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Filed pursuant to Rule 424(b)(5)
Registration No. 333-77005
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 7, 1999)
1,500,000 Shares
[ATLAS AIR LOGO]
COMMON STOCK
------------------------
TWO SELLING SHAREHOLDERS OF ATLAS AIR, INC. ARE OFFERING 1,500,000 SHARES OF
COMMON STOCK. WE WILL NOT RECEIVE ANY PROCEEDS FROM THE SALE OF COMMON STOCK BY
THE SELLING SHAREHOLDERS.
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OUR COMMON STOCK IS LISTED ON THE NEW YORK STOCK EXCHANGE UNDER THE SYMBOL
"CGO." ON SEPTEMBER 13, 2000, THE REPORTED LAST SALE PRICE OF THE COMMON STOCK
ON THE NEW YORK STOCK EXCHANGE WAS $44 15/16 PER SHARE.
------------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE S-5.
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PRICE $43 1/2 A SHARE
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<TABLE>
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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS SHAREHOLDERS
-------- ------------- ------------
<S> <C> <C> <C> <C>
Per Share....................... $43.50 $1.00 $42.50
Total........................... $65,250,000 $1,500,000 $63,750,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on
September 19, 2000.
------------------------
MORGAN STANLEY DEAN WITTER
September 14, 2000.
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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUPPLEMENT
Forward-Looking Statements............ S-2
Important Notice About Information
Presented in this Prospectus
Supplement.......................... S-3
Where You Can Find More Information... S-3
Incorporation of Certain Documents by
Reference........................... S-4
Risk Factors.......................... S-5
Use of Proceeds....................... S-10
Price Range of Common Stock and
Dividend Policy..................... S-11
Selling Shareholders.................. S-12
The Underwriter....................... S-13
Legal Matters......................... S-14
Experts............................... S-14
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<TABLE>
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PAGE
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PROSPECTUS
Where You Can Find More Information... 1
Incorporation of Certain Documents by
Reference........................... 1
The Company........................... 2
Atlas Trusts.......................... 2
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges.... 3
Description of Debt Securities........ 4
Description of Capital Stock.......... 15
Description of the Preferred
Securities.......................... 17
Description of the Guarantee.......... 29
Relationship Among the Preferred
Securities, the Corresponding Debt
Securities and the Guarantee........ 32
Description of Stock Purchase
Contracts and Stock Purchase
Units............................... 34
Selling Stockholders.................. 35
Plan of Distribution.................. 35
Validity of the Securities............ 36
Experts............................... 36
</TABLE>
FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this prospectus
supplement constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act").
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause our actual results, levels of activity,
performance or achievements or industry results, to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by such forward-looking statements. In addition, forward-looking
statements generally can be identified by the use of forward-looking terminology
such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe",
or "continue" or the negative thereof or variations thereon or similar
terminology. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from our expectations are disclosed under
"Risk Factors" and elsewhere in this prospectus supplement.
To the extent that any of the statements contained herein relating to our
expectations, assumptions and other company matters are forward-looking, they
are made in reliance upon the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on current expectations
that involve a number of uncertainties and risks
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that could cause actual results to differ materially from those projected in the
forward-looking statements, including, but not limited to, risks associated
with:
- worldwide business and economic conditions;
- product demand and the rate of growth in the air cargo industry;
- the impact of competitors and competitive aircraft and aircraft financing
availability;
- the ability to attract and retain new and existing customers;
- normalized aircraft operating costs and reliability;
- management of growth and complying with the Federal Aviation
Administration ("FAA") policies;
- the continued productivity of our workforce;
- dependence on key personnel; and
- other regulatory requirements.
As a result of the foregoing and other factors, no assurance can be given
as to our future results and achievements. Neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements.
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS SUPPLEMENT
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the attached prospectus. We have
not, and the underwriter has not, authorized anyone to provide you with
different information. We are not, and the underwriter is not, offering the
common stock in any state where the offer is not permitted. You should assume
that the information appearing in this prospectus supplement and the attached
prospectus, as well as information we previously filed or subsequently file with
the Securities and Exchange Commission ("SEC") that is incorporated by
reference, is accurate as of its date only.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Exchange Act, and in
accordance therewith file annual, quarterly and special reports, proxy
statements and other information with the SEC. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the SEC: New
York Regional Office, Seven World Trade Center, 13th Floor, New York, New York
10048; and Chicago Regional Office, Citicorp Center, 500 West Madison Street,
14th Floor, Chicago, Illinois 60601. Copies of such material can be obtained
from the Public Reference Section of the SEC, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. The SEC also maintains an
Internet Web Site at http://www.sec.gov that contains reports and other
information. Our common stock is traded on the New York Stock Exchange under the
symbol "CGO" and reports, proxy statements and other information concerning the
Company can be inspected at the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have incorporated important business and financial information about the
Company that is not included in or delivered with this prospectus supplement or
the attached prospectus. The following documents have been filed by us with the
SEC under the Exchange Act, and are incorporated herein by reference:
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000; and
- Our Current Report on Form 8-K dated May 25, 2000.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this prospectus supplement and prior
to the termination of this offering are incorporated by reference and become a
part of this prospectus supplement and the attached prospectus from their date
of filing. Any statement contained in this prospectus supplement or the attached
prospectus or in a document incorporated by reference is modified or superseded
for purposes of this prospectus supplement and the attached prospectus to the
extent that a statement contained in any such document modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus supplement or the attached prospectus.
On request and without charge, we will provide anyone who receives a copy
of this prospectus supplement and the attached prospectus with a copy of any or
all of the documents incorporated in this prospectus supplement and the attached
prospectus by reference. Written or telephone requests for such copies should be
directed to our principal office: Atlas Air, Inc., 2000 Westchester Avenue,
Purchase, New York 10577-2543 Attention: Chief Financial Officer (telephone
(914) 701-8000).
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RISK FACTORS
You should consider the following risk factors as well as other information
contained in this prospectus supplement before making a decision to invest in
the common stock being sold in this offering.
RISK FACTORS RELATING TO OUR BUSINESS
DEPENDENCE ON SIGNIFICANT CUSTOMERS; GEOGRAPHIC CONCENTRATION -- The loss of a
significant customer, or political and economic instability in the markets we
serve, may adversely affect our business.
In 1999, China Airlines accounted for approximately 26% of our total
operating revenues, and no other customer accounted for 10% or more of our total
operating revenues; for the six months ended June 30, 2000 China Airlines
accounted for approximately 23%, and no other customer accounted for more than
10% of our total operating revenues. We believe that our relationships with our
customers are mutually satisfactory, as evidenced by the fact that we have
renewed and, in certain cases, added a significant number of ACMI Contracts with
our existing customers. However, there can be no assurance that any of our ACMI
Contracts will be renewed upon their expiration. The scheduled termination dates
for the current ACMI Contracts range from 2001 to 2004. The failure to renew any
of our ACMI Contracts, or the renewal of any of our ACMI Contracts on less
favorable terms, could have a material adverse effect on our results of
operation. Additionally, we have concentrated a significant percentage of our
resources in routes between the United States and Asia and the Pacific Rim and
between Europe and Asia and the Pacific Rim. Any economic decline or any
military or political disturbance in these areas of the world might prevent or
interfere with our ability to provide service to our Asian and Pacific Rim
destinations and could have a material adverse effect on our results of
operation.
COMPETITION -- The market for air cargo services is highly competitive. If we
are unable to compete effectively, we will lose current customers and fail to
attract new customers.
A number of airlines, including Lufthansa Cargo AG, currently provide
services for themselves and for others, similar to the services we offer and new
airlines may be formed that would also compete with us. Such airlines may have
substantially greater financial resources than we do. Some of our existing ACMI
customers from time to time take some portions of their cargo operations
in-house. In addition, certain retail air freight companies, such as Evergreen
International, compete with us on a limited, indirect basis, generally outside
of the ACMI Contract operating structure. We believe that the most important
elements for competition in the air cargo business are the range, payload and
cubic capacities of the aircraft and the price, flexibility, quality and
reliability of the cargo transportation service. Our ability to achieve our
strategic plan depends upon our success in convincing major international
airlines that outsourcing some portion of their air cargo business remains more
cost-effective than undertaking cargo operations with their own incremental
capacity and resources and upon our ability to continue to obtain higher ACMI
Contract rates in connection with the 747-400 aircraft compared to those
currently obtained in connection with existing 747-200 aircraft.
EMPLOYEE LITIGATION -- An adverse ruling in an appeal filed by the union now
representing our pilots may increase our cost of doing business.
In April 1999, we received notification from the National Mediation Board
(the "NMB") that our crew members voted for representation by the Air Line
Pilots Association ("ALPA"). We expect our labor costs to decline initially
since our profit sharing plan (the "Profit Sharing Plan") excludes from the
category of eligible employees, those employees
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who have been certified by the NMB for representation. In response to ALPA's
claims that such an exclusion violates the Railway Labor Act, on May 6, 1999, we
filed an action in the United States District Court for the District of Columbia
(the "District Court") seeking a declaratory judgment confirming, inter alia,
the enforceability of the Profit Sharing Plan's exclusion. On May 10, 1999, ALPA
filed a counterclaim in that action, alleging that the exclusion of its members
from the Profit Sharing Plan violates the Railway Labor Act, and seeking
restoration of profit sharing pay. In October 1999, the District Court entered a
summary judgment in our favor ruling that we did not violate the Railway Labor
Act when we eliminated crew members' participation in the Profit Sharing Plan
following ALPA's certification as the crew members' collective bargaining agent.
In addition, the District Court dismissed all other claims in the case. ALPA has
subsequently filed an appeal of the District Court's decision. An adverse
outcome in this appeal may increase our cost of doing business.
OPERATIONS DEPENDENT UPON LIMITED FLEET -- In the event one or more of our
aircraft were to be lost or out of service for an extended period of time, we
may have difficulty fulfilling our obligations under one or more of our ACMI
Contracts.
Each of our aircraft is typically dedicated to the service of one or more
ACMI Contracts. Although we utilize spare aircraft, in the event one or more of
our aircraft were to be lost or out of service for an extended period of time,
we may have difficulty fulfilling our obligations under one or more of our ACMI
Contracts. While we believe that our insurance coverage is sufficient to cover
the replacement cost of an aircraft, there can be no assurance that suitable
replacement aircraft could be located or that, if located, we could contract for
the services of such an aircraft without undertaking substantial costs. While we
carry aircraft hull physical damage and third party liability insurance, any
extended interruption of our operations due to the loss of an aircraft could
have a material adverse effect on our business.
AGING AIRCRAFT -- The maintenance and governmental compliance costs associated
with older aircraft may adversely affect our profitability. The costs of
complying with Directives and Service Bulletins for our Boeing 747-200 aircraft
could be substantial.
Our fleet currently includes 22 Boeing 747-200 aircraft in service, all of
which were manufactured between 1974 and 1986. Manufacturer Service Bulletins
and FAA Airworthiness Directives issued under its "Aging Aircraft" program cause
Boeing 747-200 aircraft operators to be subject to extensive aircraft
examinations and require Boeing 747-200 aircraft to undergo structural
inspections and modifications to address problems of corrosion and structural
fatigue at specified times. For instance, in November 1994, Boeing issued
Nacelle Strut Modification Service Bulletins which have been converted into
Directives by the FAA. All of our Boeing 747-200 aircraft have been brought into
compliance with such Directives. Other Directives have been issued that require
inspections and minor modifications to Boeing 747-200 aircraft. It is possible
that additional Service Bulletins or Directives applicable to the types of
aircraft or engines included in our fleet could be issued in the future. The
cost of compliance with Directives and of following Service Bulletins cannot
currently be estimated, but could be substantial.
UTILIZATION OF FUTURE AIRCRAFT -- If we fail to contract for the use of
additional aircraft as they become available our profitability will be harmed.
We have not yet finalized long-term ACMI Contracts for two of the three
747-300 aircraft scheduled to be delivered in 2000. The failure to generate
adequate revenue from new aircraft pending the commencement of and service under
ACMI Contracts, or the failure to secure ACMI Contracts for such aircraft as
well as the aircraft currently in service in our
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fleet, could have a material adverse effect on our results of operation.
REGULATORY MATTERS -- We are subject to continued compliance with governmental
regulations and authorities. Failure to comply with relevant rules and
regulations would adversely affect our business.
Under the Federal Aviation Act of 1958, as amended and recodified at 49
U.S.C. Subtitle VII (the "Aviation Act"), the Department of Transportation
("DOT") and the FAA exercise regulatory authority over us. We have obtained the
necessary authority to conduct flight operations, including a Certificate of
Public Convenience and Necessity (a "CPCN") from the DOT and an Air Carrier
Operating Certificate from the FAA; however, the continuation of such authority
is subject to our continued compliance with applicable statutes, rules and
regulations pertaining to the airline industry, including any new rules and
regulations that may be adopted in the future. All air carriers are subject to
strict scrutiny and inspection by FAA officials and to the imposition of new
regulatory requirements that can negatively affect their operations. We are
considered to be a high-growth carrier by the FAA and, therefore, receive
heightened attention by the FAA and DOT. FAA approval is required for each of
our long-term ACMI Contracts and DOT approval is required for each of our
long-term ACMI Contracts with foreign air carriers. In addition, FAA approval is
required for each of our short-term seasonal ACMI Contracts. In order to provide
service to foreign points, we must also obtain permission for such operations
from the applicable foreign governments and certain airport authorities.
Moreover, in some instances, ACMI Contracts are subject to prior and/or periodic
approvals of foreign governments, whose decisions can be affected by ongoing
negotiations and relations with the United States. For example, a recent ruling
by an aviation agency of the British government concluded that one of our two
long term wet-leases of a 747-400 freighter aircraft to British Airways no
longer meets the "exceptional circumstances" exception necessary for their
operating approval due to changed market conditions in the United Kingdom. The
adoption or enforcement of similar rules by other countries could adversely
affect our business. Failure to obtain FAA, DOT and/or foreign approvals could
have a material adverse effect on our results of operation. The DOT also
regulates the transportation of hazardous materials by air cargo carriers.
Although customers are required to label shipments that contain hazardous
materials, customers may not inform us when their cargo includes hazardous
materials. Although we have never had such an incident, the transportation of
unmanifested hazardous materials could result in fines, penalties, banning
hazardous materials from our aircraft for a period of time, possible damage to
our aircraft or other liability.
CONTROL BY PRINCIPAL SHAREHOLDER -- We have a single shareholder with a
controlling interest in our company, who can determine the outcome of all
matters to be voted upon by the shareholders.
As of September 8, 2000 Michael A. Chowdry, the founder, Chief Executive
Officer, President and Chairman of the Board of Directors of the Company,
beneficially owned approximately 51.1% of our common stock. As a result, Mr.
Chowdry is able to direct and control our policies, including the election of
directors, mergers, sales of assets and other such transactions. After the
offering, Mr. Chowdry will beneficially own 47.4% of our common stock.
