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Filed pursuant to Rule 424(b)(3)
Registration No. 333-52497
PROSPECTUS
4,400,000 PREFERRED SECURITIES
CENTRAL PARKING FINANCE TRUST
5 1/4% Convertible Trust Issued Preferred Securities
(Liquidation Amount $25 per Preferred Security)
guaranteed to the extent set forth herein by,
and convertible into common stock of
CENTRAL PARKING CORPORATION
and
69,473 SHARES
CENTRAL PARKING CORPORATION
Common Stock, $0.01 par value
This Prospectus relates to the 5 1/4% Convertible Trust Issued
Preferred Securities (the "Preferred Securities") liquidation preference $25 per
Preferred Security, which represent preferred undivided beneficial interests in
the assets of Central Parking Finance Trust, a statutory business trust formed
under the laws of the State of Delaware ("Central Parking Finance" or the
"Trust"), the shares of common stock, $0.01 par value per share (the "Company
Common Stock"), of Central Parking Corporation, a Tennessee corporation (the
"Company"), issuable upon conversion of the Preferred Securities and 69,473
shares of Company Common Stock being offered by certain selling shareholders.
The Company owns all the common securities issued by the Trust (the "Common
Securities" and, together with the Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the assets of the Trust. The
69,473 shares of Company Common Stock were issued in two separate acquisitions
by the Company pursuant to an exemption from the requirements of the Securities
Act of 1933, as amended (the "Securities Act"). The Preferred Securities were
issued and sold (the "Original Offering") on March 18, 1998 (the "Original
Offering Date") in transactions exempt from the registration requirements of the
Securities Act, in the United States to persons reasonably believed by the
Initial Purchasers (as defined below) of the Preferred Securities to be
qualified institutional buyers in reliance on Rule 144A under the Securities
Act) and outside the United States to non-U.S. persons in offshore transactions
in reliance on Regulation S under the Securities Act. The Trust exists for the
sole purpose of issuing the Trust Securities and investing the proceeds thereof
in an equivalent amount of 5 1/4% Convertible Subordinated Debentures due 2028
(the "Convertible Debentures") of the Company. Upon an event of default under
the Trust Agreement (as defined herein), the holders of the Preferred Securities
will have a preference over the holders of the Common Securities with respect to
payments in respect of distributions and payments upon redemption, liquidation
and otherwise.
The Preferred Securities, the Company Common Stock issuable upon
conversion of the Preferred Securities and the additional 69,473 shares of
Company Common Stock (the "Offered Securities") may be offered and sold from
time to time by the holders named herein or by their transferees, pledgees,
donees or their successors (collectively, the "Selling Holders") pursuant to
this Prospectus. The Offered Securities may be sold by the Selling Holders from
time to time directly to purchasers or through agents, underwriters or dealers.
See "Plan of Distribution." If required, the names of any such agents or
underwriters involved in the sale of the Offered Securities and the applicable
agent's commission, dealer's purchase price or underwriter's discount, if any,
will be set forth in an accompanying supplement to this Prospectus (the
"Prospectus Supplement"). The Selling Holders will receive all of the net
proceeds from the sale of the Offered Securities and will pay all underwriting
discounts and selling commissions, if any, applicable to any such sale. The
Company is responsible for payment of all other expenses incident to the offer
and sale of the Offered Securities. The Selling Holders and any broker-dealers,
agents or underwriters which participate in the distribution of the Offered
Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commission received by them and any profit on the resale
of the Offered Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution"
for a description of indemnification arrangements.
Holders of the Preferred Securities are entitled to receive cumulative
cash distributions at an annual rate of 5 1/4% of the liquidation amount of $25
per Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on each January 1, April 1, July 1 and October 1,
commencing July 1, 1998. See "Description of the Preferred
Securities--Distributions." The distribution rate and the distribution payment
dates and other payment dates for the Preferred Securities correspond to the
interest rate and interest payment dates and other payment dates for the
Convertible Debentures, which are the sole assets of the Trust. As a result, if
principal or interest is not paid on the Convertible Debentures, no amounts will
be paid with respect to the Preferred Securities.
Each Preferred Security is convertible at the option of the holder
thereof, into shares of the Company Common Stock at a conversion rate of 0.4545
shares of Company Common Stock for each Preferred Security (equivalent to a
conversion price of $55.00 per share of Company Common Stock), subject to
adjustment in certain circumstances. The Company Common Stock is quoted on the
New York Stock Exchange ("NYSE") under the symbol "CPC." On May 27, 1998, the
last reported sale price of the Company Common Stock on the NYSE was $44.9375.
SEE RISK FACTORS BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS TO BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE PREFERRED SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 29, 1998
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(Continued from previous page.)
The Company has the right to defer payments of interest on the
Convertible Debentures at any time for up to 20 consecutive quarters (each, an
"Extension Period"), but not beyond the maturity of the Convertible Debentures.
If interest payments are so deferred, distributions on the Preferred Securities
also will be deferred. During any Extension Period, distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at a
rate of 5 1/4% per annum compounded quarterly. During any Extension Period,
holders of Preferred Securities will be required to include such deferred
interest in their gross income for United States federal income tax purposes in
advance of receipt of the cash distributions with respect to such deferred
interest payments. Moreover, if a holder of Preferred Securities converts its
Preferred Securities into Company Common Stock during any Extension Period, the
holder will not receive any cash related to the deferred distributions. There
could be multiple Extension Periods of varying lengths throughout the term of
Convertible Debentures (but distributions would continue to accumulate quarterly
and accrue interest until the end of any such Extension Period). See "Risk
Factors--Option to Extend Interest Payment Periods," "Description of the
Preferred Securities--Distributions" and "Description of the Convertible
Debentures--Option to Extend Interest Payment Periods."
The payment of distributions out of moneys held by the Trust and
payments on liquidation of the Trust or the redemption of Preferred Securities,
as described below, are guaranteed by the Company (the "Guarantee") to the
extent the Trust has funds available therefor as described under "Description of
the Guarantee." The Guarantee, when taken together with the Company's
obligations under the Indenture (as defined herein) pursuant to which the
Convertible Debentures are issued and its obligations under the Trust Agreement,
including its obligations to pay costs, expenses, debts and liabilities of the
Trust (other than with respect to the Trust Securities), provide a full and
unconditional guarantee of amounts due on the Preferred Securities. The
Company's obligations under the Guarantee rank (i) subordinate and junior to all
other liabilities of the Company except any liabilities that may be pari passu
by their terms, (ii) pari passu with the most senior preferred stock issued from
time to time by the Company and with any guarantee now or hereafter entered into
by the Company in respect of any preferred or preference stock or any preferred
securities of any affiliate of the Company and (iii) senior to the Company
Common Stock. See "Description of the Guarantee." The obligations of the Company
under the Convertible Debentures are subordinate and junior in right of payment
to Senior Indebtedness (as defined herein) of the Company. See "Capitalization."
The Convertible Debentures are redeemable by the Company, in whole or
in part, from time to time, on or after April 3, 2001 at the redemption prices
set forth herein. The Convertible Debentures may also be redeemed at any time
upon the occurrence of a Tax Event (as defined herein). If the Company redeems
Convertible Debentures, the Trust must redeem Trust Securities on a pro rata
basis having an aggregate liquidation amount equal to the aggregate principal
amount of the Convertible Debentures so redeemed at a redemption price
corresponding to the redemption price of the Convertible Debentures plus accrued
and unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities--Redemption." The
Preferred Securities will be redeemed upon maturity of the Convertible
Debentures. In addition, the Trust will be dissolved upon the occurrence of a
Tax Event arising from a change in law or a change in legal interpretation
regarding tax matters, unless the Convertible Debentures are redeemed in the
limited circumstances described herein. The Trust will also be dissolved upon
the occurrence of an Investment Company Event (as defined herein). Upon
dissolution of the Trust, the Convertible Debentures will be distributed to the
holders of the Preferred Securities, on a pro rata basis, in lieu of any cash
distribution. If the Convertible Debentures are distributed to the holders of
the Preferred Securities, the Company will use its best efforts to cause the
Convertible Debentures to be listed on the NYSE or other national securities
exchange or similar organization as the Preferred Securities are then listed or
quoted. See "Description of the Preferred Securities--Special Event Redemption
or Distribution" and "Description of the Convertible Debentures."
In the event of the liquidation, winding up or termination of the
Trust, the holders of the Preferred Securities will be entitled to receive for
each Preferred Security a liquidation amount of $25 plus accrued and unpaid
distributions thereon (including interest thereon) to the date of payment,
unless, in connection with such dissolution, Convertible Debentures are
distributed to the holders of the Preferred Securities. See "Description of the
Preferred Securities-- Liquidation Distribution Upon Dissolution."
The Preferred Securities sold to qualified institutional buyers in
reliance on Rule 144A and outside the United States in reliance on Regulation S
under the Securities Act of 1933, as amended (the "Securities Act") are
represented by a global certificate or certificates registered in the name of
The Depository Trust Company ("DTC") or its nominee. Beneficial interests in
such Preferred Securities are shown on, and transfers thereof will be effected
only through, records maintained by the participants in DTC. Beneficial
interests in the Regulation S Global Security (as defined herein) initially may
be held only through the Euroclear System ("Euroclear") and Cedel Bank, societe
anonyme ("Cedel Bank"). After initial issuance of the Global Securities (as
defined herein), Preferred Securities in certificated form (the "Certificated
Securities") may be issued in exchange for the Global Securities on the terms
and under the limited circumstances set forth in the indenture governing the
Convertible Debentures (the "Indenture"). See "Description of the Preferred
Securities--Book-Entry Only Issuance-The Depository Trust Company."
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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference certain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which are intended to be covered by the safe harbors created
thereby. Those statements include, but may not be limited to, the discussions of
the Company's expectations concerning its future profitability, the discussion
of the Company's strategic relationships, the Company's operating and growth
strategy, including possible strategic acquisitions, and the Company's
assumptions regarding certain matters, including anticipated cost savings, in
preparation of the unaudited pro forma financial information. Investors are
cautioned that all forward-looking statements involve risks and uncertainties
including, without limitation, the factors set forth under the caption "Risk
Factors" in this Prospectus. Although the Company believes that the assumptions
underlying the forward-looking statements contained herein are reasonable, any
of the assumptions could be inaccurate and, therefore, there can be no assurance
that the forward-looking statements included or incorporated by reference in
this Prospectus will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included or
incorporated by reference herein, the inclusion of such information should not
be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices located at 7 World Trade
Center, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company Common
Stock is listed on the NYSE, and reports and other information concerning the
Company can also be inspected at the office of the NYSE, 20 Broad Street, New
York, New York 10005. Such material may also be accessed electronically by means
of the Commission's home page on the internet at http://www.sec.gov.
The Trust and the Company have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 under the
Securities Act, with respect to the securities offered hereby. This Prospectus
constitutes a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain portions of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained in the
Prospectus as to any contracts, agreements, or other documents filed as an
exhibit to, or incorporated by reference in, the Registration Statement are
qualified in all respects to the copy of such contract, agreement, or other
document filed as an exhibit or incorporated by reference in the Registration
Statement. For further information with respect to the Trust, the Company and
the securities offered hereby, reference is hereby made to the Registration
Statement, including the exhibits and schedules thereto.
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Trust and the Company do not believe that
such financial statements would be material to the holders of the Preferred
Securities because (i) all of the voting securities of the Trust will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) the Trust has no independent operations but exists for the sole
purpose of issuing securities representing undivided beneficial interests in its
respective assets and investing the proceeds thereof in the Convertible
Debentures issued by the Company and (iii) the obligations of the Trust under
the Preferred Securities are fully and unconditionally guaranteed by the Company
to the extent that the Trust has funds available to meet such obligations. See
"Central Parking Finance Trust," "Description of the Preferred Securities,"
"Description of the Guarantee" and "Description of the Convertible Debentures."
In future filings under the Exchange Act, a footnote to the Company's
annual consolidated financial statements will state that the Trust is
consolidated with the Company and that the sole assets of the Trust are the
Convertible Debentures. The Guarantee, when taken together with the Convertible
Debentures and the Company's obligations to pay all fees and expenses of the
Trust, constitutes a guarantee to the extent described herein by the Company of
the distribution, liquidation and other payments payable to the holders of the
Preferred Securities. The Guarantee does not apply, however, to distributions by
the Trust unless and until the Trust has funds available therefor, as more fully
described under "Description of the Guarantee."
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by the
Company are incorporated by reference in their entirety in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended
September 30, 1997;
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended December 31, 1997 and March 31, 1998;
3. The Company's Current Reports on Forms 8-K and 8-K/A filed
February 17, 1998 and May 15, 1998 reporting the acquisition
of Kinney System Holding Corp. and February 20, 1998
relating to the offering of Preferred Securities; and
4. The Company's Prospectus dated March 13, 1998 filed pursuant
to Rule 424(b)(5) of the Securities Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
filing of a post-effective amendment which indicates the termination of this
offering shall be deemed to be incorporated by reference in this Pospectus and
to be a part of this Prospectus from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, upon the request of such person, a copy of
any or all of the documents referred to above, other than exhibits to such
documents unless such exhibits are specifically incorporated by reference herein
or in any incorporated document. Requests should be directed to: Investor
Relations Department, 2401 21st Avenue South, Suite 200, Nashville, Tennessee
37212. The Company's telephone number is 615-297-4255.
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RISK FACTORS
The following factors should be considered, together with the other
information contained or incorporated by reference in this Prospectus, in
evaluating the Company and the Trust before purchasing the Offered Securities.
INTEGRATION OF ACQUISITIONS
The Company completed three acquisitions in fiscal 1997 and the
Diplomat and Kinney Acquisitions (defined herein) in the first two quarters of
fiscal 1998. These acquisitions have substantially increased the number of
persons employed by the Company, the number of facilities operated by the
Company, and the geographic markets serviced by the Company. Although the
Company believes that it can successfully integrate and manage acquired
operations and achieve certain economies of scale, there can be no assurance
that acquisitions will be integrated successfully into the Company's operations,
that cost savings or operating synergies will be realized, to the extent
anticipated by the Company or that the acquired operations will achieve levels
of profitability that justify the Company's investments therein. Furthermore,
there can be no assurance that the Company will be able to consummate parking
facility or company acquisitions in the future at the rate currently expected,
if at all, or, if completed, that any acquired facility or company will be
successfully integrated into the Company's operations. Moreover, because of the
price paid by the Company or because of the performance of acquired operations
after such acquisitions, there can be no assurance that the results of the
acquired operations will not be dilutive to the Company's per share earnings.
Any acquisition contemplated or completed by the Company may result in adverse
short-term effects on the Company's reported operating results, divert
management's attention, introduce difficulties in retaining, hiring and training
key personnel, and introduce risks associated with unanticipated problems or
legal liabilities, some or all of which could have a material adverse effect on
the Company's financial condition and results of operations. The Company
receives information regarding potential acquisitions from time to time;
however, there are currently no material acquisitions which the Company believes
are more likely than not to occur.
ABILITY TO MANAGE GROWTH
The Company intends to continue to expand its business by adding
management contracts and leases and by acquiring additional parking facilities
and operators. The Company's growth will be affected by the results of
operations of added parking facilities which will depend upon contract terms,
government licenses and approvals, and local competitive environments. The
nature of licenses and approvals, and the timing and likelihood of obtaining
them, vary widely from state to state and country to country. The Company's
growth will also be directly affected by the Company's ability to obtain
suitable financing and by the competitive environment for acquisitions. Some of
the acquired operations may be located in geographic markets in which the
Company has little or no presence. Successful integration and management of
additional facilities will depend on a number of factors, many of which are
beyond the Company's control. The Company's growth plans will also place
significant demands on the Company's management and operating personnel and will
require the Company to improve its operational, financial, and management
information systems.
DEPENDENCE ON MANAGEMENT CONTRACTS AND LEASES
The principal sources of the Company's revenues are management
contracts and leases relating to parking facilities owned by unaffiliated
property owners. For fiscal 1995, 1996 and 1997 revenues from management
contracts accounted for 25.2%, 23.8%, and 18.9%, respectively, and revenues from
leased facilities accounted for 70.6%, 71.8%, and 74.7%, respectively, of the
Company's total revenues. For the six month periods ended March 31, 1997 and
1998, revenues from management contracts accounted for 20.1% and 16.5%,
respectively, and revenues from leased facilities accounted for 74.1% and 78.3%,
respectively, of the Company's total revenues. Management contracts, in general,
are for terms of one to three years, but are cancelable by the property owner on
short notice. Leases generally are for three to ten year terms. There can be no
assurance that the Company will be able to maintain or renew its management
contracts and leases on favorable terms. The loss, or renewal on less favorable
terms, of a substantial number of management contracts or leases could have a
material adverse effect on the Company's financial condition and results of
operations. Under its management contracts, the Company provides ancillary
services such as insurance, accounting, equipment leasing, and consulting. A
material reduction in the profit margins associated with these ancillary
services provided under its management contracts, caused by, among other things,
increases in costs or claims associated with, or reductions in the number of
clients purchasing, insurance provided by the Company could have a material
adverse effect on the Company's financial condition and results of operations.
DEPENDENCE ON PROPERTY PERFORMANCE
The Company's revenues and profitability are dependent on the
performance of the parking facilities it owns, leases and manages. The Company's
revenues from leased and owned parking facilities consist of parking fees
collected by such facilities. For fiscal 1995, 1996, and 1997 revenues from
leased and owned facilities accounted for 74.8%, 76.2%, and 81.1%, respectively,
of the Company's total revenues. For the six month periods ended March 31, 1997
and 1998, revenues from leased and owned facilities accounted for 79.9% and
83.5%, respectively, of the Company's total revenues. The Company's leases
generally require the Company to make a fixed monthly lease payment regardless
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of the parking fees collected. Some management contracts provide for payment to
the Company based on a percentage of gross revenues generated by the parking
facility. Accordingly, performance of the Company's parking facilities depends,
in part, on the Company's ability to negotiate favorable contract terms, the
Company's ability to control operating expenses, financial conditions prevailing
generally and in areas where parking facilities are located, the nature and
extent of competitive parking facilities in the area, and the real estate market
generally.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND CONVERTIBLE
DEBENTURES
The Company's obligations under the Guarantee are subordinate and
junior in right of payment to all liabilities of the Company and pari passu with
the most senior preferred stock issued from time to time, if any, by the
Company. The obligations of the Company under the Convertible Debentures are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company and pari passu with obligations to or rights of the
Company's other general unsecured creditors. No payment of principal (including
redemption payments, if any), premium, if any, or interest on the Convertible
Debentures may be made if (i) any Senior Indebtedness of the Company is not paid
when due and any applicable grace period with respect to such default has ended
with such default not having been cured or waived or ceasing to exist, or (ii)
the maturity of any Senior Indebtedness has been accelerated because of a
default. As of March 31, 1997, Senior Indebtedness aggregated approximately
$76.0 million. In addition, because certain of the Company's operations are
conducted through its subsidiaries and the subsidiaries have not guaranteed the
payment of principal of and interest on the Convertible Debentures, all
liabilities of the subsidiaries, including trade payables, are effectively
senior to the Convertible Debentures and the Guarantee. There are no terms in
the Preferred Securities, the Convertible Debentures or the Guarantee that limit
the Company's or any subsidiary's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Convertible Debentures and the
Guarantee. See "Description of the Guarantee--Status of the Guarantee;
Subordination" and "Description of the Convertible Debentures."
