As filed with the Securities and Exchange Commission on August 22, 1996
Registration No. 333-05289
333-05289-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. 2
To
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
SOUTHWESTERN PUBLIC SERVICE CAPITAL I SOUTHWESTERN PUBLIC SERVICE COMPANY
(Exact name of Registrant as (Exact name of Registrant as
specified in the Trust Agreement) specified in its charter)
Delaware New Mexico
(State or other jurisdiction of incorporation or organization)
75-6494522 75-0575400
(I.R.S. Employer Identification Number)
Tyler at Sixth
Amarillo, Texas 79101
(806) 378-2121
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Bill D. Helton
Chairman of the Board
and Chief Executive Officer
Tyler at Sixth
Amarillo, Texas 79101
(806) 378-2121
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Gary W. Wolf, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
____________________
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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 the Form is a post-effective amendment filed pursuant Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
____
/___/
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
____
/___/
____________________
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CALCULATION OF REGISTRATION FEE
: Proposed :
: maximum :
Title of each : aggregate : Amount of
class of securities : offering : registration
to be registered : price : fee
: :
Southwestern Public Service : :
Capital I Preferred Securities : (1)(2) : N/A
: :
Southwestern Public Service : :
Company Surety Obligations with : :
respect to Preferred Securities : (1)(2) : N/A
Southwestern Public Service : :
Company Deferrable Interest : :
Subordinated Debentures : (1)(2) : N/A
Total $100,000,000 $34,482.76(3)
(1) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement exceed $100,000,000.
(2) Subject to Footnote (1), there are being registered hereunder a presently
indeterminate number of Preferred Securities of Southwestern Public
Service Capital I, together with related Surety Obligations and Deferrable
Interest Subordinated Debentures of Southwestern Public Service Company
for which no separate consideration will be received by any of the
Registrants. The Surety Obligations with respect to the Preferred
Securities are comprised of the following instruments: the Guarantee,
the Deferrable Interest Subordinated Debentures, the Trust Agreement,
the Indenture and the Expense Agreement, all as described in the
Registration Statement.
(3) Pursuant to Rule 457(o), the registration fee is calculated on the
basis of the proposed maximum offering price of the securities.
____________________
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>
Information contained herein is subject to completion or amendment. A registra-
tion statement relating to these securities has been filed with the Securities
and Exchange Commission. These securities may not be sold nor may offers to buy
be accepted prior to the time the registration statement becomes effective.
Neither this prospectus supplement nor the prospectus to which it relates shall
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualifica-
tion under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION DATED AUGUST 22, 1996
PRELIMINARY PROSPECTUS SUPPLEMENT
TO PRELIMINARY PROSPECTUS DATED AUGUST 22, 1996
4,000,000 Preferred Securities
Southwestern Public Service Capital I
__% Trust Preferred Securities, Series A
(Liquidation Amount $25 per Preferred Security)
Fully and unconditionally guaranteed by
SOUTHWESTERN PUBLIC SERVICE COMPANY
------------------
The ___% Trust Preferred Securities, Series A (the "Preferred Securities")
offered hereby represent undivided preferred beneficial interests in South-
western Public Service Capital I, a trust formed under the laws of the State
of Delaware (the "Issuer" or the "Trust"). The preferred interests
represented by the Preferred Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the trust interests represented by
the Common Securities (as defined) issued by the Issuer. See "Description
of Preferred Securities -- Subordination of Common Securities" in the
accompanying Prospectus.
Southwestern Public Service Company, a New Mexico corporation (the "Com-
pany"), will be the owner of the trust interests represented by the common
securities (the "Common Securities") issued by the Issuer. The Issuer
exists for the sole purpose of issuing its trust interests and investing the
proceeds thereof in the % Deferrable Interest Subordinated Debentures,
Series A, Due (the "Junior Subordinated Debentures") issued by the
Company.
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions accruing from the date of original issuance and payable quar-
terly in arrears on , , and of each
year, commencing , 199 , at the rate of % per annum. The Company
has the right to defer interest payments on the Junior Subordinated
Debentures by extending the interest payment period thereon at any time for
up to 20 consecutive quarters (each an "Extension Period"). If interest
payments are so deferred, distributions on the Preferred Securities will
also be deferred. During an Extension Period, distributions, as well as
interest thereon to the extent permitted by law, will continue to accrue,
and holders of Preferred Securities will be required to accrue interest
income for United States Federal income tax purposes. See "Certain Terms of
the Junior Subordinated Debentures -- Option to Extend Interest Payment
Period" and "United States Taxation -- Potential Extension of Interest
Payment Period and Original Issue Discount."
As more fully described herein, the Company will enter into several
contractual arrangements (the "Surety Obligations") for the purpose of fully
and
<PAGE>
unconditionally guaranteeing the payment of distributions on, payments on any
redemption of, and any liquidation distribution with respect to the Preferred
Securities. These Surety Obligations are comprised of: (i) the guarantee by
the Company (the "Guarantee") for the benefit of holders of Preferred
Securities; (ii) the trust agreement pursuant to which the Trust was formed
(the "Trust Agreement"); (iii) an expenses and liabilities agreement (the
"Expense Agreement") provided for in the Trust Agreement pursuant to which
the Company will agree to pay all of the Trust indebtedness, expenses or
liabilities (other than obligations of the Trust to pay to holders of the
Preferred Securities the amounts due such holders pursuant to the terms of
the Preferred Securities); and (iv) the Junior Subordinated Debentures and
the indenture (the "Indenture") pursuant to which they will be issued.
The Guarantee is limited to a guarantee, on a subordinated basis, to the
holders of Preferred Securities, of the payment of distributions, out of moneys
held by the Issuer, and payments upon liquidation of the Issuer or the re-
demption of Preferred Securities, as set forth below. See "Certain Terms of
the Guarantee." If the Company fails to make interest payments on the
Junior Subordinated Debentures held by the Issuer, the Issuer will have
insufficient funds to pay distributions on the Preferred Securities. The
Guarantee does not cover payment of distributions when the Issuer does not
have sufficient funds to pay such distributions. In such event, the remedy
of a holder of Preferred Securities is to enforce the rights of the Issuer
under the Junior Subordinated Debentures held by the Issuer. The Company's
obligations under the Guarantee are subordinate and junior in right of
payment to all other liabilities of the Company except trade credit and any
liabilities that may be made pari passu with or subordinate to the
Guarantee expressly by their terms ("Senior Indebtedness"). Wilmington
Trust Company is the Property Trustee of the Issuer and the Guarantee Trustee of
the Company.
The Preferred Securities are subject to mandatory redemption upon
repayment of the Junior Subordinated Debentures at maturity or their earlier
redemption, in whole or in part. See "Description of Preferred Securi-
ties -- Redemption" in the accompanying Prospectus. The Company will have
the option at any time on or after , , to redeem, in whole or in
part, the Junior Subordinated Debentures, and will also have the right at
any time, upon occurrence of a Special Event (as defined herein), to redeem,
in whole but not in part, the Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Optional Redemption" in
the accompanying Prospectus.
The Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness of the Company. As of May 31, 1996, the Com-
pany had approximately $771 million principal amount of Senior Indebtedness out-
standing. The terms of the Junior Subordinated Debentures do not limit the
Company's ability to incur additional Senior Indebtedness. See "Description
of Junior Subordinated Debentures -- Subordination" in the accompanying
Prospectus.
In the event of the liquidation of the Issuer, the holders of the
Preferred Securities will be entitled to receive for each Preferred Security
a liquidation
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preference of $25 (the "Liquidation Amount") plus accrued and unpaid distribu-
tions thereon to the date of payment and interest thereon to the extent
permitted by law, subject to certain limitations. See "Description of
Preferred Securities -- Liquidation Distribution Upon Dissolution" in the
accompanying Prospectus.
Application has been made to have the Preferred Securities approved for
listing on the New York Stock Exchange.
The Preferred Securities will be represented by a global certificate
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Preferred Securities will be shown on, and
transfers thereof will be effected only through, records maintained by
Participants (as defined herein) in DTC. Except as described herein,
Preferred Securities in certificated form will not be issued in exchange for
the global certificate. See "Description of Preferred Securities -- Book-
Entry-Only Issuance -- The Depository Trust Company" in the accompanying
Prospectus.
____________________
SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THE PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING
THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT ON THE PREFERRED
SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE
RELATED FEDERAL INCOME TAX CONSEQUENCES.
____________________
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 REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
S-3
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_______________________________________________________________
Initial
Public Under- Proceeds to
Offering writing the
Price Commission(1) Issuer(2)(3)
Per Preferred Security $25.00 (2) $
Total $100,000,000 (2) $
______________________________________________________________
_______________
(1) The Issuer and the Company have agreed to indemnify the several Under-
writers (as defined herein) against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures,
the Underwriting Agreement provides that the Company will pay to the
Underwriters, as compensation for their arranging the investment
therein of such proceeds, $ per Preferred Security (or $
in the aggregate); or, in the case of certain institutions, $ per
Preferred Security. Accordingly, the maximum aggregate amount of
underwriting commission will be $___, but the actual amount of
underwriting commission will be less than such amount to the extent that
Preferred Securities are sold to such institutions.
(3) Expenses of the offering, which are payable by the Company, are
estimated to be $ .
____________________
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, and subject to receipt and acceptance by
them and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in
book-entry form through the facilities of DTC on or about , 199_.
____________________
The date of this Prospectus Supplement is , 199_.
______________________
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<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its
entirety by the detailed information and financial statements
incorporated herein by reference.
The Offering
Securities Offered........................ % Trust Preferred Securities,
Series A
Distribution Payment Dates................ , , and
, commencing
, 199 , subject to
deferral as described herein
Redemption................................ At the option of the Company at
$25 per Preferred Security, in
whole or in part, on or after
, or, in whole, but not
in part, upon the occurrence of a
Special Event (as defined
herein).
Use of Proceeds........................... Proceeds from this offering will
be used by the Company for the
repayment of short-term debt and
for general corporate purposes.
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<PAGE>
SOUTHWESTERN PUBLIC SERVICE CAPITAL I
General
Southwestern Public Service Capital I is a statutory
business trust formed under the Delaware Business Trust Act pursu-
ant to (i) a Trust Agreement executed by David M. Wilks, President
and Chief Operating Officer of the Company, as depositor of the
Issuer, and the Property Trustee and (ii) the filing of a Certifi-
cate of Trust with the Delaware Secretary of State on June 5,
1996. Such Trust Agreement will be amended and restated in its
entirety (as so amended and restated, the "Trust Agreement") sub-
stantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part. The
Trust Agreement will be qualified as an indenture under the Trust
Indenture Act. The Issuer exists for the exclusive purposes of
(i) issuing the Preferred Securities and the Common Securities
representing trust interests in the Issuer, (ii) purchasing the
Junior Subordinated Debentures with the Common Securities and the
proceeds from the sale of the Preferred Securities and (iii)
engaging only in those other activities necessary or incidental
thereto. All of the Common Securities will be owned by the Com-
pany. The Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Preferred Securities,
except that upon the occurrence and continuance of an Event of
Default under the Trust Agreement, the rights of the holders of
the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subor-
dinate and junior to the rights of the holders of the Preferred
Securities. The Company will acquire Common Securities having an
aggregate Liquidation Amount equal to 3% of the total capital of
the Issuer. The Issuer will terminate on , _____
unless earlier terminated as provided in the Trust Agreement. The
Issuer's business and affairs will be conducted by the Property
Trustee and the Administrative Trustees. The holder of the Common
Securities, or if an Event of Default has occurred and is continu-
ing, the holders of at least a majority in the aggregate Liquida-
tion Amount of the then outstanding Preferred Securities, will be
entitled to appoint, remove or replace the Trustees (as defined
herein) of the Issuer.
The duties and obligations of the Trustees shall be gov-
erned by the Trust Agreement. David M. Wilks, Robert D. Dickerson
and James D. Steinhilper, all employees of the Company, will be
appointed as Administrative Trustees pursuant to the terms of the
Trust Agreement. Under the Trust Agreement, the Administrative
Trustees will have certain duties and powers including, but not
limited to, the delivery of certain notices to the holders of the
Preferred Securities, the appointment of the Paying Agent (as
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<PAGE>
defined in the accompanying Prospectus) and the Registrar (as
defined in the accompanying Prospectus) and the registering of
transfers of the Preferred Securities. Under the Trust Agreement,
Wilmington Trust Company, as the Property Trustee, will have cer-
tain duties and powers including, but not limited to, holding
legal title to the Junior Subordinated Debentures on behalf of the
Trust, the collection of payments in respect of the Junior Subor-
dinated Debentures, maintenance of the Payment Account (as defined
in the Trust Agreement), the sending of default notices with
respect to the Preferred Securities and the distribution of the
assets of the Trust in the event of a winding up of the Trust.
See "Description of Preferred Securities" in the accompanying
Prospectus.
The Company has agreed to pay all fees and expenses
related to the Issuer and the offering of the Preferred Securities
pursuant to the Expense Agreement.
Accounting Treatment
The Trust is a special purpose entity which is effec-
tively controlled by the Company. The financial position, operat-
ing results and cash flows of this special purpose entity will be
consolidated with the Company. The Junior Subordinated Debentures
issued by the Company to the Trust and all other intercompany
transactions will be eliminated in consolidation. The Preferred
Securities issued by the Trust will be reflected as a separate
line item titled "Company-Obligated Mandatorily Redeemable Pre-
ferred Securities of Subsidiary Trust holding solely Subordinated
Debt Securities" in the Company's Consolidated Statement of Capi-
talization. In addition, the Company will include, in a footnote
to its financial statements, disclosure that the sole asset of the
Trust is Junior Subordinated Debentures, stating the principal
amount, interest rate and maturity date of such Junior Subordi-
nated Debentures and include, in an audited footnote to the finan-
cial statements, disclosure that (a) the Trust is wholly owned,
(b) the sole asset of the Trust is Junior Subordinated Debentures,
stating the principal amount, the interest rate and maturity date
of such Subordinated Debentures and (c) considered together, the
Surety Obligations constitute a full and unconditional guarantee
by the Company of the Trust's obligations under the Preferred
Securities.
RECENT DEVELOPMENTS
On March 19, 1996, President Clinton proposed certain
tax law changes that would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain
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<PAGE>
debt obligations issued on or after December 7, 1995 (the "Pro-
posed Legislation") if such debt obligations have a maximum term
of in excess of 20 years and are not shown as indebtedness on the
issuer's applicable consolidated balance sheet. In addition, the
Proposed Legislation would deny issuers an interest deduction on
any debt instrument with a weighted average maturity of more than
40 years. On March 29, 1996, Senate Finance Committee Chairman
William V. Roth, Jr. and House Ways and Means Committee Chairman
Bill Archer issued a joint statement (the "Joint Statement") indi-
cating their intent that certain legislative proposals initiated
by the Clinton administration, including the Proposed Legislation,
that may be adopted by either of the tax-writing committees of
Congress would have an effective date that is no earlier than the
date of "appropriate Congressional action." There can be no
assurances, however, that the effective date guidance contained in
the Joint Statement will be incorporated into the Proposed Legis-
lation, if enacted, or that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of the
Company to deduct the interest payable on the Junior Subordinated
Debentures.
If the tax law changed, as a result of the Proposed Leg-
islation or otherwise, so that in the Company's judgment it would
be precluded from deducting interest on the Junior Subordinated
Debentures, the Company could, subject to receiving an Opinion of
Counsel to the effect that a relevant tax law change (as described
in the accompanying Prospectus) had occurred, redeem the Junior
Subordinated Debentures in whole, thereby causing a mandatory
redemption of the Preferred Securities in whole at a price of $25
per Preferred Security, plus accrued but unpaid distributions.
The Company presently anticipates that, as permitted by the terms
of the Junior Subordinated Debentures and subject to market and
other conditions, it would cause such redemption of the Preferred
Securities if the tax law changed, as a result of the Proposed
Legislation or otherwise, in a manner that would not permit the
interest deduction. The Company also has the option, subject to
receiving an Opinion of Counsel, of distributing Junior Subordi-
nated Debentures or the option of leaving the Preferred Securities
outstanding should such a tax law change occur as described under
"Certain Terms of the Preferred Securities -- Special Event
Redemption or Distribution."
USE OF PROCEEDS
The Issuer will use the proceeds from this offering of
$100,000,000 million, together with the Common Securities, to pur-
chase the Junior Subordinated Debentures. The Company will use
the cash proceeds from the sale of the Junior Subordinated
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Debentures, net of the Underwriters' compensation and the other
expenses of this offering, for the repayment of short-term debt
and for general corporate purposes. As of ____________, 1996,
approximately $_______ of such short-term indebtedness was out-
standing and it had a weighted average interest rate of approxi-
mately _____% per annum and maturities within __________ of its
date of issuance.
CERTAIN TERMS OF THE PREFERRED SECURITIES
General
The following summary description of certain terms and
provisions of the Preferred Securities sets forth certain portions
of the description of the terms and provisions of the Preferred
Securities included in the accompanying Prospectus under the head-
ing "Description of Preferred Securities," to which description
reference is hereby made. This summary of certain terms and pro-
visions of the Preferred Securities does not purport to be com-
plete and is subject to, and qualified in its entirety by refer-
ence to, the Trust Agreement. The form of the Trust Agreement has
been filed as an exhibit to the Registration Statement of which
this Prospectus Supplement and the accompanying Prospectus are a
part. See "Description of Preferred Securities" in the accompany-
ing Prospectus.
Distributions
The Preferred Securities represent undivided preferred
beneficial interests in the assets of the Issuer, and the distri-
butions on each Preferred Security are payable at the rate set
forth on the cover page of this Prospectus Supplement, payable,
except in the event of an extension, quarterly in arrears on
, , and of each year, com-
mencing ____________. Distributions in arrears after the payment
date therefor will accumulate additional distributions thereon (to
the extent permitted by law) compounded quarterly at the rate per
annum set forth on the cover page of this Prospectus Supplement.
The term "distributions" as used herein shall include any such
additional distributions to the extent permitted by law. Distri-
butions will accrue from the date of original issuance of the Pre-
ferred Securities. The amount of distributions payable for any
period will be computed on the basis of a 360-day year of twelve
30-day months and, for any period shorter than a full monthly
period, shall be computed on the basis of the actual number of
days elapsed in such period.
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So long as an Event of Default under the Indenture has
not occurred and is continuing, the Company has the right at any
time and from time to time to extend the interest payment period
on the Junior Subordinated Debentures for not more than 20 con-
secutive quarters, provided that any such Extension Period shall
not extend beyond the maturity date or redemption date of the Jun-
ior Subordinated Debentures. During any Extension Period quar-
terly distributions on the Preferred Securities would be deferred
by the Issuer, would continue to accrue, and holders of Preferred
Securities would be required to accrue interest income for United
States Federal income tax purposes. See "Certain Terms of the
Junior Subordinated Debentures -- Option to Extend Interest Pay-
ment Period" and "United States Taxation -- Potential Extension of
Interest Payment Period and Original Issue Discount." In the
event that the Company exercises this right, during such period it
may not declare or pay any dividends or distributions (other than
dividends or distributions payable in common stock of the Company
or other securities ranking junior in right of payment to the Jun-
ior Subordinated Debentures) on, or redeem, purchase, acquire, or
make a liquidation payment with respect to, any of its capital
stock or any security ranking pari passu with or junior in right
of payment to the Junior Subordinated Debentures, or make any
guarantee payment with respect to the foregoing (other than pro
rata payments under the Guarantee) or repurchase, or cause any of
its subsidiaries to repurchase, any security of the Company rank-
ing pari passu with or junior in right of payment to the Junior
Subordinated Debentures (except for payments made on any series of
Junior Subordinated Debentures upon the stated maturity of such
Junior Subordinated Debentures); provided that the Company may
redeem, purchase, acquire or make a liquidation payment with
respect to any of its capital stock or any security ranking pari
passu with or junior in right of payment to the Junior Subordi-
nated Debentures, make any guarantee payment with respect to the
foregoing or repurchase, or cause any of its subsidiaries to
repurchase, any security of the Company ranking pari passu with or
junior in right of payment to the Junior Subordinated Debentures
with securities (or the proceeds from the issuance of securities)
having no higher ranking than the capital stock or the other secu-
rities which are to be redeemed, purchased, or acquired, with
respect to which a liquidation payment is to be made, to which a
guarantee payment is to be made with respect to the foregoing or
which are to be repurchased. This covenant effectively requires
that an interest payment on the Junior Subordinated Debentures may
be extended only if the interest periods on all other series of
Junior Subordinated Debentures that may be outstanding at the time
are likewise extended. Prior to the termination of any such
extended interest payment period, the Company may further extend
the interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof may
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not exceed 20 consecutive quarters or extend beyond the maturity
or redemption date of the Junior Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all
amounts then due, the Company may select a new extended interest
payment period, subject to the above requirements. See "Certain
Terms of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period" and "United States Taxation -- Potential
Extension of Interest Payment Period and Original Issue Discount."
