words such as
"anticipate", "estimate", "project", and "expect" are intended to identify
forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Such statements are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated, projected or expected. Among the key risk
factors that may have a direct bearing on Dynegy's results of operations and
financial condition are: (i) competitive practices in the industries in which
Dynegy competes, (ii) fluctuations in energy commodity prices which have not
been properly hedged or which are inconsistent with Dynegy's open position in
its energy marketing activities, (iii) operational and systems risks, (iv)
environmental liabilities which are not covered by indemnity or insurance, and
(v) the impact of current and future laws and governmental regulations
(particularly environmental regulations) affecting the energy industry in
general and Dynegy's operations in particular.
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THE COMPANY
Dynegy Inc. (NYSE:DYN) is one of the leading marketers of energy products
and services in North America. Dynegy holds a leadership position in the
marketing of natural gas, natural gas liquids and electricity. Dynegy is also
a leading natural gas gatherer, processor and transporter through direct and
indirect ownership and operation of natural gas processing plants,
fractionators, storage facilities and pipelines. These activities combined
with a substantial independent power generation business, enable the company
to offer energy solutions to customers in North America, Australia, the UK and
Colombia.
The Company is a holding company that conducts substantially all of its
business through its subsidiaries. From inception of operations in 1984 until
1990, Natural Gas Clearinghouse ("Clearinghouse") limited its activities
primarily to natural gas marketing. Starting in 1990, Clearinghouse began
expanding its core business operations through acquisitions and strategic
alliances with certain of its shareholders resulting in the formation of a
midstream energy asset business and establishing energy marketing operations
in both Canada and the United Kingdom. Effective March 1, 1995, Clearinghouse
and Trident NGL Holding, Inc., a fully integrated natural gas liquids company,
merged ("Trident Combination"). On August 31, 1996, the Company completed a
strategic combination with Chevron U.S.A. Inc. and certain Chevron affiliates
(collectively "Chevron") whereby substantially all of Chevron's midstream
assets were merged with the Company ("Chevron Combination"). In June 1997, the
Company acquired Destec Energy, Inc., a leading independent power producer,
now named Dynegy Power Corp.
On July 6, 1998, Dynegy changed its name from NGC Corporation to be
representative of the full range of energy products and services offered by
the Company.
Through the growth of the Company's core marketing businesses combined with
the assets and services of the merged companies, Dynegy has established itself
as a market leader in natural gas, natural gas liquids, power generation and
energy marketing.
BG plc, Chevron and NOVA Corporation each own approximately 25.4% of the
outstanding common stock of Dynegy.
The principal executive office of the Company is located at 1000 Louisiana,
Suite 5800, Houston, Texas 77002, and the telephone number of that office is
(713) 507-6400. Dynegy and its affiliates maintain marketing and/or regional
offices in Atlanta, Georgia; Bogata, Colombia; Boston, Massachusetts;
Brisbane, Australia; Calgary, Alberta; Chicago, Illinois; Dallas, Texas;
Englewood, Colorado; London, England; Mexico City, Mexico; Midland, Texas;
Oklahoma City, Oklahoma; Pleasanton, California; Pittsburgh, Pennsylvania;
Tampa, Florida; Tulsa, Oklahoma; and Washington, D.C.
THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to (i) a declaration of trust, dated as of July 15, 1998, and entered into by
the Company, as sponsor, and the trustees named therein, and (ii) the filing
of a certificate of trust with the Delaware Secretary of State on July 15,
1998. The declaration will be amended and restated in its entirety (as so
amended and restated, the "Trust Agreement"), substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, as of the date the Preferred Securities of such Trust are initially
issued. The Trust Agreement will be qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Trust exists for the
exclusive purposes of (i) issuing and selling the Preferred Securities and
Common Securities, (ii) using the proceeds from the sale of the Preferred
Securities and Common Securities to acquire the Trust Debentures, and (iii)
engaging in only those other activities necessary or incidental thereto. The
Trust Debentures will be the sole assets of the Trust, and, accordingly,
payments under the Trust Debentures will be the sole revenues of the Trust.
The Trust has a term of 35 years, but may dissolve earlier as provided in the
Trust Agreement.
Dynegy will directly or indirectly acquire all of the Common Securities,
which will have an aggregate liquidation amount equal to 3% of the total
capital of the Trust. The Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Preferred Securities, except that upon
the occurrence and
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continuance of a Debenture Event of Default, the rights of the holders of the
Common Securities to payments in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Preferred Securities. See "Description of Preferred
Securities--Subordination of Common Securities."
The Trust's business and affairs will be conducted by its trustees, as set
forth in the Trust Agreement. At the time of the issuance of the Preferred
Securities, the trustees for the Trust will be initially The First National
Bank of Chicago, as the Property Trustee (the "Property Trustee"), First
Chicago Delaware Inc., as the Delaware Trustee (the "Delaware Trustee"), and
three individual trustees (the "Administrative Trustees") who are officers of
the Company (collectively, the "Issuer Trustees"). The First National Bank of
Chicago, as Property Trustee, will act as sole indenture trustee under the
Trust Agreement. The First National Bank of Chicago also will act as indenture
trustee under the Guarantee and the Debenture Indenture. See "Description of
Guarantee" and "Description of Trust Debentures." The holder of the Common
Securities of the Trust or, if an Event of Default under the Trust Agreement
("Trust Indenture Event of Default") has occurred and is continuing, the
holders of not less than a majority in Liquidation Amount of the Preferred
Securities, will be entitled to appoint, remove or replace the Property
Trustee and/or the Delaware Trustee. 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 will be vested exclusively in the
holder of the Common Securities. The duties and obligations of each Issuer
Trustee will be governed by the Trust Agreement.
For so long as the Preferred Securities remain outstanding, the Company
covenants (i) to maintain directly or indirectly 100% ownership of the Common
Securities, (ii) to use its reasonable efforts to cause the Trust to remain a
statutory business trust and not to voluntarily dissolve, wind-up, liquidate
or be terminated, except as permitted by the Trust Agreement, (iii) to use its
reasonable efforts to ensure that the Trust will not be an "investment
company" for purposes of the Investment Company Act, (iv) to use its
reasonable efforts to cause the Trust to continue to be treated as a grantor
trust and not an association taxable as a corporation for United States
federal income tax purposes and (v) to use its reasonable efforts to cause
each holder of Trust Securities to be treated as owning an undivided
beneficial interest in the Trust Debentures.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the Trust
Agreement and the Delaware Business Trust Act (the "Trust Act"). The location
of the principal executive office of the Trust is c/o Dynegy Inc., 1000
Louisiana, Suite 5800, Houston, Texas 77002, and its telephone number is 713-
507-6400.
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USE OF PROCEEDS
Except as may otherwise be described in the Prospectus Supplement relating
to an offering of Securities, the net proceeds from the sale of the Securities
will be used for general corporate purposes. Any allocation of the net
proceeds of an offering of Securities to a specific purpose will be determined
at the time of such offering and will be described in the related Prospectus
Supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of earnings
to fixed charges for the periods shown. The computation for each of the years
ended December 31, 1993 through 1994 includes only the consolidated results of
Clearinghouse and its subsidiaries. The computation for 1995 includes the
consolidated results of Clearinghouse and its subsidiaries for the full year,
and of Trident NGL Holding, Inc. and its subsidiaries from March 1, 1995, the
effective date of the Trident Combination.
<TABLE>
<CAPTION>
NATURAL GAS
DYNEGY INC. CLEARINGHOUSE
--------------------------------------------------------- YEARS ENDED
YEARS ENDED DECEMBER 31, DECEMBER 31,
SIX MONTHS ----------------------------------- ----------------------------
ENDED JUNE 30,
1998 1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
1.82 (a) 4.07 2.48 13.08 19.18
</TABLE>
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(a) Earnings were inadequate to cover fixed charges for the year ended
December 31, 1997, by approximately $72.9 million.
For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before income taxes and fixed charges (excluding capitalized
interest and depreciation of interest previously capitalized) less
undistributed income from equity investees. Fixed charges consist of (i) the
Company's interest expense, (ii) amortization of deferred financing costs,
(iii) interest capitalized during the year and (iv) the portion of the
Company's lease rental expense representative of the interest factor
attributable to such leases.
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DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior or subordinated debt of
the Company and will be issued, in the case of Debt Securities that will be
senior debt ("Senior Debt Securities"), under an Indenture dated as of
September 26, 1996, as amended and restated as of March 23, 1998 (the "Senior
Debt Indenture"), between the Company, as issuer, and The First National Bank
of Chicago, as trustee, and, in the case of Debt Securities that will be
subordinated debt ("Subordinated Debt Securities"), under a Subordinated
Indenture dated as of July 17, 1998 (the "Subordinated Debt Indenture"),
between the Company, as issuer, and The First National Bank of Chicago, as
trustee. The Senior Debt Indenture and the Subordinated Debt Indenture are
sometimes hereinafter referred to individually as the "Debt Indenture" and
collectively as the "Debt Indentures." First National Bank of Chicago (and any
successor thereto as trustee under the Debt Indentures) is hereinafter
referred to as the "Debt Trustee." The statements under this caption are
summaries of certain provisions of the Debt Indentures. Wherever particular
Sections of the Debt Indentures or terms not defined herein that are defined
in the Debt Indentures are referred to herein or in a Prospectus Supplement,
it is intended that such Sections or defined terms shall be incorporated by
reference herein or therein, as the case may be. The Debt Indentures are
substantially identical, except for certain covenants of the Company and
provisions relating to subordination and conversion.
The Debt Securities may be issued from time to time in one or more series.
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities of all series. The particular
terms of each series of Debt Securities offered by any Prospectus Supplement
(the "Offered Debt Securities") will be described therein.
The Company's Trust Debentures are separately described in this Prospectus
under the caption "Description of the Trust Debentures."
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
General. The Debt Securities will be unsecured senior or subordinated
obligations of the Company and may be issued from time to time in one or more
series. The Debt Indentures do not limit the amount of Debt Securities,
debentures, notes or other types of indebtedness that may be issued by the
Company or any of its subsidiaries nor do they restrict transactions between
the Company and its affiliates or the payment of dividends or other
distributions by the Company to its stockholders. In addition, other than as
may be set forth in any Prospectus Supplement and, in the case of the Senior
Debt Indenture, other than as set forth under "--Limitation on Liens," the
Debt Indentures do not and the Debt Securities will not contain any covenants
or other provisions that are intended to afford holders of the Debt Securities
special protection in the event of either a change of control of the Company
or a highly leveraged transaction involving the Company.
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Offered Debt Securities (to the extent such
terms are applicable to such Offered Debt Securities): (i) the title of the
Offered Debt Securities; (ii) classification as either Senior Debt Securities
or Subordinated Debt Securities; (iii) whether the Offered Debt Securities
that constitute Subordinated Debt Securities are convertible into Common Stock
and, if so, the terms and conditions upon which such conversion will be
effected including the initial conversion price or conversion rate (the
"Conversion Price") and any adjustments thereto in addition to or different
from those described herein, the conversion period and other conversion
provisions in addition to or in lieu of those described herein; (iv) any limit
on the aggregate principal amount of the Offered Debt Securities; (v) whether
the Offered Debt Securities are to be issuable as Registered Securities or
Bearer Securities or both, whether any of the Offered Debt Securities are to
be issuable initially in temporary global form and whether any of the Offered
Debt Securities are to be in permanent global form; (vi) the price or prices
(expressed as a percentage of the aggregate principal amount thereof) at which
the Offered Debt Securities will be issued; (vii) the date or dates on which
the Offered Debt Securities will mature; (viii) the rate or rates per annum
(or the method by which such will be determined) at which the Offered Debt
Securities will bear interest, if any, and the date from which any such
interest will accrue and whether, and under what circumstances, additional
amounts with respect to such Debt Securities shall be payable; (ix) the
Interest Payment Dates on which any such interest
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<PAGE>
on the Offered Debt Securities will be payable, the Regular Record Date for
any interest payable on any Offered Debt Securities which are Registered
Securities on any Interest Payment Date and the extent to which, or the manner
in which, any interest payable on a temporary global Offered Debt Security on
an Interest Payment Date will be paid; (x) any mandatory or optional sinking
fund or analogous provisions; (xi) each office or agency where, subject to the
terms of the Debt Indentures as described below under "Payment and Paying
Agents", the principal of and any premium and interest on the Offered Debt
Securities will be payable and each office or agency where, subject to the
terms of the Debt Indentures as described below under "--Form, Exchange,
Registration and Transfer", the Offered Debt Securities may be presented for
registration of transfer or exchange; (xii) the right of the Company to redeem
the Offered Debt Securities at its option and the period or periods, if any,
within which and the price or prices at which the Offered Debt Securities may,
pursuant to any optional or mandatory redemption provisions, be redeemed, in
whole or in part, and the other detailed terms and provisions of any such
optional or mandatory redemption; (xiii) the denominations in which any
Offered Debt Securities which are Registered Securities will be issuable, if
other than denominations of $1,000 and any integral multiple thereof, and the
denomination or denominations in which any Offered Debt Securities which are
Bearer Securities will be issuable, if other than the denomination of $5,000;
(xiv) the currency or currencies (including composite currencies) in which
payment of principal of and any premium and interest on the Offered Debt
Securities is payable; (xv) any index used to determine the amount of payments
of principal of and any premium and interest on the Offered Debt Securities;
(xvi) information with respect to book-entry procedures, if any; and (xvii)
any other terms of the Offered Debt Securities not inconsistent with the
provisions of the Debt Indentures. (Section 301) Any such Prospectus
Supplement will also describe any special provisions for payment of additional
amounts with respect to the Offered Securities.
Debt Securities may be issued as Original Issue Discount Securities. An
Original Issue Discount Security is a Debt Security, including any Zero-Coupon
Security, which is issued at a price lower than the amount payable upon the
Stated Maturity thereof and which provides that upon redemption or
acceleration of the maturity thereof, an amount less than the amount payable
upon the Stated Maturity thereof and determined in accordance with the terms
of such Debt Security shall become due and payable. Special United States
federal income tax considerations applicable to Debt Securities issued at an
original issue discount, including Original Issue Discount Securities, and
special United States tax considerations and other terms and restrictions
applicable to any Debt Securities issued in bearer form, offered exclusively
to United States Aliens or denominated in other than United States dollars,
will be set forth in a Prospectus Supplement relating thereto.
The Debt Securities will be general unsecured obligations of the Company.
The Company is a holding company, conducting all of its business through
subsidiaries. Accordingly, the ability of the Company to meet its obligations
under the Debt Indentures and the Debt Securities will be dependent on the
earnings and cash flows of its subsidiaries and the ability of its
subsidiaries to pay dividends or to advance funds to the Company.
Form, Exchange, Registration and Transfer. Debt Securities of a series may
be issuable in definitive form solely as Registered Securities, solely as
Bearer Securities or as both Registered Securities and Bearer Securities.
Unless otherwise indicated in an applicable Prospectus Supplement, Bearer
Securities will have interest coupons attached. (Section 201) The Debt
Indentures also will provide that Debt Securities of a series may be issuable
in temporary or permanent global form. (Section 201)
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor. In addition, if Debt
Securities of any series are issuable as both Registered Securities and Bearer
Securities, at the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Debt Indenture, Bearer Securities (with
all unmatured coupons, except as provided below, and all matured coupons in
default) of such series will be exchangeable for Registered Securities of the
same series of any authorized denominations and of a like aggregate principal
amount and tenor. Bearer Securities surrendered in exchange for Registered
Securities between a Regular Record Date or a Special Record Date and the
relevant date for payment of interest shall be surrendered without the coupon,
relating to such date for payment of interest, and interest accrued as of such
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date will not be payable in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holders of
such coupon, when due in accordance with the terms of the applicable Debt
Indenture. Bearer Securities will not be issued in exchange for Registered
Securities. (Section 305)
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration or transfer (with the
form of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose with respect to any series of Debt Securities and referred to in
an applicable Prospectus Supplement, without service charge and upon payment
of any taxes and other governmental charges as described in the Debt
Indentures. Such transfer or exchange will be effected upon the Security
Registrar or any such transfer agent, as the case may be, being satisfied with
the documents of title and identity of the person making the request. The
Company has appointed the Debt Trustee as Security Registrar. (Section 305) If
a Prospectus Supplement refers to any transfer agent (in addition to the
Security Registrar) initially designated by the Company with respect to any
series of Debt Securities, the Company may at any time rescind the designation
of any such transfer agent or approve a change in the location through which
any such transfer agent act, except that, if Debt Securities of a series are
issuable solely as Registered Securities, the Company will be required to
maintain a transfer agent in each Place of Payment for such series and, if
Debt Securities of a series are issuable as Bearer Securities, the Company
will be required to maintain (in addition to the Security Registrar) a
transfer agent in a Place of Payment for such series located outside the
United States. The Company may at any time designate additional transfer
agents with respect to any series of Debt Securities. (Section 1002)
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days prior to the
selection of Debt Securities of that series for redemption and ending on the
close of business on (A) if Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (B) if Debt Securities of the series are issuable as Bearer Securities,
the day of the first publication of the relevant notice of redemption or, if
Debt Securities of the series are also issuable as Registered Securities and
there is no publication, the mailing of the relevant notice of redemption;
(ii) register the transfer or exchange of any Registered Security, or portion
thereof, called for redemption, except the unredeemed portion of any
Registered Security being redeemed in part; or (iii) exchange any Bearer
Security called for redemption, except to exchange such Bearer Security for a
Registered Security of that series and like tenor which is immediately
surrendered for redemption. (Section 305)
Payment and Paying Agents. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of principal of, and any premium and interest
on, Bearer Securities will be payable, subject to any applicable laws and
regulations, at the offices of such Paying Agents outside the United States as
the Company may designate from time to time, in the manner indicated in such
Prospectus Supplement. (Section 1002) Unless otherwise indicated in an
applicable Prospectus Supplement, payment of interest on Bearer Securities on
any Interest Payment Date will be made only against surrender to the Paying
Agent of the coupon relating to such Interest Payment Date. (Section 1001) No
payment with respect to any Bearer Security will be made at any office or
agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank
located in the United States. Notwithstanding the foregoing, payments of
principal of, and any premium and interest on, Bearer Securities denominated
and payable in U.S. dollars will be made at the offices of the Company's
Paying Agent in the Borough of Manhattan, the City of New York, if (but only
if) payment of the full amount thereof in U.S. dollars at all offices or
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Section 1002)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, and any premium and interest on, Registered Securities will
be made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time, except that at the option of the Company payment
of any interest may be made by check mailed on or before the due date to the
address of the Person entitled thereto as such address shall appear in the
Security Register. (Sections 307, 1002) Unless otherwise indicated in an
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applicable Prospectus Supplement, payment of any installment of interest on
Registered Securities will be made to the Person in whose name such Registered
Security is registered at the close of business on the Regular Record Date for
such interest. (Section 307)
Unless otherwise indicated in an applicable Prospectus Supplement, the Debt
Trustee at its Corporate Trust Office will be designated as a Paying Agent for
the Company for payments with respect to Debt Securities which are issuable
solely as Registered Securities, and the Company will maintain a Paying Agent
outside the United States for payments with respect to Debt Securities
(subject to the limitations described above in the case of Bearer Securities)
which are issuable solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Any Paying Agents outside the United States
and any other Paying Agents in the United States initially designated by the
Company for the Debt Securities will be named in an applicable Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that, if Debt Securities of a
series are issuable solely as Registered Securities, the Company will be
required to maintain a Paying Agent in each Place of Payment for such series
and, if Debt Securities of a series are issuable as Bearer Securities, the
Company will be required to maintain (i) a Paying Agent in the Borough of
Manhattan, the City of New York, for principal payments with respect to any
Registered Securities of the series (and for payments with respect to Bearer
Securities of the series in the circumstances described above, but not
otherwise), and (ii) a Paying Agent in a Place of Payment located outside the
United States where Debt Securities of such series and any coupons
appertaining thereto may be presented and surrendered for payment. (Section
1002)
All monies paid by the Company to a Paying Agent for the payment of
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will (subject to applicable escheat laws) be
repaid to the Company, and the Holder of such Debt Security or any coupon will
thereafter look only to the Company for payment thereof. (Section 1003)
Global Debt Securities. Debt Securities of a series may be issued in whole
or in part in the form of one or more global Debt Securities that will be
deposited with, or on behalf of, a depository identified in the Prospectus
Supplement relating to such series. Global Debt Securities may be issued in
either registered or bearer form and in either temporary or permanent form.