SUBORDINATION AND RESTRICTIVE COVENANTS
The ability of the Trust to pay amounts due on the Preferred Securities
is wholly dependent upon the Company making payments on the Convertible
Debentures. Since certain of the Company's operations are conducted through its
subsidiaries, the ability of the Company to pay interest and principal on the
Convertible Debentures, and, therefore, for the Trust to make distributions and
other payments on the Preferred Securities, may be dependent on the
subsidiaries' ability to pay dividends to the Company. Because the subsidiaries
do not guarantee the payment of principal of and interest on the Convertible
Debentures, claims of holders of the Preferred Securities will effectively be
subordinate to the claims of creditors of the subsidiaries, including trade
creditors. See "--Ranking of Subordinate Obligations Under the Guarantee and
Convertible Debentures."
The ability of the Company's subsidiaries to pay dividends, as well as
repay debt, is restricted by the provisions of the New Credit Facility and is
dependent on the Company's financial and operating performance, which, in turn,
is subject to prevailing economic conditions and to financial, business and
other factors beyond its control. There can be no assurance that financial
results that comply with the restrictive covenants and financial tests in the
New Credit Facility will be achieved.
RIGHTS UNDER THE GUARANTEE
It is expected that at the time the Shelf Registration Statement
becomes effective, the Guarantee will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
Guarantee Trustee (as defined herein) will act as indenture trustee under the
Guarantee for the purposes of compliance with the provisions of the Trust
Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent the Trust has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions with respect to Preferred Securities called for redemption by the
Trust, to the extent the Trust has funds available therefor, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Convertible Debentures to the
holders of Preferred Securities or a redemption of all the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of the
payment, to the extent the Trust has funds available therefor, or (b) the amount
of assets of the Trust remaining available for distribution to holders of the
Preferred Securities in liquidation of the Trust. The holders of a majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Guarantee. Notwithstanding the foregoing,
if the Company has failed to make a payment under the Guarantee, any holder of
Preferred Securities may directly institute a legal proceeding against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If the Company were to default on its obligation to pay amounts payable
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on the Convertible Debentures, the Trust would lack available funds for the
payment of distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, holders of the Preferred Securities would rely on the enforcement by
(i) the Property Trustee of its rights as registered holder of the Convertible
Debentures against the Company pursuant to the terms of the Convertible
Debentures or (ii) such holder of its right against the Company under certain
circumstances to enforce payments on the Convertible Debentures. See
"--Enforcement of Certain Rights by Holders of Preferred Securities,"
"Description of the Guarantee" and "Description of the Convertible Debentures."
The Trust Agreement provides that each holder of Preferred Securities, by
acceptance thereof, agrees to the provisions of the Guarantee, including the
subordination provisions thereof, and the Indenture.
OPTION TO EXTEND INTEREST PAYMENT PERIODS
The Company has the right under the Indenture to defer payments of
interest on the Convertible Debentures by extending the interest payment period
at any time, and from time to time, on the Convertible Debentures. As a
consequence of such an extension, quarterly distributions on the Preferred
Securities would be deferred (but despite such deferral would continue to accrue
interest thereon, compounded quarterly) by the Trust during any such extended
interest payment period. Such right to extend the interest payment period for
the Convertible Debentures is limited to a period not exceeding 20 consecutive
quarters, during which no interest shall be due and payable; provided, that no
such Extension Period may extend beyond the maturity date of the Convertible
Debentures. In the event that the Company exercises this right to defer interest
payments, the Company has agreed, among other things, (a) not to declare or pay
dividends on, or make a distribution with respect to, or redeem or purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of Company Common Stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security requiring the Company to purchase shares of
Company Common Stock, (ii) as a result of a reclassification of the Company's
capital stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock or (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged (or make any guarantee
payments with respect to the foregoing)), (b) not to make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by the Company that rank pari
passu with or junior to the Convertible Debentures and (c) not to make any
guarantee payments with respect to the foregoing (other than pursuant to the
Guarantee). Prior to the termination of any such extension period, the Company
may further extend the interest period; provided, that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
20 consecutive quarters or extend beyond the maturity date of the Convertible
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the above requirements. See "Description of the Preferred
Securities--Distributions" and "Description of the Convertible
Debentures--Option to Extend Interest Payment Periods."
Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
continue to accrue income (as original issue discount ("OID")) in respect of the
deferred interest allocable to its Preferred Securities for federal income tax
purposes, which will be allocated but not distributed, to holders of record of
Preferred Securities. As a result, each such holder of Preferred Securities will
recognize income for federal income tax purposes in advance of the receipt of
cash and will not receive the cash from the Trust related to such income if such
holder disposes of its Preferred Securities prior to the record date for the
date on which distributions of such amounts are made. The Company has no current
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Convertible Debentures. However, should the
Company determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be affected. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of the Company's
right to defer interest payments, the market price of the Preferred Securities
(which represent an undivided beneficial interest in the Convertible Debentures)
may be more volatile than other securities on which OID accrues that do not have
such rights. See "United States Federal Income Taxation--Interest Income and
Original Issue Discount."
COMPETITION
The parking industry is highly competitive. The Company's competitors
range from small single-lot operators to large regional and national
multi-facility operators, and include municipal and other governmental entities.
Some of the Company's present and potential competitors have or may obtain
greater financial and marketing resources than those of the Company.
Furthermore, the Company competes for qualified management personnel with other
parking facility operators, with property management companies, and with
property owners. There can be no assurance that the Company will not encounter
increased competition in the future, due to, among other things, increased
construction of parking facilities, which could limit its ability to attract
customers, expand its business, or maintain profitable pricing levels, and which
could have a material adverse effect on the Company's financial condition or
results of operations or decrease its market share. The Company competes for
acquisitions with other parking facility operators, real estate
8
<PAGE> 8
developers and real estate investment trusts. There can be no assurance that the
Company will not encounter increased competition for acquisitions in the future
and that such competition will not have an adverse effect on the Company's
ability to complete acquisitions or on prices paid for acquisitions.
FOREIGN CURRENCY EXCHANGE RATES
The Company operates in the United Kingdom, Germany, Mexico, Malaysia,
Canada, and Spain, maintains a business development office in the Netherlands,
and intends to expand its business in these and other international locations.
For the six months ended March 31, 1998, revenues from United Kingdom operations
represented 96.1% of the revenues generated by foreign operations, excluding
earnings from joint ventures. The Company receives revenues and incurs expenses
in various foreign currencies in connection with its foreign operations and, as
a result, the Company is subject to currency exchange rate fluctuations. The
Company intends to continue to invest in foreign leased or owned parking
facilities, either independently or through joint ventures, where appropriate,
and may become increasingly exposed to foreign currency fluctuations. Presently,
the Company has limited exposure to foreign currency risk and anticipates
implementing a hedge program if such risk materially increases.
DEPENDENCE ON KEY MANAGEMENT
The success of the Company is highly dependent on the continued
services of the Company's management team. The loss of services of one or more
members of the Company's senior management team could have a material adverse
effect on the Company's financial condition and results of operations. Although
the Company has entered into employment agreements with, and historically has
been successful in retaining the services of, its senior management, there can
be no assurance that the Company will be able to retain such personnel in the
future. The Company is a beneficiary of certain life insurance policies on
certain key executives ranging from $100,000 to approximately $1.2 million.
ENVIRONMENTAL AND OTHER REGULATIONS
Under various federal, state, and local environmental laws, ordinances,
and regulations, a current or previous owner or operator of real property may be
liable for the cost of removal or remediation of hazardous or toxic substances
on, under, or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with the ownership
or operation of parking facilities, the Company may be potentially liable for
such costs. Although the Company is currently not aware of any material
environmental claims pending or threatened against it or any of its owned or
operated parking facilities, there can be no assurance that a material
environmental claim will not be asserted against the Company or against its
owned or operated parking facilities. The cost of defending against claims of
liability, or of remediating a contaminated property, could have a material
adverse effect on the Company's financial condition or results of operations.
Various other governmental regulations affect the Company's operation
of parking facilities, both directly and indirectly, including air quality laws,
licensing laws, and the Americans with Disabilities Act of 1990 (the "ADA").
Under the ADA, all public accommodations, including parking facilities, are
required to meet certain federal requirements related to access and use by
disabled persons. Although management believes that the parking facilities it
owns and operates are in substantial compliance with these requirements, a
determination that the Company or the facility owner is not in compliance with
the ADA could result in the imposition of fines or damage awards against the
Company.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as a holder of the Convertible
Debentures against the Company. In addition, the holders of a majority in
liquidation amount of the Preferred Securities 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 Trust Agreement, including the right to
direct the Property Trustee to exercise the remedies available to it as a holder
of the Convertible Debentures. If the Property Trustee fails to enforce its
rights under the Convertible Debentures, any holder of Preferred Securities may
directly institute a legal proceeding against the Company to enforce the
Property Trustee's rights under the Convertible Debentures without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Convertible
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date), then a holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Convertible Debentures having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Convertible Debentures. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of
9
<PAGE> 9
Preferred Securities under the Declaration to the extent of any payment made by
the Company to such holder of Preferred Securities in such Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Convertible Debentures. The Indenture
provides that the Indenture Trustee (as defined herein) shall give holders of
the Convertible Debentures notice of all uncured defaults or events of default
within 30 days after occurrence. However, except in the case of a default or an
event of default in payment on the Convertible Debentures, the Indenture Trustee
(as defined herein) is protected in withholding such notice if its officers or
directors in good faith determine that withholding of such notice is in the
interest of the holders.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), the Trust
shall be dissolved, except in the limited circumstance described below, with the
result that the Convertible Debentures would be distributed to the holders of
the Trust Securities in connection with the liquidation of the Trust. In the
case of a Special Event that is a Tax Event, in certain circumstances, the
Company shall have the right to redeem the Convertible Debentures, in whole or
in part, in lieu of a distribution of the Convertible Debentures by the Trust,
in which event the Trust will redeem the Trust Securities on a pro rata basis to
the same extent as the Convertible Debentures are redeemed by the Company. See
"Description of the Preferred Securities--Special Event Redemption or
Distribution."
Under current federal income tax law, a distribution of Convertible
Debentures upon the dissolution of the Trust would not be a taxable event to
holders of the Preferred Securities. Upon occurrence of a Special Event,
however, a dissolution of the Trust in which holders of the Preferred Securities
receive cash would be a taxable event to such holders. See "United States
Federal Income Taxation--Receipt of Convertible Debentures or Cash Upon
Liquidation of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Convertible Debentures that may be distributed in exchange for
Preferred Securities if a dissolution or liquidation of the Trust were to occur.
Accordingly, the Preferred Securities that an investor may purchase, or the
Convertible Debentures that a holder of Preferred Securities may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby.
Because holders of Preferred Securities may receive Convertible Debentures upon
the occurrence of a Special Event, prospective purchasers of Preferred
Securities are also making an investment decision with regard to the Convertible
Debentures and should carefully review all the information regarding the
Convertible Debentures contained in this Prospectus. See "Description of the
Preferred Securities--Special Event Redemption or Distribution."
LIMITED VOTING RIGHTS
Holders of Preferred Securities have limited voting rights and are not
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, Issuer Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. See "Description of the Preferred
Securities--Voting Rights."
VARIATIONS IN QUARTERLY OPERATING RESULTS
The Company has experienced fluctuations in its quarterly revenues and
profitability. These fluctuations are caused by a variety of factors including
the timing of gains on sales of owned facilities, preopening costs, the effect
of weather on travel and transportation patterns, and local and national
economic conditions. There can be no assurance that fluctuations in revenues and
net earnings will not cause the market price of the Company Common Stock to
fluctuate substantially. Results for any particular quarter may not be
indicative of future results or results for the full fiscal year.
CONTROL BY MR. CARELL AND FAMILY
Monroe J. Carell, Jr., Chairman and Chief Executive Officer of the
Company, trusts established for the benefit of his family, and foundations
controlled by Mr. Carell and his family, beneficially own an aggregate of
approximately 61.5% of the outstanding shares of Company Common Stock as of
March 31, 1998, after giving pro forma effect to the Company's Common Stock
offering in March 1998. Accordingly, such persons have majority control of the
Company and the ability to elect all members of the Board of Directors; to
effect or prevent a merger or a sale of assets; to adopt, amend, or repeal the
Company's Amended and Restated Charter and Bylaws; and to take certain other
actions requiring the vote or consent of the Company's shareholders.
VOLATILITY OF MARKET PRICE FOR COMPANY COMMON STOCK
From time to time, there may be significant volatility in the market
price of the Company Common Stock. The Company believes that the current market
price of the Company Common Stock reflects expectations that the Company will be
able to continue to operate its facilities profitably, add management contracts
and leases and acquire new facilities at a significant rate, and operate them
profitably. If the Company is unable to operate its facilities profitably or add
new facilities at a pace that reflects the expectations of the market, investors
could sell shares of the Company
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<PAGE> 10
Common Stock at or after the time that it becomes apparent that the expectations
may not be realized, resulting in a decrease in the market price of the Company
Common Stock. In addition to quarterly operating results of the Company, changes
in earnings estimates by analysts, general conditions in the economy, the
financial markets, or the parking industry, or other developments affecting the
Company could cause the market price of the Company Common Stock to fluctuate
substantially. The stock market may experience extreme price and volume
fluctuations and such volatility may have a significant effect on the market
price of the Company Common Stock for reasons unrelated to the Company's
operating performance. See "Price Range of Company Common Stock and Dividend
Policy."
TRADING CHARACTERISTICS OF PREFERRED SECURITIES
The Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Convertible Debentures. In addition, as a result of the Company's right to defer
interest payments, the market price of the Preferred Securities (which represent
an undivided interest in the assets of the Trust) may be more volatile than
other similar securities where the issuer does not have such right to defer
interest payments. A holder who disposes of his Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest on the Convertible Debentures through the date of
disposition in income as ordinary income (i.e., OID) and to add such amount to
his adjusted tax basis in his pro rata share of the underlying Convertible
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include, in the form of OID, all accrued
but unpaid interest), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for federal income tax purposes. See "United States Federal Income
Taxation--Interest Income and Original Issue Discount" and "--Sales of Preferred
Securities."
LACK OF PUBLIC MARKET FOR THE PREFERRED SECURITIES
There is no existing trading market for the Preferred Securities, and
there can be no assurance regarding the future development of a market for the
Preferred Securities, or the ability of holders of the Preferred Securities to
sell their Preferred Securities or the price at which such holders may be able
to sell their Preferred Securities. If such a market were to develop, the
Preferred Securities could trade at prices that may be higher or lower than the
initial offering price depending on many factors, including prevailing interest
rates, the price of the Company Common Stock, the Company's operating results,
any election by the Company to extend interest payment periods and the market
for similar securities. The Initial Purchasers currently make a market in the
Preferred Securities. The Initial Purchasers are not obligated to do so,
however, and any market making with respect to the Preferred Securities may be
discontinued at any time without notice. Therefore, there can be no assurance as
to the liquidity of any trading market for the Preferred Securities or that an
active public market for the Preferred Securities will develop. The Company does
not intend to apply for listing or quotation of the Preferred Securities on any
securities exchange or stock market.
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<PAGE> 11
\
THE COMPANY
Central Parking Corporation (the "Company") is a leading provider of
parking services operating, as of March 31, 1998, 2,272 parking facilities
containing approximately 933,000 spaces in 34 states, the District of Columbia,
Puerto Rico, the United Kingdom, Germany, Canada, Mexico, Malaysia, and Spain.
The Company also has a business development office in the Netherlands. In each
of the last five years, the Company has increased the number of facilities it
operates by approximately 150 facilities, excluding acquisitions and major
property purchases. The Company's leadership position in the parking industry is
a result of applying professional management strategies to a fragmented industry
managed largely by small local operators; developing relationships with key real
estate managers and developers, including sports arena operators; understanding
the needs of the parking public; applying technology to parking services; and
retaining employees through formal training programs and performance-based
compensation.
The Company provides parking management services at multi-level parking
facilities and surface lots. It also provides parking consulting, shuttle,
valet, parking meter enforcement, and billing and collection services. The
Company operates parking facilities under three general types of arrangements:
management contracts, leases, and fee ownership. As of March 31, 1998, the
Company operated 1,168 parking facilities under management contracts, 1,037
parking facilities under leases, and owned, either independently or through
joint ventures, 67 parking facilities.
The International Parking Institute (the "IPI") estimates that there
are 35,000 parking facilities in the United States generating approximately
$26.0 billion of annual revenues, which is divided evenly between commercial and
governmental operators. The commercial parking services business is very
fragmented, consisting of a few national companies and approximately 1,000
small, privately-held local and regional operators. The Company believes that it
has the opportunity to consolidate a portion of this fragmented, localized
industry by using its competitive advantages with regard to scale, financial
strength, technology, controls, and professionalism, all of which are becoming
increasingly important in the parking services business. For the same reasons,
the Company believes that it is well-positioned to be selected by municipal and
other governmental entities to operate their parking facilities and provide
parking-related services as such entities move toward outsourcing and
privatization.
The Company distinguishes itself from its competitors by combining a
reputation for professional integrity and quality management with operating
strategies designed to increase the revenues of parking operations for its
clients. The Company's clients include some of the nation's largest owners and
developers of mixed-use projects, major office building complexes, sports
stadiums, and hotels, as well as several municipalities. Parking facilities
operated by the Company include, among others, certain terminals operated by BAA
Heathrow International Airport (London), the Prudential Center (Boston), One
Penn Plaza (New York), Ericsson Stadium (Charlotte), Busch Stadium (St. Louis),
Reunion Arena (Dallas), Coors Field (Denver), Cinergy Field (Cincinnati), Turner
Stadium (Atlanta), and various parking facilities owned by the Hyatt and Westin
hotel chains, the Rouse Company, Faison Associates, May Department Stores,
Equity Office Properties, and Crescent Real Estate.
The Company's growth strategy is to increase revenues and profitability
by (i) increasing its market share through take-aways of competitors' contracts,
winning new management and lease contracts, purchasing properties, and nurturing
relationships with large real estate developers and asset managers; (ii)
continuing to pursue strategic acquisitions of other parking service companies;
and (iii) expanding its international activity, principally through joint
venture arrangements and consulting engagements. In addition, the Company
intends to achieve operating efficiencies through economies of scale by
leveraging its corporate infrastructure and its established presence in local
markets. Management also believes that privatization of parking and
parking-related services will provide significant opportunities in the future.
Central Parking Corporation's principal executive offices are located
at 2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212, and its
telephone number at that address is (615) 297-4255.
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RECENT DEVELOPMENTS
ACQUISITION OF DIPLOMAT PARKING CORPORATION
On October 1, 1997, subsequent to its fiscal year end, the Company
acquired the stock and certain assets of Diplomat Parking Corporation
("Diplomat") for approximately $21.7 million in cash and notes (the "Diplomat
Acquisition"). The acquisition was financed through the Company's revolving
credit facility. As of September 30, 1997, Diplomat operated 164 parking
facilities containing approximately 37,000 parking spaces, located primarily in
Washington, D.C. and Baltimore, Maryland.
ACQUISITION OF KINNEY SYSTEM HOLDING CORP.
On February 12, 1998, the Company acquired Kinney System Holding Corp.