The Company has no current intention of exercising its
right to defer payments of distributions on the Preferred Securi-
ties by extending the interest payment period on the Junior Subor-
dinated Debentures.
Redemption
Upon the payment of the Junior Subordinated Debentures,
whether at maturity or upon earlier redemption as provided in the
Indenture, the proceeds from such payment will be applied by the
Property Trustee to redeem a Like Amount (as defined below) of the
Common Securities and the Preferred Securities, upon not less than
30 nor more than 90 days' notice, at a redemption price equal to
the aggregate Liquidation Amount plus accumulated and unpaid dis-
tributions, plus additional distributions thereon to the extent
permitted by law, to the redemption date. See "Certain Terms of
Junior Subordinated Debentures -- Redemption."
The Company has the right to redeem the Junior Subordi-
nated Debentures (a) on or after _____________, _____, in whole or
in part, or (b) at any time, in whole but not in part, upon the
occurrence of a Tax Event or an Investment Company Event (each as
defined below, a "Special Event"), subject to the conditions
described under "-- Special Event Redemption or Distribution,"
below.
Special Event Redemption or Distribution
If a Special Event shall occur and be continuing with
respect to the Issuer or the Preferred Securities, the Company has
the right to (i) redeem the Junior Subordinated Debentures in
whole (but not in part) and thereby cause a mandatory redemption
of the Preferred Securities in whole (but not in part) at the
redemption price within 90 days following the occurrence of such
Special Event, or (ii) terminate the Issuer and cause the Junior
Subordinated Debentures to be distributed, subject to the receipt
of an Opinion of Counsel experienced in such matters to the effect
that the holders of the Preferred Securities will not recognize
gain or loss for Untied States Federal income tax purposes as a
result of such distribution, to the holders of the Preferred
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Securities in liquidation of the Issuer. If at any time the
Issuer is not or will not be taxed as a grantor trust, but a Tax
Event has not occurred, the Company has the right to terminate the
Issuer and cause the Junior Subordinated Debentures to be distrib-
uted, subject to the receipt of an Opinion of Counsel experienced
in such matters to the effect that the holders of the Preferred
Securities will not recognize gain or loss for United States Fed-
eral income tax purposes as a result of such distribution, to the
holders of the Preferred Securities in liquidation of the Issuer.
Under current United States Federal income tax law and interpreta-
tions, if the Issuer is treated as a grantor trust at the time of
the distribution, such a distribution should not be a taxable
event to holders of the Preferred Securities. Should there be a
change in law, a change in legal interpretation, a Special Event
or other circumstances, however, the termination could be a tax-
able event to holders of the Preferred Securities. See "United
States Taxation -- Receipt of Junior Subordinated Debentures Upon
Liquidation of the Issuer." If the Company does not elect either
option (i) or (ii) above, the Preferred Securities will remain
outstanding.
"Tax Event" means the receipt by the Issuer or the Com-
pany, as the case may be, of an Opinion of Counsel (which may be
counsel to the Issuer, the Company or an affiliate, and which must
be reasonably acceptable to the Property Trustee) experienced in
such matters to the effect that a relevant tax law change has
occurred after ___________, 1996. For purposes of the preceding
sentence a relevant tax law change is any amendment or change to
(or officially proposed amendment or change to) the laws (includ-
ing regulations thereunder) of the United States or any political
subdivision or taxing authority thereof, or the publication of any
judicial opinion interpreting such laws (and regulations) or any
written interpretation of such laws (or regulations) by any gov-
ernmental authority having jurisdiction to enforce or administer
such laws (or regulations) (including official and unofficial
opinions purporting to apply such laws and regulations to other
persons who have issued securities similar to the Junior Subordi-
nated Debentures), which amendment, change, proposed amendment or
change, opinion or interpretation could, if valid and enacted or
applied to the Issuer or the Company, result in (i) the Issuer,
either currently or within 90 days of the date thereof, becoming
subject to United States Federal income tax with respect to inter-
est received on the Junior Subordinated Debentures, (ii) interest
payable by the Company on the Junior Subordinated Debentures
attributable to the Preferred Securities, either currently or
within 90 days of the date thereof, becoming nondeductible for
United States Federal income tax purposes or (iii) the Issuer,
either currently or within 90 days of the date thereof, becoming
S-13
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subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Investment Company Event" means the occurrence of a
change in law or regulation or a change in the interpretation or
application of any law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in
1940 Act Law") to the effect that the Issuer is or will be consid-
ered an "investment company" that is required to be registered
under the Investment Company Act of 1940, as amended, which Change
in 1940 Act Law becomes effective after ______________, 1996.
"Like Amount" means (i) with respect to a redemption of
the Preferred Securities and the Common Securities (together, the
"Trust Securities"), Trust Securities having an aggregate Liquida-
tion Amount equal to the principal amount of Junior Subordinated
Debentures to be contemporaneously redeemed in accordance with the
Indenture and the proceeds of which will be used to pay the
redemption price of such Trust Securities and (ii) with respect to
a distribution of Junior Subordinated Debentures to holders of
Trust Securities in connection with a termination or liquidation
of the Issuer upon the bankruptcy, dissolution or liquidation of a
holder of Common Securities, the occurrence of a Special Event or
in the event that the Issuer is not or will not be taxed as a
grantor trust but a Tax Event has not occurred, Junior Subordi-
nated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Trust Securities in exchange for which
such Junior Subordinated Debentures are distributed.
Rights Under the Guarantee and the Junior Subordinated Debentures
The Guarantee will be a full guarantee with respect to
the Preferred Securities from the time of issuance of the Pre-
ferred Securities, but will not apply to any payments of distribu-
tions or other amounts due to the extent the Issuer does not have
sufficient available funds to pay such distributions or other
amounts due (which would occur in the event that the Company has
failed to make a payment of principal or interest on the Junior
Subordinated Debentures). There are no preconditions to a holder
of Preferred Securities instituting a legal proceeding directly
against the Company to enforce such holder's rights under the
Guarantee. If the Guarantee Trustee fails to enforce the Guaran-
tee, any holder of Preferred Securities may institute a legal pro-
ceeding directly against the Company to enforce such holder's
rights under the Guarantee without first instituting a legal pro-
ceeding against the Issuer, the Guarantee Trustee or any other
person or entity. To the extent the Company was to default on its
obligation to pay amounts payable on the Junior Subordinated
Debentures, the Issuer would lack sufficient available funds for
S-14
<PAGE>
the payment of distributions on or amounts payable on redemption
of the Trust Securities and, in such event, holders of the Pre-
ferred Securities would not be able to rely on the Guarantee for
payment of such amounts. Instead, the remedy of a holder of Pre-
ferred Securities would be to enforce the rights of the Issuer
under the Junior Subordinated Debentures held by such Issuer. The
above mechanisms and obligations relating to the Guarantee and the
Junior Subordinated Debentures and the obligations of the Company
under the other Surety Obligations, taken together, constitute a
full and unconditional guarantee by the Company of payments due on
the Preferred Securities. See "Certain Terms of the Guarantee"
and "Certain Terms of the Junior Subordinated Debentures."
CERTAIN TERMS OF THE GUARANTEE
General
The following summary description of the Guarantee sets
forth certain portions of the description of the terms and provi-
sions of the Guarantee included in the accompanying Prospectus
under the heading, "Description of Guarantee," to which descrip-
tion reference is hereby made. This summary of certain terms and
provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the
Guarantee. The form of Guarantee has been filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and
the accompanying Prospectus are a part.
The Company will fully guarantee, on a subordinated
basis, the obligations of the Issuer with respect to the Preferred
Securities; provided that the Guarantee will not apply to any pay-
ment of distributions if and to the extent that the Issuer does
not have funds sufficient to make such payments. If the Company
does not make interest payments on the Junior Subordinated Deben-
tures held by the Issuer, it is expected that the Issuer will not
pay distributions on the Preferred Securities. The Guarantee will
rank subordinate and junior in right of payment to all liabilities
of the Company (except trade credit and any liabilities that may
be made pari passu with or subordinate to the Guarantee expressly
by their terms). See "Description of the Guarantee -- Status of
the Guarantee" in the accompanying Prospectus.
Events of Default
An event of default under the Guarantee will occur upon
the failure of the Company to perform any of its payment obliga-
tions thereunder.
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If the Guarantee Trustee fails to enforce the Guarantee,
any holder of Preferred Securities may institute a legal proceed-
ing directly against the Company to enforce such holder's rights
under the Guarantee without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other person or
entity. The Guarantee is a guarantee of payment, not of
collection.
Termination of the Guarantee
The Guarantee will terminate and be of no further force
and effect upon full payment of the Redemption Price of all Pre-
ferred Securities, the distribution of Junior Subordinated Deben-
tures to holders of Preferred Securities in exchange for all of
the Preferred Securities or upon payment in full of the amounts
payable upon liquidation of the Issuer.
CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
General
The following summary description of the Junior Subordi-
nated Debentures sets forth certain portions of the description of
the terms and provisions of the Junior Subordinated Debentures
included in the accompanying Prospectus under the heading
"Description of Junior Subordinated Debentures," to which descrip-
tion reference is hereby made. This summary of certain terms and
provisions of the Junior Subordinated Debentures does not purport
to be complete and is subject to, and qualified in its entirety by
reference to, the Indenture, including the Supplemental Indenture.
The forms of Indenture and Supplemental Indenture have been filed
as exhibits to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus are a part.
Concurrently with the issuance of the Preferred Securi-
ties, the Issuer will invest the proceeds thereof, together with
the Common Securities, in the Junior Subordinated Debentures
issued by the Company to the Issuer. The Junior Subordinated
Debentures will bear interest at the annual rate of %, payable
quarterly in arrears, except in the event of an extension, on
, , , and of each
year, commencing _______. Interest which is accrued and unpaid
after the quarterly payment date therefor will bear additional
interest on the amount thereof (to the extent permitted by law) at
the rate per annum of %, compounded quarterly. The term "Inter-
est" as used herein shall include quarterly interest payments,
interest on quarterly interest payments in arrears and Additional
Interest (as defined below), as applicable.
S-16
<PAGE>
The Junior Subordinated Debentures will be issued under
the Indenture and the Supplemental Indenture. The Junior Subordi-
nated Debentures will mature on , 20 . The Junior
Subordinated Debentures will be unsecured and will rank junior and
be subordinate in right of payment to all Senior Indebtedness of
the Company. See "Description of Junior Subordinated Debentures
- -- Subordination" in the accompanying Prospectus.
Option to Extend Interest Payment Period
The Company has the right at any time and from time to
time, so long as an Event of Default under the Indenture has not
occurred and is continuing, to extend the interest payment period
for the Junior Subordinated Debentures for up to 20 consecutive
quarters; provided that no Extension Period shall extend beyond
the stated maturity date or date of redemption of the Junior Sub-
ordinated Debentures. At the end of the Extension Period, the
Company is obligated to pay all interest then accrued and unpaid
(together with interest thereon to the extent permitted by law).
During any Extension Period, the Company will not declare or pay
any dividends or distributions (other than dividends or distribu-
tions payable in capital stock of the Company or other securities,
including other indebtedness, such as notes or debentures, ranking
junior in right of payment to the Junior Subordinated Debentures)
on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of its capital stock or any security ranking
pari passu with or junior in right of payment to the Junior Subor-
dinated Debentures, or make any guarantee payment (other than pro
rata payments under the Guarantee and other than payments upon
redemptions of capital stock pursuant to any mandatory or optional
sinking fund provisions) or repurchase, or cause any of its sub-
sidiaries to repurchase, any security of the Company ranking pari
passu with or junior in right of payment to the Junior Subordi-
nated Debentures (except for payments made on any series of Junior
Subordinated Debentures upon the stated maturity of such Junior
Subordinated Debentures); provided that the Company may redeem,
purchase, acquire or make a liquidation payment with respect to
any of its capital stock, make any guarantee payment with respect
to the foregoing or repurchase, or cause any of its subsidiaries
to repurchase, any security of the Company ranking pari passu with
or junior in right of payment to the Junior Subordinated Deben-
tures with securities (or the proceeds from the issuance of secu-
rities) having no higher ranking than the capital stock or the
other securities which are to be redeemed, purchased, acquired,
with respect to which a liquidation payment is to be made, to
which a guarantee payment is to be made with respect to the fore-
going or which are to be repurchased. This covenant requires that
an interest payment on the Junior Subordinated Debentures may be
extended only if the interest payments on all other series of
S-17
<PAGE>
Junior Subordinated Debentures that may be outstanding at the time
are likewise extended. Prior to the termination of any Extension
Period, the Company may further extend the interest payment
period, provided that such Extension Period, together with all
such previous and further extensions thereof, may not exceed 20
consecutive quarters or extend beyond the maturity or redemption
date of the Junior Subordinated Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due,
the Company may select a new Extension Period subject to the above
requirements.
So long as the Property Trustee shall be the sole holder
of the Junior Subordinated Debentures, the Company is required to
give the Property Trustee and the Debenture Trustee notice of its
selection of such Extension Period at least one Business Day prior
to the date the Property Trustee or the Company is required to
give notice to any national securities exchange on which any of
the Preferred Securities are listed or to other applicable
self-regulatory organization or to holders of the Preferred Secu-
rities on the record date, but in any event not less than one
Business Day prior to such record date. The Debenture Trustee
will be required to give notice of the Company's selection of such
Extension Period to the holders of the Preferred Securities and
the Administrative Trustees.
Redemption
The Junior Subordinated Debentures are redeemable prior
to maturity at the option of the Company (i) at any time on or
after the date set forth on the cover page of this Prospectus Sup-
plement, in whole or in part, and (ii) if a Special Event occurs
and is continuing, in whole, but not in part, in each case at a
Redemption Price equal to 100% of the principal amount thereof
plus accrued interest to the redemption date. The Junior Subordi-
nated Debentures will be subject to optional redemption in whole,
but not in part, upon the termination and liquidation of the
Issuer pursuant to an order for the dissolution, termination or
liquidation of the Issuer entered by a court of competent juris-
diction. For so long as the Trust is the holder of all Junior
Subordinated Debentures outstanding, the proceeds of any redemp-
tion described in this section shall be used by the Issuer to
redeem the Preferred Securities and the Series A Common Securities
in accordance with their terms.
The Company shall not redeem the Junior Subordinated
Debentures in part unless all accrued and unpaid interest (includ-
ing any Additional Interest) has been paid in full on all Junior
Subordinated Debentures outstanding for all quarterly interest
periods on or prior to the Redemption Date.
S-18
<PAGE>
UNITED STATES TAXATION
General
The following is a summary of certain United States Fed-
eral income tax considerations that may be relevant to prospective
purchasers of Preferred Securities and represents the opinion of
Cahill Gordon & Reindel, counsel to the Company, insofar as it
relates to matters of law and legal conclusions. This section is
based upon current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed regulations
thereunder and current administrative rulings and court decisions,
all of which are subject to change. Subsequent changes may cause
tax consequences to investors to vary substantially from the con-
sequences described below. Unless otherwise stated, this summary
deals only with Preferred Securities held as capital assets and
not with special classes of holders, such as dealers in securities
or currencies, life insurance companies, persons holding Preferred
Securities as a hedge against or which are hedged against currency
risks or as a part of a straddle, or persons whose functional cur-
rency is not the United States dollar.
POTENTIAL INVESTORS ARE ADVISED TO CONSULT THEIR TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES
IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT
OF ANY STATE, LOCAL OR OTHER TAX LAWS.
While the Company believes, based upon the advice of its
counsel, that the Junior Subordinated Debentures will be treated
as indebtedness for United States Federal income tax purposes,
holders of Preferred Securities should note that the Internal
Revenue Service (the "IRS") may attempt to treat the Junior Subor-
dinated Debentures as equity rather than indebtedness for tax pur-
poses. If the IRS were successful in such attempt, the Junior
Subordinated Debentures would be subject to redemption at the
option of the Company as described under "Description of Preferred
Securities -- Redemption."
Income from Preferred Securities
In connection with the issuance of the Preferred Securi-
ties, Cahill Gordon & Reindel will render its opinion generally to
the effect that under then current law, and assuming full compli-
ance with the terms of the Trust Agreement and the Indenture (and
certain other documents), the Issuer will be classified for United
States Federal income tax purposes as a grantor trust and not as
an association taxable as a corporation.
S-19
<PAGE>
As a consequence, each holder of Preferred Securities
will be considered the owner of a pro rata portion of the Junior
Subordinated Debentures held by the Issuer. As a further conse-
quence, each holder of Preferred Securities will be required to
include in gross income his or her pro rata share of the income
accrued on the Junior Subordinated Debentures held by the Issuer.
Such income should not exceed distributions received by the hold-
ers of Preferred Securities on the Preferred Securities except in
the case of an extension of the interest payment period as
described under "Description of Preferred Securities -- Distribu-
tions." No portion of such income will be eligible for the
dividends-received deduction.
Potential Extension of Interest Payment Period and Original Issue
Discount
Under the Indenture, the Company has the option to
extend from time to time the interest payment period on the Junior
Subordinated Debentures to a period not exceeding 20 consecutive
quarters but not beyond the maturity date or redemption date of
the Junior Subordinated Debentures. The Company's option to
extend the interest payment period (even if not exercised) will
cause the Junior Subordinated Debentures, from the date of issu-
ance, to be treated as issued with "original issue discount" for
United States Federal income tax purposes. Accordingly, a holder
of Preferred Securities will accrue interest income (i.e., origi-
nal issue discount) under a constant yield basis over the term of
the Junior Subordinated Debentures (including any Extension
Period), regardless of the receipt of cash with respect to the
period to which such income is attributable.
Holders of Preferred Securities during an Extension
Period will include interest in gross income in advance of the
receipt of cash, and any holders of Preferred Securities who dis-
pose of Preferred Securities prior to the record date for the pay-
ment of distributions will include such interest in gross income,
but will not receive any cash related thereto from the Issuer.
The tax basis of a Preferred Security will be increased by the
amount of any original issue discount that is included in income
without the receipt of cash, and will be decreased when and if
such cash is subsequently received by the holder of the Preferred
Security.
Disposition of Preferred Securities
Gain or loss will be recognized on a sale, including a
redemption for cash, of Preferred Securities in an amount equal to
the difference between the amount realized and the tax basis of a
holder of the Preferred Securities in his or her Preferred
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Securities. Gain or loss recognized by a holder of Preferred
Securities on the sale or exchange of Preferred Securities held
for more than one year generally will be taxable as long-term cap-
ital gain or loss.
United States Alien Holders
For purposes of this discussion, a "United States Alien
Holder" is any holder or beneficial owner who or which is (i) a
nonresident alien individual or (ii) a foreign corporation, for-
eign partnership, foreign estate or foreign trust, in any such
case not subject to United States Federal income tax on a net
income basis in respect of the Preferred Securities.
Under present United States Federal income tax law, sub-
ject to the discussion below with respect to backup withholding:
(i) Payments by the Issuer or any of its Paying Agents
to any United States Alien Holder will not be subject to
United States withholding tax provided that (a) the benefi-
cial owner of the Preferred Securities does not actually or
constructively own 10% or more of the total combined voting
power of all classes of stock of the Company, (b) the benefi-
cial owner of the Preferred Securities is not a "controlled
foreign corporation" for United States tax purposes that is
related to the Company through stock ownership, and
(c) either (1) the beneficial owner of the Preferred Securi-
ties certifies to the Issuer or its agent, under penalties of
perjury, that it is a United States Alien Holder and provides
its name and address or (2) the holder of the Preferred Secu-
rities is a securities clearing organization, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial insti-
tution"), and such statement has been received from the bene-
ficial owner by such financial institution or by a financial
institution intermediary between it and the beneficial owner,
and such financial institution furnishes the Issuer with a
copy thereof; and
(ii) a United States Alien Holder of the Preferred Secu-
rities will not be subject to United States Federal income or
withholding tax on any gain realized on the sale or exchange
of the Preferred Securities unless (a) such person is present
in the United States for 183 days or more in the taxable year
of sale and (b) such person has a "tax home" in the United
States or certain other requirements are met.
S-21
<PAGE>
Backup Withholding and Information Reporting
In general, information requirements will apply to pay-
ments to noncorporate United States holders of the proceeds of the
sale of the Preferred Securities within the United States, and
"backup withholding" at a rate of 31% will apply to such payments
if the seller fails to provide a correct taxpayer identification
number.
Payments of the proceeds from the sale by a United
States Alien Holder of Preferred Securities made to or through a
foreign office of a broker will not be subject to information
reporting or backup withholding, except that, if the broker is a
United States person, a "controlled foreign corporation" for
United States tax purposes or a foreign person 50% or more of
whose gross income is effectively connected with a United States
trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds
from the sale of Preferred Securities to or through the United
States office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner certifies
as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding.
