Registration No. 333-______________
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UNITED STATES--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Southwestern Electric Power CompanySOUTHWESTERN ELECTRIC POWER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 72-0323455
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
SWEPCO CAPITAL TRUST I
SWEPCO CAPITAL TRUST II
SWEPCO CAPITAL TRUST III
(Exact name of registrant as specified in its charter)
Delaware [TO BE APPLIED FOR]
[TO BE APPLIED FOR]
[TO BE APPLIED FOR]
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1 Riverside Plaza
Columbus, Ohio 43215
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614)223-1000
ARMANDO A. PENA, 716-1000
GEOFFREY S. CHATAS, Treasurer
JEFFREY D. CROSS, Senior Vice President and General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza
Columbus, Ohio 43215
(614) 223-1580
(Name, address716-1580
(Names, addresses and telephone number,numbers, including
area code, of agentagents for service)
It is respectfully requested that the Commission send copies
of all notices, orders and communications to:
Simpson Thacher & Bartlett LLP Dewey Ballantine LLP
425 Lexington Avenue 1301 Avenue of the Americas
New York, NY 10017-3909 New York, NY 10019-6092
Attention: James M. Cotter Attention: E. N. Ellis, IV
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Approximate date of commencement of proposed saleAPPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to the public: As soon
as practicabletime after the effective date of the Registration Statement.
-------------------
IfIF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
CALCULATION OF REGISTRATION FEE
============================== =================== =================== ======================= ========================
Proposed Proposed
Title of Each Class Maximum Maximum
Of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered(1) Per Unit* Offering Price* Registration Fee(3)
- ------------------------------ ------------------- ------------------- ----------------------- ------------------------
Senior Notes 100%
- ------------------------------ ------------------- ------------------- ----------------------- ------------------------
Junior Subordinated
Debentures 100%
- ------------------------------ ------------------- ------------------- ----------------------- ------------------------
Trust Preferred Securities
and Related Guarantees(2) 100%
- ------------------------------ ------------------- ------------------- ----------------------- ------------------------
Total $350,000,000 $350,000,000 $28,315
============================== =================== =================== ======================= ========================
*Estimated solely for purposes of calculating the only securitiesregistration fee.
(1) There are being registered on this Form are being offered
pursuanthereunder such presently indeterminate principal
amount or number of Senior Notes, Junior Subordinated Debentures, and Trust
Preferred Securities and related Guarantees with an aggregate initial
offering price not to dividend or interest reinvestment plans, please checkexceed $350,000,000. We may refer to Senior Notes and
Junior Subordinated Debentures collectively herein as "Debt Securities".
Debt Securities also may be issued to a trust in connection with the
following
box. [ ]
If anyissuance and sale of Trust Preferred Securities and later distributed upon
dissolution and distribution of the securities being registered on this Form are toassets thereof, which would include
such Debt Securities for which no separate consideration will be offered
on a delayed or continuous basis pursuantreceived.
Pursuant to Rule 415457(o) under the Securities Act of 1933, and General
Instruction II.D. of Form S-3, which permits the registration fee to be
calculated on the basis of the maximum aggregate offering price of all the
securities listed, the table does not specify by each class information as
to the amount to be registered, proposed maximum offering price per unit or
proposed maximum aggregate offering price.
(2) Includes the obligations of Southwestern Electric Power Company under the
respective trust agreements, the applicable indenture, the related series
of Debt Securities and the respective Guarantees, which include its
covenant to pay any indebtedness, expenses or liabilities of the trusts
(other than obligations pursuant to the terms of the Trust Preferred
Securities or other than securities offered onlysimilar interests), all as described in connection with dividend or
interest reinvestment plans, please checkthis
registration statement. No separate consideration will be received for the
following box.[x]
If this Form is filed to register additional securities for an offeringGuarantees and, pursuant to Rule 462(b)457(n) under the Securities Act please checkof 1933,
no separate fee is payable in respect thereof.
(3) The aggregate filing fee for all the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected tosecurities registered will be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of
Each Class Proposed Proposed
Of Maximum Maximum
Securities Amount Offering Aggregate
to be to be Price Offering Amount of
Registered Registered Per Unit* Price* Registration Fee
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- ----------------------------------------------------------------------
Unsecured
Notes $300,000,000 100% $300,000,000 $27,600
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*Estimated solely for purpose of calculating the registration fee.$28,315.
------------------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The within Prospectus contains the information required by Rule 429 of
the Commission under the Securities Act of 1933 with respect to $50,000,000$250,000,000 of
Debt Securities of the registrant remaining unsold under Registration Statement
No. 333-87834,333-100632, declared effective May 21, 2002April 7, 2003, for which a fee of $4,600$23,000 was
paid.
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBERAUGUST 18, 20022003
PROSPECTUS
$600,000,000
SOUTHWESTERN ELECTRIC Power Company
1 RIVERSIDE PLAZA
COLUMBUS, OHIO 43215
(614) 716-1000
SENIOR NOTES
JUNIOR SUBORDINATED DEBENTURES
SWEPCO CAPITAL TRUST I
SWEPCO CAPITAL TRUST II
SWEPCO CAPITAL TRUST III
TRUST PREFERRED SECURITIES
Guaranteed as described herein by
SOUTHWESTERN ELECTRIC POWER COMPANY
1 Riverside Plaza
Columbus, Ohio 43215
614-223-1000
$350,000,000
UNSECURED NOTES
TERMS OF SALE
The followingThis prospectus contains summaries of the general terms may applyof the
securities. You will find the specific terms of these securities, and the manner
in which they are being offered, in supplements to this prospectus. You should
read this prospectus and the $350,000,000 unsecured notes (the
"notes") that we may sell at one or more times. A pricing supplement oravailable prospectus supplement will includecarefully before
you invest.
In this prospectus, unless the final terms for each note. If we decidecontext indicates otherwise, the words
"we", "ours" and "us" refer to list upon issuance any note or notes on a securities exchange, a pricing
supplement or prospectus supplement will identify the exchangeSouthwestern Electric Power Company and state when we
expect trading could begin.
- Mature 9 monthsits
consolidated subsidiaries. "Trusts" refer to 50 years - Fixed or floating interest rate -
Remarketing features - Certificate or book-entry form - Subject to
redemption
- Not convertible, amortized or subject to a sinking fund - Interest paid
on fixed rate notes quarterly or semi-annually - Interest paid on floating
rate notes monthly, quarterly, semi-annually, or annually - Issued in
multiples of a minimum denominationSWEPCo Capital Trust I, SWEPCo
Capital Trust II and SWEPCo Capital Trust III.
INVESTING IN THESE NOTESSECURITIES INVOLVES RISKS. SEE THE SECTION ENTITLED "RISK
FACTORS" BEGINNING ON PAGE 23 FOR MORE INFORMATION.
The notes have not been approved or disapproved by the Securities and Exchange
CommissionTHE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
("SEC") or any state securities commission, nor have these
organizations determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is ____________, 2002._________________, 2003.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we and the trusts
filed with the SEC. We also file annual, quarterly and special reports and other
information with the SEC. You may read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N. W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. You may also examine our SEC filings through the SEC's web site
at http://www.sec.gov or at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all the securities registered herein.
o Annual Report on Form 10-K for the year ended December 31, 2002 (as
updated by the Company's Current Report on Form 8-K dated May 14,
2003);
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003
and June 30, 2003; and
o Current Reports on Form 8-K dated April 8, 2003 and May 14, 2003.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Mr. R. Todd Rimmer
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215
(614) 716-1000
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date on the front of those documents.
The Trusts will not be subject to the informational requirements of the
Securities Exchange Act of 1934.
PROSPECTUS SUPPLEMENTS
We may provide information to you about the notes in up to three
separate documents that progressively provide more detail: (a) this prospectus
provides general information some of which may not apply to your securities; (b)
the accompanying prospectus supplement provides more specific terms of your
securities; and (c) if not in the accompanying prospectus supplement, the
2
pricing supplement will provide the final terms of your securities. It is
important for you to consider the information contained in this prospectus, the
prospectus supplement and any pricing supplement in making your investment
decision.
THE COMPANY
We generate, sell, purchase, transmit and distribute electric power. We
serve approximately 431,000437,000 retail customers in northeastern Texas, northwestern
Louisiana and western Arkansas. We also sell and transmit power at wholesale to
other electric utilities, municipalities, electric cooperatives and non-utility
entities engaged in the wholesale power market. Our principal executive offices
are located at 1 Riverside Plaza, Columbus, Ohio 43215 (telephone number
614-223-1000)614-716-1000). We are a subsidiary of American Electric Power Company, Inc., a
public utility holding company, and we are a part of the American Electric Power
integrated utility system. The executive offices of American Electric Power
Company, Inc. are located at 1 Riverside Plaza, Columbus, Ohio 43215 (telephone
number 614-223-1000)614-716-1000).
RISK FACTORS
RISKS RELATED TO OUR REGULATED
BUSINESS AND EVOLVING REGULATION
o Our rates are subject to regulation by three states and a federal agency
whose regulatory paradigms and goals may not be consistent.
We operate in, and are subject to the laws and regulations of, the
states of Texas, Louisiana and Arkansas. We are currently a vertically
integrated electric utility and most of our revenue results from the sale of
electricity to retail customers subject to bundled rates that are approved by
the applicable state utility commission and, to a certain extent, the Federal
Energy Regulatory Commission (the "FERC"). Texas has enacted electric utility
restructuring legislation ("Texas Restructuring Legislation") that requires the
legal separation and deregulation of generation assets from transmission and
distribution assets that will remain regulated. The implementation of such
legislation has been delayed in the portion of Texas in which we operate.operate until
at least January 1, 2007. Arkansas approved anhas repealed its electric utility
restructuring law which establishedat the general
framework governing the retail electric market, but has delayed competition
until October 1, 2003, andrequest of the Arkansas Public Service Commission
("Arkansas Commission") has the ability. The restructuring law had not been implemented prior to
further delay it for an additional two years.
The Arkansas Commission has recommended to the Arkansas General Assembly the
further delay or repeal of the electric restructuring law.its repeal. Louisiana has not enacted an electric utility restructuring law and
has not announced any plans to do so, and the Louisiana Public Service
Commission ("Louisiana Commission") has determined that retail competition is
not in the public interest at this time.
FERC has pursued several regulatory initiatives, such as the formation
and operation of new regional transmission organizations, or "RTOs", which have
been designed to generally facilitate competition in the energy sector. States
such as Louisiana have questioned both the FERC's jurisdiction to pursue such
initiatives and their benefit, if any, to the ratepayers in their state. Our
state commissions generally have authority over the sale or other transfer of
control, of transmission assets to an RTO.