("Kinney"), a privately-held company headquartered in New York City, which the
Company believes is the largest operator of parking facilities in the New York
City metropolitan area and one of the largest parking companies in the
Northeastern United States (the "Kinney Acquisition" and, collectively with the
Diplomat Acquisition, the "Acquisitions"). Kinney has been in the parking
business for over 60 years. In addition to enhancing the Company's leading
market position in New York City, Kinney increases the Company's presence in a
number of other major markets such as Boston, Philadelphia and Washington, D.C.
and broadens its geographic coverage in the following nine states: Connecticut,
Florida, Kentucky, Maryland, Massachusetts, New Hampshire, New York,
Pennsylvania, and Virginia. Kinney provides both self-parking and valet parking
services, and provides parking related services such as facility design and
development and consulting services.
On February 12, 1998, Kinney operated 403 parking facilities containing
approximately 168,800 spaces, including approximately 76,700 in the New York
City metropolitan area, 42,800 in Boston, 30,100 in Philadelphia and 10,300 in
Washington, D.C. Kinney's facility mix was comprised of 225 leased sites, 170
managed sites and 8 owned sites. The parking facilities operated by Kinney
include Yankee Stadium, the Waldorf-Astoria, Port Authority Bus Terminal, World
Financial Center and the General Motors Building in New York City, The
Ritz-Carlton--Boston, Government Center in Boston, Spectrum--Philadelphia, and
the Four Seasons Hotel of Washington, D.C.
Consideration for the Kinney Acquisition was $208.8 million, including
$171.8 million in cash and other consideration and $37.0 million (882,422
shares) in Company Common Stock. In connection with this transaction, the
Company assumed $8.1 million in capitalized leases and refinanced $24.2 million
in existing Kinney debt. The purchase price is subject to adjustment based on
the outcome of an independent evaluation of Kinney's February 12, 1998 balance
sheet. The Company financed the Kinney Acquisition with borrowings under the New
Credit Facility described below.
NEW CREDIT FACILITY
On February 11, 1998, the Company established a new credit facility
(the "New Credit Facility") providing for an aggregate availability of up to
$300 million, consisting of a five-year $200 million revolving credit facility,
including a sublimit of $25 million for standby letters of credit, and a $100
million five-year term loan. The New Credit Facility bears interest until June
30, 1998 at a rate of LIBOR plus 1.25%. On June 30, 1998, the interest rate on
the New Credit Facility and the commitment fee on the unused portion will revert
to a grid pricing based upon the achievement of various financial ratios. The
New Credit Facility contains certain covenants including those that require the
Company to maintain certain financial ratios, restrict further indebtedness, and
limit the amount of dividends payable. The Company used borrowings under the New
Credit Facility to replace the Company's prior revolving credit facility and to
finance the Kinney Acquisition. On March 18, 1998, the Company completed the
Original Offering and an offering of additional equity, from which the Company
obtained $195.3 million in proceeds. The Company repaid and terminated the $100
million term loan with proceeds from the offerings. The remaining $95.3 million
in proceeds was applied to reduce the outstanding balance under the $200
million revolving credit facility.
PUBLIC OFFERING OF THE COMPANY COMMON STOCK
Concurrently with the Original Offering, the Company offered 1,875,000
shares of Company Common Stock pursuant to a registered public offering (the
"Company Common Stock Offering"), which along with over-allotments totalled
2,137,500 shares. The net proceeds to the Company from the Company Common Stock
Offering were approximately $89.3 million after deducting underwriting discounts
and commissions and estimated offering expenses.
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<PAGE> 13
CENTRAL PARKING FINANCE TRUST
Central Parking Finance Trust (the "Trust") is a statutory business
trust created under Delaware law pursuant to (i) a trust agreement executed by
the Company (as Depositor), the Delaware Trustee and one of the Administrative
Trustees (each as defined herein) and (ii) the filing of a certificate of trust
with the Delaware Secretary of State on February 18, 1998. In connection with
the Original Offering, such trust agreement was amended and restated in its
entirety (as so amended and restated, the "Trust Agreement"). The Trust exists
for the sole purposes of (i) issuing and selling the Preferred Securities and
Common Securities, (ii) using the proceeds from the sale of the Preferred
Securities and Common Securities to acquire the Convertible Debentures issued by
the Company and (iii) engaging in only those other activities necessary or
incidental thereto. Accordingly, the Convertible Debentures are the sole assets
of the Trust, and payments under the Convertible Debentures will be the sole
revenue of the Trust. The Trust has a term of 30 years, but may dissolve earlier
as provided in the Trust Agreement.
All of the Common Securities are directly or indirectly owned by the
Company. The Common Securities rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities, except that upon the occurrence
and continuance of a Declaration Event of Default (as defined herein) resulting
from an Event of Default under the Indenture, 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. See "Description of the
Preferred Securities--Subordination of Common Securities." The Company has
acquired Common Securities in an aggregate liquidation amount equal to 3% of the
total capitalization of the Trust.
The Trust's business and affairs are conducted by its trustees, which
were appointed by the Company as holder of the Common Securities. Pursuant to
the Trust Agreement, the number of trustees is initially five. Three of the
trustees (the "Administrative Trustees") are persons who are employees or
officers of, or affiliated with, the Company. A fourth trustee is a financial
institution unaffiliated with the Company that serves as property trustee (the
"Property Trustee") under the Trust Agreement. Chase Bank of Texas, National
Association is the Property Trustee until removed or replaced by the holder of
the Common Securities. See "Description of the Convertible Debentures." The
fifth trustee is a financial institution or an affiliate thereof which maintains
a principal place of business or residence in the State of Delaware (the
"Delaware Trustee"). Chase Manhattan Bank Delaware is the Delaware Trustee until
removed or replaced by the holder of the Common Securities. The Administrative
Trustees, the Property Trustee and the Delaware Trustee are referred to herein
as the "Issuer Trustees." Chase Bank of Texas, National Association also acts as
indenture trustee under the Guarantee (the "Guarantee Trustee") and as the
indenture trustee under the Indenture. See "Description of the Guarantee" and
"Description of the Convertible Debentures."
The Property Trustee holds the title to the Convertible Debentures for
the benefit of the Trust and holders of the Preferred Securities and the Common
Securities and has the power to exercise all of the rights, powers and
privileges as the holder of the Convertible Debentures. In addition, the
Property Trustee maintains exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Convertible Debentures for the benefit of the Trust and holders
of the Preferred Securities and the Common Securities. The Property Trustee will
make payments of distributions and payments on liquidation, redemption and
otherwise to holders of the Preferred Securities and the Common Securities out
of funds from the Property Account. The Guarantee Trustee holds the Guarantee
for the benefit of the holders of the Preferred Securities. The Company, as the
holder of all the Common Securities, has the right to appoint, remove or replace
any Issuer Trustee and to increase or decrease the number of Issuer Trustees,
provided that the number of Issuer Trustees shall be at least three, the
majority of which will be Administrative Trustees. The duties and obligations of
obligations of the Issuer Trustees are governed by the Trust Agreement. The
rights of the holders of the Preferred Securities, including economic rights,
rights to information and voting rights, are as set forth in the Trust Agreement
and the Delaware Business Trust Act, as amended (the "Trust Act").
The Company will pay all fees and expenses related to the Trust and the
offering of the Trust Securities and will pay, directly or indirectly, all
ongoing costs and expenses of the Trust. See "Description of the Convertible
Debentures." The principal corporate offices of the Trust are located at 2401
21st Avenue South, Suite 200, Nashville, TN 37212, and its telephone number is
(615) 297-4255.
USE OF PROCEEDS
Neither the Company nor the Trust will receive any proceeds from the
sale of the Offered Securities.
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<PAGE> 14
PRICE RANGE OF COMPANY COMMON STOCK AND DIVIDEND POLICY
The Company Common Stock is quoted on the NYSE under the symbol "PK."
The following table sets forth, on a per share basis for the periods indicated,
the high and low sale prices for the Company Common Stock as reported by the
NYSE.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL 1996
First Quarter (since the Company's initial public offering on October 10, 1995) $ 13.11 $ 8.00
Second Quarter 18.17 12.00
Third Quarter 22.75 15.83
Fourth Quarter 22.17 15.75
FISCAL 1997
First Quarter $ 24.58 $ 21.08
Second Quarter 22.75 16.33
Third Quarter 23.25 15.92
Fourth Quarter 32.92 22.17
FISCAL 1998
First Quarter $ 46.81 $ 31.42
Second Quarter 49.375 38.44
Third Quarter (through May 27, 1998) 48.4375 43.875
</TABLE>
On May 27, 1998, the last reported sale price of the Company Common
Stock on the NYSE was $44.9375 per share. On May 27, 1998, there were
approximately 8,000 holders of the Company Common Stock, based on the number of
record holders and the number of individual participants represented by security
position listings.
Since April 1997, the Company has distributed a quarterly cash dividend
of $0.015 per share of Company Common Stock. The Company had previously declared
a dividend of $0.013 per share of Company Common Stock following the end of each
quarter since its initial public offering in October 1995. The Board of
Directors currently intends to declare a cash dividend each quarter depending on
the Company's profitability and capital necessary to finance operations and
expansion. The Company reserves the right, however, to retain all or a
substantial portion of its earnings to finance the operation and expansion of
the Company's business. As a result, the future payment of dividends will depend
upon, among other things, the Company's profitability, capital requirements,
financial condition, growth, business opportunities, and other factors that the
Board of Directors may deem relevant, including restrictions in any
then-existing credit agreement. The New Credit Facility contains certain
restrictions on the Company's ability to pay dividends; however, the Company
does not believe these restrictions limit its ability to pay currently
anticipated cash dividends. In addition, the Preferred Securities prohibit the
payment of dividends on the Company Common Stock if the quarterly distributions
on the Preferred Securities are not made for any reason.
RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis for each of the three years in the period ended
September 30, 1997 and for the six-month periods ended March 31, 1997 and March
31, 1998. The pro forma ratio of earnings to fixed charges gives effect to the
Acquisitions, including the incurrence of related indebtedness, the Original
Offering, the Company Common Stock Offering and the application of the net
proceeds to reduce indebtedness, as if they had occurred on October 1, 1996.
<TABLE>
<CAPTION>
Six Months
Year Ended September 30, Ended March 31,
------------------------ --------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio to earnings to fixed charges 1.9x 2.1x 1.9x 1.9x 1.8x
</TABLE>
For purposes of this computation, fixed charges consist of interest
expense and amortization of deferred financing fees, capitalized interest and
one-third of rental expenses, representative of that portion of rental expenses
attributable to interest and preferred stock dividends. Earnings consist of
income before income taxes plus fixed charges (other than capitalized interest,
but including the amortization thereof).
15
<PAGE> 15
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1998. This table should be read in conjunction with the Company's
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Unaudited Pro Forma Consolidated Financial Information and the
Consolidated Financial Statements and Notes thereto incorporated herein by
reference.
<TABLE>
<CAPTION>
Actual
---------
(In thousands)
<S> <C>
Long-term debt and capital lease obligations, less $ 70,796
current portion
Mandatorily redeemable convertible preferred --
securities of trust subsidiary
Shareholders' equity:
Preferred Stock, $0.01 par value, 1,000,000 shares --
authorized, no shares outstanding
Common Stock, $0.01 par value, 50,000,000 shares 295
authorized; 26,316,054(1) issued and outstanding,
actual; and 29,335,976(1) shares issued and
outstanding, pro forma as adjusted
Additional paid-in capital 162,901
Foreign currency translation adjustment 342
Retained earnings 175,058
Deferred compensation on restricted stock, net (536)
---------
Total shareholders' equity 238,060
---------
Total capitalization $ 418,856
=========
</TABLE>
(1) Does not include 833,385 shares of Company Common Stock issuable upon
the exercise of stock options granted under the Company's stock option
plans at March 31, 1998 or any shares of Company Common Stock issuable
upon the conversion of the Preferred Securities offered hereby.
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with the
Consolidated Financial Statements of the Company, with the Preferred Securities
shown on such Consolidated Financial Statements as mandatorily redeemable
convertible preferred securities of trust subsidiary. The sole assets of the
Trust will be the Convertible Debentures.
16
<PAGE> 16
DESCRIPTION OF THE PREFERRED SECURITIES
The following summary of certain material terms and provisions of the
Preferred Securities and the Trust Agreement does not purport to be complete and
is subject to, and qualified in its entirety by reference to, all the provisions
of the Trust Agreement. The Preferred Securities were issued pursuant to the
terms of the Trust Agreement and the Trust Act. It is expected that at the time
this Shelf Registration Statement of which this Prospectus forms a part becomes
effective, the Trust Agreement will be qualified as an indenture under the Trust
Indenture Act. Chase Bank of Texas, National Association, as Property Trustee,
will act as indenture trustee for purposes of compliance with the Trust
Indenture Act. Capitalized terms not otherwise defined herein have the meanings
assigned to them in the Trust Agreement and those made part of the Trust
Agreement by the Trust Indenture Act.
GENERAL
Pursuant to the terms of the Trust Agreement, the Issuer Trustees, on
behalf of the Trust, have issued the Trust Securities. The Preferred Securities
represent preferred, undivided beneficial ownership interests in the assets of
the Trust and entitle the holders thereof to a preference in certain
circumstances with respect to distributions and amounts payable on redemption or
liquidation over the Common Securities, as well as other benefits as described
in the Trust Agreement. The Preferred Securities will be issued in fully
registered form without interest coupons. The Common Securities represent
common, undivided beneficial interests in the assets of the Trust.
All of the Common Securities are owned, directly or indirectly, by the
Company. The Common Securities rank pari passu, and payments will be made
thereon on a pro rata basis, with the Preferred Securities, except that upon the
occurrence of a Declaration Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise were subordinated to the rights of the
holders of Preferred Securities. See "--Subordination of Common Securities."
Title to the Convertible Debentures is held by the Property Trustee for the
benefit of the holders of the Trust Securities. The Trust Agreement does not
permit the issuance by the Trust of any securities other than the Trust
Securities or the incurrence of any indebtedness by the Trust. The payment of
distributions out of moneys held by the Trust, and payments upon redemption of
the Preferred Securities or liquidation of the Trust, are guaranteed by the
Company to the extent described under "Description of the Guarantee." The
Guarantee is held by Chase Bank of Texas, National Association, the Guarantee
Trustee, for the benefit of the holders of the Preferred Securities. The
Guarantee does not cover payment of distributions when the Trust does not have
sufficient available funds to pay such distributions. In such event, the remedy
of a holder of Preferred Securities is to (i) vote to direct the Property
Trustee to enforce the Property Trustee's rights under the Convertible
Debentures or (ii) if the failure of the Trust to pay distributions is
attributable to the failure of the Company to pay interest or principal on the
Convertible Debentures, to institute a proceeding directly against the Company
for enforcement of payment to such holder of the principal of or interest on the
Convertible Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder on or after the
respective due date specified in the Convertible Debentures. See "--Voting
Rights."
DISTRIBUTIONS
Distributions on Preferred Securities are fixed at a rate per annum of
5 1/4% of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
a rate per annum of 5 1/4% thereof compounded quarterly. The term "distribution"
as used herein includes any such interest (including any Additional Interest,
Compounded Interest and Liquidated Damages, if any (each as defined herein))
payable unless otherwise stated. The amount of distributions payable for any
period are computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities are cumulative, accrue from
the date of initial issuance and are payable quarterly in arrears on each
January 1, April 1, July 1 and October 1, commencing July 1, 1998, when, as and
if available for payment, by the Property Trustee, except as otherwise described
below. So long as no Indenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer interest payments from
time to time on the Convertible Debentures for successive periods not exceeding
20 consecutive quarterly interest periods (each, an Extension Period) during
which no interest shall be due and payable; provided, that no such Extension
Period may extend beyond the maturity date of the Convertible Debentures. As a
consequence of such extension, quarterly distributions on the Preferred
Securities would be deferred (though such distributions would continue to accrue
with interest) during any such extended interest payment period. In the event
that the Company exercises this right, then, during such period, the Company has
agreed, among other things, (a) not to declare or pay dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Company Common Stock in connection with
the satisfaction by the Company of its obligations under any employee benefit
plans or the satisfaction by the Company of its obligations pursuant to any
contract or security requiring the Company to purchase shares of Company Common
Stock, (ii) as a result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or (iii) the purchase
of fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such
17
<PAGE> 17
capital stock or the security being converted or exchanged (or make any
guarantee payments with respect to the foregoing)), (b) not to make any payment
of interest, principal of or premium, if any, on, or repay, repurchase or redeem
any debt securities (including guarantees) issued by the Company that rank pari
passu with or junior to the Convertible Debentures, and (c) not to make any
guarantee payments with respect to the foregoing (other than pursuant to the
Guarantee). Prior to the termination of any such Extension Period, the Company
may further extend such Extension Period; provided, that such Extension Period,
together with all previous and further extensions thereof, may not exceed 20
consecutive quarters and that such Extension Period may not extend beyond the
maturity date of the Convertible Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may select
a new Extension Period, subject to the above requirements. Consequently, there
could be multiple Extension Periods of varying lengths throughout the term of
the Convertible Debentures. See "Description of the Convertible
Debentures--Interest" and "Description of the Convertible Debentures--Option to
Extend Interest Payment Periods." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to the holders of
record of Preferred Securities as they appear on the books and records of the
Trust on the record date next following the termination of such deferral period.
The Company has no current intention to exercise its right to defer
payments of interest by extending the interest payment period on the Convertible
Debentures.
Distributions on the Preferred Securities will be made to the extent
that the Trust has funds available for the payment of such distributions in the
Property Account. Amounts available to the Trust for distribution to the holders
of the Preferred Securities will be limited to payments received by the Trust
from the Company for the Convertible Debentures. See "Description of the
Convertible Debentures." The payment of distributions out of funds held by the
Trust is guaranteed by the Company on a limited basis as set forth under
"Description of the Guarantee."
Distributions on the Preferred Securities will be payable to the
holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which will be fifteen days prior to the relevant payment
dates. Subject to any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under "--Book-Entry
Only Issuance-The Depository Trust Company" below. In the event that any date on
which distributions are payable on the Preferred Securities is not a Business
Day, payment of the distribution payable on such date will be made on the next
succeeding day which is a Business Day (without any distribution or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. A "Business Day" shall mean any day other than a day on which
banking institutions in New York, New York or in Wilmington, Delaware are
authorized or required by law to close.
CONVERSION RIGHTS
General. Preferred Securities are convertible at any time prior to 5:00
p.m. (New York City time) on the Business Day immediately preceding the date of
repayment of such Preferred Securities, whether at maturity or upon redemption
(either at the option of the Company or pursuant to a Tax Event), at the option
of the holder thereof and in the manner described below, into shares of Company
Common Stock at an initial conversion rate of 0.4545 shares of Company Common
Stock for each Preferred Security (equivalent to a conversion price of $55.00
per share of Company Common Stock), subject to adjustment as described below.
The Trust covenants in the Trust Agreement not to convert Convertible Debentures
held by it except pursuant to a notice of conversion delivered to the Property
Trustee, as conversion agent (the "Conversion Agent"), by a holder of Preferred
Securities.
A holder of a Preferred Security wishing to exercise its conversion
right shall deliver an irrevocable conversion notice, together, if the Preferred
Security is a Certificated Security (as defined herein), with such Certificated
Security, to the Conversion Agent which shall, on behalf of such holder,
exchange such Preferred Security for a portion of the Convertible Debentures and
immediately convert such Convertible Debentures into Company Common Stock.
Holders may obtain copies of the required form of the conversion notice from the
Conversion Agent. Procedures for converting book-entry Preferred Securities into
shares of Company Common Stock will differ, as described under "--Book-Entry
Only Issuance-The Depository Trust Company."