The IRS has issued proposed regulations which, if
enacted in their current form, would require backup withholding on
payments with respect to the Junior Subordinated Debentures that
are made outside the United States if the payor has actual knowl-
edge that the recipient is a United States Holder. The proposed
regulations are proposed to be effective for payments made after
December 31, 1997, and current law would remain in effect until
then. United States Holders should consult with their tax advi-
sors as to compliance with the new rules so as to avoid possible
backup withholding on payments after 1997.
Receipt of Junior Subordinated Debentures
upon Liquidation of the Issuer
Under certain circumstances as described in "Description
of Preferred Securities -- Special Event Redemption or Distribu-
tion," the Company may cause the Issuer to be terminated and the
Junior Subordinated Debentures to be distributed to the holders of
Preferred Securities in liquidation of such holders' interests in
the Issuer. Under current United States Federal income tax law
and interpretations, if the Trust is treated as a grantor trust at
the time of the distribution, such a distribution should not be
treated as a taxable event to holders of the Preferred Securities.
Such a tax-free transaction would result in a holder of Preferred
Securities retaining an aggregate tax basis in the Junior
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Subordinated Debentures equal to such holder's aggregate tax basis
in the holder's pro rata share of the Junior Subordinated Deben-
tures prior to the distribution. A holder's holding period for
such Junior Subordinated Debentures would include the period for
which the Preferred Securities were held by such holder.
If the Trust were not treated as a grantor trust at the
time of the distribution, the distribution could be a taxable
event to holders of the Preferred Securities, in which case the
principles discussed above under "-- Disposition of the Preferred
Securities" would apply, and the holders would have a new tax
basis and holding period in the Junior Subordinated Debentures.
UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, the Company and the Issuer have agreed that the Issuer
will issue and sell to each of the underwriters named below
(collectively, the "Underwriters") and the Underwriters have sev-
erally agreed to purchase from the Issuer, the respective number
of Preferred Securities set forth opposite its name below:
Number of
Preferred
Underwriter Securities
Total ...................... 4,000,000
Subject to the terms and conditions of the Underwriting
Agreement, the Underwriters are committed to take and pay for all
the Preferred Securities offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securi-
ties in part directly to the public at the initial public offering
price set forth on the cover page of this Prospectus Supplement,
and in part to certain securities dealers at such price less a
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concession of $ per Preferred Security. The Underwriters
may allow, and such dealers may reallow, a concession not in
excess of $ per Preferred Security to certain brokers and
dealers. After the Preferred Securities are released for sale to
the public, the offering price and other selling terms may from
time to time be varied by the representatives of the Underwriters.
In view of the fact that the proceeds from the sale of
the Preferred Securities (together with the delivery by the Issuer
to the Company of the Common Securities) will be used to purchase
the Junior Subordinated Debentures issued by the Company, the
Underwriting Agreement provides that the Company will pay as
Underwriters' compensation for the Underwriters arranging the
investment therein of such proceeds, an amount of $ per Pre-
ferred Security or ($ per Preferred Security sold to certain
institutions) for the accounts of the several Underwriters.
The Company and the Issuer have agreed, during the
period beginning from the date of the Underwriting Agreement and
continuing to and including the earlier of (i) the date on which
the distribution of the Preferred Securities ceases, as determined
by the Underwriters, or (ii) 30 days after the issuance of the
Preferred Securities, not to offer, sell, contract to sell or
otherwise dispose of any Preferred Securities, any other interests
of the Issuer or any other issuer of a series of Preferred Securi-
ties or the Company which are substantially similar to the Pre-
ferred Securities (including any Guarantee of such securities) or
any securities convertible into or exchangeable for Preferred
Securities, preferred stock or such substantially similar securi-
ties of the Issuer or the Company, without the prior written con-
sent of the representatives of the Underwriters.
Prior to this offering, there has been no market for the
Preferred Securities. Application has been made to have the Pre-
ferred Securities approved for listing on the New York Stock
Exchange. In order to meet one of the requirements for listing
the Preferred Securities on the New York Stock Exchange, the
Underwriters will undertake to sell lots of 100 or more Preferred
Securities to a minimum of 400 beneficial holders. If approved
for listing, trading of the Preferred Securities on the New York
Stock Exchange is expected to commence within a fourteen-day
period after the initial delivery of the Preferred Securities.
The representatives have advised the Company that they intend to
make a market in the Preferred Securities prior to the commence-
ment of trading on the New York Stock Exchange, but are not obli-
gated to do so and may discontinue any such market-making at any
time without notice.
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The Company and the Issuer have agreed to indemnify the
several Underwriters against certain liabilities, including lia-
bilities under the Securities Act of 1933, or to make contribu-
tions in respect thereof.
Certain of the Underwriters engage in transactions with,
and from time to time have performed services for, the Company in
the ordinary course of business.
S-25
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 22, 1996
PROSPECTUS
$100,000,000
SOUTHWESTERN PUBLIC SERVICE CAPITAL I
TRUST PREFERRED SECURITIES
Fully and Unconditionally Guaranteed by
SOUTHWESTERN PUBLIC SERVICE COMPANY
____________________
Southwestern Public Service Capital I, a statutory business trust
formed under the laws of the State of Delaware (the "Issuer"), may offer, from
time to time, its preferred securities (the "Preferred Securities") represent-
ing preferred undivided beneficial interests in the assets of the Issuer.
Southwestern Public Service Company, a New Mexico corporation (the "Company"),
will be the sole owner of the beneficial interests represented by common secu-
rities (the "Common Securities") of the Issuer. The payment of periodic cash
distributions with respect to the Preferred Securities and payments on liquida-
tion or redemption with respect to such Preferred Securities are each guaran-
teed by the Company pursuant to several contractual arrangements of the Company
comprised of the Guarantee, the Junior Subordinated Debentures, the Indenture,
the Trust Agreement and the Expense Agreement (collectively, the "Surety Obli-
gations"), as more fully described herein. The Company's obligations under its
guarantee (the "Guarantee") for the benefit of holders of Preferred Securities
will be subordinate and junior in right of payment to all Senior Indebtedness
of the Company. Concurrently with the issuance by the Issuer of its Preferred
Securities, such Issuer will invest the proceeds thereof and any contributions
made in respect of the Common Securities in a corresponding series of the Com-
pany's junior subordinated deferrable interest debentures (the "Junior Subordi-
nated Debentures") having terms corresponding to the Issuer's Preferred Securi-
ties. The Junior Subordinated Debentures will be unsecured and subordinate and
junior in right of payment to the Senior Indebtedness of the Company. The Jun-
ior Subordinated Debentures held by the Issuer will be its sole asset and pay-
ments of principal and interest under such Junior Subordinated Debentures will
be its only revenue. Upon the occurrence of certain events, the Company may
redeem the Junior Subordinated Debentures or may terminate the Issuer and cause
the Junior Subordinated Debentures to be distributed to the holders of the cor-
responding Preferred Securities in liquidation of their interest in such
Issuer.
The Preferred Securities may be offered in amounts, at prices and
on terms to be determined at the time of offering; provided, that the aggregate
initial public offering price of all Preferred Securities shall not exceed
$100,000,000. Specific terms of the Preferred Securities in respect of which
this Prospectus is being delivered will be set forth in an accompanying Pro-
spectus Supplement with respect to such series, including, without limitation
and where applicable, the specific title, aggregate amount, dividend rate or
rates (or method of determining such rate or rates), the initial public
<PAGE>
offering price and any other rights, preferences, privileges, limitations and
restrictions.
The Prospectus Supplement relating to the Preferred Securities will
contain information concerning certain United States Federal income tax consid-
erations, if applicable to the Preferred Securities.
The Preferred Securities may be sold to or through underwriters or
dealers as designated from time to time. The names of such dealers or under-
writers and any applicable commissions or discounts will be set forth in the
Prospectus Supplement with respect to such Preferred Securities. See "Plan of
Distribution."
____________________
SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUM-
STANCES DURING AND UNDER WHICH PAYMENT ON THE PREFERRED SECURITIES AND THE JUN-
IOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX
CONSEQUENCES.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
The date of this Prospectus is _______, 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGIS-
TRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURI-
TIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS
TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFEC-
TIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITA-
TION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REG-
ISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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<PAGE>
AVAILABLE INFORMATION
Southwestern Public Service Company (the "Company") is
subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance there-
with files reports and other information with the Securities and
Exchange Commission (the "Commission") which may be inspected and
copied at the offices of the Commission, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center,
Suite 1300, New York, New York 10048, and copies of such material
can be obtained from the Public Reference Section of the Commis-
sion, Washington, D.C. 20549, at prescribed rates. (The Commis-
sion maintains a site on the World Wide Web containing reports,
proxy materials, information statements and other items. The
address is http://www.sec.gov.) Certain securities of the Company
are listed on the New York, Chicago and Pacific Stock Exchanges.
Reports, proxy and information statements, and other information
concerning the Company can be inspected at such exchanges.
The Company and the Issuer have filed with the Commis-
sion a registration statement on Form S-3 (herein, together with
all amendments and exhibits thereto, referred to as the "Registra-
tion Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby
made to the Registration Statement.
No separate financial statements of the Issuer are
included herein. The Company considers that such financial state-
ments would not be material to holders of the Preferred Securities
because: (i) all of the Common Securities of the Issuer will be
owned by the Company, a reporting company under the Exchange Act;
(ii) the Issuer has no independent operations, but exists for the
sole purpose of issuing the Preferred Securities and investing the
proceeds thereof (plus the Common Securities) in the Junior Subor-
dinated Debentures; and (iii) the obligations of the Issuer under
the Preferred Securities are fully and unconditionally guaranteed
by the Company.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission (File No. 1-3789) pursuant to the the Exchange Act are
incorporated herein by reference as of their respective dates of
filing and shall be deemed to be a part hereof:
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<PAGE>
1. The Company's Annual Report on Form 10-K for the
year ended August 31, 1995 (the "1995 Form 10-K").
2. The Company's Quarterly Report on Form 10-Q for the
quarters ended November 30, 1995 (the "November Quarterly
Report"), February 29, 1996 (the "February Quarterly Report") and
May 31, 1996 (the "May Quarterly Report").
3. The Company's Current Reports on Form 8-K filed
February 2, 1996, February 26, 1996 and July 1, 1996.
4. Joint Proxy Statement/Prospectus for the Annual
Meeting held January 31, 1996 included in the Registration State-
ment on Form S-4 of New Century Energies, Inc. (Registration
No. 33-64951).
All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this offering
shall also be deemed to be incorporated by reference in this Pro-
spectus and to be a part hereof from the date of filing of such
documents.
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 request of any such
person, a copy of any or all documents referred to above which
have been or may be incorporated by reference in this Prospectus
(not including exhibits to such incorporated information that are
not specifically incorporated by reference into such information).
Requests for such copies should be directed to Secretary, South-
western Public Service Company, Tyler at Sixth, Amarillo, Texas
79101.
THE COMPANY
The Company, incorporated under the laws of the State of
New Mexico in 1921, is principally engaged in the generation,
transmission, distribution and sale of electric energy in portions
of Texas, New Mexico, Oklahoma and Kansas. The electric proper-
ties comprise an interconnected system. A major portion of the
Company's electric operating revenues is derived from operations
in Texas. The Company has two wholly owned non-utility subsidiar-
ies, Utility Engineering Corporation and Quixx Corporation. The
principal executive offices of the Company are located at Tyler at
Sixth, Amarillo, Texas 79101 (Tel: 806-378-2121).
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<PAGE>
At the annual meeting of the Company's shareholders held
on January 31, 1996, the shareholders approved the proposed
"merger of equals" of the Company and Public Service Company of
Colorado ("PSCo") (the "Merger Agreement"). Pursuant to the terms
of the Merger Agreement, upon satisfaction or waiver of the terms
and conditions thereof, the Company and PSCo will become wholly
owned subsidiaries of a new holding company called New Century
Energies, Inc. The Company and PSCo will maintain their separate
identities and continue to serve customers in their respective
service areas. The Company's obligations, such as guarantees,
debt and any preferred stock (including the Guarantee and the Jun-
ior Subordinated Debentures) of the Company outstanding at the
time of effectiveness of the merger will remain outstanding obli-
gations, debt and preferred stock of the Company and the terms and
conditions thereof will not change. The transaction is subject to
various conditions including the receipt of approvals from various
state and federal regulators.
THE ISSUER
Southwestern Public Service Capital I is a statutory
business trust formed under Delaware law pursuant to (i) a trust
agreement executed by David M. Wilks, President and Chief Operat-
ing Officer of the Company (together with his successors, the
"Depositor"), as the depositor of the Issuer, and the Issuer
Trustees (as defined herein) and (ii) the filing of a certificate
of trust with the Delaware Secretary of State. Such trust agree-
ment 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 is a part. The Trust Agreement will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The Issuer exists for the exclusive pur-
pose of (i) issuing its Preferred Securities and Common Securi-
ties, (ii) purchasing the Junior Subordinated Debentures with the
Common Securities and the proceeds from the sale of the Preferred
Securities and (iii) engaging only in those other activities nec-
essary or incidental thereto. All of the Common Securities will
be owned by the Company. The Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Pre-
ferred Securities, except that upon the occurrence and continuance
of an Event of Default (as defined herein) under the Trust Agree-
ment, the rights of the holders of the corresponding Common Secu-
rities to payment in respect of distributions and payments upon
liquidation, redemption or other acquisition of Common Securities
will be subordinated to the rights of the holders of Preferred
Securities. The Company will acquire Common Securities of the
Issuer in an aggregate Liquidation Amount equal to 3% of the total
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<PAGE>
capital of the Issuer and, at that time, also become the Deposi-
tor. The Issuer will have a term of more than 20 and not less
than 50 years, as specified in the applicable Prospectus Supple-
ment, but may terminate earlier as provided in the Trust Agree-
ment. The Issuer's business and affairs is conducted by its
trustees, each appointed by the Company as holder of the Common
Securities: Wilmington Trust Company (the "Property Trustee") and
three individual trustees (the "Administrative Trustees") who are
employees or officers of or affiliated with the Company (collec-
tively, the "Issuer Trustees"). The Depositor of the Issuer or
the holders of a majority in Liquidation Amount of the Preferred
Securities and Common Securities, if an event of default under the
Trust Agreement has occurred and is continuing, will be entitled
to appoint, remove or replace the Issuer Trustees. Unless an
event of default under the Trust Agreement shall have occurred and
is continuing, the holders of the Preferred Securities and Common
Securities shall not have the right to vote to appoint, remove or
replace the Administrative Trustees, which voting rights are
vested exclusively in the Depositor of the Issuer. The duties and
obligations of each of the Issuer Trustees are governed by the
Trust Agreement. The Company has agreed to pay all fees and
expenses related to the Issuer and the offering of the Preferred
Securities and has agreed to pay, directly or indirectly, all
ongoing costs, expenses and liabilities, limited to the extent
provided herein, of the Issuer.
The principal executive office of the Issuer is Tyler at
Sixth, Amarillo, Texas 79101, Attention: Secretary (Tel: (806)
378-2121).
RISK FACTORS
PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES SHOULD
CAREFULLY REVIEW THE INFORMATION CONTAINED ELSEWHERE IN THIS PRO-
SPECTUS AND IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND SHOULD
PARTICULARLY CONSIDER THE FOLLOWING MATTERS:
Subordination of Guarantee and Junior Subordinated
Debentures. The Company's obligations under the Guarantee and
under the Junior Subordinated Debentures are subordinate and jun-
ior in right of payment to all Senior Indebtedness other than
indebtedness that may be made pari passu with or subordinate to
the Guarantee and the Junior Subordinated Debentures expressly by
their terms. As of May 31, 1996, the Company had approximately
$771 million principal amount of indebtedness for borrowed money
and other obligations constituting Senior Indebtedness outstand-
ing. There are no terms of the Preferred Securities, the Junior
Subordinated Debentures or the Guarantee that limit the Company's
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<PAGE>
ability to incur additional Senior Indebtedness. See "Description
of Guarantee -- Status of the Guarantee" and "Description of Jun-
ior Subordinated Debentures -- Subordination."
The ability of the Issuer to pay amounts due on its Pre-
ferred Securities is solely dependent upon the Company making pay-
ments on the Junior Subordinated Debentures held by such Issuer as
and when required.
Option to Extend Interest Payment Period; Tax Conse-
quences. The Company has the right under the Indenture (as
defined herein) to extend, from time to time, the interest payment
period on the Junior Subordinated Debentures for a period not
exceeding 20 consecutive quarters. Upon the termination of any
such extended interest payment period and the payment of all
amounts then due, the Company may select a new extended interest
payment period, subject to the requirements described herein and
in the accompanying Prospectus. During any such extended interest
payment period, quarterly distributions on the Preferred Securi-
ties would be deferred (but would continue to accrue with addi-
tional distributions thereon to the extent permitted by law) by
the Issuer. In the event that the Company exercises this right,
during such period it may not declare or pay dividends or distri-
butions (other than dividends or distributions payable in capital
stock of the Company or other securities ranking junior in right
of payment to the Junior Subordinated Debentures) on, or redeem,
purchase, acquire, or make a liquidation payment with respect to
any of its capital stock or any security ranking pari passu with
or junior in right of payment to the Junior Subordinated Deben-
tures, or make any guarantee payment with respect to the foregoing
(other than pro rata payments under the Guarantee) or repurchase,
or cause any of its subsidiaries to repurchase, any security of
the Company ranking pari passu with or junior in right of payment
to the Junior Subordinated Debentures (except for payments made on
any series of Junior Subordinated Debentures upon the stated
maturity of such Junior Subordinated Debentures); provided that
the Company may redeem, purchase, acquire or make a liquidation
payment with respect to any of its capital stock, make any guaran-
tee payment with respect to the foregoing or repurchase, or cause
any of its subsidiaries to repurchase, any security of the Company
ranking pari passu with or junior in right of payment to the Jun-
ior Subordinated Debentures with securities (or the proceeds from
the issuance of securities) having no higher ranking than the cap-
ital stock or the other securities which are to be redeemed, pur-
chased, or acquired, with respect to which a liquidation payment
is to be made, to which a guarantee payment is to be made with
respect to the foregoing or which are to be repurchased. Prior to
the termination of any such extended interest payment period, the
Company may further extend the interest payment period, provided
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<PAGE>
that such extended interest payment period, together with all pre-
vious and further extensions thereof, may not exceed 20 consecu-
tive quarters and that such extended interest payment period may
not extend beyond the maturity or redemption date of the Junior
Subordinated Debentures. Upon the termination of any extended
interest payment period and the payment of all amounts then due,
the Company may select a new extended interest payment period,
subject to the foregoing requirements. If the Company should
determine to exercise its extension right in the future, the mar-
ket price of the Preferred Securities is likely to be affected.
The Issuer and the Company believe that such an extension of an
interest payment period on the Junior Subordinated Debentures is
unlikely to occur. See "Certain Terms of the Preferred Securities
- -- Distributions" and "Certain Terms of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period" set forth
in the accompanying Prospectus Supplement.
Should an interest payment period be extended, Preferred
Securities holders will continue to recognize interest income for
United States Federal income tax purposes. As a result, such
holders will be required to include accruing interest in gross
income for United States Federal income tax purposes in advance of
the actual receipt of such interest. Furthermore, such holders
will not receive the related actual interest payments from the
Issuer if they dispose of their Preferred Securities prior to the
record date for payment of distributions. See "United States
Taxation -- Potential Extension of Interest Payment Period and
Original Issue Discount" set forth in the accompanying Prospectus
Supplement.
Rights Under the Guarantee. The Guarantee will be qual-
ified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Wilmington Trust Company
will act as indenture trustee under the Guarantee for the purposes
of compliance with the Trust Indenture Act (the "Guarantee Trus-
tee"). The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Preferred Securities and will also
be the trustee for the Junior Subordinated Debentures and the
Property Trustee (as defined herein).
The Guarantee is limited to a guarantee, on a subordi-
nated basis, to the holders of the Preferred Securities, of the
payment (but not the collection) of (i) any accrued and unpaid
distributions required to be paid on the Preferred Securities, if
and only to the extent that the Issuer has funds sufficient to
make payment therefor, (ii) the Redemption Price (as defined
herein) with respect to Preferred Securities called for redemption
by the Issuer, if and only to the extent that the Issuer has funds
sufficient to make payment therefor and (iii) upon a voluntary or
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<PAGE>
involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with a redemption of all of the Pre-
ferred Securities), the lesser of (a) the aggregate Liquidation
Amount and all accrued and unpaid distributions on the Preferred
Securities to the date of payment, to the extent the Issuer has
funds sufficient to make such payment, and (b) the amount of
assets of the Issuer remaining available for distribution to hold-
ers of the Preferred Securities in liquidation of the Issuer. The
holders of a majority in aggregate Liquidation Amount of the Pre-
ferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
Guarantee Trustee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee. There
are no preconditions to any holder of Preferred Securities insti-
tuting a legal proceeding directly against the Company to enforce
such holder's rights under the Guarantee. There is no requirement
that a holder of Preferred Securities first institute a legal pro-
ceeding against the Issuer, the Guarantee Trustee or any other
person or entity. If the Company were to default on its obliga-
tions under the Junior Subordinated Debentures, the Issuer would
lack available funds for the payment of distributions or amounts
payable on redemption of the Preferred Securities or otherwise,
and in such event holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts. In
such event, the holders of at least 25% in aggregate Liquidation
Amount of the Preferred Securities then outstanding shall have the
right to enforce directly the rights of the Issuer under the Jun-
ior Subordinated Debentures. See "Description of Guarantee --
Status of the Guarantee" and "Description of Junior Subordinated
Debentures -- Subordination."