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DEPENDENCE UPON KEY MANAGEMENT PERSONNEL -- Our executive officers and key
employees are critical to our business. These officers and key personnel may not
remain with us and their loss may harm our operations.
We believe that our success in acquiring ACMI Contracts and managing our
operations will depend substantially upon the continued services of many of our
present executive officers. The loss of the services of any of such persons
could have a material adverse effect on our business. We have employment
agreements with such officers, which are generally terminable at any time by
either party.
SEASONALITY OF CUSTOMERS' CARGO OPERATIONS -- Seasonal fluctuations in revenue
may result in a reduction of available working capital.
The cargo operations of our airline customers are seasonal in nature, with
peak activity traditionally in the second half of the year, and with a
significant decline occurring in the first quarter. As a result, our revenues
typically decline in the first quarter of the year as our minimum contractual
aircraft utilization level temporarily decreases. Our ACMI Contracts typically
allow our customers to cancel a maximum of 5% of the guaranteed hours of
aircraft utilization over the course of a year. Our customers most often
exercise such cancellation options early in the first quarter of the year, when
the demand for air cargo capacity has been historically low or following the
seasonal holiday peak in the latter part of the fourth quarter.
ABILITY TO SERVICE DEBT -- We have substantial indebtedness and may not be able
to service our debt. This indebtedness could harm our competitive position.
We are highly leveraged. As of June 30, 2000, our total long term debt
outstanding, net of current portion, was approximately $1.3 billion. Our high
degree of leverage could have important consequences to prospective investors,
including the following:
- our ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be
diminished in the future;
- a substantial portion of our cash flow from operations will be required
for the payment of principal and interest on our indebtedness, thereby
reducing the funds available to us for our operations and other purposes;
- we may be substantially more leveraged than some of our competitors,
which may place us at a competitive disadvantage; and
- our substantial degree of leverage may hinder our ability to adjust
rapidly to changing market conditions and could make us more vulnerable
in the event of a downturn in our business or general economic
conditions.
Our ability to make scheduled payments of the principal of, or to pay
interest on, or to refinance, our indebtedness and to make scheduled payments
under our lease obligations depends on our future performance, which is subject
to economic, financial, competitive and other factors beyond our control. There
can be no assurance, however, that our business will continue to generate
sufficient cash flow from operations to service our debt. If unable to do so, we
may be required to refinance all or a portion of our existing debt, to sell
assets or to obtain additional financing. There can be no assurance that any
such refinancing or that any such sale of assets or additional financing would
be possible on favorable terms.
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RESTRICTIONS IMPOSED BY TERMS OF OUR INDEBTEDNESS -- If we do not comply with
the restrictive covenants contained in our debt instruments it may result in an
event of default.
Certain of our debt instruments limit our ability to undertake certain
transactions. These debt instruments restrict our ability to:
- incur additional indebtedness;
- incur liens, pay dividends or make other restricted payments;
- consummate asset sales;
- enter into transactions with affiliates;
- impose restrictions on the ability of a subsidiary to pay dividends or
make certain payments to us;
- merge or consolidate with any other person; or
- sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our assets.
In addition, certain of our other debt instruments contain other more
restrictive financial and operating covenants. Our ability to meet such
financial ratios and tests may be affected by events beyond our control. We
cannot assure you that we will meet such tests. A breach of any of these
covenants could result in a default under certain debt instruments. In an event
of default under the various debt instruments, the lenders could elect to
declare all amounts outstanding, together with accrued interest, to be
immediately due and payable. If we are unable to repay those amounts, such
lenders could proceed against the collateral granted to them to secure that
indebtedness. If our lenders accelerate the payment of indebtedness, our assets
may not be sufficient to repay in full such indebtedness and our other
indebtedness.
RISK FACTORS RELATING TO THE COMMON STOCK AND THE OFFERING
OWNERSHIP AND VOTING BY FOREIGN OWNERS -- We have significant restrictions on
foreign ownership of our voting stock and voting of our stock by foreign owners.
Under applicable regulatory restrictions, no more than 25% of our voting
stock can be owned and controlled, directly or indirectly, by persons who are
not United States citizens. Our restated certificate of incorporation provides
that no shares of capital stock may be voted by or at the direction of persons
who are not United States citizens unless such shares are registered on a
separate stock record.
ANTI-TAKEOVER PROVISIONS; PREFERRED STOCK -- Provisions in our charter documents
may deter a third party from acquiring us.
Our restated certificate of incorporation authorizes our board of directors
to issue preferred stock without stockholder approval. Our board of directors
could use the preferred stock as a means to delay, defer or prevent a takeover
attempt that a stockholder might consider in our best interest. In addition,
certain provisions of Delaware law and our restated certificate of incorporation
and restated bylaws might impede a merger, consolidation, takeover or other
business combination involving us, as well as specified transactions with an
interested stockholder.
SHARES ELIGIBLE FOR FUTURE SALE -- Future sales of our stock, or the prospect
that sales may occur could adversely affect our stock price.
As of September 8, 2000, we had 38,123,257 shares of common stock
outstanding, without taking into account any shares issuable upon the exercise
of outstanding options. 17,024,673 of these shares are freely transferable by
persons other than our "affiliates"
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without restriction or further registration under the Securities Act. The shares
of common stock beneficially owned by Mr. Chowdry will be "restricted
securities" within the meaning of Rule 144 under the Securities Act and may not
be sold in the absence of registration under the Securities Act unless an
exemption from registration is available, including exemptions contained in Rule
144 under the Securities Act. Sales of substantial numbers of shares of common
stock in the public market could adversely affect the market price of the common
stock.
In addition to the shares described above, as of September 8, 2000, options
to purchase an aggregate of 2,378,882 shares of common stock were outstanding.
An aggregate of an additional 2,131,938 shares of common stock have been
reserved for issuance under our existing option plans. We have registered under
the Securities Act all shares of common stock issuable upon exercise of such
options. Shares of common stock issued upon exercise of options will be
immediately available for sale in the public market, subject to the volume
limitations of Rule 144 under the Securities Act applicable to our affiliates.
POSSIBLE VOLATILITY OF STOCK PRICE -- The market price of our common stock could
decline below the public offering price.
The trading price of our common stock has increased substantially since our
initial public offering in August 1995, although it has been subject to wide
fluctuations in response to a variety of factors, including quarterly variations
in operating results, market conditions in the air cargo industry, comments or
recommendations issued by analysts who follow us, our competitors or the air
cargo industry and general economic and market conditions. In addition, the
stock market has from time to time experienced extreme price and volume
volatility. These fluctuations may be unrelated to the operating performance of
particular companies whose shares are traded. Market fluctuations may adversely
affect the market price of our common stock. The market price of our common
stock could continue to be subject to significant fluctuations in response to
our operating results and other factors and there can be no assurance that the
market price of our common stock will not decline below the public offering
price.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling shareholders.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
In November 1997, our common stock commenced trading on the New York Stock
Exchange ("NYSE") under the symbol "CGO." Prior to that, our common stock traded
on the Nasdaq National Market under the trading symbol "ATLS." The approximate
number of shareholders of record at September 12, 2000 was 292.
In January 1999, we declared a 3-for-2 stock split for shareholders of
record as of January 25, 1999 which was effected on February 8, 1999 (the "Stock
Split"). The following table sets forth for the periods indicated the high and
low bid quotations, as quoted by the NYSE. Such quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions. These amounts are approximate as a result of
their restatement to reflect the Stock Split.
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HIGH LOW
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YEAR ENDED DECEMBER 31, 1998
First Quarter.......................................... $22 21/32 $14 15/32
Second Quarter......................................... 27 9/16 20 7/8
Third Quarter.......................................... 25 21/32 14 1/16
Fourth Quarter......................................... 32 5/8 15 15/32
YEAR ENDED DECEMBER 31, 1999
First Quarter.......................................... 34 15/16 26 1/2
Second Quarter......................................... 34 24 3/4
Third Quarter.......................................... 36 18 7/8
Fourth Quarter......................................... 28 1/4 19 1/16
YEAR ENDED DECEMBER 31, 2000
First Quarter.......................................... 31 22 1/8
Second Quarter......................................... 37 3/16 25 5/16
Third Quarter (through September 13)................... 46 1/8 35
</TABLE>
We have not declared any cash dividends and do not plan to do so in the
foreseeable future. The agreements governing our outstanding indebtedness in
certain circumstances may restrict us from paying dividends or making other
distributions on our common stock.
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SELLING SHAREHOLDERS
The following table sets forth certain information as to the ownership of
our common stock as of September 8, 2000 by the selling shareholders listed
below, adjusted to reflect the sale of 1,500,000 shares offered by the selling
shareholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING(1) SHARES OFFERING(1)
--------------------- BEING ---------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- ---------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
Michael A. Chowdry(2)......... 19,513,655 51.1% 1,400,000 18,113,655 47.4%
Richard H. Shuyler(3)......... 172,993 0.5% 100,000 72,993 0.2%
</TABLE>
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(1) Unless otherwise indicated, the selling shareholders have sole voting and
investment power with respect to the shares beneficially owned by them. The
table includes the following shares issuable upon the exercise of options
that are exercisable within 60 days from September 8, 2000. Mr.
Chowdry -- 123,752 shares and Mr. Shuyler -- 100,993 shares.
(2) The 1,400,000 shares of common stock will be offered by Chowdry Limited
Partnership, a Wyoming limited partnership, the general partner of which is
Chowdry, Inc. and whose limited partner is a trust for the benefit of Mr.
Chowdry's children. The number of shares of common stock listed for Mr.
Chowdry includes 1,755,000 shares held by Chowdry, Inc. and 8,471,501 shares
held by Chowdry Limited Partnership. Mr. Chowdry is the sole stockholder and
director of Chowdry, Inc. Mr. Chowdry has the sole voting and disposition
powers with respect to these shares. The Chowdry Family Foundation (the
"Foundation"), a non-profit corporation, owns 292,500 shares of common
stock. Mr. Chowdry is one of the Foundation's directors and officers, and as
such he may be deemed to share the power to vote and the power to dispose of
these shares. However, one person other than Mr. Chowdry has been given
authority by the Foundation's Board of Directors to determine whether any
disposition of these shares is to be made.
(3) The 100,000 shares of common stock will be offered by Rubicon Investments,
LLC, a Colorado limited liability company managed by Mr. Shuyler and his
wife, the members of which are Mr. Shuyler, his wife, and a trust for the
benefit of their daughter. The number of shares of common stock listed for
Mr. Shuyler includes, prior to the offering, 100,993 shares issuable upon
the exercise of options, of which options to acquire 100,000 shares are held
by Rubicon Investments, LLC, and, after the offering, 993 shares issuable
upon the exercise of options, none of which shares are held by Rubicon
Investments, LLC. Mr. Shuyler and his wife share the voting and investment
power with respect to the shares issuable upon the exercise of options held
by Rubicon Investments, LLC.
S-12
<PAGE> 13
THE UNDERWRITER
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus supplement, Morgan Stanley & Co.
Incorporated as the underwriter has agreed to purchase, and the selling
shareholders have agreed to sell to the underwriter, all of the shares offered
hereby.
The underwriter is offering the shares of common stock subject to its
acceptance of the shares from the selling shareholders and subject to prior
sale. The underwriting agreement provides that the obligations of the
underwriter to pay for and accept delivery of the shares of common stock offered
hereby are subject to the approval of certain legal matters by its counsel and
to certain other conditions. The underwriter is obligated to take and pay for
all of the shares of common stock offered by this prospectus supplement if any
such shares are taken.
The per share price of any shares sold shall be the public offering price
set forth on the cover page of this prospectus supplement in United States
dollars.
The underwriter initially proposes to offer the shares of common stock
directly to the public at the public offering price set forth on the cover page
hereof. After the initial offering of the shares of common stock, the offering
price and other selling terms may from time to time be varied by the
underwriter.
Our common stock is listed on the New York Stock Exchange under the symbol
"CGO" and the shares of our common stock that the selling shareholders will sell
in the offering are listed on the New York Stock Exchange.
We and the selling shareholders have agreed that, without the prior written
consent of the underwriter, we and the selling shareholders will not,
respectively, during the period ending 90 days after the date of this prospectus
supplement:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer, any shares of
our common stock or any securities convertible into or exercisable or
exchangeable for our common stock; or
- enter into any swap or other arrangement that transfers to another any of
the economic consequences of ownership of our common stock;
whether any transaction described above is to be settled by delivery of common
stock or such other securities, in cash or otherwise.
The restrictions described in the previous paragraph do not apply to:
- the sale of shares to the underwriter;
- options to be issued or shares to be sold under our 1995 Stock Option
Plan and the Stock Purchase Plan;
- transactions by any person other than us relating to shares of common
stock or other securities acquired in open market transactions after the
completion of the offering; or
- the issuance by us of shares of common stock as consideration for the
purchase by us of any business or assets, provided that any recipient of
such shares of common stock agrees to be bound by the foregoing
restrictions.
S-13
<PAGE> 14
To facilitate the offering, the underwriter may engage in transactions that
stabilize, maintain or otherwise affect the price of the common stock.
Specifically, the underwriter may over-allot in connection with the offering,
creating a short position in the common stock for its own account. In addition,
to cover over-allotments or to stabilize the price of the common stock, the
underwriter may bid for, and purchase, shares of common stock in the open
market. Any of these activities may stabilize or maintain the market price of
the common stock above independent market levels. The underwriter is not
required to engage in these activities, and may end any of these activities at
any time.
The selling shareholders, the underwriter and we have agreed to indemnify
each other against certain liabilities, including liabilities under the
Securities Act.
From time to time, the underwriter provided, and may continue to provide,
investment banking services to us for which it has received customary fees and
commissions.
LEGAL MATTERS
Certain matters with respect to the validity of the shares of common stock
offered hereby will be passed upon for us by Cahill Gordon & Reindel, New York,
New York. In connection with this offering, Shearman & Sterling, New York, New
York, will pass upon certain legal matters for the underwriter.
EXPERTS
The consolidated financial statements incorporated by reference herein and
in the prospectus accompanying this prospectus supplement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference in reliance upon
the authority of said firm as experts in giving said report.
S-14
<PAGE> 15
PROSPECTUS
ATLAS AIR, INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
------------------------
ATLAS AIR CAPITAL I
ATLAS AIR CAPITAL II
ATLAS AIR CAPITAL III
PREFERRED SECURITIES FULLY AND
UNCONDITIONALLY GUARANTEED BY ATLAS AIR, INC.