Holders of Preferred Securities at 5:00 p.m. (New York City time) on a
distribution record date will be entitled to receive the distribution payable on
such Preferred Securities on the corresponding distribution payment date
notwithstanding the conversion of such Preferred Securities following such
distribution record date but prior to such distribution payment date. Except as
provided in the immediately preceding sentence, neither the Trust nor the
Company will make, or be required to make, any payment, allowance or adjustment
for accumulated and unpaid distributions, whether or not in arrears, on
converted Preferred Securities. The Company will make no payment or allowance
for distributions on the shares of Company Common Stock issued upon such
conversion, except to the extent that such shares of Company Common Stock are
held of record on the record date for any such distributions. Each conversion
will be deemed to have been effected immediately prior to 5:00 p.m. (New York
City time) on the day on which the related conversion notice was received by the
Conversion Agent.
18
<PAGE> 18
Shares of Company Common Stock issued upon conversion of Preferred
Securities will be validly issued, fully paid and non-assessable. No fractional
shares of Company Common Stock will be issued as a result of conversion, but in
lieu thereof such fractional interest will be paid by the Company in cash based
on the last reported sale price of Company Common Stock on the date such
Preferred Securities are surrendered for conversion.
Conversion Price Adjustments--General. The conversion price is subject
to adjustment in certain events, including (a) the issuance of shares of Company
Common Stock as a dividend or a distribution with respect to Company Common
Stock, (b) subdivisions, combinations and reclassifications of Company Common
Stock, (c) the issuance to all holders of Company Common Stock of rights or
warrants entitling them (for a period not exceeding 45 days) to subscribe for
shares of Company Common Stock at less than the then Current Market Price (as
defined below) of the Company Common Stock, (d) the distribution to holders of
Company Common Stock of evidences of indebtedness of the Company, securities or
capital stock, cash or assets (including securities, but excluding those rights,
warrants, dividends and distributions referred to above and dividends and
distributions paid exclusively in cash), (e) the payment of dividends (and other
distributions) on Company Common Stock paid exclusively in cash, excluding cash
dividends if the annualized per share amount thereof does not exceed 20% of the
Current Market Price of Company Common Stock as of the trading day immediately
preceding the date of declaration of such dividend, and (f) payment to holders
of Company Common Stock in respect of a tender or exchange offer (other than an
odd-lot offer) by the Company for Company Common Stock at a price in excess of
110% of the then Current Market Price of Company Common Stock as of the trading
day next succeeding the last date tenders or exchanges may be made pursuant to
such tender or exchange offer. The term "Current Market Price" means the average
of the daily closing prices for the five consecutive trading days selected by
the Company commencing not more than 20 trading days before, and ending not
later than, the earlier of the day in question or, if applicable, the day before
the "ex" date with respect to the issuance or distribution in question.
The Company from time to time may reduce the conversion price of the
Convertible Debentures (and thus the conversion price of the Preferred
Securities) by any amount selected by the Company for any period of at least 20
days, in which case the Company shall give at least 15 days' notice of such
reduction. The Company may, at its option, make such reductions in the
conversion price, in addition to those set forth above, as the Company's Board
of Directors deems advisable to avoid or diminish any income tax to holders of
Company Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes. See "United States Federal Income Taxation--Adjustment of Conversion
Price."
No adjustment of the conversion price will be made upon the issuance of
any shares of Company Common Stock pursuant to any present or future plan
providing for the reinvestment of dividends or interest payable on securities of
the Company and the investment of additional optional amounts in shares of
Company Common Stock under any such plan. No adjustment in the conversion price
will be required unless such adjustment would require a change of at least one
percent (1%) in the price then in effect; provided, however, that any adjustment
that would not be required to be made shall be carried forward and taken into
account in any subsequent adjustment. If any action would require adjustment of
the conversion price pursuant to more than one of the provisions described
above, only one adjustment shall be made and such adjustment shall be the amount
of adjustment that has the highest absolute value to the holder of the Preferred
Securities.
Conversion Price Adjustments--Merger, Consolidation or Sale of Assets
of the Company. If any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as described below. In addition, in the event of a Common Stock
Fundamental Change (as defined below), each Preferred Security shall be
convertible solely into common stock of the kind received by holders of Company
Common Stock as a result of such Common Stock Fundamental Change.
In the event that the Company is party to any transaction (including,
without limitation, a merger other than a merger that does not result in a
reclassification, conversion, exchange or cancellation of Company Common Stock),
consolidation, sale of all or substantially all of the assets of the Company,
recapitalization or reclassification of Company Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Company Common
Stock) or any compulsory share exchange (each of the foregoing being referred to
as a "Transaction"), in each case, as a result of which shares of Company Common
Stock shall be converted into the right to receive, or shall be exchanged for,
(i) in the case of any Transaction other than a Transaction involving a Common
Stock Fundamental Change (and subject to funds being legally available for such
purpose under applicable law at the time of such conversion), securities, cash
or other property, each Preferred Security shall thereafter be convertible into
the kind and, in the case of a Transaction which does not involve a Fundamental
Change, amount of securities, cash and other property receivable upon the
consummation of such Transaction by a holder of that number of shares of Company
Common Stock into which a Preferred Security was convertible immediately prior
to such Transaction, or (ii) in the case of a Transaction involving a Common
Stock Fundamental Change, common stock, each Preferred Security shall thereafter
be convertible (in the manner described therein) into common stock of the kind
received by holders of Company Common Stock (but in each case after giving
effect to any adjustment discussed below relating to a Fundamental Change if
such Transaction constitutes a Fundamental Change). The holders of Preferred
Securities have no voting rights with respect to any Transaction.
19
<PAGE> 19
The conversion price in the case of any Transaction involving a
Fundamental Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined
below), the conversion price of the Preferred Securities will thereupon
become the lower of (A) the conversion price in effect immediately
prior to such Non-Stock Fundamental Change, but after giving effect to
any other prior adjustments effected pursuant to the preceding
paragraphs, and (B) the greater of the Applicable Price (as defined
below) or the then applicable Reference Market Price (as defined below)
plus any then-accrued and unpaid distributions on one Preferred
Security; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Preferred Securities in effect immediately
prior to such Common Stock Fundamental Change, but after giving effect
to any other prior adjustments effected pursuant to the preceding
paragraphs, will thereupon be adjusted by multiplying such conversion
price by a fraction of which the numerator will be the Purchaser Stock
Price (as defined below) and the denominator will be the Applicable
Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% of the value of the consideration
received by a holder of Company Common Stock is common stock of the
successor, acquirer, or other third party (and cash, if any, is paid
only with respect to any fractional interests in such common stock
resulting from such Common Stock Fundamental Change) and (B) all
Company Common Stock will have been exchanged for, converted into, or
acquired for common stock (and cash with respect to fractional
interests) of the successor, acquirer, or other third party, the
conversion price of the Preferred Securities in effect immediately
prior to such Common Stock Fundamental Change will thereupon be
adjusted by multiplying such conversion price by a fraction of which
the numerator will be one and the denominator will be the number of
shares of common stock of the successor, acquirer, or other third party
received by a holder of one share of Company Common Stock as a result
of such Common Stock Fundamental Change.
The foregoing conversion price adjustments are designed, in certain
circumstances, to reduce the conversion price that would be applicable in
"Fundamental Change" Transactions where all or substantially all the Company
Common Stock is converted into securities, cash, or property and not more than
50% of the value received by the holders of Company Common Stock consists of
stock listed or admitted for listing subject to notice of issuance on the NYSE
or a national securities exchange or quoted on the Nasdaq National Market (a
Non-Stock Fundamental Change, as defined below). Such reduction would result in
an increase in the amount of the securities, cash, or property into which each
Preferred Security is convertible over that which would have been obtained in
the absence of such conversion price adjustment.
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Company Common Stock (measured as described in the
definition of Applicable Price below) is lower than the then applicable
conversion price of a Preferred Security but greater than or equal to the
"Reference Market Price," the conversion price will be adjusted as described
above with the effect that each Preferred Security will be convertible into
securities, cash or property of the same type received by the holders of Company
Common Stock in the Transaction but in an amount per Preferred Security that
would at the time of the Transaction have had a value equal to the Liquidation
Preference.
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Company Common Stock (measured as described in the
definition of Applicable Price) is lower than both the conversion price of a
Preferred Security in effect prior to any adjustment described above and the
Reference Market Price, the conversion price will be adjusted as described above
but calculated as though such initial value had been the Reference Market Price.
In a Fundamental Change Transaction where all or substantially all the
Company Common Stock is converted into securities, cash, or property and more
than 50% of the value received by the holders of Company Common Stock consist of
listed or Nasdaq National Market traded common stock (a Common Stock Fundamental
Change, as defined below), the foregoing adjustments are designed to provide in
effect that (a) where Company Common Stock is converted partly into such common
stock and partly into other securities, cash, or property, each Preferred
Security will be convertible solely into a number of shares of such common stock
determined so that the initial value of such shares (measured as described in
the definition of "Purchaser Stock Price" below) equals the value of the shares
of Company Common Stock into which such Preferred Security was convertible
immediately before the Transaction (measured as aforesaid) and (b) where Company
Common Stock is converted solely into such common stock, each Preferred Security
will be convertible into the same number of shares of such common stock
receivable by a holder of the number of shares of Company Common Stock into
which such Preferred Security was convertible immediately before such
Transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock
Fundamental Change in which the holders of the Company Common Stock receive only
cash, the amount of cash received by the holder of one share of Company Common
Stock and (ii) in the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the Closing Prices (as defined
below) for the Company Common Stock during the ten trading
20
<PAGE> 20
days prior to the record date for the determination of the holders of Company
Common Stock entitled to receive such securities, cash, or other property in
connection with such Non-Stock Fundamental Change or Common Stock Fundamental
Change or, if there is no such record date, the date upon which the holders of
the Company Common Stock shall have the right to receive such securities, cash,
or other property (such record date or distribution date being hereinafter
referred to as the "Entitlement Date"), in each case as adjusted in good faith
by the Company to appropriately reflect any of the events referred to in clauses
(i) through (vi) of the first paragraph under "--Conversion Price
Adjustments--General."
The term "Closing Price" means on any day the reported last sale price
on such day or in case no sale takes place on such day, the average of the
reported closing bid and asked prices in each case on the NYSE Consolidated
Transactions Tape or, if the stock is not listed or admitted to trading on the
NYSE, on the principal national securities exchange on which such stock is
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices as
furnished by any NYSE member firm, selected by the Debenture Trustee for that
purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change
in which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Company
Common Stock consists of common stock that for each of the ten consecutive
trading days prior to the Entitlement Date has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the Nasdaq National Market; provided, however, that a
Fundamental Change shall not be a Common Stock Fundamental Change unless either
(i) the Company continues to exist after the occurrence of such Fundamental
Change and the outstanding Preferred Securities continue to exist as outstanding
Preferred Securities or (ii) not later than the occurrence of such Fundamental
Change, the outstanding Preferred Securities are converted into or exchanged for
shares of convertible preferred stock of an entity succeeding to the business of
the Company or a subsidiary thereof, which convertible preferred stock has
powers, preferences, and relative, participating, optional, or other rights, and
qualifications, limitations, and restrictions, substantially similar to those of
the Preferred Securities.
The term "Fundamental Change" means the occurrence of any Transaction
or event in connection with a plan pursuant to which all or substantially all of
the Company Common Stock shall be exchanged for, converted into, acquired for,
or constitute solely the right to receive securities, cash, or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization, or
otherwise), provided, that, in the case of a plan involving more than one such
Transaction or event, for purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when substantially all of
the Company Common Stock shall be exchanged for, converted into, or acquired for
or constitute solely the right to receive securities, cash, or other property,
but the adjustment shall be based upon the consideration that a holder of
Company Common Stock received in such Transaction or event as a result of which
more than 50% of the Company Common Stock shall have been exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property. The term "Non-Stock Fundamental Change"
means any Fundamental Change other than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common
Stock Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive trading
days prior to and including the Entitlement Date, as adjusted in good faith by
the Company to appropriately reflect any of the events referred to in clauses
(i) through (vi) of the first paragraph under "--Conversion Price
Adjustments--General."
The term "Reference Market Price" shall initially mean $29.37 (which is
an amount equal to 66 2/3% of the reported last sale price for Company Common
Stock on the NYSE Consolidated Transactions Tape on March 12, 1998) and in the
event of any adjustment of the conversion price other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price shall also be adjusted
so that the ratio of the Reference Market Price to the conversion price after
giving effect to any such adjustment shall always be the same as the ratio of
the initial Reference Market Price to the initial conversion price of the
Preferred Securities.
Conversion price adjustments or omissions in making such adjustments
may, under certain circumstances, be deemed to be distributions that could be
taxable as dividends to holders of Preferred Securities or to the holders of
Company Common Stock. See "United States Federal Income Taxation--Adjustment of
Conversion Price."
REDEMPTION
The Convertible Debentures mature on April 1, 2028, and may be
redeemed, in whole or in part, at any time after April 3, 2001 or at any time in
certain circumstances upon the occurrence of a Tax Event. Upon the repayment of
the Convertible Debentures, whether at maturity or upon redemption (either at
the option of the Company or pursuant to a Tax Event), the proceeds from such
repayment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the Convertible Debentures so repaid or
redeemed at the applicable Redemption Price, together with accrued and unpaid
distributions through the date of redemption; provided, that holders
21
<PAGE> 21
of the Trust Securities shall be given not less than 30 nor more than 60 days'
notice of such redemption. See "--Special Event Redemption or Distribution,"
"--Redemption Procedures," "Description of the Convertible Debentures--General,"
"Description of the Convertible Debentures--Mandatory Redemption" and
"Description of the Convertible Debentures-- Optional Redemption."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Tax Event or an Investment Company Event (either
event, a "Special Event") shall occur and be continuing, the Trust shall, unless
the Convertible Debentures are redeemed in the limited circumstances described
below, be dissolved with the result that, after satisfaction of creditors, if
any, of the Trust, Convertible Debentures with an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, and having the same record date for payment
as the Preferred Securities and the Common Securities outstanding at such time
would be distributed on a pro rata basis to the holders of the Preferred
Securities and the Common Securities in liquidation of such holders' interests
in the Trust, within 90 days following the occurrence of such Special Event;
provided, however, that in the case of the occurrence of a Tax Event, as a
condition of such dissolution and distribution, the Property Trustee, on behalf
of the Trust, shall have received an opinion of nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on published revenue rulings of the Internal
Revenue Service, to the effect that the holders of the Preferred Securities will
not recognize any income, gain or loss for United States federal income tax
purposes as a result of such dissolution and distribution of Convertible
Debentures; and, provided, further, that if at the time there is available to
the Trust the opportunity to eliminate, within such 90-day period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which in the sole
judgment of the Company has or will cause no adverse effect on the Trust, the
Company or the holders of the Trust Securities and will involve no material
cost, the Trust will pursue such measure in lieu of dissolution. Furthermore, if
in the case of the occurrence of a Tax Event, (i) the Property Trustee, on
behalf of the Trust, has received an opinion (a "Redemption Tax Opinion") of
nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that the
Company would be precluded from deducting the interest on the Convertible
Debentures for United States federal income tax purposes even if the Convertible
Debentures were distributed to the holders of Preferred Securities and Common
Securities in liquidation of such holders' interests in the Trust as described
above or (ii) the Property Trustee shall have been informed by such tax counsel
that a No Recognition Opinion cannot be delivered to the Trust, the Company
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Convertible Debentures, in whole (but not in part) for cash within 90
days following the occurrence of such Tax Event, and promptly following such
redemption, the Preferred Securities and Common Securities will be redeemed by
the Trust at the Redemption Price; provided, however, that if at the time there
is available to the Company or the Trust the opportunity to eliminate, within
such 90-day period, the Tax Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure which in the sole judgment of the Company has or will cause no adverse
effect on the Trust, the Company or the holders of the Trust Securities and will
involve no material cost, the Company or the Trust will pursue such measure in
lieu of redemption.
"Tax Event" means that the Property Trustee, on behalf of the Trust,
shall have received an opinion of nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that as
a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or (d)
any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after the date of this Prospectus (collectively, a "Change in
Tax Law"), there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to income accrued or received on the Convertible
Debentures, (ii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges or (iii) interest payable by the Company to the Trust on
the Convertible Debentures is not, or within 90 days of the date thereof will
not be, deductible by the Company for United States federal income tax purposes.
Notwithstanding anything in the previous sentence to the contrary, a Tax Event
shall not include any Change in Tax Law that requires the Company for United
States federal income tax purposes to defer taking a deduction for any OID that
accrues with respect to the Convertible Debentures until the interest payment
related to such OID is paid by the Company in money; provided, that such Change
in Tax Law does not create more than an insubstantial risk that the Company will
be prevented from taking a deduction for OID accruing with respect to the
Convertible Debentures at a date that is no later than the date the interest
payment related to such OID is actually paid by the Company in money.
"Investment Company Event" means that the Property Trustee, on behalf
of the Trust, shall have received an opinion of nationally recognized
independent counsel experienced in practice under the Investment Company Act of
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1940, as amended (the "1940 Act"), 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 1940 Act Law"), there is more than an insubstantial risk
that the Trust is or will be considered an "investment company" which is
required to be registered under the 1940 Act, which Change in 1940 Act Law
becomes effective on or after the date hereof.
On the date fixed for any distribution of Convertible Debentures, upon
dissolution of the Trust, (i) the Preferred Securities and the Common Securities
will no longer be deemed to be outstanding, (ii) DTC or its nominee, as the
record holder of such Preferred Securities, will receive a registered global
certificate or certificates representing the Convertible Debentures to be
delivered upon such distribution and (iii) certificates representing Trust
Securities not held by DTC or its nominee will be deemed to represent beneficial
interests in the Convertible Debentures having an aggregate principal amount
equal to the stated liquidation amount of, and bearing accrued and unpaid
interest equal to accrued and unpaid distributions on, such Preferred Securities
until such certificates are presented to the Company or its agent for transfer
or reissuance.
There can be no assurance as to the market price for the Convertible
Debentures which may be distributed in exchange for Trust Securities if a
dissolution and liquidation of the Trust were to occur. Accordingly, the
Convertible Debentures which the investor may subsequently receive on
dissolution and liquidation of the Trust may trade at a discount to the price of
the Trust Securities exchanged. If the Convertible Debentures are distributed to
the holders of the Preferred Securities, the Company will use its best efforts
to cause the Convertible Debentures to be listed on the NYSE or on any such
other national securities exchange or similar organization as the Preferred
Securities are then listed or quoted.
At any time, the Company has the right to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, cause the Convertible Debentures to be distributed to the
holders of the Preferred Securities in dissolution of the Trust. Under current
United States federal income tax law and interpretations and assuming, as
expected, the Trust is treated as a grantor trust, a distribution of the
Convertible Debentures should not be a taxable event to the Trust and holders of
the Preferred Securities. Should there be a change in law, a change in legal
interpretation, a Special Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "United States Federal Income Taxation--Receipt of Convertible Debentures or
Cash upon Liquidation of the Trust."
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid in cash on
all Preferred Securities for all quarterly distribution periods terminating on
or prior to the date of redemption.