(Section 203) Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a global Debt Security may not
be transferred except as a whole by the depository for such global Debt
Security to a nominee of such depository or by a nominee of such depository to
such depository or another nominee of such depository or by the depository or
any nominee to a successor depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series of
Debt Securities and certain limitations and restrictions relating to a series
of Bearer Securities in the form of one or more global Debt Securities will be
described in the Prospectus Supplement relating to such series.
Events of Default. Any one of the following events will constitute an Event
of Default under either Debt Indenture with respect to Debt Securities of any
series issued under such Debt Indenture: (a) failure to pay any interest on
any Debt Security of that series when due, continued for 30 days; (b) failure
to pay principal of or any premium on any Debt Security of that series when
due; (c) failure to deposit any sinking fund payment, when due, in respect of
any Debt Security of that series; (d) failure to perform any other covenant of
the Company in such Debt Indenture (other than a covenant included in such
Debt Indenture solely for the benefit of series of Debt Securities other than
that series), continued for 90 days after written notice as provided in such
Debt Indenture; (e) certain events in bankruptcy, insolvency or reorganization
involving the Company; and (f) any other Event of Default provided with
respect to Debt Securities of that series. (Section 501)
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding occurs and is continuing, either the Debt Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series, by notice as provided in the applicable Debt
Indenture, may declare the
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principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified
in the terms of that series) of all the Debt Securities of that series to be
due and payable immediately. At any time after a declaration of acceleration
with respect to Debt Securities of any series has been made, but before a
judgment or decree for payment of money has been obtained by the Debt Trustee,
the Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 502)
Each Debt Indenture provides that, subject to the duty of the Debt Trustee
during default to act with the required standard of care, the Debt Trustee
will be under no obligation to exercise any of its rights or powers under such
Debt Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Debt Trustee reasonable indemnity. (Section
601, 603) Subject to such provisions for the indemnification of the Debt
Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debt Trustee, or exercising any trust or power conferred on the Debt Trustee,
with respect to the Debt Securities of that series; provided, however, that
the Debt Trustee shall not be obligated to take any action unduly prejudicial
to Holders not joining in such direction or involving the Debt Trustee in
personal liability. (Section 512)
The Company will be required to furnish to the Debt Trustee annually a
statement as to the performance by the Company of its obligations under each
Debt Indenture and as to any default in such performance. (Section 1007)
Defeasance. If so specified with respect to any particular series of Debt
Securities issued under either Debt Indenture, the Company may discharge its
indebtedness and its obligations or certain of its obligations under such Debt
Indenture with respect to such series by depositing funds or obligations
issued or guaranteed by the United States of America with the Debt Trustee
(Sections 1301-1303).
Defeasance and Discharge. Each Debt Indenture provides that, if so specified
with respect to the Debt Securities of any series issued under such Debt
Indenture, the Company will be discharged from any and all obligations in
respect of the Debt Securities of such series (except for certain obligations
relating to temporary Debt Securities and exchange of Debt Securities,
registration of transfer or exchange of Debt Securities of such series,
replacement of stolen, lost or mutilated Debt Securities of such series,
maintenance of paying agencies to hold moneys for payment in trust and
payments of additional amounts, if any, required in consequence of United
States withholding taxes imposed on payments to non-United States persons)
upon the deposit with the Debt Trustee, in trust, of money and/or U.S.
Government Obligations which, through the payment of interest and principal in
respect thereof in accordance with their terms, will provide money in an
amount sufficient to pay the principal of (and premium, if any), and each
installment of interest on, the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the applicable Debt
Indenture and the Debt Securities of such series. (Sections 1302 and 1304)
Such a trust may only be established if, among other things, the Company has
delivered to the Debt Trustee an Opinion of Counsel to the effect that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of the Indenture there has
been a change in applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that the
Holders of the Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge, and will be subject to federal income tax on the same amounts and
in the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred. (Section 1304) In the
event of any such defeasance and discharge of Debt Securities of such series,
Holders of Debt Securities of such series would be entitled to look only to
such trust fund for payment of principal of and any premium and any interest
on their Debt Securities until Maturity.
Defeasance of Certain Obligations. Each Debt Indenture provides that, if so
specified with respect to the Debt Securities of any series issued thereunder,
the Company may omit to comply with certain restrictive covenants, including
(in the case of the Senior Debt Indenture) the covenant described under "--
Limitation on
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Liens" below, but excluding (in the case of the Subordinated Debt Indenture)
any applicable obligation of the Company respecting the conversion of Debt
Securities of such series into Common Stock, and any such omission shall not
be an Event of Default with respect to the Debt Securities of such series,
upon the deposit with the Debt Trustee, in trust, of money and/or U.S.
Government Obligations, which through the payment of interest and principal in
respect thereof in accordance with their terms, will provide money in an
amount sufficient to pay the principal of (and premium, if any), and each
installment of interest on, the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of such Debt Indenture
and the Debt Securities of such series. The obligations of the Company under
such Debt Indenture and the Debt Securities of such series other than with
respect to such covenants shall remain in full force and effect. (Section
1303) Such a trust may be established only if, among other things, the Company
has delivered to the Debt Trustee an Opinion of Counsel to the effect that the
Holders of the Debt Securities of such series will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations, and will be subject to federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred. (Section 1304)
Although the amount of money and U.S. Government Obligations on deposit with
the Debt Trustee would be intended to be sufficient to pay amounts due on the
Debt Securities of such series at the time of their Stated Maturity, in the
event the Company exercises its option to omit compliance with the covenants
defeased with respect to the Debt Securities of any series as described above
and the Debt Securities of such series are declared due and payable because of
the occurrence of any Event of Default, such amount may not be sufficient to
pay amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. The Company shall in any
event remain liable for such payments as provided in the applicable Debt
Indenture.
Federal Income Tax Consequences Relating to Defeasance and Covenant
Defeasance. Under current United States federal income tax law, defeasance and
discharge would likely be treated as a taxable exchange of Debt Securities to
be defeased for an interest in the defeasance trust. As a consequence, a
holder would recognize gain or loss equal to the difference between the
holder's cost or other tax basis for such Debt Securities and the value of the
holder's interest in the defeasance trust, and thereafter would be required to
include in income a share of the income, gain or loss of the defeasance trust.
Under current United States federal income tax law, covenant defeasance would
ordinarily not be treated as a taxable exchange of such Debt Securities.
Modification and Waiver. Modifications and amendments of either Debt
Indenture may be made by the Company and the Debt Trustee with the consent of
the Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series affected by such modification or amendment;
provided, however, that no such modification or amendment may, without consent
of the Holder of each Outstanding Security affected thereby, (a) change the
Stated Maturity of the principal of, or any installment of principal of or
interest on, any Debt Security; (b) change the Redemption Date with respect to
any Debt Security; (c) reduce the principal amount of, or premium or interest
on, any Debt Security; (d) change any obligation of the Company to pay
additional amounts; (e) reduce the amount of principal of an Original Issue
Discount Security payable upon acceleration of the Maturity thereof; (f)
change the coin or currency in which any Debt Security or any premium or
interest thereon is payable; (g) change the redemption right of any Holder;
(h) impair the right to institute suit for the enforcement of any payment on
or with respect to any Debt Security or any conversion right with respect
thereto; (i) reduce the percentage in principal amount of Outstanding
Securities of any series, the consent of whose Holders is required for
modification or amendment of such Debt Indenture or for waiver of compliance
with certain provisions of such Debt Indenture or for waiver of certain
defaults; (j) reduce the requirements contained in such Debt Indenture for
quorum or voting; (k) change any obligation of the Company to maintain an
office or agency in the places and for the purposes required by such Debt
Indenture; (l) adversely affect the right to convert Subordinated Debt
Securities, if applicable; or (m) modify any of the above provisions. (Section
902)
The Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Subordinated Debt Securities without the
consent of each holder of Senior Indebtedness (as defined below under
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"--Provisions Applicable Solely to Subordinated Debt Securities") then
outstanding that would be adversely affected thereby. (Section 907 of the
Subordinated Debt Indenture)
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of the Holders of all Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Debt Indenture under which
such series has been issued. (Section 1008) The Holders of a majority in
aggregate principal amount of the Outstanding Securities of each series may,
on behalf of all Holders of Debt Securities of that series, waive any past
default under the applicable Debt Indenture with respect to any Debt
Securities of that series, except a default (a) in the payment of principal
of, or premium, if any, or any interest on any Debt Security of such series or
(b) in respect of a covenant or provision of such Debt Indenture which cannot
be modified or amended without the consent of the Holder of each Outstanding
Security of such series affected. (Section 513)
Each Debt Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
thereunder, or are present at a meeting of the Holders of Debt Securities for
quorum purposes, (i) the principal amount of an Original Issue Discount
Security that shall be deemed to be Outstanding shall be the amount of the
principal that would be due and payable as of the date of such determination
upon acceleration of the Maturity thereof, and (ii) the principal amount of a
Debt Security denominated in a foreign currency or currency units shall be the
U.S. dollar equivalent, determined on the date of original issuance of such
Debt Security, of the principal amount of such Debt Security or, in the case
of an Original Issue Discount Security, the U.S. dollar equivalent, determined
on the date of original issuance of such Debt Security, of the amount
determined as provided in clause (i) above. (Section 101)
Each Debt Indenture contains provisions for convening meetings of the
Holders of Debt Securities of a series if Debt Securities of that series are
issuable as Bearer Securities. (Section 1401) A meeting may be called at any
time by the Debt Trustee, and also, upon request by the Company or the Holders
of at least 10% in aggregate principal amount of the Outstanding Securities of
that series, in any such case upon notice given in accordance with the
provisions described under "--Notices" below. (Section 1402) Except for any
consent which must be given by the Holders of each Outstanding Security
affected thereby, as described above, any resolution presented at a meeting
(or adjourned meeting at which a quorum is present) may be adopted by the
affirmative vote of the Holders of a majority in principal amount of the
Outstanding Securities of that series; provided, however, that, except for any
consent or waiver that must be given by the Holder of each Outstanding
Security affected thereby, as described above, any resolution with respect to
any request, demand, authorization, direction, notice, consent, waiver or
other action which may be made, given or taken by the Holders of a specified
percentage, which is less than a majority in principal amount of the
Outstanding Securities of a series, may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote
of such specified percentage in aggregate principal amount of the Outstanding
Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance
with the applicable Debt Indenture will be binding on all Holders of Debt
Securities of that series and related coupons. The quorum at any meeting, and
at any reconvened meeting, will be Persons holding or representing a majority
in aggregate principal amount of the Outstanding Securities of a series.
(Section 1404)
Consolidation, Merger and Sale of Assets. The Company, without the consent
of the Holders of any of the Outstanding Securities under either Debt
Indenture, may consolidate with or merge into, or convey, transfer or lease
its properties and assets substantially as an entirety to, any other Person
which is a corporation, partnership or trust organized and validly existing
under the laws of any domestic jurisdiction, provided that any successor
Person assumes the Company's obligations on the Debt Securities and under such
Debt Indenture, that after giving effect to the transaction no Event of
Default shall have occurred and be continuing, and that certain other
conditions are met. (Section 801)
Notices. Except as otherwise provided in the Debt Indentures, notices to
Holders of Bearer Securities will be given by publication at least twice in a
daily newspaper in The City of New York and in such other city or
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cities as may be specified in such Bearer Securities. Notices to Holders of
Registered Securities will be given by mail to the addresses of such Holders
as they appear in the Security Register. (Section 106)
Title. Title to any Bearer Securities (including Bearer Securities in
permanent global form) and any coupons appertaining thereto will pass by
delivery. The Company, the Debt Trustee and any agent of the Company or the
Debt Trustee may treat the bearer of any Bearer Security and the bearer of any
coupon and the registered owner of any Registered Security as the owner
thereof (whether or not such Debt Security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes. (Section 308)
Replacement of Securities. Any mutilated Debt Security or a Debt Security
with a mutilated coupon appertaining thereto will be replaced by the Company
at the expense of the Holder upon surrender of such Debt Security to the Debt
Trustee. Debt Securities or coupons that become destroyed, stolen or lost will
be replaced by the Company at the expense of the Holder upon delivery to the
Debt Trustee of the Debt Security and coupons or evidence of destruction, loss
or theft thereof satisfactory to the Company and the Debt Trustee; in the case
of any coupon which becomes destroyed, stolen or lost, such coupon will be
replaced by issuance of a new Debt Security in exchange for the Debt Security
to which such coupon appertains. In the case of a destroyed, lost or stolen
Debt Security or coupon, an indemnity satisfactory to the Debt Trustee and the
Company may be required at the expense of the Holder of such Debt Security or
coupon before a replacement Debt Security will be issued. (Section 306)
Governing Law. The Debt Indentures, the Debt Securities and coupons will be
governed by, and construed in accordance with, the laws of the State of New
York. (Section 113)
Regarding the Trustee. The Company and certain affiliates from time to time
borrow money from, and maintain deposit accounts and conduct certain banking
transactions with, The First National Bank of Chicago in the ordinary course
of their business. The First National Bank of Chicago serves as agent and is a
lender under the Company's bank credit facility.
The Indenture contains certain limitations on the right of the Debt Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received
in respect of any such claim as security or otherwise. (Section 613) The Debt
Trustee will be permitted to engage in certain other transactions; however, if
it acquires any conflicting interest (as described in each Debt Indenture), it
must eliminate such conflict or resign. (Section 608)
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
General. Senior Debt Securities will be issued under the Senior Debt
Indenture, and each series will rank pari passu as to the right of payment of
principal and any premium and interest with each other series issued
thereunder and will rank senior to all series of Subordinated Debt Securities
that may be issued.
Certain Definitions. "Funded Indebtedness" means all outstanding
indebtedness (including indebtedness incurred under any revolving credit,
letter of credit or working capital facility) that matures by its terms, or
that is renewable at the option of any obligor thereon to a date, more than
one year after the date on which such indebtedness is originally incurred.
(Section 101)
"Net Tangible Assets" means the total amount of assets appearing on a
consolidated balance sheet of the Company and its Subsidiaries less, without
duplication: (i) total current liabilities (excluding current maturities of
long-term debt and preferred stock); (ii) all reserves for depreciation and
other asset valuation reserves; (iii) all intangible assets such as goodwill,
trademarks, trade names, patents and unamortized debt discount and expense
carried as an asset; and (iv) all appropriate adjustments on account of
minority interests of other Persons holding common stock in any Subsidiary.
(Section 101)
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"Principal Property" means any natural gas, natural gas liquids or crude oil
pipeline, distribution system, gathering system, storage facility or
processing plant, except any such property that in the opinion of the Board of
Directors of the Company is not of material importance to the business
conducted by the Company and its consolidated Subsidiaries taken as a whole.
(Section 101)
"Principal Subsidiary" means any Subsidiary which owns a Principal Property.