This Prospectus relates to the issuance by Atlas Air, Inc. ("Atlas" or the
"Company") of (i) secured and unsecured debt securities (the "Debt Securities"),
(ii) shares of preferred stock, $1.00 per share (the "Preferred Shares"), (iii)
shares of common stock, $.01 per share (the "Common Stock"), which may include
shares being sold by certain of our shareholders, (iv) contracts to purchase our
Common Stock ("Stock Purchase Contracts") and (v) units consisting of a Stock
Purchase Contract and any of our other securities described above. This
Prospectus also relates to the issuance of certain preferred securities (the
"Preferred Securities") by Atlas Air Capital I, Atlas Air Capital II or Atlas
Air Capital III (each an "Atlas Trust"). Atlas owns the common securities of
each Atlas Trust and it is anticipated that Atlas will guarantee (each a
"Guarantee") distributions and liquidation payments on the Preferred Securities.
The securities described in this paragraph are referred to in this Prospectus,
collectively, as the Securities.
ISSUANCE OF SECURITIES
-- Securities may be periodically offered in one or more separate series or
classes;
-- Securities may be denominated in U.S. dollars or other currencies or
currency units;
-- Prices and terms will be determined at the time of sale; and
-- The total aggregate principal amount or issue price of the Securities
will not exceed $250 million (or equivalent in foreign currencies or
currency units).
This Prospectus is accompanied by a Prospectus Supplement which includes
additional information as to a particular series of Debt Securities, Preferred
Stock, Common Stock, Stock Purchase Contracts, Stock Purchase Units or Preferred
Securities. Sales of Securities may not be consummated without both this
Prospectus and a Prospectus Supplement. The Securities may be offered,
separately or together, at prices and terms to be set forth in one or more
Prospectus Supplements.
The Common Stock is listed on the New York Stock Exchange. Any Common Stock
offered will be listed, subject to notice of issuance, on such exchange.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Securities or determined that this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
May 7, 1999
<PAGE> 16
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 1
Incorporation of Certain Documents by Reference............. 1
The Company................................................. 2
Atlas Trusts................................................ 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 3
Description of Debt Securities.............................. 4
Description of Capital Stock................................ 15
Description of the Preferred Securities..................... 17
Description of the Guarantee................................ 29
Relationship Among the Preferred Securities, the
Corresponding Debt Securities and the Guarantee........... 32
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 34
Selling Stockholders........................................ 35
Plan of Distribution........................................ 35
Validity of the Securities.................................. 36
Experts..................................................... 36
</TABLE>
i
<PAGE> 17
WHERE YOU CAN FIND MORE INFORMATION
We and the Atlas Trusts filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (herein, together with
all amendments and exhibits, referred to as the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities to be offered. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For more information about the Company, the Atlas Trusts and the
Securities to be offered by this Prospectus, reference is made to the
Registration Statement and its exhibits and schedules. Any statement made in
this Prospectus concerning the provisions of certain documents may be incomplete
and, in each instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement otherwise filed with the Commission.
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. The Registration Statement, its exhibits and
such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
Regional Offices of the Commission: New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048; and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60601.
Copies of such material can be obtained from the Public Reference Section of the
Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission also maintains an Internet Web Site at
http://www.sec.gov that contains reports and other information. Our Common Stock
is traded on the New York Stock Exchange under the symbol "CGO" and reports,
proxy statements and other information concerning the Company can be inspected
at the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
We have not filed separate financial statements of the Atlas Trusts. All of
the common securities of the Atlas Trusts will be owned by us and the Atlas
Trusts have no operating history or independent operations. In addition,
following the issuance of the Preferred Securities, the Atlas Trusts will not
engage in any activity other than holding as trust assets certain of the
Securities issued by us. In connection with any issuance of Preferred
Securities, we will, through one or more Guarantees or other agreements,
irrevocably and unconditionally guarantee payments on the Preferred Securities.
For these reasons, we do not think that the financial statements of any of the
Atlas Trusts would be material to prospective purchasers of the Preferred
Securities.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE:
The following documents have been filed by the Company with the Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998,
2. The Company's Current Report on Form 8-K dated April 26, 1999, and
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<PAGE> 18
3. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act and all amendments thereto and reports filed for the
purpose of updating such description.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act: (1) subsequent to the initial filing of this Prospectus and
prior to the date it is declared effective; and (2) subsequent to the date of
this Prospectus and prior to the termination of this offering are incorporated
by reference and become a part of this Prospectus from their date of filing. Any
statement contained in this Prospectus or in a document incorporated by
reference is modified or superseded for purposes of this Prospectus to the
extent that a statement contained in any such document modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
On request, we will provide anyone who receives a copy of this Prospectus
with a copy of any or all of the documents incorporated in this Prospectus by
reference. Written or telephone requests for such copies should be directed to
our principal office: Atlas Air, Inc., 538 Commons Drive, Golden, Colorado
80401, Attention: Chief Financial Officer (telephone (303) 526-5050).
You should rely only on the information incorporated by reference or
provided in this Prospectus or any Prospectus Supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of the Securities in any state where the offer is not permitted. You
should not assume that the information in this Prospectus or any Prospectus
Supplement is accurate as of any date other than the date on the front of those
documents.
THE COMPANY
We are the world's largest air cargo outsourcer, with an all Boeing fleet
of 747 freighter aircraft that comply with Stage 3 FAA noise regulations. We
provide reliable airport-to-airport cargo transportation services throughout the
world to major international air carriers generally under three- to five-year
fixed-rate U.S. dollar denominated contracts which typically require that we
supply aircraft, crew, maintenance and insurance. Our customers currently
include some of the world's leading air carriers, including Alitalia, British
Airways and China Airlines Ltd. We provide efficient, cost effective service to
our customers primarily as a result of our productive work force, the
outsourcing of a significant part of our regular maintenance work on a
long-term, fixed-cost contractual basis and the advantageous cost economies
realized in the operation of our fleet, comprised solely of Boeing 747 aircraft
which are configured for service in long-haul cargo operations.
Atlas is incorporated under the laws of the State of Delaware. Our
principal executive offices are located at 538 Commons Drive, Golden, Colorado
80401, and our telephone number is (303) 526-5050.
ATLAS TRUSTS
Each Atlas Trust is a statutory business trust formed under Delaware law
for the exclusive purpose of issuing and selling its Trust Securities and using
the proceeds from the sale of such Trust Securities to acquire corresponding
Securities issued by us. Each Atlas Trust will be governed by a trust agreement
(each, as amended and restated at the time of any issuance of Preferred
Securities, a "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. Each Trust
2
<PAGE> 19
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
All of the Common Securities of each Atlas Trust will be owned by Atlas.
The Common Securities of an Atlas Trust will rank pari passu, and payments will
be made thereon pro rata, with the Preferred Securities of such Atlas Trust,
except that upon the occurrence and continuance of an event of default under a
Trust Agreement. Upon such events, the rights of the Company as holder of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Preferred Securities of such Atlas Trust. We will own Common
Securities in an aggregate liquidation amount equal to not less than 3% of the
total capital of each Atlas Trust.
Unless otherwise specified in the applicable Prospectus Supplement, each
Atlas Trust has a term of approximately 55 years, but may dissolve earlier as
provided in the applicable Trust Agreement. Each Trust's business and affairs
are conducted by its trustees, each appointed by the Company as holder of the
Common Securities. Unless otherwise specified in the applicable Prospectus
Supplement, the trustees for each Trust will be The First National Bank of
Chicago, as the Property Trustee (the "Property Trustee"), First Chicago
Delaware, Inc., as the Delaware Trustee (the "Delaware Trustee"), and three
individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with the Company (collectively, the "Issuer
Trustees"). The First National Bank of Chicago, as Property Trustee, will act as
sole indenture trustee under each Trust Agreement for purposes of compliance
with the Trust Indenture Act. The First National Bank of Chicago will also act
as trustee under the Guarantees and the Indenture (as defined herein). See
"Description of Guarantees" and "Description of Debt Securities." The holder of
the Common Securities of an Atlas Trust, or the holders of a majority in
liquidation preference of the related Preferred Securities if certain events of
default under the Trust Agreement for such Atlas Trust have occurred and are
continuing, will be entitled to appoint, remove or replace the Property Trustee
and/or the Delaware Trustee for such Trust. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights are vested exclusively in the holder
of the Common Securities. The duties and obligations of each Issuer Trustee are
governed by the applicable Trust Agreement. The Company will pay all fees and
expenses related to each Trust and the offering of the Preferred Securities and
will pay, directly or indirectly, all ongoing costs, expenses and liabilities of
each Trust.
USE OF PROCEEDS
Except as otherwise provided in the applicable Prospectus Supplement, the
net proceeds to the Company from the sale of the Securities offered hereby will
be available for general corporate purposes, including, but not limited to,
repayment of short-term or long-term indebtedness, capital expenditures,
repurchases of common stock and acquisitions. The Company will not receive any
of the proceeds from the sale of Common Stock by any selling stockholders.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges represents the number of times that
fixed charges were covered by earnings. For purposes of computing the ratio of
earnings to fixed charges, "earnings" consists of income (loss) prior to income
tax benefit (expense), as adjusted to exclude the "Write-off of capital
investment and other" in the second quarter of 1997, and fixed charges
(excluding capitalized interest for the period). "Fixed charges" consist of
3
<PAGE> 20
interest expense (including amounts capitalized), amortization of debt issuance
costs and one-third of rental payments on operating leases (such one-third
portion having been deemed by us to represent the interest portion of such
payments). The table below presents the ratio of earnings to fixed charges for
the years ended December 31, 1994, 1995, 1996, 1997 and 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1.21 1.86 2.11 1.30 1.34
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued in one or more series under an Indenture
(the "Indenture") between the Company and The First National Bank of Chicago, as
trustee (the "Trustee"), a form of which is filed as an exhibit to the
Registration Statement. The Indenture will be subject to, and governed by, the
Trust Indenture Act. The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
express reference to the Indenture and the Securities Resolution (which may be
in the form of resolution or a supplemental indenture authorizing a series
(copies of which have been or will be filed with the Commission). All article
and section references herein are to the articles and sections of the Indenture,
and all capitalized terms used in this section without definition have the
meanings given such terms in the Indenture.
The Debt Securities will constitute senior or subordinated debt of the
Company. The Debt Securities will be issued under one or more separate
Securities Resolutions for Senior Debt Securities or Subordinated Debt
Securities. The particular terms of the Debt Securities offered by a Prospectus
Supplement will be described in such Prospectus Supplement, along with any
applicable modifications of, or additions to, the general terms of the Debt
Securities as described herein and in the Indenture. Accordingly, for a
description of the terms of any series of Debt Securities, reference must be
made both the Prospectus Supplement relating thereto and the description of the
Debt Securities set forth in this Prospectus.
GENERAL
The Indenture does not limit the amount of Debt Securities that can be
issued thereunder and provides that the Debt Securities may be issued from time
to time in one or more series pursuant to the terms of one or more Securities
Resolutions creating such series. The Indenture does not restrict the amount of
debt that may be incurred by the Company or any subsidiary. The Indenture does
not contain any covenant or other provision that is specifically intended to
afford any Holder special protection in the event of highly leveraged
transactions or any other transactions resulting in a decline in the ratings or
credit quality of the Company. As of the date of this Prospectus, there were no
Debt Securities outstanding under the Indenture. The ranking of a series of Debt
Securities with respect to all indebtedness of the Company will be established
by the Securities Resolution creating such series. Although the Indenture
provides for the possible issuance of Debt Securities in other forms or
currencies, the only Debt Securities covered by this Prospectus will be Debt
Securities denominated in U.S. dollars in registered form without coupon unless
otherwise indicated in the applicable Prospectus Supplement.
4
<PAGE> 21
TERMS
Reference is made to the Prospectus Supplement for the following terms, if
applicable, of the Debt Securities offered thereby:
-- the designation, aggregate principal amount, currency or composite
currency and denominations;
-- the price at which such Debt Securities will be issued and, if an index,
formula or other method is used, the method for determining amounts of
principal or interest;
-- the maturity date and other dates, if any, on which principal will be
payable;
-- the interest rate or rates, if any, or method of calculating the
interest rate or rates;
-- the date or dates from which interest will accrue and on which interest
will be payable, and the record dates for the payment of interest;
-- the manner of paying principal and interest;
-- the place or places where principal and interest will be payable;
-- the terms of any mandatory or optional redemption by the Company
including any sinking fund;
-- the terms of any conversion or exchange right;
-- the terms of any redemption at the option of Holders;
-- any tax indemnity provisions;
-- if the Debt Securities provide that payments of principal or interest
may be made in a currency other than that in which Debt Securities are
denominated, the manner for determining such payments;
-- the portion of principal payable upon acceleration of a Discounted Debt
Security (as defined below);
-- whether and upon what terms Debt Securities may be defeased;
-- whether any events of default or covenants in addition to or in lieu of
those set forth in the Indenture apply;
-- provisions for electronic issuance of Debt Securities or for Debt
Securities in uncertificated form;
-- the ranking of the Debt Securities, including the relative degree, if
any, to which the Debt Securities of such series shall be subordinated
to one or more other series of Debt Securities in right of payment,
whether outstanding or not;
-- any provisions relating to extending or shortening the date on which the
principal and premium, if any, of Debt Securities of such series is
payable;
-- any provision relating to the deferral of payment of any interest;
-- if such Debt Securities are to be issued to an Atlas Trust, the forms of
the related trust agreement and guarantee agreement relating thereto;
-- the additions or changes, if any, to the Indenture with respect to the
Debt Securities of such series as shall be necessary to permit or
facilitate the issuance of such Debt Securities to an Atlas Trust; and
5
<PAGE> 22
-- any other terms not inconsistent with the provisions of the Indenture,
including any covenants or other terms that may be required or advisable
under United States or other applicable laws or regulations, or
advisable in connection with the marketing of the Debt Securities.
(Section 2.01)
Debt Securities of any series may be issued as registered Debt Securities,
bearer Debt Securities or uncertificated Debt Securities, and in such
denominations as specified in the terms of the series. (Section 2.01)
In connection with its original issuance, no bearer Security will be
offered, sold or delivered to any location in the United States, and a bearer
Debt Security in definitive form may be delivered in connection with its
original issuance only upon presentation of a certificate in a form prescribed
by the Company to comply with United States laws and regulations. (Section 2.04)
Registration of transfer of registered Debt Securities may be requested
upon surrender thereof at any agency of the Company maintained for that purpose
and upon fulfillment of all other requirements of the agent. (Sections 2.03 and
2.07)
Debt Securities may be issued under the Indenture as Discounted Debt
Securities to be offered and sold at a substantial discount from the principal
amount thereof. Special United States federal income tax and other
considerations applicable thereto will be described in the Prospectus Supplement
relating to such Discounted Debt Securities. "Discounted Debt Security" means a
Debt Security where the amount of principal due upon acceleration is less than
the stated principal amount. (Sections 1.01)
RANKING OF DEBT SECURITIES
Unless stated otherwise in a Prospectus Supplement, the Debt Securities
will be unsecured and will rank equally and ratably with other unsecured and
unsubordinated debt of the Company. The Debt Securities will not be secured by
any properties or assets and will represent unsecured debt of the Company. The
Indenture does not limit the ability of any of the Company's subsidiaries to
issue debt, and the Debt Securities will be effectively subordinated to all
existing and future indebtedness and other liabilities and commitments of the
Company's subsidiaries.