Exposure to inconsistent state and Federal regulatory standards may
limit our ability to operate profitably. Further alteration of the regulatory
landscape in which we operate may harm our financial condition and results of
operations.
3
o We are subject to the risk that our regulators will not permit recovery
of material amounts of our fuel costs.
Our retail rates currently in effect in Louisiana are adjusted based on
our cost of fuel in accordance with a fuel cost adjustment. The fuel cost
adjustment is applied to each billing month based on the second previous month's
average fuel cost. Provision for any over- or under-recovery of fuel costs is
allowed under an automatic fuel clause.
In Arkansas, a fuel adjustment rider is developed annually based on the
previous year's actual fuel cost. This factor is then applied to each billing
month's sales, allowing us to recover fuel costs from customers. Any difference
between actual fuel cost for the month and revenues collected from customers,
including interest, will be used in the determination of the annual factor for
the following year.
The Louisiana Commission and the Arkansas Commission may audit our fuel
costs to determine the reasonableness of the actual fuel costs. To the extent
these commissions do not permit us to recover fuel costs under the procedures
described above, our net income could be materially reduced.
We experienced significant natural gas price increasesAs a result of complaints filed by customers, the Louisiana Commission
is performing an audit of our fuel rates. Five customers filed a suit in the
second half
of 2000Caddo Parish District Court in January 2003 and early 2001 which resulted in under-recovery offiled a complaint with the
Louisiana Commission. The customers claim that we have overcharged them for fuel
costs in Texas
and the need to seek increases insince 1975. Management believes that our fuel rates prior through 1999,
the date to which fuel costs have been reconciled, were proper and surcharges there to recover
these under-recoveries. During 2001, gas price declines and fuel rate and fuel
surcharge increaseshave been
approved by the Public UtilityLouisiana Commission. If the Louisiana Commission or the Court
rules against us, it could have an adverse impact on results of Texas (PUCT)
lowered our unrecovered fuel balances at the end of 2001.operations and
cash flows.
Fuel recovery for Texas utilities is a multi-step procedure. When fuel
costs change, utilities file twice each year with the PUCT for authority to
adjust fuel factors. If a utility's prior fuel factors result in an over- or
under-recovery of fuel, the utility will also request a surcharge factor to
refund or collect that amount. While fuel factors are intended to recover all
fuel-related costs, final settlement of these accounts are subject to
reconciliation and approval by the PUCT. Fuel reconciliation proceedings
determine whether fuel costs incurred and collected during the reconciliation
period were reasonable and necessary. All fuel costs incurred since the prior
reconciliation date are subject to PUCT review and approval. If material amounts
are determined to be unreasonable and ordered to be refunded to customers,
results of operations and cash flows would be diminished. AsIn June 2003, we filed
with the PUCT to reconcile fuel costs. This reconciliation covers the period of
January 2000 through December 2002. At December 31, 2001,2002, our filing detailed a
$2.2 million over-recovery balance including interest. During the amountreconciliation
period, we incurred $434.8 million of eligible fuel cost we have incurred
that is subject to reconciliation is $314 million; the amount that we have
under-recovered as of that date is $7 million.expense. If PUCT does not
reconcile and permit recovery for these costs for any reason, our revenue and
income would suffer in a corresponding amount. Fuel cost recovery as described
above will end upon implementation of Texas Restructuring Legislation in our
service area.
o The implementation of electric utility restructuring legislation in
Arkansas and Texas may limit our ability to pass on to our customers our costs of
production in those jurisdictions.
Arkansas
If and when Arkansas implements the electric restructuring law, the costs
that we incur to generate and sell electricity in Arkansas may not be eligible
for recovery through rates. While the electric restructuring law in Arkansas
established the general framework governing the retail electric market, the
Arkansas Commission has been charged with the task of addressing market power
issues, which have not yet been resolved. There can be no assurance that we will
be able to generate and sell electricity profitably in Arkansas following
implementation.
Texas4
While customer choice of electricity supplier began in much of Texas on
January 1, 2002, it has been delayed in our service area. Pursuant to
restructuring, delivery of electricity continues to be the responsibility of the
local electric transmission and distribution company at regulated prices. Once
customer choice is implemented, the protection afforded by retail fuel clause
recovery mechanisms will likely be eliminated. In view of the fact that higher
fuel prices and generating unit outage can only be partially passed through, and
then only with regulatory approval, we would bear the costs associated with
those events. At present, however, we are protected against market price changes
by an active fuel clause.
o The different regional power markets in which we compete or will compete
in the future have changing transmission regulatory structures, which
could affect our performance in these regions.
Our results are likely to be affected by differences in the market and
transmission regulatory structures in various regional power markets. Problems
or delays that may arise in the formation and operation of RTOs may restrict ourOur
ability to sell power produced by our generating capacity to certain markets may
be restricted if there is insufficient transmission capacity otherwise available. The
rules governing the various regional power markets may also change from time to
time, which could affect our costs or revenues. Because it remains unclear which
companies will be participating in the various regional power markets, or how
RTOs will develop or what regions they will cover, we are unable to assess fully
the impact that these power markets may have on our business.
We are currently a member of the Southwest Power Pool ("SPP"). The SPP
hashad agreed to merge with the Midwest Independent Transmission System Operator
("MISO"), an independent operator of transmission assets in the Midwest. MISO
and SPP recently announced that they were no longer pursuing their merger. We
provided notice that we will withdraw from the SPP effectiveafter October 31, 2002. This
action was taken to provide us additional flexibility in deciding which RTO we
will ultimately join.
Subsequent to this action, we have entered into a Memorandum Of
Understanding with MISO/SPP under conditions favorable to AEP. This agreement
also provides for a continuation of the services currently provided by the SPP
for us in the interim. Final decisions on this issue have not been made.
The Louisiana Commission isand Arkansas Commissions are concerned about the effect on
retail ratepayers of utilities in Louisiana and Arkansas joining RTOs. The
Commission hasCommissions have ordered allthe utilities in Louisiana,those states, including us, to perform
and submit to the CommissionCommissions the costs and benefits of RTO options available to
the utilities. The Louisiana Commission has also determined that certain RTO
structures that contemplate legally transferring transmission assets to it are
presumptively not in the public interest. To the extent we are faced with
conflicting state and Federal requirements as to our participation in RTOs, it
could adversely affect our ability to operate and recover transmission costs
from retail customers.
Management is unable to predict the outcome of these transmission
regulatory actions and proceedings or their impact on the timing and operation
of RTOs, our transmission operations or future results of operations and cash
flows.
o AEP's merger with CSW may ultimately be found to violate the Public
Utility Holding Company Act of 1935 ("PUHCA").
AEP acquired CSW in a merger completed on June 15, 2000. As a result of
the merger AEP acquired four additional domestic electric utility companies,
including us. On January 18, 2002, the U.S. Court of Appeals for the District of
Columbia ruled that the SEC's June 14, 2000
5
order approving the merger failed to properly find that the merger meets the
requirements of PUHCA and sent the case back to the SEC for further review.
Specifically, the Court told the SEC to revisit its conclusion that the merger
met PUHCA's requirement that the electric utilities be "physically
interconnected" and confined to a "single area or region."
We believe that the merger meets the requirements of PUHCA and expect
the matter to be resolved favorably. We intend to fully cooperate with the staff
of the SEC in supplementing the record, if necessary, to ensure the merger
complies with PUHCA. We can give no assurance, however, that: (i) the SEC or any
applicable court review will find that the merger complies with PUHCA, or (ii)
the SEC or any applicable court review will not impose material adverse
conditions on us in order to find that the merger complies with PUHCA. If the
merger were ultimately found to violate PUHCA, it may require AEP to take
remedial actions or divest assets, which may harm our results of operations or
financial condition.
RISKS RELATED TO OUR POWER TRADING
AND WHOLESALE BUSINESSES
o We plan to significantly reduce the scope and scale of our power trading
and marketing operations.
In October 2002 AEP announced its plans to reduce the exposure to energy
trading markets of its subsidiaries that trade power (including us) and to
downsize the trading and wholesale marketing operations conducted on behalf of
such subsidiaries. It is expected that in the future our power trading and
marketing operations will be limited to risk management around our generation
assets and those of our regulated affiliates. Trading and marketing operations
that were not limited to risk management around such assets have contributed to
our wholesale revenues and earnings in the past. Management is unable to predict
the effect this downsizing of our trading operations will have on our future
results of operations and cash flows. The following risk factors appearing under
this subheading should be read in light of the announcements discussed in this
paragraph.
o Our revenues and results of operations are subject to market risks that
are beyond our control.
We sell power from our generation facilities into the spot market or
other competitive power markets or on a contractual basis. We also enter into
contracts to purchase and sell electricity as part of our power marketing and
trading operations. With respect to such transactions, we are not guaranteed any
rate of return on our capital investments through regulated rates, and our
revenues and results of operations are likely to depend, in large part, upon
prevailing market prices for power in our regional markets and other competitive
markets. These market prices may fluctuate substantially over relatively short
periods of time. It is reasonable to expect that trading margins may erode as
markets mature and that there may be diminished opportunities for gain should
volatility decline. In addition, the FERC, which has jurisdiction over wholesale
power rates, as well as independent system operators that oversee some of these
markets, may impose price limitations, bidding rules and other mechanisms to
address some of the volatility in these markets. Fuel prices may also be
volatile, and the price we can obtain for power sales may not change at the same
rate as changes in fuel costs. These factors could reduce our margins and
therefore diminish our revenues and results of operations.
6
Volatility in market prices for fuel and power may result from:
- weather conditions;
- seasonality;
- power usage;
- illiquid markets;
- transmission or transportation constraints or inefficiencies;
- - availability of competitively priced alternative energy sources;
- - demand for energy commodities;
- - natural gas, crude oil and refined products, and coal production levels;
- - natural disasters, wars, embargoes and other catastrophic events; and
- - federal, state and foreign energy and environmental regulation and
legislation.
o Our power trading (including fuel procurement and power marketing) and
risk management policies cannot eliminate the risk associated with these
activities.
Our power trading (including fuel procurement and power marketing)
activities expose us to risks of commodity price movements. We attempt to manage
our exposure through enforcement of established risk limits and risk management
procedures. These risk limits and risk management procedures may not always be
followed or may not work as planned and cannot eliminate the risks associated
with these activities. As a result, we cannot predict the impact that our power
trading and risk management decisions may have on our business, operating
results or financial position.
We routinely have open trading positions in the market, within
established guidelines, resulting from the management of our trading portfolio.
To the extent open trading positions exist, fluctuating commodity prices can
improve or diminish our financial results and financial position.