In the event of any redemption in part, the Trust is not required to
(i) issue, register the transfer of or exchange any Preferred Security during a
period beginning at the opening of business 15 days before any selection for
redemption of Preferred Securities and ending at the close of business on the
earliest date in which the relevant notice of redemption is deemed to have been
given to all holders of Preferred Securities to be so redeemed and (ii) register
the transfer of or exchange any Preferred Securities so selected for redemption,
in whole or in part, except for the unredeemed portion of any Preferred
Securities being redeemed in part.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), and if the Company has paid to
the Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Convertible Debentures, then, by 12:00 noon, New
York City time, on the redemption date, the Trust will irrevocably deposit with
DTC funds sufficient to pay the amount payable on redemption of all book-entry
certificates and will give DTC irrevocable instructions and authority to pay
such amount in respect of Preferred Securities represented by the Global
Certificates (as defined herein) and will irrevocably deposit with the paying
agent for the Preferred Securities funds sufficient to pay such amount in
respect of any Certificated Securities and will give such paying agent
irrevocable instructions and authority to pay such amount to the holders of
Certificated Securities upon surrender of their certificates. If notice of
redemption shall have been given and funds are deposited as required, then upon
the date of such deposit, all rights of holders of such Preferred Securities so
called for redemption will cease, except (i) the right of the holders of such
Preferred Securities to receive the Redemption Price, but without interest on
such Redemption Price, and (ii) the right to convert such Preferred Securities
into Company Common Stock in the manner described herein through the close of
business on the date fixed for redemption. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
amount payable on such date will be made on the next succeeding day which is a
Business Day (without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by the Trust or by the
Company pursuant to the Guarantee described under "Description of the
Guarantee," distributions on such Preferred Securities will continue to accrue
at the then applicable rate, from the original redemption date to the date of
payment, in which case the actual
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payment date will be considered the date fixed for redemption for purposes of
calculating the amount payable upon redemption (other than for calculating any
premium).
Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
If less than all of the Preferred Securities and Common Securities
issued by the Trust are to be redeemed on a redemption date, then the aggregate
liquidation preference of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata among the Preferred Securities and the
Common Securities. The particular Preferred Securities to be redeemed shall be
selected not more than 60 days prior to the redemption date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by lot or by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple of $25 in excess thereof) of the
liquidation preference of the Preferred Securities. The Property Trustee shall
promptly notify the Conversion Agent in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities selected
for partial redemption, the liquidation preference thereof to be redeemed; it
being understood that, in the case of Preferred Securities held by DTC (or any
successor) or its nominee, the distribution of the proceeds of such redemption
will be made in accordance with the procedures of DTC or its nominee. For all
purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Securities redeemed or to be redeemed only in part, to
the portion of the aggregate liquidation preference of Preferred Securities
which has been or is to be redeemed.
Notice of any redemption of Convertible Debentures will be mailed at
least 30 days but not more than 60 days before the redemption date to each
holder of Convertible Debentures to be redeemed at its registered address.
Unless the Company defaults in payment of the Redemption Price, on and after the
redemption date interest shall cease to accrue on such Convertible Debentures or
portions thereof called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the amount payable upon redemption of,
the Trust Securities, as applicable, shall be made pro rata based on the
liquidation amount of the Trust Securities; provided, however, that, if on any
distribution date or redemption date a Declaration Event of Default shall have
occurred and be continuing, no payment of any distribution on, or amount payable
upon redemption of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid distributions on
all outstanding Preferred Securities for all distribution periods terminating on
or prior thereto, or in the case of payment of the amount payable upon
redemption of the Preferred Securities, the full amount of such amount in
respect of all outstanding Preferred Securities shall have been made or provided
for, and all funds available to the Property Trustee shall first be applied to
the payment in full in cash of all distributions on, or the amount payable upon
redemption of, Preferred Securities then due and payable.
In the case of any Declaration Event of Default, the holder of Common
Securities will be deemed to have waived any such Declaration Event of Default
until all such Declaration Events of Default with respect to the Preferred
Securities have been cured, waived or otherwise eliminated. Until any such
Declaration Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Preferred Securities and not the 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.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Preferred Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Convertible Debentures in an aggregate stated principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, the Preferred Securities have been
distributed on a pro rata basis to the holders of the Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Preferred Securities, except that
if a Declaration Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
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Pursuant to the Trust Agreement, the Trust shall terminate (i) on April
1, 2028, the expiration of the term of the Trust, (ii) upon the bankruptcy of
the Company, (iii) upon the filing of a certificate of dissolution or the
equivalent with respect to the Company, the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent of at
least a majority in liquidation amount of the Trust Securities, voting together
as a single class, to file such certificate of cancellation, or the revocation
of the charter of the Company and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iv) upon the distribution of all of
the Convertible Debentures upon the occurrence of a Special Event, except in the
case of a Tax Event that has occurred and is continuing following which the
Company has elected to pay any additional sums such that the net amount received
by holders of Preferred Securities in respect of Distributions is not reduced as
a result of such Tax Event and the Company has not revoked any such election or
failed to make such payments, (v) upon the entry of a decree of a judicial
dissolution of the Company or the Trust, or (vi) upon the redemption, conversion
or exchange of all the Trust Securities and the amounts necessary for
redemption, conversion or exchange thereof, including any Additional Interest,
Compounded Interest and Liquidated Damages, if any, shall have been paid to the
holders in accordance with the terms of the Trust Securities.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any entity succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be successor of such Issuer Trustee under the
Trust Agreement, provided such corporation shall be otherwise qualified and
eligible.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other entity, except as
described below. The Trust may, with the consent of a majority of the
Administrative Trustees and without the consent of the holders of the Trust
Securities, the Property Trustee or the Delaware Trustee consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State of the United States; provided, that (i) if the
Trust is not the survivor, such successor entity either (x) expressly assumes
all of the obligations of the Trust under the Trust Securities or (y)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Securities (the "Successor Securities"), so long as the
Successor Securities rank the same as the Preferred Securities rank with respect
to distributions, assets and payments, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Convertible Debentures, (iii) the
Preferred Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on such national
securities exchange or with another organization on which the Preferred
Securities are then listed or quoted, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Preferred Securities (including any Successor Securities) in
any material respect, (vi) such successor entity has a purpose substantially
identical to that of the Trust, (vii) the Company guarantees the obligations of
such successor entity under the Successor Securities to the same extent as
provided by the Guarantee and (viii) prior to such merger, consolidation,
amalgamation or replacement, the Company has received an opinion of a nationally
recognized independent counsel to the Trust reasonably acceptable to the
Property Trustee experienced in such matters to the effect that: (A) such
merger, consolidation, amalgamation or replacement will not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act and (C) following such merger, consolidation,
amalgamation or replacement, the Trust (or such successor trust) will be treated
as a grantor trust for United States federal income tax purposes.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in liquidation amount of the Common Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation, amalgamation, merger or replacement would cause the Trust or
the successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of
Default") constitutes an event of default under the Trust Agreement with respect
to the Trust Securities (a "Declaration Event of Default"); provided, that
pursuant to the Trust Agreement, the holder of the Common Securities will be
deemed to have waived any Declaration Event of Default with respect to the
Common Securities until all Declaration Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until such
Declaration Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities and only
the holders of the Preferred Securities will
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have the right to direct the Property Trustee with respect to certain matters
under the Trust Agreement and, therefore, the Indenture.
If the Property Trustee fails to enforce its rights under the
Convertible Debentures after a holder of Preferred Securities has made a written
request, such holder of record of Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Property Trustee's rights
under the Convertible Debentures without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Convertible Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, the redemption date), then a
holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Convertible Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder on or after the
respective due date specified in the Convertible Debentures. In connection with
such Direct Action, the Company will be subrogated to the rights of such holder
of Preferred Securities under the Trust Agreement to the extent of any payment
made by the Company to such holder of Preferred Securities in such Direct
Action. The holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Convertible
Debentures.
Within ten days after the occurrence of any Declaration Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Declaration Event of Default to the holders of the
Preferred Securities, the Administrative Trustees and the Company, as Depositor,
unless such Declaration Event of Default shall have been cured or waived. Upon
the occurrence of a Declaration Event of Default, the Property Trustee as the
sole holder of the Convertible Debentures will have the right under the
Indenture to declare the principal of and interest on the Convertible Debentures
to be immediately due and payable. The Company and the Trust are each required
to file annually with the Property Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Trust Agreement.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture
Act and under "Description of the Guarantee--Amendments and Assignment," and as
otherwise required by law and the Trust Agreement, the holders of the Preferred
Securities will have no voting rights.
Subject to the requirement of the Property Trustee to obtain a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Trust Agreement, including the right to direct the Property Trustee, as holder
of the Convertible Debentures, to (i) exercise the remedies available to it
under the Indenture as a holder of the Convertible Debentures, (ii) waive any
past Indenture Event of Default that is waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Convertible Debentures shall be due and payable or (iv) consent to any
amendment, modification, or termination of the Indenture or the Convertible
Debentures where such consent shall be required; provided, however, 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 Convertible
Debentures affected thereby, only the holders of the percentage of the aggregate
stated liquidation amount of the Preferred Securities which is at least equal to
the percentage required under the Indenture may direct the Property Trustee to
give such consent or take such action. If the Property Trustee fails to enforce
its rights under the Convertible Debentures after a holder of record of
Preferred Securities has made a written request, such holder of record of
Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Property Trustee's rights under the Convertible
Debentures without first instituting any legal proceeding against the Property
Trustee or any other person or entity. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Convertible Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption on the redemption date), then a holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Convertible
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Convertible Debentures. The Property Trustee shall notify all
holders of the Preferred Securities of any notice of default received from the
Indenture Trustee with respect to the Convertible Debentures. Such notice shall
state that such Indenture Event of Default also constitutes a Declaration Event
of Default. The Property Trustee shall be under no obligation to take any of the
actions described in clause (i), (ii) or (iii) above unless the Property Trustee
has obtained an opinion of independent tax counsel to the effect that as a
result of such action, the Trust will not fail to be classified as a grantor
trust for United States federal income tax purposes and each holder will be
treated as owning an undivided beneficial interest in the Convertible
Debentures.
In the event the consent of the Property Trustee, as the holder of the
Convertible Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Property Trustee
shall
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request the direction of the holders of the Trust Securities with respect to
such amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a majority in liquidation
amount of the Trust Securities voting together as a single class; provided,
however, that where a consent under the Indenture would require the consent of
the holders of more than a majority of the aggregate principal amount of the
Convertible Debentures, the Property Trustee may only 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 shall 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 tax counsel to
the effect that for the purposes of United States federal income tax the Trust
will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities
may be given at a separate meeting of holders of Preferred Securities convened
for such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be mailed to each holder of record of Preferred Securities. Each such notice
will include a statement setting forth the following information: (i) the date
of such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Preferred Securities will be required for the
Trust to redeem and cancel Preferred Securities or distribute Convertible
Debentures in accordance with the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned at such time by the Company or any entity
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the Company, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Preferred
Securities were not outstanding.
The procedures by which holders of Preferred Securities represented by
the Global Certificates may exercise their voting rights are described below.
See "--Book-Entry Only Issuance-The Depository Trust Company."
Holders of the Preferred Securities will have no rights to appoint or
remove the Administrative Trustees, who may be appointed, removed or replaced
solely by the Company as the holder of all of the Common Securities.
MODIFICATION OF THE TRUST AGREEMENT
The Trust Agreement may be modified and amended if approved by the
Administrative Trustees (and in certain circumstances the Property Trustee and
the Delaware Trustee); provided, that if any proposed amendment provides for, or
the Administrative Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Trust Agreement or otherwise or
(ii) the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of the Trust Agreement, then the holders of the Trust Securities
voting together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby; provided, further, that if any amendment or proposal referred
to in clause (i) above would adversely affect only the Preferred Securities or
the Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Securities.
Notwithstanding the foregoing, no amendment or modification may be made
to the Trust Agreement if such amendment or modification would (i) cause the
Trust to be classified for purposes of United States federal income taxation as
other than a grantor trust, (ii) reduce or otherwise adversely affect the powers
of the Property Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
REGISTRATION RIGHTS
In connection with the Original Offering, the Company and the Trust
entered into a registration rights agreement dated March 18, 1998 with the
Initial Purchasers (the "Registration Rights Agreement") pursuant to which the
Company and the Trust would, at the Company's expense, for the benefit of the
holders of the Preferred Securities, the Guarantee, the Convertible Debentures
and the shares of Company Common Stock issuable upon conversion of the
Convertible Debentures (together, the "Registrable Securities"), (i) file with
the Commission, a registration statement (the "Shelf Registration Statement")
covering resales of the Registrable Securities, (ii) use their best efforts to
cause the Shelf Registration Statement to be declared effective under the
Securities Act within 150 days of and (iii) use their best efforts to keep
effective the Shelf Registration Statement until two years after the date it is
declared effective or such
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earlier date as all Registrable Securities shall have been disposed of or on
which all Registrable Securities held by persons that are not affiliates of the
Company or the Trust may be resold without registration pursuant to Rule 144(k)
under the Securities Act (the "Effectiveness Period"). The Company will provide
to each holder of Registrable Securities copies of this Prospectus which is a
part of the Shelf Registration Statement, notify each holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resales of the Registrable Securities. A
holder of Registrable Securities that sells such Registrable Securities pursuant
to the Shelf Registration Statement is required to be named as a selling
security holder in this Prospectus and to deliver this Prospectus to purchasers,
is subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and is bound by the provisions of the Registration
Rights Agreement, including certain indemnification obligations.
If (i) by May 17, 1998, the Shelf Registration Statement had not been
filed with the Commission, or (ii) by August 15, 1998, the Shelf Registration
Statement had not been declared effective (each, a "Registration Default"),
additional interest ("Liquidated Damages") will accrue on the Convertible
Debentures and, accordingly, additional distributions will accrue on the
Preferred Securities, in each case from and including the day following such
Registration Default. Liquidated Damages will be paid quarterly in arrears, with
the first quarterly payment due on the first interest or distribution payment
date, as applicable, following the date on which such Liquidated Damages begin
to accrue, and will accrue at a rate per annum equal to an additional
one-quarter of one percent (0.25%) of the principal amount or liquidation
amount, as applicable, to and including the 60th day following such Registration
Default and one-half of one percent (0.50%) thereof from and after the 61st day
following such Registration Default. The Company has the right to suspend the
Shelf Registration Statement under certain circumstances for up to 90
consecutive days. In the event that the Shelf Registration Statement ceases to
be effective during the Effectiveness Period for more than 90 consecutive days
or any 120 days, whether or not consecutive, during any 12-month period, then
the interest rate borne by the Convertible Debentures and the distribution rate
borne by the Preferred Securities will each increase by an additional one-half
of one percent (0.50%) per annum from such 91st or 121st day, as applicable,
until such time as the Shelf Registration Statement again becomes effective.
This Prospectus is a part of the Shelf Registration Statement filed in
accordance with the foregoing requirements.
The summary herein of certain provisions of the Registration Rights
Agreement is subject to, and is qualified in its entirety by reference to, all
the provisions of the Registration Rights Agreement, a copy of which is
available upon request to the Company or the Initial Purchasers.
BOOK-ENTRY ONLY ISSUANCE-THE DEPOSITORY TRUST COMPANY
The description of book-entry procedures in this Prospectus includes
summaries of certain rules and operating procedures of DTC that affect transfers
of interest in the global certificate or certificates issued in connection with
sales of Preferred Securities made pursuant to this Prospectus. The Preferred
Securities were issued only as fully registered securities registered in the
name of Cede & Co. (as nominee for DTC), in each case for credit to an account
of a direct or indirect participant in DTC as described below. One or more fully
registered global Preferred Security certificates (the "144A Global Securities")
was issued, representing in the aggregate, Preferred Securities sold in reliance
on Rule 144A and was deposited with DTC. One or more fully registered global
Preferred Security certificates (the "Regulation S Global Securities" and,
together with the 144A Global Securities, the "Global Securities") was issued,
representing in the aggregate, Preferred Securities sold in offshore
transactions in reliance on Regulation S and was deposited with DTC.
The Regulation S Global Security initially was deposited with or on
behalf of DTC and was registered in the name of the Global Security holder for
credit to subscribers' accounts at Euroclear and Cedel Bank. Euroclear and Cedel
Bank are each Participants in DTC's system. Beneficial interests in the
Regulation S Global Security may be held only through Euroclear and Cedel until
the expiration of a 40-day restricted period, as defined under Regulation S (the
"Restricted Period"). After the expiration of the Restricted Period, investors
may hold beneficial interests in the Regulation S Global Security through
organizations other than Euroclear and Cedel Bank that are Participants in DTC's
system. Euroclear and Cedel Bank will hold interests in the Regulation S Global
Security on behalf of their Participants through customers' securities accounts
in their respective names on the books of their respective depositaries, which
are Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear, and Citibank, N.A., as operator of Cedel Bank. In turn, each of
Euroclear and Cedel Bank will hold such interests in the Regulation S Global
Security in customers' securities accounts in its name on the books of DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a Global Security.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants")
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deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is owned
by a number of its Participants and by the NYSE, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by
or through Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities, except in the event that use of the
book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities
deposited by Participants with DTC are registered in the name of DTC's nominee,
Cede & Co. The deposit of Preferred 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 Preferred Securities; DTC's
records reflect only the identity of the Participants to whose accounts such
Preferred Securities are credited, which may or may not be the Beneficial
Owners. The Participants and Indirect Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Security, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Preferred Securities represented thereby for all
purposes under the Trust Agreement and the Preferred Securities. No beneficial
owner of an interest in a Global Security will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the Trust Agreement.
DTC has advised the Company that it will take any action permitted to
be taken by a holder of Preferred Securities (including the presentation of
Preferred Securities for exchange as described below) only at the direction of
one or more Participants to whose account the DTC interests in the Global
Securities are credited and only in respect of such portion of the aggregate
liquidation amount of Preferred Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Preferred Securities, DTC will exchange the Global Securities
for Certificated Securities, which it will distribute to its Participants.
Conveyance of notices and other communications by DTC to Participants,
by Participants to Indirect Participants, and by 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 in respect of the Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Preferred
Securities are being redeemed, DTC will determine the amount of the interest of
each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Preferred Securities
are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distributions on the Preferred Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
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Except as provided herein, a Beneficial Owner of an interest in a
Global Security will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Securities among Participants of
DTC, DTC is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Company, the Issuer nor the Trustee will have any responsibility for the
performance by DTC or its Participants or Indirect Participants under the rules
and procedures governing DTC. DTC may discontinue providing its services as
securities depository with respect to the Preferred Securities at any time by
giving notice to the Trust. Under such circumstances, in the event that a
successor securities depository is not obtained, Preferred Security certificates
are required to be printed and delivered. Additionally, the Trust (with the
consent of the Company) may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor depository). In that event,
certificates for the Preferred Securities will be printed and delivered. In each
of the above circumstances, the Company will appoint a paying agent with respect
to the Preferred Securities.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company and the Trust believes to
be reliable, but the Trust takes no responsibility for the accuracy thereof.
ADDITIONAL INFORMATION CONCERNING EUROCLEAR AND CEDEL BANK
Euroclear and Cedel Bank hold securities for participating
organizations and facilitate the clearance and settlement of securities
transactions between their respective participants through electronic book-entry
changes in accounts of such participants. Euroclear and Cedel Bank provide to
their participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Euroclear and Cedel Bank interface with
domestic securities markets. Euroclear and Cedel Bank participants are financial
institutions such as underwriters, securities brokers and dealers, banks, trust
companies and certain other organizations. Indirect access to Euroclear and
Cedel Bank is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodian relationship with a
Euroclear or Cedel Bank participant, either directly or indirectly.