SUCCESSOR OBLIGOR
The Indenture provides that, unless otherwise specified in the Securities
Resolution establishing a series of Debt Securities, the Company shall not
consolidate with or merge into, or transfer all or substantially all of its
assets to, any person in any transaction in which the Company is not the
survivor, unless: (1) the person is organized under the laws of the United
States or a State thereof or is organized under the laws of a foreign
jurisdiction and consents to the jurisdiction of the courts of the United States
or a State thereof; (2) the person assumes by supplemental indenture all the
obligations of the Company under the Indenture, the Debt Securities and any
coupons; (3) all required approvals of any regulatory body having jurisdiction
over the transaction shall have been obtained; and (4) immediately after the
transaction no Default (as defined below) exists. The successor shall be
substituted for the Company, and thereafter all obligations of the Company under
the Indenture, the Debt Securities and any coupons shall terminate. (Section
5.01)
6
<PAGE> 23
EXCHANGE OF DEBT SECURITIES
Registered Debt Securities may be exchanged for an equal aggregate
principal amount of registered Debt Securities of the same series and date of
maturity in such authorized denominations as may be requested upon surrender of
the registered Debt Securities at an agency of the Company maintained for such
purpose and upon fulfillment of all other requirements of such agent. (Section
2.07)
DEFAULT AND REMEDIES
Unless the Securities Resolution establishing the series otherwise provides
(in which event the Prospectus Supplement will so state), an "Event of Default"
with respect to a series of Debt Securities will occur if:
(1) the Company defaults in any payment of interest on any Debt
Securities of such series when the same becomes due and payable and the
Default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal and premium,
if any, of any Debt Securities of the series when the same becomes due and
payable at maturity or upon redemption, acceleration or otherwise;
(3) the Company defaults in the payment or satisfaction of any sinking
fund obligation with respect to any Debt Securities of the series as
required by the Securities Resolution establishing such series;
(4) the Company defaults in the performance of any of its other
agreements applicable to the series and the Default continues for 60 days
after the notice specified below;
(5) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian for it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case,
(B) appoints a Custodian for the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company, and the order or decree
remains unstayed and in effect for 60 days; or
(7) there occurs any other Event of Default provided for in such
series. (Section 6.01)
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or a similar official under any Bankruptcy Law.
(Section 6.01)
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<PAGE> 24
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default. (1.01) A Default under subparagraph (4) above is
not an Event of Default until the Trustee or the Holders of at least 25% in
principal amount of the series notify the Company of the Default and the Company
does not cure the Default within the time specified after receipt of the notice.
(Section 6.01) If an Event of Default occurs and is continuing on a series, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the series (or, in the case of a series issued to an Atlas Trust, so
long as any of the related Preferred Securities of such Atlas Trust remain
outstanding, if, upon such Event of Default, the Trustee or the Holders of not
less than 25% in aggregate principal amount of such series fail to declare the
principal of all the Debt Securities of such series to be so immediately due and
payable, the holders of 25% in aggregate liquidation amount of such Preferred
Securities then outstanding shall have such right) by notice to the Company and
the Trustee, may declare the principal of and accrued interest on all the Debt
Securities of the series to be due and payable immediately. Discounted Debt
Securities may provide that the amount of principal due upon acceleration is
less than the stated principal amount. (6.02) The Holders of a majority in
principal amount of the series, by notice to the Trustee, may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default on the series have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration; provided, that in the case of a series
issued to an Atlas Trust, so long as any of the related Preferred Securities of
such Atlas Trust remain outstanding, the holders of a majority in aggregate
liquidation amount of such Preferred Securities then outstanding shall also have
such right to rescission of acceleration and its consequences with respect to
such series, subject to the same conditions set forth above. (Section 6.02) If
an Event of Default occurs and is continuing on a series, the Trustee may pursue
any available remedy to collect principal or interest due on the series, to
enforce the performance of any provision applicable to the series or otherwise
to protect the rights of the Trustee and Holders of the series. (Section 6.03)
In the case of series issued to an Atlas Trust, any holder of the related
Preferred Securities of such Atlas Trust shall have the right, upon the
occurrence and continuance of an Event of Default described in clauses (1) and
(2) of the first paragraph of this subsection with respect to such series, to
institute a suit directly against the Company to enforce payment to such holder
of the principal of, and premium, if any, and interest on, the Debt Securities
having a principal amount equal to the aggregate liquidation amount of such
Preferred Securities held by such holder. (Section 6.06)
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Debt Securities of the series. (Section 7.01) Subject to
certain limitations, Holders of a majority in principal amount of the Debt
Securities of the series may direct the Trustee in its exercise of any trust or
power with respect to such series. (Section 6.05) Except in the case of Default
in payment on a series, the Trustee may withhold from Holders of such series
notice of any continuing Default if it determines that withholding the notice is
in the interest of Holders of the series. (Section 7.04) The Company is required
to furnish the Trustee annually a brief certificate as to the Company's
compliance with all conditions and covenants under the Indenture. (Section 4.04)
The Indenture does not have a cross-default provision. Thus, a default by
the Company on any other debt, including any other series of Debt Securities,
would not constitute an Event of Default. A Securities Resolution may provide
for a cross-default provision, in which case the Prospectus Supplement will
describe the terms thereof.
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AMENDMENTS AND WAIVERS
The Indenture and the Debt Securities or any coupons of the series may be
amended, and any default may be waived as follows: Unless the Securities
Resolution otherwise provides (in which event the Prospectus Supplement will so
state), the Company and the Trustee may amend the Debt Securities, the Indenture
and any coupons with the written consent of the Holders of a majority in
principal amount of the Debt Securities of all series affected voting as one
class; provided that, in the case of a series issued to an Atlas Trust, so long
as any of the related Preferred Securities of such Atlas Trust remain
outstanding, no such amendment shall be made that adversely affects the holders
of such Preferred Securities in any material respect, and no termination of the
Indenture shall occur, without the prior consent of the holders of not less than
a majority in aggregate liquidation amount of such Preferred Securities then
outstanding unless and until the principal (and premium, if any) of the Debt
Securities of such series and all accrued and unpaid interest thereon have been
paid in full; and provided further that, in the case of a series issued to an
Atlas Trust, so long as any of the related Preferred Securities of such Atlas
Trust remain outstanding, no amendment shall be made to the provisions of the
Indenture described in the fourth paragraph under "Defaults and Remedies" above
without the prior consent of the holders of each such Preferred Security then
outstanding unless and until the principal (and premium, if any) of the Debt
Securities of such series and all accrued and unpaid interest hereon have been
paid in full. (Section 10.02) Unless the Securities Resolution otherwise
provides (in which event the Prospectus Supplement will so state), a Default on
a particular series may be waived with the consent of the Holders of a majority
in principal amount of the Debt Securities of the series (or, in the case of a
series issued to an Atlas Trust, so long as any of the related Preferred
Securities of such Atlas Trust remain outstanding, the holders of a majority in
aggregate liquidation amount of such Preferred Securities then outstanding.
(Section 6.04) However, without the consent of each Debt Security holder
affected, no amendment or waiver may (1) reduce the amount of Debt Securities
whose Holders must consent to an amendment or waiver, (2) reduce the interest on
or change the time for payment of interest on any Debt Security, (3) change the
fixed maturity of any Debt Security, (4) reduce the principal of any
non-Discounted Debt Security or reduce the amount of the principal of any
Discounted Debt Security that would be due on acceleration thereof, (5) change
the currency in which the principal or interest on a Debt Security is payable,
(6) make any change that materially adversely affects the right to convert or
exchange any Debt Security, or (7) waive any Default in payment of interest on
or principal of a Debt Security. (Sections 6.04 and 10.02) Without the consent
of any Debt Security holder, the Company and the Trustee may amend the
Indenture, the Debt Securities or any coupons: to cure any ambiguity, omission,
defect or inconsistency; to provide for assumption of Company obligations to
Debt Security holders in the event of a merger or consolidation requiring such
assumption; to provide that specific provisions of the Indenture shall not apply
to a series of Debt Securities not previously issued; to create a series and
establish its terms; to provide for a separate Trustee for one or more series;
or to make any change that does not materially adversely affect the rights of
any Debt Security holder. (Section 10.01)
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Debt Securities of a series may be defeased in accordance with their terms
and, unless the Securities Resolution establishing the terms of the series
otherwise provides, as set forth in the Indenture and described briefly below.
The Company at any time may terminate as to a series all of its obligations
(except for certain obligations, including obligations with respect to the
defeasance trust and obligations to register the transfer or exchange of a Debt
Security, to
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replace destroyed, lost or stolen Debt Securities and coupons, and to maintain
paying agencies in respect of the Debt Securities) with respect to the Debt
Securities of the series and any related coupons and the Indenture ("legal
defeasance"). The Company at any time may terminate as to a series its
obligations, if any, with respect to the Debt Securities and coupons of the
series under any restrictive covenants which may be applicable to a particular
series ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, a series may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, a series may
not be accelerated by reference to any restrictive covenants which may be
applicable to a particular series. (Section 8.01)
To exercise either defeasance option as to a series, the Company must (i)
irrevocably deposit in trust (the "defeasance trust") with the Trustee or
another trustee money or U.S. Government Obligations, (ii) deliver a certificate
from a nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due on the deposited
U.S. Government Obligations, without reinvestment, plus any deposited money
without investment will provide cash at such times and in such amounts as will
be sufficient to pay the principal and interest when due on all Debt Securities
of such series to maturity or redemption, as the case may be, and (iii) comply
with certain other conditions. In particular, the Company must obtain an opinion
of tax counsel that the defeasance will not result in recognition of any income,
gain or loss to Holders for federal income tax purposes. "U.S. Government
Obligations" means direct obligations of the United States or an agency or
instrumentality of the United States, the payment of which is unconditionally
guaranteed by the United States, which, in either case, have the full faith and
credit of the United States of America pledged for payment and which are not
callable at the issuer's option, or certificates representing an ownership
interest in such obligations. (Section 8.02)
CERTAIN PROVISIONS RELATING TO CORRESPONDING DEBT SECURITIES
General. Debt Securities may be issued in one or more series of Debt
Securities under the Indenture with terms corresponding to the terms of a series
of related Preferred Securities ("Corresponding Debt Securities"). Concurrently
with the issuance of each Atlas Trust's Preferred Securities, such Atlas Trust
will invest the proceeds thereof and the consideration paid by the Company for
the Common Securities in a series of Corresponding Debt Securities issued by the
Company to such Atlas Trust. Each series of Corresponding Debt Securities will
be in the principal amount equal to the aggregate stated Liquidation Amount of
the related Preferred Securities. Holders of the related Preferred Securities
for a series of Corresponding Debt Securities will have the rights in connection
with modifications to the Indenture or upon occurrence of a Trust Event of
Default (as defined under "Description of Preferred Securities -- Events of
Default; Notice") relating to Corresponding Debt Securities described under
"-- Amendments and Waivers," "-- Defaults and Remedies," and "-- Enforcement of
Certain Rights by Holders of Preferred Securities," unless provided otherwise in
the Prospectus Supplement for such related Preferred Securities.
Unless otherwise specified in the applicable Prospectus Supplement, the
Company will covenant, as to each series of Corresponding Debt Securities, (i)
to maintain, directly or indirectly, 100% ownership of the Common Securities of
the Atlas Trust to which Corresponding Debt Securities have been issued,
provided that certain successors which are permitted pursuant to the Indenture
may succeed to the Company's ownership of the
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Common Securities, (ii) not to voluntarily dissolve, wind-up or liquidate any
Atlas Trust, except (a) in connection with a distribution of Corresponding Debt
Securities to the holders of the Preferred Securities in liquidation of such
Atlas Trust or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the related Trust Agreement and (iii) to use its
reasonable efforts, consistent with the terms and provisions of the related
Trust Agreement, to cause such Atlas Trust to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
Federal income tax purposes. For additional covenants relating to payment of
certain expenses of the Atlas Trusts, see "Description of Preferred
Securities -- Payment of Expenses."
Option to Extend Interest Payment Date. If provided in the applicable
Prospectus Supplement, the Company shall have the right at any time and from
time to time during the term of any series of Corresponding Debt Securities to
defer payment of interest for such number of consecutive interest payment
periods as may be specified in the applicable Prospectus Supplement (each, an
"Extension Period"), subject to the terms, conditions and covenants, if any,
specified in such Prospectus Supplement, provided that such Extension Period may
not extend beyond the maturity date of such series of Corresponding Debt
Securities. Certain United Sates Federal income tax consequences and special
considerations applicable to any such Corresponding Debt Securities will be
described in the applicable Prospectus Supplement.
Redemption. Unless otherwise indicated in the applicable Prospectus
Supplement, the Company, may, as its option redeem the Corresponding Debt
Securities of any series in whole or at any time or in part from time to time.
Corresponding Debt Securities may be redeemed in the denominations as set forth
in the applicable Prospectus Supplement. Except as otherwise specified in the
applicable Prospectus Supplement, the redemption price for any Corresponding
Debt Security so redeemed shall equal any accrued and unpaid interest thereon to
the redemption date, plus the principal amount thereof. Unless otherwise
specified in the applicable Prospectus Supplement, the Company may not redeem a
series of Corresponding Debt Securities in part unless all accrued and unpaid
interest has been paid in full on all outstanding Corresponding Debt Securities
of such series for all interest periods terminating on or prior to the
redemption date.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Debt Security Tax Event (as defined below) in respect of an Atlas Trust shall
occur and be continuing, the Company may, at its option, redeem the
Corresponding Debt Securities held by such Atlas Trust at any time within 90
days of the occurrence of such Debt Security Tax Event, in whole but not in
part, subject to the provisions of the applicable Securities Resolution. The
redemption price for any such Corresponding Debt Securities shall be equal to
100% of the principal amount of such Corresponding Debt Securities then
outstanding plus accrued and unpaid interest to the date fixed for redemption.
For so long as the applicable Atlas Trust is the holder of all such outstanding
Corresponding Debt Securities, the proceeds of any such redemption will be used
by the Atlas Trust to redeem the corresponding Trust Securities in accordance
with their terms.