(Section 101)
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which is owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries, or (ii) any partnership
or similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned. For the
purposes of this definition, "securities having ordinary voting power" means
securities or other equity interests which ordinarily have voting power for
the election of directors, or persons having management power with respect to
the Person, whether at all times or only so long as no senior class of
securities has such voting power by reason of any contingency. (Section 101)
Limitation on Liens. The Senior Debt Indenture provides that the Company
will not, and will not permit any Principal Subsidiary to, issue, assume or
guarantee any indebtedness for money borrowed ("Debt") if such Debt is secured
by a mortgage, pledge, security interest or lien (a "mortgage" or "mortgages")
upon any Principal Property of the Company or any Principal Subsidiary or upon
any shares of stock or indebtedness of any Principal Subsidiary (whether such
Principal Property, shares of stock or indebtedness is now owned or hereafter
acquired) without in any such case effectively providing that the Senior Debt
Securities shall be secured equally and ratably with (or prior to) such Debt,
except that the foregoing restrictions shall not apply to: (a) mortgages on
any property acquired, constructed or improved by the Company or any Principal
Subsidiary after the date of the Senior Debt Indenture which are created
within 180 days after such acquisition (or in the case of property constructed
or improved, after the completion and commencement of commercial operation of
such property, whichever is later) to secure or provide for the payment of the
purchase price or cost thereof; provided that in the case of such construction
or improvement the mortgages shall not apply to any property theretofore owned
by the Company or any Principal Subsidiary other than theretofore unimproved
real property; (b) existing mortgages on property acquired (including
mortgages on any property acquired from a Person which is consolidated with or
merged with or into the Company or a Subsidiary) or mortgages outstanding at
the time any corporation, partnership or trust becomes a Subsidiary that are
not incurred in connection with such entity becoming a Subsidiary; (c)
mortgages in favor of domestic or foreign governmental bodies to secure
advances or other payments pursuant to any contract or statute or to secure
indebtedness incurred to finance the purchase price or cost of constructing or
improving the property subject to such mortgages, including mortgages to
secure Debt of the pollution control or industrial revenue bond type; (d)
mortgages in favor of the Company or any Principal Subsidiary; (e) mortgages
on any Principal Property held, leased or used by the Company or any Principal
Subsidiary in connection with the exploration for, development of or
production of (but not the gathering, processing, transportation or marketing
of) natural gas, oil or other minerals; or (f) any extension, renewal or
replacement (or successive extensions, renewals or replacements), in whole or
in part, of any mortgage referred to in the foregoing clauses (a), (b), (c),
(d) and (e). (Section 1006)
Notwithstanding the foregoing, the Company and any Principal Subsidiary may,
without securing the Senior Debt Securities, issue, assume or guarantee
secured Debt (which would otherwise be subject to the foregoing restrictions)
in an aggregate amount which, together with all other such Debt, does not
exceed 15% of the Net Tangible Assets, as shown on a consolidated balance
sheet, prepared by the Company in accordance with generally accepted
accounting principles, as of a date not more than 90 days prior to the
proposed transaction. (Section 1006)
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Subordination. The Subordinated Debt Securities will be subordinate and
junior in right of payment, to the extent set forth in the Subordinated Debt
Indenture, to all Senior Indebtedness (as defined below) of the Company.
(Article Sixteen of the Subordinated Debt Indenture)
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"Senior Indebtedness" is defined in Section 101 of the Subordinated Debt
Indenture as Indebtedness (as defined below) of the Company, whether
outstanding on the date of the Subordinated Debt Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company,
unless the instrument creating or evidencing such Indebtedness provides that
such Indebtedness is not senior or superior, in right of payment, to the
Subordinated Debt Securities or to other Indebtedness which is pari passu
with, or subordinated to, the Subordinated Debt Securities; provided, however,
that in no event shall Senior Indebtedness include (a) Indebtedness of the
Company owed or owing to any Subsidiary of the Company or any officer,
director or employee of the Company or any Subsidiary of the Company except in
respect of deferred compensation in an amount not to exceed $10,000,000 at any
one time, (b) Indebtedness to trade creditors, (c) any liability for taxes
owed or owing by the Company and (d) the Subordinated Debt Securities.
"Indebtedness" is defined in Section 101 of the Subordinated Debt Indenture
as, with respect to any Person, (a) all liabilities and obligations,
contingent or otherwise, of any such Person, (i) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (ii) evidenced by bonds, notes,
debentures or similar instruments, (iii) representing the balance deferred and
unpaid of the purchase price of any property or services, except such as would
constitute trade payables to trade creditors in the ordinary course of
business, (iv) evidenced by bankers' acceptances or similar instruments issued
or accepted by banks, (v) for the payment of money relating to a Capitalized
Lease Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such Person with respect to any letter of credit; (b) all net
obligations of such Person under Interest Swap and Hedging Obligations; (c)
all liabilities of others of the kind described in the preceding clause (a) or
(b) that such Person has guaranteed or that is otherwise its legal liability
and all obligations to purchase, redeem or acquire any Capital Stock and (d)
any and all deferrals, renewals, extensions, refinancings, refundings (whether
direct or indirect) of any liability of the kind described in any of the
preceding clause (a), (b) or (c), or this clause (d), whether or not between
or among the same parties.
The Subordinated Debt Indenture provides that no payment may be made by the
Company on account of the principal of or any premium or interest on the
Subordinated Debt Securities, or to acquire any of the Subordinated Debt
Securities (including repurchases of Subordinated Debt Securities at the
option of the Holders) for cash or property (other than Junior Securities), or
on account of any redemption provisions of the Subordinated Debt Securities,
(i) upon the maturity of any Senior Indebtedness of the Company by lapse of
time, acceleration (unless waived) or otherwise, unless and until all
principal of and any premium and interest on such Senior Indebtedness are
first paid in full (or such payment is duly provided for), or (ii) in the
event of default in the payment of any principal of or any premium or interest
on any Senior Indebtedness when it becomes due and payable, whether at stated
maturity or at a date fixed for prepayment or by declaration or otherwise (a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist. (Section 1601 of the Subordinated
Debt Indenture)
Upon (i) the happening of an event of default (other than a Payment Default)
that permits the holders of Senior Indebtedness or their representative
immediately to accelerate its maturity and (ii) written notice of such event
of default given to the Company and the Trustee by the holders of at least 25%
in the aggregate principal amount outstanding of such Senior Indebtedness or
their representative (a "Payment Notice"), then, unless and until such event
of default has been cured or waived or otherwise has ceased to exist, no
payment (by set off or otherwise) may be made by or on behalf of the Company
on account of the principal of or any premium or interest on the Subordinated
Debt Securities, or to acquire or repurchase any of the Subordinated Debt
Securities for cash or property, or on account of any redemption provisions of
the Subordinated Debt Securities, in any such case other than payments made
with Junior Securities of the Company. Notwithstanding the foregoing, unless
(i) the Senior Indebtedness in respect of which such event of default exists
has been declared due and payable in its entirety within 179 days after the
Payment Notice is delivered as set forth above (the "Payment Blockage
Period"), and (ii) such declaration has not been rescinded or waived, at the
end of the Payment Blockage Period, the Company shall be required to pay all
sums not paid to the Holders of the Subordinated Debt Securities during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Subordinated Debt Securities. Any number
of Payment Notices may be given; provided, however, that (i) not more than one
Payment Notice shall be given within a period of any 360
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consecutive days and (ii) no event of default that existed upon the date of
such Payment Notice or the commencement of such Payment Blockage Period
(whether or not such event of default is on the same issue of Senior
Indebtedness) shall be made the basis for the commencement of any other
Payment Blockage Period. (Section 1601 of the Subordinated Debt Indenture)
Upon any distribution of assets of the Company upon any dissolution, winding
up, liquidation or reorganization of the Company, whether voluntary or
involuntary, in bankruptcy, insolvency, receivership or a similar proceeding
or upon assignment for the benefit of creditors or any marshaling of assets or
liabilities, (i) the holders of all Senior Indebtedness will first be entitled
to receive payment in full (or have such payment duly provided for) before the
Holders are entitled to receive any payment on account of the principal of or
any premium or interest on the Subordinated Debt Securities (other than Junior
Securities) and (ii) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (other than
Junior Securities) to which the Holders or the Trustee on behalf of the
Holders would be entitled (by set off or otherwise), except for the
subordination provisions contained in the Subordinated Debt Indenture, will be
paid by the liquidating trustee or agent or other Person making such a payment
or distribution directly to the holders of Senior Indebtedness or their
representative to the extent necessary to make payment in full of all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness. (Section
1601 of the Subordinated Debt Indenture)
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) is
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the foregoing provisions, then such payment or
distribution shall be received and held in trust by the Trustee or such
Holders for the benefit of the holders of Senior Indebtedness, and shall be
paid or delivered by the Trustee or such Holders, as the case may be, to the
holders of the Senior Indebtedness remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay or to provide for the payment of all
such Senior Indebtedness in full after giving effect to any concurrent payment
and distribution to the holders of such Senior Indebtedness. (Section 1601 of
the Subordinated Debt Indenture)
No provisions contained in the Subordinated Debt Indenture or the
Subordinated Debt Securities will affect the obligation of the Company, which
is absolute and unconditional, to pay, when due, principal of and any premium
and interest on the Subordinated Debt Securities as and when the same shall
become due and payable. The subordination provisions of the Subordinated Debt
Indenture and the Subordinated Debt Securities will not prevent the occurrence
of any Event of Default under the Subordinated Debt Indenture or limit the
rights of the Trustee or any Holder, subject to the three preceding
paragraphs, to pursue any other rights or remedies with respect to the
Subordinated Debt Securities. (Sections 501 and 1601 of the Subordinated Debt
Indenture)
The Prospectus Supplement respecting any series of Subordinated Debt
Securities will set forth any subordination provisions applicable to such
series in addition to or different from those described above.
By reason of such subordination, in the event of the insolvency of the
Company, Holders of Senior Indebtedness and holders of other obligations of
the Company that are not subordinated to Senior Indebtedness may receive more,
ratably, than Holders of the Subordinated Debt Securities. Such subordination
will not prevent the occurrence of an Event of Default or limit the right of
acceleration in respect of the Subordinated Debt Securities.
Conversion. The Subordinated Debt Indenture may provide for a right of
conversion of Subordinated Debt Securities into Common Stock (or cash in lieu
thereof). (Sections 301 and 1501 of the Subordinated Debt Indenture) The
following provisions will apply to Subordinated Debt Securities that are
convertible Subordinated Debt Securities unless otherwise provided in the
Prospectus Supplement for such Subordinated Debt Securities.
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The Holder of any convertible Subordinated Debt Securities will have the
right exercisable at any time prior to the close of business on the second
Business Day prior to their Stated Maturity, unless previously redeemed or
otherwise purchased by the Company, to convert such Subordinated Debt
Securities into shares of Common Stock at the Conversion Price set forth in
the Prospectus Supplement, subject to adjustment. (Section 1502 of the
Subordinated Debt Indenture) The holder of convertible Subordinated Debt
Securities may convert any portion thereof which is $1,000 in principal amount
of any integral multiple thereof. (Section 1502 of the Subordinated Debt
Indenture)
In certain events, the Conversion Price will be subject to adjustment as set
forth in the Subordinated Debt Indenture. Such events include: (a) any payment
of a dividend (or other distribution) payable in Common Stock on any class of
Capital Stock of the Company, (b) any subdivision, combination or
reclassification of Common Stock, (c) any issuance to all holders of Common
Stock of rights, options or warrants entitling them to subscribe for or
purchase Common Stock at less than the then current market price (as
determined in accordance with the Subordinated Debt Indenture) of Common
Stock; provided, however, that if such options or warrants are only
exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted until such triggering events occur, (d)
any distribution to all holders of Common Stock of evidences of indebtedness,
shares of Capital Stock other than Common Stock, cash or other assets
(including securities, but excluding those dividends, rights, options,
warrants and distributions referred to above and excluding regular dividends
and distributions paid exclusively in cash), (e) any distribution consisting
exclusively of cash (excluding any cash portion of distributions referred to
in (d) above, or cash distributed upon a merger or consolidation to which the
third succeeding paragraph applies) to all holders of Common Stock in an
aggregate amount that, combined together with (i) all other such all-cash
distributions made within the then preceding 12 months in respect of which no
adjustment has been made and (ii) any cash and the fair market value of other
consideration paid or payable in respect of any tender offer by the Company or
any of its Subsidiaries for Common Stock concluded within the preceding 12
months in respect of which no adjustment has been made, exceeds 15% of the
Company's market capitalization (defined as being the product of the then
current market price of the Common Stock times the number of shares of Common
Stock then outstanding) on the record date of such distribution, and (f) the
completion of a tender or exchange offer made by the Company or any of its
Subsidiaries for Common Stock that involves an aggregate consideration that,
together with (i) any cash and the fair market value of other consideration
payable in a tender or exchange offer by the Company or any of its
Subsidiaries for Common Stock expiring within the 12 months preceding the
expiration of such tender or exchange offer in respect of which no adjustment
has been made and (ii) the aggregate amount of any such all-cash distributions
referred to in (e) above to all holders of Common Stock within the 12 months
preceding the expiration of such tender or exchange offer in respect of which
no adjustments have been made, exceeds 15% of the Company's market
capitalization on the expiration of such tender offer. No adjustment of the
Conversion Price will be required to be made until the cumulative adjustments
amount to 1.0% or more of the Conversion Price as last adjusted. The Company
reserves the right to make such reductions in the Conversion Price in addition
to those required in the foregoing provisions as it considers to be advisable
in order that any event treated for federal income tax purposes as a dividend
of a stock or stock rights will not be taxable to the recipients. In the event
the Company elects to make such a reduction in the Conversion Price, the
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder if and to the extent
that such laws and regulations are applicable in connection with the reduction
of the Conversion Price. (Section 1504 of the Subordinated Debt Indenture)
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based on the then
current market price of the Common Stock. (Section 1503 of the Subordinated
Debt Indenture) Upon conversion, no adjustments will be made for accrued
interest or dividends, and therefore convertible Subordinated Debt Securities
surrendered for conversion between the record date for an interest payment and
the Interest Payment Date (except convertible Subordinated Debt Securities
called for redemption on a redemption date during such period) must be
accompanied by payment of an amount equal to the interest thereon which the
registered holder is to receive. (Sections 1504 and 1502 of the Subordinated
Debt Indenture)
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In the case of any reclassification, consolidation or merger of the Company
with or into another Person or any merger of another Person with or into the
Company (with certain exceptions), or in case of any conveyance, transfer or
lease of the assets of the Company substantially as an entirety, each
convertible Subordinated Debt Security then outstanding will, without the
consent of any Holder thereof, become convertible only into the kind and
amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, conveyance, transfer or lease by a
holder of the number of shares of Common Stock into which such Subordinated
Debt Security was convertible immediately prior thereto, after giving effect
to any adjustment event, who failed to exercise any rights of election and
received per share the kind and amount received per share by a plurality of
non-electing shares. (Section 1505 of the Subordinated Debt Indenture)
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DESCRIPTION OF THE PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement, the Trust will issue the
Preferred Securities. The Preferred Securities will represent preferred
undivided beneficial interests in the assets of the Trust, and the holders
thereof will be entitled to a preference over the Common Securities in certain
circumstances with respect to Distributions and amounts payable on redemption
of the Trust Securities or liquidation of the Trust. See "--Subordination of
Common Securities." The Trust Agreement will be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). This summary of
certain provisions of the Preferred Securities, the Common Securities and the
Trust Agreement, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Trust Agreement, including the definitions therein of
certain terms.
GENERAL
The Trust Agreement authorizes the Trust to issue the Preferred Securities
and the Common Securities. All of the Common Securities will be owned by the
Company. The Preferred Securities will rank pari passu, and payments will be
made thereon pro rata, with the Common Securities except that upon the
occurrence of a Debenture Event of Default, the rights of the holders of the
Common Securities to receive Distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
Preferred Securities. Legal title to the Trust Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the Trust
Securities. The Trust may not borrow money, issue debt or any securities other
than the Trust Securities, execute mortgages or pledge any of its assets. The
Guarantee will not guarantee payment of Distributions or amounts payable on
redemption of the Preferred Securities or liquidation of the Trust when the
Trust does not have funds on hand legally available for such payments. See
"Description of Guarantee." In such event, the remedy of a holder of Preferred
Securities is to direct the Property Trustee to enforce its rights under the
Trust Debentures. In addition, a holder of Preferred Securities may institute
a legal proceeding directly against the Company, without first instituting a
legal proceeding against the Property Trustee or any other person or entity,
for enforcement of payment to such holder of principal of, premium, if any, or
interest on the Trust Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities of such holder on or
after the due date specified in the Trust Debentures.
Holders of the Preferred Securities have no preemptive or similar rights.
DISTRIBUTIONS
Distributions on the Preferred Securities will be payable on the dates and
at the rates set forth in a Prospectus Supplement hereto. The Distribution
rate and the relevant Distribution Date (as defined below) for the Trust
Securities will correspond to the payments and payment dates on the Trust
Debentures. The ability of the Trust to make timely payments of Distributions
on the Trust Securities is solely dependent on the Company's making interest
payments on the Trust Debentures as and when required.
So long as no Debenture Event of Default has occurred and is continuing, the
Company will have the right under the Indenture to elect to defer the payment
of interest on the Trust Debentures at any time and from time to time for a
period not exceeding 10 consecutive semi-annual periods with respect to each
Extension Period; provided that no Extension Period shall end on a date other
than an Interest Payment Date or extend beyond the Stated Maturity Date. Semi-
annual Distributions on the Preferred Securities will be deferred by the Trust
during any such Extension Period. Distributions to which holders of the
Preferred Securities are entitled during any such Extension Period will
accumulate additional Distributions thereon at the rate per annum set forth in
the Prospectus Supplement from the relevant Distribution Date (to the extent
permitted by applicable law), but not exceeding the interest rate then
accruing on the Trust Debentures. The term "Distributions," as used herein,
shall include any such additional Distributions.