Our power trading and risk management activities, including our power
sales agreements with counterparties, rely on projections that depend heavily on
judgments and assumptions by management of factors such as the future market
prices and demand for power and other energy-related commodities. These factors
become more difficult to predict and the calculations become less reliable the
further into the future these estimates are made. Even when our policies and
procedures are followed and decisions are made based on these estimates, results
of operations may be diminished if the judgments and assumptions underlying
those calculations prove to be wrong or inaccurate.
o Our financial performance may be adversely affected if we are unable to
successfully operate our electric generating facilities.
Our performance depends on the successful operation of our electric
generating facilities. Operating electric generating facilities involves many
risks, including:
- operator error and breakdown or failure of equipment or processes;
- operating limitations that may be imposed by environmental or other
regulatory requirements;
- labor disputes;
- fuel supply interruptions; and
- catastrophic events such as fires, earthquakes, explosions, floods or
other similar occurrences.
7
A decrease or elimination of revenues from power produced by our
electric generating facilities or an increase in the cost of operating the
facilities would adversely affect our results of operations.
o Parties with whom we have contracts may fail to perform their
obligations, which could harm our results of operations.
We are exposed to the risk that counterparties that owe us money or
power will breach their obligations. Should the counterparties to these
arrangements fail to perform, we may be forced to enter into alternative hedging
arrangements or honor underlying commitments at then-current market prices that
may exceed our contractual prices, which would cause our financial results to be
diminished and we might incur losses. Although our estimates take into account
the expected probability of default by a counterparty, our actual exposure to a
default by a counterparty may be greater than the estimates predict if defaults
by counterparties exceed our estimates.
o We rely on electric transmission facilities that we do not own or
control. If these facilities do not provide us with adequate
transmission capacity, we may not be able to deliver our wholesale
electric power to the purchasers of our power.
We depend on transmission facilities owned and operated by other
unaffiliated power companies to deliver the power we sell at wholesale. This
dependence exposes us to a variety of risks. If transmission is disrupted, or
transmission capacity is inadequate, we may not be able to sell and deliver our
wholesale power. If a region's power transmission infrastructure is inadequate,
our recovery of wholesale costs and profits may be limited. If restrictive
transmission price regulation is imposed, the transmission companies may not
have sufficient incentive to invest in expansion of transmission infrastructure.
The FERC has issued electric transmission initiatives that require
electric transmission services to be offered unbundled from commodity sales.
Although these initiatives are designed to encourage wholesale market
transactions for electricity, access to transmission systems may in fact not be
available if transmission capacity is insufficient because of physical
constraints or because it is contractually unavailable. We also cannot predict
whether transmission facilities will be expanded in specific markets to
accommodate competitive access to those markets.
o We do not fully hedge against price changes in commodities.
As part of our power marketing and trading operations, we routinely
enter into contracts to purchase and sell electricity and to procure fuel. In
connection with these trading activities, we routinely enter into financial
contracts, including futures and options, over-the counterover-the-counter options, swaps and
other derivative contracts. These activities expose us to risks from price
movements. If the values of the financial contracts change in a manner we do not
anticipate, it could harm our financial position or reduce the financial
contribution of our trading operations.
We manage our exposure by establishing risk limits and entering into
contracts to offset some of our positions (i.e., to hedge our exposure to
demand, market effects of weather and other changes in commodity prices).
However, we do not always hedge the entire exposure of our operations from
commodity price volatility. To the extent we do not hedge against commodity
8
price volatility, our results of operations and financial position may be
improved or diminished based upon our success in the market.
o We are unable to predict the course, results or impact, if any, of
current or future energy market investigations.
In February 2002, the FERC issued an order directing its staff to
conduct a fact-finding investigation into whether any entity, including Enron
Corp., manipulated short-term prices in electric energy or natural gas markets
in the West or otherwise exercised undue influence over wholesale prices in the
West, for the period January 1, 2000, forward. In April 2002, AEP furnished
certain information to the FERC in response to their related data request.
Pursuant to the FERC's February order, on May 8, 2002, the FERC issued
further data requests, including requests for admissions, with respect to
certain trading strategies engaged in by Enron Corp. and, allegedly, traders of
other companies active in the wholesale electricity and ancillary services
markets in the West, particularly California, during the years 2000 and 2001.
This data request was issued to AEP as part of a group of over 100 entities
designated by the FERC as all sellers of wholesale electricity and/or ancillary
services to the California Independent System Operator and/or the California
Power Exchange.
The May 8, 2002 FERC data request required senior management to conduct
an investigation into AEP's trading activities during 2000 and 2001 and to
provide an affidavit as to whether AEP engaged in certain trading practices that
the FERC characterized in the data request as being potentially manipulative.
AEP's senior management complied with the order and denied its involvement with
those trading practices.
On May 21, 2002, the FERC issued a further data request with respect to
this matter to AEP and over 100 other market participants requesting information
for the years 2000 and 2001 concerning "wash", "round trip" or "sale/buy back"
trading in the Western System Coordinating Council ("WSCC"), which involves the
sale of an electricity product to another company together with a simultaneous
purchase of the same product at the same price (collectively, "wash sales").
Similarly, on May 22, 2002, the FERC issued an additional data request with
respect to this matter to AEP and other market participants requesting similar
information for the same period with respect to the sale of natural gas products
in the WSCC and Texas. After reviewing its records, AEP responded to the FERC
that it did not participate in any "wash sale" transactions involving power or
gas in the relevant market. AEP further informed the FERC that certain of its
traders did engage in trades on the Intercontinental Exchange, an electronic
electricity trading platform owned by a group of electricity trading companies,
including AEP, on September 21, 2001, the day on which all brokerage commissions
for trades on that exchange were donated to charities for the victims of the
September 11, 2001 terrorist attacks, which do not meet the FERC criteria for a
"wash sale" but do have certain characteristics in common with such sales.
The Public UtilitiesUtility Commission of Texas, which has jurisdiction over
several of our affiliates, also issued similar data requests to AEP and other
power marketers. AEP responded to such data request by the July 2, 2002 response
date. We understand that the SEC and US Commodity Futures Trading Commission
("CFTC") are also looking into "wash sale" trading practices. The CFTC issued a
subpoena to AEP on June 17, 2002 requesting information with respect to these
matters. AEP responded to CFTC.
In addition, the US Department of Justice made a
civil investigation demand to AEP and other electric generating companies
concerning their investigation of the Intercontinental Exchange.9
In August 2002, AEP received an informal data request from the SEC
asking it to voluntarily provide documents related to "round-trip" or "wash"
trades and AEP has provided the requested information to the SEC. In March 2003,
AEP recentlyreceived a subpoena from the SEC. The subpoena seeks additional information
and is part of the SEC's formal investigative process. AEP responded to the
subpoena in April 2003. AEP has completed a review of its trading activities in
the United States for the last three years involving sequential trades with the
same terms and counterparties. The revenue from such trading is not material to
either our financial statements or AEP's. We believe that substantially all
these transactions involve economic substance and risk transference and do not
constitute "wash sales".
Management is unable to predict the course or outcome of these or any
future energy market investigations or their impact, if any, on power commodity
trading generally or, more specifically, on our trading operations or future
results of operations and cash flows.
o Diminished liquidity in the wholesale power markets could negatively
impact our earnings.
The Enron Corp. bankruptcy and enhanced regulatory scrutiny have
contributed to more rigorous credit rating review of wholesale power market
participants. Credit downgrades and financial difficulties of certain other
market participants have significantly reduced such participants' participation
in the wholesale power markets. These events are causing a decrease in the
number of significant participants in the wholesale power markets, at least
temporarily, which could result in a decrease in the volume and liquidity in the
wholesale power markets. Reduced liquidity in these markets could also hamper
our efforts to exit transactions not related to risk management of our assets
that we entered into before reducing the scale of our power marketing and
trading operations. We are unable to predict the impact of such
developments on our power marketing
and trading business.business, if such developments continue.
o Uncertainty exists regarding FERC proposed security standards.
In July 2002, the FERC published for comment its proposed security
standards as part of the Standard Electricity Market Design ("SMD"). These
standards are intended to ensure all market participants have a basic security
program that effectively protects the electric grid and related market
activities and require compliance by January 1, 2004. The impact of these
proposed standards is far-reaching and has significant penalties for
non-compliance. These standards apply to marketers, transmission owners, and
power producers, including us. Compliance with these standards would represent a
significant effort that will impact us. Unless the cost of compliance can be
recovered from customers, results of operations and cash flows would be
adversely affected. After the FERC's proposal in 2002, the North American
Electric Reliability Council ("NERC"), with FERC's support, developed a new set
of standards to address industry compliance. These new standards closely
parallel the initial, proposed FERC standards in both content and compliance
time frames, and were approved by the NERC ballot body in June of 2003. AEP is
developing financial requirements for security implementation and compliance
with these NERC standards. Since these financial requirements are not yet
determined, management cannot predict the impacts of such standards on future
results of operations and cash flows.
o Potential for disruption exists if the delay of a FERC market power
mitigation order is lifted.
10
A FERC order on AEP's triennial market based wholesale power rate
authorization update required certain mitigation actions that certain AEP
subsidiaries, including us, would need to take for sales/purchases within its
control area and required AEP to post information on its website regarding its
power systems status. As a result of a request for rehearing filed by AEP and
other market participants, FERC issued an order delaying the effective date of
the mitigation plan until after a planned technical conference on market power
determination. No such conference has been held and management is unable to
predict the timing of any further action by the FERC or its affect on future
results of our operations and cash flows.
RISKS RELATED TO MARKET OR ECONOMIC VOLATILITY
o We are subject to risks associated with a changing economic environment.
In response to the occurrence of several recent events, including the
September 11, 2001 terrorist attack on the United States, the ongoing war
against terrorism by the United States, and the bankruptcy of Enron Corp., the
financial markets have been disrupted in general, and the availability and cost
of capital for our business and that of our competitors has been at least
temporarily harmed. In addition, following the bankruptcy of Enron Corp., the
credit ratings agencies initiated a thorough review of the capital structure and
earnings power of energy companies, including us. These events could constrain
the capital available to our industry and could limit our access to funding for
our operations. Our business is capital intensive, and we are dependent upon our
ability to access capital at rates and on terms we determine to be attractive.
If our ability to access capital becomes significantly constrained, our interest
costs will likely increase and our financial condition could be harmed and
future results of operations could be significantly diminished.
The insurance industry has also been disrupted by these events. As a
result, the availability of insurance covering risks we and our competitors
typically insure against may decrease. In addition, the insurance we are able to
obtain may have higher deductibles, higher premiums and more restrictive policy
terms.
o A downgrade in our credit rating or that of AEP could negatively affect
our ability to access capital and/or to operate our power trading
businesses.