"Debt Security Tax Event" means the receipt by the applicable Atlas Trust
of an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced proposed change)
in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative written decision, pronouncement or action or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which proposed change, pronouncement, action
or decision is an-
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nounced on or after the date of issuance of the applicable series of
Corresponding Debt Securities pursuant to the applicable Securities Resolution,
there is more than an insubstantial risk that (i) the applicable Atlas Trust is,
or will be within 90 days of the date of such opinion, subject to the United
States Federal income tax with respect to income received or accrued on the
corresponding series of Corresponding Debt Securities, (ii) interest payable by
the Company on such series of Corresponding Debt Securities is not, or within 90
days of the date of such opinion, will not be, deductible by the Company, in
whole or in part, for United States Federal income tax purposes or (iii) the
applicable Atlas Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
Restrictions on Certain Payments. The Company will, unless otherwise
provided in the applicable Prospectus Supplement, covenant, as to each series of
Corresponding Debt Securities, that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company (including other Corresponding Debt Securities) that
rank par passu with or junior in interest to the Corresponding Debt Securities
or make any guarantee by the Company of the debt securities of any subsidiary of
the Company is such guarantee ranks pari passu or junior in interest to the
Corresponding Debt Securities (other than (a) dividends or distributions in
common stock of the Company, (b) redemptions or purchases of any rights pursuant
to the Company's shareholder rights plan ("Rights Agreement"), if any, or any
successor to such Rights Agreements in the future, (c) payments under any
Guarantee and (d) purchases of common stock related to the issuance of common
stock under any of the Company's benefit plans for its directions, officers or
employees) if at such time (A) there shall have occurred any event of which the
Company has actual knowledge (a) that with the giving of notice or the lapse of
time, or both, would constitute an Event of Default under the Indenture with
respect to the Corresponding Debt Securities of such series and (b) in respect
of which the Company shall not have taken reasonable steps to cure, (B) is such
Corresponding Debt Securities are held by an Atlas Trust which is the issuer of
a series of related Preferred Securities, the Company shall be in default with
respect to its payment of any obligations under the Guarantee relating to such
related Preferred Securities or (C) the Company shall have given notice of its
selection of an Extension Period as provided pursuant to the Securities
Resolution with respect to the Corresponding Debt Securities of such series and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
Enforcement of Certain Rights by Holders of Preferred Securities. If an
Event of Default with respect to a series of Corresponding Debt Securities has
occurred and is continuing and such event is attributable to the failure of the
Company to pay principal of or premium, if any, or interest, if any, on such
series of Corresponding Debt Securities in the date such interest, premium or
principal is otherwise payable, a holder of related Preferred Securities may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of the principal of or premium, if any, or interest, if
any, on such Corresponding Debt Securities having a principal amount equal to
the aggregate Liquidation Amount of the related Preferred Securities of such
holder (a "Direct Action"). The Company may not amend the Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all of the Preferred Securities. If the right to bring a
Direct Action is removed, the applicable Atlas Trust may become subject to the
reporting obligations under the Exchange Act. The Company shall have the right
pursuant
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to the Indenture to set-off any payments made to such holder of Preferred
Securities by the Company in connection with a Direct Action. Unless otherwise
specified in the applicable Prospectus Supplement, the holders of the related
Preferred Securities will not be able to exercise directly may remedies other
than those set forth in this paragraph available to the holders of the
Corresponding Debt Securities.
REGARDING THE TRUSTEE
The First National Bank of Chicago will act as Trustee and Registrar for
Debt Securities issued under the Indenture and, unless otherwise indicated in a
Prospectus Supplement, the Trustee will also act as Transfer Agent and Paying
Agent with respect to the Debt Securities. (Section 2.03) The Company may remove
the Trustee with or without cause if the Company so notifies the Trustee three
months in advance and if no Default occurs during the three-month period.
(Section 7.07) The Trustee, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
affiliates, and may otherwise deal with the Company or its affiliates, as if it
were not Trustee.
BOOK-ENTRY
DTC will act as securities depository for the Securities. The Securities
will be issued only as fully registered securities registered in the name of
Cede & Co. (DTC's partnership nominee). One or more fully registered global
certificates will be issued for the Securities representing the aggregate
principal amount of the Securities and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act, as
amended. DTC holds securities that its participants (the "Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly (the "Indirect Participants," and
together with the Direct Participants, the "Participants"). The rules applicable
to DTC and its Participants are on file with the SEC.
Purchases of the Securities within the DTC system must be made by or
through Direct Participants which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual purchaser of each Security
(a "Beneficial Owner") will in turn be recorded on the Direct and Indirect
Participants' respective records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interest in the Securities will be effected by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership
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interest in Securities except in the event that use of the book-entry system for
the Securities is discontinued.
The deposit of the Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Securities; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Securities are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other direct communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Securities of an issue are being redeemed, DTC's practice will determine by lot
the amount of the interest of each Direct Participant in such series to be
redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Securities. Under its usual procedures. DTC mails an omnibus proxy (an "Omnibus
Proxy") to the Participants as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest on the Securities will be paid to
DTC. DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in
"street-name," and will be the responsibility of such Participant and not of
DTC, the underwriters, or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal,
premium, if any, and interest to DTC is the responsibility of the Company or the
Trustee. Disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to the
Company. Under such circumstances and in the event that a successor securities
depository is not obtained, certificates for the Securities are required to be
printed and delivered. In addition, the Company may decide to discontinue use of
the system of book-entry transfers through DTC (or any successor securities
depository). In that event, certificates for the Securities will be printed and
delivered.
The Company will not have any responsibility or obligation to Participants
or to the persons for whom they act as nominees with respect to the accuracy of
the records of DTC, its nominees or any Direct or Indirect Participant with
respect to any ownership interest in the Securities, or with respect to payments
or providing of notice to the Direct Participants, the Indirect Participants or
the Beneficial Owners.
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So long as Cede & Co. is the registered owner of the Securities, as nominee
of DTC, references herein to holders of the Securities shall mean Cede & Co. or
DTC and shall not mean the Beneficial Owners of the Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from DTC. None of the Company, the Trustees or the
underwriters take any responsibility for the accuracy or completeness thereof.
DESCRIPTION OF CAPITAL STOCK
The following summarizes the material terms of our capital stock.
GENERAL
Our authorized capital stock consists of shares of Common Stock, par value
$.01 per share, of which 34,265,621 shares were issued and outstanding as of
March 31, 1999, and 10,000,000 shares of Preferred Stock, $1.00 per share, none
of which are currently outstanding.
COMMON STOCK
Except as set forth under "-- Limitation on Voting by Foreign Owners," the
holders of Common Stock are entitled under the Restated Certificate of
Incorporation to one vote for each share held of record on all matters submitted
to a vote of the stockholders. Subject to preferential rights with respect to
any outstanding Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of
legally available funds. In the event of liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities and satisfaction of preferential
rights and have no rights to convert their Common Stock into any other
securities. The outstanding shares of Common Stock are fully paid and
non-assessable.
PREFERRED STOCK
The Board of Directors is authorized under the Restated Certificate of
Incorporation to issue up to 10,000,000 shares of Preferred Stock in one or more
series. The Board is also authorized to fix the rights, preferences, privileges
and restrictions on the Preferred Stock, including:
-- dividend rights,
-- dividend rates,
-- conversion rights,
-- voting rights,
-- terms of redemption,
-- redemption prices,
-- liquidation preferences and
-- the number of shares constituting any series or the designation of such
series, without further vote or action by the stockholders.
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The issuance of Preferred Stock may have the effect of delaying deferring
or preventing a change in control of the Company without further action by the
stockholders. The issuance of Preferred Stock with voting and conversion rights
may adversely affect the voting power of the holders of Common Stock, including
the loss of voting control to others.
LIMITATION ON VOTING BY FOREIGN OWNERS
The Restated Certificate of Incorporation defines "Foreign Ownership
Restrictions" as "applicable statutory, regulatory and interpretive restrictions
regarding foreign ownership or control of U.S. air carriers (as amended or
modified from time to time)." Such restrictions currently require that no more
than 25% of our voting stock be owned or controlled, directly or indirectly by
persons who are not U.S. citizens ("Foreigners") for purposes of the Foreign
Ownership Restrictions, that our chief executive officer and at least two thirds
of the members of our Board of Directors and other managing officers be U.S.
citizens and that we are not otherwise subject to foreign control.
The Restated Certificate of Incorporation provides that no shares of
capital stock may be voted by or at the direction of Foreigners, unless such
shares are registered on a separate stock record (the "Foreign Stock Record").
Our Restated Bylaws further provide that no shares shall be registered on the
Foreign Stock Record if the amount so registered would exceed the Foreign
Ownership Restrictions. Registration on the Foreign Stock Record is made in
chronological order based on the date we receive a written request for
registration.
CERTAIN PROVISIONS OF OUR RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
The Restated Certificate of Incorporation and Restated Bylaws include
certain provisions summarized below which may have an anti-takeover effect and
may delay, defer or prevent a tender offer or takeover attempt that stockholders
might consider in their best interest, including attempts that might result in a
premium over the market price for the shares held by stockholders.
Our Restated Certificate of Incorporation and Restated Bylaws provide:
-- that any action required or permitted to be taken by our stockholders
may be effected only at an annual or special meeting of stockholders,
and not by written consent of the stockholders,
-- that any meeting of stockholders may be called only by the Chairman of
the Board or upon the affirmative vote of at least a majority of the
members of the Board of Directors and
-- for an advance notice procedure for the nomination, other than by or at
the direction of the Board of Directors or a Committee of the Board of
Directors, of candidates for election as directors, as well as for other
stockholder proposals to be considered at annual meetings of
stockholders.
In general, we must receive notice of intent to nominate a director or
raise business at such meetings not less than 60 nor more than 90 days before
the meeting, and such notice must contain certain information concerning the
person to be nominated or the matters to be brought before the meeting and
concerning the stockholder submitting the proposal. The affirmative vote of at
least a majority of the directors or the holders of at least 66 2/3% of the
voting power of our voting stock is required to alter, amend or repeal, or adopt
any provision inconsistent with, the Bylaw provisions described in this
paragraph.
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CERTAIN PROVISIONS OF DELAWARE LAW
We are subject to Section 203 of the Delaware General Corporation Law,
which prohibits a Delaware corporation from engaging in a wide range of
specified transactions with any interested stockholder, defined to include,
among others, any person or entity who in the previous three years obtained 15%
or more of any class or series of stock entitled to vote in the election of
directors, unless, among other exceptions, the transaction is approved by (i)
the Board of Directors prior to the date the interested stockholder obtained
such status or (ii) the holders of two thirds of the outstanding shares of each
class or series which is not owned by the interested stockholder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is American
Securities Transfer Incorporated.
DESCRIPTION OF THE PREFERRED SECURITIES
The following description sets forth certain general terms and provisions
of the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms and provisions of the Preferred Securities offered by a
Prospectus Supplement and the application of these general terms and provisions
will be described in the applicable Prospectus Supplement.
The Regular Trustees, on behalf of the Trust and pursuant to the
Declaration, will issue one class of Preferred Securities and one class of
Common Securities. The Trust Securities will represent undivided beneficial
ownership interests in the assets of the Trust. The following summaries of
certain terms of the Preferred Securities and certain provisions of the
Declaration do not purport to be complete, and reference is hereby made to the
Trust Indenture Act and the copy of the Declaration, including definitions of
certain terms used in the Declaration that is filed as an exhibit to the
Registration Statement. Capitalized terms used in this section not otherwise
defined in this Prospectus have the meanings set forth in the Declaration.
Certain material United States federal income tax consequences applicable to the
offering of the Preferred Securities will be described in the applicable
Prospectus Supplement.
GENERAL
Except as described below under "-- Subordination of Common Securities,"
the Preferred Securities will rank on a parity, and payments will be made
proportionately, with the Common Securities. The Property Trustee will hold
legal title to the Debt Securities in trust for the benefit of the holders of
the Trust Securities. The Guarantee Agreement executed by Atlas for the benefit
of the holders of the Preferred Securities (the "Guarantee") will be a guarantee
with respect to the Preferred Securities but will not guarantee the payment of
Distributions or any amounts payable on redemption or liquidation of the
Preferred Securities when the Trust does not have funds on hand available to
make such payments. See "Description of the Guarantee." Certain material U.S.
federal income tax consequences and special considerations applicable to the
Preferred Securities will be described in the applicable Prospectus Supplement.
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DISTRIBUTIONS
Distributions on each Preferred Security will accumulate and be payable at
a rate specified in the applicable Prospectus Supplement. 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 the actual number of days elapsed per 30-day
month unless otherwise specified in the applicable Prospectus Supplement.
Distributions that are in arrears will accumulate additional distributions at
the rate per annum if and as specified in the applicable Prospectus Supplement
("Additional Amounts"). The term "Distributions" means cumulative cash
distributions that accumulate at the per annum rate specified in the applicable
Prospectus Supplement, together with any Additional Amounts unless otherwise
stated.
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as are specified in the applicable Prospectus Supplement. If the date on which
any Distributions on the Trust Securities are payable (each, a "payment date")
is not a Business Day (as defined below), then payment of such Distributions
will be made on the next Business Day (without any interest or other payment in
respect of any such delay), provided that if such next Business Day falls in the
next calendar year, then payment of such Distributions will be made on the
Business Day preceding the payment date. Each date on which Distributions are
payable is referred to as a "Distribution Date." A "Business Day" means any day
other than a Saturday or Sunday or a day on which banking institutions in New
York City are authorized or required by law or executive order to remain closed,
or a day on which the Indenture Trustee, or the principal office of the Property
Trustee, is closed for business.
If provided in the applicable Prospectus Supplement, Atlas will have the
right under the Indenture to defer payments of interest on the Corresponding
Debt Securities from time to time by extending the applicable interest payment
period for a period or periods that will be specified in the applicable
Prospectus Supplement (each, an "Extension Period"). If Atlas exercises its
right to defer interest payments on the Corresponding Debt Securities, then any
payments of Distributions on the Preferred Securities also would be deferred.
During an Extension Period, interest will continue to accrue on the
Corresponding Debt Securities (compounded quarterly), and, as a result,
Distributions would continue to accumulate at the rate per annum if and as
specified in the applicable Prospectus Supplement. During any Extension Period,
Atlas may not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of Atlas'
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of Atlas that rank on
a parity with or junior in interest to the Corresponding Debt Securities or make
any guarantee payments with respect to any guarantee by Atlas of the debt
securities of any subsidiary of Atlas if such guarantee ranks on a parity with
or junior in interest to the Corresponding Debt Securities (other than (a)
purchases or acquisitions of capital stock of Atlas in connection with the
satisfaction by Atlas of our obligations under any employee benefit plans or
pursuant to any contract or security outstanding on the date of such event
requiring Atlas' to purchase capital stock of Atlas, (b) as a result of a
reclassification of Atlas' capital stock or the exchange or conversion of one
class or series of Atlas' capital stock for another class or series of Atlas'
capital stock, (c) the purchase of fractional interests in shares of Atlas'
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) dividends or
distributions in capital stock of Atlas (e) redemptions or repurchases of any
rights pursuant to a rights agreement and (f) payments under the Guarantee).
Prior to the termination of any Extension Period, Atlas may further extend the
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Extension Period, but the total duration of any such Extension Period may not
exceed 20 consecutive quarters or extend beyond the stated maturity of the
Corresponding Debt Securities. Once any Extension Period terminates and Atlas
has paid all amounts then due, Atlas may commence a new Extension Period,
provided that such Extension Period together with all other extensions may not
exceed 20 quarters or extend beyond the stated maturity of the Debt Securities.