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Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end
on a date other than an Interest Payment Date or extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the
payment of all amounts then due on any Interest Payment Date, the Company may
elect to begin a new Extension Period, subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the
end thereof. The Company must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of any such
Extension Period (or an extension thereof) at least five Business Days prior
to the earlier of (i) the date the Distributions on the Preferred Securities
would have been payable except for the election to begin such Extension Period
or (ii) the date the Administrative Trustees are required to give notice to
any securities exchange or to holders of such Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than five Business Days prior to such record date. There is no limitation
on the number of times that the Company may elect to begin an Extension
Period. Accordingly, there could be multiple Extension Periods of varying
lengths throughout the term of the Preferred Securities. See "Description of
Trust Debentures--Option to Extend Interest Payment Date."
During any such Extension Period, the Company may not, and will not permit
any subsidiaries 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 (other than (a) dividends
or distributions in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Common Stock, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of the Company's capital stock or the exchange or conversion
of one class or series of the Company's capital stock for another class or
series of the Company's capital stock, (d) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, and (e) purchases of Common Stock related to the issuance of
Common Stock or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's dividend reinvestment
plans), (ii) make any payment of principal of or premium, if any, or interest
on or repay, repurchase or redeem any debt securities of the Company
(including Other Debentures) that rank pari passu with or junior in right of
payment to the Trust Debentures or (iii) make any guarantee payments (other
than payments under the Guarantee) with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company (including
Other Guarantees) if such guarantee ranks pari passu with or junior in right
of payment to the Trust Debentures.
The revenue of the Trust available for distribution to holders of the
Preferred Securities will be limited to payments under the Trust Debentures in
which the Trust will invest the proceeds from the issuance and sale of the
Trust Securities. See "Description of Trust Debentures--General." If the
Company does not make interest payments on the Trust Debentures, the Property
Trustee will not have funds available to pay Distributions on the Preferred
Securities. The payment of Distributions (if and to the extent the Trust has
funds on hand legally available for the payment of such Distributions) will be
guaranteed by the Company on a limited basis as set forth herein under
"Description of Guarantee."
PAYMENT OF ADDITIONAL SUMS
If a Tax Event has occurred and is continuing and the Trust is the holder of
all of the Trust Debentures, the Company will pay Additional Sums (as defined
below), if any, on the Trust Debentures. "Additional Sums" means the
additional amounts as may be necessary in order that the amount of
Distributions then due and payable by the Trust on the outstanding Preferred
Securities and Common Securities of the Trust will not be reduced as a result
of any additional taxes, duties and other governmental charges to which the
Trust has become subject as a result of a Tax Event.
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REDEMPTION
Upon the repayment on the Stated Maturity Date or prepayment prior to the
Stated Maturity Date of the Trust Debentures (other than following the
distribution of the Trust Debentures to the holders of the Trust Securities),
the proceeds from such repayment or prepayment 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 of a date of
redemption to the holders of the Trust Securities (the "Redemption Date"), at
the applicable Redemption Price, which shall be equal to (i) in the case of
the payment of the Trust Debentures on the Stated Maturity Date, the Maturity
Redemption Price (equal to the principal amount of, plus accrued and unpaid
interest on, the Trust Debentures), (ii) in the case of the optional
prepayment of the Trust Debentures, upon the occurrence and continuation of a
Special Event, the Special Event Redemption Price (equal to the Special Event
Prepayment Price in respect of the Trust Debentures) and (iii) in the case of
the optional prepayment of the Trust Debentures, the Optional Redemption Price
(equal to the Optional Prepayment Price in respect of the Trust Debentures).
See "Description of Trust Debentures--Optional Prepayment" and "--Special
Event Prepayment." If less than all of the Trust Debentures are to be prepaid
on a Redemption Date, then the proceeds of such prepayment shall be allocated
pro rata among the Trust Securities.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Trust Debentures to be paid in accordance with their terms
and (ii) with respect to a distribution of Trust Debentures upon the
liquidation of the Trust, Trust Debentures having a principal amount equal to
the Liquidation Amount of the Trust Securities of the holder to whom such
Trust Debentures are being distributed.
The Company will have the option to prepay the Trust Debentures, (i) in
whole at any time or in part from time to time at the Optional Prepayment
Price and (ii) in whole but not in part, at any time within 90 days of the
occurrence of a Special Event, at the Special Event Prepayment Price. See
"Description of Trust Debentures--Optional Prepayment" and "--Special Event
Prepayment."
REDEMPTION PROCEDURES
If applicable, Trust Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Trust Debentures. Any redemption of Trust Securities shall
be made and the applicable Redemption Price shall be payable on the Redemption
Date only to the extent that the Trust has funds legally available for the
payment of such applicable Redemption Price. See also "--Subordination of
Common Securities."
If the Trust gives a notice of redemption in respect of the Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are legally available, with respect to the Preferred
Securities held by DTC or its nominees, the Property Trustee will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price.
See "--Form, Denomination, Book-Entry Procedures and Transfer." With respect
to the Preferred Securities held in certificated form, the Property Trustee,
to the extent funds are legally available, will irrevocably deposit with the
paying agent for the Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the applicable Redemption Price to the
holders thereof upon surrender of their certificates evidencing the Preferred
Securities. See "--Payment and Paying Agency." Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date 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 the Preferred Securities called for redemption will cease,
except the right of the holders of the Preferred Securities to receive the
applicable Redemption Price, but without interest on such Redemption Price,
and the Preferred Securities will cease to be outstanding. In the event that
any Redemption Date of Preferred Securities is not a Business Day, then the
applicable Redemption Price payable on such date will be paid on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such next
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succeeding Business Day falls in the next calendar year, such payment shall be
made on the immediately preceding Business Day. In the event that payment of
the applicable Redemption Price is improperly withheld or refused and not paid
either by the Trust or by the Company pursuant to the Guarantee as described
under "Description of Guarantee," (i) Distributions on Preferred Securities
will continue to accumulate at the then applicable rate, from the Redemption
Date originally established by the Trust to the date such applicable
Redemption Price is actually paid and (ii) the actual payment date will be the
Redemption Date for purposes of calculating the applicable 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.
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accumulated and unpaid Distributions have been paid on
all Preferred Securities for all semi-annual Distribution periods terminating
on or prior to the Redemption Date. If less than all of the Preferred
Securities and Common Securities issued by the Trust are to be redeemed on a
Redemption Date, then the aggregate amount of such Preferred Securities and
Common Securities to be redeemed shall be allocated pro rata among the
Preferred Securities and the Common Securities. 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, by such
method as the Property Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $1,000 or
integral multiples of $1,000 in excess thereof) of the Liquidation Amount of
Preferred Securities in denominations larger than $1,000. 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 Security
selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities shall relate, in the case of any Preferred Security 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 prior to the Redemption Date to each holder of Trust Securities at its
registered address. Unless the Company defaults in payment of the applicable
Redemption Price on, or in the repayment of, the Trust Debentures, on and
after the Redemption Date Distributions will cease to accrue on the Trust
Securities called for redemption.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF TRUST DEBENTURES
The Company will have the right at any time to dissolve the Trust and, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, cause the Trust Debentures to be distributed to the holders of
the Trust Securities in liquidation of the Trust. Such right is subject to the
Administrative Trustees having received an opinion of counsel to the effect
that such distribution will not be a taxable event to holders of Preferred
Securities.
The Trust shall automatically dissolve upon 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 Trust Debentures to the holders of
the Trust Securities, if the Company has given written direction to the
Property Trustee to dissolve the Trust (which direction is optional and,
except as described above, wholly within the discretion of the Company, as
Sponsor); (iii) redemption of all of the Trust Securities as described under
"--Redemption;" (iv) expiration of the term of the Trust; and (v) the entry of
an order for the dissolution of the Trust by a court of competent
jurisdiction.
If a dissolution occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the holders of the Trust
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Securities a Like Amount of the Trust Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
holders will be entitled to receive pro rata out of the assets of the Trust
legally available for distribution to holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an amount
equal to the aggregate of the Liquidation Amount plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets on hand legally available to
pay in full the aggregate Liquidation Distribution, then the amount payable
directly by the Trust on the Trust Securities shall be paid on a pro rata
basis, except that if a Debenture Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities. See "--Subordination of Common Securities."
If the Company elects not to prepay the Trust Debentures prior to maturity
in accordance with their terms and either elects not to or is unable to
liquidate the Trust and distribute the Trust Debentures to holders of the
Trust Securities, the Trust Securities will remain outstanding until the
repayment of the Trust Debentures on the Stated Maturity Date.
After the liquidation date is fixed for any distribution of Trust Debentures
to holders of the Trust Securities, (i) the Trust Securities will no longer be
deemed to be outstanding, (ii) DTC or its nominee will receive, in respect of
each registered global certificate, if any, representing Trust Securities and
held by it, a registered global certificate or certificates representing the
Trust Debentures to be delivered upon such distribution and (iii) any
certificates representing Trust Securities not held by DTC or its nominee will
be deemed to represent Trust Debentures having a principal amount equal to the
Liquidation Amount of such Trust Securities, and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid Distributions on
such Trust Securities until such certificates are presented to the
Administrative Trustees or their agent for cancellation, whereupon the Company
will issue to such holder, and the Debenture Trustee will authenticate, a
certificate representing such Trust Debentures.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default has occurred and is
continuing, no payment of any Distribution on, or applicable Redemption Price
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of the Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions on all of the outstanding Preferred Securities for all
Distribution periods terminating on or prior thereto, or in the case of
payment of the applicable Redemption Price the full amount of such Redemption
Price, 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 Preferred Securities then due
and payable.
In the case of any Event of Default under the Trust Agreement, the Company,
as holder of the Common Securities, will be deemed to have waived any right to
act with respect to such Event of Default until the effect of such Event of
Default with respect to the Preferred Securities shall have been cured, waived
or otherwise eliminated. Until any such Event of Default has been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the holders of the Preferred Securities and not on behalf of the
Company as holder of the Common Securities, and only the holders of the
Preferred Securities will have the right to direct the Property Trustee to act
on their behalf.
EVENTS OF DEFAULT; NOTICE
The occurrence of a Debenture Event of Default (see "Description of Trust
Debentures--Debenture Events of Default") constitutes an "Event of Default"
under the Trust Agreement (a "Trust Agreement Event of Default").
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Within five Business Days after the occurrence of any Trust Agreement Event
of Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Trust Agreement Event of Default to the holders of the
Preferred Securities, the Administrative Trustees and the Company, as Sponsor,
unless such Trust Agreement Event of Default shall have been cured or waived.
The Company, as Sponsor, 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
the Trust Agreement.
Upon the occurrence of a Trust Agreement Event of Default, the Debenture
Trustee or the Property Trustee as the holder of the Trust Debentures will
have the right under the Debenture Indenture to declare the principal of and
interest on the Trust Debentures to be immediately due and payable.
If a Trust Agreement Event of Default occurs and is continuing, then the
holders of not less than a majority in aggregate Liquidation Amount of
Preferred Securities have the right to direct the exercise of any trust or
power conferred upon the Property Trustee under the Trust Agreement, including
the right to direct the Property Trustee under the Trust Agreement to exercise
the remedies available to it as holder of the Trust Debentures. If the
Property Trustee fails to enforce its rights with respect to the Trust
Debentures held by the Trust, any record holder of Preferred Securities may,
to the fullest extent permitted by law, institute legal proceedings directly
against the Company to enforce the Property Trustee's rights under such Trust
Debentures without first instituting any legal proceedings against such
Property Trustee or any other person or entity. In addition, if a Trust
Agreement Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest, principal or other
required payments on the Trust Debentures issued to the Trust on the date such
interest, principal or other payment is otherwise payable, then a record
holder of Preferred Securities may, on or after the respective due dates
specified in the Trust Debentures, institute a proceeding directly against the
Company for enforcement of payment on Trust Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Preferred Securities
held by such holder. In connection with such Direct Action, the Company will
be subrogated to the rights of such record holder of Preferred Securities to
the extent of any payment made by the Company to such record holder of
Preferred Securities.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described under "--Liquidation of the Trust and Distribution of Trust
Debentures" and "--Subordination of Common Securities."
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default 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
Trust Agreement.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, convert into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any corporation or other
Person, except as described below or as otherwise described under "--
Liquidation of the Trust and Distribution of Trust Debentures." The Trust may,
at the request of the Company, as Sponsor, with the consent of the
Administrative Trustees and without the consent of the holders of the
Preferred Securities, the Delaware Trustee or the Property Trustee, merge with
or into, convert into, consolidate, amalgamate, or be replaced by or convey,
transfer or lease its properties and assets as an entirety or 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
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obligations of the Trust with respect to the Trust Securities and the Trust
Agreement or (b) substitutes for the Trust Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Trust
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company, as Sponsor, expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Trust Debentures, (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 Trust Securities are then listed or quoted, if
any, (iv) if the Preferred Securities (including any Successor Securities) are
rated by any nationally recognized statistical rating organization prior to
such transaction, such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Preferred Securities
(including any Successor Securities) or, if the Trust Debentures are so rated,
the Trust Debentures, to be downgraded by any such nationally recognized
statistical rating organization, (v) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect, (vi)
such successor entity has a purpose substantially identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company, as Sponsor, has received an
opinion from independent counsel to the Trust experienced in such matters to
the effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including
any Successor Securities) in any material respect, and (b) following such
merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease, (1) neither the Trust nor such successor entity will be
required to register as an investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and (2) the Trust or the
successor entity will continue to be classified as a grantor trust for United
States federal income tax purposes, (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 and the
Common Guarantee and (ix) there shall have been furnished to the Property
Trustee an officer's certificate and an opinion of counsel, each to the effect
that all conditions precedent in the Trust Agreement to such transaction have
been satisfied. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge with or into, convert into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or 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 consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity not to be classified as a
grantor trust for United States federal income tax purposes or would cause the
holders of the Trust Securities not to be treated as owning an undivided
interest in the Trust Debentures.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "--Mergers, Consolidations, Amalgamations
or Replacements of the Trust" and "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The 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 Trust Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters
or questions arising under the Trust Agreement, which shall not be
inconsistent with the other provisions of the Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that the Trust will 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 Trust will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in each such case such action shall not adversely
affect in any material respect the interests of the holders of the Trust
Securities. Any amendments of the Trust Agreement
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pursuant to the foregoing shall become effective when notice thereof is given
to the holders of the Trust Securities. The Trust Agreement may be amended by
the Issuer Trustees and the Company (i) with the consent of holders
representing a majority (based upon Liquidation Amount) of the outstanding
Trust Securities, and (ii) upon 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 Trust's status as a grantor trust for
United States federal income tax purposes or the 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, the Trust Agreement
may not be amended to (a) 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 (b) 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 Trust Debentures are held by the Trust, the Issuer Trustees
shall not (i) direct the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee, or executing any trust or
power conferred on the Debenture Trustee with respect to the Trust Debentures,
(ii) waive any past defaults under the Indenture, (iii) exercise any right to
rescind or annul a declaration of acceleration of the maturity of the
principal of the Trust Debentures or (iv) consent to any amendment,
modification or termination of the Indenture or the Trust Debentures, where
such consent shall be required, without, in each case, obtaining the prior
approval of the holders of a majority in Liquidation Amount of all outstanding
Preferred Securities; provided, however, that where a consent under the
Indenture would require the consent of each holder of Trust Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior consent of each holder of the 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 pursuant to a
subsequent vote of such holders. The Property Trustee shall notify each holder
of Preferred Securities of any notice of default which it receives with
respect to the Trust Debentures. 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
experienced in such matters to the effect that the Trust will not fail to be
classified as a grantor trust 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 such holders 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 the Trust
Agreement.
No vote or consent of the holders of Preferred Securities will be required
for the Trust to redeem and cancel the Preferred Securities in accordance with
the Trust Agreement.
Notwithstanding that holders of the 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 Trustee shall not be entitled to vote
or consent and shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
PAYMENT AND PAYING AGENCY
Payments in respect of Preferred Securities held in global form shall be
made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates, or in respect of Preferred
Securities that 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. The paying agent (the "Paying Agent") shall
initially be an affiliate of the Property 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, the Administrative
Trustees and the
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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.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Securities will be in registered, global form (collectively, the
"Global Preferred Securities"). The Global Preferred Securities will be
deposited upon issuance with DTC, in New York, New York, and registered in the
name of DTC or its nominee, in each case for credit to an account of a direct
or indirect participant in DTC as described below.
A Global Preferred Security may not be transferred as a whole except by DTC
to another nominee of DTC or to a successor of DTC or its nominee. Beneficial
interests in the Global Preferred Securities shall be transferred and
exchanged through the facilities of DTC. Beneficial interests in the Global
Preferred Securities may not be exchanged for Preferred Securities in
certificated form except in the limited circumstances described below. See "--
Exchange of Book-Entry Preferred Securities for Certificated Preferred
Securities."
DEPOSITARY PROCEDURES
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of
the Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency," registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the "Indirect Participants"). Persons
who are not Participants may beneficially own securities held by or on behalf
of DTC only through the Participants or the Indirect Participants. The
ownership interest and transfer of ownership interest of each actual purchaser
of each security held by or on behalf of DTC are recorded on the records of
the Participants and the Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Preferred Securities, DTC
will credit the accounts of Participants designated by the Exchange Agent with
portions of the Liquidation Amount of the Global Preferred Securities and (ii)
ownership of such interests in the Global Preferred Securities will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Preferred Securities).