Standard & Poor's and Moody's rate our senior, unsecured debt at BBB+BBB and
A2,Baa1, respectively. If Moody's or Standard & Poor's were to downgrade our
long-term rating, particularly below investment grade, our borrowing costs would
increase, which would diminish our financial results. In addition, we would
likely be required to pay a higher interest rate in future financings, and our
potential pool of investors and funding sources could decrease.
Further, ifOn February 10, 2003, Moody's downgraded AEP's short-term debt rating to
P-3 (with stable outlook) from P-2. On March 7, 2003, S&P affirmed AEP's
short-term rating were to fall below P-2 orof A-2 the current ratings
assigned by Standard & Poor's andwith stable outlook. As a result of Moody's respectively, it would significantly
limit itsdowngrade,
AEP's access to the commercial paper market may be limited and would increase our short-term
borrowing costs may increase because we conduct our short-term borrowing through
AEP and on the same terms available to AEP.
On April 19, 2002, Moody's Investor Service ("Moody's") placed our credit
ratings on review for possible downgrade. The review could conclude with more
than a one notch downgrade. Currently, Moody's rates our senior unsecured debt
at A2.11
Our power trading business relies on the investment grade ratings of our
senior, unsecured debt. Most of our counterparties require the creditworthiness
of an investment grade entity to stand behind transactions. If our rating were
to decline below investment grade, our ability to profitably operate our power
trading business would be diminished because we would likely have to deposit
cash or cash related instruments, which would reduce our profits.
o Our operating results may fluctuate on a seasonal and quarterly basis.
Electric power generation is generally a seasonal business. In many
parts of the country, demand for power peaks during the hot summer months, with
market prices also peaking at that time. In other areas, power demand peaks
during the winter. As a result, our overall operating results in the future may
fluctuate substantially on a seasonal basis. The pattern of this fluctuation may
change depending on the terms of power sale contracts we enter into. In
addition, we have historically sold less power, and consequently earned less
income, when weather conditions are milder. We expect that unusually mild
weather in the future could diminish our results of operations and harm our
financial condition.
o Changes in technology may significantly affect our business by making
our power plants less competitive.
A key element of our business model is that generating power at central
power plants achieves economies of scale and produces power at relatively low
cost. There are other technologies that produce power, most notably fuel cells,
microturbines, windmills and photovoltaic (solar) cells. It is possible that
advances in technology will reduce the cost of alternative methods of producing
power to a level that is competitive with that of most central power station
electric production. If this were to happen and if these technologies achieved
economies of scale, our market share could be eroded, and the value of our power
plants could be reduced. Changes in technology could also alter the channels
through which retail electric customers buy power, thereby harming our financial
results.
o Changes in commodity prices may increase our cost of producing power or
decrease the amount we receive from selling power, harming our financial
performance.
We are exposed to changes in the price and availability of coal and
natural gas because a significant portion of our generating capacity is
coal-fired with the remainder using natural gas as fuel. We have contracts of
varying durations for the supply of fuel for most of our existing generation
capacity, but as these contracts end, we may not be able to purchase fuel on
terms as favorable as the current contracts. Our exposure to such changes in
fuel costs is mitigated in part by our ability to recover fuel costs from
regulated customers pursuant to state and Federal fuel recovery provisions,
subject to applicable review by these regulatory bodies.
Changes in the cost of fuel and changes in the relationship between such
cost and the market price of power will affect our financial results. Since the
price we obtain for power may not change at the same rate as the change in fuel
costs, we may be unable to pass on the changes in costs to our customers in the
future.
Actual power prices and fuel costs will differ from those assumed in
financial projections used to initially value our trading and marketing
transactions, and those differences may be
12
material. As a result, our financial results may be diminished in the future as
those transactions are marked to market.
o Demand for power could exceed our supply capacity.
We are currently obligated to supply power to our regulated retail and
wholesale customers. At peak times, the demand for power required to meet this
obligation may exceed our available generation capacity. Until recently, we have
had little need to purchase power in the market for our retail customers. If
current consumption trends continue in the future, we may be required to buy
more power on the market or build additional generation. Either the market or
regulators (through rate recovery) may not permit us to pass all of these
purchase or construction costs on to our customers. To the extent regulators do
not permit timely recovery of the base rate portion of these costs, we have
exposure to regulatory lag associated with the time between the incurrence of
costs of purchased or constructed capacity and their recovery in customers'
rates.
RISKS RELATED TO ENVIRONMENTAL REGULATION
o Our costs of compliance with environmental laws are significant, and the
cost of compliance with future environmental laws could harm our cash
flow and profitability.
Our operations are subject to extensive federal, state and local
environmental statutes, rules and regulations relating to air quality, water
quality, waste management, natural resources and health and safety. Compliance
with these legal requirements requires us to commit significant capital toward
environmental monitoring, installation of pollution control equipment, emission
fees and permits at all of our facilities. These expenditures have been
significant in the past and we expect that they will increase in the future.
Costs of compliance with environmental regulations could harm our industry, our
business and our results of operations and financial position, especially if
emission and/or discharge limits are tightened, more extensive permitting
requirements are imposed, additional substances become regulated and the number
and types of assets we operate increase.
o Governmental authorities may assess penalties on us for failures to
comply with environmental laws and regulations.
If we fail to comply with environmental laws and regulations, even if
caused by factors beyond our control, that failure may result in the assessment
of civil or criminal penalties and fines against us. Recent lawsuits by the EPA
and various states filed against certain of our affiliate utility companies
highlight the environmental risks faced by generating facilities, in general,
and coal-fired generating facilities, in particular.
PROSPECTUS SUPPLEMENTS
We may provide information to you about the notes in up to three separate
documents that progressively provide more detail: (a) this prospectus provides
general information some of which may not apply to your notes, (b) the
accompanying prospectus supplement provides more specific terms of your notes,
and (c) if not in the accompanying prospectus supplement, the pricing supplement
will provide the final terms of your notes. It is important for you to consider
the information contained in this prospectus, the prospectus supplement and any
pricing supplement in making your investment decision.13
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated
is as follows:
Twelve Months
Period Ended Ratio
December 31, 1997 3.46TWELVE MONTHS
PERIOD ENDED RATIO
------------- -----
December 31, 1998 3.52
December 31, 1999 2.95
December 31, 2000 2.562.55
December 31, 2001 3.203.18
December 31, 2002 2.95
June 30, 2002 3.012003 2.99
For current information on the Ratio of Earnings to Fixed Charges,
please see our most recent Form 10-K and 10-Q. See Where You Can Find More Information.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we filed with(as updated by the SEC.
We also file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
You may also examine our SEC filings through the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the document listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all the notes.
Annual Report on Form 10-K for the year ended December 31, 2001.
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002 and
June 30, 2002; and Current Report on Form
8-K dated June 20, 2002.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Mr. R. Todd Rimmer
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215
614-223-1000
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these notes in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents.May 14, 2003) and 10-Q. See WHERE YOU CAN FIND MORE INFORMATION.
USE OF PROCEEDS
Unless otherwise stated in a prospectus supplement, theThe net proceeds from the sale of any of the notesoffered securities will be
used for general corporate purposes relating to our utility business. TheseUnless stated
otherwise in a prospectus supplement, these purposes include redeeming or
repurchasing outstanding debt, or preferred stock and replenishing working capital.capital, financing our
subsidiaries' ongoing construction and maintenance programs. If we do not use
the net proceeds immediately, we temporarily invest them in short-term,
interest-bearing obligations.
The prospectus supplement of a particular offering of securities will
identify the use of proceeds for the offering. The proceeds from the sale of
Trust Preferred Securities by a trust will be invested in Debt Securities issued
by us. Except as we may otherwise describe in the related prospectus supplement,
we expect to use the net proceeds of the sale of such Debt Securities to the
applicable trust for the above purposes.
THE TRUSTS
SWEPCo Capital Trust I, SWEPCo Capital Trust II and SWEPCo Trust III
(each a "trust") are statutory business trusts created under the Delaware
Statutory Trust Act pursuant to amended and restated declarations of trust,
among SWEPCo, The Bank of New York, as the Property Trustee, The Bank of New
York (Delaware) as Delaware Trustee and two employees of SWEPCo as
Administrative Trustees. In this prospectus, we refer to these declarations as
the trust agreements.
Each trust exists solely to:
- issue and sell its Trust Preferred Securities (including Trust Capital
Securities) and Trust Common Securities (the "Trust Securities");
- use the proceeds from the sale of its Trust Securities to purchase and
hold a series of our Debt Securities;
- maintain its status as a grantor trust for federal income tax purposes;
and
14
- engage in other activities that are necessary or incidental to these
purposes.
We estimatewill purchase all of the Trust Common Securities. The Trust Common
Securities will represent an aggregate liquidation amount equal to at least 3%
of the total capital of the trust. Payments will be made on the Trust Common
Securities PRO RATA with the Trust Preferred Securities, except that the Trust
Common Securities' right to payment will be subordinated to the rights of the
Trust Preferred Securities if there is a default under the trust agreement
resulting from an event of default under the applicable indenture.
We will guarantee the Trust Preferred Securities as described later in
this prospectus.
Each trust's business and affairs will be conducted by its Administrative
Trustees, as set forth in the trust agreement. The office of the Delaware
Trustee in the State of Delaware is 700 White Clay Center, Newark, DE 19711. The
trust's offices are located at 1 Riverside Plaza, Columbus, Ohio 43215; the
telephone number is (614) 716-1000.
ACCOUNTING TREATMENT OF TRUSTS
For financial reporting purposes, the debt instruments issued to the
trusts will be included in our construction costsconsolidated financial statements under the
long-term debt section. Appropriate disclosures concerning the Trusts, the
Guarantees, the Senior Notes and the Junior Subordinated Debentures will be
included in 2002
will approximate $111,900,000. At June 30, 2002, our outstanding short-term debt
was $65,073,000.the notes to the consolidated financial statements.
DESCRIPTION OF THE SENIOR NOTES
GeneralGENERAL
We will issue the notesSenior Notes under the Indenture dated February 25,
2000 (as previously supplemented and amended) between us and the Trustee, The
Bank of New York. This prospectus briefly outlines some provisions of the
Indenture. If you would like more information on these provisions, you should
review the Indenture and any supplemental indentures that we have filed or will
file with the SEC. See Where You Can Find More InformationWHERE YOU CAN FIND MORE INFORMATION on how to locate
these documents. You may also review these documents at the Trustee's offices at
5 Penn Plaza,101 Barclay Street, New York, New York.
The Indenture does not limit the amount of notesSenior Notes that may be
issued. The Indenture permits us to issue notesSenior Notes in one or more series or
tranches upon the approval of our board of directors pursuant to any
supplemental indentures. Each series of notesSenior Notes may differ as to their
terms.