See "Description of the Debt Securities -- Certain Provisions Relating to
Corresponding Debt Securities -- Option to Extend Interest Payments." Once an
Extension Period has terminated, any deferred Distributions, including
accumulated Additional Amounts, will be paid to those holders of record of the
Trust Securities appearing on the books and records of the Trust on the first
record date following the termination of such Extension Period.
It is expected that any revenue available for the payment of Distributions
to holders of the Preferred Securities will be limited to payments made to the
Trust by Atlas under the Corresponding Debt Securities. If Atlas does not make
interest payments on the Corresponding Debt Securities, then the Property
Trustee will not have any funds available to pay Distributions on the Preferred
Securities. The payment of Distributions (if and to the extent the Trust has
funds legally available for the payment of such Distributions and cash
sufficient to make such payments) is guaranteed by Atlas as set forth under the
Guarantee. See "Description of the Guarantee."
The Property Trustee will pay Distributions to the holders of the Preferred
Securities as such holders appear on the Trust's securities register on the
relevant record dates. As long as the Preferred Securities are represented by
one or more Global Securities, the relevant record dates will be the close of
business on the Business Day next preceding each Distribution Date, unless a
different regular record date is established or provided for the corresponding
interest payment date on the Corresponding Debt Securities. Subject to any
applicable laws and regulations and the provisions of the Declaration, unless
otherwise specified in the applicable Prospectus Supplement, each such payment
will be made as described under "Book-Entry Issuance." If any Preferred
Securities are not represented by Global Securities, then the relevant record
date for such Preferred Securities will be the fifteenth Business Day prior to
the relevant Distribution Date, that is specified in the applicable Prospectus
Supplement.
MARKET RATE RESET
Unless the Prospectus Supplement otherwise provides, the interest rate on
the Debt Securities that remain outstanding on and after the settlement date of
any Stock Purchase Contract (and therefore the distribution rate on the
Preferred Securities) will be reset on the third Business Day immediately
preceding such Purchase Contract Settlement Date to the Reset Rate, which will
be equal to the sum of the Reset Spread and the rate of interest on the Two-Year
Benchmark Treasury in effect on the third Business Day immediately preceding the
Purchase Contract Settlement Date and will be determined by the Reset Agent as
the rate the Preferred Securities should bear in order for a Preferred Security
to have market value as specified in the Prospectus Supplement on the third
Business Day immediately preceding the Purchase Contract Settlement Date. The
"Two-Year Benchmark Treasury" shall mean direct obligations of the United States
(which may be obligations traded on a when-issued basis only) having a maturity
comparable to the remaining term to maturity of the Preferred Securities, as
agreed upon by the Company and the Reset Agent. The rate for the Two-Year
Benchmark Treasury will be the bid side rate displayed at 10:00 A.M., New York
City time, on the third Business Day immediately preceding the Purchase Contract
Settlement Date in the Telerate system (or if the Telerate system is (a) no
longer available on the third Business
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Day immediately preceding the Purchase Contract Settlement Date or (b) in the
opinion of the Reset Agent (after consultation with the Company) no longer an
appropriate system from which to obtain such rate, such other nationally
recognized quotation system as, in the opinion of the Reset Agent (after
consultation with the Company) is appropriate). If such rate is not so
displayed, the rate for the Two-Year Benchmark Treasury shall be, as calculated
by the Reset Agent, the yield to maturity for the Two-Year Benchmark Treasury,
expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis, and computed by taking the arithmetic
mean of the secondary market bid rates, as of 10:30 A.M., New York City time, on
the third Business Day immediately preceding the Purchase Contract Settlement
Date of three leading United States government securities dealers selected by
the Reset Agent (after consultation with the Company) (which may include the
Reset Agent or an affiliate thereof).
On the tenth Business Day immediately preceding the Purchase Contract
Settlement Date, the Two-Year Benchmark Treasury to be used to determine the
Reset Rate on the Purchase Contract Settlement Date will be selected and the
Reset Spread to be added to the rate on the Two-Year Benchmark Treasury in
effect on the third Business Day immediately preceding the Purchase Contract
Settlement Date will be established by the Reset Agent, and the Reset Spread and
the Two-Year Benchmark Treasury will be announced by the Company (the "Reset
Announcement Date"). The Company will cause a notice of the Reset Spread and
such Two-Year Benchmark Treasury to be published on the Business Day following
the Reset Announcement Date by publication in a daily newspaper in the English
language of general circulation in The City of New York, which is expected to be
The Wall Street Journal. The Company will request, not later than 7 nor more
than 15 calendar days prior to the Reset Announcement Date, that the Depositary
notify its participants holding Preferred Securities, of such Reset Announcement
Date and of the procedures that must be followed if any owner wishes to settle
the related Purchase Contract with cash on the Business Day immediately
preceding the Purchase Contract Settlement Date.
OPTIONAL REMARKETING
Unless the Prospectus Supplement otherwise provides, pursuant to a
remarketing agreement and subject to the terms of a remarketing underwriting
agreement, on or prior to the fifth Business Day immediately preceding the
Purchase Contract Settlement Date, but no earlier than the Payment Day
immediately preceding the Purchase Contract Settlement Date, holders of separate
Preferred Securities may elect to have their Preferred Securities remarketed by
delivering their Preferred Securities along with a notice of such election to
the Custodial Agent. The Custodial Agent will hold such Preferred Securities in
an account separate from the collateral account in which the Pledged Securities
will be held. Holders of Preferred Securities electing to have their Preferred
Securities remarketed will also have the right to withdraw such election on or
prior to the fifth Business Day immediately preceding the Purchase Contract
Settlement Date.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Unless otherwise specified in the applicable
Prospectus Supplement, if the Corresponding Debt Securities held by the Trust
are repaid or redeemed in whole or in part, either upon their maturity date or
earlier, then the Property Trustee will use the proceeds from such repayment or
redemption to redeem Trust Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Corresponding Debt Securities
being repaid or redeemed. The redemption price per Trust Security will be
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equal to the aggregate stated amount of the Trust Securities being redeemed plus
any accumulated and unpaid Distributions thereon to the date of redemption plus
the related amount of the premium, if any, paid by Atlas upon the concurrent
redemption of the Corresponding Debt Securities (the "Redemption Price"). In the
event of a partial redemption, the Trust Securities will be redeemed among all
of the holders of Trust Securities on a pro rata basis. Holders of the Trust
Securities will receive at least 30 days but not more than 60 days notice of
such redemption.
Tax Event Redemption. If a Tax Event occurs and is continuing, Atlas will
have the right to redeem the Corresponding Debt Securities in whole (but not in
part) and thereby cause a mandatory redemption of the Trust Securities in whole
(but not in part) at the Redemption Price within 90 days following the
occurrence of such Tax Event. In the event a Tax Event has occurred and is
continuing and Atlas does not elect to redeem the Corresponding Debt Securities
(thereby causing a mandatory redemption of such Preferred Securities) or to
liquidate the Trust (causing the Corresponding Debt Securities to be distributed
to holders of the Trust Securities in exchange therefor upon liquidation of the
Trust as described above), the Preferred Securities will remain outstanding. See
"Description of Debt Securities -- Certain Provisions Relating to Corresponding
Debt Securities" for a definition of Tax Event.
Distribution of Corresponding Debt Securities. Unless otherwise specified
in the applicable Prospectus Supplement, Atlas will have the right to dissolve
the Trust at any time and, after satisfaction of any liabilities to creditors of
the Trust as provided by applicable law, to cause the Corresponding Debt
Securities to be distributed pro rata to the holders of the Trust Securities in
liquidation of the Trust. If, at any time, an Investment Company Event shall
occur and be continuing, the Trust shall be dissolved and the corresponding Debt
Securities will be distributed pro rata to the holders of the Trust Securities
in liquidation of the Trust.
"Investment Company Event" means the receipt by the applicable Atlas Trust
of an opinion of counsel experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in the Investment
Company Act"), the applicable Atlas Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which Change in
the Investment Company Act becomes effective on or after the date of original
issuance of the series of Preferred Securities issued by the Atlas of Trust.
After the date fixed for any distribution of Corresponding Debt Securities,
(i) the Preferred Securities will no longer be deemed to be outstanding and (ii)
any certificates representing the Preferred Securities will be deemed to
represent Corresponding Debt Securities in a principal amount equal to the
stated liquidation amount of the Preferred Securities, bearing accrued and
unpaid interest in an amount equal to the accumulated and unpaid Distributions
on the Preferred Securities, until such certificates are presented to the
Regular Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or for the Corresponding Debt Securities that may be distributed in
exchange for Preferred Securities upon dissolution or liquidation of the Trust.
Accordingly, the Preferred Securities that an investor may purchase, or the
Corresponding Debt Securities that such investor may receive upon dissolution or
liquidation of the Trust, may trade at a discount to the price that such
investor paid to purchase the Preferred Securities offered hereby.
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REDEMPTION PROCEDURES
Any Preferred Securities being redeemed will be redeemed by the Trust at
the applicable Redemption Price with the proceeds received by the Trust from the
contemporaneous redemption of the Corresponding Debt Securities by Atlas.
Redemptions of Preferred Securities will be made and the applicable Redemption
Price will be payable only to the extent that the Trust has funds on hand
available for the payment of such Redemption Price.
If the Trust notifies the holders of the Preferred Securities of a
redemption and if the Preferred Securities to be redeemed are issued in global
form, then on the applicable redemption date, the Property Trustee will deposit
irrevocably with the depositary for the Preferred Securities funds sufficient to
pay the applicable redemption price, to the extent funds are available. In
addition, the Property Trustee will give the depositary irrevocable instructions
and authority to pay the redemption price to the beneficial owners of the
Preferred Securities. If the Preferred Securities are not issued in global form,
then the Property Trustee will pay the applicable Redemption Price to the
holders of the Preferred Securities by check mailed to their respective
addresses appearing on the register of the Trust on the redemption date. In
addition, the Property Trustee will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Preferred Securities upon surrender of their certificates evidencing the
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to a redemption date for the Preferred Securities will be payable to the
holders of the Preferred Securities as they appear on the register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If a
notice of redemption has been given and funds have been deposited as required,
then upon the date of such deposit, all of the rights of the holders of the
Preferred Securities to be redeemed will cease, except for the right of such
holders to receive the Redemption Price (without interest thereon), and the
Preferred Securities will cease to be outstanding. If the redemption date is not
a Business Day, then payment of the applicable Redemption Price will be made on
the next Business Day (and without any interest or other payment in respect of
any such delay). If, however, the next Business Day falls in the next calendar
year, then payment of the Redemption Price will be made on the Business Day
preceding the redemption date.
If any payments for the redemption of any Preferred Securities are
improperly withheld or refused and not paid either by the Trust or by Atlas
pursuant to the Guarantee, then Distributions on the Preferred Securities will
continue to accumulate at the then applicable rate, from the redemption date
originally established by the Trust until the date upon which such redemption
payments actually are paid, in which case the actual payment date will be the
date fixed for redemption for purposes of calculating the applicable redemption
price.
Subject to the Declaration and applicable law (including, without
limitation, U.S. federal securities laws), Atlas or its subsidiaries may
purchase at any time and from time to time outstanding Preferred Securities by
tender, in the open market or by private agreement.
Any notice of the redemption of Trust Securities or the distribution of
Corresponding Debt Securities in exchange for Trust Securities will be mailed to
each holder of Preferred Securities being so redeemed at least 30 days but not
more than 60 days before the applicable redemption date, at such holder's
registered address. Unless Atlas defaults in the payment of the redemption price
on the Corresponding Debt Securities, interest will cease to accrue on the
Corresponding Debt Securities or portions thereof (and Distributions will cease
to accumulate on the Preferred Securities or portions thereof) called for
redemption on and after the redemption date.
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SUBORDINATION OF COMMON SECURITIES
The payment of Distributions on, and any payment upon redemption of, the
Preferred Securities and Common Securities, as applicable, will be made pro rata
based on their respective liquidation amounts. If, however, an Indenture Event
of Default has occurred and continues on any Distribution Date or redemption
date, then the amounts payable on such date will not be made on any of the
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of any Common Securities will be made until all
accumulated and unpaid Distributions or redemption payments, as the case may be,
on all of the outstanding Preferred Securities for which Distributions are to be
paid or that have been called for redemption, as the case may be, are fully
paid. See "Description of Debt Securities -- Indenture Events of Default." All
funds available to the Property Trustee first will be applied to the payment in
full in cash of all Distributions on, or the redemption price of, the Preferred
Securities then due and payable. The Trust will not issue any securities or
other interests in the assets of the Trust other than the Preferred Securities
and the Common Securities.
In the event that an Event of Default under the Declaration resulting from
an Indenture Event of Default (a "Trust Enforcement Event") has occurred and is
continuing with respect to the Preferred Securities, then Atlas, as sole holder
of the Common Securities, will be deemed to have waived any right to act with
respect to any such Trust Enforcement Event until the effect of such Trust
Enforcement Event with respect to the Preferred Securities has been cured,
waived or otherwise eliminated. Until such Trust Enforcement Event has been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Preferred Securities and not on behalf of Atlas, as
holder of the Common Securities, and only the holders of the Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf. See "-- Trust Enforcement Events; Notice."
DISSOLUTION OF THE TRUST AND DISTRIBUTIONS UPON DISSOLUTION
Unless otherwise specified in the applicable Prospectus Supplement pursuant
to the Declaration, the Trust will automatically dissolve upon the expiration of
its term or, if earlier, shall dissolve on the first to occur of: (i) certain
events of bankruptcy, dissolution or liquidation of Atlas; (ii) the written
direction to the Property Trustee from Atlas at any time to dissolve the Trust
and to distribute the Corresponding Debt Securities in exchange for the Trust
Securities; (iii) redemption of all of the Preferred Securities as described
under "-- Redemption or Exchange -- Mandatory Redemption"; and (iv) the entry of
an order for the dissolution of the Trust by a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Trust will be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities in exchange therefor Corresponding Debt
Securities, unless such distribution is determined by the Property Trustee not
to be practical, in which event the holders of the Trust Securities will be
entitled to receive out of the assets of the Trust distributions in cash or
other immediately available funds to the extent such funds are available for
distribution after satisfaction of the Trust's liabilities to any creditors (the
"Liquidation Distributions"). The amount of each Liquidation Distribution will
be equal to the aggregate of the stated liquidation amount plus accumulated and
unpaid Distributions thereon to the date of payment. If, however, Corresponding
Debt Securities are to be distributed in connection with such Liquidation, then
the holders of the Trust Securities will receive Corresponding Debt Securities
in an aggregate principal amount equal to the
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aggregate stated liquidation amount of the Trust Securities, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accumulated and unpaid Distributions on, such Trust Securities.