Special Event Redemption. Upon the occurrence of a Spe-
cial Event (as defined herein), the Company has the right to
redeem the Junior Subordinated Debentures, in whole but not in
part, in which event the Issuer will redeem the Preferred Securi-
ties. See "Certain Terms of the Preferred Securities -- Redemp-
tion" and "-- Special Event Redemption or Distribution" set forth
in the accompanying Prospectus Supplement.
Recent Tax Law Proposals. If the tax law changed, as a
result of the Proposed Legislation as described under "Recent
Developments" below or otherwise, so that in the Company's judg-
ment it would be precluded from deducting interest on the Junior
Subordinated Debentures, the Company could redeem the Junior Sub-
ordinated Debentures, thereby causing a mandatory redemption of
the Preferred Securities. The Company presently anticipates that,
as permitted by the terms of the Junior Subordinated Debentures
and subject to market and other conditions, it would cause such
redemption of the Preferred Securities if the tax law changed, as
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<PAGE>
a result of the Proposed Legislation or otherwise, in a manner
that would not permit the interest deduction. The Company also
has the option of distributing Junior Subordinated Debentures or
of leaving the Preferred Securities outstanding should such a tax
law change occur as described under "Certain Terms of the Pre-
ferred Securities -- Special Event Redemption or Distribution" set
forth in the accompanying Prospectus Supplement. If the Preferred
Securities are redeemed, holders would receive $25 per Preferred
Security plus accrued and unpaid distributions to the redemption
date. Gain or loss will be recognized on a redemption for cash of
Preferred Securities in an amount equal to the difference between
the amount realized and the tax basis of a holder of the Preferred
Securities in his or her Preferred Securities. Gain or loss rec-
ognized by a holder of Preferred Securities on the redemption of
Preferred Securities held for more than one year generally will be
taxable as long-term capital gain or loss. In addition, the
holder would have the ability to reinvest the proceeds received in
an alternate investment; however, there can be no assurance that
the rate of return on any alternative investment would be as
favorable to a holder as an investment in the Preferred Securi-
ties. If the Company chose to distribute the Junior Subordinated
Debentures to the holders of the Preferred Securities, under cur-
rent United States Federal income tax law and interpretations, if
the Trust is treated as a grantor trust at the time of the distri-
bution, such a distribution should not be treated as a taxable
event to holders of the Preferred Securities. Such a tax-free
transaction would result in a holder of Preferred Securities
retaining an aggregate tax basis in the Junior Subordinated Deben-
tures equal to such holder's aggregate tax basis in the holder's
pro rata share of the Junior Subordinated Debentures prior to the
distribution. A holder's holding period for such Junior Subordi-
nated Debentures would include the period for which the Preferred
Securities were held by such holder. If the Trust were not
treated as a grantor trust at the time of the distribution, the
distribution could be a taxable event to holders of the Preferred
Securities, in which case the principles discussed above with
respect to a redemption of Preferred Securities would apply, and
the holders would have a new tax basis and holding period in the
Junior Subordinated Debentures.
Limited Voting Rights. Holders of Preferred Securities
will have limited voting rights, and, except upon the occurrence
of an Event of Default (as defined herein) under the Trust Agree-
ment, will not be entitled to vote to appoint, remove or replace
the Property Trustee or the Administrative Trustees (as defined
herein) or to increase or decrease the number of the Administra-
tive Trustees. Such voting rights are vested exclusively in the
Depositor, unless and until an Event of Default has occurred and
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<PAGE>
is continuing. See "Description of Preferred Securities -- Events
of Default; Notice."
Trading Characteristics of Preferred Securities. Appli-
cation has been made to have the Preferred Securities approved for
listing on the New York Stock Exchange. If approved for listing,
the Preferred Securities are expected to trade at a price that
takes into account the value, if any, of accrued and unpaid dis-
tributions; thus, purchasers will not pay and sellers will not
receive any accrued and unpaid interest with respect to their
undivided interests in Junior Subordinated Debentures owned
through the Preferred Securities that is not included in the trad-
ing price of the Preferred Securities. However, interest on the
Junior Subordinated Debentures will be included in the gross
income of U.S. Holders (as defined herein) of Preferred Securities
as it accrues, rather than when it is paid. See "United States
Taxation -- Income from Preferred Securities" and "-- Disposition
of Preferred Securities" set forth in the accompanying Prospectus
Supplement.
Because the Preferred Securities pay a dividend at a
fixed rate based upon the fixed interest rate payable on the Jun-
ior Subordinated Debentures, the trading price of the Preferred
Securities may decline if interest rates rise.
RECENT DEVELOPMENTS
On March 19, 1996, President Clinton proposed certain
tax law changes that would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain
debt obligations issued on or after December 7, 1995 (the "Pro-
posed Legislation") if such debt obligations have a maximum term
of in excess of 20 years and are not shown as indebtedness on the
issuer's applicable consolidated balance sheet. In addition, the
Proposed Legislation would deny issuers an interest deduction on
any debt instrument with a weighted average maturity of more than
40 years. On March 29, 1996, Senate Finance Committee Chairman
William V. Roth, Jr. and House Ways and Means Committee Chairman
Bill Archer issued a joint statement (the "Joint Statement") indi-
cating their intent that certain legislative proposals initiated
by the Clinton administration, including the Proposed Legislation,
that may be adopted by either of the tax-writing committees of
Congress would have an effective date that is no earlier than the
date of "appropriate Congressional action." There can be no
assurances, however, that the effective date guidance contained in
the Joint Statement will be incorporated into the Proposed Legis-
lation, if enacted, or that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of the
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<PAGE>
Company to deduct the interest payable on the Junior Subordinated
Debentures.
If the tax law changed, as a result of the Proposed Leg-
islation or otherwise, so that in the Company's judgment it would
be precluded from deducting interest on the Junior Subordinated
Debentures, the Company could, subject to receiving an Opinion of
Counsel to the effect that a relevant tax law change (as described
in the accompanying Prospectus) had occurred, redeem the Junior
Subordinated Debentures in whole, thereby causing a mandatory
redemption of the Preferred Securities in whole at a price of $25
per Preferred Security, plus accrued but unpaid distributions.
The Company presently anticipates that, as permitted by the terms
of the Junior Subordinated Debentures and subject to market and
other conditions, it would cause such redemption of the Preferred
Securities if the tax law changed, as a result of the Proposed
Legislation or otherwise, in a manner that would not permit the
interest deduction. The Company also has the option, subject to
receiving an Opinion of Counsel, of distributing Junior Subordi-
nated Debentures or the option of leaving the Preferred Securities
outstanding should such a tax law change occur as described under
"Description of Preferred Securities -- Special Event Redemption
or Distribution."
USE OF PROCEEDS
The Issuer will use the proceeds from the Offering of
its Preferred Securities, together with its Common Securities, to
purchase Junior Subordinated Debentures. The proceeds received by
the Company from the sale of the Junior Subordinated Debentures
will be used as described in the Prospectus Supplement by which
such securities are offered.
EARNINGS RATIOS
The Company's Ratio of Earnings to Fixed Charges for
each of the periods indicated is as follows:
Twelve Months Ended
May 31, August 31,
1996 1995 1994 1993 1992 1991
Ratio of Earnings
to Fixed Charges: 4.59 5.10 4.76 4.82 4.53 4.67
The Company's Ratios for future periods will be included
in the Company's Reports on Form 10-K and 10-Q. Such Reports are
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<PAGE>
incorporated by reference into this Prospectus at the time they
are filed.
DESCRIPTION OF PREFERRED SECURITIES
General
An original trust agreement between David M. Wilks,
President and Chief Operating Officer of the Company, as Deposi-
tor, and Wilmington Trust Company, as the Property Trustee, has
been used to authorize and create the Issuer. The original trust
agreement is filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Preferred Securities and the
Common Securities of the Issuer (together, the "Issuer Securi-
ties") will be issued by the Administrative Trustees on behalf of
the Issuer pursuant to the terms of the Trust Agreement (as
amended and restated from the original trust agreement). The Pre-
ferred Securities represent undivided preferred beneficial inter-
ests in the assets of the Issuer and entitle the holders thereof
to a preference over the Common Securities of such Issuer, in cer-
tain circumstances, with respect to distributions and amounts pay-
able on redemption or liquidation as well as to other benefits as
described in the Trust Agreement. The following summary of cer-
tain provisions of the Trust Agreement does not purport to be com-
plete and is subject to, and qualified in its entirety by refer-
ence to, the provisions of the Trust Agreement and the Trust
Indenture Act. Wherever particular sections or defined terms of
the Trust Agreement are referred to, such sections or defined
terms are incorporated herein by reference. Section references
used herein are references to provisions of the Trust Agreement
unless otherwise stated.
All of the Common Securities of the Issuer will be owned
by the Company. The Common Securities of the Issuer rank pari
passu, and payments will be made thereon pro rata, with the Pre-
ferred Securities of the such Issuer except as described under "--
Subordination of Common Securities." (Section 4.03). Legal title
to the Junior Subordinated Debentures will be held in the name of
the Property Trustee and held in trust for the benefit of the
holders of the Issuer Securities. (Section 2.09). The Guarantee
is a full and unconditional guarantee on a subordinated basis with
respect to the Preferred Securities but does not guarantee payment
of distributions or amounts payable on redemption or liquidation
of the Preferred Securities when the Issuer does not have funds
sufficient to make such payments.
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The Preferred Securities will initially be offered in
denominations of $25 (based on Liquidation Amount) and integral
multiples of $25 in excess thereof.
Liquidation Amount
The amount payable on the Preferred Securities in the
event of any liquidation of the Issuer is $25 per Preferred Secu-
rity (the "Liquidation Amount"), plus accumulated and unpaid dis-
tributions unless, in connection with such liquidation, the Junior
Subordinated Debentures are distributed to the holders of the Pre-
ferred Securities.
Distributions
The distributions payable on the Preferred Securities
will be fixed at the rate per annum set forth in the Prospectus
Supplement. Distributions in arrears after the quarterly payment
date therefor will accumulate additional distributions thereon
compounded quarterly at the same rate per annum, to the extent
permitted by law. The term "distributions" as used herein
includes any such additional distributions (the "Additional
Amounts"), unless otherwise stated, with respect to the Preferred
Securities. The amount of distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day
months and, for any period shorter than a full month, shall be
computed on the basis of the actual number of days elapsed in such
period. (Section 4.01(b)). See "Description of Junior Subordi-
nated Debentures -- Additional Interest."
Distributions on the Preferred Securities will be cumu-
lative, will accrue from the date of the initial issuance thereof,
and will be payable quarterly in arrears, on the payment dates set
forth in the applicable Prospectus Supplement of each year, except
in the event of an extension of the interest payment period by the
Company on the corresponding series of Junior Subordinated Deben-
tures. In the event that any date on which distributions are
otherwise payable on Preferred Securities is not a Business Day,
payment of the distributions payable on such date will be made on
the next succeeding day that is a Business Day (and without any
interest or other payment in respect to any such delay) except
that, if such Business Day is in the next succeeding calendar
year, payment of such distribution shall be made on the immedi-
ately preceding Business Day, in each case with the same force and
effect as if made on such date (each date on which distributions
are otherwise payable in accordance with the foregoing, a "Distri-
bution Date"). A "Business Day" shall mean any day other than
(x) a Saturday or a Sunday, (y) a day on which banks in New York
are authorized or obligated by law or executive order to remain
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closed or (z) a day on which the Corporate Trust Office of the
Property Trustee or the principal office of the Company is closed
for business. (Section 1.01 and 4.01(a)).
So long as an Event of Default under the Deferrable
Interest Subordinated Debenture Indenture (the "Indenture") has
not occurred and is not continuing, the Company has the right
under the Indenture, as supplemented by a supplemental indenture
relating to the Junior Subordinated Debentures (a "Supplemental
Indenture"), to extend, at any time and from time to time, the
interest payment period on each series of Junior Subordinated
Debentures issued thereunder for a period not exceeding 20 con-
secutive quarters, with the consequence that quarterly distribu-
tions on the corresponding Preferred Securities would be deferred
(but would continue to accrue distributions thereon, including
additional distributions payable on unpaid distributions to the
extent permitted by law at the rate per annum set forth in the
Prospectus Supplement, compounded quarterly) by the Issuer during
any such extended interest payment period; provided that any such
extension period shall not extend beyond the maturity date or
redemption date of the Junior Subordinated Debentures. During any
extension period quarterly distributions on the Preferred Securi-
ties would be deferred by the Issuer, would continue to accrue,
and holders of Preferred Securities would be required to accrue
interest income for United States Federal income tax purposes.
See "Description of Junior Subordinated Debentures -- Option to
Extend Interest Payment Period" herein and "United States
Taxation -- Potential Extension of Interest Payment Period and
Original Issue Discount" in the accompanying Prospectus Supple-
ment. In the event the Company exercises this right, during such
period the Company may not declare or pay any dividends or distri-
butions (other than dividends or distributions payable in capital
stock of the Company or other securities ranking junior in right
of payment to the Junior Subordinated Debentures) on or redeem,
purchase, acquire, or make a liquidation payment with respect to,
any of its capital stock or any security ranking pari passu with
or junior in right of payment to the Junior Subordinated Deben-
tures, or make any guarantee payments with respect to the fore-
going (other than pro rata payments under the Guarantee) or repur-
chase, or cause any of its subsidiaries to repurchase, any secu-
rity of the Company ranking pari passu with or junior in right of
payment to the Junior Subordinated Debentures (except for payments
made on any series of Junior Subordinated Debentures upon the
stated maturity of such Junior Subordinated Debentures); provided
that the Company may redeem, purchase, acquire or make a liquida-
tion payment with respect to any of its capital stock or any secu-
rity ranking pari passu with or junior in right of payment to the
Junior Subordinated Debentures, make any guarantee payment with
respect to the foregoing or repurchase, or cause any of its
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subsidiaries to repurchase, any security of the Company ranking
pari passu with or junior in right of payment to the Junior
Subordinated Debentures with securities (or the proceeds from the
issuance of securities) having no higher ranking than the capital
stock or the other securities which are to be redeemed, purchased,
or acquired, with respect to which a liquidation payment is to be
made, to which a guarantee payment is to be made with respect to
the foregoing or which are to be repurchased. This covenant
requires that an interest payment period on the Junior Subordi-
nated Debentures may be extended only if the interest payment
periods on all other series of Junior Subordinated Debentures that
may be outstanding at the time are likewise extended. Prior to
the termination of any such extended interest payment period, the
Company may further extend the interest payment period, provided
that such extended interest payment period, together with all pre-
vious and further extensions thereof, may not exceed 20 consecu-
tive quarters or extend beyond the maturity or the redemption date
of the series of the Junior Subordinated Debentures in question.
Upon the termination of any extended interest payment period and
the payment of all amounts then due, the Company may select a new
extended interest payment period subject to the foregoing require-
ments. See "Description of Junior Subordinated Debentures --
Interest" and "-- the Company's Option to Extend Interest Payment
Periods" herein and "United States Taxation -- Potential Extension
of Interest Payment Period and Original Issue Discount" in the
accompanying Prospectus Supplement.
It is anticipated that the income of the Issuer avail-
able for distribution to the holders of the Preferred Securities
will be limited to the payments under the Junior Subordinated
Debentures which the Issuer will purchase with the Common Securi-
ties and the proceeds from the issuance and sale of the Preferred
Securities. See "Description of Junior Subordinated Debentures."
If the Company does not make interest payments on the Junior Sub-
ordinated 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 an Issuer has funds
sufficient to make such payments) is guaranteed on a subordinated
basis by the Company to the extent set forth herein under
"Description of Guarantee." The Company's obligations under the
Guarantee, the Trust Agreement, the Expense Agreement, the Junior
Subordinated Debentures and the Indenture constitute, in the
aggregate, a full and unconditional guarantee with respect to the
Preferred Securities. See "Relationship Among the Preferred Secu-
rities, the Junior Subordinated Debentures and the Guarantee."
Distributions on the Preferred Securities will be pay-
able to the holders thereof as they appear on the register of the
Issuer on the relevant record dates, which, as long as the
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Preferred Securities remain in book-entry-only form, will be one
Business Day prior to the relevant Distribution Date. Subject to
any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under
"-- Book-Entry-Only Issuance -- The Depository Trust Company"
below. In the event that the Preferred Securities do not remain
in book-entry-only form, the relevant record date shall be the
date 15 days prior to the relevant Distribution Date.
(Section 4.01(d)).
Redemption
Upon the repayment of any series of Junior Subordinated
Debentures, whether at maturity or upon earlier redemption as pro-
vided in the Indenture, the proceeds from such repayment shall be
applied by the Property Trustee to redeem a Like Amount (as
defined herein) of Issuer Securities, upon not less than 30 nor
more than 90 days' notice, at a redemption price equal to the
aggregate Liquidation Amount plus accumulated and unpaid distribu-
tions, plus additional distributions thereon, if any, to the
extent permitted by law, to the redemption date (the "Redemption
Price"). See "Description of Junior Subordinated Debentures --
Optional Redemption."
The Company will have the right to redeem the Junior
Subordinated Debentures (a) on or after a date to be specified in
the Prospectus Supplement, in whole or in part, or (b) at any
time, in whole but not in part, upon occurrence of a Tax Event or
an Investment Company Event (each as defined below, a "Special
Event"), subject to the conditions described under "-- Special
Event Redemption or Distribution" and "Description of Junior Sub-
ordinated Debentures -- Optional Redemption."
Special Event Redemption or Distribution
If a Special Event shall occur and be continuing with
respect to the Issuer or the Preferred Securities of the Issuer,
the Company has the right to (i) redeem the corresponding Junior
Subordinated Debentures in whole, but not in part, and thereby
cause a mandatory redemption of such Preferred Securities in
whole, but not in part, at the Redemption Price within 90 days
following the occurrence of such Special Event, or (ii) terminate
the Issuer and cause the corresponding Junior Subordinated Deben-
tures to be distributed, subject to the receipt of an Opinion of
Counsel experienced in such matters to the effect that the holders
of the Preferred Securities will not recognize gain or loss for
United States Federal income tax purposes as a result of such dis-
tribution, to the holders of the Preferred Securities in liquida-
tion of such Issuer. If at any time the Issuer is not or will not
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be taxed as a grantor trust, but a Tax Event has not occurred, the
Depositor has the right to terminate such Issuer and cause the
corresponding Junior Subordinated Debentures to be distributed,
subject to the receipt of an Opinion of Counsel experienced in
such matters to the effect that the holders of the Preferred Secu-
rities will not recognize gain or loss for United States Federal
income tax purposes as a result of such distribution, to the hold-
ers of the Preferred Securities of such Issuer. Under current
United States Federal income tax law and interpretations, if the
Issuer is treated as a grantor trust at the time of the distribu-
tion, such a distribution should not be a taxable event to holders
of the Preferred Securities. Should there be a change in law, a
change in legal interpretation, a Special Event or other circum-
stances, however, the termination could be a taxable event to
holders of the Preferred Securities of an Issuer. See "United
States Taxation -- Receipt of Junior Subordinated Debentures Upon
Liquidation of the Issuer" in the accompanying Prospectus Supple-
ment. If the Company does not elect either option (i) or (ii)
above, the Preferred Securities will remain outstanding.