The notesSenior Notes are unsecured and will rank equally with all our
unsecured unsubordinated debt. Substantially all of our fixed properties and
franchises are subject to the lien of our first mortgage bonds issued under and
secured by a Mortgage and Deed of Trust, dated as of February 1, 1940 (as
previously supplemented and amended) between us and The Bank of New York, as
trustee. For current information on our debt outstanding see our most recent
Form 10-K and Form 10-Q. See Where You Can Find More Information.WHERE YOU CAN FIND MORE INFORMATION.
The notesSenior Notes will be denominated in U.S. dollars and we will pay
principal and interest in U.S. dollars. Unless an applicable pricing or
prospectus supplement states otherwise, the notesSenior Notes will not be subject to
any conversion, amortization, or sinking fund. We expect that the
notes15
Senior Notes will be "book-entry," represented by a permanent global note
registered in the name of The Depository Trust Company, or its nominee. We
reserve the right, however, to issue note certificates registered in the name of
the noteholders.
The interest rate and interest and other payment dates of each series of
Senior Notes issued to a trust will correspond to the rate at which
distributions will be paid and the distribution and other payment dates of the
Trust Preferred Securities.
The Indenture does not protect holders of the Senior Notes if we engage
in a highly leveraged transaction.
In the discussion that follows, whenever we talk about paying principal
on the notes,Senior Notes, we mean at maturity or redemption. Also, in discussing the
time for notices and how the different interest rates are calculated, all times
are New York City time and all references to New York mean the City of New York,
unless otherwise noted.
The following terms may apply to each noteSenior Note as specified in the
applicable pricing or prospectus supplement and the note.
RedemptionsSenior Note.
REDEMPTIONS
If we issue redeemable notes,Senior Notes, we may redeem such notesSenior Notes at
our option unless an applicable pricing or prospectus supplement states
otherwise. The pricing or prospectus supplement will state the terms of
redemption. We may redeem notesSenior Notes in whole or in part by delivering written
notice to the noteholders no more than 60, and not less than 30, days prior to
redemption. If we do not redeem all the notesSenior Notes of a series at one time,
the Trustee selects the notesSenior Notes to be redeemed in a manner it determines to
be fair.
Remarketed NotesREMARKETED SENIOR NOTES
If we issue notesSenior Notes with remarketing features, an applicable
pricing or prospectus supplement will describe the terms for the notesSenior Notes
including: interest rate, remarketing provisions, our right to redeem notes,Senior
Notes, the holders' right to tender notes,Senior Notes, and any other provisions.
Book-EntryNOTE CERTIFICATES-REGISTRATION, TRANSFER, AND PAYMENT OF INTEREST AND PRINCIPAL
If we issue note certificates, they will be registered in the name of
the noteholder. The Senior Notes may be transferred or exchanged, pursuant to
administrative procedures in the indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent. Payments on note certificates will be made by check.
INTEREST RATE
The interest rate on the Senior Notes will either be fixed or floating.
The interest paid will include interest accrued to, but excluding, the date of
maturity or redemption. Interest is generally payable to the person in whose
name the Senior Note is registered at the close of business on the record date
before each interest payment date. Interest payable at maturity or redemption,
however, will be payable to the person to whom principal is payable.
16
If we issue a Senior Note after a record date but on or prior to the
related interest payment date, we will pay the first interest payment on the
interest payment date after the next record date. We will pay interest payments
by check or wire transfer, at our option.
For a discussion of our ability to defer interest payments on the Senior
Notes, see DESCRIPTION OF TRUST PREFERRED SECURITIES--OPTION TO EXTEND INTEREST
PAYMENT PERIOD.
FIXED RATE NOTES
A pricing or prospectus supplement will designate the record dates,
payment dates and the fixed rate of interest payable on a Senior Note. We will
pay interest quarterly or semi-annually, and upon maturity or redemption. Unless
an applicable pricing or prospectus supplement states otherwise, if any payment
date falls on a day that is not a business day, we will pay interest on the next
business day and no additional interest will be paid. Interest payments will be
the amount of interest accrued to, but excluding, each payment date. Interest
will be computed using a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Each floating rate Senior Note will have an interest rate formula. The
applicable pricing supplement will state the initial interest rate or interest
rate formula on each Senior Note effective until the first interest reset date.
The applicable pricing or prospectus supplement will state the method and dates
on which the interest rate will be determined, reset and paid.
EVENTS OF DEFAULT
"Event of Default" means any of the following:
- Registration, Transfer,failure to pay the principal of (or premium, if any, on) any Senior Note
of a series for three days after payment is due;
- failure to pay any interest on any Senior Note of any series for 30 days
after payment is due;
- failure to perform any other requirements in such Senior Notes, or in
the Indenture in regard to such Senior Notes, for 90 days after notice;
- failure to pay any sinking fund installment for three days after payment
is due;
- certain events of bankruptcy or insolvency; or
- any other event of default specified in a series of Senior Notes.
An Event of Default for a particular series of Senior Notes does not
necessarily mean that an Event of Default has occurred for any other series of
Senior Notes issued under the Indenture. If an Event of Default occurs and
Paymentcontinues, the Trustee or the holders of at least 33% of the principal amount of
the Senior Notes of the series affected may require us to repay the entire
principal of the Senior Notes of such series within ten days after the date of
such notice ("Repayment Acceleration"). In most instances, the holders of at
least a majority in aggregate principal amount
17
of the Senior Notes of the affected series may rescind a previously triggered
Repayment Acceleration if we have first cured our default by depositing with the
Trustee enough money to pay all (unaccelerated) past due amounts and penalties,
if any. For a discussion of remedies in the event Senior Notes are issued to a
trust, see DESCRIPTION OF TRUST PREFERRED SECURITIES--ENFORCEMENT OF CERTAIN
RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES.
The Trustee must within 90 days after a default occurs, notify the
holders of the Senior Notes of the series of default unless such default has
been cured or waived. We are required to file an annual certificate with the
Trustee, signed by an officer, concerning any default by us under any provisions
of the Indenture.
Subject to the provisions of the Indenture relating to its duties in
case of default, the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
holders unless such holders offer the Trustee reasonable indemnity. Subject to
the provisions for indemnification, the holders of a majority in principal
amount of the Senior Notes of any series may direct the time, method and place
of conducting any proceedings for any remedy available to, or exercising any
trust or power conferred on, the Trustee with respect to such Senior Notes.
MODIFICATION OF INDENTURE
Under the Indenture, our rights and obligations and the rights of the
holders of any Senior Notes may be changed. Any change affecting the rights of
the holders of any series of Senior Notes requires the consent of the holders of
not less than a majority in aggregate principal amount of the outstanding Senior
Notes of all series affected by the change, voting as one class. However, we
cannot change the terms of payment of principal or interest, or a reduction in
the percentage required for changes or a waiver of default, unless the holder
consents. We may issue additional series of Senior Notes and take other action
that does not affect the rights of holders of any series by executing
supplemental indentures without the consent of any noteholders.
CONSOLIDATION, MERGER OR SALE
We may merge or consolidate with any entity or sell our assets
substantially as an entirety as long as the successor or purchaser expressly
assumes the payment of principal, and premium, if any, and interest on the
Senior Notes.
LEGAL DEFEASANCE
We will be discharged from our obligations on the Senior Notes of any
series on the 91st day after the date of the deposit referred to in the first
item below if, among other things:
- we deposit with the Trustee sufficient cash or government securities to
pay (i) the principal, interest, any premium and any other sums due to
the stated maturity date or a redemption date of the Senior Note of the
series and (ii) any applicable mandatory sinking fund payments on the
day such payments are due;
- we deliver to the Trustee an opinion of counsel to the effect that such
provision would not cause any outstanding Senior Notes then listed on a
national security exchange to be delisted; and
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- we deliver to the Trustee an opinion of counsel stating that the federal
income tax obligations of noteholders of that series will not change as
a result of our performing the action described above.
If this happens, the noteholders of the series will not be entitled to
the benefits of the Indenture except for registration of transfer and exchange
of Senior Notes and replacement of lost, stolen or mutilated Senior Notes.
COVENANT DEFEASANCE
We will be discharged from our obligations under certain restrictive
covenants applicable to the Senior Notes of a particular series if, among other
things, we perform all of the actions described above. See LEGAL DEFEASANCE. If
this happens, any later breach of that particular restrictive covenant will not
result in Repayment Acceleration. If we cause an Event of Default apart from
breaching that restrictive covenant, there may not be sufficient money or
government obligations on deposit with the Trustee to pay all amounts due on the
Senior Notes of that series. In that instance, we would remain liable for such
amounts.
GOVERNING LAW
The Indenture and Senior Notes of all series will be governed by the
laws of the State of New York.
CONCERNING THE TRUSTEE
We and our affiliates use or will use some of the banking services of
the Trustee and other services of its affiliates in the normal course of
business.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
GENERAL
We will issue the Junior Subordinated Debentures directly to the public
or to a trust under the Subordinated Indenture to be entered into by us and the
Subordinated Indenture Trustee, The Bank of New York. This prospectus briefly
outlines some provisions of the Subordinated Indenture. If you would like more
information on these provisions, you should review the Subordinated Indenture
and any supplemental indentures or company orders that we will file with the
SEC. See WHERE YOU CAN FIND MORE INFORMATION on how to locate these documents.
The Junior Subordinated Debentures are unsecured obligations and are
junior in right of payment to "Senior Indebtedness". You may find a description
of the subordination provisions of the Junior Subordinated Debentures, including
a description of Senior Indebtedness under SUBORDINATION.
The Subordinated Indenture does not limit the amount of Junior
Subordinated Debentures that we may issue under it. We may issue Junior
Subordinated Debentures from time to time under the Subordinated Indenture in
one or more series by entering into supplemental indentures or by our Board of
Directors or a duly authorized committee authorizing the issuance. The
Subordinated
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Indenture also gives us the ability to reopen a previous issue of a series of
Junior Subordinated Debentures and issue additional Junior Subordinated
Debentures of such series.