If the Liquidation Distribution can be paid only in part because the Trust
has insufficient assets available to pay the aggregate Liquidation Distribution
in full, then the amounts payable directly by the Trust on the Trust Securities
will be paid on a pro rata basis. Atlas, as sole holder of the Common
Securities, will be entitled to receive Liquidation Distributions on a pro rata
basis with the Holders of the Preferred Securities, except that if an Indenture
Event of Default has occurred and is continuing, then the Preferred Securities
will have a preference over the Common Securities with regard to such
Liquidation Distributions.
TRUST ENFORCEMENT EVENTS; NOTICE
Under the Declaration, holders of Trust Securities have certain rights in
the event that any Indenture Event of Default has occurred and continues with
respect to the Trust Securities issued thereunder. See "Description of Debt
Securities -- Indenture Events of Default." If a Trust Enforcement Event has
occurred and is continuing, the Preferred Securities will have a preference over
the Common Securities upon dissolution of the Trust, as described above.
The Property Trustee will transmit by mail, first class postage prepaid,
notice of such Trust Enforcement Event to the holders of the Trust Securities
within 90 days of the occurrence of the Trust Enforcement Event unless such
Trust Enforcement Event has been cured before the giving of such notice. Atlas
and the Regular Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration as well as any
reports that may be required to be filed by them under the Trust Indenture Act.
REMOVAL OF TRUSTEES
Unless an Indenture Event of Default has occurred and continues, any
Trustee may be removed with or without cause at any time by the holder of the
Common Securities. If an Indenture Event of Default has occurred and continues,
the Property Trustee and the Delaware Trustee may be removed by a majority of
the stated liquidation amount of the Preferred Securities. The removal of a
Property Trustee or a Delaware Trustee, however, will not be effective until a
successor Trustee possessing the qualifications to act as a Property Trustee or
Delaware Trustee, as the case may be, has accepted its appointment in accordance
with the provisions of the Declaration.
MERGER OR CONSOLIDATION OF TRUSTEES
Any entity into which the Property Trustee, the Delaware Trustee or any
Regular Trustee that is not a natural person may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee may be a party, or any entity
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Declaration, provided
that such entity is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate with, convert into, amalgamate or merge with
or into, be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below or as described in "Dissolution of the
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Trust and Distributions upon Dissolution." At the request of Atlas and with the
consent of a majority of the Regular Trustees, and without the consent of the
holders of the Preferred Securities, the Delaware Trustee or the Property
Trustee, the Trust may consolidate with, convert into, amalgamate or merge with
or into, be replaced by or convey, transfer or lease its properties
substantially as an entirety to a trust organized as such under the laws of any
state. Such consolidation, conversion, amalgamation, merger, replacement,
conveyance, transfer or lease will be subject, however, to the following
limitations:
(i) if the Trust is not the successor entity, then the successor entity
either must (a) expressly assume all of the Trust's obligations with
respect to the Trust Securities or (b) substitute for the Trust
Securities other securities having substantially the same terms as
the Trust Securities (the "Successor Securities"), so long as such
Successor Securities rank the same as the Trust Securities with
respect to distributions and payments upon liquidation, redemption
and otherwise;
(ii) Atlas must expressly appoint a trustee of a successor entity
possessing the same powers and duties as the Property Trustee as the
holder of the Corresponding Debt Securities;
(iii) the Preferred Securities or any Successor Securities must be
listed, or upon notification of issuance will be listed, on any
national securities exchange or with any other organization on
which the Preferred Securities are then listed or quoted;
(iv) such consolidation, conversion, amalgamation, merger, replacement,
conveyance, transfer or lease must not cause the Preferred
Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization;
(v) such consolidation, conversion, amalgamation, merger, replacement,
conveyance, transfer or lease must not adversely affect the rights,
preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material
respect;
(vi) such successor entity must have a purpose substantially identical to
that of the Trust;
(vii) prior to such consolidation, conversion, amalgamation, merger,
replacement, conveyance, transfer or lease, Atlas must have received
an opinion of independent counsel to the Trust experienced in such
matters to the effect that (a) such consolidation, conversion,
amalgamation, merger, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor
Securities) in any material respect; (b) following such
consolidation, conversion, amalgamation, merger, replacement,
conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under
the Investment Company Act and (c) following such consolidation,
conversion, amalgamation, merger, replacement, conveyance, transfer
or lease, the Trust (or the successor entity) will continue to be
classified as a grantor trust for U.S. federal income tax purposes;
and
(viii) Atlas or any permitted successor or assignee must own all of the
common securities and must guarantee the obligations of such
successor entity under the Successor Securities, at least to the
extent provided by the Guarantee.
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Notwithstanding the foregoing, unless holders of 100% in aggregate liquidation
amount of the Trust Securities give their consent, the Trust will not
consolidate with, convert into, amalgamate or merge with or into, be replaced by
or convey, transfer or lease its properties and assets substantially as an
entirety to, any other entity or permit any other entity to consolidate with,
amalgamate or merge with or into, or replace it, if such consolidation,
conversion, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be classified as other than a
grantor trust for U.S. federal income tax purposes or would cause each holder of
Trust Securities not to be treated as owning an undivided beneficial ownership
interest in the Corresponding Debt Securities.
VOTING RIGHTS; AMENDMENT OF DECLARATION
Except as provided below and under "Description of the
Guarantee -- Amendments; Assignment" and as otherwise required by the
Declaration, the Business Trust Act, the Trust Indenture Act and other
applicable law, the holders of the Trust Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion
in certain circumstances set forth in the last sentence of this paragraph, the
holders of a majority in aggregate liquidation amount of the Preferred
Securities, voting separately as a class, have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee, or to direct the exercise of any trust or power conferred upon
the Property Trustee under the Declaration. This includes the right to direct
the Property Trustee, as holder of the Corresponding Debt Securities, to (i)
exercise the remedies available to it under the Indenture, (ii) consent to any
amendment or modification of the Indenture or the Corresponding Debt Securities
where such consent will be required or (iii) waive any past default and its
consequences that is waivable under the Indenture; provided that if an Indenture
Event of Default has occurred and is continuing, then the holders of 25% of the
aggregate stated liquidation amount of the Preferred Securities may direct the
Property Trustee to declare the principal of and interest on the Corresponding
Debt Securities due and payable; and provided further that where a consent or
action under the Indenture would require the consent or act of the holders of
more than a majority of the aggregate principal amount of Corresponding Debt
Securities affected thereby, the Property Trustee only may give such consent or
take such action at the direction of the holders of at least the same proportion
in aggregate stated liquidation amount of the Preferred Securities. The Property
Trustee will notify all holders of the Preferred Securities of any notice of any
Indenture Event of Default that it has received from Atlas. Such notice will
state that such Indenture Event of Default also constitutes an Trust Enforcement
Event. Except with respect to directing the time, method and place of conducting
a proceeding for a remedy, the Property Trustee will have no obligation to take
any of the actions described in clause (i) or (ii) above unless it first has
obtained an opinion of independent tax counsel experienced in such matters to
the effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for U.S. federal income tax purposes and that each
holder of Trust Securities will be treated as owning an undivided beneficial
ownership interest in the Corresponding Debt Securities.
If the consent of the Property Trustee, as the holder of the Corresponding
Debt Securities, is required under the Indenture with respect to any amendment
or modification of the Indenture, the Property Trustee will request the
direction of the holders of the Trust Securities with respect to such amendment
or modification and will vote with respect to such amendment or modification as
directed by the holders of a majority in stated liquidation amount of the Trust
Securities voting together as a single class; provided that where a consent
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under the Indenture would require the consent of the holders of more than a
majority of the aggregate principal amount of Corresponding Debt Securities, the
Property Trustee only may give such consent at the direction of the holders of
at least the same proportion in aggregate stated liquidation amount of the Trust
Securities. The Property Trustee will not take any such action in accordance
with the directions of the holders of the Trust Securities unless the Property
Trustee has obtained an opinion of independent tax counsel to the effect that
the Trust will not be classified as other than a grantor trust for United States
federal income tax purposes as a result of such action, and that each holder of
Trust Securities will be treated as owning an undivided beneficial ownership
interest in the Corresponding Debt Securities.
A waiver of an Indenture Event of Default with respect to the Corresponding
Debt Securities will constitute a waiver of the corresponding Trust Enforcement
Event.
Any required approval or direction of the holders of the Preferred
Securities may be given at a separate meeting of holders of the Preferred
Securities convened for such purpose, at a meeting of all of the holders of the
Trust Securities or pursuant to written consent. The Regular Trustees will
direct the Property Trustee to cause a notice of any meeting at which the
holders of the Preferred Securities are entitled to vote to be mailed to each
holder of record of Preferred Securities. Each such notice will include a
statement setting forth (i) the date, time and place of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote and (iii) instructions for the delivery of
proxies.
No vote or consent of the holders of Preferred Securities will be required
for the Trust to redeem and cancel the Preferred Securities or distribute the
Corresponding Debt Securities in accordance with the Declaration and the terms
of the Trust Securities.
Notwithstanding that holders of the Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned at such time by Atlas, the Trustees or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, Atlas or any Trustee will not be entitled to vote or consent and
will, for purposes of such vote or consent, be treated as if such Preferred
Securities were not outstanding.
Except during the continuance of an Indenture Event of Default, the holders
of the Preferred Securities will have no rights to appoint or remove the
Trustees, who may be appointed, removed or replaced solely by Atlas as the
holder of all of the Common Securities. If an Indenture Event of Default has
occurred and is continuing, the Property Trustee and the Delaware Trustee may be
removed and replaced by the holders of a majority in liquidation amount of the
Preferred Securities.
Generally, the Declaration may be amended without the consent of the
holders of the Trust Securities, if such amendment does not have a material
adverse effect on certain rights, preferences or privileges of the holders of
the Trust Securities. Any amendment, however, that affects the powers,
preferences or special rights of the Trust Securities, or results in the
dissolution, winding-up or termination of the Trust (other than pursuant to the
Declaration), will not be effective unless the holders of at least 66 2/3% of
the stated liquidation amount of the Trust Securities have approved such
amendment. Further, any amendment that changes the amount or timing of any
Distribution or otherwise adversely affects the amount of any Distribution
required to be made in respect of the Trust Securities, or any amendment that
restricts the rights of a holder of Trust Securities to institute a suit for the
enforcement of payment of Distributions, will not be effective unless each
holder of Trust Securities has approved such amendment.
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GLOBAL PREFERRED SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Securities may be issued in whole or in part in global form ("Global
Preferred Securities") that will be deposited with, or on behalf of, a
depositary identified in the applicable Prospectus Supplement. Global Preferred
Securities may be issued in fully registered form and in either temporary or
permanent form. Unless and until a Global Preferred Security is exchanged in
whole or in part for the individual Preferred Securities represented thereby,
the depositary holding such Global Preferred Security may transfer such Global
Preferred Security only to its nominee or successor depositary (or vice versa)
and only as a whole. Unless otherwise indicated in the applicable Prospectus
Supplement for the Preferred Securities, the depositary for the Global Preferred
Securities will be The Depository Trust Company. See "Book-Entry Issuance." The
laws of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in certificated form. Such limits and laws
may impair the ability to transfer beneficial interests in Global Preferred
Securities.
The specific terms of the depositary arrangement for the Preferred
Securities will be described in the applicable Prospectus Supplement. Atlas
anticipates that the description of the depositary set forth below under
"Book-Entry Issuance" generally will apply to any depositary arrangements. Atlas
expects that the applicable depositary or its nominee, upon receipt of any
payment of liquidation amount, premium or Distributions in respect of a
permanent Global Preferred Security representing any of the Preferred
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the aggregate
principal amount of such Global Preferred Security as shown on the records of
the depositary or its nominee. Atlas also expects that payments by Participants
to Beneficial Owners will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of customers
in bearer form or registered in "street name." Such payments will be the
responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if at
any time the depositary is unwilling, unable or ineligible to continue as a
depositary for the Preferred Securities, the Trust will appoint a successor
depositary with respect to the Preferred Securities. If a successor depositary
is not appointed by the Trust within 90 days after the Trust receives such
notice or becomes aware of such ineligibility, the Trust's election that the
Preferred Securities be represented by one or more Global Securities will no
longer be effective, and a Regular Trustee on behalf of the Trust will execute,
and the Property Trustee will authenticate and deliver, Preferred Securities in
definitive registered form, in any authorized denominations, in an aggregate
stated liquidation amount equal to the principal amount of the Global Preferred
Securities representing the Preferred Securities in exchange for such Global
Preferred Securities. In addition, the Trust may at any time and in its sole
discretion, subject to any limitations described in the applicable Prospectus
Supplement, determine not to have any Preferred Securities represented by one or
more Global Preferred Securities, and, in such event, a Regular Trustee on
behalf of the Trust will execute and the Property Trustee will authenticate and
deliver Preferred Securities in definitive registered form, in an aggregate
stated liquidation amount equal to the principal amount of the Global Preferred
Securities representing such Preferred Securities, in exchange for such Global
Preferred Securities.
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PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to the
applicable depositary, which will credit the relevant Participants' accounts on
the applicable Distribution dates or, if the Preferred Securities are not held
by a depositary, such payments will be made by check mailed to the address of
the holder entitled thereto as such address will appear on the Trust's security
register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent for the Preferred Securities initially will be the Property
Trustee. The paying agent will be permitted to resign as paying agent upon 30
days' written notice to the Property Trustee and Atlas.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but the Trust may require payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange of Preferred Securities.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee will not be liable for any action taken, suffered or
omitted to be taken by it without negligence, in good faith and reasonably
believed by it to be authorized or within the discretion, rights or powers
conferred upon it by the Declaration. The Property Trustee will be under no
obligation to exercise any rights or powers vested in it by the Declaration at
the request or direction of any holder of Trust Securities, unless such holder
provides the Property Trustee security and indemnity, reasonably satisfactory to
the Property Trustee, against the costs and expenses and liabilities that might
be incurred by it in complying with such request or direction.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, construed
and interpreted in accordance with the laws of the State of Delaware.
DESCRIPTION OF THE GUARANTEE
The following description sets forth certain general terms and provisions
of the Guarantee to which any Prospectus Supplement may relate. The particular
terms and provisions of the Guarantee and the application of these general terms
and provisions thereto will be described in the applicable Prospectus
Supplement.
Pursuant to and for the purposes of compliance with the Trust Indenture
Act, the Guarantee will qualify as an indenture, and The First National Bank of
Chicago will act as trustee under the Guarantee (the "Guarantee Trustee") and
hold the Guarantee for the benefit of the holders of the Trust Securities. The
following summaries of certain terms and provisions of the Guarantee do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, the form of Guarantee (including the definitions therein of
certain terms) that is filed as an exhibit to the Registration Statement, and to
the Trust Indenture Act. Capitalized terms used in this section not otherwise
defined in this Prospectus have the meanings set forth in the Guarantee.