Investors in the Global Preferred Securities may hold their interests
therein directly through DTC if they are participants in such system, or
indirectly through organizations which are participants in such system. All
interests in a Global Preferred Security will be subject to the procedures and
requirements of DTC. Those interests held through Euroclear or Cedel Bank may
also be subject to the procedures and requirements of such system. The laws of
some states require that certain persons take physical delivery in
certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Preferred Security to such persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a Global
Preferred Security to pledge such interests to persons or entities that do not
participate in the DTC system,
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or otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Preferred Securities, see "--
Exchange of Book-Entry Preferred Securities for Certificated Preferred
Securities."
Except as described below, owners of interests in the Global Preferred
Securities will not have Preferred Securities registered in their name, will
not receive physical delivery of Preferred Securities in certificated form and
will not be considered the registered owners or holders thereof under the
Trust Agreement for any purpose.
Payments in respect of each Global Preferred Security registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms
of the Trust Agreement, the Property Trustee will treat the persons in whose
names the Preferred Securities, including the Global Preferred Securities, are
registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Property Trustee nor any agent thereof has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Preferred Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Preferred Securities or (ii) any other matter relating to the actions
and practices of DTC or any of its Participants or Indirect Participants. DTC
has advised the Trust and the Company that its current practice, upon receipt
of any payment in respect of securities such as the Preferred Securities, is
to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in
Liquidation Amount of beneficial interests in the relevant security as shown
on the records of DTC unless DTC has reason to believe it will not receive
payment on such payment date. Payments by the Participants and the Indirect
Participants to the beneficial owners of Preferred Securities represented by
Global Preferred Securities will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Property
Trustee, the Trust or the Company. None of the Trust, the Company or the
Property Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Preferred Securities,
and the Trust, the Company and the Property Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee for
all purposes.
Interests in the Global Preferred Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its Participants. Transfers
between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Preferred Securities only at the
direction of one or more Participants to whose account with DTC interests in
the Global Preferred Securities are credited and only in respect of such
portion of the Liquidation Amount of the Preferred Securities as to which such
Participant or Participants has or have given such direction. However, if
there is an Event of Default under the Trust Agreement, DTC reserves the right
to exchange the Global Preferred Securities for Preferred Securities in
certificated form and to distribute such Preferred Securities to its
Participants.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
Although DTC, has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Preferred Securities among Participants in DTC, they
are under no obligation to perform or to continue to perform such procedures,
and such procedures may be discontinued at any time. None of the Trust, the
Company or the Property Trustee will have any responsibility for the
performance by DTC or their respective participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
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EXCHANGE OF BOOK-ENTRY PREFERRED SECURITIES FOR CERTIFICATED PREFERRED
SECURITIES
A Global Preferred Security is exchangeable for Preferred Securities in
certificated form if (i) DTC notifies the Trust that it is unwilling or unable
to continue as Depositary for the Global Preferred Security or has ceased to
be a clearing agency registered under the Exchange Act, and the Trust
thereupon fails to appoint a successor Depositary within 90 days, (ii) the
Company, on behalf of the Trust, in its sole discretion elects to cause the
issuance of the Preferred Securities in certificated form or (iii) there shall
have occurred and be continuing an Event of Default under the Trust Agreement.
In addition, beneficial interests in a Global Preferred Security may be
exchanged for certificated Preferred Securities upon request but only upon at
least 20 days' prior written notice given to the Property Trustee by or on
behalf of DTC in accordance with customary procedures. In all cases,
certificated Preferred Securities delivered in exchange for any Global
Preferred Security or beneficial interests therein will be registered in the
names, and issued in any approved denominations, requested by or on behalf of
the Depositary (in accordance with its customary procedures).
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of the Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trust will not be required to register or cause to be
registered the transfer of the Preferred Securities after they have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of a
Trust Agreement Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, during the existence of
a Trust Agreement 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 Trust Agreement
at the request of any holder of Trust Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. If no Trust Agreement Event of Default has occurred and is
continuing and the Property Trustee is required to decide between alternative
courses of action, construe ambiguous provisions in the Trust Agreement or is
unsure of the application of any provision of the Trust Agreement, and the
matter is not one on which holders of the Preferred Securities or the Common
Securities are entitled under the 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.
The First National Bank of Chicago, will serve as the Property Trustee, the
Debenture Trustee and the Guarantee Trustee. First Chicago Delaware Inc. will
serve as the Delaware Trustee. The Company and certain of its subsidiaries
maintain deposit accounts and banking relationships with The First National
Bank of Chicago.
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MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not 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
Trust Debentures 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 the Trust or the 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 Trust Securities.
The Trust Agreement and the Preferred Securities will be governed by and
construed in accordance with the internal laws of the State of Delaware;
provided that the immunities and standard of care of the Property Trustee
should be governed by New York law.
DESCRIPTION OF TRUST DEBENTURES
The Trust Debentures will be issued under an Indenture, as supplemented or
amended from time to time (as so supplemented or amended, the "Debenture
Indenture"), between the Company and The First National Bank of Chicago, as
trustee (the "Debenture Trustee"). The Debenture Indenture will be qualified
under the Trust Indenture Act. This summary of certain terms and provisions of
the Trust Debentures and the Debenture Indenture does not purport to be
complete and is subject to and is qualified in its entirety by reference to
the Debenture Indenture and those terms made a part of the Debenture Indenture
by the Trust Indenture Act. A copy of the Debenture Indenture is filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Trust will
invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Trust Debentures issued by the
Company. The Trust Debentures will bear interest from the same date and at the
same rate as the Preferred Securities. It is anticipated that, until the
liquidation, if any, of the Trust, each Trust Debenture will be held in the
name of the Property Trustee in trust for the benefit of the holders of the
Trust Securities.
The Trust Debentures will be issued in denominations of $1,000 and integral
multiples thereof. The Trust Debentures will mature on the date provided in
the Supplemental Prospectus hereto (the "Stated Maturity Date").
The Trust Debentures will rank pari passu with all Other Debentures and will
be unsecured and subordinate and junior in right of payment to all Senior
Indebtedness to the extent and in the manner set forth in the Debenture
Indenture. See "--Subordination."
SUBORDINATION
In the Debenture Indenture, the Company has covenanted and agreed that any
Trust Debentures issued thereunder will be subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided in the Debenture
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, or in connection with
any insolvency, receivership or bankruptcy proceeding of the Company, all
Senior Indebtedness must be paid in full before the holders of Trust
Debentures will be entitled to receive or retain any payment in respect
thereof.
In the event of the acceleration of the maturity of Trust Debentures, the
holders of all Senior Indebtedness outstanding at the time of such
acceleration will first be entitled to receive payment in full of such Senior
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Indebtedness before the holders of Trust Debentures will be entitled to
receive or retain any payment in respect of the Trust Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Trust Debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Indebtedness" shall mean (i) every obligation of the Company for money
borrowed; (ii) every obligation of the Company evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of the Company with respect to letters of credit,
banker's acceptances or similar facilities issued for the account of the
Company; (iv) every obligation of the Company issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business);
(v) every capital lease obligation of the Company; (vi) all indebtedness of
the Company whether incurred on or prior to the date of the Debenture
Indenture or thereafter incurred, for claims in respect of derivative
products, including interest rate, foreign exchange rate and commodity forward
contracts, options and swaps and similar arrangements; and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another
Person and all dividends of another Person the payment of which, in either
case, the Company has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Trust Debentures" shall mean (i)
Indebtedness, whether outstanding on the date of execution of the Debenture
Indenture or thereafter created, assumed or incurred, to the extent such
Indebtedness specifically by its terms ranks equally with and not prior to the
Trust Debentures in right of payment upon the happening of the dissolution or
winding-up or liquidation or reorganization of the Company and (ii) all other
debt securities, and guarantees in respect of those debt securities (including
Other Debentures and Other Guarantees), issued to any other trust, or a
trustee of such trust, partnership or other entity affiliated with the Company
that is a financing vehicle of the Company (a "financing entity") in
connection with the issuance by such financing entity of equity securities
that are similar to the Preferred Securities or other securities guaranteed by
the Company. The securing of any Indebtedness, otherwise constituting
Indebtedness Ranking on a Parity with the Trust Debentures, shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking on
a Parity with the Trust Debentures.
"Indebtedness Ranking Junior to the Trust Debentures" shall mean any
Indebtedness, whether outstanding on the date of execution of the Debenture
Indenture or thereafter created, assumed or incurred, to the extent such
Indebtedness specifically by its terms ranks junior to and not equally with or
prior to the Trust Debentures (and any other Indebtedness Ranking on a Parity
with the Trust Debentures) in right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Company. The
securing of any Indebtedness, otherwise constituting Indebtedness Ranking
Junior to the Trust Debentures shall not be deemed to prevent such
Indebtedness from constituting Indebtedness Ranking Junior to the Trust
Debentures.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding on
the date of execution of the Debenture Indenture or thereafter created,
assumed or incurred, except Indebtedness Ranking on a Parity with the Trust
Debentures or Indebtedness Ranking Junior to the Trust Debentures, and any
deferrals, renewals or extensions of such Senior Indebtedness.
The Company is a holding company and all of the operating assets of the
Company are owned by the Company's subsidiaries. The Company relies primarily
on dividends from its subsidiaries to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. The Company is a legal entity separate and distinct from its
subsidiaries. Holders of Trust Debentures should look only to the Company for
payments on the Trust Debentures.
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Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability
of holders of the Preferred Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary,
except to the extent the Company may itself be recognized as a creditor of
that subsidiary. Accordingly, the Trust Debentures will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries and all liabilities of any future subsidiaries of the Company.
The Debenture Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company or any subsidiary, including Senior
Indebtedness.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is continuing, the
Company will have the right under the Debenture Indenture at any time and from
time to time during the term of the Trust Debentures to defer the payment of
interest for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period; provided that no Extension Period shall end
on a date other than an Interest Payment Date or extend beyond the Stated
Maturity Date. At the end of such Extension Period, the Company must pay all
interest then accrued and unpaid (together with interest thereon at the rate
set forth in a Prospectus Supplement ("Compounded Interest")).
During any such Extension Period, the Company may 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 (other than (a) dividends
or distributions in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Common Stock, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of the Company's capital stock or the exchange or conversion
of one class or series of the Company's capital stock for another class or
series of the Company's capital stock, (d) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, and (e) purchases of Common Stock related to the issuance of
Common Stock or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's dividend reinvestment
plans), (ii) make any payment of principal of, or premium, if any, or interest
on or repay, repurchase or redeem any debt securities of the Company
(including Other Debentures) that rank pari passu with or junior in right of
payment to the Trust Debentures or (iii) make any guarantee payments (other
than payments under the Guarantee) with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company (including
Other Guarantees) if such guarantee ranks pari passu with or junior in right
of payment to the Trust Debentures.
Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end
on a date other than an Interest Payment Date or extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the
payment of all amounts then due on any Interest Payment Date, the Company may
elect to begin a new Extension Period, subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the
end thereof. The Company must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of any Extension
Period (or an extension thereof) at least five Business Days prior to the
earlier of (i) the date the Distributions on the Trust Securities would have
been payable except for the election to begin or extend such Extension Period
or (ii) the date the Administrative Trustees are required to give notice to
any securities exchange or to holders of Capital Securities of the record date
or the date such Distributions are payable, but in any event not less than
five Business Days prior to such record date. The Property Trustee shall give
notice of the Company's election to begin or extend a new Extension Period to
the holders of the Preferred Securities. There is no limitation on the number
of times that the Company may elect to begin an Extension Period. Accordingly,
there could be multiple Extension Periods of varying lengths throughout the
term of the Trust Debentures.
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OPTIONAL PREPAYMENT
The Trust Debentures may be prepayable, in whole at any time or in part from
time to time, at the option of the Company at a prepayment price (the
"Optional Prepayment Price") to the extent and as set forth in an applicable
Prospectus Supplement.
SPECIAL EVENT PREPAYMENT
If a Special Event shall occur and be continuing, the Company may, at its
option, prepay the Trust Debentures in whole (but not in part) at any time
within 90 days of the occurrence of such Special Event, at a prepayment price
(the "Special Event Prepayment Price") equal to 100% of the principal amount
of the Trust Debentures to be redeemed plus accrued and unpaid interest
thereon (including Additional Sums, if any) to the date of redemption.
A "Special Event" means a Tax Event or an Investment Company Event.
"Investment Company Event" means the receipt by the Trust and the Company of
an opinion of counsel from counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of original issuance of the Preferred Securities, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act,
which change or prospective change becomes effective or would become
effective, as the case may be, on or after the date of the original issuance
of the Preferred Securities.
A "Tax Event" means the receipt by the Company and the 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 prospective 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
amendment or change in any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or after
the Issue Date, there is more than an insubstantial risk that (i) the 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
Trust Debentures, (ii) interest payable by the Company on the Trust Debentures
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 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.
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Trust Debentures to be
prepaid at its registered address. Unless the Company defaults in payment of
the prepayment price, on and after the prepayment date interest ceases to
accrue on such Trust Debentures called for prepayment.
ADDITIONAL SUMS
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Trust Debentures such additional amounts as may be
necessary in order that the amount of Distributions then due and payable by
the Trust on the outstanding Trust Securities shall not be reduced as a result
of any such additional taxes, duties and other governmental charges
("Additional Sums").
CERTAIN COVENANTS OF THE COMPANY
The Company covenants in the Debenture Indenture that if and so long as the
Trust is the holder of all Trust Debentures, the Company, as borrower, will
pay to the Trust all fees and expenses related to the Trust and
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the offering of the Trust Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trust (including any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any domestic taxing
authority upon the Trust but excluding obligations under the Trust
Securities).
The Company also covenants 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 (which includes common and
preferred stock) (other than (a) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Common
Stock, (b) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan
in the future, or the redemption or repurchase of any such rights pursuant
thereto, (c) as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock, (d) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (e) purchases of Common Stock
related to the issuance of Common Stock or rights under any of the Company's
benefit plans for its directors, officers, employees or any of the Company's
dividend reinvestment plans), (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of
the Company (including Other Debentures) that rank pari passu with or junior
in right of payment to the Trust Debentures or (iii) make any guarantee
payments (other than payments under the Guarantee) with respect to any
guarantee by the Company of the debt securities of any subsidiary of the
Company (including under Other Guarantees) if such guarantee ranks pari passu
or junior in right of payment to the Trust Debentures, if at such time (1)
there shall have occurred any event of which the Company has actual knowledge
that (a) with the giving of notice or the lapse of time, or both, would be a
Debenture Event of Default and (b) in respect of which the Company shall not
have taken reasonable steps to cure, (2) a Debenture Event of Default shall
have occurred and be continuing, (3) if such Trust Debentures are held by the
Property Trustee, the Company shall be in default with respect to its payment
of any obligations under the Guarantee or (4) the Company shall have given
notice of its election of an Extension Period as provided in the Indenture, or
such Extension Period, or any extension thereof, shall have commenced and be
continuing.
So long as the Trust Securities remain outstanding, the Company also
covenants (i) to maintain 100% direct or indirect ownership of the Common
Securities; provided, however, that any successor of the Company permitted
under the Indenture may succeed to the Company's ownership of such Common
Securities, (ii) to use its reasonable efforts to cause the Trust (a) to
remain a business trust, except in connection with the distribution of Trust
Debentures to the holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities, or certain mergers, consolidations
or amalgamations, each as permitted by the Trust Agreement, and (b) to
otherwise continue to be treated as a grantor trust for United States federal
income tax purposes and (iii) to use its reasonable efforts to cause each
holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Trust Debentures.
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of Trust Debentures, amend the Debenture Indenture for
specified purposes, including, among other things, to cure any ambiguity or to
correct or supplement any provision contained in the Debenture Indenture or
any supplemental indenture which is defective or inconsistent with any other
provision contained therein (provided that any such action does not materially
adversely affect the interest of the holders of Trust Debentures) and
qualifying, or maintaining the qualification of, the Debenture Indenture under
the Trust Indenture Act. The Debenture Indenture contains provisions
permitting the Company and the Debenture Trustee, with the consent of the
holders of a majority in aggregate principal amount of Trust Debentures, to
amend the Debenture Indenture in a manner affecting the rights of the holders
of Trust Debentures; provided that no such modification may, without the
consent of the holders of each outstanding Trust Debenture so affected, (i)
change the Stated Maturity, or reduce the rate of interest (including
Compounded Interest) or extend the time of payment of interest thereon except
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pursuant to the Company's right under the Debenture Indenture to defer the
payment of interest as provided therein (see "--Option to Extend Interest
Payment Date") or reduce the principal amount of, or the amount of premium on,
the Trust Debentures or reduce the amount payable on redemption thereof or
make the principal of, or interest or premium on, the Trust Debentures payable
in any coin or currency other than that provided in the Trust Debentures, or
impair or affect the right of any holder of Trust Debentures to institute suit
for the payment thereof, (ii) modify the provisions of the Indenture with
respect to the subordination of the Trust Debentures in a manner adverse to
the holders, (iii) reduce the percentage of principal amount of Trust
Debentures, the holders of which are required to consent to any such
modification of the Debenture Indenture, or are required to consent to any
waiver provided for in the Debenture Indenture or (iv) modify certain other
provisions of the Debenture Indenture relating to amendments and waivers of
holders; provided, however, that if the Trust Debentures are held by the
Trust, such amendment shall not be effective until the holders of a majority
in liquidation amount of the Trust Securities shall have consented to the
amendment; and provided, further, that if the consent of the holders of each
Trust Security is required, such amendment will not be effective until each
holder of the Trust Securities has consented to such amendment.