A prospectus supplement or pricing supplement will include the final
terms for each Junior Subordinated Debenture. If we decide to list upon issuance
any Junior Subordinated Debenture or Junior Subordinated Debentures on a
securities exchange, a prospectus supplement or pricing supplement will identify
the exchange and state when we expect trading could begin. The following terms
of the Junior Subordinated Debentures that we may sell at one or more times will
be established in a prospectus supplement:
- Maturity
- Fixed or floating interest rate
- Remarketing features
- Certificate or book-entry form
- Redemption
- Not convertible, amortized or subject to a sinking fund
- Interest paid on fixed rate Junior Subordinated Debentures quarterly or
semi-annually
- Interest paid on floating rate Junior Subordinated Debentures monthly,
quarterly, semi-annually, or annually
- Issued in multiples of a minimum denomination
- Ability to defer interest payments
- Any other terms not inconsistent with the Subordinated Indenture
- Issued with Original Issue Discount
The interest rate and Principalinterest and other payment dates of each series of
Junior Subordinated Debentures issued to a trust will correspond to the rate at
which distributions will be paid and the distribution and other payment dates of
the Trust Preferred Securities.
The Subordinated Indenture does not protect the holders of Junior
Subordinated Debentures if we engage in a highly leveraged transaction.
REDEMPTION
Provisions relating to the redemption of Junior Subordinated Debentures
will be set forth in the applicable prospectus supplement. Unless we state
otherwise in the applicable prospectus supplement, we may redeem Junior
Subordinated Debentures only upon notice mailed at least 30 but not more than 60
days before the date fixed for redemption. If we do not redeem all the Junior
Subordinated Debentures of a series at one time, the Subordinated Indenture
Trustee selects those to be redeemed in a manner it determines to be fair.
REMARKETED JUNIOR SUBORDINATED DEBENTURES
If we issue Junior Subordinated Debentures with remarketing features, an
applicable pricing or prospectus supplement will describe the terms for the
Junior Subordinated Debentures including: interest rate, remarketing provisions,
our right to purchase or redeem Junior Subordinated Debentures, the holders'
right to tender Junior Subordinated Debentures, and any other provisions.
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JUNIOR SUBORDINATED DEBENTURE CERTIFICATES-REGISTRATION, TRANSFER, AND PAYMENT
OF INTEREST AND PRINCIPAL
Unless otherwise indicated in the applicable prospectus supplement, each
series of Junior Subordinated Debentures issued to the public initially will be
in the form of one or more global Junior Subordinated Debentures, in registered
form, without coupons, as described under BOOK-ENTRY SYSTEM. However, if we
issue Junior Subordinated Debenture certificates, they will be registered in the
name of the Junior Subordinated Debentureholder. The Junior Subordinated
Debentures may be transferred or exchanged, pursuant to administrative
procedures in the Subordinated Indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent. Payments to public holders of Junior Subordinated Debenture
certificates will be made by check.
ORIGINAL ISSUE DISCOUNT
We may issue the Junior Subordinated Debentures at an original issue
discount, bearing no interest or bearing interest at a rate that, at the time of
issuance, is below market rate, to be sold at a substantial discount below their
stated principal amount. Generally speaking, if the Junior Subordinated
Debentures are issued at an original issue discount and there is an event of
default or acceleration of their maturity, holders will receive an amount less
than their principal amount. Tax and other special considerations applicable to
original issue discount debt will be described in the prospectus supplement in
which we offer those Junior Subordinated Debentures.
INTEREST RATE
The interest rate on the Junior Subordinated Debentures will either be
fixed or floating. The interest paid will include interest accrued to, but
excluding, the date of maturity or redemption. Interest is generally payable to
the person in whose name the Junior Subordinated Debenture is registered at the
close of business on the record date before each interest payment date. Interest
payable at maturity or redemption, however, will be payable to the person to
whom principal is payable.
If we issue a Junior Subordinated Debenture after a record date but on
or prior to the related interest payment date, we will pay the first interest
payment on the interest payment date after the next record date. We will pay
interest payments by check or wire transfer, at our option.
For a discussion of our ability to defer interest payments on the Junior
Subordinated Debentures, see DESCRIPTION OF TRUST PREFERRED SECURITIES--OPTION
TO EXTEND INTEREST PAYMENT PERIOD.
FIXED RATE JUNIOR SUBORDINATED DEBENTURES
A pricing or prospectus supplement will designate the record dates,
payment dates, our ability to defer interest payments and the fixed rate of
interest payable on a Junior Subordinated Debenture. We will pay interest
quarterly or semi-annually, and upon maturity or redemption. Unless an
applicable pricing or prospectus supplement states otherwise, if any payment
date falls on a day that is not a business day, we will pay interest on the next
business day and no additional interest will be paid. Interest payments will be
the amount of interest accrued to, but excluding, each payment date. Interest
will be computed using a 360-day year of twelve 30-day months.
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FLOATING RATE JUNIOR SUBORDINATED DEBENTURES
Each floating rate Junior Subordinated Debenture will have an interest
rate formula. The applicable prospectus supplement or pricing supplement will
state the initial interest rate or interest rate formula on each Junior
Subordinated Debenture effective until the first interest reset date. The
applicable pricing or prospectus supplement will state the method and dates on
which the interest rate will be determined, reset and paid.
EVENTS OF DEFAULT
The following are events of default under the Subordinated Indenture
with respect to any series of Junior Subordinated Debentures, unless we state
otherwise in the applicable prospectus supplement:
- failure to pay for three business days the principal of (or premium, if
any, on) any Junior Subordinated Debenture of a series when due and
payable;
- failure to pay for 30 days any interest on any Junior Subordinated
Debenture of any series when due and payable;
- failure to perform any other requirements in such Junior Subordinated
Debentures, or in the Subordinated Indenture, for 90 days after notice;
- certain events of our bankruptcy or insolvency; or
- any other event of default specified in a series of Junior Subordinated
Debentures.
An event of default for a particular series of Junior Subordinated
Debentures does not necessarily mean that an event of default has occurred for
any other series of Junior Subordinated Debentures issued under the Subordinated
Indenture. If an event of default occurs and continues, the Subordinated
Indenture Trustee or the holders of at least 33% of the principal amount of the
Junior Subordinated Debentures of the series affected may require us to repay
the entire principal of the Junior Subordinated Debentures of such series
immediately ("Repayment Acceleration"). In most instances, the holders of at
least a majority in aggregate principal amount of the Junior Subordinated
Debentures of the affected series may rescind a previously triggered Repayment
Acceleration. However, if we cause an event of default because we have failed to
pay (unaccelerated) principal, premium, if any, or interest, Repayment
Acceleration may be rescinded only if we have first cured our default by
depositing with the Subordinated Indenture Trustee enough money to pay all
(unaccelerated) past due amounts and penalties, if any. For a discussion of
remedies in the event Junior Subordinated Debentures are issued to a trust, see
DESCRIPTION OF TRUST PREFERRED SECURITIES--ENFORCEMENT OF CERTAIN RIGHTS BY
HOLDERS OF TRUST PREFERRED SECURITIES.
The Subordinated Indenture Trustee must within 90 days after a default
occurs, notify the holders of the Junior Subordinated Debentures of the series
of default unless such default has been cured or waived. We are required to file
an annual certificate with the Subordinated Indenture Trustee, signed by an
officer, concerning any default by us under any provisions of the Subordinated
Indenture.
In the case of Junior Subordinated Debentures issued to a trust, a
holder of Trust Preferred Securities may institute a legal proceeding directly
against us without first instituting a legal proceeding against the Property
Trustee of the trust by which those Trust Preferred Securities were issued or
any other person or entity, for enforcement of payment to that holder of
principal or
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interest on an equivalent amount of Junior Subordinated Debentures of the
related series on or after the due dates specified in those Junior Subordinated
Debentures.
Subject to the provisions of the Subordinated Indenture relating to its
duties in case of default, the Subordinated Indenture Trustee shall be under no
obligation to exercise any of its rights or powers under the Subordinated
Indenture at the request, order or direction of any holders unless such holders
offer the Subordinated Indenture Trustee reasonable indemnity. Subject to the
provisions for indemnification, the holders of a majority in principal amount of
the Junior Subordinated Debentures of any series may direct the time, method and
place of conducting any proceedings for any remedy available to, or exercising
any trust or power conferred on, the Subordinated Indenture Trustee with respect
to such Junior Subordinated Debentures.
MODIFICATION OF SUBORDINATED INDENTURE
Under the Subordinated Indenture, our rights and obligations and the
rights of the holders of any Junior Subordinated Debentures may be changed. Any
change affecting the rights of the holders of any series of Junior Subordinated
Debentures requires the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Junior Subordinated Debentures of
all series affected by the change, voting as one class. However, we cannot
change the terms of payment of principal or interest, or a reduction in the
percentage required for changes or a waiver of default, unless the holder
consents. We may issue additional series of Junior Subordinated Debentures and
take other action that does not affect the rights of holders of any series by
executing supplemental indentures without the consent of any debentureholders.
CONSOLIDATION, MERGER OR SALE
We may merge or consolidate with any entity or sell substantially all of
our assets as an entirety as long as the successor or purchaser expressly
assumes the payment of principal, premium, if any, and interest on the Junior
Subordinated Debentures.
LEGAL DEFEASANCE
We will be discharged from our obligations on the Junior Subordinated
Debentures of any series at any time if:
- we deposit with the Trustee sufficient cash or government securities to
pay the principal, interest, any premium and any other sums due to the
stated maturity date or a redemption date of the Junior Subordinated
Debenture of the series, and
- we deliver to the Trustee an opinion of counsel stating that the federal
income tax obligations of debentureholders of that series will not
change as a result of our performing the action described above.
If this happens, the debentureholders of the series will not be entitled
to the benefits of the Subordinated Indenture except for registration of
transfer and exchange of Junior Subordinated Debentures and replacement of lost,
stolen or mutilated Junior Subordinated Debentures.
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COVENANT DEFEASANCE
We will be discharged from our obligations under any restrictive
covenant applicable to the Junior Subordinated Debentures of a particular series
if we perform both actions described above. See LEGAL DEFEASANCE. If this
happens, any later breach of that particular restrictive covenant will not
result in Repayment Acceleration. If we cause an event of default apart from
breaching that restrictive covenant, there may not be sufficient money or
government obligations on deposit with the Subordinated Indenture Trustee to pay
all amounts due on the Junior Subordinated Debentures of that series. In that
instance, we would remain liable for such amounts.
Junior Subordinated Debentures issued to a trust will not be subject to
covenant defeasance.
SUBORDINATION
Each series of Junior Subordinated Debentures will be subordinate and
junior in right of payment, to the extent set forth in the Subordinated
Indenture, to all Senior Indebtedness as defined below. If:
- we make a payment or distribution of any of our assets to creditors upon
our dissolution, winding-up, liquidation or reorganization, whether in
bankruptcy, insolvency or otherwise;
- a default beyond any grace period has occurred and is continuing with
respect to the payment of principal, interest or any other monetary
amounts due and payable on any Senior Indebtedness; or
- the maturity of any Senior Indebtedness has been accelerated because of
a default on that Senior Indebtedness,
then the holders of Senior Indebtedness generally will have the right to receive
payment, in the case of the first instance, of all amounts due or to become due
upon that Senior Indebtedness, and, in the case of the second and third
instances, of all amounts due on that Senior Indebtedness, or we will make
provision for those payments, before the holders of any Junior Subordinated
Debentures have the right to receive any payments of principal or interest on
their Junior Subordinated Debentures.