When beneficial interests are to be transferred from the account of a
Participant (other than Morgan Guaranty Trust Company of New York and Citibank,
N.A., as depositaries for Euroclear and Cedel Bank, respectively) to the account
of a Euroclear participant or a Cedel Bank participant, the purchaser must send
instructions to Euroclear or Cedel Bank through a participant at least one
business day prior to settlement. Euroclear or Cedel Bank, as the case may be,
will instruct Morgan Guaranty Trust Company of New York or Citibank, N.A. to
receive the beneficial interests against payment. Payment will include interest
attributable to the beneficial interest from and including the last payment date
to and excluding the settlement date, on the basis of a calendar year consisting
of twelve 30-day calendar months. For transactions settling on the 31st day of
the month, payment will include interest accrued to and excluding the first day
of the following month. Payment will then be made by Morgan Guaranty Trust
Company of New York or Citibank, N.A., as the case may be, to the Participant's
account against delivery of the beneficial interests. After settlement has been
completed, the beneficial interests will be credited to the respective clearing
systems and by the clearing system, in accordance with its usual procedures, to
the Euroclear participants' or Cedel Bank participants' accounts. Credit for the
beneficial interests will appear on the next business day (European time) and
the cash debit will be back-valued to, and interest attributable to the
beneficial interests will accrue from, the value date (which would be the
preceding business day when settlement occurs in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Euroclear or
Cedel Bank cash debit will instead be valued as of the actual settlement date.
Euroclear participants and Cedel Bank participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Euroclear or Cedel Bank. Under
this approach, they may take on credit exposure to Euroclear or Cedel Bank until
the beneficial interests are credited to their accounts one day later. Finally,
day traders that use Euroclear or Cedel Bank and that purchase beneficial
interests from Participants for credit to Euroclear participants or Cedel Bank
participants should note that these trades would automatically fall on the sale
side unless affirmative action were taken to avoid these potential problems.
Due to time zone differences in their favor, Euroclear participants and
Cedel Bank participants may employ their customary procedures for transactions
in which beneficial interests are to be transferred by the respective clearing
system, through Morgan Guaranty Trust Company of New York or Citibank, N.A., to
another Participant. The seller must send instructions to Euroclear or Cedel
Bank through a participant at least one business day prior to settlement. In
these cases, Euroclear or Cedel Bank will instruct Morgan Guaranty Trust Company
of New York or Citibank, N.A., as the case may be, to credit the beneficial
interests to the Participant's account against payment. Payment will include
interest attributable to the beneficial interest from and including the last
payment date to and excluding the settlement date on the basis of a calendar
year consisting of twelve 30-day calendar months. For transactions settling on
the 31st day of the month, payment will include interest accrued to and
excluding the first day of the following month. The
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payment will then be reflected in the account of the Euroclear participant or
Cedel Bank participant the following business day, and receipt of the cash
proceeds in the Euroclear or Cedel Bank participant's account will be
back-valued to the value date (which would be the preceding business day, when
settlement occurs in New York). If the Euroclear participant or Cedel Bank
participant has a line of credit with its representative clearing system and
elects to draw on such line of credit in anticipation of receipt of the sale
proceeds in its account, the back-valuation may substantially reduce or offset
any overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., if trade fails), receipt of the cash
proceeds in the Euroclear or Cedel Bank participant's account would instead be
valued as of the actual settlement date.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the applicable distribution dates or, in the case of
Certificated Securities, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Trust's register. The Paying Agent shall initially be Chase Bank of Texas,
National Association. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Issuer Trustees. In the event that
Chase Bank of Texas, National Association shall no longer be the Paying Agent,
the Trustee shall appoint a successor to act as Paying Agent (which shall be a
bank or trust company).
REGISTRAR, TRANSFER AGENT, PAYING AGENT AND CONVERSION AGENT
The Property Trustee acts as Registrar, Transfer Agent, Paying Agent
and Conversion Agent for the Preferred Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust or the Company may require) in respect of any tax
or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered
the transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Company and certain of its subsidiaries maintain deposit accounts
and conduct other banking transactions with the Property Trustee in the ordinary
course of their businesses. The Property Trustee, prior to the occurrence of a
default with respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Trust Agreement and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The holders of Preferred Securities
will not be required to offer such indemnity in the event such holders, by
exercising their voting rights, direct the Property Trustee to take any action
following a Declaration Event of Default.
GOVERNING LAW
The Trust Agreement and the Preferred Securities are governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the 1940
Act or characterized as other than a grantor trust for United States federal
income tax purposes so that the Convertible Debentures will be treated as
indebtedness of the Company for United States federal income tax purposes. In
this connection, the Administrative Trustees are authorized to take any action,
not inconsistent with applicable law, the certificate of trust or the Trust
Agreement that the Administrative Trustees determine in their discretion to be
necessary or desirable for such purposes as long as such action does not
adversely affect the interests of the holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee
which was executed and delivered by the Company for the benefit of the holders
from time to time of the Preferred Securities. The summary does not purport to
be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the Guarantee. The Guarantee
incorporates by reference the terms of the Trust Indenture Act. It is expected
that at the time the Shelf Registration Statement becomes effective, the
Guarantee will be qualified under the Trust Indenture Act. Chase Bank of Texas,
National Association, as the Guarantee Trustee, will hold the Guarantee for the
benefit of the holders of the Preferred Securities.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, the Company
irrevocably and unconditionally agreed to pay in full to the holders of the
Preferred Securities (except to the extent paid by such Trust), as and when due,
regardless of any defense, right of set off or counterclaim which the Trust may
have or assert, the following payments (the "Guarantee Payments"), without
duplication: (i) any accrued and unpaid distributions that are required to be
paid on the Preferred Securities to the extent the Trust has funds available
therefor, (ii) the Redemption Price, with respect to any Preferred Securities
called for redemption by the Trust, to the extent the Trust has funds available
therefor and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Convertible Debentures to the holders of Preferred Securities or the redemption
of all the Preferred Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Preferred
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 Preferred Securities upon the liquidation of the
Trust. The holders of a majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee. Any holder of Preferred Securities may directly institute a legal
proceeding against the Company to enforce the obligations of the Guarantor under
the Guarantee without first instituting a legal proceeding against the Trust,
the Guarantee Trustee or any other person or entity. If the Company were to
default on its obligation to pay amounts payable on the Convertible Debentures,
the Trust would lack available funds for the payment of distributions or amounts
payable on redemption of the Preferred Securities or otherwise, and in such
event holders of the Preferred Securities would not be able to rely upon the
Guarantee for payment of such amounts. Instead, a holder of the Preferred
Securities would be required to rely on the enforcement (1) by the Property
Trustee of its rights, as registered holder of the Convertible Debentures,
against the Company pursuant to the terms of the Convertible Debentures or (2)
by such holder of Preferred Securities of its right against the Company to
enforce payments on Convertible Debentures. See "Description of the Convertible
Debentures." The Trust Agreement provides that each holder of Preferred
Securities, by acceptance thereof, agrees to the provisions of the Guarantee,
including the subordination provisions thereof, and the Indenture.
The Guarantee is a guarantee on a subordinated basis with respect to
the Preferred Securities from the time of issuance of such Preferred Securities
but does not apply to any payment of distributions or Redemption Price, or to
payments upon the dissolution, winding-up or termination of the Trust, except to
the extent the Trust shall have funds available therefor. If the Company does
not make interest payments on the Convertible Debentures, the Trust will not pay
distributions on the Preferred Securities and will not have funds available
therefor. See "Description of the Convertible Debentures." The Guarantee, when
taken together with the Company's obligations under the Convertible Debentures,
and the Indenture thereto and the Trust Agreement, including its obligations to
pay costs, expenses, debts and liabilities of the Trust (other than with respect
to the Trust Securities) provides a full and unconditional guarantee on a
subordinated basis by the Company of payments due on the Preferred Securities
issued by the Trust.
The Company has also agreed separately to irrevocably and
unconditionally guarantee the obligations of the Trust with respect to the
Common Securities (the "Common Securities Guarantee") to the same extent as the
Guarantee, except that upon the occurrence and during the continuation of a
Declaration Event of Default, holders of Preferred Securities shall have
priority over holders of Common Securities with respect to distributions and
payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company has covenanted that, so long as any
Preferred Securities remain outstanding, if (i) the Company has exercised its
option to defer interest payments on the Convertible Debentures by extending the
interest payment period and such extension shall be continuing, (ii) the Company
shall be in default with respect to its payment or other obligations under the
Guarantee or (iii) there shall have occurred and be continuing any event that,
with the giving of notice or the lapse of time or both, would constitute an
Indenture Event of Default, then the Company has agreed (a) not to declare or
pay dividends on, or make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of Company Common Stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security requiring the
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Company to purchase shares of Company Common Stock, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock or (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
(or make any guarantee payments with respect to the foregoing)), (b) not to make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank pari passu with or junior
to the Convertible Debentures (except by conversion into or exchange for shares
of its capital stock), and (c) not to make any guarantee payments with respect
to the foregoing (other than pursuant to the Guarantee).
As part of the Guarantee, the Company agreed that it will honor all
obligations described therein relating to the conversion of the Preferred
Securities into Company Common Stock as described in "Description of the
Preferred Securities--Conversion Rights."
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation preference of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of 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
the Preferred Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, any record holder of Preferred Securities shall have the
right, which is absolute and unconditional, to proceed directly against the
Company to obtain Guarantee Payments, without first waiting to determine if the
Guarantee Trustee has enforced the Guarantee or instituting a legal proceeding
against the Trust, the Guarantee Trustee or any other person or entity. The
Company has waived any right or remedy to require that any action be brought
just against the Trust, or any other person or entity, before proceeding
directly against the Company.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely
affect the rights of holders of Preferred Securities (in which case no vote will
be required), the Guarantee may be amended only with the prior approval of the
holders of at least a majority in liquidation amount of all the outstanding
Preferred Securities. The manner of obtaining any such approval of holders of
the Preferred Securities will be as set forth under "Description of the
Preferred Securities--Voting Rights." All guarantees and agreements contained in
the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Preferred Securities then outstanding. Except in connection with any
permitted merger or consolidation of the Company with or into another entity or
any permitted sale, transfer or lease of the Company's assets to another entity
as described below under "Description of the Convertible Debentures," the
Company may not assign its rights or delegate its obligations under the
Guarantee without the prior approval of the holders of at least a majority of
the aggregate stated liquidation amount of the Preferred Securities then
outstanding.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to each holder of Preferred Securities
upon (i) full payment of the Redemption Price of all Preferred Securities, (ii)
distribution of the Convertible Debentures held by the Trust to the holders of
the Preferred Securities, (iii) liquidation of the Trust or (iv) the
distribution of Company Common Stock to such holder in respect of the conversion
of such holder's Preferred Securities into Company Common Stock and will
terminate completely upon full payment of the amounts payable in accordance with
the Declaration 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 Preferred
Securities must restore payment of any sum paid under such Preferred Securities
or such Guarantee.
STATUS OF THE GUARANTEE; SUBORDINATION
The Guarantee constitutes an unsecured obligation of the Company and
ranks (i) subordinate and junior to all other liabilities of the Company except
any liabilities that may be pari passu expressly by their terms, (ii) pari passu
with the most senior preferred stock issued from time to time by the Company and
with any guarantee now or hereafter entered into by the Company in respect of
any preferred or preference stock or preferred securities of any affiliate of
the Company and (iii) senior to the Company Common Stock. The terms of the
Preferred Securities provide that each
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holder of Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
The Guarantee constitutes a guarantee of payment and not of collection
(that is, the guaranteed party may directly institute a legal proceeding against
the Company to enforce its rights under a Guarantee without instituting a legal
proceeding against any other person or entity).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with
respect to the Guarantee, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, after default with respect to the
Guarantee, shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to such provision,
the Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Guarantee at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantee is governed by, and construed in accordance with, the
laws of the State of New York.
DESCRIPTION OF THE CONVERTIBLE DEBENTURES
Set forth below is a description of the specific terms of the
Convertible Debentures in which the Trust invested the proceeds from the
issuance and sale of the Trust Securities. The following description does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture between the Company and Chase Bank of Texas,
National Association, as trustee (the "Indenture Trustee"), a copy of which may
be obtained from the Company upon request. Certain capitalized terms used herein
are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Convertible Debentures may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the Preferred Securities--Special Event Redemption or
Distribution." If the Convertible Debentures are distributed to the holders of
Preferred Securities, the Company will use its best efforts to have the
Convertible Debentures listed on the NYSE or on such other national securities
exchange or similar organization on which the Preferred Securities are then
listed or quoted.
GENERAL
The Convertible Debentures were issued as unsecured debt under the
Indenture. The Convertible Debentures were limited in aggregate principal amount
of $113,402,050, such amount being the sum of the aggregate stated liquidation
amount of the Preferred Securities and the Common Securities.
The Convertible Debentures are not subject to a sinking fund provision.
The entire principal amount of the Convertible Debentures will become due and
payable, together with any accrued and unpaid interest thereon, including
Compounded Interest and Additional Interest (both as defined herein), if any, on
April 1, 2028.
The Convertible Debentures, if distributed to holders of Preferred
Securities in liquidation of such holder's interest in the Trust, will initially
be issued in the same form as the Preferred Securities that such Convertible
Debentures replace. See "--Book-Entry and Settlement." Under certain limited
circumstances, Convertible Debentures may be issued in certificated form in
exchange for a Global Security. In the event that Convertible Debentures are
issued in certificated form, such Convertible Debentures will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Payments on Convertible Debentures issued as a Global Security will be
made to DTC, a successor depositary or, in the event that no depositary is used,
to a Paying Agent for the Convertible Debentures. In the event Convertible
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Convertible Debentures will be registrable and
Convertible Debentures will be exchangeable for Convertible Debentures of other
denominations of a like aggregate principal amount at the corporate trust office
of the Indenture Trustee in The City of New York; provided, that unless the
Convertible Debentures are held by the Trust or any successor permissible under
"Description of the Preferred Securities--Merger, Consolidation or Amalgamation
of the Trust," payment of interest may be made at the option of the Company by
check mailed to the address of the persons entitled thereto.
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There are no covenants or provisions in the Indenture that afford
holders of Convertible Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
INTEREST
Each Convertible Debenture bears interest at the rate of 5 1/4% per
annum from the original date of issuance, payable quarterly in arrears on
January 1, April 1, July 1 and October 1 (each, an "Interest Payment Date"),
commencing July 1, 1998, to the person in whose name such Convertible Debenture
is registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full quarterly period for which interest is
computed will be computed on the basis of the actual number of days elapsed. In
the event that any date on which interest is payable on the Convertible
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (without
any interest or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIODS
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company shall have the right at any time during the term of the
Convertible Debentures to defer interest payments from time to time by extending
the interest payment period for successive periods not exceeding 20 consecutive
quarters for each such period (each an Extension Period); provided, no Extension
Period may extend beyond the maturity date of the Convertible Debentures. At the
end of each Extension Period, the Company shall pay all interest then accrued
and unpaid (including Additional Interest and Liquidated Damages, if any)
together with interest thereon compounded quarterly at the rate specified for
the Convertible Debentures to the extent permitted by applicable law
("Compounded Interest"); provided, that during any Extension Period, the Company
has agreed, among other things, (a) not to declare or pay dividends on, or make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Company Common Stock in connection with
the satisfaction by the Company of its obligations under any employee benefit
plans or the satisfaction by the Company of its obligations pursuant to any
contract or security requiring the Company to purchase shares of Company Common
Stock, (ii) as a result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or (iii) the purchase
of fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged (or make any guarantee payments with respect to the
foregoing)), (b) not to make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem, any debt securities issued by the
Company that rank pari passu with or junior to the Convertible Debentures
(except by conversion into or exchange for shares of its capital stock) and (c)
shall not make any guarantee payments with respect to the foregoing. Prior to
the termination of any such Extension Period, the Company may further extend
such Extension Period; provided, that such Extension Period together with all
previous and further extensions thereof may not exceed 20 consecutive quarters
and may not extend beyond the maturity of the Convertible Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the above requirements.
No interest during an Extension Period, except at the end thereof, shall be due
and payable. The Company has no current intention of exercising its right to
defer payments of interest by extending the interest payment period on the
Convertible Debentures. If the Property Trustee shall be the sole holder of the
Convertible Debentures at the time the Company selects an Extension Period, the
Company shall give the Administrative Trustees and the Property Trustee notice
of its selection of such Extension Period at least one Business Day prior to the
earlier of (i) the date the distributions on the Preferred Securities are
payable or (ii) the date the Trust is required to give notice to the NYSE (or
any applicable self-regulatory organization) or to holders of the Preferred
Securities of the record date or the date such distribution is payable, but in
any event not less than ten Business Days prior to such record date. The Company
shall cause the Trust to give notice of the Company's selection of such
Extension Period to the holders of the Preferred Securities. If the Property
Trustee shall not be the sole holder of the Convertible Debentures at the time
the Company selects an Extension Period, the Company shall give the holders of
the Convertible Debentures notice of its selection of such Extension Period at
least ten Business Days prior to the earlier of (i) the Interest Payment Date or
(ii) the date the Company is required to give notice to the NYSE (or any
applicable self-regulatory organization) or to holders of the Convertible
Debentures on the record or payment date of such related interest payment, but
in any event not less than two Business Days prior to such record date.
ADDITIONAL INTEREST
If the Trust would be required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States, or any other taxing authority, then, in any such case, the
Company will pay as additional interest ("Additional Interest") such amounts as
shall be required so that the net amounts
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received and retained by the Trust after paying any such taxes, duties,
assessments or governmental charges will be not less than the amounts the Trust
would have received had no such taxes, duties, assessments or governmental
charges been imposed.
CONVERSION OF THE CONVERTIBLE DEBENTURES
The Convertible Debentures are convertible into Company Common Stock at
the option of the holders of the Convertible Debentures at any time prior to
5:00 p.m. (New York City time) the Business Day immediately preceding the date
of repayment of such Convertible Debentures, whether at maturity or upon
redemption (either at the option of the Company or pursuant to a Tax Event), at
the initial conversion price set forth on the cover page of this Prospectus
subject to the conversion price adjustments described under "Description of the
Preferred Securities--Conversion Rights." The Trust will covenant not to convert
Convertible Debentures held by it except pursuant to a notice of conversion
delivered to the Conversion Agent by a holder of Preferred Securities. Upon
surrender of a Preferred Security to the Conversion Agent for conversion, the
Trust will distribute $25 principal amount of the Convertible Debentures to the
Conversion Agent on behalf of the holder of the Preferred Securities so
converted, whereupon the Conversion Agent will convert such Convertible
Debentures to Company Common Stock on behalf of such holder. The Company's
delivery to the holders of the Convertible Debentures (through the Conversion
Agent) of the fixed number of shares of Company Common Stock into which the
Convertible Debentures are convertible (together with the cash payment, if any,
in lieu of fractional shares) will be deemed to satisfy the Company's obligation
to pay the principal amount of the Convertible Debentures so converted, and the
accrued and unpaid interest thereon attributable to the period from the last
date to which interest has been paid or duly provided for; provided, however,
that if any Convertible Debenture is converted after a record date for payment
of interest, the interest payable on the related interest payment date with
respect to such Convertible Debenture shall be paid to the Trust (which will
distribute such interest to the converting holder) or other holder of
Convertible Debentures, as the case may be, despite such conversion; provided,
further that if any Convertible Debentures delivered for conversion during an
Extension Period of redemption thereof from the Property Trustee to the holders
of the Preferred Securities, the Company shall be required to pay to the Trust
all accrued and unpaid interest, if any, on such Convertible Debentures through
the date of conversion which amount shall be simultaneously distributed to the
holders of the Preferred Securities in respect of which such Convertible
Debentures were delivered. See "--Optional Redemption," "Description of the
Preferred Securities--Conversion Rights" and "--Redemption."