DEBENTURE EVENTS OF DEFAULT
The Debenture Indenture provides that any one or more of the following
described events with respect to the Trust Debentures constitute a "Debenture
Event of Default" (whatever the reason for such Debenture 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) failure to pay any interest (including Compounded Interest and
Additional Sums, if any) on the Trust Debentures or any Other Debentures,
when due and the continuance of such failure for 30 days (subject to the
deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the Trust
Debentures or any Other Debentures when due whether at maturity, upon
redemption, by declaration of acceleration of maturity or otherwise; or
(iii) failure to perform, or breach of, any other covenant or warranty of
the Company contained in the Indenture for 90 days after written notice to
the Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of Trust Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Company.
Within five Business Days after the occurrence of a Debenture Event of
Default actually known to the Indenture Trustee, the Indenture Trustee shall
transmit notice of such Indenture Event of Default to the Debenture holders,
unless such Indenture Event of Default shall have been cured or waived. The
Debenture Indenture requires the annual filing by the Company with the
Debenture Trustee of a certificate as to the absence of certain defaults under
the Indenture.
The holders of a majority in aggregate outstanding principal amount of the
Trust Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee or
to exercise any trust or power conferred upon the Debenture Trustee under the
Debenture Indenture. If a Debenture Event of Default has occurred and is
continuing, the Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the Trust Debentures may declare the
principal amount on all Trust Debentures due and payable immediately upon a
Debenture Event of Default and should the Debenture Trustee or such holders of
Trust Debentures fail to make such declaration, the holders of not less than
25% in aggregate Liquidation Amount of the Preferred Securities shall have
such right. The holders of a majority in aggregate outstanding principal
amount of the Trust Debentures may annul such declaration and waive the
default if the default (other than the non-payment of the principal of the
Trust Debentures which has become due solely by such acceleration) has been
cured and a sum sufficient to pay all matured installments of interest
(including Compounded Interest and Additional Sums, if any) and principal of,
and premium, if any, due otherwise than by acceleration (with any Compounded
Interest due thereon) has been deposited with the
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Debenture Trustee, and should the holders of such Trust Debentures fail to
annul such declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of the Preferred Securities shall have such
right.
Prior to the declaration accelerating the maturity of the Trust Debentures,
the holders of a majority in aggregate outstanding principal amount of the
Trust Debentures may, on behalf of the holders of all the Trust Debentures,
waive any past default or Debenture Event of Default and its consequences,
except a default in the payment of principal (or premium, if any) on or
interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest (and premium, if any) and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee)
(including Compounded Interest and Additional Sums, if any) or a default in
respect of a covenant or provision which under the Debenture Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Trust Debenture affected, and should the holders of such Trust Debentures fail
to waive such default, the holders of a majority in aggregate Liquidation
Amount of the Preferred Securities shall have such right.
In case a Debenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Trust Debentures and any other amounts payable under the
Debenture Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Trust Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of the Company to pay the principal of
(or premium, if any), or interest (including Compounded Interest and
Additional Sums, if any) on the Trust Debentures on the date such payment is
otherwise required, a holder of Preferred Securities may institute a Direct
Action. The Company may not amend the Debenture 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. Notwithstanding any payments
made to a holder of Preferred Securities by the Company in connection with a
Direct Action, the Company shall remain obligated to pay the principal of (or
premium, if any) or interest (including Compounded Interest and Additional
Sums, if any) on the Trust Debentures, and the Company shall be subrogated to
the rights of the holder of such Preferred Securities with respect to payments
on the Preferred Securities to the extent of any payments made by the Company
to such holder in any Direct Action.
The holders of the 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 Trust Debentures unless there shall have been
an Event of Default under the Trust Agreement. See "Description of Preferred
Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Debenture Indenture provides that the Company shall not consolidate with
or merge into any other Person or convey, transfer or lease its properties as
an entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or convey, transfer or lease its
properties as an entirety or substantially as an entirety to the Company,
unless: (i) in case the Company consolidates with or merges into another
Person or conveys, transfers or leases its properties substantially as an
entirety to any Person, the successor Person is organized and existing under
the laws of the United States or any State or the District of Columbia, and
such successor Person expressly assumes the Company's obligations on the Trust
Debentures and the Indenture; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time
or both, would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
SATISFACTION AND DISCHARGE
The Debenture Indenture provides that when, among other things, all Trust
Debentures not previously cancelled or delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will
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become due and payable at maturity or called for redemption within one year,
and the Company deposits or causes to be deposited with the Debenture Trustee
funds, in trust, for the purpose and in an amount sufficient to pay on the
Stated Maturity Date or upon redemption of all the Trust Debentures not
previously delivered to the Debenture Trustee for cancellation, the principal
(and premium, if any) and interest (including Compounded Interest and
Additional Sums, if any) due or to become due on the Stated Maturity Date, or
the redemption date, as the case may be, then the Debenture Indenture will
cease to be of further effect (except as to the Company's obligations to pay
all other sums due pursuant to the Debenture Indenture and to provide the
officers' certificates and opinions of counsel described therein), and the
Company will be deemed to have satisfied and discharged the Debenture
Indenture.
FORM, REGISTRATION AND TRANSFER
If the Trust Debentures are distributed to the holders of the Trust
Securities, the Trust Debentures may be represented by one or more global
certificates registered in the name of the DTC or its nominee. Under such
circumstances, the depositary arrangements for the Trust Debentures would be
expected to be substantially similar to those in effect for the Preferred
Securities. For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Description of Preferred Securities--
Form, Denomination, Book-Entry Procedures and Transfer" and "--Depositary
Procedures."
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and interest on Trust
Debentures will be made at the office of the Debenture Trustee in Wilmington,
Delaware or at the office of such Paying Agent or Paying Agents as the Company
may designate from time to time, except that at the option of the Company
payment of any interest may be made, except in the case of Trust Debentures in
global form, (i) by check mailed to the address of the holder thereof as such
address shall appear in the register for Trust Debentures or (ii) by transfer
to an account maintained by the holder thereof, provided that proper transfer
instructions have been received by the relevant Record Date. Payment of any
interest on any Trust Debenture will be made to the Person in whose name such
Trust Debenture is registered at the close of business on the Record Date for
such interest, except in the case of defaulted interest. The Company may at
any time designate additional Paying Agents or rescind the designation of any
Paying Agent; however the Company will at all times be required to maintain a
Paying Agent in each place of payment for the Trust Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent for the
payment of the principal of (and premium, if any) or interest on any Trust
Debenture and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall, at the request
of the Company, be repaid to the Company and the holder of such Trust
Debenture shall thereafter look, as a general unsecured creditor, only to the
Company for payment thereof.
GOVERNING LAW
The Indenture and the Trust Debentures will be governed by and construed in
accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to such provisions, the Debenture Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Trust Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby.
The Debenture Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it. The First National Bank of Chicago
will serve as Debenture Trustee. See "Description of Preferred Securities--
Information Concerning the Property Trustee."
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DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the Guarantee, which
will be executed and delivered by the Company for the benefit of the holders
from time to time of Preferred Securities. The Guarantee will be qualified
under the Trust Indenture Act. The First National Bank of Chicago, as the
Guarantee Trustee, will hold the Guarantee for the benefit of the holders of
the Preferred Securities. The following summary is not necessarily complete,
and reference is hereby made to the copy of the form of the Guarantee
(including the definitions therein of certain terms), which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part,
and to the Trust Indenture Act. Whenever particular defined terms of the
Guarantee are referred to in this Prospectus, such defined terms are
incorporated herein by reference.
GENERAL
The Company will irrevocably and unconditionally agree to pay in full on a
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 the 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 Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i)
any accumulated and unpaid Distributions required to be paid on the Preferred
Securities, to the extent that the Trust has funds on hand legally available
therefor at such time, (ii) the applicable Redemption Price with respect to
the Preferred Securities called for redemption, to the extent that the Trust
has funds on hand legally available therefor at such time and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of the Trust
(other than in connection with the distribution of the Trust Debentures to
holders of the Preferred Securities), the lesser of (a) the Liquidation
Distribution, to the extent the Trust has funds legally available therefor at
the time, and (b) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Securities after satisfaction of
liabilities to creditors of the Trust as required by applicable law. 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 Preferred
Securities or by causing the Trust to pay such amounts to such holders.
The Guarantee will be a guarantee of the Guarantee Payments with respect to
the Preferred Securities from the time of issuance of the Preferred
Securities, but will not apply to Distributions and other payments on the
Preferred Securities when the Trust does not have sufficient funds legally and
immediately available to make such Distributions or other payments. Therefore,
if the Company does not make interest payments on the Trust Debentures held by
the Property Trustee, the Trust will not make Distributions on the Preferred
Securities.
The Guarantee will rank subordinate and junior in right of payment to all
Senior Indebtedness to the extent provided therein. See "--Status of the
Guarantee." Because the Company is a holding company, the right of the Company
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise is subject to the
prior claims of creditors of that subsidiary, except to the extent the Company
may itself be recognized as a creditor of that subsidiary. Accordingly, the
Company's obligations under the Guarantee effectively will be subordinated to
all existing and future liabilities of the Company's subsidiaries and all
liabilities of any future subsidiaries of the Company. Claimants should look
only to the Company for payments under the Guarantee. See "Description of the
Trust Debentures--Subordination." The Guarantee does not limit the incurrence
or issuance of other secured or unsecured debt of the Company or any
subsidiary of the Company, including Senior Indebtedness, whether under the
Indenture, any other indenture that the Company may enter into in the future
or otherwise.
The Company will, through the Guarantee, the Trust Agreement, the Trust
Debentures and the Debenture Indenture, taken together, fully, irrevocably and
unconditionally guarantee all of the Trust's obligations under 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 Trust's obligations under
the Preferred Securities. See "Relationship Among the Preferred Securities,
the Trust Debentures and the Guarantee."
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STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as the Trust Debentures. See "Description of
Trust Debentures--Subordination."
The Guarantee will rank pari passu with all Other Guarantees issued by the
Company after the Issue Date with respect to preferred securities (if any)
issued by Other Trusts. The Guarantee will constitute a guarantee of payment
and not of collection (i.e., the guaranteed party may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against any other
person or entity). The Guarantee will be held for the benefit of the holders
of the Preferred Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Trust
or upon distribution to the holders of the Preferred Securities of the Trust
Debentures. The Guarantee does not place a limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder;
provided, however, that with respect to a default other than a default in
payment of any Guarantee Payment, the Company shall have received notice of
such default and shall not have cured such default within 60 days after
receipt of such notice. The holders of not less than a majority in Liquidation
Amount of the Preferred Securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee
or any other person or entity.
The Company, as guarantor, will be 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.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will
be required), the Guarantee may only be amended with the prior approval of the
holders of a majority of the Liquidation Amount of such outstanding Preferred
Securities. The manner of obtaining any such approval will be as set forth
under "Description of Preferred Securities--Voting Rights; Amendment of the
Trust Agreement." All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon (i)
full payment of the applicable Redemption Price of the Preferred Securities or
(ii) upon liquidation of the Trust, the full payment of the Liquidation
Distribution or the distribution of the Trust Debentures to the holders of the
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Preferred
Securities must restore payment of any sums paid under the Preferred
Securities or the Guarantee.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, will undertake to
perform only such duties as are specifically set forth in the Guarantee and,
in case a default with respect to the Guarantee has occurred, 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
Guarantee Trustee will be under no obligation to exercise any of the powers
vested in it by the Guarantee at the request of any holder of the Preferred
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE
TRUST DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Trust has funds on hand legally available for the payment
of such Distributions) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of Guarantee." Taken together, the
Company's obligations under the Trust Debentures, the Debenture Indenture, the
Trust Agreement and the Guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of Distributions and other
amounts 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 Trust's obligations under the Preferred
Securities. If and to the extent that the Company does not make the required
payments on the Trust Debentures, the Trust will not have sufficient funds to
make the related payments, including Distributions, on the Preferred
Securities. The Guarantee will not cover any such payment when the Trust does
not have sufficient funds on hand legally available therefor. In such event,
the remedy of a holder of Preferred Securities is to institute a Direct
Action. The obligations of the Company under the Guarantee are subordinate and
junior in right of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Trust Debentures, such payments will be sufficient to cover Distributions and
other payments due on the Trust Securities, primarily because: (i) the
aggregate principal amount or Prepayment Price of the Trust Debentures is
equal to the sum of the Liquidation Amount or Redemption Price, as applicable,
of the Trust Securities; (ii) the interest rate and interest and other payment
dates on the Trust Debentures will match the Distribution rate and
Distribution and other payment dates for the Trust Securities; (iii) the
Company, as Sponsor, shall pay for all and any costs, expenses and liabilities
of the Trust except the Trust's obligations to holders of Trust Securities
under such Trust Securities; and (iv) the Trust Agreement will provide that
the Trust is not authorized to engage in any activity that is not consistent
with the limited purposes thereof.
Notwithstanding anything to the contrary in the Debenture 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
Guarantee.
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 Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
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LIMITED PURPOSE OF THE TRUST
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Trust, and the Trust exists for the sole purpose of (i)
issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Trust Debentures, and (iii) and
engaging in only those other activities necessary, advisable or incidental
thereto. A principal difference between the rights of a holder of a Preferred
Security and a holder of a Trust Debenture is that a holder of a Trust
Debenture will be entitled to receive from the Company the principal amount of
(and premium, if any) and interest on Trust Debentures held, while a holder of
Preferred Securities is entitled to receive Distributions from the Trust (or,
in certain circumstances, from the Company under the Guarantee) if and to the
extent the Trust has funds on hand legally available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Unless the Trust Debentures are distributed to holders of the Trust
Securities, upon any voluntary or involuntary dissolution and liquidation of
the Trust, after satisfaction of liabilities to creditors of the Trust as
required by applicable law, the holders of the Trust Securities will be
entitled to receive, out of assets held by the Trust, the Liquidation
Distribution in cash. See "Description of Preferred Securities--Liquidation of
the Trust and Distribution of Trust Debentures." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Trust Debentures, would be a subordinated creditor of the
Company, subordinated in right of payment to all Senior Indebtedness as set
forth in the Debenture Indenture, but entitled to receive payment in full of
principal (and premium, if any) and interest, before any stockholders of the
Company receive payments or distributions. Since the Company will be the
guarantor under the Guarantee and will agree to pay for all costs, expenses
and liabilities of the Trust (other than the Trust's obligations to the
holders of its Trust Securities), the positions of a holder of Preferred
Securities and a holder of Trust Debentures 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 COMMON STOCK AND PREFERRED STOCK
The Company's authorized capital stock consists of 400,000,000 shares of
Common Stock, par value $0.01 per share, and 50,000,000 shares of Preferred
Stock, par value $0.01 per share. The summary description of the capital stock
of the Company contained herein is necessarily general and reference should be
made in each case to the Company's Restated Certificate of Incorporation, as
amended, and Amended and Restated Bylaws, which are exhibits to the
Registration Statement of which this Prospectus is a part.
COMMON STOCK
General. As of July 15, 1998, an aggregate of 152,695,271 shares of Common
Stock were issued and outstanding. Subject to any prior rights of the
Preferred Stock then outstanding, holders of Common Stock are entitled to
receive such dividends as are declared by the Board of Directors out of funds
legally available therefor. Subject to the voting rights, if any, of the
Preferred Stock, all voting rights are vested in the holders of shares of
Common Stock, each share being entitled to one vote. The holders of Common
Stock are not entitled to cumulative voting rights in the election of
directors. In the event of the liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and any preferential amount to which
the holders of Preferred Stock are entitled. The holders of Common Stock have
no preemptive or conversion rights and are not subject to further calls or
assessments by the Company. The Common Stock currently outstanding is, and the
Common Stock to be issued hereunder will be, fully paid and nonassessable.
The transfer agent and registrar for the Common Stock of the Company is
ChaseMellon Shareholder Services, L.L.C.
Board of Directors; Stockholders Agreement. BG plc, Chevron and NOVA
Corporation each own approximately 25.4% of the outstanding shares of Common
Stock. Pursuant to a stockholders agreement dated August 31, 1996 (the
"Stockholders Agreement"), such parties have agreed to vote their Common
Stock, subject to certain conditions, to cause the Board of Directors to
consist of thirteen directors to be nominated as follows: (i) each of the BG
Group, NOVA Group and Chevron Group (as such terms are defined in the
Stockholders Agreement) may nominate: (A) three directors as long as such
stockholder remains a Class A Group (as defined below); (B) two directors as
long as such stockholder remains a Class B Group (as defined below); and (C)
one director as long as such stockholder remains a Class C Group (as defined
below); (ii) two members shall be officers of Dynegy nominated by the Board of
Directors; (iii) two members shall be independent directors nominated by the
Board of Directors; and (iv) all other members, if any, shall be nominated and
elected in accordance with applicable law.
Pursuant to the Stockholders Agreement: (i) a "Class A Group" is defined as
a Group (as defined in the Stockholders Agreement), that owns collectively at
least 34,760,890 shares of Common Stock; (ii) a "Class B Group" is defined as
a Group that owns collectively at least 23,173,926 shares of Common Stock but
less than 34,760,890 shares of Common Stock; and (iii) a "Class C Group" is
defined as a Group that owns collectively at least 11,586,963 shares of Common
Stock but less than 23,173,926 shares of Common Stock. Currently, each of the
BG Group, NOVA Group and Chevron Group is a Class A Group under the
Stockholders Agreement, and, therefore, entitled to designate three directors
to serve on the Board of Directors based on its ownership of Common Stock.
PREFERRED STOCK
General. The following description of the terms of the Preferred Stock sets
forth certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain terms of a series of the Preferred
Stock offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of the Preferred Stock. If so indicated in
the Prospectus Supplement, the terms of any such series may differ from the
terms set forth below. The following description of the Preferred Stock
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summarizes certain provisions of the Company's Restated Certificate of
Incorporation filed as an exhibit to the Registration Statement to which this
Prospectus relates and is subject to and qualified in its entirety by
reference to the Restated Certificate of Incorporation and the statement of
designations that will be filed with the Commission promptly after the
offering of such series of Preferred Stock.