"Tax Event" means the receipt by the Issuer or the Com-
pany, as the case may be, of an Opinion of Counsel (which may be
counsel to the Issuer, the Company or an affiliate, and which must
be reasonably acceptable to the Property Trustee) experienced in
such matters to the effect that a relevant tax law change has
occurred after a date specified in the accompanying Prospectus
Supplement. For purposes of the preceding sentence, a relevant
tax law change is any amendment or change to (or officially pro-
posed amendment or change to) the laws (including regulations
thereunder) of the United States or any political subdivision or
taxing authority thereof, or the publication of any judicial opin-
ion interpreting such laws (and regulations) or any written inter-
pretation of such laws (or regulations) by any governmental
authority having jurisdiction to enforce or administer such laws
(or regulations) (including official and unofficial opinions pur-
porting to apply such laws and regulations to other persons who
have issued securities similar to the Junior Subordinated Deben-
tures), which amendment, change, proposed amendment or change,
opinion or interpretation could, if valid and enacted or applied
to an Issuer or the Company, result in (i) such Issuer, either
currently or within 90 days of the date thereof, becoming subject
to United States Federal income tax with respect to interest
received on the Junior Subordinated Debentures, (ii) interest pay-
able by the Company on the Junior Subordinated Debentures attrib-
utable to the Preferred Securities, either currently or within 90
days of the date thereof, becoming nondeductible for United States
Federal income tax purposes or (iii) the Issuer, either currently
or within 90 days of the date thereof, becoming subject to more
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<PAGE>
than a de minimis amount of other taxes, duties or other govern-
mental charges.
"Investment Company Event" means the occurrence of a
change in law or regulation or a change in the interpretation or
application of any law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in
1940 Act Law") to the effect that the Issuer is or will be consid-
ered an "investment company" that is required to be registered
under the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 1940 Act Law becomes effective after a date
specified in the accompanying Prospectus Supplement.
"Like Amount" means (i) with respect to a redemption of
Issuer Securities, Issuer Securities having an aggregate Liquida-
tion Amount equal to the principal amount of corresponding Junior
Subordinated Debentures to be contemporaneously redeemed in accor-
dance with the Indenture and the proceeds of which will be used to
pay the Redemption Price of such Issuer Securities and (ii) with
respect to a distribution of Junior Subordinated Debentures to
holders of the Preferred Securities in connection with the termi-
nation or liquidation of the Issuer upon the bankruptcy, dissolu-
tion or liquidation of a holder of the Common Securities, the
occurrence of a Special Event or in the event that the Issuer is
not or will not be taxed as a grantor trust but a Tax Event has
not occurred, Junior Subordinated Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Preferred
Securities of the holders to whom such series of Junior Subordi-
nated Debentures is distributed.
Redemption Procedures
Preferred Securities redeemed on each date fixed for
redemption (the "Redemption Date") shall be redeemed at the
Redemption Price with the proceeds from the contemporaneous
redemption of the corresponding Junior Subordinated Debentures.
Redemptions of Preferred Securities shall be made, and the Redemp-
tion Price shall be deemed payable, on each Redemption Date only
to the extent that an Issuer has funds sufficient for the payment
of such Redemption Price. (Section 4.02(d)). See "-- Subordina-
tion of Common Securities."
If the Property Trustee gives a notice of redemption in
respect of Preferred Securities of a particular series (which
notice will be conditioned upon the redemption of the related
series of Junior Subordinated Debentures), then, by 12:00 noon,
New York time, on the Redemption Date, the Property Trustee will,
so long as such Preferred Securities are in book-entry-only form,
irrevocably deposit with The Depository Trust Company ("DTC")
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funds sufficient to pay the applicable Redemption Price and, at
the direction of the Depositor, will give DTC irrevocable instruc-
tions and authority to pay the Redemption Price to the holders of
such Preferred Securities. See "-- Book-Entry-Only Issuance --
The Depository Trust Company." If such Preferred Securities are
no longer in book-entry-only form, the Property Trustee will irre-
vocably deposit with the Paying Agent for such Preferred Securi-
ties funds sufficient to pay the applicable Redemption Price and
will give such Paying Agent irrevocable instructions and authority
to pay the Redemption Price to the holders thereof upon surrender
of their certificates evidencing Preferred Securities. Notwith-
standing the foregoing, distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption
shall be payable to the holders of such Preferred Securities on
the relevant record date for the related Distribution Date. If
notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of hold-
ers of such Preferred Securities so called for redemption will
cease, except the right of the holders of such Preferred Securi-
ties to receive the Redemption Price, but without interest on such
Redemption Price, and such Preferred Securities will cease to be
outstanding. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest
or other payment in respect of any such delay), except that, if
such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is not paid either by the Issuer
or by the Company pursuant to the Guarantee described herein under
"Description of Guarantee," distributions on such Preferred Secu-
rities will continue to accrue at the rate set forth on the face
of such securities, from the original Redemption Date to the date
of payment, in which case the actual payment date will be consid-
ered the date fixed for redemption for purposes of calculating the
Redemption Price. Failure to deposit the Redemption Price with
the Property Trustee (and/or irrevocably direct the Property Trus-
tee to apply money held by it to the redemption of Preferred Secu-
rities) in the case of an optional redemption shall not be an
Event of Default but shall be deemed to be a rescission of the
call for redemption. (Section 4.02(e)).
Subject to applicable law (including, without limita-
tion, United States Federal securities law), the Company or its
subsidiaries may at any time and from time to time purchase out-
standing Preferred Securities by tender, in the open market or by
private agreement.
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<PAGE>
Payment of the Redemption Price on Preferred Securities
to holders of such Preferred Securities shall be made to the
record holders thereof as they appear on the register for such
Preferred Securities on the relevant record date, which shall be
one Business Day prior to the relevant Redemption Date, provided,
however, that in the event that such Preferred Securities do not
remain in book-entry-only form, the relevant record date shall be
the date 15 days prior to the Redemption Date. (Section 4.02(f)).
If less than all the outstanding Issuer Securities are
to be redeemed on a Redemption Date, then the aggregate amount
payable shall be allocated 3% to the Common Securities and 97% to
the Preferred Securities. The particular Preferred Securities to
be redeemed shall be selected not more than 90 days prior to the
Redemption Date by the Property Trustee from the outstanding Pre-
ferred 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 $25 and integral multiples in excess thereof) of the
aggregate Liquidation Amount of Preferred Securities of a denomi-
nation larger than $25. The Property Trustee shall promptly
notify the Securities Registrar in writing of the Preferred Secu-
rities selected for partial redemption and, in the case of any
such Preferred Securities selected for partial redemption, the
aggregate Liquidation Amount thereof to be redeemed. For all pur-
poses of the Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of a series of
Preferred Securities shall relate, in the case of any Preferred
Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of the Preferred Securities
that has been or is to be redeemed. (Section 4.02(g)).
Subordination of Common Securities
Payment of distributions (including Additional Amounts,
if applicable) on, and the Redemption Price of, Issuer Securities,
as applicable, shall be made pro rata based on the aggregate
Liquidation Amount of both the Preferred Securities and the Common
Securities; provided, however, that if on any Distribution Date or
Redemption Date an Event of Default (as defined herein, see "--
Events of Default; Notice," below) under the Indenture shall have
occurred and be continuing, with respect to the Preferred Securi-
ties, no payment of any distribution (including Additional
Amounts, if applicable) on, or the Redemption Price of, any Common
Security corresponding thereto, and no other payment on account of
the redemption, liquidation or other acquisition of the corre-
sponding Common Securities shall be made unless payment in full in
cash of all accumulated and unpaid distributions (including Addi-
tional Amounts, if applicable) on all outstanding Preferred
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Securities for all distribution periods terminating on or prior
thereto, or in the case of payment of the Redemption Price the
full amount of such Redemption Price on all such outstanding Pre-
ferred Securities called for redemption, shall have been made or
provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all dis-
tributions (including Additional Amounts, if applicable) on, or
the Redemption Price of such Preferred Securities then due and
payable. (Section 4.03(a)).
In the case of any Event of Default under the Trust
Agreement, the holder of the Common Securities will be deemed to
have waived any right to act with respect to any such Event of
Default under such Trust Agreement until the effect of all such
Events of Default with respect to the Preferred Securities have
been cured, waived or otherwise eliminated. Until all such Events
of Default under the Trust Agreement have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on
behalf of the holders of the Preferred Securities and not the
holder of the Common Securities, and only the holders of such Pre-
ferred Securities will have the right to direct the Property Trus-
tee to act on their behalf. (Section 4.03(b)).
Liquidation Distribution Upon Dissolution
Pursuant to the Trust Agreement, the Issuer shall be
liquidated on the first to occur of: (i) the expiration of the
term of the Trust; (ii) the bankruptcy, dissolution or liquidation
of a holder of Common Securities; (iii) the Depositor has elected
to cause the Trust to be dissolved after the occurrence of a Spe-
cial Event or in the event that the Trust is not or will not be
taxed as a grantor trust but a Tax Event has not occurred;
(iv) the redemption of all of the Preferred Securities; and (v) an
order for dissolution of the Trust issued by a court of competent
jurisdiction. (Section 9.01 and 9.02).
If an early termination occurs as described in
clause (iii) of the immediately preceding paragraph, the Issuer
shall be liquidated as expeditiously as practicable by having the
Property Trustee distribute, subject to the receipt of an Opinion
of Counsel experienced in such matters to the effect that the
holders of the Preferred Securities will not recognize gain or
loss for United States Federal income tax purposes as a result of
such distribution, to each holder of Preferred Securities and Com-
mon Securities a Like Amount of Junior Subordinated Debentures
held by such Issuer (a "Final Distribution"). However, in the
event that the Property Trustee determines that such Final Distri-
bution is impractical, the holders of such Issuer Securities will
be entitled to receive, out of the assets of the Issuer available
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for distribution to holders after satisfaction of all liabilities
of creditors, an amount equal to the aggregate of the stated
Liquidation Amount of $25 per Issuer Security plus accrued and
unpaid distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Dis-
tribution can be paid only in part because the Issuer has insuffi-
cient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by such Issuer on
the Issuer Securities shall be paid on a pro rata basis. However,
if an Event of Default has occurred and is continuing, the holders
of the Common Securities will be entitled to receive distributions
upon any such dissolution only after the holders of the Preferred
Securities. If the Junior Subordinated Debentures are distributed
to the holders of the corresponding Preferred Securities, the Com-
pany will use reasonable efforts to have such Junior Subordinated
Debentures listed on such stock exchanges, if any, on which the
Preferred Securities are then listed. If the Company defaults on
its payment obligations under the Indenture, a holder will have
the right to take action directly against the Company for enforce-
ment of payment of principal of or interest on the Junior Subordi-
nated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder. If
an early termination occurs as described in clause (ii) of the
immediately preceding paragraph, a liquidating trustee (the
"Liquidating Trustee") may be appointed by a majority of the
aggregate Liquidation Amount of the Issuer Securities or by a
court of competent jurisdiction. Any such Liquidating Trustee
shall (unless otherwise instructed by a court of competent juris-
diction) make a Final Distribution or, if deemed appropriate by
such Liquidating Trustee, make a Liquidation Distribution, in sub-
stantially the same manner as described above. (Section 9.04).
Events of Default; Notice
The occurrence of an "Event of Default" as defined in
Section 501 of the Indenture (see "Description of Junior Subordi-
nated Debentures -- Events of Default") constitutes an "Event of
Default" under the Trust Agreement.
Within five Business Days after the occurrence of any
Event of Default actually known to the Property Trustee, the Prop-
erty Trustee shall transmit notice of such Event of Default to the
holders of the Preferred Securities, the Administrative Trustees
and the Depositor, unless such Event of Default shall have been
cured or waived. (Section 8.02).
Unless an Event of Default shall have occurred and be
continuing, any Trustee with respect to the Issuer Securities may
be removed at any time by act of the Depositor of the Issuer. If
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an Event of Default has occurred and is continuing, any Trustee
with respect to the Issuer Securities may be removed at such time
by act of the holders of a majority in aggregate Liquidation
Amount of the outstanding Issuer Securities, delivered to such
Trustee (in its individual capacity and on behalf of the relevant
Issuer). No resignation or removal of a Trustee and no appoint-
ment of a successor Trustee shall be effective until the accep-
tance of appointment by the successor Trustee in accordance with
the provisions of the Trust Agreement. (Section 8.10).
If an Event of Default has occurred and is continuing,
the Preferred Securities shall have a preference over the corre-
sponding Common Securities upon dissolution of the relevant Issuer
as described above. See "-- Liquidation Distribution Upon
Dissolution."
Merger or Consolidation of a Trustee
Any corporation into which either the Property Trustee
or any Administrative Trustee that is not a natural person may be
merged or with which it may be consolidated or any corporation
resulting from any merger, conversion or consolidation to which
any such Trustee shall be a party shall be the successor to such
Trustee under the Trust Agreement, provided such corporation is
otherwise qualified and eligible. (Section 8.12).
Voting Rights
Except as provided below and under "Description of Guar-
antee -- Amendments and Assignments" and as otherwise required by
law, the holders of the Preferred Securities will have no voting
rights. (Section 6.01(a)).
So long as any Junior Subordinated Debentures are held
by the Issuer, the Property Trustee 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 Jun-
ior Subordinated Debentures, (ii) waive any past default which is
waivable under Section 513 of the Indenture, (iii) exercise any
right to rescind or annul any declaration that the principal of
all the Junior Subordinated Debentures shall be due and payable or
(iv) consent to any amendment, modification of termination of the
Indenture or the Junior Subordinated Debentures, where such con-
sent shall be required, without, in each case, obtaining the prior
approval of the holders of at least a majority in aggregate Liqui-
dation Amount of the outstanding Issuer Securities; provided, how-
ever, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected
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thereby, no such consent shall be given by the Property Trustee
without the prior consent of each holder of the Issuer Securities.
The Property Trustee shall not revoke any action previously autho-
rized or approved by a vote of the holders of the Issuer Securi-
ties, except pursuant to a subsequent vote of the outstanding
Issuer Securities. The Property Trustee shall notify all holders
of Issuer Securities of any notice of default received from the
Debenture Trustee. In addition to obtaining the foregoing approv-
als of the holders of the Issuer Securities, prior to taking any
of the foregoing actions, the Property Trustee shall obtain an
Opinion of Counsel experienced in such matters to the effect that
the Issuer will not be classified as an association taxable as a
corporation for United States Federal income tax purposes on
account of such action. (Section 6.01(b)).
If any proposed amendment to the Trust Agreement pro-
vides for, or the Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or spe-
cial rights of the holders of the Issuer Securities, whether by
way of amendment to the Trust Agreement relating to such Issuer
Securities or otherwise, or (ii) the dissolution, winding-up or
termination of the Issuer, other than pursuant to the Trust Agree-
ment, then the holders of the outstanding Issuer Securities will
be entitled to vote on such amendment or proposal, and such amend-
ment or proposal shall not be effective except with the approval
of the holders of at least a majority in aggregate Liquidation
Amount of such outstanding Issuer Securities. (Section 6.01(c)).
No amendment to the Trust Agreement may be made if, as a
result of such amendment, the Issuer would be classified as an
association taxable as a corporation for United States Federal
income tax purposes. (Section 6.01(c)).
Any required approval of the holders of Issuer Securi-
ties may be given at a meeting of the holders of Issuer Securities
convened for such purpose or pursuant to the written consent of
such holders. The Administrative Trustees will cause a notice of
any meeting at which holders of such Issuer Securities are enti-
tled to vote, or of any matter upon which action by written con-
sent of such holders is to be taken, to be given to each holder of
record of such Issuer Securities in the manner set forth in the
Trust Agreement (Section 6.02).
No vote or consent of the holders of Issuer Securities
will be required for the Issuer to redeem and cancel Issuer Secu-
rities in accordance with the Trust Agreement.
Notwithstanding that holders of Issuer Securities are
entitled to vote or consent under any of the circumstances
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described above, any of the Issuer Securities that are owned by
the Company, any Trustee or any affiliate of the Company or any
Trustee, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
Co-Property Trustees and Separate Property Trustees
Unless an Event of Default under the Trust Agreement
shall have occurred and be continuing, at any time or times, for
the purpose of meeting the legal requirements of the Trust Inden-
ture Act or of any jurisdiction in which any part of the Trust
Property (as defined in the Trust Agreement) may at the time be
located, the Depositor and the Administrative Trustees shall have
power to appoint, and upon the written request of the Administra-
tive Trustees, the Depositor shall for such purpose join with the
Administrative Trustees in the execution, delivery and performance
of all instruments and agreements necessary or proper to appoint
one or more persons approved by the Property Trustee either to act
as co-property trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to act as separate trustee
of any such Trust Property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such
person or persons in such capacity, any property, title, right or
power deemed necessary or desirable, subject to the provisions of
the Trust Agreement. If the Depositor does not join in such
appointment within 15 days after the receipt by it of a request to
do so, or in case an Event of Default under the Indenture has
occurred and is continuing, the Administrative Trustees and the
Property Trustee shall have power to make such appointment.
(Section 8.09).
Payment and Paying Agents
Payments in respect of the Preferred Securities shall be
made to DTC, which shall credit the relevant accounts at DTC on
the applicable Distribution Dates or, if the Preferred Securities
are not held by DTC, such payments shall be made by check mailed
to the address of the holder entitled thereto as such address
shall appear on the securities register. The Paying Agent shall
initially be Wilmington Trust Company. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice
to the Administrative Trustees, the Property Trustee and the
Depositor. In the event that Wilmington Trust Company chooses no
longer to be the Paying Agent, the Administrative Trustees shall
appoint a successor acceptable to the Property Trustee and the
Company to act as Paying Agent (which shall be a bank or trust
company or the Company). (Section 4.04 and 5.08).
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Book-Entry-Only Issuance--The Depository Trust Company
DTC will act as securities depository for the Preferred
Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global Preferred
Security certificates will be issued, representing in the aggre-
gate the total number of Preferred Securities, and will be depos-
ited with Wilmington Trust Company, as custodian for DTC.
DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the
New York Uniform Commercial Code, and a "clearing agency" regis-
tered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds the securities that its participants ("Partici-
pants") deposit with it. DTC facilitates the settlement of secu-
rities transactions among Participants through electronic comput-
erized book-entry changes in Participants' accounts, thereby elim-
inating the need for physical movement of securities certificates.
Direct Participants include securities brokers, securities deal-
ers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a
number of its Direct Participants, as well as by the New York
Stock Exchange, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers,
securities dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
underwriters with respect to the Preferred Securities may be
Direct or Indirect Participants. The rules applicable to DTC and
its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system
must be made by or through Direct Participants, which will receive
a credit for the Preferred Securities on DTC's records. The own-
ership interest of each actual purchaser of each Preferred Secu-
rity ("Beneficial Owner") is, in turn, recorded on a Direct or
Indirect Participant's records, as the case may be. Beneficial
Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the respective Direct
or Indirect Participants through which the Beneficial Owners pur-
chased Preferred Securities. Transfers of ownership interests in
the Preferred Securities are also effected by entries made on the
books of Participants acting on behalf of Beneficial Owners.
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Beneficial Owners will not receive certificates representing their
ownership interests in Preferred Securities, except in the event
that use of the book-entry system for the Preferred Securities is
discontinued.
DTC has no knowledge of the actual Beneficial Owners of
the Preferred Securities; DTC's records reflect only the identity
of the Direct Participants to whose accounts such Preferred Secu-
rities are credited, which may or may not be the Beneficial Own-
ers. The Participants are responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect Partici-
pants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by the arrangements made among
them, subject to any statutory or regulatory requirements as may
be in effect from time time.
Redemption notices, if any, will be sent to DTC. If
less than all of the Preferred Securities of a particular series
are being redeemed, DTC's practice is to determine by lot the
amount of the Preferred Securities held by each Direct Participant
in such series to be redeemed.
Although voting with respect to the Preferred Securities
is limited to the holders of record of the Preferred Securities,
in those cases where a vote is required neither DTC nor Cede & Co.
will itself consent or vote with respect to any Preferred Securi-
ties. Under its usual procedures, DTC would mail an Omnibus Proxy
to the Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants (identified in a listing attached to the
Omnibus Proxy) to whose accounts the Preferred Securities are
credited on the record date.
Distribution payments on the Preferred Securities will
be made by the Issuer to DTC. DTC's practice is to credit Direct
Participants' accounts on the relevant payment date in accordance
with their respective holdings as shown on DTC's records, unless
DTC has reason to believe that it will not receive payments on
such payment date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices
and will be the responsibility of such Participants and not of
DTC, the Issuer or the Company, subject to any statutory or regu-
latory requirements as may be in effect from time to time. Pay-
ment of distributions to DTC is the responsibility of the Issuer,
disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the
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Beneficial Owners is the responsibility of the Direct or Indirect
Participants in whose accounts the Preferred Securities are held,
respectively.
DTC may discontinue providing its services as securities
depositary with respect to the Preferred Securities at any time by
giving reasonable notice to the Issuer. If DTC stops providing
such services and a successor securities depositary is not
obtained, Preferred Security certificates must be printed and
delivered. Additionally, the Administrative Trustees (with the
consent of the Company) could decide to discontinue use of the
system of book-entry transfers through DTC (or a successor deposi-
tary). In that event, definitive certificates for the Preferred
Securities would be printed and delivered.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company
and the Issuer believe to be reliable. Neither the Company nor
the Issuer have responsibility for the performance by DTC or its
Participants of their respective obligations as described herein
or under the rules and procedures governing their respective
operations.
Registrar and Transfer Agent
Wilmington Trust Company will act as Securities Regis-
trar and transfer agent for the Issuer Securities.