MANDATORY REDEMPTION
Upon repayment at maturity or as a result of acceleration upon the
occurrence of an Indenture Event of Default, the Company will redeem the
Convertible Debentures, in whole but not in part, at a redemption price equal to
100% of the principal amount thereof, together with any accrued and unpaid
interest thereon. Any payment pursuant to this provision shall be made prior to
12:00 noon, New York City time, on the date of such repayment or acceleration or
at such other time on such earlier date as the parties thereto shall agree. The
Convertible Debentures are not entitled to the benefit of any sinking fund or,
except as set forth above or as a result of acceleration, any other provision
for mandatory prepayment.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Convertible Debentures,
in whole or in part, at any time or from time to time after April 3, 2001, upon
not less than 30 nor more than 60 days' notice, at the optional redemption
prices (expressed as a percentage of the principal amount of Convertible
Debentures to be redeemed) shown in the table below, plus any accrued and unpaid
interest, including Additional Interest, Compounded Interest and Liquidated
Damages, if any, to the redemption date, if redeemed during the 12-month period
beginning April 3:
<TABLE>
<CAPTION>
OPTIONAL
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2001 103.00%
2002 102.25%
2003 101.50%
2004 100.75%
2005 and thereafter 100.00%
</TABLE>
If the Company has deferred interest payments, all unpaid interest must be paid
in cash prior to redemption.
If a partial redemption of the Preferred Securities resulting from a
partial redemption of the Convertible Debentures would result in the delisting
of the Preferred Securities, the Company may only redeem Convertible Debentures
in whole.
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REDEMPTION PROCEDURES
Notices of any redemption of the Convertible Debentures and the
procedures for such redemption shall be as provided with respect to the
Preferred Securities under "Description of the Preferred Securities--Redemption
Procedures." Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of Convertible
Debentures to be redeemed at its registered address. Unless the Company defaults
in payment of the redemption price, on and after the redemption date interest
shall cease to accrue on such Convertible Debentures or portions thereof called
for redemption.
DISTRIBUTION OF CONVERTIBLE DEBENTURES
At any time, the Company has the right to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, cause the Convertible Debentures to be distributed to the
holders of the Preferred Securities in dissolution of the Trust. If distributed
to holders of Preferred Securities in liquidation, the Convertible Debentures
will initially be issued in the form of one or more global securities and DTC,
or any successor depositary for the Preferred Securities, will act as depositary
for the Convertible Debentures. It is anticipated that the depositary
arrangements for the Convertible Debentures would be substantially identical to
those in effect for the Preferred Securities. There can be no assurance as to
the market price of any Convertible Debentures that may be distributed to the
holders of Preferred Securities. For a description of DTC and the terms of the
depositary matters, see "--Book-Entry and Settlement."
SUBORDINATION
The Indenture provides that the Convertible Debentures are subordinate
and junior in right of payment to all existing and future Senior Indebtedness of
the Company. No payment of principal of (including redemption payments, if any),
premium, if any, or interest on, the Convertible Debentures may be made if (i)
any Senior Indebtedness of the Company is not paid when due and any applicable
grace period with respect to such default has ended and such default has not
been cured or waived, or ceased to exist or (ii) the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default. At March
31, 1998, Senior Indebtedness of the Company was approximately $76.0 million.
Upon any distribution of assets of the Company to creditors upon any
dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
principal of, and premium, if any, and interest due or to become due on, all
Senior Indebtedness of the Company must be paid in full before the holders of
the Convertible Debentures are entitled to receive or retain any payment. Upon
satisfaction of all claims related to all Senior Indebtedness of the Company
then outstanding, the rights of the holders of the Preferred Securities will be
subrogated to the rights of the holders of Senior Indebtedness of the Company to
receive payments or distributions applicable to Senior Indebtedness until all
amounts owing on the Convertible Debentures are paid in full.
The term "Senior Indebtedness" shall mean in respect of the Company:
(i) the principal, premium, if any, and interest in respect of (A) indebtedness
of such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise, and
(vi) all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Convertible Debentures and (2) any indebtedness between or among such obligor or
its affiliates, including all other debt securities and guarantees in respect of
those debt securities issued to any other trust, or trustee of such trust,
partnership or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing Entity of preferred securities or
other securities that rank pari passu with, or junior to, the Preferred
Securities. Such Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued by the Company. See "Capitalization."
CERTAIN COVENANTS
In the Indenture, the Company has covenanted that, so long as any
Convertible Debentures are outstanding, if (i) there shall have occurred and be
continuing any event that with the giving of notice or the lapse of time or
both, would constitute an Indenture Event of Default, (ii) the Company shall be
in default with respect to its payment of any
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obligations under the Guarantee, or (iii) the Company has exercised its option
to defer interest payments on the Convertible Debentures by extending the
interest payment period and such period, or any extension thereof, shall be
continuing, then the Company has agreed (a) not to declare or pay dividends on,
make distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Company Common Stock in connection with
the satisfaction by the Company of its obligations under any employee benefit
plans or the satisfaction by the Company of its obligations pursuant to any
contract or security requiring the Company to purchase shares of Company Common
Stock, (ii) as a result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or (iii) the purchase
of fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged (or make any guarantee payments with respect to the
foregoing)), (b) not to make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior to the Convertible Debentures (except by
conversion into or exchange for shares of its capital stock), and (c) not to
make any guarantee payments with respect to the foregoing (other than pursuant
to the Guarantee).
The Company has covenanted (i) to directly or indirectly maintain 100%
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of such Common Securities and (ii) to use its reasonable
efforts to cause the Trust (x) to remain a statutory business trust, except in
connection with the distribution of Convertible Debentures to the holders of
Trust Securities in liquidation of the Trust, the redemption of all of the Trust
Securities of the Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the Trust Agreement, and (y) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company will not consolidate with or
merge into any other corporation or convey, transfer or lease its assets
substantially as an entirety unless (a) if the Company is not the survivor, the
successor is a corporation organized in the United States and expressly assumes
the due and punctual payment of the principal of (and premium, if any) and
interest on all Convertible Debentures issued thereunder and the performance of
every other covenant of the Indenture on the part of the Company and (b)
immediately thereafter no event of default under the Indenture and no event
which, after notice or lapse of time, or both, would become an event of default
under the Indenture, shall have happened and be continuing. Upon any such
consolidation, merger, conveyance or transfer, the successor corporation shall
succeed to and be substituted for the Company under the Indenture and thereafter
the predecessor corporation shall be relieved of all obligations and covenants
under the Indenture and the Convertible Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of the Preferred Securities in connection
with the involuntary or voluntary dissolution, winding-up or liquidation of the
Trust as a result of the occurrence of a Special Event, the Convertible
Debentures will be issued in the same form as the Preferred Securities which
such Convertible Debentures replace. Any Global Security will be replaced by one
or more global certificates (each a "Global Security") registered in the name of
the depositary or its nominee. Except under the limited circumstances described
below, the Convertible Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Convertible Debentures
in definitive form. The Global Securities described above may not be transferred
except by the depositary to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or to a
successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a
Global Security are not entitled to receive physical delivery of Convertible
Debentures in definitive form and are not considered the holders thereof for any
purpose under the Indenture, and no Global Security representing Convertible
Debentures shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the depositary or its
nominee or to a successor depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of DTC or if such person is not a
Participant, on the procedures of the Participant through which such person owns
its interest to exercise any rights of a holder under the Indenture.
For a description of DTC and the specific terms of the depositary
arrangements, see "Description of the Preferred Securities--Book-Entry Only
Issuance-The Depository Trust Company." As of the date of this Prospectus, the
description herein of DTC's book-entry system and DTC's practices as they relate
to purchases, transfers, notices and payments with respect to the Convertible
Preferred Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by DTC. The Company may
appoint a successor to DTC or any
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successor depositary in the event DTC or such successor depositary is unable or
unwilling to continue as a depositary for the Global Securities.
None of the Company, the Trust, the Indenture Trustee, any paying agent
and any other agent of the Company or the Indenture Trustee has any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Convertible Debentures or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Convertible Debentures
registered in the names of persons other than the depositary or its nominee only
if (i) the depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) the Company, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Event of Default with respect to such Convertible
Debentures. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Convertible Debentures registered in such
names as the depositary shall direct. It is expected that such instructions will
be based upon directions received by the depositary from its Participants with
respect to ownership of beneficial interests in such Global Security.
PAYMENT AND PAYING AGENTS
Payments on Convertible Debentures represented by a Global Security
will be made to DTC, as the depositary for the Convertible Debentures. In the
event Convertible Debentures are issued in definitive form, principal of and
premium, if any, and any interest on Convertible Debentures will be payable, the
transfer of the Convertible Debentures will be registrable, and the Convertible
Debentures will be exchangeable for Convertible Debentures of other
denominations of a like aggregate principal amount at the corporate office of
the Indenture Trustee in the City of New York or at the office of such Paying
Agent or Paying Agents as the Company may designate, except that at the option
of the Company payment of any interest may be made (i) by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Securities Register or (ii) by wire transfer to an account maintained by the
Person entitled thereto as specified in the Securities Register, provided that
proper transfer instructions have been received by the Regular Record Date.
Payment of any interest on Convertible Debentures will be made to the Person in
whose name such Convertible Debentures are registered at the close of business
on the Regular Record Date for such interest, except in the case of defaulted
interest. The Regular Record Date for the interest payable on any Interest
Payment Date shall be the fifteenth day (whether or not a Business Day) next
preceding such Interest Payment Date. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent.
Any monies deposited with the Indenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of and
premium, if any, or interest on any Convertible Debentures and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Convertible Debentures shall thereafter look,
as a general unsecured creditor, only to the Company for payment thereof.
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Convertible Debentures: (i) failure for 30 days to pay
interest on the Convertible Debentures, including any Additional Interest,
Compounded Interest and Liquidated Damages, if any, in respect thereof, when due
provided that a valid extension of an interest payment period will not
constitute a default in the payment of interest (including any Additional
Interest, Compounded Interest or Liquidated Damages, if any) for this purpose;
or (ii) failure to pay principal of or premium, if any, on the Convertible
Debentures when due whether at maturity, upon redemption, by declaration or
otherwise; or (iii) failure by the Company to deliver shares of Company Common
Stock upon an election by a holder of Preferred Securities to convert such
Preferred Securities; or (iv) failure to observe or perform any other covenant
contained in the Indenture for 90 days after notice to the Company by the
Trustee or by the holders of not less than 25% in aggregate outstanding
principal amount of the Convertible Debentures; (v) the dissolution, winding up
or termination of the Trust, except in connection with the distribution of
Convertible Debentures to the holders of Preferred Securities in liquidation of
the Trust upon the redemption of all outstanding Preferred Securities and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration; or (vi) certain events in bankruptcy, insolvency or
reorganization of the Company.
The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Convertible Debentures may declare the
principal of and interest on the Convertible Debentures due and payable
immediately on the occurrence of an Event of Default; provided, however, that,
after such acceleration, but before a judgment or decree based on acceleration,
the holders of a majority in aggregate principal amount of outstanding
Convertible Debentures may, under certain circumstances, rescind and annul such
acceleration if all Events of Default,
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other than the nonpayment of accelerated principal, have been cured or waived as
provided in the Indenture. For information as to waiver of defaults, see
"--Modifications and Amendments of the Indenture."
Notwithstanding the foregoing, if an Indenture Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Convertible Debentures on the date
such interest or principal is otherwise payable, the Company acknowledges that,
in such event, a holder of Preferred Securities may institute a Direct Action
for payment on or after the respective due date specified in the Convertible
Debentures. The Company may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of all the
holders of Preferred Securities. Notwithstanding any payment made to such holder
of Preferred Securities by the Company in connection with a Direct Action, the
Company shall remain obligated to pay the principal of or interest on the
Convertible Debentures held by the Trust or the Property Trustee and the Company
shall be subrogated to the rights of the holder of such Preferred Securities
with respect to payments on the Preferred Securities to the extent of any
payments made by the Company to such holder in any Direct Action. The holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Convertible Debentures.
The Holders of not less than a majority in principal amount of the
outstanding Convertible Debentures may on behalf of the holders of all the
Convertible Debentures waive any past defaults except (a) a default in payment
of the principal of (or premium, if any) or interest, if any, on any Convertible
Debentures and (b) a default in respect of a covenant or provision of the
Indenture which cannot be amended or modified without the consent of the holder
of each Convertible Debenture; provided, however, that if the Convertible
Debentures are held by the Trust or a trustee of such Trust, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in liquidation amount of Trust Securities shall have consented to such
waiver or modification to such waiver; provided, further, that if the consent of
the holder of each outstanding Convertible Debenture is required, such waiver
shall not be effective until each holder of the Trust Securities shall have
consented to such waiver.
A default under any other indebtedness of the Company or the Trust
would not constitute an Event of Default under the Convertible Debentures.
Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee in case an Event of Default shall occur and be continuing,
the Indenture Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any holders of
Convertible Debentures, unless such holders shall have offered to the Indenture
Trustee reasonable indemnity. Subject to such provisions for the indemnification
of the Indenture Trustee, the holders of a majority in aggregate principal
amount of the Convertible Debentures then outstanding will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee with respect to such series.
No holder of any Convertible Debenture has any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
(i) such holder shall have previously given to the Indenture Trustee written
notice of a continuing Event of Default, (ii) if the Trust is not the sole
holder of Convertible Debentures, the holders of at least 25% in aggregate
principal amount of the Convertible Debentures then outstanding shall also have
made written request, (iii) such holder has offered reasonable indemnity to the
Indenture Trustee to institute such proceeding as Indenture Trustee, (iv) the
Indenture Trustee shall have failed to institute such proceeding within 60 days
of such notice, and (v) the Indenture Trustee shall not have received from the
holders of a majority in aggregate principal amount of the outstanding
Convertible Debentures a direction inconsistent with such request. However, such
limitations do not apply to a suit instituted by a holder of a Convertible
Debenture for enforcement of payment of the principal of or interest on such
Convertible Debenture on or after the respective due dates expressed in such
Convertible Debenture.
The Company is required to file annually with the Indenture Trustee and
the Property Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants under the Indenture.
MODIFICATIONS AND AMENDMENTS OF THE INDENTURE
The Indenture contains provisions permitting the Company and the
Indenture Trustee, with the consent of the holders of not less than a majority
in aggregate principal amount of the outstanding Convertible Debentures, to
modify the Indenture or the rights of the holders of Convertible Debentures;
provided, however, that no such modification may, without the consent of the
holder of each outstanding Convertible Debenture affected thereby, (i) extend
the stated maturity of the Convertible Debentures or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or reduce any premium payable upon the redemption thereof, or adversely affect
the right to convert Convertible Debentures or the subordination provisions of
the Indenture, or (ii) reduce the percentage in aggregate principal amount of
outstanding Convertible Debentures, the holders of which are required to consent
to any such supplemental indenture.
40
<PAGE> 40
In addition, the Company and the Indenture Trustee may execute, without
the consent of any holder of Convertible Debentures, any supplemental indenture
to cure any ambiguities, comply with the Trust Indenture Act and for certain
other customary purposes.
GOVERNING LAW
The Indenture and the Convertible Debentures are governed by, and
construed in accordance with, the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the Indenture and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provision, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Convertible Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
EFFECT OF OBLIGATIONS UNDER THE CONVERTIBLE DEBENTURES
AND THE GUARANTEE
As set forth in the Trust Agreement, the sole purpose of the Trust is
to issue the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust, and to invest the proceeds from such issuance and sale in
the Convertible Debentures.
As long as payments of interest and other payments are made when due on
the Convertible Debentures, 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 Convertible Debentures 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 Convertible Debentures will match the distribution rate and distribution and
other payment dates for the Preferred Securities; (iii) pursuant to the
Indenture, the Company shall pay, and the Trust shall not be obligated to pay,
directly or indirectly, all costs, expenses, debt and obligations of the Trust
other than with respect to the Trust Securities; and (iv) the Trust Agreement
further provides that the Issuer Trustees will not cause or permit the Trust to,
among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are available)
and other payments due on the Preferred Securities (to the extent funds therefor
are available) are guaranteed by the Company as and to the extent set forth
under "Description of the Guarantee." If the Company does not make interest
payments on the Convertible Debentures purchased by the Trust, it is expected
that the Trust will not have sufficient funds to pay distributions on the
Preferred Securities. The Guarantee is a guarantee on a subordinated basis with
respect to the Preferred Securities from the time of its issuance but does not
apply to any payment of distributions unless and until the Trust has sufficient
funds for the payment of such distributions.
The Guarantee covers the payment of distributions and other payments on
the Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal on the Convertible Debentures held by the Trust
as its sole asset. The Guarantee, when taken together with the Company's
obligations under the Convertible Debentures and the Indenture and its
obligations under the Trust Agreement, including its obligations to pay costs,
expenses, debts and liabilities of the Trust (other than with respect to the
Trust Securities), will provide a full and unconditional guarantee of amounts on
the Preferred Securities.
If the Company fails to make interest or other payments on the
Convertible Debentures when due (taking account of any Extension Period), the
Trust Agreement provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities--Book-Entry Only Issuance-The Depository Trust Company" and
"Description of the Preferred Securities--Voting Rights," may direct the
Property Trustee to enforce its rights under the Convertible Debentures. If the
Property Trustee fails to enforce its rights under the Convertible Debentures,
any holder of Preferred Securities may directly institute a legal proceeding
against the Company to enforce the Property Trustee's rights under the
Convertible Debentures without first instituting any legal proceeding against
the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on, the Convertible Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Preferred Securities may institute a Direct Action for
41
<PAGE> 41
payment on or after the respective due date specified in the Convertible
Debentures. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Preferred Securities in such Direct Action. The Company, under the Guarantee,
acknowledges that the Guarantee Trustee shall enforce the Guarantee on behalf of
the holders of the Preferred Securities. If the Company fails to make payments
under the Guarantee, the Guarantee provides a mechanism whereby the holders of
the Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee,
or any other person or entity.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock currently consists of 50,000,000
shares of Company Common Stock, $.01 par value per share, and 1,000,000 shares
of serial Preferred Stock, par value $.01 per share (the "Company Preferred
Stock"). As of May 27, 1998, there were (i) 29,217,791 shares of Company Common
Stock issued and outstanding, excluding 275,203 shares subject to restricted
stock agreements, (ii) 832,193 shares of Company Common Stock reserved for
issuance upon exercise of outstanding options, and (iii) no shares of Preferred
Stock outstanding.
COMPANY COMMON STOCK
Each holder of Company Common Stock is entitled to one vote per share
on all matters to be voted on by the shareholders. The Charter does not provide
for cumulative voting and, accordingly, the holders of a majority of the
outstanding shares have the power to elect all directors and to control the
resolution of all issues put to a vote of the shareholders. There are no
preemptive or other subscription rights, conversion rights, or redemption or
sinking fund provisions with respect to shares of the Company Common Stock. All
shares of the Company Common Stock outstanding upon consummation of the Offering
will be validly issued, fully paid, and nonassessable. The shares of Company
Common Stock have the following rights, subject, in each case, to the rights of
the holders of any outstanding Company Preferred Stock: (i) to receive
dividends, if any, as may be declared and paid from time to time by the Board of
Directors, in its discretion, from funds legally available therefore; and (ii)
upon liquidation, dissolution, or winding up of the Company, to receive pro rata
all assets remaining available for distribution.