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GENERAL
To the extent set forth in the Guarantee and except to the extent paid by
the Trust, Atlas will irrevocably and unconditionally agree to pay the holders
of the Trust Securities the Guarantee Payments (as defined below), in full, as
and when due, regardless of any defense, right of set-off or counterclaim that
the Trust may have or assert. The payments subject to the Guarantee (the
"Guarantee Payments") include:
(i) any accumulated and unpaid Distributions that are required to be paid
on the Trust Securities, to the extent the Trust has funds available
therefor;
(ii) the redemption price, including all accumulated and unpaid
Distributions to the date of redemption, with respect to the Trust
Securities upon the redemption of the Corresponding Debt Securities
if a Tax Event or Investment Company Event occurs or upon maturity of
the Corresponding Debt Securities, to the extent the Trust has funds
available therefor;
(iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the
distribution of Corresponding Debt Securities to the holders in
exchange for the Trust Securities, as provided in the Declaration),
the lesser of (a) the aggregate of the stated liquidation amount and
all accumulated and unpaid Distributions on the Trust Securities to
the date of payment, to the extent the Trust has funds available
therefor, and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Trust Securities in
liquidation of the Trust.
Atlas' obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by Atlas to the holders of Preferred Securities
or by causing the Trust to pay such amounts to such holders.
If a Trust Enforcement Event has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments will be
subordinated to the rights of holders of Preferred Securities to receive
Guarantee Payments. See "Description of the Preferred
Securities -- Subordination of Common Securities."
The Guarantee will apply only to the extent the Trust has funds available
to make payments with respect to the Trust Securities. If Atlas does not make
interest payments on the Corresponding Debt Securities owned by the Trust, the
Trust will not have funds available to pay Distributions on the Preferred
Securities.
Through the Guarantee, the Corresponding Debt Securities and the Indenture,
taken together, Atlas has fully and unconditionally guaranteed all of the
Trust's obligations under the Trust Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of the documents
that has the effect of providing a full and unconditional guarantee of the
Trust's obligations under the Declaration. See "Relationship Among the Preferred
Securities, the Corresponding Debt Securities and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute a guarantee of payment and not of collection.
The beneficiaries of the Guarantee may institute a legal proceeding directly
against Atlas to enforce its rights under the Guarantee without instituting a
legal proceeding against any other person or entity.
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CERTAIN COVENANTS OF ATLAS
Atlas will covenant that, so long as any Trust Securities remain
outstanding, if an Event of Default occurs under the Guarantee or a Trust
Enforcement Event occurs under the Declaration and written notice of such event
has been given to Atlas, then Atlas may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to any of Atlas' capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of Atlas that rank on a parity with or junior in interest to the
Corresponding Debt Securities or make any guarantee payments with respect to any
guarantee by Atlas of the debt securities of any subsidiary of Atlas if such
guarantee ranks on a parity with or junior in interest to the Corresponding Debt
Securities (other than (a) purchases or acquisitions of capital stock of Atlas
in connection with the satisfaction by Atlas of its obligations under any
employee benefit plans or the satisfaction by Atlas of its obligations pursuant
to any contract or security outstanding on the date of such event requiring
Atlas to purchase capital stock of Atlas, (b) as a result of a reclassification
of Atlas' capital stock for another class or series of Atlas' capital stock, (c)
the purchase of fractional interests in shares of Atlas' capital stock pursuant
to the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (d) dividends or distributions in capital stock of
Atlas, (e) redemptions or repurchases of any rights pursuant to a rights
agreement and (f) payments under the Guarantee).
AMENDMENTS; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of the Trust Securities in any material respect (that do not require
the consent of holders), the Guarantee may be amended only with the prior
approval of the holders of at least a majority in liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all the outstanding Trust Securities. All
guarantees and agreements contained in the Guarantee will bind the successors,
assigns, receivers, trustees and representatives of Atlas and will inure to the
benefit of the holders of the Trust Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
Atlas to perform any of its payment or other obligations under the Guarantee.
The holders of a majority in stated liquidation amount of the Trust
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee, any holder of Trust Securities may institute a legal proceeding
directly against Atlas to enforce its rights under the Guarantee, without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person. Notwithstanding the foregoing, if Atlas has failed to make a
Guarantee Payment, a holder of Trust Securities may directly institute a
proceeding against Atlas for enforcement of the Guarantee for such payment.
Atlas, as guarantor, is required to file annually with the Guarantee
Trustee a certificate indicating whether or not Atlas is in compliance with all
of the conditions and obligations applicable to it under the Guarantee.
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TERMINATION
The Guarantee will terminate (i) if a Tax Event or an Investment Company
Event occurs or upon maturity of the Corresponding Debt Securities, upon full
payment of the redemption price of all of the Trust Securities, (ii) upon
distribution of the Corresponding Debt Securities held by the Trust to the
holders of the Trust Securities or (iv) upon full payment of the amounts payable
in accordance with the Declaration upon liquidation of the Trust. The Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of the Trust Securities must return payment of any sums paid
under the Trust Securities or the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, will undertake to perform only those duties specifically set
forth in the Guarantee and, after a default that has not been cured or waived,
will exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Guarantee
Trustee will be under no obligation to exercise any of the rights or powers
vested in it by the Guarantee at the request or direction of any holder of the
Trust Securities, unless such holder provides the Guarantee Trustee security and
indemnity, reasonably satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Guarantee Trustee's agents, nominees or custodians) and liabilities that might
be incurred thereby. The foregoing will not relieve the Guarantee Trustee, upon
the occurrence of an event of default under the Guarantee, of its obligation to
exercise the rights and powers vested in it by the Guarantee.
GOVERNING LAW
The Guarantee will be governed by, construed and interpreted in accordance
with the laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING DEBT SECURITIES AND THE GUARANTEE
To the extent set forth in the Guarantee and to the extent funds are
available, Atlas will irrevocably guarantee the payment of Distributions and
other amounts due on the Trust Securities. See "Description of the Guarantee."
If and to the extent Atlas does not make payments on the Corresponding Debt
Securities, the Trust will not have sufficient funds to pay Distributions or
other amounts due on the Trust Securities. The Guarantee does not cover any
payment of Distributions or other amounts due on the Trust Securities unless the
Trust has sufficient funds for the payment of such Distributions or other
amounts. In such event, a holder of Trust Securities may institute a legal
proceeding directly against Atlas to enforce payment of such Distributions or
other amounts to such holder after the respective due dates. Taken together,
Atlas' obligations under the Corresponding Debt Securities, the Indenture and
the Guarantee provide a full and unconditional guarantee of payments of
Distributions and other amounts due on the Trust Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of these
documents that provides a full and unconditional guarantee of the Trust's
obligations under the Trust Securities.
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SUFFICIENCY OF PAYMENTS
As long as payments of interest and other amounts are made when due on the
Corresponding Debt Securities, such payments will be sufficient to cover
Distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of the Corresponding Debt Securities
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Corresponding Debt Securities will match the distribution rate and
distribution and other payment dates for the Trust Securities; (iii) Atlas, as
issuer of the Corresponding Debt Securities, will pay, and the Trust will not be
obligated to pay, directly or indirectly, all costs, expenses, debts and
obligations of the Trust (other than with respect to the Trust Securities); and
(iv) the Declaration further provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, Atlas has the
right to set-off any payment it is otherwise required to make thereunder against
and to the extent it has already made, or is concurrently on the date of such
payment making, a related payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
The Declaration provides that if Atlas fails to make interest or other
payments on the Corresponding Debt Securities when due (taking account of any
Extension Period), the holders of the Preferred Securities may direct the
Property Trustee to enforce its rights under the Indenture. See "Description of
Preferred Securities -- Voting Rights; Amendment of Declaration." If the
Property Trustee fails to enforce its rights under the Indenture in respect of
an Indenture Event of Default, any holder of record of Preferred Securities may,
to the fullest extent permitted by applicable law, institute a legal proceeding
against Atlas to enforce the Property Trustee's rights under the Indenture
without first instituting any legal proceeding against the Property Trustee or
any other person or entity. Notwithstanding the foregoing, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of Atlas to pay interest or principal on the Corresponding Debt
Securities on the date such interest or principal is otherwise payable, then a
holder of Preferred Securities may institute a Direct Action against Atlas for
payment.
If Atlas fails to make payments under the Guarantee, a holder of Preferred
Securities may institute a proceeding directly against Atlas for enforcement of
the Guarantee for such payments.
LIMITED PURPOSE OF TRUST
The Preferred Securities evidence undivided beneficial ownership interests
in the Trust, and the Trust exists for the sole purpose of issuing and selling
the Trust Securities and using the proceeds to purchase Corresponding Debt
Securities. A principal difference between the rights of a holder of Preferred
Securities and a holder of Corresponding Debt Securities is that a holder of
Corresponding Debt Securities is entitled to receive from Atlas the principal
amount of and interest accrued on Corresponding Debt Securities held, while a
holder of Preferred Securities is entitled to receive Distributions and other
payments from the Trust (or from Atlas under the Guarantee) only if and to the
extent the Trust has funds available for the payment of such Distributions and
other payments.
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RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Trust involving the redemption or repayment of the Corresponding Debt
Securities, the holders of the Trust Securities will be entitled to receive, out
of assets held by the Trust, subject to the rights of creditors of the Trust, if
any, the Liquidation Distribution in cash. Because Atlas is the guarantor under
the Guarantee and, as issuer of the Corresponding Debt Securities, has agreed to
pay for all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of the Trust Securities), the positions of a holder
of Trust Securities and a holder of the Corresponding Debt Securities relative
to other creditors and to shareholders of Atlas in the event of liquidation or
bankruptcy of Atlas would be substantially the same.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
Unless otherwise specified in the applicable Prospectus Supplement, the
Company may issue Stock Purchase Contracts, including contracts obligating
holders to purchase from the Company, and the Company to sell to the holders, a
specified number of shares of Common Stock or Preferred Stock at a future date
or dates. The consideration per share of Common Stock or Preferred Stock may be
fixed at the time the Stock Purchase Contracts are issued or may be determined
by a specific reference to a formula set forth in the Stock Purchase Contracts.
The Stock Purchase Contracts may be issued separately or as part of Units
("Stock Purchase Units") consisting of a Stock Purchase Contract and either (x)
Senior Debt Securities or Subordinated Debt Securities, (y) debt obligations of
third parties, including U.S. Treasury securities, or (z) Preferred Securities
of an Atlas Trust, securing the holder's obligation to purchase the Common or
Preferred Stock under the Stock Purchase Contracts. The Stock Purchase Contracts
may require the Company to make periodic payments to the holders of the Stock
Purchase Units or vice versa, and such payments may be unsecured or prefunded on
some basis. The Stock Purchase Contracts may require holders to secure their
obligations thereunder in a specified manner and in certain circumstances Atlas
may deliver newly issued prepaid stock purchase contracts ("Prepaid Securities")
upon release to a holder of any collateral securing such holder's under the
original Stock Purchase Contract.
Pledged Securities and Pledge Agreement. The securities related to the
Stock Purchase Contracts (collectively, the "Pledged Securities") will be
pledged to a collateral agent (the "Collateral Agent"), for the benefit of
Atlas, pursuant to the Pledge Agreement to secure the obligations of holders of
Stock Purchase Contracts to purchase Common Stock or Preferred Stock under the
related Stock Purchase Contracts. The rights of holders of Stock Purchase
Contracts to the related Pledged Securities will be subject to the Company's
security interest created by the Pledge Agreement. No holder of Stock Purchase
Contracts will be permitted to withdraw the Pledged Securities related to such
Stock Purchase Contracts from the pledge arrangement except upon the termination
or Early Settlement of the related Stock Purchase Contracts. Subject to such
security interest and the terms of the Purchase Contract Agreement and the
Pledge Agreement, each holder of a Stock Purchase Contract will retain full
beneficial ownership of the related Pledged Securities.
Except as described in the applicable Prospectus Supplement, the Collateral
Agent will, upon receipt of distributions on the Pledged Securities, distribute
such payments to Atlas or the Purchase Contract Agent, as provided in the Pledge
Agreement. The Purchase Contract
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Agent will in turn distribute payments it receives as provided in the Purchase
Contract Agreement.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units and, if applicable, Prepaid
Securities. The description in the Prospectus Supplement will not necessarily be
complete and will be qualified in its entirety by reference to the Stock
Purchase Contracts, and, if applicable, collateral arrangements and depositary
arrangements, relating to such Stock Purchase Contracts or Stock Purchase Units
and, if applicable, Prepaid Securities and the document pursuant to which such
Prepaid Securities will be issued.
SELLING STOCKHOLDERS
Some of the shares of Common Stock being offered pursuant to this
Prospectus directly or pursuant to Stock Purchase Contracts may be offered by
certain Selling Stockholders, including Michael A. Chowdry, the Chairman, Chief
Executive Officer and President of the Company, and certain other officers of
the Company. Identification of any such selling stockholder will be made in the
applicable Prospectus Supplement.
PLAN OF DISTRIBUTION
The Company and the Atlas Trusts (and with respect to shares of Common
Stock, the selling stockholders) may sell the Securities to or through one or
more underwriters or dealers or may sell the Securities directly to other
purchasers or through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or 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 the Securities, underwriters or agents may
receive compensation from the Company or from purchasers of the Securities for
whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters may sell the Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of the Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on the
resale of the Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the applicable Prospectus Supplement.
Under agreements which may be entered into by the Company and the Atlas
Trusts, underwriters and agents who participate in the distribution of the
Securities may be entitled to indemnification by the Company against
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase the Securities from the
Company or the Atlas Trusts pursuant to contracts providing for payment and
delivery on a future date. Institutions with which such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but in
all cases such institutions must be approved by the Company. The obligations of
any purchaser
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under any such contract will be subject to the condition that the purchase of
the Securities being offered is not at the time of delivery prohibited under the
laws of the jurisdiction to which such purchaser is subject. The underwriters
and such other agents will not have any responsibility in respect of the
validity or performance of such contracts.
Unless otherwise indicated in the applicable Prospectus Supplement, Atlas
does not intend to apply for the listing of any Debt Securities on a national
securities exchange. If any Securities are sold to or through underwriters,
dealers or agents, the underwriters, dealers or agents may make a market in such
Securities, as permitted by applicable laws and regulations. No underwriter,
dealer or agent would be obligated, however, to make a market in such
Securities, and any such market-making could be discontinued at any time at the
sole discretion of the underwriter, dealer or agent. Accordingly, no assurance
can be given as to the liquidity of, or trading markets for, such Securities.
Certain of the underwritings or agents and their associates may be
customers of, engage in transactions with, and perform services for, the Company
in the ordinary course of business.
VALIDITY OF THE SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement (i) the
validity of the Securities of Atlas offered hereby will be passed upon for the
Company by Cahill Gordon & Reindel (a partnership including a professional
corporation), New York, New York and (ii) the validity of the Preferred
Securities offered hereby will be passed upon for the Atlas Trusts and the
Company by Richards, Layton & Finger, P.A. Wilmington, Delaware.
EXPERTS
The consolidated financial statements incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in giving said report.
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[ATLAS AIR LOGO]