"Senior Indebtedness" means, with respect to any series of Junior
Subordinated Debentures, the principal, premium, interest and any other payment
in respect of any of the following:
- all of our indebtedness that is evidenced by notes, debentures, bonds or
other securities we sell for money or other obligations for money
borrowed, other than outstanding junior subordinated debentures issued
pursuant to the Indenture dated as of May 1, 1997;
- all indebtedness of others of the kinds described in the preceding
category which we have assumed or guaranteed or which we have in effect
guaranteed through an agreement to purchase, contingent or otherwise;
and
- all renewals, extensions or refundings of indebtedness of the kinds
described in either of the preceding two categories.
Any such indebtedness, renewal, extension or refunding, however, will
not be Senior Indebtedness if the instrument creating or evidencing it or the
assumption or Guarantee of it provides that it is not superior in right of
payment to or is equal in right of payment with those Junior Subordinated
Debentures. Senior Indebtedness will be entitled to the benefits of the
subordination provisions in the Subordinated Indenture irrespective of the
amendment, modification or waiver of any term of the Senior Indebtedness.
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The Subordinated Indenture does not limit the amount of Senior
Indebtedness that we may issue. As of June 30, 2003, our Senior Indebtedness
(which includes our first mortgage bonds) totaled approximately $782 million.
GOVERNING LAW
The Subordinated Indenture and Junior Subordinated Debentures of all
series will be governed by the laws of the State of New York.
CONCERNING THE TRUSTEE
We and our affiliates use or will use some of the banking services of
the Subordinated Indenture Trustee in the normal course of business. The
Subordinated Trustee is also the Trustee under the Indenture relating to the
Senior Notes.
DESCRIPTION OF TRUST PREFERRED SECURITIES
Each trust may issue Trust Preferred Securities and Trust Common
Securities under the trust agreement, which we refer to in this prospectus as
the Trust Securities. These Trust Securities will represent undivided beneficial
interests in the assets of the trust. Selected provisions of the trust agreement
are summarized below. This summary is not complete. The form of trust agreement
is filed with the SEC herewith and you should read the trust agreement for
provisions that may be important to you. The trust agreement will be qualified
as an indenture under the Trust Indenture Act. You should also refer to the
Trust Indenture Act for provisions that apply to the Trust Preferred Securities.
GENERAL
Each trust will exist for the exclusive purposes of:
- issuing and selling its Trust Preferred Securities and Trust Common
Securities;
- investing the gross proceeds of the Trust Securities in our Debt
Securities;
- maintaining its status as a grantor trust for federal income tax
purposes;
- making distributions; and
- engaging in only those other activities necessary, advisable or
incidental to the purposes listed above.
Our Debt Securities will be the sole assets of each trust, and our
payments under the Debt Securities will be the sole income of each trust. No
separate financial statements of any trust will be included in this prospectus.
We consider that these financial statements would not be material to holders of
the Trust Preferred Securities because no trust would have any independent
operations and the only purposes of each trust are those described above. We do
not expect that any trust will be filing annual, quarterly or special reports
with the SEC. The principal place of business of each trust will be c/o
Southwestern Electric Power Company, 1 Riverside Plaza, Columbus, OH 43215.
Each trust will exist until terminated as provided in its trust
agreement. The trustees of each trust will be:
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- two of our employees or officers or two employees or officers of our
affiliates as administrators (the "Administrative Trustees"); and
- The Bank of New York, which will act as Property Trustee and as
indenture trustee for purposes of the Trust Indenture Act (the "Property
Trustee") and The Bank of New York (Delaware) which will act, for the
purpose of complying with the provisions of the Delaware Statutory Trust
Act, as Delaware Trustee (the "Delaware Trustee").
The trust agreement will authorize the Administrative Trustees to issue
two classes of Trust Securities: Trust Preferred Securities and Trust Common
Securities. We will own all of the Trust Common Securities issued by each trust,
which will rank equally in right of payment with the Trust Preferred Securities
issued by the respective trust. However, if an event of default occurs and is
continuing under the trust agreement, rights of the holders of the Trust Common
Securities to payment for distributions and otherwise will be subordinated to
the rights of the holders of the Trust Preferred Securities. We will acquire
Trust Common Securities of each trust in a total liquidation amount of at least
three percent of the total capital of the trust.
Proceeds from the sale of both the Trust Preferred Securities and the
Trust Common Securities issued by each trust will be used to purchase our Debt
Securities, which will be held in trust by the Property Trustee for the benefit
of the holders of the Trust Securities issued by the respective trust. We will
guarantee the payments of distributions and payments of redemption or
liquidation with respect to the Trust Preferred Securities issued by each trust,
but only to the extent the respective trust has funds legally available for and
cash sufficient to make those payments and has not made the payments. See
DESCRIPTION OF GUARANTEES below.
Each Guarantee, when taken together with our obligations under the
related Debt Securities, the related indenture and the related trust agreement,
will provide a full and unconditional guarantee of amounts due on the Trust
Preferred Securities issued by the respective trust. The Trust Preferred
Securities will have the terms, including distributions, redemption, voting,
liquidation rights and other rights or restrictions that will be described in
the related trust agreement or made part of it by the Trust Indenture Act or the
Delaware Statutory Trust Act.
PROVISIONS OF A PARTICULAR SERIES
Each Trust may issue only one series of Trust Preferred Securities. The
applicable prospectus supplement will set forth the principal terms of the Trust
Preferred Securities that will be offered, including:
- the name of the Trust Preferred Securities;
- the liquidation amount and number of Trust Preferred Securities issued;
- the annual distribution rate or rates or method of determining such rate
or rates, the payment date or dates and the record dates used to
determine the holders who are to receive distributions;
- whether distributions will be cumulative and, in the case of Trust
Preferred Securities, having cumulative distribution rights, the date
from which distributions will be cumulative;
- the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions on which the Trust Preferred
Securities will be purchased or redeemed, in whole or in part;
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- the terms and conditions, if any, upon which the Debt Securities and the
related Guarantee may be distributed to holders of the Trust Preferred
Securities;
- any securities exchange on which the Trust Preferred Securities will be
listed;
- any remarketing features of the Trust Preferred Securities;
- the terms and conditions, if any, upon which the Trust Preferred
Securities may be converted into our securities; and
- any other relevant rights, covenants, preferences, privileges,
limitations or restrictions of the Trust Preferred Securities.
Terms of the Trust Preferred Securities issued by each trust will mirror
the terms of the Debt Securities held by the respective trust. In other words,
the interest rate and interest and other payment dates of each series of Debt
Securities issued to a trust will correspond to the rate at which distributions
will be paid and the distribution and other payment dates of the Trust Preferred
Securities of that trust. The prospectus supplement will also set forth whether
the Debt Securities to be issued to a trust will be Senior Notes or Junior
Subordinated Debentures.
DISTRIBUTIONS
The Trust Preferred Securities represent preferred, undivided,
beneficial interests in the assets of the respective trust. The applicable
prospectus supplement will state the annual rate, as a percentage of the
liquidation amount, at which distributions on each Trust Preferred Security will
be payable, the liquidation amount and the dates on which distributions will be
payable.
Each trust will use the proceeds from the issuance and sale of the Trust
Preferred Securities to purchase our Debt Securities. The income of a trust
available for distribution to holders of the Trust Preferred Securities issued
by that trust will be limited to payments under those Debt Securities. If we do
not make payments on the Debt Securities, a trust will not have funds available
to pay distributions or other amounts payable on the Trust Preferred Securities
issued by that trust. The payment of distributions and other amounts payable on
the Trust Preferred Securities issued by a trust, if and to the extent the trust
has funds legally available for and cash sufficient to make such payments, is
guaranteed by us as described herein under DESCRIPTION OF GUARANTEES.
OPTION TO ACCELERATE MATURITY DATE
If, at any time the Debt Securities are held by a trust, we are not able
to deduct the interest payable on the Debt Securities as a result of a Tax
Event, then we have the right to accelerate the stated maturity of the Debt
Securities to the minimum extent required so that interest on the Debt
Securities will be deductible for United States federal income tax purposes.
However, the resulting maturity may not be less than 15 years from the date of
the original issuance. Moreover, we may not accelerate the stated maturity
unless we have received an opinion of counsel to the effect that (1) following
acceleration, interest paid on the Debt Securities will be deductible for United
States federal income tax purposes and (2) the holders of Trust Preferred
Securities will not recognize income, gain or loss for United States federal
income tax purposes as a result of this acceleration and will be subject to
United States federal tax in the same amount, in the same manner and at the same
times as would have been the case if acceleration had not occurred.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
If the applicable prospectus supplement so states, we will have the
right to defer the payment of interest on the Debt Securities at any time or
from time to time for a period, which we refer to in this prospectus as an
"extension period," not exceeding 20 consecutive quarterly periods with respect
to each extension period. During each extension period we shall have the right
to make partial payments of interest on the Debt Security on any interest
payment date. At the end of each extension period we shall pay all interest then
accrued and unpaid. No extension period may extend beyond the stated maturity of
the Debt Securities or end on a date other than an interest payment date. As a
consequence of any such deferral, distributions on the Trust Preferred
Securities by a trust will be deferred during any such extension period.
Distributions to which holders of the Trust Preferred Securities are entitled
will accumulate additional distributions at the rate stated in the applicable
prospectus supplement. During an extension period, interest will continue to
accrue and holders of Debt Securities, or holders of Trust Preferred Securities
while outstanding, will be required to accrue original issue discount income for
United States federal income tax purposes. We will provide further discussion of
the accrual of original issue discount in the applicable prospectus supplement.
Prior to the termination of any extension period, we may further defer
the payment of interest, provided that, unless the applicable prospectus
supplement states otherwise, no extension period may exceed 20 consecutive
quarterly periods or extend beyond the stated maturity of the Debt Securities.
Upon the termination of any extension period and the payment of all amounts then
due, we may elect to begin a new extension period subject to the above
conditions. No interest shall be due and payable during an extension period,
except at its end. We must give the applicable trustee and the Property Trustee
notice of our election of an extension period at least one business day prior to
the earlier of the date the distributions on the Trust Preferred Securities
would have been payable but for the election to begin such extension period and
the date the Property Trustee is required to give notice to holders of the Trust
Preferred Securities of the record date or the date such distributions are
payable, but in any event not less than one business day prior to such record
date. The applicable trustee will give notice of our election to begin a new
extension period to the holders of the Trust Preferred Securities.