General. Under the Company's Restated Certificate of Incorporation, the
Board of Directors is authorized, without further shareholder action, to
provide for the issuance of up to 50,000,000 shares of Preferred Stock in one
or more series, with such voting powers, or without voting powers, and with
such designations and relative rights and preferences as shall be set forth in
resolutions providing for the issuance thereof adopted by the Board of
Directors. As of July 15, 1998, an aggregate of 7,815,363 shares of Preferred
Stock were issued and outstanding. See "--Series A Participating Preferred
Stock." No other shares of Preferred Stock are issued, outstanding or
designated as to series. It is not possible to state the actual effect of the
authorization and issuance of a new series of Preferred Stock upon the rights
of holders of the Common Stock and other series of Preferred Stock unless and
until the Board of Directors determines the attributes of such new series of
Preferred Stock and the specific rights of its holders. Such effects might
include, however, (i) restrictions on dividends on Common Stock and other
series of Preferred Stock if dividends on such new series of Preferred Stock
have not been paid; (ii) dilution of the voting power of Common Stock and
other series of Preferred Stock to the extent that such new series of
Preferred Stock has voting rights, or to the extent that any such new series
of Preferred Stock is convertible into Common Stock; (iii) dilution of the
equity interest of Common Stock and other series of Preferred Stock; and (iv)
limitation on the right of holders of Common Stock and other series of
Preferred Stock to share in the Company's assets upon liquidation until
satisfaction of any liquidation preference attributable to such new series of
Preferred Stock.
The Preferred Stock will have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in the Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation of such Preferred Stock, the number of shares offered and the
liquidation value thereof; (ii) the price at which such Preferred Stock will
be issued; (iii) the dividend rate (or method of calculation), the dates on
which dividends shall be payable, whether such dividends shall be cumulative
or noncumulative and, if cumulative, the dates from which dividends shall
commence to accumulate; (iv) the liquidation preference thereof; (v) any
redemption or sinking fund provisions; (vi) any conversion or exchange
provisions of such Preferred Stock; and (vii) any additional dividend,
liquidation, redemption, sinking fund and other rights, preferences,
limitations and restrictions of such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of the Preferred Stock, each series of the Preferred Stock
will rank on a parity as to dividends and distributions in the event of a
liquidation with each other series of the Preferred Stock, if any. Holders of
Preferred Stock will have no preemptive rights to subscribe for or purchase
shares of capital stock.
Dividend Rights. Holders of the Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors, out
of assets of the Company legally available therefor, cash dividends at such
rates and on such dates as are set forth in the Prospectus Supplement relating
to such series of the 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 books of the Company on such record dates as will be fixed
by the Board of Directors or a duly authorized committee thereof. Dividends on
any series of the Preferred Stock may be cumulative or noncumulative, as
provided in the Prospectus Supplement relating thereto. If the Board of
Directors 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 shall have no obligation
to pay the dividend accrued for that period, whether or not dividends are
declared for any future period.
No full dividends will be declared or paid or set apart for payment on
preferred stock of any series ranking, as to dividends, on a parity with or
junior to any series of Preferred Stock for any period unless full dividends
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have been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof set apart for such payment on such series
of Preferred Stock for the then-current dividend period and, if such Preferred
Stock is cumulative, all other dividend periods terminating on or before the
date of payment of such full dividends. When dividends are not paid in full
upon any series of the Preferred Stock and any other preferred stock ranking
on a parity as to dividends with such series of the Preferred Stock, all
dividends declared upon such series of the Preferred Stock and any other
preferred stock ranking on a parity as to dividends will be declared pro rata
so that the amount of dividends declared per share on such series of the
Preferred Stock and such other preferred stock will in all cases bear to each
other the same ratio that accrued dividends, including, in the case of
cumulative Preferred Stock, accumulations, if any, in respect of prior
dividend periods, per share on such series of the Preferred Stock and such
other preferred stock bear to each other. Except as provided in the preceding
sentence, unless full dividends, including, in the case of cumulative
Preferred Stock, accumulations, if any, in respect of prior dividend periods,
on all outstanding shares of any series of the Preferred Stock have been paid
or declared and set aside for payment, no dividends (other than a dividend or
distribution paid in shares of, or warrants, rights or options exercisable for
or convertible into, Common Stock or another stock ranking junior to such
series of the Preferred Stock as to dividends and upon liquidation) will be
declared or paid or set aside for payment or other distributions made upon the
Common Stock or any other stock of the Company ranking junior to or on a
parity with the Preferred Stock as to dividends or upon liquidation, nor will
any Common Stock or any other stock of the Company ranking junior to or on a
parity with such series of the Preferred Stock as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Company (except by
conversion into or exchange for stock of the Company ranking junior to such
series of the Preferred Stock as to dividends and upon liquidation). No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments which may be in arrears.
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 Common Stock or any other class of stock ranking
junior to such series of the Preferred Stock upon liquidation, liquidating
distributions in the amount set forth in the Prospectus Supplement relating to
such series of the Preferred Stock plus an amount equal to accrued and unpaid
dividends for the then-current dividend period and, if such series of the
Preferred Stock is cumulative, for all dividend periods prior thereto. 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 and any other shares of stock of the Company ranking as to any such
distribution on a parity with such series of the Preferred Stock are not paid
in full, the holders of the Preferred Stock of such series and of such other
shares will share ratably in any such distribution of assets of the Company in
proportion to the full respective preferential amounts 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 substantially all the property or business of the Company
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,
voluntary or involuntary, of the Company.
Redemption. A series of the Preferred Stock may be redeemable, in whole or
in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund, in each case upon terms, at the times
and at the redemption prices set forth in the Prospectus Supplement relating
to such series.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
series of Preferred Stock that will be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption. The redemption price may be payable in
cash, capital stock or in cash received from the net proceeds of the issuance
of capital stock of the Company, as specified in the Prospectus Supplement
relating to such series of Preferred Stock.
If fewer than all the outstanding shares of any series of the Preferred
Stock are to be redeemed, whether by mandatory or optional redemption, the
selection of the shares to be redeemed will be determined by lot or pro
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rata as may be determined by the Board of Directors or a duly authorized
committee thereof, or by any other method which may be determined by the Board
of Directors or such committee to be equitable. From and after the date of
redemption (unless default shall be made by the Company in providing for the
payment of the redemption price), dividends shall cease to accrue on the
shares of Preferred Stock called for redemption and all rights of the holders
thereof (except the right to receive the redemption price) shall cease.
In the event that full dividends, including accumulations in the case of
cumulative Preferred Stock, on any series of the Preferred Stock have not been
paid, such series of the Preferred Stock may not be redeemed in part and the
Company may not purchase or acquire any shares of such series of the Preferred
Stock otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of such series of the Preferred Stock.
Conversion or Exchange Rights. The Prospectus Supplement for any series of
the Preferred Stock will state the terms, if any, on which shares of such
series are convertible into, or exchangeable for, securities of the Company or
another person.
Voting Rights. Unless otherwise determined by the Board of Directors and
indicated in the Prospectus Supplement relating to a particular series of
Preferred Stock, the holders of the Preferred Stock will not be entitled to
vote, except as set forth below or except as expressly required by applicable
law. In the event the Company issues share of any series of Preferred Stock
with voting rights, including any voting rights in the case of dividend
arrearages, unless otherwise specified in the Prospectus Supplement relating
to a particular series of Preferred Stock, each such share will be entitled to
one vote on matters on which holders of such series of the Preferred Stock are
entitled to vote. In the case of any series of Preferred Stock having one vote
per share on matters on which holders of such series are entitled to vote, the
voting power of such series, on matters on which holders of such series and
holders of other series of preferred stock are entitled to vote as a single
class, will depend on the number of shares in such series, not on the
aggregate liquidation preference or initial offering price of the shares of
such series of Preferred Stock.
Series A Participating Preferred Stock. As of July 15, 1998, the Company had
issued and outstanding 7,815,363 shares of Series A Participating Preferred
Stock, all of which are held by Chevron. Except as provided by law, holders of
the Series A Participating Preferred Stock are not entitled to voting rights.
Subject to certain anti-dilutive adjustments in the event of
reclassification of the Common Stock, the holders of Series A Participating
Preferred Stock are entitled to receive dividends or distributions equal per
share in amount and kind to any dividend or distribution payable on shares of
Common Stock, when and as the same are declared by the Board of Directors out
of any funds legally available therefor and paid to the holders of Common
Stock, and no dividend may be declared and paid on Common Stock unless an
identical dividend or distribution is declared and paid concurrently on Series
A Participating Preferred Stock.
In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, no distribution shall be made to the holders
of Common Stock or any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock unless, prior thereto, the holders of the Series A Preferred
Stock shall have received $1.00 per share. At the option of the holder, each
share of Series A Participating Preferred Stock may be converted, subject to
certain adjustments, into one share of Common Stock (i) (a) in order to avoid
dilution of the holder's percentage ownership of the issued Common Stock,
provided that, with respect to dilution resulting from the issuance of
additional compensatory options as approved by not less than 85% of the entire
Board of Directors, the holder would have no such conversion right so long as
its ownership of Common Stock would still be greater than 20% of the Common
Stock, or (b) to maintain a percentage ownership of the issued Common Stock at
least equal to that of the then largest other stockholder of the Company; (ii)
if any entity other than the holder of the Series A Participating Preferred
Stock or an affiliate of such holder makes a tender offer for the Common Stock
and such holder tenders the shares of the Series A Participating Preferred
Stock in the same proportion as it tenders Common Stock; (iii) upon approval
by the stockholders of the Company of any merger or recapitalization proposal
in which the Series A
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Participating Preferred Stock would be treated differently than Common Stock,
and (iv) upon approval by the stockholders of the Company of any (a) sale of
all or substantially all of the assets of the Company or (b) liquidation,
dissolution or winding up of the Company.
DEPOSITARY SHARES
General. The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In such event,
the Company will issue to the public receipts for Depositary Shares, each of
which will represent a fraction (to be set forth in the Prospectus Supplement
relating to a particular series of Preferred Stock) of a share of a particular
series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock
represented by such Depositary Share, to all the rights and preferences of the
Preferred Stock represented thereby (including dividend, voting, redemption an
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such exhibits.
If required by law or applicable securities exchange rules, engraved
Depositary Receipts will be prepared. Pending the preparation of definitive
engraved Depositary Receipts, the Depositary may, upon the written order of
the Company, issue temporary Depositary Receipts substantially identical to
(and entitling the holders thereof to all the rights pertaining to) the
definitive Depositary Receipts but not in definitive form. Definitive
Depositary Receipts will be prepared thereafter without unreasonable delay,
and temporary Depositary Receipts will be exchangeable for definitive
Depositary Receipts at the Company's expense.
Dividends and Other Distributions. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Preferred
Stock to the record holders of Depositary Shares relating to such Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
Redemption of Depositary Shares. If a series of preferred Stock represented
by Depositary Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of such series of Preferred Stock held by the
Depositary. The redemption price per Depositary Share will be equal to the
applicable fraction of their redemption price per share payable with respect
to such series of the Preferred Stock. Wherever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing the shares
of Preferred Stock so redeemed. If fewer 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 Depositary.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of the Preferred Stock are entitled to vote, the Depositary will
mail the information contained in such notice of meeting to the
47
<PAGE>
record holders of the Depositary Shares relating to such Preferred Stock. Each
record holder of such Depositary Shares on the record date (which will be the
same date as the record date for the Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of the Preferred Stock represented by such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the
amount of the Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
action that may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting shares of the
Preferred Stock to the extent it does not receive specific instructions from
the holders of Depositary Shares representing such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary. However, any amendment that materially and adversely
alters the rights of the holders of Depositary Shares will not be effective
unless such amendment has been approved by the holders of at least a majority
of the Depositary Shares then outstanding. The Deposit Agreement may be
terminated by the Company or the Depositary only if (i) all outstanding
Depositary Shares have been redeemed or (ii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution
has been distributed to the holders of Depositary Receipts.
Charges of Depositary. The Company will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. The Company will pay charges of the Depositary in connection
with the initial deposit of the Preferred Stock and any redemption of the
Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges, including a fee
for the withdrawal of shares of Preferred Stock upon surrender of Depositary
Receipts, as are expressly provided in the Deposit Agreement to be for their
accounts.
Withdrawal of Preferred Stock. Upon surrender of Depositary Receipts at the
principal office of the Depositary, subject to the terms of the Deposit
Agreement, the owner of the Depositary Shares evidenced thereby is entitled to
delivery of the number of whole shares of Preferred Stock and all money and
other property, if any, represented by such Depositary Shares. Partial shares
of Preferred Stock will not be issued. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of whole shares of Preferred Stock
to be withdrawn, the Depositary will deliver to such holder at the same time a
new Depositary Receipt evidencing such excess number of Depositary Shares.
Holders of Preferred Stock thus withdrawn will not thereafter be entitled to
deposit such shares under the Deposit Agreement or to receive Depositary
Receipts evidencing Depositary Shares therefor.
Miscellaneous. The Depositary will forward to holders of Depository Receipts
all reports and communications from the Company that are delivered to the
Depositary and that the Company is required to furnish to the holders of the
Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and
the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares
or Preferred Stock unless satisfactory indemnity is furnished. They may rely
upon written advice of counsel or accountants, or upon information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Receipts
or other persons believed to be competent and on documents believed to be
genuine.
Resignation and Removal of Depositary. The Depositary may resign at any time
by delivering to the Company notice of its election to do so, and the Company
may at any time remove the Depositary, any such resignation or removal to take
effect upon the appointment of a successor Depositary and its acceptance of
such appointment. Such successor Depositary must be appointed within 60 days
after delivery of the notice of
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<PAGE>
resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock, Depositary Shares or Common Stock. Securities
Warrants may be issued independently or together with Debt Securities,
Preferred Stock, Depositary Shares or Common Stock offered by any Prospectus
Supplement and may be attached to or separate from any such Offered
Securities. Each series of Securities Warrants will be issued under a separate
warrant agreement (a "Securities Warrant Agreement") to be entered into
between the Company and a bank or trust company, as warrant agent (the
"Securities Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Securities Warrants. The Securities
Warrant Agent will act solely as an agent of the Company in connection with
the Securities Warrants and will not assume any obligation or relationship of
agency or trust for or with any holders of Securities Warrants or beneficial
owners of Securities Warrants. The following summary of certain provisions of
the Securities Warrants does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all provisions of the Securities
Warrant Agreements.
Reference is made to the Prospectus Supplement relating to the particular
issue of Securities Warrants offered thereby for the terms of and information
relating to such Securities Warrants, including, where applicable: (i) the
designation, aggregate principal amount, currencies, denominations, and terms
of the series of Debt Securities purchasable upon exercise of Debt Warrants
and the price at which such Debt Securities may be purchased upon such
exercise; (ii) the number of shares of Common Stock purchasable upon the
exercise of Common Stock Warrants and the price at which such number of shares
of Common Stock may be purchased upon such exercise; (iii) the number of
shares and series of Preferred Stock and/or Depositary Shares purchasable upon
the exercise of Preferred Stock Warrants and the price at which such number of
shares of such series of Preferred Stock and/or Depositary Shares may be
purchased upon such exercise; (iv) the date on which the right to exercise
such Securities Warrants shall commence and the date on which such right shall
expire (the "Expiration Date"); (v) United States Federal income tax
consequences applicable to such Securities Warrants; (vi) the amount of
Securities Warrants outstanding as of the most recent practicable date; and
(vii) any other terms of such Securities Warrants. Common Stock Warrants will
be offered and exercisable for U.S. dollars only. Securities Warrants will be
issued in registered form only. The exercise price for Securities Warrants
will be subject to adjustment in accordance with the applicable Prospectus
Supplement.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred
Stock, Depositary Shares or Common Stock at such exercise price as shall in
each case be set forth in, or calculable from, the Prospectus Supplement
relating to the Securities Warrants, which exercise price may be subject to
adjustment upon the occurrence of certain events as set forth in such
Prospectus Supplement. After the close of business on the Expiration Date (or
such later date to which such Expiration Date may be extended by the Company),
unexercised Securities Warrants will become void. The place or places where,
and the manner in which, Securities Warrants may be exercised shall be
specified in the Prospectus Supplement relating to such Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, Preferred Stock, Depositary Shares or Common Stock, holders of
such Securities Warrants will not have any of the rights of holders of Debt
Securities, Preferred Stock, Depositary Shares or Common Stock, as the case
may be, purchasable upon such exercise, including the right to receive
payments of principal of, premium, if any, or interest, if any, on the Debt
Securities purchasable upon such exercise or to enforce covenants in the
applicable Indenture, or to receive payments of dividends, if any, on the
Preferred Stock, Depositary Shares or Common Stock purchasable upon such
exercise, or to exercise any applicable right to vote.
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<PAGE>
PLAN OF DISTRIBUTION
Any of the Securities being offered hereby may be sold in any one or more of
the following ways from time to time: (i) through agents; (ii) to or through
underwriters; (iii) through dealers; and (iv) directly by the Company or (v)
in the case of Preferred Securities, by the Trust to purchasers.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company or the Trust to such agent will be set
forth, in the applicable Prospectus Supplement. Unless otherwise indicated in
such Prospectus Supplement, any such agent will be acting on a reasonable best
efforts basis of the period of its appointment. Any such agent may be deemed
to be an underwriter, as that term is defined in the Securities Act, of the
Securities so offered and sold.