(Section 5.04).
Registration of transfers of Issuer Securities will be
effected without charge by or on behalf of the Issuer, but upon
payment (with the giving of such indemnity as the Issuer or the
Company may require) in respect of any tax or other governmental
charges which may be imposed in connection therewith.
(Section 5.04).
The Securities Registrar will not be required to regis-
ter or cause to be registered any transfer of Issuer Securities
after they have been called for redemption. (Section 5.04).
Information Concerning the Property Trustee
The Property Trustee undertakes to perform only such
duties as are specifically set forth in the Trust Agreement and,
after an Event of Default under the Indenture, 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 Indenture at the request of
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any holder of Preferred Securities or Junior Subordinated Deben-
tures unless the Property Trustee is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred
thereby. (Section 8.01).
Modification of the Trust Agreement
From time to time, the Company and the Trustees may,
without the consent of any holders of the Preferred Securities,
amend the Trust Agreement for specified purposes, including, among
other things, (i) to cure ambiguities, correct or supplement any
provision of the Trust Agreement which may be inconsistent with
any other provision thereof 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 ensure that the Trust will not be
classified for United States Federal income tax purposes as an
association taxable as a corporation and will not be required to
register as an "investment company" under the 1940 Act; provided,
however, that such amendment or action shall not adversely affect
the rights of any holder of the Issuer Securities. The Trust
Agreement contains provisions permitting the Company and the
Trustees, with the consent of the holders of not less than a
majority in aggregate Liquidation Amount of the outstanding Issuer
Securities related thereto and upon receipt of an appropriate
Opinion of Counsel, to modify the Trust Agreement in a manner
affecting the rights of the holders of such Issuer Securities;
provided that no such modification may, without the consent of the
holder of each such outstanding Issuer Security affected by the
proposed modification (i) change the amount or timing of any dis-
tribution on such Issuer Securities or otherwise adversely affect
the amount of any distribution required to be made in respect of
such Issuer Securities as of a specified date, (ii) restrict the
right of any holder of such Issuer Securities to institute suit
for the enforcement of any payment under such Trust Agreement or
(iii) change the percentage of Issuer Securities required to con-
sent to any modification to the Trust Agreement. (Section 10.02).
Governing Law
The Trust Agreement will be governed by, and construed
in accordance with, the laws of the State of Delaware.
(Section 10.05).
Miscellaneous
The Administrative Trustees are authorized and directed
to conduct the affairs of the Issuer and to operate the Issuer so
that the Issuer will not be deemed to be an "investment company"
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required to be registered under the 1940 Act or be taxed as a cor-
poration for United States Federal income tax purposes and so that
the Junior Subordinated Debentures will be treated as indebtedness
of the Company for United States Federal income tax purposes. In
this connection, the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law, the cer-
tificate of trust of the Issuer or the Trust Agreement, that the
Administrative Trustees determine in their discretion to be neces-
sary or desirable for such purposes, as long as such action does
not adversely affect the interest of the holders of the Preferred
Securities. (Section 2.07).
Holders of the Preferred Securities have no preemptive
rights.
DESCRIPTION OF GUARANTEE
General
Set forth below is certain information concerning the
Guarantee that will be executed and delivered by the Company for
the benefit of the holders from time to time of Preferred Securi-
ties. The Guarantee will be qualified as an indenture under the
Trust Indenture Act. Wilmington Trust Company will act as inden-
ture trustee (the "Guarantee Trustee") under the Guarantee for
purposes of compliance with the Trust Indenture Act. The terms of
the Guarantee will be those set forth in such Guarantee and those
made part of such Guarantee by the Trust Indenture Act. This sum-
mary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by
reference to, the Guarantee, the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus is
a part, and of the Trust Indenture Act. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Pre-
ferred Securities. Whenever particular provisions of or defined
terms in the Guarantee are referred to, such sections or defined
terms are incorporated herein by reference. Section references
used herein are references to provisions of the Guarantee unless
otherwise stated.
The Company will agree, on a subordinated basis, to the
extent set forth below, to make the Guarantee Payments (as defined
below) in full to the holders of the Preferred Securities (without
duplication of amounts theretofore paid by the Issuer with respect
thereto), as and when due, regardless of any defense, right of
set-off or counterclaim that such Issuer may have or assert other
than the defense of payment. (Section 5.1). The following pay-
ments with respect to the Preferred Securities, to the extent not
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paid by or on behalf of the Issuer (the "Guarantee Payments"),
will be subject to the related Guarantee (without duplication):
(i) any accrued and unpaid distributions required to be paid on
the Preferred Securities, if and only to the extent that the
Issuer has funds sufficient to make such payment; (ii) the Redemp-
tion Price with respect to any such Preferred Securities called
for redemption by the Issuer, if and only to the extent that the
Issuer has funds sufficient to make such payment; and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of
such Issuer (other than in connection with a redemption of all of
the corresponding Preferred Securities), the lesser of (a) the
aggregate Liquidation Amount and all accrued and unpaid distribu-
tions on such Preferred Securities to the date of payment, to the
extent the Issuer has funds sufficient to make such payment, and
(b) such amount of assets of such Issuer remaining available for
distribution to holders of such Preferred Securities in liquida-
tion of such Issuer. (Section 1.1). 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 Issuer to pay such amounts to such
holders. (Section 5.1).
The Guarantee will be a guarantee on a subordinated
basis with respect to the Preferred Securities from the time of
the issuance of such Preferred Securities, but will not apply
(i) to any payment of distributions if and to the extent that the
Issuer does not have funds sufficient to make such payments or
(ii) to the collection of payment. If the Company does not make
interest payments on a series of Junior Subordinated Debentures
held by the Issuer, it is expected that such Issuer will not pay
distributions on such Preferred Securities. The Guarantee will
rank subordinate and junior in right of payment to all liabilities
of the Company (except trade credit and any liabilities made pari
passu with, or subordinate to, the Guarantee by their terms). See
"-- Status of the Guarantee."
With respect to the Preferred Securities, the mechanisms
and obligations relating to the Guarantee, the Indenture and the
Junior Subordinated Debentures and the obligation of the Company
under the Trust Agreement to pay all obligations, costs and
expenses (other than obligations of the Trust to pay to holders of
the Preferred Securities the amounts due such holders pursuant to
the terms of the Preferred Securities) of the Issuer (the "Expense
Agreement") taken together, are a full and unconditional subordi-
nated guarantee by the Company of payment due of such Preferred
Securities. See "Description of Junior Subordinated Debentures"
and "Relationship Among the Preferred Securities, the Junior Sub-
ordinated Debentures and the Guarantee".
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Amendments and Assignments
Except with respect to any changes that do not adversely
affect the rights of the holders of Preferred Securities (in which
case no consent of such holders will be required), the terms of
the Guarantee may be changed only with the prior approval of the
holders of not less than a majority in aggregate Liquidation
Amount of such outstanding Preferred Securities. All guarantees
and agreements contained in the Guarantee will be binding upon the
successors, assigns, receivers, trustees and representatives of
the Company, and shall inure to the benefit of the holders of the
corresponding Preferred Securities then outstanding. (Sections
8.1 and 8.2).
Events of Default
An event of default under the Guarantee will occur upon
the failure of the Company to perform any of its payment obliga-
tions thereunder. (Section 1.1). The holders of a majority in
aggregate Liquidation Amount of the Preferred Securities have the
right to direct the time, method and place of conducting any pro-
ceeding 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.
(Section 5.4).
Any holder of the Preferred Securities may institute a
legal proceeding directly against the Company to enforce such
holder's rights under the Guarantee without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any
other person or entity. (Section 5.4).
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence
and continuance of a default by the Company in the performance of
the Guarantee, undertakes to perform only such duties as are spe-
cifically set forth in the Guarantee and, after default with
respect to the Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct
of his or her own affairs. Subject to this provision, the Guaran-
tee Trustee is under no obligation to exercise any of the powers
vested in it by the Guarantee at the request of any holder of Pre-
ferred Securities unless the Guarantee Trustee is offered reason-
able indemnity against the costs, expenses and liabilities that
might be incurred thereby. (Sections 3.1 and 3.2).
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Termination of the Guarantee
The Guarantee will terminate and be of no further force
and effect upon full payment of the Redemption Price of all Pre-
ferred Securities, the distribution of Junior Subordinated Deben-
tures to the holders of such Preferred Securities in exchange for
all of such Preferred Securities or upon payment in full of the
amounts payable upon liquidation of the Issuer. Notwithstanding
the foregoing, the Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of
Preferred Securities must restore payment of any sums paid under
such Preferred Securities or the Guarantee. (Section 7.1).
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of
the Company and will rank subordinate and junior in right of pay-
ment to all Senior Indebtedness (as defined below) of the Company.
(Section 6.1). The Trust Agreement provides that each holder of
Preferred Securities by acceptance thereof agrees to the subordi-
nation provisions and other terms of the Guarantee.
The Guarantee will rank pari passu with any similar
guarantees issued by the Guarantor on behalf of the holders of
Preferred Securities issued by any other issuer holding Junior
Subordinated Debentures issued under the Indenture. (Section
6.2).
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 Guarantor to enforce its
rights under the Guarantee without first instituting a legal pro-
ceeding against any other person or entity). (Section 5.5).
Governing Law
The Guarantee will be governed by and construed in
accordance with the laws of the State of New York. (Section 8.5).
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
General
Set forth below is a description of certain terms of the
Junior Subordinated Debentures which the Issuer will purchase with
its Common Securities and the proceeds of the issuance and sale of
such Issuer's Preferred Securities. The following summary does
not purport to be complete and is subject in all respects to, and
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<PAGE>
is qualified in its entirety by reference to, the Indenture, as
supplemented by a supplemental indenture creating the series of
Junior Subordinated Debentures (the "Supplemental Indenture"),
from the Company to Wilmington Trust Company, as trustee with
respect to the Junior Subordinated Debentures (the "Debenture
Trustee"), the forms of which are filed as exhibits to the Regis-
tration Statement of which this Prospectus is a part, and the
Trust Indenture Act. Whenever particular provisions of or defined
terms in the Indenture or the Supplemental Indenture are referred
to, such sections or defined terms are incorporated herein by ref-
erence. Section references used herein are references to provi-
sions of the Indenture unless otherwise stated.
Concurrently with the issuance of Preferred Securities,
the Issuer will invest the proceeds thereof in a corresponding
series of Junior Subordinated Debentures newly issued by the Com-
pany. The Junior Subordinated Debentures will mature on a date
that is more than 20 and less than 50 years from the date of issu-
ance, as specified in the Prospectus Supplement. The Junior Sub-
ordinated Debentures will be unsecured subordinated obligations of
the Company issued under the Indenture. The Junior Subordinated
Debentures will be in a principal amount equal to the aggregate
stated Liquidation Amount of the Preferred Securities plus the
Company's concurrent investment in the Common Securities and will
rank pari passu with any other series of Junior Subordinated
Debentures that may be issued. The Indenture does not limit the
aggregate principal amount of Junior Subordinated Debentures which
may be issued thereunder.
Optional Redemption
The Company will have the right, at any time and from
time to time, as set forth in the Supplemental Indenture, to
redeem the Junior Subordinated Debentures, in whole or in part, at
a redemption price as set forth in such Supplemental Indenture,
together with any accrued but unpaid interest thereon, including
any Additional Interest (as defined below) to the redemption date.
If a Special Event shall occur and be continuing, the
Company shall have the right to redeem any series of Junior Subor-
dinated Debentures in whole but not in part, at 100% of the prin-
cipal amount thereof plus any accrued and unpaid interest on such
Junior Subordinated Debentures, including any Additional Interest,
if any, to the redemption date fixed for redemption for such
series. (Section 102 of the Supplemental Indenture).
For so long as the Issuer is the holder of all the out-
standing Junior Subordinated Debentures, the proceeds of any such
redemption will be used by such Issuer to redeem Preferred
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Securities and the Common Securities in accordance with their
terms. The Company may not redeem Junior Subordinated Debentures
in part unless all accrued and unpaid interest thereon (including
any Additional Interest) has been paid in full on all outstanding
Junior Subordinated Debentures for all interest periods terminat-
ing on or prior to the redemption date. (Section 102 of the Sup-
plemental Indenture).
Any optional redemption of Junior Subordinated Deben-
tures shall be made upon not less than 30 nor more than 90 days'
notice to the holders thereof. If at the time of mailing of any
notice of redemption the Company shall not have deposited with the
Debenture Trustee (and/or irrevocably directed the Debenture Trus-
tee to apply, from money held by it available to be used for the
redemption of Junior Subordinated Debentures) an amount in cash
sufficient to redeem all of the Junior Subordinated Debentures to
be redeemed, including accrued interest to such redemption date,
such notice shall state that the proposed redemption to which such
notice relates is subject to the deposit of such amount with the
Debenture Trustee on or before the redemption date. Failure to
have so deposited such amount (or directed such payment) shall not
constitute an Event of Default but shall be deemed to be a rescis-
sion of the call for redemption. (Section 1204).
After notice of redemption is given and the Company hav-
ing on or before the redemption date deposited with the Debenture
Trustee (and/or having irrevocably directed the Debenture Trustee
to apply, from money held by it available to be used for the
redemption of Junior Subordinated Debentures) an amount in cash
sufficient to redeem all of the Junior Subordinated Debentures to
be redeemed, the Junior Subordinated Debentures so to be redeemed
will, on the redemption date, become due and payable and from and
after such date, such Junior Subordinated Debentures will cease to
bear interest. (Section 1206).
The Junior Subordinated Debentures will be subject to
optional redemption in whole, but not in part, upon the termina-
tion and liquidation of the Issuer holding such series of Junior
Subordinated Debentures pursuant to an order for the dissolution,
termination or liquidation of such Issuer entered by a court of
competent jurisdiction. For so long as the Issuer is the holder
of all Junior Subordinated Debentures, the proceeds of any redemp-
tion described in this section shall be used by such Issuer to
redeem its Preferred Securities and the Common Securities in
accordance with their terms.
The Company shall not redeem the Junior Subordinated
Debentures in part unless all accrued and unpaid interest (includ-
ing any Additional Interest) has been paid in full on all Junior
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Subordinated Debentures outstanding for all interest periods on or
prior to the redemption date.
Distributions of Debentures
Under certain circumstances involving the termination of
the Issuer, Junior Subordinated Debentures held by such Issuer may
be distributed to the holders of the Preferred Securities in
liquidation of the Issuer, after satisfaction of all liabilities
to creditors of the Issuer as provided by applicable law. If dis-
tributed to holders of Preferred Securities in liquidation, the
Junior Subordinated Debentures will initially be issued in the
form of one or more global securities, and DTC, or any successor
depositary for the Preferred Securities, will act as depositary
for the Junior Subordinated Debentures. It is anticipated that
the depositary arrangements for the Junior Subordinated Deben-
tures, if distributed, would be substantially identical to those
in effect for the Preferred Securities. Neither the Company, the
Debenture Trustee, any Paying Agent nor any other agent of the
Company or the Debenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of persons holding Junior Subordinated Debentures
in the form of a global security for the Junior Subordinated
Debentures or for maintaining, supervising or reviewing any
records relating to such holders.
A global security shall be exchangeable for Junior Sub-
ordinated Debentures registered in the names of persons other than
DTC or its nominee only if (i) DTC notifies the Company that it is
unwilling or unable to continue as a depositary for such global
security and no successor depositary shall have been appointed, or
if at any time DTC ceases to be a clearing agency registered under
the Exchange Act at a time when DTC is required to be so regis-
tered to act as such depositary, (ii) the Company in its sole dis-
cretion determines that such global security shall be so exchange-
able, or (iii) there shall have occurred and be continuing an
Event of Default with respect to such global security. Any global
security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for definitive certificates registered in
such names as DTC shall direct. It is expected that such instruc-
tions will be based upon directions received by DTC from its Par-
ticipants with respect to the ownership of beneficial interests in
such global security. In the event that Junior Subordinated
Debentures are issued in definitive form, such Junior Subordinated
Debentures will be issued in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the
offices described below.
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Payments on Junior Subordinated Debentures represented
by a global security will be made to DTC, as the depositary for
the Junior Subordinated Debentures. In the event Junior Subordi-
nated Debentures are issued in definitive form, principal and
interest will be payable, the transfer of the Junior Subordinated
Debentures will be registrable, and Junior Subordinated Debentures
will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corpo-
rate office of the Debenture Trustee in Wilmington, Delaware, or
at the offices of any paying or transfer agent appointed by the
Company, provided that payment of interest may be made, at the
option of the Company, by check mailed to the address of the per-
sons entitled thereto or by wire transfer. In addition, if the
Junior Subordinated Debentures are issued in certificated form,
the record dates for payment of interest will be the 15th day pre-
ceding the end of each quarter. For a description of DTC and the
terms of the depositary arrangements relating to payments, trans-
fers, voting rights and other matters, see "Description of Pre-
ferred Securities -- Book-Entry-Only Issuance -- The Depository
Trust Company."
If the Junior Subordinated Debentures are distributed to
the holders of Preferred Securities upon the liquidation of the
Issuer, the Company will use its best efforts to list the Junior
Subordinated Debentures on such stock exchanges, if any, as the
Preferred Securities are then listed.
Interest
The Junior Subordinated Debentures shall bear interest
at the rate per annum set forth in the applicable Supplemental
Indenture and from the date specified therein. Such interest
shall be payable in arrears on the dates of each year specified in
the Supplemental Indenture (each, an "Interest Payment Date"),
subject to certain exceptions, to the person in whose name such
Junior Subordinated Debentures are registered, at the close of
business on the Business Day next preceding such Interest Payment
Date. (Section 307 of the Indenture and Section 101 of the Sup-
plemental Indenture). It is anticipated that the Junior Subordi-
nated Debentures issued with respect to an issue of Preferred
Securities will be held in the name of the Property Trustee in
trust for the benefit of the holders of the Issuer Securities.
The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months
and, for any period shorter than a full monthly period, shall be
computed on the basis of the actual number of days elapsed in such
period. (Section 310). In the event that any date on which
interest is payable on the Junior Subordinated Debentures is not a
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Business Day, then payment of the interest payable on such date
will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeed-
ing calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on the date the payment was originally payable.
(Section 101 of the Supplemental Indenture).
Interest which is accrued and unpaid after the Interest
Payment Date therefor will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate specified for
the Junior Subordinated Debentures. The term "Interest" as used
herein shall include interest payments, interest on interest pay-
ments in arrears and Additional Interest, as applicable.
The Company's Option to Extend Interest Payment Periods
The Company shall have the right, at any time and from
time to time while the Junior Subordinated Debentures are out-
standing, so long as an Event of Default has not occurred or is
continuing, to extend the interest payment period on such Junior
Subordinated Debentures for a period not exceeding 20 consecutive
quarters (the "Extension Period") during which period interest
will compound quarterly. At the end of any such Extension Period,
the Company must pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for such
Junior Subordinated Debentures to the extent permitted by appli-
cable law). During any such Extension Period, the Company may not
declare or pay any dividends or distributions (other than divi-
dends or distributions payable in capital stock of the Company or
other securities ranking junior in right of payment to the Junior
Subordinated Debentures) on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of its capital stock or
any security ranking pari passu with or junior in right of payment
to the Junior Subordinated Debentures, or make any guarantee pay-
ment with respect to the foregoing (other than pro rata payments
under the Guarantee) or repurchase, or cause any of its subsidiar-
ies to repurchase, any security of the Company ranking pari passu
with or junior in right of payment to the Junior Subordinated
Debentures (except for payments made on any series of Junior Sub-
ordinated Debentures upon the stated maturity of such Junior Sub-
ordinated Debentures); provided that the Company may redeem, pur-
chase, acquire or make a liquidation payment with respect to any
of its capital stock or any security ranking pari passu with or
junior in right of payment to the Junior Subordinated Debentures,
make any guarantee payment with respect to the foregoing or repur-
chase, or cause any of its subsidiaries to repurchase, any secu-
rity of the Company ranking pari passu with or junior in right of
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payment to the Junior Subordinated Debentures with securities (or
the proceeds from the issuance of securities) having no higher
ranking than the capital stock or the other securities which are
to be redeemed, purchased, acquired, with respect to which a
liquidation payment is to be made, to which a guarantee payment is
to be made with respect to the foregoing or which are to be repur-
chased. This covenant requires that an interest payment period on
the Junior Subordinated Debentures may be extended only if the
interest payment periods on all other series of Junior Subordi-
nated Debentures that may be outstanding at the time are likewise
extended. Prior to the termination of any Extension Period, the
Company may further extend the interest payment period, provided
that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters
or extend beyond the maturity date or redemption date of such Jun-
ior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Com-
pany may select a new Extension Period, subject to the foregoing
requirements. No interest shall be due and payable during an
Extension Period, except at the end thereof. So long as the Prop-
erty Trustee shall be the sole holder of the Junior Subordinated
Debentures, the Company must give the Property Trustee, the Admin-
istrative Trustees and the Debenture Trustee notice of its selec-
tion of such Extension Period at least one Business Day prior to
the earlier of (i) the date that the distribution on the Preferred
Securities is payable or (ii) the date the Administrative Trustees
are required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization or to holders of the
Preferred Securities of the record date for the payment of such
distribution or the date such distribution is payable, but in any
event not less than one Business Day prior to such record date.