COMPANY PREFERRED STOCK
The Company's Board of Directors may authorize, without further action
by the Company's shareholders, the issuance of up to 1,000,000 shares of Company
Preferred Stock in one or more series, and may fix by resolution, to the extent
permitted by the Tennessee Business Corporation Act, the terms and rights of
each such series, including the voting powers, full or limited, if any, of the
shares of such series and the designations, preferences, and relative,
participating, optional, or other special rights, and qualifications,
limitations, or restrictions thereof. The issuance of Company Preferred Stock by
action of the Board of Directors could adversely affect the voting power,
dividend rights and other rights of holders of the Company Common Stock.
Issuance of a series of Company Preferred Stock could also, depending on the
terms of such series, either impede or facilitate the completion of a merger,
tender offer, or other takeover attempt. Although the Board of Directors is
required to make a determination as to the best interests of the shareholders of
the Company when issuing Company Preferred Stock, the Board of Directors could
act in a manner that would discourage an acquisition attempt or other
transaction that some, or a majority, of the shareholders might believe to be in
the best interests of the Company or in which shareholders might receive a
premium for their stock over the then prevailing market price.
42
<PAGE> 42
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership, disposition and
conversion of Preferred Securities. Unless otherwise stated, this summary deals
only with Preferred Securities held as capital assets by holders who purchase
the Preferred Securities upon original issuance. This summary addresses the
United States federal income tax considerations to holders of Preferred
Securities who are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any political subdivision thereof or therein, estates, the
income of which is subject to United States federal income taxation regardless
of its source, trusts, if a U.S. court is able to exercise primary supervision
over the trust's administration and one or more United States persons has the
authority to control all of the trust's substantial decisions or other holders
who are otherwise subject to United States federal income taxation on a net
income basis with respect to Preferred Securities ("U.S. Holders") and does not
address the tax consequences to holders of Preferred Securities who are not U.S.
Holders. This summary does not deal with special classes of holders such as
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, common trust funds, dealers in securities or currencies,
tax-exempt investors, or persons that will hold the Preferred Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. Dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly on
a retroactive basis.
CLASSIFICATION OF THE CONVERTIBLE DEBENTURES
The Company intends to take the position that the Convertible
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company under current law, and, by acceptance of a Preferred
Security, each holder covenants to treat the Convertible Debentures as
indebtedness and the Preferred Securities as evidence of an indirect beneficial
ownership interest in the Convertible Debentures. No assurance can be given,
however, that such position of the Company will not be challenged by the
Internal Revenue Service or, if challenged, that such a challenge will not be
successful. The remainder of this discussion assumes that the Convertible
Debentures will be classified as indebtedness of the Company for United States
federal income tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel to the Company and the Trust,
rendered its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Trust will be classified for United Stated
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Convertible Debentures, and each holder will be
required to include in its gross income any interest (or OID) with respect to
its allocable share of those Convertible Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury regulations applicable to debt instruments issued on or
after August 13, 1996 (the "Regulations"), a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with OID. The Company believes that the likelihood of its
exercising its option to defer payments is remote within the meaning of the
Regulations. Based on the foregoing, the Company believes that, although the
matter is not free from doubt, the Convertible Debentures will not be considered
to be issued with OID at the time of their original issuance and, accordingly,
that a holder of the Preferred Securities should include in gross income such
holder's allocable share of interest on the Convertible Debentures in accordance
with such holder's method of tax accounting.
Under the Regulations, if the option to defer any payment of interest
was determined not to be "remote" or if the Company exercised such option, the
Convertible Debentures would be treated as issued with OID at the time of
issuance, or at the time of such exercise, as the case may be, and all stated
interest on the Convertible Debentures would thereafter be treated as OID as
long as the Convertible Debentures remain outstanding. In such event, all of the
holder's taxable interest income with respect to the Convertible Debentures
would constitute OID that would have to be included in income on an economic
accrual basis before the receipt of cash attributable to the interest,
regardless of such holder's method of tax accounting, and actual distributions
of stated interest would not be reported as taxable income.
43
<PAGE> 43
Consequently, holders of Preferred Securities would be required to include in
gross income OID even though the Company would not make any actual cash payments
during the extension period.
No rulings or other interpretations have been issued by the Internal
Revenue Service ("IRS") which have addressed the meaning of the term "remote" as
used in the Regulations, and it is possible that the IRS could take a position
contrary to the interpretation herein.
Because income on the Preferred Securities will constitute interest or
OID, corporate holders of Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
RECEIPT OF CONVERTIBLE DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption
"Description of the Preferred Securities--Special Event Redemption or
Distribution," Convertible Debentures may be distributed to holders in exchange
for the Preferred Securities and in liquidation of the Trust. Under current law,
such a distribution to holders, for United States federal income tax purposes,
would be treated as a nontaxable event to each holder, and each holder would
receive an aggregate tax basis in the Convertible Debentures equal to such
holder's aggregate tax basis in its Preferred Securities. A holder's holding
period in the Convertible Debentures so received in liquidation of the Trust
would include the period during which the Preferred Securities were held by such
holder. If, however, the related Special Event is a Tax Event which results in
the Trust being treated as an association taxable as a corporation, the
distribution would likely constitute a taxable event to holders of the Preferred
Securities, in which event the Company would generally be required to redeem the
Convertible Debentures and distribute the resulting cash in liquidation of the
Trust.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Convertible Debentures may be redeemed for cash and
the proceeds of such redemption distributed to holders in redemption of their
Preferred Securities. Under current law, such a redemption would, for United
States federal income tax purposes, constitute a taxable disposition of the
redeemed Preferred Securities, and a holder would recognize gain or loss as if
it sold such redeemed Preferred Securities for cash. See "--Sales of Preferred
Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will be considered to have
disposed of all or part of his pro rata share of the Convertible Debentures and
will recognize gain or loss equal to the difference between its adjusted tax
basis in the Preferred Securities and the amount realized on the sale of such
Preferred Securities. Assuming that the Company does not exercise its option to
defer payment of interest on the Convertible Debentures and that the Convertible
Debentures are not deemed to be issued with OID, a holder's adjusted tax basis
in the Preferred Securities will generally be its initial purchase price. If the
Convertible Debentures are deemed to be issued with OID, a holder's tax basis in
the Preferred Securities generally will be its initial purchase price, increased
by OID previously includible in such holder's taxable income to the date of
disposition and decreased by distributions or other payments received on the
Preferred Securities since and including the date that the Convertible
Debentures were deemed to be issued with OID. Such gain or loss generally will
be capital gain or loss (except to the extent of any accrued interest with
respect to such holder's pro rata share of the Preferred Securities required to
be included in income as ordinary income). Under the Taxpayer Relief Act of
1997, net capital gain (i.e., generally, capital gain in excess of capital loss)
recognized by an individual from the sale of a capital asset that has been held
for more than 18 months will be subject to tax at a rate not to exceed 20%,
capital gain from the sale of an asset held for more than 12 months but not more
than 18 months will be subject to tax at a rate not to exceed 28%, and capital
gain recognized from the sale of a capital asset that has been held for 12
months or less will be subject to tax at ordinary income tax rates. In addition,
capital gain recognized by a corporate taxpayer will be subject to tax at the
ordinary income tax rates applicable to corporations. If the selling price is
less than the holder's adjusted tax basis, such holder will recognize tax loss,
and subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United State federal income tax purposes.
Should the Company exercise its option to defer any payment of interest
on the Convertible Debentures, the Preferred Securities may trade at a price
that does not accurately reflect the value of the accrued but unpaid interest
with respect to the underlying Convertible Debentures. In such event, a holder
who disposes of its Preferred Securities between record dates for payments of
distributions thereon will be required to include in income as ordinary income
accrued but unpaid interest on the Convertible Debentures through the date of
disposition and to add such amount to its adjusted tax basis in its pro rata
share of the underlying Convertible Debentures deemed disposed of. To the extent
that the selling price is less than the holder's adjusted tax basis (which will
include, in the form of OID, all accrued but unpaid interest), such holder will
recognize a capital loss.
44
<PAGE> 44
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would
treat holders of Preferred Securities as having received a constructive
distribution from the Company in the event the conversion ratio of the
Convertible Debentures were adjusted if (i) as a result of such adjustment, the
proportionate interest (measured by the quantum of Company Common Stock into or
for which the Convertible Debentures are convertible or exchangeable) of the
holders of the Preferred Securities in the assets or earnings and profits of the
Company were increased, and (ii) the adjustment was not made pursuant to a bona
fide, reasonable antidilution formula. An adjustment in the conversion ratio
would not be considered made pursuant to such a formula if the adjustment was
made to compensate for certain taxable distributions with respect to the Company
Common Stock. Thus, under certain circumstances, a reduction in the conversion
price for the holders may result in deemed dividend income to holders to the
extent of the current or accumulated earnings and profits of the Company.
Holders of the Preferred Securities would be required to include their allocable
share of such deemed dividend income in gross income but would not receive any
cash related thereto.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Generally, income on the Preferred Securities will be reported to
holders on Forms 1099, which forms should be mailed to holders of Preferred
Securities by January 31 following each calendar year.
Payments made on, and proceeds from the sale of, the Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the Internal Revenue Service.
On October 7, 1997, the United States Treasury Department issued final
Treasury regulations governing information reporting and the certification
procedures regarding withholding and backup withholding on certain amounts paid
to non-U.S. Holders after December 31, 1998. Such regulations, among other
things, may change the certification procedures relating to the receipt by
intermediaries of payments on behalf of a beneficial owner of a Preferred
Security. Prospective investors should consult their tax advisors regarding the
effect, if any, of such new regulations on an investment in the Preferred
Securities.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
45
<PAGE> 45
SELLING HOLDERS
The Preferred Securities were originally issued by the Trust and sold
by the Initial Purchasers in a transaction exempt from the registration
requirements of the Securities Act, to persons reasonably believed by such
Initial Purchasers to be "qualified institutional buyers" (as defined in Rule
144A under the Securities Act), or outside the United States to non-U.S. persons
in offshore transactions in reliance on Regulation S under the Securities Act.
The Selling Holders may from time to time offer and sell pursuant to this
Prospectus any or all of the Preferred Securities and Company Common Stock
issued upon conversion of the Preferred Securities.
The following table sets forth information with respect to the record
holders of the Preferred Securities as of May 1, 1998. The term Selling Holder
includes the record holders listed below and the beneficial owners of the
Preferred Securities and their transferees, pledgees, donees or other
successors.
<TABLE>
<CAPTION>
NUMBER OF CONVERTIBLE
SELLING HOLDER PREFERRED SECURITIES
-------------- --------------------
<S> <C> <C>
1. Alta Partners Holdings, LDC 50,000
2. American Southern Insurance Company 5,000
3. Aristeia Trading L.L.C. 47,500
4. Aristeia International Limited 47,500
5. Atlas Assets, Inc. for the Atlas Growth & Income Fund 20,000
6. Bankers Fidelity Life Insurance Company 5,000
7. Bear, Stearns & Co., Inc. 263,000
8. BNP Arbitrage SNC 100,000
9. BNY Hamilton Equity Income Fund 60,000
10. CALAMOS Growth and Income Fund 10,200
11. CALAMOS Global Growth and Income Fund 1,050
12. CALAMOS Convertible Fund 17,400
13. California Public Employees' Retirement System 100,000
14. Champion International Corporation Master Retirement Trust 15,700
15. Commonwealth Life Insurance Comp. - Stock TRAC (Teamsters I) 75,000
16. Commonwealth Life Insurance Comp. - Camden Teamsters Non-Enhanced 75,000
17. Delaware Group Premium Fund, Inc. Convertible Securities Series 6,000
18. Delta Airlines Master Trust 26,500
19. Delta Life Insurance Co. 5,000
20. Deutsche Bank A.G. 769,000
21. Donaldson, Lufkin & Jenrette Securities Corporation 82,000
22. GA Casulty & Surety 5,000
23. Highbridge Capital Corporation 250,000
24. Highmark Convertible Securities Fund 10,000
25. J. C. Bradford & Co. 14,500
26. K A Management Ltd. 174,199
27. K A Trading L.P. 85,801
28. Kettering Medical Center Funded Depreciation Account 3,000
29. Lutheran Brotherhood High Yield Fund 30,000
30. Lutheran Brotherhood 75,000
31. MFS Series Trust - MFS Convertible Securities Fund 150
32. MFS Series Trust V - MFS Total Return Fund 49,850
33. McMahan Securities Co., L.P. 12,000
34. Millennium Trading Co. L.P. 125,000
35. National Automobile Dealers Association Retirement Trust 37,000
36. NationsBanc Montgomery Securities 53,000
37. PaceSetter I, L.P. 58,000
38. Pacific Life Insurance Company 25,000
38. Paloma Securities L.L.C. 100,000
39. Port Authority of Allegheny County Retirement and Disability Allowance 19,200
Plan for the Employees Represented by Local 85 of the Amalgamated
Transit Union
40. Q Investments L.P. 64,000
41. R L Investments, LDC 56,000
42. RJR Nabisco, Inc. Defined Benefit Master Trust 14,500
43. Safeco Asset Management Income Fund 456,200
44. SoundShore Partners L.P. 25,000
45. SPT 19,350
46. Teachers Insurance and Annuity Association of America 50,000
47. Tennessee Consolidated Retirement System 150,000
</TABLE>
46
<PAGE> 46
<TABLE>
<CAPTION>
NUMBER OF CONVERTIBLE
SELLING HOLDER PREFERRED SECURITIES
-------------- --------------------
<S> <C> <C>
47. The Dow Chemical Company Employees' Retirement Plan 26,300
48. The Fondren Foundation 2,600
49. The Northwestern Mutual Life Insurance Company 100,000*
50. Transamerica Life Insurance & Annuity Company 100,000
51. Tribeca Investments, L.L.C. 125,000
52. Unifi, Inc. Profit Sharing Plan and Trust 6,000
53. United Food and Commercial Workers Local 1262 and Employers Pension 14,000
Fund
54. Wilmington Trust Company, Trustee U/A 10/1/96 for the Baymark 3,000
Industries, Inc. Retirement Plan, as directed by MCM, Inc., Investment
Advisor
---------
4,119,500
</TABLE>
* Includes 10,000 shares held in The Northwestern Mutual Life Insurance Company
Group Annuity Separate Account.
In addition, the following table sets forth information with respect to
the record holders of the Company Common Stock issued in two private placement
transactions by the Company, the resale of such Company Common Stock is also
being registered on this Shelf Registration Statement.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
SELLING HOLDER COMPANY COMMON STOCK
-------------- --------------------
<S> <C> <C>
1. Eddie W. Turner 8,589
2. Greg Martin 8,253
3. Continental Group, Inc. 52,631
------
69,473
</TABLE>
None of the Selling Holders has, or within the past three years has
had, any position, office or other material relationship with the Trust or the
Company or any of their predecessors or affiliates, except as noted above.
Because the Selling Holders may, pursuant to this Prospectus, offer all or some
portion of the Preferred Securities, the Company Common Stock issuable upon
conversion of the Preferred Securities, or the Company Common Stock, no estimate
can be given as to the amount of the Preferred Securities, Company Common Stock
or the Company Common Stock issuable upon conversion of the Preferred Securities
that will be held by the Selling Holders upon termination of any such sales. In
addition, the Selling Holders identified above may have sold, transferred or
otherwise disposed of all or a portion of their Preferred Securities, since the
date on which they provided the information regarding their Preferred
Securities, in transactions exempt from the registration requirements of the
Securities Act.
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers
directly by the Selling Holders. Alternatively, the Selling Holders may from
time to time offer the Offered Securities to or through underwriters,
broker/dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Holders or
the purchasers of such securities for whom they may act as agents. The Selling
Holders and any underwriters, broker/dealers or agents that participate in the
distribution of Offered Securities may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of such securities and
any discounts, commissions, concessions or other compensation received by any
such underwriter, broken dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act.
The Offered Securities may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale(
at varying prices determined at the time of sale or at negotiated prices. The
sale of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered Securities may be listed or quoted at
the time of sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or in the over-the-counter market or (iv)
through the writing of options. At the time a particular offering of the Offered
Securities is made, a Prospectus Supplement, if required, will be distributed
which will set forth the aggregate amount and type of Offered Securities being
offered and the terms of the offering, including the name or names of any
underwriters, broker/dealers or agents, any discounts, commissions and other
terms constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Offered Securities will be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or any exemption
from registration or qualification is available and is complied with.
47
<PAGE> 47
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Offered Securities by the
Selling Holders. The foregoing may affect the marketability of such securities.
Pursuant to the Registration Rights Agreement, all expenses of the
registration of the Offered Securities will be paid by the Company, including,
without limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders will
pay all underwriting discounts and selling commissions, if any. The Selling
Holders will be indemnified by the Company and the Trust, jointly and severally
against certain civil liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution in connection therewith. The
Company and the Trust will be indemnified by the Selling Holders severally
against certain civil liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution in connection therewith.
48
<PAGE> 48
EXPERTS
The consolidated financial statements of Central Parking Corporation
and Subsidiaries as of September 30, 1997 and 1996, and for each of the years in
the three-year period ended September 30, 1997, have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein and
upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the
Preferred Securities were passed upon by Harwell Howard Hyne Gabbert & Manner,
P.C., Nashville, Tennessee, special counsel to the Trust and the Company.
Certain legal matters relating to the classification of the Trust for United
States federal income tax purposes were passed upon by Skadden, Arps, Slate,
Meagher & Flom LLP.
49
<PAGE> 49
================================================================================
No dealer, salesperson or other person has been authorized to give
any information or to make any representations not contained in
this Prospectus in connection with the offer contained herein, and,
if given or made, such information or representations must not be
relied upon as having been authorized by the Company, the Trust
or any of their agents. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the
Securities offered hereby by anyone in any jurisdiction in which
such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to
any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the
Company or the Trust since the date hereof or that the
information contained herein is correct as of any time subsequent
to the date hereof.
----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SPECIAL CAUTIONARY NOTICE REGARDING
FORWARD-LOOKING STATEMENTS.................................4
AVAILABLE INFORMATION.........................................4
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE..................................................5
RISK FACTORS..................................................6
THE COMPANY..................................................12
RECENT DEVELOPMENTS..........................................13
CENTRAL PARKING FINANCE TRUST................................14
USE OF PROCEEDS..............................................14
PRICE RANGE OF COMPANY COMMON STOCK AND
DIVIDEND POLICY...........................................15
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)...............................................15
CAPITALIZATION...............................................16
ACCOUNTING TREATMENT.........................................16
DESCRIPTION OF THE PREFERRED SECURITIES......................17
DESCRIPTION OF THE GUARANTEE.................................32
DESCRIPTION OF THE CONVERTIBLE DEBENTURES....................34
EFFECT OF OBLIGATIONS UNDER THE
CONVERTIBLE DEBENTURES AND THE
GUARANTEE.................................................41
DESCRIPTION OF CAPITAL STOCK ...............................42
UNITED STATES FEDERAL INCOME TAXATION........................43
SELLING HOLDERS..............................................46
PLAN OF DISTRIBUTION.........................................47
EXPERTS......................................................49
LEGAL MATTERS................................................49
</TABLE>
================================================================================
4,400,000 SHARES
CENTRAL PARKING FINANCE TRUST
5 1/4% TRUST ISSUED PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY,
AND CONVERTIBLE INTO
COMMON STOCK OF
CENTRAL PARKING CORPORATION
AND
69,473 SHARES
CENTRAL PARKING CORPORATION
COMMON STOCK
_________________
PROSPECTUS
_________________
May 29, 1998