If Securities are sold by means of an underwritten offering, the Company
and, in the case of an offering of Preferred Securities, the Trust will
execute an underwriting agreement with an underwriter or underwriters at the
time an agreement for such sale is reached, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, the
respective amounts underwritten and the terms of the transaction, including
commissions, discounts and any other compensation of the underwriters and
dealers, if any, will be set forth in the applicable Prospectus Supplement
which will be used by the underwriters to make resales of the Securities in
respect of which this Prospectus is being delivered to the public. If
underwriters are utilized in the sale of any Securities in respect of which
this Prospectus is being delivered, such 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 fixed public
offering prices or at varying prices determined by the underwriters at the
time of sale. Securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by
one or more underwriters. If any underwriter or underwriters are utilized in
the sale of Securities, unless otherwise indicated in the applicable
Prospectus Supplement, the underwriting agreement will provide that the
obligations of the underwriters are subject to certain conditions precedent
and that the underwriters with respect to a sale of such Securities will be
obligated to purchase all such Securities if any are purchased.
The Company or the Trust, as applicable, may grant to the underwriters
options to purchase additional Securities, to cover over-allotments, if any,
at the initial public offering price (with additional underwriting commissions
or discounts), as may be set forth in the Prospectus Supplement relating
thereto. If the Company or the Trust, as applicable, grants any over-allotment
option, the terms of such over-allotment option will be set forth in the
Prospectus Supplement for such Securities.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company or the Trust, as applicable, will
sell such Securities to the dealer as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such
dealer at the time of resale. Any such dealer may be deemed to be an
underwriter, as such term is defined in the Securities Act, of the Securities
so offered and sold. The name of the dealer and their terms of the transaction
will be set forth in the Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company or
the Trust, as applicable, and the sale thereof may be made by the Company or
the Trust directly to institutional investors or others, who may be deemed to
be underwriters within the meaning of the Securities Act with respect to any
resale thereof. The terms of any such sales will be described in the
Prospectus Supplement relating thereto.
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<PAGE>
Securities may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase,
in accordance with a redemption or repayment pursuant to their terms, or
otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for the Company or the Trust, as
applicable. Any remarketing firm will be identified and the terms of its
agreement, if any, with the Company or the Trust and its compensation will be
described in the applicable Prospectus Supplement. Remarketing firms may be
deemed to be underwriters, as that term is defined in the Securities Act, in
connection with the Securities remarketed thereby.
If so indicated in the applicable Prospectus Supplement, the Company or the
Trust, as applicable, may authorize agents and underwriters to solicit offers
by certain institutions to purchase Securities from the Company or the Trust
at the public offering price set forth in the applicable Prospectus Supplement
pursuant to delayed delivery contracts providing for payment and delivery on
the date or dates stated in the applicable Prospectus Supplement. Such delayed
delivery contracts will be subject to only those conditions set forth in the
applicable Prospectus Supplement. A commission indicated in the applicable
Prospectus supplement will be paid to underwriters and agents soliciting
purchases of Securities pursuant to delayed delivery contracts accepted by the
Company or the Trust, as applicable.
Agents, underwriters, dealers and remarketing firms may be entitled under
relevant agreements with the Company or the Trust, as applicable, to
indemnification by the Company or the Trust against certain liabilities,
including liabilities under the Securities Act, or to contribution with
respect to payments which such agents, underwriters, dealers and remarketing
firms may be required to make in respect thereof.
Each series of Securities will be a new issue and, other than the Common
Stock, which is listed on the New York Stock Exchange, will have no
established trading market. The Company may elect to list any series of
Securities on an exchange, and in the case of the Common Stock, on any
additional exchange, but, unless otherwise specified in the applicable
Prospectus Supplement, the Company shall not be obligated to do so. No
assurance can be given as to the liquidity of the trading market for any of
the Securities.
Agents, underwriters, dealers and remarketing firms may be customers of,
engage in transactions with, or perform services for, the Company and its
subsidiaries in the ordinary course of business.
VALIDITY OF SECURITIES
The validity of the Preferred Securities will be passed upon for the Company
and the Trust by Richards, Layton & Finger P.A., special Delaware counsel to
the Company and the Trust. The validity of the Securities (other than the
Preferred Securities) will be passed upon for the Company by Vinson & Elkins
L.L.P., Houston, Texas, and will be passed upon for any agents, dealers or
underwriters by counsel named in the applicable Prospectus Supplement.
EXPERTS
The audited consolidated financial statements and schedule of Dynegy
(formerly NGC Corporation) and subsidiaries, incorporated by reference in this
Registration Statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities being registered are estimated as follows:
<TABLE>
<S> <C>
Registration Fee................................................ $147,500
Legal fees and expenses......................................... 100,000
Accounting fees and expenses.................................... 50,000
Printing and engraving expenses................................. 50,000
Trustee's fees and expenses..................................... 25,000
Depositary's fees and expenses.................................. 10,000
Miscellaneous expenses.......................................... 20,000
--------
Total....................................................... $402,500
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102 of the Delaware General Corporation Law (the
"DGCL"), the Restated Certificate of Incorporation of the Company, as amended,
provides that, to the fullest extent permitted by Delaware law, no director
shall be liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as director. By virtue of these provisions, a
director of the Company is not personally liable for monetary damages for
breach of such director's fiduciary duty except for liability for (i) breach
of duty of loyalty to the Company or its stockholders, (ii) acts or omissions
not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) dividends or stock repurchases or redemptions that are
unlawful under the DGCL and (iv) any transaction from which such director
receives an improper personal benefit. In addition, the Certificate of
Incorporation provides that if the DGCL is amended to authorize the further
elimination or limitation of the liability of a director, then the liability
of the directors will be eliminated or limited to the fullest extent permitted
by the DGCL, as amended. As a result, the rights of the Company and its
stockholders to obtain monetary damages for acts or omissions of directors
will be more limited than they would be in the absence of the limitation of
liability provision. The limitation of liability provision does not limit or
affect a stockholder's ability to seek and obtain relief under the federal
securities laws.
Section 145 of the DGCL permits indemnification upon a determination that an
officer or director has met the applicable standard of conduct. Such officer
or director is required to have acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of a corporation and,
with respect to any criminal action, without reasonable cause to believe his
conduct was unlawful. Section 145 does not authorize indemnification in
actions brought by or in the right of a corporation with respect to any claim,
issue or matter as to which a director or officer is adjudged to be liable to
the corporation, unless specifically authorized by the Delaware Court of
Chancery or the court in which such action is brought. The Company's
Certificate of Incorporation provides for the mandatory indemnification of
officers and directors to the fullest extent permitted under the DGCL. Section
145 also expressly provides that the power to indemnify authorized thereby is
not exclusive of any rights granted under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise.
The above discussion of the Company's Restated Certificate of Incorporation
and of Sections 102 and 145 of the DGCL is not intended to be exhaustive and
is qualified in its entirety by such Restated Certificate of Incorporation and
the DGCL.
The Company has purchased liability insurance policies covering its
directors and officers to insure against losses that are not covered by the
indemnification of directors and officers by the Company, as discussed above.
II-1
<PAGE>
Covered losses include those arising from any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by the directors or officers in their respective capacities as such.
The Company is also insured against losses incurred as a result of indemnity
payments to any director or officer.
ITEM 16. EXHIBITS
<TABLE>
<C> <C> <S>
*1.1 -- Proposed Form of Underwriting Agreement (Debt
Securities).
*1.2 -- Proposed Form of Underwriting Agreement (Preferred
Stock).
*1.3 -- Proposed Form of Underwriting Agreement (Common Stock).
*1.4 -- Proposed Form of Underwriting Agreement (Securities
Warrants).
*1.5 -- Proposed Form of Underwriting Agreement (Preferred
Securities).
***4.1 -- Restated Certificate of Incorporation.
***4.1.1 -- Certificate of Amendment to the Restated Certificate of
Incorporation.
4.2 -- Amended and Restated Bylaws of the Company (incorporated
by reference to Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the year ended December 31,
1996).
**4.3 -- Form of Debt Securities.
4.4 -- Indenture by and between the Company and The First
National Bank of Chicago, as Trustee, dated as of
September 26, 1996, as amended and restated as of March
23, 1998 (incorporated by reference to Exhibit 4.21 to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1997).
***4.5 -- Subordinated Debt Indenture between the Company and the
First National Bank of Chicago, as Trustee, dated July
17, 1998.
***4.6 -- Certificate of Trust of Dynegy Capital Trust II.
***4.7 -- Declaration of Trust of Dynegy Capital Trust II.
***4.8 -- Form of Amended and Restated Declaration of Trust of
Dynegy Capital Trust II.
***4.9 -- Form of Trust Preferred Security Certificate for Dynegy
Capital Trust II (included in Exhibit 4.8).
***4.10 -- Form of Debenture Indenture between the Company and The
First National Bank of Chicago, as Trustee.
***4.11 Form of Trust Debentures of the Company (included in
Exhibit 4.10).
***4.12.1 -- Form of Guarantee in respect of Dynegy Capital Trust II,
with respect to the Common Securities.
***4.12.2 -- Form of Guarantee in respect of Dynegy Capital Trust II,
with respect to the Preferred Securities.
**4.13 -- Form of Securities Warrants.
**4.14 -- Form of Depositary Agreement.
**4.15 -- Form of Depositary Receipt.
***5.1 -- Opinion of Vinson & Elkins L.L.P.
***5.2 -- Opinion of Richards, Layton & Finger P.A., as to the
validity of the Preferred Securities.
****12.1 -- Computation of Ratio of Earnings to Fixed Charges.
***23.1 -- Consent of Arthur Andersen LLP.
***23.2 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
5.1).
***23.3 -- Consent of Richards, Layton & Finger P.A. (included in
Exhibit 5.2).
***24.1 -- Powers of Attorney (included on the signature pages to
this Registration Statement).
***25.1 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of Debt Trustee under the
Subordinated Debt Indenture.
***25.2 -- Form T-1 Statement of Eligibility of Debenture Trustee
and Qualification under the Trust Indenture Act of 1939
under the Debenture Indenture.
***25.3 -- Form T-1 Statement of Eligibility of Debenture Trustee
and Qualification under the Trust Indenture Act of 1939
under the Guarantee with respect to the Amended and
Restated Declaration of Trust.
***25.4 -- Form T-1 Statement of Eligibility of Debenture Trustee
and Qualification under the Trust Indenture Act of 1939
under the Preferred Securities.
</TABLE>
II-2
<PAGE>
- --------
* The Company will file any underwriting agreement that it may enter into
as an exhibit to a Current Report on Form 8-K which is incorporated by
reference into this Registration Statement.
** The Company will file any forms of Debt Securities, Securities Warrants,
Depositary Receipts or Depositary Agreement, or any legal opinions, not
previously so filed in a Current Report on Form 8-K.
*** Previously filed.
**** Filed herewith.
ITEM 17. UNDERTAKING
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities Act of
1933 if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed on the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in response to Item
II-3
<PAGE>
15, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Dynegy Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Houston, State of Texas on August 18, 1998.
DYNEGY INC.
By: /s/ C. L. Watson
----------------------------------
C. L. WATSON
CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE OFFICER AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME AND SIGNATURE TITLE DATE
Chairman of the Board,
* Chief Executive August 18, 1998
- ----------------------------------- Officer and Director
C. L. WATSON (Principal Executive
Officer)
Senior Vice President
* and Chief Financial August 18, 1998
- ----------------------------------- Officer (Principal
JOHN U. CLARKE Financial Officer and
Principal Accounting
Officer)
Director
* August 18, 1998
- -----------------------------------
STEPHEN J. BRANDON
Director
* August 18, 1998
- -----------------------------------
FRANK J. CHAPMAN
Director
* August 18, 1998
- -----------------------------------
PAUL NICHOLAS WOOLLACOTT
II-5
<PAGE>
NAME AND SIGNATURE TITLE DATE
* Director August 18, 1998
- -----------------------------------
JEFFREY M. LIPTON
* Director August 18, 1998
- -----------------------------------
A. TERENCE POOLE
* Director August 18, 1998
- -----------------------------------
JACK S. MUSTOE
* Director August 18, 1998
- -----------------------------------
DARALD W. CALLAHAN
* Director August 18, 1998
- -----------------------------------
PATRICIA A. WOERTZ
* Director August 18, 1998
- -----------------------------------
PETER J. ROBERTSON
* Director August 18, 1998
- -----------------------------------
DANIEL L. DIENSTBIER
* Director August 18, 1998
- -----------------------------------
J. OTIS WINTERS
/s/ Lisa Q. Metts
By ___________________________
LISA Q. METTS
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dynegy Capital
Trust II certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas
on August 18, 1998.
DYNEGY CAPITAL TRUST II
By: Dynegy Inc., as Sponsor
----------------------------------
By: /s/ John U. Clarke
------------------------------
John U. Clarke
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <C> <S>
*1.1 -- Proposed Form of Underwriting Agreement (Debt Securities).
*1.2 -- Proposed Form of Underwriting Agreement (Preferred Stock).
*1.3 -- Proposed Form of Underwriting Agreement (Common Stock).
*1.4 -- Proposed Form of Underwriting Agreement (Securities
Warrants).
*1.5 -- Proposed Form of Underwriting Agreement (Preferred
Securities).
***4.1 -- Restated Certificate of Incorporation.
***4.1.1 -- Certificate of Amendment to the Restated Certificate of
Incorporation.
4.2 -- Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996).
**4.3 -- Form of Debt Securities.
4.4 -- Indenture by and between the Company and The First National
Bank of Chicago, as Trustee, dated as of September 26, 1996,
as amended and restated as of March 23, 1998 (incorporated by
reference to Exhibit 4.21 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
***4.5 -- Subordinated Debt Indenture between the Company and the First
National Bank of Chicago, as Trustee, dated July 17, 1998.
***4.6 -- Certificate of Trust of Dynegy Capital Trust II.
***4.7 -- Declaration of Trust of Dynegy Capital Trust II.
***4.8 -- Form of Amended and Restated Declaration of Trust of Dynegy
Capital Trust II.
***4.9 -- Form of Trust Preferred Security Certificate for Dynegy
Capital Trust II (included in Exhibit 4.8).
***4.10 -- Form of Debenture Indenture between the Company and The First
National Bank of Chicago, as Trustee.
***4.11 -- Form of Trust Debentures of the Company (included in Exhibit
4.10).
***4.12.1 -- Form of Guarantee in respect of Dynegy Capital Trust II, with
respect to the Common Securities.
***4.12.2 -- Form of Guarantee in respect of Dynegy Capital Trust II, with
respect to the Preferred Securities.
**4.13 -- Form of Securities Warrants.
**4.14 -- Form of Depositary Agreement.
**4.15 -- Form of Depositary Receipt.
***5.1 -- Opinion of Vinson & Elkins L.L.P.
***5.2 -- Opinion of Richards, Layton & Finger P.A., as to the validity
of the Preferred Securities.
****12.1 -- Computation of Ratio of Earnings to Fixed Charges.
***23.1 -- Consent of Arthur Andersen LLP.
***23.2 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
***23.3 -- Consent of Richards, Layton & Finger P.A. (included in
Exhibit 5.2).
***24.1 -- Powers of Attorney (included on the signature pages to this
Registration Statement).
***25.1 -- Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of Debt Trustee under the
Subordinated Debt Indenture.
***25.2 -- Form T-1 Statement of Eligibility of Debenture Trustee and
Qualification under the Trust Indenture Act of 1939 under the
Debenture Indenture.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <C> <S>
***25.3 -- Form T-1 Statement of Eligibility of Debenture Trustee and
Qualification under the Trust Indenture Act of 1939 under the
Guarantee with respect to the Amended and Restated Declaration of
Trust.
***25.4 -- Form T-1 Statement of Eligibility of Debenture Trustee and
Qualification under the Trust Indenture Act of 1939 under the
Preferred Securities.
</TABLE>
- --------
* The Company will file any underwriting agreement that it may enter into as
an exhibit to a Current Report on Form 8-K which is incorporated by
reference into this Registration Statement.
** The Company will file any forms of Debt Securities, Securities Warrants,
Depositary Receipts or Depositary Agreement, or any legal opinions, not
previously so filed in a Current Report on Form 8-K.
*** Previously filed.
**** Filed herewith.
ii
<PAGE>
EXHIBIT 12.1
DYNEGY INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES ($ in 000's)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six-Months Years Ended December 31,
Ended ---------------------------------------------------
30-Jun-98 1997 1996 1995 1994 1993
---------- --------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Computation of Earnings:
Pre-tax income (loss) from continuing operations $51,454 $(149,895) $169,645 $65,234 $44,105 $48,776
Undistributed income from equity investors 5,099 4,073 21,729 9,169 3,803 --
------- --------- -------- ------- ------- -------
Computed Earnings (Loss) 46,355 (153,968) 147,916 56,065 40,302 46,776
------- --------- -------- ------- ------- -------
Fixed Charges:
Interest costs:
Expensed 34,096 63,455 46,202 34,475 1,114 642
Capitalized 2,792 8,800 1,200 1,028 -- --
Amortization of financing costs 633 943 772 1,132 1,267 1,130
Other -- -- 203 -- -- --
Amortization of Premium (2,162) (6,768) (4,892) (3,216) -- --
Minority interest in income of a subsidiary 8,316 9,841 -- -- -- --
Rental expense representative of interest factor 9,416 13,572 4,171 3,719 955 801
------- --------- -------- ------- ------- -------
Total Fixed Charges 53,091 89,843 47,656 37,138 3,336 2,573
------- --------- -------- ------- ------- -------
Earnings Before Income Taxes and Fixed Charges $96,654 $ (72,925) $194,169 $92,175 $49,638 $49,349
======= ========= ======== ======= ======= =======
Ratio of Earnings in Fixed Charges 1.82 (a) 4.07 2.48 13.08 19.18
======= ========= ======== ======= ======= =======
</TABLE>
- -------------
(a) Earnings are inadequate to cover fixed charges for the year ended
December 31, 1997, by approximately $72.9 million.