The Debenture Trustee will be required to give prompt notice of
the Company's selection of such Extension Period to the holders of
the Preferred Securities and the Administrative Trustees. (Sec-
tion 101 of the Supplemental Indenture).
Right of Set-Off
Notwithstanding anything to the contrary in the Inden-
ture, the Company shall have the right to set-off any payment it
is otherwise required to make thereunder to the extent the Company
has theretofore made, or is concurrently on the date of such pay-
ment making, a payment under the Guarantee. (Section 311).
Additional Interest
If at any time the Issuer shall be required to pay any
interest on distributions in arrears in respect of the Preferred
Securities pursuant to the terms thereof, the Company will pay as
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interest to such Issuer, as the holder of the corresponding Junior
Subordinated Debentures, an amount of additional interest ("Addi-
tional Interest Attributable to Deferral") equal to interest on
distributions in arrears. Accordingly, in such circumstances the
Company will, to the fullest extent permitted by applicable law,
pay interest upon interest in order to provide for quarterly com-
pounding on such Junior Subordinated Debentures. In addition, if
the Issuer is required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding
taxes) imposed by the United States or any other taxing authority,
then, in each case, the Company will also pay such amounts as
shall be required so that the net amounts received and retained by
such Issuer after paying such taxes, duties, assessments or gov-
ernmental charges will be not less than the amounts such Issuer
would have received had no such taxes, duties, assessments or gov-
ernmental charges been imposed ("Additional Interest Attributable
to Taxes," and, together with Additional Interest Attributable to
Deferral, "Additional Interest"). (Section 101 of the Indenture
and Section 101 of the Supplemental Indenture).
Subordination
The Junior Subordinated Debentures will be subordinate
and junior in right of payment to the prior payment, in full in
cash or cash equivalents, of all Senior Indebtedness (as defined
below). (Sections 101 and 1101). In the event of (a) any insol-
vency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relating to the Company or to its assets, or
(b) any liquidation, dissolution or other winding-up of the Com-
pany, whether voluntary or involuntary and whether or not involv-
ing insolvency or bankruptcy, or (c) any assignment for the bene-
fit of creditors or any other marshalling of assets and liabili-
ties of the Company (except a distribution in connection with a
consolidation of the Company with, or the merger of the Company
into, another corporation or the liquidation or dissolution of the
Company following conveyance, transfer or lease of its properties
and assets substantially as an entirety to another corporation
upon the terms and conditions described below under "--Consolida-
tion, Merger and Sale"), the holders of all Senior Indebtedness
will be entitled to receive payment in full in cash or cash equiv-
alents of all amounts due or to become due thereon, before the
holders of Junior Subordinated Debentures are entitled to receive
any payment on account of the principal of or interest on the Jun-
ior Subordinated Debentures; and any payment or distribution of
assets of the Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to which the
holders of the Junior Subordinated Debentures or the Debenture
Trustee would be entitled but for the provisions of the Indenture
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relating to subordination shall be paid by the liquidating trustee
or agent or other person making such payment or distribution
directly to the holders of Senior Indebtedness ratably according
to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness to the extent necessary to make payment in full in
cash or cash equivalents of all Senior Indebtedness remaining
unpaid. In the event that, notwithstanding the foregoing, the
Debenture Trustee or any holder of the Junior Subordinated Deben-
tures shall have received payment or distribution of assets of the
Company of any kind or character (excluding certain permitted sub-
ordinated securities) before all Senior Indebtedness is paid in
full or payment thereof provided for, then such payment or distri-
bution will be paid over or delivered to the trustee in bank-
ruptcy, receiver, liquidating trustee, custodian, assignee, agent
or other person making payment or distribution of the assets of
the Company for application to the payment of all Senior Indebted-
ness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in cash or cash equivalents. (Section 1102).
The Company is prohibited from making payments on
account of the principal of or interest on the Junior Subordinated
Debentures or on account of the purchase or redemption or other
acquisition of the Junior Subordinated Debentures if there shall
have occurred and be continuing: (a) a default in any payment
with respect to any Senior Indebtedness or (b) any other event of
default with respect to any Senior Indebtedness resulting in the
acceleration of the maturity thereof. (Section 1103). In the
event that the Company makes any payment to the Debenture Trustee
or any holder of Junior Subordinated Debentures, which payment is
prohibited by the foregoing, then such payment is required to be
paid over to the representative of the holders of the Senior
Indebtedness then outstanding to the extent necessary to pay in
full, in cash or cash equivalents, all Senior Indebtedness. (Sec-
tion 1103).
Subject to the payment in full of all Senior Indebted-
ness, the holders of the Junior Subordinated Debentures shall be
subrogated to the rights of the holders of Senior Indebtedness to
receive payments and distributions of assets of the Company appli-
cable to the Senior Indebtedness until the Junior Subordinated
Debentures are paid in full. (Section 1105).
If the Company fails to make any payment on the Junior
Subordinated Debentures when due or within any applicable grace
period, such failure will constitute an Event of Default under the
Indenture. See "--Events of Default."
As of May 31, 1996, the Senior Indebtedness of the Com-
pany was approximately $771 million.
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The term "Senior Indebtedness" shall mean the principal
of, interest on and any other payment due pursuant to any of the
following, whether outstanding at the date of execution of any
Supplemental Indenture or thereafter incurred, created or assumed:
(a) all indebtedness of the Company on a consolidated
basis (other than any obligations to trade creditors) evi-
denced by notes, debentures, bonds or other securities sold
by the Company for money borrowed and capitalized lease
obligations;
(b) all indebtedness of others of the kinds described
in the preceding clause (a) assumed by or guaranteed in any
manner by the Company or in effect guaranteed by the Company;
(c) all obligations of the Company issued or assumed as
the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company
under any title retention agreement (but excluding trade
accounts payable);
(d) certain obligations of the Company for the reim-
bursement of any obligor on any letter of credit, banker's
acceptance, security purchase facility, surety bond or simi-
lar credit transaction entered into in the ordinary course of
business of the Company; and
(e) all renewals, extensions or refundings of indebted-
ness of the kinds described in any of the preceding clauses
(a) through (d);
unless, in the case of any particular indebtedness, capitalized
lease obligation, guarantee, renewal, extension or refunding, the
instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness,
capitalized lease obligation, guarantee, renewal, extension or
refunding is made pari passu with or subordinate to the Junior
Subordinated Debentures. (Section 101).
Notwithstanding the foregoing, the Junior Subordinated
Debentures will rank pari passu with each other series of Junior
Subordinated Debentures that may be issued under the Indenture.
The Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued.
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Certain Covenants
The Junior Subordinated Debentures will not be secured
by any properties or assets and will represent unsecured debt of
the Company.
Unless otherwise indicated in a Prospectus Supplement,
the covenants contained in the Indenture and the Junior Subordi-
nated Debentures do not afford holders of the Junior Subordinated
Debentures special protection in the event of a highly leveraged
or other transaction involving the Company that may adversely
affect holders of the Junior Subordinated Debentures.
In the Indenture, the Company covenants that it will not
declare or pay any dividends or distributions (other than divi-
dends or distributions payable in common stock of the Company or
other securities ranking junior in right of payment to the Junior
Subordinated Debentures) on, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its capital stock or
any security ranking pari passu with or junior in right of payment
to the Junior Subordinated Debentures, or make any guarantee pay-
ments with respect to the foregoing (other than pro rata payments
under the Guarantee) or repurchase, or cause any of its subsidiar-
ies to repurchase, any security of the Company ranking pari passu
with or junior in right of payment to the Junior Subordinated
Debentures (except for payments made on any series of Junior Sub-
ordinated Debentures upon the stated maturity of such Junior Sub-
ordinated Debentures) if at such time (i) 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
constitute an Event of Default with respect to such Junior Subor-
dinated Debentures and (b) which the Company shall not have taken
reasonable steps to cure, (ii) the Company shall have given notice
of its selection of an Extension Period as provided in the Inden-
ture, and such Extension Period, or any extension thereof, shall
have commenced and be continuing, or (iii) the Company shall be in
default with respect to its payment of any obligations under the
Guarantee. Notwithstanding the foregoing, the Company may redeem,
purchase, acquire or make a liquidation payment with respect to
any of its capital stock or any security ranking pari passu with
or junior in right of payment to the Junior Subordinated Deben-
tures, make any guarantee payment with respect to the foregoing or
repurchase, or cause any of its subsidiaries to repurchase, any
security of the Company ranking pari passu with or junior in right
of payment to the Junior Subordinated Debentures with securities
(or the proceeds from the issuance of securities) having no higher
ranking than the capital stock or the other securities which are
to be redeemed, purchased, acquired, with respect to which a
liquidation payment is to be made, to which a guarantee payment is
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to be made with respect to the foregoing or which are to be repur-
chased. (Section 1005).
The Company also covenants (i) not to transfer ownership
of Common Securities of the Issuer to which Junior Subordinated
Debentures have been issued to any person other than an affiliate
of the Company as permitted under the Indenture; provided that no
such transfer will result in (x) such Issuer being considered an
"investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, or (y) the Issuer not
being taxed as a grantor trust for United States Federal income
tax purposes, (ii) not to voluntarily dissolve, wind up or termi-
nate the Issuer, except in connection with the distribution of the
Junior Subordinated Debentures to the holders of the Preferred
Securities of such Issuer in liquidation of such Issuer or in con-
nection with certain mergers, consolidations or amalgamations per-
mitted by the Trust Agreement and (iii) to use its reasonable
efforts, consistent with the terms and provisions of the Trust
Agreement, to cause such Issuer to remain a grantor trust and
otherwise not to be classified as an association taxable as a cor-
poration for United States Federal income tax purposes. (Section
1005).
Events of Default
The Indenture will provide that any one or more of the
following described events with respect to Junior Subordinated
Debentures that has occurred and is continuing constitutes an
"Event of Default" with respect to the Junior Subordinated
Debentures:
(a) failure for 30 days to pay any interest on the Jun-
ior Subordinated Debentures, including any Additional Inter-
est in respect thereof, when due (subject to the deferral of
any due date in the case of an Extension Period);
(b) failure to pay any principal on the Junior Subordi-
nated Debentures when due whether at maturity, upon redemp-
tion, by declaration of acceleration or otherwise; except
that, in the case of an optional redemption, the failure to
redeem any Junior Subordinated Debenture which is the result
of the Company's failure to deposit on or before the redemp-
tion date with the Debenture Trustee (and/or having irrevoca-
bly directed the Debenture Trustee to apply, from money held
by it available to be used for the redemption of Junior Sub-
ordinated Debentures) an amount in cash sufficient to redeem
all of the Junior Subordinated Debentures to be redeemed,
shall not be an Event of Default, but shall be deemed a
rescission of the call for redemption;
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(c) failure to observe or perform in any material
respect any other covenant relating to such series of Junior
Subordinated Debentures 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 principal amount of
the outstanding Junior Subordinated Debentures; or
(d) certain events in bankruptcy, insolvency or reor-
ganization of the Company. (Section 501).
If an Event of Default has occurred and is continuing,
the holders of a majority in outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Debenture Trustee. (Section 512). The Debenture
Trustee or the holders of not less than 25% in aggregate outstand-
ing principal amount of the Junior Subordinated Debentures may
declare the principal and interest due and payable immediately
upon an Event of Default. In addition, the holders of at least
25% in aggregate Liquidation Amount of the Preferred Securities
shall have such right. The holders of a majority in outstanding
principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default has been
cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration and any
Additional Interest has been deposited with the Debenture Trustee.
(Section 502).
The holders of a majority in outstanding principal
amount of the Junior Subordinated Debentures may, on behalf of the
holders of all the Junior Subordinated Debentures, waive any past
default, except a default in the payment of principal or interest
(unless such default has been cured and a sum sufficient to pay
all matured installments of interest and principal due otherwise
than by acceleration has been deposited with the Debenture Trus-
tee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the con-
sent of the holder of each outstanding Junior Subordinated Deben-
ture. (Section 513). The Company is required to file annually
with the Debenture Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants
applicable to it under the Indenture. (Section 1004).
Unless otherwise provided in a Prospectus Supplement, a
voluntary or involuntary dissolution of the Issuer prior to the
redemption or maturity of the Junior Subordinated Debentures held
by such Issuer will not constitute an Event of Default with
respect to such Junior Subordinated Debentures. If the Issuer is
dissolved, an event the possibility of which the Company and the
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Issuer consider to be remote, any of the following, among other
things, could occur: (i) a distribution of the Junior Subordi-
nated Debentures held by such Issuer to the holders of the Pre-
ferred Securities, (ii) a cash distribution to the holders of such
Preferred Securities out of the sale of assets of such Issuer,
after satisfaction of all liabilities to creditors, or (iii) a
permitted redemption at par of the Junior Subordinated Debentures,
and a consequent redemption of a like amount of such Preferred
Securities, at the option of the Company under the circumstances
described under "--Optional Redemption" or (iv) the rollover of
Trust Property (as defined in the Trust Agreement) into another
entity with similar characteristics.
Form, Exchange and Transfer
The Junior Subordinated Debentures, if issued in certif-
icated form, will be issuable only in registered form, without
coupons and only in denominations of $25 and integral multiples
thereof. (Section 302).
Subject to the terms of the Indenture, Junior Subordi-
nated Debentures may be presented for registration of transfer or
exchange (duly endorsed or accompanied by satisfactory instruments
of transfer) at the office of the securities registrar or at the
office of any transfer agent designated by the Company for such
purpose. No service charge will be made for any registration of
transfer or exchange of Junior Subordinated Debentures, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
Such transfer or exchange will be effected upon the securities
registrar or such transfer agent, as the case may be, being satis-
fied with the documents of transfer, title and identity of the
person making the request. The Company has appointed the Deben-
ture Trustee as the initial securities registrar. (Section 305).
The Company may at any time designate additional transfer agents,
rescind the designation of any transfer agent or approve a change
in the office through which any transfer agent acts.
(Section 1002).
If the Junior Subordinated Debentures are to be redeemed
in part, the Company will not be required to issue, register the
transfer of or exchange any Junior Subordinated Debentures during
a period beginning at the opening of business 15 days before the
day of mailing of the notice of redemption for such Junior Subor-
dinated Debentures that may be selected for redemption and ending
at the close of business on the day of such mailing.
(Section 305).
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Payment and Paying Agents
Payment of interest on a Junior Subordinated Debenture
on any interest payment date will be made to the person in whose
name such Junior Subordinated Debenture (or one or more predeces-
sor Junior Subordinated Debentures) is registered at the close of
business on the regular record date for such interest.
(Section 307).
Principal of and any interest on the Junior Subordinated
Debentures will be payable at the office of such Paying Agent or
Paying Agents as the Company may designate for such purpose from
time to time, except that at the option of the Company, payment of
any interest may be made by check mailed to the address of the
person entitled thereto as such address appears in the securities
register or by wire transfer. The corporate trust office of the
Debenture Trustee in the City of Wilmington, Delaware is desig-
nated as the Company's initial sole Paying Agent for payments with
respect to the Junior Subordinated Debentures. The Company may at
any time designate additional Paying Agents or rescind the desig-
nation of any Paying Agent or approve a change in the office
through which any Paying Agent acts. (Section 1002).
Supplemental Indentures, Modification of the Indenture
From time to time the Company and the Debenture Trustee
may, without the consent of the holders of the Junior Subordinated
Debentures, amend, waive or supplement the Indenture for specified
purposes, including, among other things, curing ambiguities,
defects or inconsistencies, qualifying, or maintaining the quali-
fication of, the Indenture under the Trust Indenture Act, or mak-
ing any other change that does not adversely affect the rights of
any holder of Junior Subordinated Debentures. (Section 901). The
Indenture will contain provisions permitting the Company and the
Debenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the Junior Subordinated
Debentures, to modify the Indenture in a manner affecting the
rights of the holders of such Junior Subordinated Debentures; pro-
vided that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture so
affected, (i) change the fixed maturity of the Junior Subordinated
Debentures, reduce the principal amount thereof, or reduce the
rate or extend the time for payment of interest thereon (otherwise
than as permitted under the Indenture), (ii) reduce the percentage
of the principal amount of Junior Subordinated Debentures, the
holders of which are required to consent to any such modification
of the Indenture or (iii) modify certain provisions of the Inden-
ture relating to the waiver of past defaults or compliance by the
Company with certain covenants set forth therein. The Indenture
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also requires the consent of the holders of the affected Preferred
Securities, if any, in respect of certain amendments to or termi-
nation of the Indenture and in respect to compliance by the Com-
pany with certain covenants in the Indenture. (Section 902). In
addition, the Company and the Debenture Trustee may execute, with-
out the consent of any holders of Junior Subordinated Debentures,
Supplemental Indentures for the purpose of creating new series of
Junior Subordinated Debentures. (Section 901).
Consolidation, Merger and Sale
The Company may not consolidate with, merge into, or
convey, transfer or lease its properties and assets substantially
as an entirety to, any person (a "Successor Person"), and may not
permit any person to merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to the Company,
unless: (i) the Successor Person (if any) is a corporation, part-
nership, trust or other entity organized and validly existing
under the laws of any United States jurisdiction and assumes the
Company's obligations on the Junior Subordinated Debentures, the
Indenture, the Guarantee and the Expense Agreement;
(ii) immediately after giving effect to the transaction and treat-
ing any indebtedness which becomes an obligation of the Company or
any subsidiary as a result of the transaction as having been
incurred by it at the time of the transaction, no Event of
Default, and no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing;
(iii) such transaction does not give rise to any breach or viola-
tion of the Trust Agreement or the Guarantee; and (iv) the Company
has delivered to the Debenture Trustee an Officers' Certificate
and an Opinion of Counsel as to certain matters. (Section 801).
Satisfaction and Discharge
Under the terms of the Indenture, the Company will be
discharged from any and all obligations in respect of the Junior
Subordinated Debentures (except, in each case, for certain obliga-
tions to register the transfer or exchange of such Junior Subordi-
nated Debentures, replace stolen, lost or mutilated Junior Subor-
dinated Debentures and hold moneys or U.S. Government Obligations
(as defined in the Indenture) for payment in trust) if the Company
deposits with the Debenture Trustee, in trust, moneys or U.S.
Government Obligations in an amount sufficient to pay all the
principal of, and interest on, such Junior Subordinated Debentures
on the dates such payments are due in accordance with the terms of
such Junior Subordinated Debentures. (Section 401).
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Governing Law
The Indenture, any Supplemental Indenture and the Junior
Subordinated Debentures will be governed by, and construed in
accordance with, the laws of the State of New York.
(Section 112).
Miscellaneous
The Company will have the right at all times to assign
any of its rights or obligations under the Indenture to a direct
or indirect wholly-owned subsidiary of the Company, provided that,
in the event of any such assignment, the Company will remain lia-
ble for such obligations. Subject to the foregoing, the Indenture
will be binding upon and inure to the benefit of the parties
thereto and their respective successors and assigns.
(Section 109).
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As long as payments of interest and other payments are
made when due on the Junior Subordinated Debentures, such payments
will be sufficient to cover distributions and other payments due
on the Preferred Securities because: (i) the aggregate principal
amount of the Junior Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Issuer Secu-
rities; (ii) the interest rate and interest and other payment
dates on the Junior Subordinated Debentures will correspond to the
distribution rate and distribution and other payment dates on the
Preferred Securities; (iii) the Expense Agreement entered into by
the Company pursuant to the Trust Agreement provide that the Com-
pany shall pay for all, and the Issuer shall not be obligated to
pay, directly or indirectly, for any, costs, expenses or liabili-
ties of such Issuer, including any income taxes, duties and other
governmental charges, and all costs and expenses with respect
thereto, to which such Issuer may become subject, except for
United States withholding taxes and such Issuer's payment obliga-
tions to holders of the Preferred Securities under such Preferred
Securities; and (iv) the Trust Agreement further provides that the
Trustees shall not cause or permit the Issuer to, among other
things, engage in any activity that is not consistent with the
limited purposes of the Issuer. The Company's obligations under
the Guarantee, the Trust Agreement, the Expense Agreement, the
Junior Subordinated Debentures and the Indenture constitute, in
the aggregate, a full and unconditional guarantee with respect to
the Preferred Securities.
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Payments of distributions and other amounts due on Pre-
ferred Securities (to the extent the Issuer has funds sufficient
for the payment of such distributions) are guaranteed by the Com-
pany as and to the extent set forth under "Description of Guaran-
tee." If and to the extent that the Company does not make pay-
ments on the Junior Subordinated Debentures, the Issuer will not
pay distributions or other amounts due on the Preferred
Securities.
A holder of a Preferred Security to which such Guarantee
applies may institute a legal proceeding directly against the Com-
pany to enforce such holder's rights under such Guarantee without
first instituting a legal proceeding against the Issuer of such
Preferred Security or any other person or entity. In addition, if
the Company defaults on its obligations under the Indenture, the
holders of at least 25% in the aggregate Liquidation Amount of the
Preferred Securities then outstanding shall have the right to
enforce the rights of the Issuer under the Junior Subordinated
Debentures.
The Preferred Securities will evidence the rights of the
holders thereof to the benefits of the Issuer, a trust that exists
for the sole purpose of issuing its Issuer Securities and invest-
ing the proceeds of its Preferred Securities in the corresponding
Junior Subordinated Debentures of the Company, while the Junior
Subordinated Debentures represents indebtedness of the Company. A
principal difference between the rights of a holder of a Preferred
Security and a holder of a Junior Subordinated Debenture is that a
holder of a Junior Subordinated Debenture will accrue, and (sub-
ject to the permissible extensions of the interest payment period)
is entitled to receive, interest on the principal amount of Junior
Subordinated Debentures held, while a holder of Preferred Securi-
ties is only entitled to receive distributions if and to the
extent the Issuer has funds sufficient for the payment of such
distributions.
Upon any voluntary or involuntary dissolution,
winding-up or termination of the Issuer involving the distribution
of Junior Subordinated Debentures, the holders of Preferred Secu-
rities will be entitled to receive, out of assets legally avail-
able for distribution to such holders, the Final Distribution or a
Liquidation Distribution; provided, however, that if an Event of
Default under the Trust Agreement shall have occurred and be con-
tinuing, the holders of the Common Securities shall be entitled to
receive, out of assets legally available for distribution to such
holders, distributions only after the holders of the Preferred
Securities. See "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Issuer,
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<PAGE>
as a holder of Junior Subordinated Debentures, would be a subordi-
nated creditor of the Company, subordinated in right of payment to
all Senior Indebtedness, but entitled to receive payment in full
of principal and interest before any stockholders of the Company
receive any payments or distributions. Since the Company has
agreed to pay for all costs, expenses and liabilities of the
Issuer (other than United States withholding taxes and other than
the Issuer's obligations to the holders of Preferred Securities
under the Preferred Securities, which obligations are indepen-
dently covered by the Guarantee), the positions of a holder of
Preferred Securities and a holder of Junior Subordinated Deben-
tures relative to other creditors and to stockholders of the Com-
pany in the event of a liquidation or bankruptcy of the Company
would be substantially the same.
A default or event of default under any Senior Indebted-
ness will not constitute a default or Event of Default under the
Junior Subordinated Debentures. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness, the sub-
ordination provisions of the Junior Subordinated Debentures pro-
vide that no payments may be made in respect of the Junior Subor-
dinated Debentures until such Senior Indebtedness has been paid in
full or any payment default thereunder has been cured or waived.
Failure to make required payments on the Junior Subordi-
nated Debentures would constitute an Event of Default under the
Indenture.
PLAN OF DISTRIBUTION
The Preferred Securities may be sold in a public offer-
ing to or through underwriters or dealers designated from time to
time. The Issuer may sell its Preferred Securities as soon as
practicable after the effectiveness of the Registration Statement
of which this Prospectus is a part. The names of any underwriters
or dealers involved in the sale of the Preferred Securities in
respect of which this Prospectus is delivered, the number of Pre-
ferred Securities to be purchased by any such underwriters or
dealers and the applicable commissions or discounts will be set
forth in the applicable Prospectus Supplement.
Underwriters may offer and sell Preferred Securities at
a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
In connection with the sale of Preferred Securities, underwriters
will be deemed to have received compensation from the Company and
the Issuer in the form of underwriting discounts or commissions.
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<PAGE>
Underwriters may sell Preferred Securities to or through dealers,
and such dealers may receive compensation in the form of dis-
counts, concessions or commissions from the underwriters.
Any underwriting compensation paid by the Company to
underwriters in connection with the offering of the Preferred
Securities, and any discounts, concessions or commissions allowed
by such underwriters to participating dealers, will be set forth
in the applicable Prospectus Supplement. Underwriters and dealers
participating in the distribution of Preferred Securities may be
deemed to be underwriters, and any discounts and commissions
received by them, and any profit realized by them on resale of
such Preferred Securities, may be deemed to constitute underwrit-
ing discounts and commissions under the Securities Act. Under-
writers and dealers may be entitled, pursuant to their agreement
with the Company and the Issuer, to indemnification against and
contribution toward certain civil liabilities, including liabili-
ties under the Securities Act, and to reimbursement by the Company
for certain expenses.
In connection with the offering of the Preferred Securi-
ties, the Issuer thereof may grant to the underwriters an option
to purchase additional Preferred Securities to cover over-allot-
ments, if any, at the initial public offering price (with an addi-
tional underwriting commission), as set forth in the applicable
Prospectus Supplement.
Underwriters and dealers may engage in transactions
with, or perform services for, the Company, the Issuer and any of
their respective affiliates.
The Issuer's Preferred Securities will be a new issue of
securities and will have no established trading market. Any
underwriters to whom the Issuer's Preferred Securities are sold by
such Issuer for public offering and sale may make a market in such
Preferred Securities, but such underwriters will not be obligated
to do so and may discontinue any market-making at any time without
notice. Such Preferred Securities may or may not be listed on a
national securities exchange. No assurance can be given as to the
liquidity of or the existence of meaningful trading markets for
any Preferred Securities.
LEGAL OPINIONS
Certain legal matters in connection with the Preferred
Securities are being passed upon for the Company and the Issuer by
Hinkle, Cox, Eaton, Coffield & Hensley, L.L.P., Amarillo, Texas,
and Cahill Gordon & Reindel, a partnership including a
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<PAGE>
professional corporation, New York, New York, and for the Issuer
by Richards, Layton & Finger, special Delaware counsel to the Com-
pany and the Issuers. Cahill Gordon & Reindel and Richards,
Layton & Finger are not passing upon the incorporation of the Com-
pany and are relying upon the opinions of Hinkle, Cox, Eaton,
Coffield & Hensley, L.L.P. as to matters of New Mexico and Texas
law; Rainey, Ross, Rice & Binns, Oklahoma City, Oklahoma as to
matters of Oklahoma law; and Foulston & Siefkin, Topeka, Kansas as
to matters of Kansas law. Gary W. Wolf, a partner in the law firm
of Cahill Gordon & Reindel, is a director of the Company.
EXPERTS
The consolidated financial statements of Southwestern
Public Service Company and subsidiaries as of August 31, 1995 and
1994 and for the years then ended included in the Company's 1995
Form 10-K, which is incorporated herein by reference, have been
audited by Deloitte & Touche LLP ("Deloitte & Touche"), indepen-
dent certified public accountants, as stated in their report,
which is also incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
With respect to any unaudited interim financial informa-
tion included in the Company's quarterly reports on Form 10-Q that
are or will be incorporated herein by reference, Deloitte & Touche
applies limited procedures in accordance with professional stan-
dards for reviews of such information. As stated in any of its
reports that are included in the Company's quarterly reports on
Form 10-Q that are or will be incorporated herein by reference,
Deloitte & Touche did not audit and did not express an opinion on
such interim financial information. Accordingly, the degree of
reliance on any of Deloitte & Touche's reports on such information
should be restricted in light of the limited nature of the review
procedures applied. Deloitte & Touche is not subject to the lia-
bility provisions of Section 11 of the Securities Act for any of
its reports on such unaudited interim financial information
because those reports are not "reports" or a "part" of the Regis-
tration Statement filed under the Securities Act with respect to
the Preferred Securities or the Junior Subordinated Debentures
prepared or certified by an accountant within the meaning of Sec-
tions 7 and 11 of the Securities Act.
The consolidated financial statements of Southwestern
Public Service Company and subsidiaries for the year ended
August 31, 1993 included in the Company's 1995 Form 10-K, which is
incorporated herein by reference, are incorporated herein in reli-
ance upon the report of KPMG Peat Marwick LLP, independent
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<PAGE>
certified public accountants, included in the 1995 Form 10-K, and
upon the authority of that firm as experts in accounting and
auditing.
To the extent that a firm of certified public accoun-
tants audits and reports on the financial statements of the Com-
pany issued at future dates, and consents to the use of their
report thereon, such financial statements also will be incorpo-
rated by reference herein in reliance upon their report and said
authority.
The statements and legal conclusions as to all matters
of law in the Company's 1995 Form 10-K, the November Quarterly
Report, the February Quarterly Report, the May Quarterly Report
and this Prospectus (except as to matters of Kansas and Oklahoma
law and United States Federal income tax matters in such docu-
ments) have been reviewed by Hinkle, Cox, Eaton, Coffield &
Hensley, L.L.P. Statements and legal conclusions as to matters of
Oklahoma law in such documents have been reviewed by Rainey, Ross,
Rice & Binns. Statements and legal conclusions as to matters of
Kansas law in such documents have been reviewed by Foulston &
Siefkin. Statements and legal conclusions in the accompanying
Prospectus Supplement as to United States Federal income tax mat-
ters have been reviewed by Cahill Gordon & Reindel. All such
statements and legal conclusions are set forth in such documents
and incorporated by reference herein or set forth herein in reli-
ance upon said firms, respectively, as experts.
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<PAGE>
No dealer, salesman, or any other
person has been authorized to give 4,000,000
any information or to make any PREFERRED SECURITIES
representations other than those
contained in this Prospectus, in-
cluding any prospectus supplement
in connection with the offer con-
tained in this Prospectus, and, if
given or made, such information or SOUTHWESTERN PUBLIC
representations must not be relied SERVICE CAPITAL I
upon as having been authorized by
the Company or any underwriter, (Liquidation Amount
dealer, or agent. This Prospectus $25 per Preferred
does not constitute an offer to Security)
sell or a solicitation of an offer
to buy any of these securities in ___% Trust
any jurisdiction to any person to Preferred Securities,
whom it is unlawful to make such Series A
offer or solicitation in such juris-
diction. Neither the delivery of Fully and
this Prospectus nor any sale made Unconditionally
hereunder shall, under any circum- Guaranteed by
stances, create any implication
that there has been no change in SOUTHWESTERN PUBLIC
the affairs of the Company since SERVICE COMPANY
the date hereof.
_______________
TABLE OF CONTENTS
Prospectus Supplement
Page
Prospectus Summary.................. S-6
Southwestern Public Service
Capital I.......................... S-7
Recent Developments................. S-8
Use of Proceeds..................... S-9
Certain Terms of the
Preferred Securities ............. S-10
Certain Terms of the
Guarantee ........................ S-15
Certain Terms of the Junior
Subordinated Debentures .......... S-16
United States Taxation ............. S-19
Underwriting ....................... S-23
Prospectus
Available Information............... 3
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<PAGE>
Incorporation of Certain
Documents by Reference............ 3
The Company......................... 4
The Issuer.......................... 5
Risk Factors........................ 6
Recent Developments................. 11
Use of Proceeds..................... 12
Earnings Ratios..................... 12
Description of Preferred
Securities........................ 13
Description of Guarantee............ 31
Description of Junior
Subordinated Debentures........... 34
Relationship Among the Preferred
Securities, the Junior
Subordinated Debentures
and the Guarantee................. 50
Plan of Distribution................ 52
Legal Opinions...................... 53 Dated , 1996
Experts............................. 54
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate (except for the Secu-
rities and Exchange Commission registration fee) of the fees
and expenses payable by the Company in connection with the dis-
tribution of the Preferred Securities.
Securities and Exchange Commission
Registration Fee .............................. $ 34,482.76
Listing Fee ...................................... 50,000.00
Counsel Fees and Expenses ........................ 220,000.00
Services of Independent Accountants .............. 40,000.00
Trustee's Fees and Expenses ...................... 25,000.00
Printing Expenses, including Engraving ........... 150,000.00
Rating Agency Fees................................ 100,000.00
Blue Sky Fees and Expenses ....................... 10,000.00
Miscellaneous Expenses ........................... _10,517.24
Total ................................ $640,000.00
Item 15. Idemnification of Directors and Officers.
Section 53-11-4.1 of the New Mexico Business Corpora-
tion Act (the "NMBCA") empowers a corporation to indemnify any
officer or director against judgments, penalties, fines, set-
tlements, and reasonable expenses actually incurred by the per-
son in connection with any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, adminis-
trative, or investigative, if the person acted in good faith
and in a manner reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to a
criminal proceeding, had no reasonable cause to believe the
person's conduct was unlawful. This section empowers a corpo-
ration to maintain insurance or furnish similar protection,
including, but not limited to, providing a trust fund, a letter
of credit, or self-insurance, on behalf of any officer or
director against any liability asserted against the person in
such capacity whether or not the corporation would have the
power to indemnify the person against such liability under the
provisions of this section.
II-1
<PAGE>
The indemnification authorized by Section 53-11-4.1
is not exclusive of any other rights to which an officer or
director may be entitled under the articles of incorporation,
the bylaws, an agreement, a resolution of shareholders or
directors or otherwise.
Article Sixth of the Restated Articles of Incorpora-
tion of the Company provides that a director of the Company
shall not be personally liable to the Company or to the share-
holders for monetary damages for a breach of fiduciary duty as
a director unless such director has breached or failed to per-
form the duties of his or her office in accordance with the
NMBCA, and the breach or failure to perform constitutes negli-
gence, willful misconduct, or recklessness.
Article IV of the Bylaws of the Company requires the
Company, to the fullest extent permitted by the NMBCA, to pay
or reimburse expenses, liabilities, and losses incurred by an
officer or director involved in any action, suit, or proceed-
ing, whether civil, criminal, administrative, or investigative
by reason of the fact that such person is or was serving as an
officer or director of the Company.
The Bylaws also require the Company to pay or reim-
burse all covered expenses to an officer or director promptly
upon receipt of a written claim and, where the claimant seeks
an advancement of expenses, an undertaking by or on behalf of
the person to repay such amounts if it should ultimately be
determined by a court of final jurisdiction that such person is
not entitled to indemnification.
The Company has entered into indemnity agreements
with each officer and director of the Company. These contracts
provide for the advancement of expenses (including attorneys'
fees) incurred or to be incurred by an officer or director in
connection with a proceeding. The contracts also provide for
indemnification of such persons against expenses, liabilities,
and losses.
Pursuant to each director's indemnity agreement, the
Company keeps in effect a letter of credit in the face amount
of $5,000,000 obtained from a commercial bank for the benefit
of all directors who are a party to an indemnity agreement. A
director who has incurred or may incur expenses in connection
with a proceeding prior to the final disposition of such a pro-
ceeding for any reason may request an independent trustee to
draw upon the letter of credit for the payment or advancement
II-2
<PAGE>
of such expenses. Upon such request, the trustee will draw
upon the letter of credit and deliver such funds to such
director.
The Company is insured up to $25,000,000 against loss
in excess of $200,000 because of any claim made against the
Company or its officers or directors and alleged to have been
caused by any negligent act, error, omission, or breach of duty
by its officers or directors. The insurance is subject to cer-
tain exclusions.
Item 16. Exhibits.
Reference is made to the Exhibit Index filed as part
of this Registration Statement.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Sec-
tion 10(a)(3) of the Securities Act of 1933, as
amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Regis-
tration 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 being offered (if
the total dollar value of securities offered would
not exceed that which was registered) and any devia-
tion from the low or high end of the estimated maxi-
mum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effec-
tive registration statement;
II-3
<PAGE>
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any mate-
rial change to such information in the Registration
Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the Registration Statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 (the "1934 Act") that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any lia-
bility under the Securities Act, each such post-effective
amendment shall be deemed to be a new Registration State-
ment 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, each filing of Registrant's annual report pursuant to Sec-
tion 13(a) or Section 15(d) of the 1934 Act that is incorpo-
rated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the secu-
rities 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 may be permitted to directors, offic-
ers and controlling persons of the Registrant pursuant to the
provisions described under Item 15 above, or otherwise, the
Registrant has been advised that in the opinion of the Securi-
ties and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, there-
fore, unenforceable. In the event that a claim for indemnifi-
cation 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
II-4
<PAGE>
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 control-
ling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against pub-
lic policy as expressed in the Securities Act and will be gov-
erned by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, Southwestern Public Service Company, the Reg-
istrant, certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3
and has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned, there-
under duly authorized, in the City of Amarillo, and the State
of Texas, on the 22nd day of August, 1996.
SOUTHWESTERN PUBLIC SERVICE COMPANY
(Registrant)
By: *
---------------------------
Bill D. Helton
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment No. 2 to the Registration
Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
Principal Executive and Chairman of the August 22, 1996
Financial Officer and Board and Chief
Director: Executive Officer
*
- ---------------------------
Bill D. Helton
Principal Accounting Officer: Executive Vice August 22, 1996
President,
Accounting and
Corporate
Development
/s/ Doyle R. Bunch II
- ------------------------------
Doyle R. Bunch II
<PAGE>
Directors:
Gene H. Bishop* )
C. Coney Burgess* )
J. C. Chambers* )
Danny H. Conklin* )
Giles M. Forbess* ) Directors August 22, 1996
R. R. Hemminghaus* )
Don Maddox* )
J. Howard Mock* )
Shirley Bird Perry* )
David M. Wilks* )
Gary W. Wolf* )
*The undersigned, by signing his name hereto, does sign and execute this
Amendment No. 2 to the Registration Statement pursuant to the Powers of
Attorney executed by the above-named officers and directors of the Company
and which have been filed with the Securities and Exchange Commission on
behalf of such officers and directors.
By: /s/ Doyle R. Bunch II
Doyle R. Bunch II
Attorney-in-Fact
<PAGE>
Pursuant to the requirements of the Securities Act of
1933, as amended, Southwestern Public Service Capital I, the
Registrant, certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3
and has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Amarillo, and the State
of Texas, on the 22nd day of August, 1996.
SOUTHWESTERN PUBLIC SERVICE
CAPITAL I
(Registrant)
By: /s/David M. Wilks
David M. Wilks,
President and Chief
Operating Officer of
Southwestern Public
Service Company,
as Depositor
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- -------- -------
* 1(a) - Form of Underwriting Agreement relating to the
Preferred Securities.
* 4(a) - Form of Indenture.
* 4(b) - Form of Supplemental Indenture.
4(c) - Form of Debenture (included in Exhibit 4(b)).
4(d) - Form of Preferred Security (included as
Exhibit G to Exhibit 4(h)).
* 4(e) - Form of Guarantee Agreement.
* 4(f) - Certificate of Trust for Southwestern Public
Service Capital I.
* 4(g) - Trust Agreement for Southwestern Public Service
Capital I.
* 4(h) - Form of Amended and Restated Trust Agreement.
* 5(a) - Opinion of Hinckle, Cox, Eaton, Coffield &
Hensley, L.L.P. relating to the legality of the
Debentures and the Guarantee.
* 5(b) - Opinion of Richards, Layton & Finger, special
Delaware counsel, relating to the legality of
the Preferred Securities of Southwestern Public
Service Capital I.
* 8 - Opinion of Cahill Gordon & Reindel, as to tax
matters.
10 - Form of Expense Agreement (included as
Exhibit F in Exhibit 4(h)).
12 - Statements re Computation of Ratios of Earnings
to Fixed Charges (incorporated by reference to
exhibit 12 Form 10-K for 1995 and exhibit 12
Form 10-Q for quarter ended May 31, 1996).
* 15 - Letter re Unaudited Interim Financial
Information.
* 23(a) - Consent of Hinkle, Cox, Eaton, Coffield &
Hensley, L.L.P. (included in Exhibit 5(a)).
* 23(b) - Consent of Richards, Layton & Finger (included
in Exhibit 5(b)).
* 23(c) - Consent of Cahill Gordon & Reindel (included in
Exhibit 8).
* 23(d) - Consent of Foulston & Siefkin.
* 23(e) - Consent of Rainey, Ross, Rice & Binns.
* 23(f) - Consent of Deloitte & Touche LLP, independent
certified public accountants.
* 23(g) - Consent of KPMG Peat Marwick LLP, independent
certified public accountants.
* 24 - Powers of Attorney.
<PAGE>
Exhibit
Number Exhibit
- ------- -------
* 25(a) - Statement of Eligibility under the Trust Inden-
ture Act of 1939 (on Form T-1) of Debenture
Trustee.
* 25(b) - Statement of Eligibility under the Trust Inden-
ture Act of 1939 (on Form T-1) of Property
Trustee.
* 25(c) - Statement of Eligibility under the Trust Inden-
ture Act of 1939 (on Form T-1) of Guarantee
Trustee.
____________________
* Previously filed.
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