Unless the applicable prospectus supplement states otherwise, during any
extended interest period, or for so long as an event of default under the
applicable indenture or any payment default under the Guarantee has occurred and
is continuing, we will not, except in limited circumstances, (1) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of our capital stock, (2) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any Debt Securities of ours that rank equally with, or junior to, the
Debt Securities, or (3) make any guarantee payments with respect to any
guarantee issued by us if such guarantee ranks equally with, or junior to, the
applicable Debt Securities.
REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise indicated in the applicable prospectus supplement, each
series of Trust Preferred Securities will be issued initially in the form of one
or more global securities, in registered form, without coupons, as described
under BOOK-ENTRY SYSTEM. However, if we issue certificates, they will be issued
in the name of the security holder.
Trust Preferred Securities of any series will be exchangeable for other
Trust Preferred Securities of the same series of any authorized denominations of
a like aggregate liquidation
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amount and tenor. Subject to the terms of the trust agreement and the
limitations applicable to global securities, Trust Preferred Securities may be
presented for exchange or registration of transfer--duly endorsed or accompanied
by a duly executed instrument of transfer--at the office of the Property
Trustee, without service charges but upon payment of any taxes and other
governmental charges as described in the trust agreement. Such transfer or
exchange will be effected upon the Property Trustee being satisfied with the
documents of title and identity of the person making the request.
The Property Trustee will not be required to issue, register the
transfer of, or exchange any Trust Preferred Securities during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of any Trust Preferred Securities called for redemption and
ending at the close of business on the day of mailing or register the transfer
of, or exchange, any Trust Preferred Securities selected for redemption except,
in the case of any Trust Preferred Security to be redeemed in part, the portion
thereof not to be so redeemed.
PAYMENT AND PAYING AGENTS
Distributions and other payments on Trust Preferred Securities issued in
the form of global securities will be paid in the manner described under
BOOK-ENTRY SYSTEM.
The paying agent initially will be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees. If the Property Trustee is no longer the paying agent,
the Property Trustee will appoint a successor, which must be a bank or trust
company reasonably acceptable to the Administrative Trustees, to act as paying
agent. Such paying agent will be permitted to resign as paying agent upon 30
days' written notice to the Property Trustee and the Administrative Trustees at
which time the paying agent will return all unclaimed funds and all other funds
in its possession to the Property Trustee.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Debt
Securities held by a trust, the proceeds shall be applied by the Property
Trustee to redeem a Like Amount, as defined below, of the Trust Securities
issued by that trust, upon not less than 30 nor more than 60 days' notice,
unless otherwise indicated in a prospectus supplement, at a redemption price
equal to the aggregate liquidation amount of the Trust Preferred Securities plus
accumulated but unpaid distributions to but excluding the redemption date and
the related amount of the premium, if any, paid by us upon the concurrent
redemption of the Debt Securities. If less than all the Debt Securities held by
a trust are to be repaid or redeemed on a redemption date, then the proceeds
from the repayment or redemption shall be allocated to the redemption
proportionately of the Trust Preferred Securities and the Trust Common
Securities issued by that trust based on the relative liquidation amounts of the
classes. The amount of premium, if any, paid by us upon the redemption of all or
any part of the Debt Securities held by a trust to be repaid or redeemed on a
redemption date shall be allocated to the redemption proportionately of the
Trust Preferred Securities and the Trust Common Securities issued by that trust.
Unless the applicable prospectus supplement states otherwise, we will
have the right to redeem the Debt Securities held by a trust:
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- on or after the date fixed for redemption as stated in the applicable
prospectus supplement, in whole at any time or in part from time to
time; or
- prior to the date fixed for redemption as stated in the applicable
prospectus supplement, in whole, but not in part, at any time within 90
days following the occurrence and during the continuation of a Tax Event
or an Investment Company Event, each as defined below.
"Like Amount" means:
- with respect to a redemption of Trust Securities, Trust Securities
having a liquidation amount equal to that portion of the principal
amount of Debt Securities to be contemporaneously redeemed in accordance
with the applicable indenture, allocated to the Trust Common Securities
and to the Trust Preferred Securities based upon the relative
liquidation amounts of the classes; and
- with respect to a distribution of Debt Securities to holders of Trust
Securities in connection with a dissolution or liquidation of a trust,
Debt Securities having a principal amount equal to the liquidation
amount of the Trust Securities of the holder to whom the Debt Securities
are distributed.
"Tax Event" means the receipt by a trust of an opinion of counsel to us
experienced in relevant matters to the effect that, as a result of any amendment
to, or change--including any announced prospective change--in, the laws or any
regulations thereunder of the United States or any political subdivision or
taxing authority of or in the United States, or as a result of any official
administrative pronouncement or action or judicial decision interpreting or
applying these laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance by
a trust of Trust Preferred Securities, including, without limitation, any of the
foregoing arising with respect to, or resulting from, any proposal, proceeding
or other action commencing on or before the date of issuance, there is more than
an insubstantial risk that:
- the trust is, or will be within 90 days of the delivery of the opinion,
subject to United States federal income tax with respect to income
received or accrued on the Debt Securities we have issued to that trust;
- interest payable by us on the Debt Securities is not, or within 90 days
of the delivery of the opinion, will not be, deductible by us, in whole
or in part, for United States federal income tax purposes; or
- the trust is, or will be within 90 days of the delivery of the opinion,
subject to more than an insubstantial amount of other taxes, duties or
other governmental charges.
"Investment Company Event" means the receipt by a trust of an opinion of counsel
to us experienced in these matters to the effect that, as a result of the
occurrence of a change in law or regulation or a written change--including any
announced prospective change--in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act, which change or prospective change becomes effective or
would become effective, as the case may be, on or after the date of the issuance
by that trust of Trust Preferred Securities.
If and for so long as a trust is the holder of all the Debt Securities
issued by us to that trust, we will pay, with respect to the Debt Securities,
such additional amounts as may be necessary in
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order that the amount of distributions then due and payable by a trust on the
outstanding Trust Preferred Securities and Trust Common Securities of a trust
will not be reduced as a result of any additional taxes, duties and other
governmental charges to which that trust has become subject, including as a
result of a Tax Event.
REDEMPTION PROCEDURES
Trust Preferred Securities of a trust redeemed on each redemption date
shall be redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the Debt Securities held by that trust.
Redemptions of Trust Preferred Securities shall be made and the redemption price
shall be payable on each redemption date only to the extent that a trust has
funds on hand available for the payment of the redemption price. See also
SUBORDINATION OF TRUST COMMON SECURITIES.
If a trust gives a notice of redemption in respect of any Trust
Preferred Securities, then, by 12:00 noon, New York City time, on the redemption
date, to the extent funds are available, in the case of Trust Preferred
Securities held in book-entry form, the Property Trustee will deposit
irrevocably with the depository funds sufficient to pay the applicable
redemption price and will give the depository irrevocable instructions and
authority to pay the redemption price to the holders of the Trust Preferred
Securities. With respect to Trust Preferred Securities not held in book-entry
form, the Property Trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the Trust Preferred Securities funds
sufficient to pay the applicable redemption price and will give the paying agent
irrevocable instructions and authority to pay the redemption price to the
holders upon surrender of their certificates evidencing the Trust Preferred
Securities. Notwithstanding the foregoing, distributions payable on or prior to
the redemption date for any Trust Preferred Securities called for redemption
shall be payable to the holders of the Trust Preferred Securities on the
relevant record dates for the related distribution dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of the deposit all rights of the holders of the Trust Preferred Securities
so called for redemption will cease, except the right of the holders of the
Trust Preferred Securities to receive the redemption price, and any distribution
payable in respect of the Trust Preferred Securities, but without interest on
the redemption price, and the Trust Preferred Securities will cease to be
outstanding. In the event that payment of the redemption price in respect of
Trust Preferred Securities called for redemption is improperly withheld or
refused and not paid either by a trust or by us pursuant to the Guarantee as
described under DESCRIPTION OF GUARANTEES, distributions on the Trust Preferred
Securities will continue to accumulate at the then applicable rate, from the
redemption date originally established by a trust for the Trust Preferred
Securities it issues to the date the redemption price is actually paid, in which
case the actual payment date will be the date fixed for redemption for purposes
of calculating the redemption price.
If less than all the Trust Preferred Securities and Trust Common
Securities are to be redeemed on a redemption date, then the aggregate
liquidation amount of the Trust Preferred Securities and Trust Common Securities
to be redeemed shall be allocated proportionately to the Trust Preferred
Securities and the Trust Common Securities based upon the relative liquidation
amounts of the classes. The particular Trust Preferred Securities to be redeemed
shall be selected on a proportionate basis not more than 60 days prior to the
redemption date by the Property Trustee from the outstanding Trust Preferred
Securities not previously called for redemption, or if the Trust Preferred
Securities are then held in the form of a global Trust Preferred Security, in
accordance with the depository's customary procedures. The Property Trustee
shall promptly notify the
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securities registrar for the Trust Securities in writing of the Trust Preferred
Securities selected for redemption and, in the case of any Trust Preferred
Securities selected for partial redemption, the liquidation amount to be
redeemed. For all purposes of the trust agreements, unless the context otherwise
requires, all provisions relating to the redemption of Trust Preferred
Securities shall relate, in the case of any Trust Preferred Securities redeemed
or to be redeemed only in part, to the portion of the aggregate liquidation
amount of Trust Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each registered holder of Trust
Preferred Securities to be redeemed at its address appearing on the securities
register for the Trust Securities. Unless we default in payment of the
redemption price on the related Debt Securities, on and after the redemption
date interest will cease to accrue on the Debt Securities or portions of them
called for redemption.
REMARKETED TRUST PREFERRED SECURITIES
If we issue Trust Preferred Securities with remarketing features, an applicable
pricing or prospectus supplement will describe the terms for the Trust Preferred
Securities including: interest rate, remarketing provisions, our right to
purchase or redeem Trust Preferred Securities, the holders' right to tender
Trust Preferred Securities, and any other provisions.
SUBORDINATION OF TRUST COMMON SECURITIES
If on any distribution date or redemption date a payment event of
default with respect to the underlying Debt Securities has occurred and is
continuing, no payment on or in respect of the related Trust Common Securities
shall be made unless all amounts due in respect of the related Trust Preferred
Securities (including the liquidation amount or redemption price, if applicable)
shall have been paid or payment provided for. All funds immediately available to
the respective Property Trustee shall first be applied to the payment in full in
cash of all distributions on, or redemption price of, the Trust Preferred
Securities then due and payable.
In the case of any event of default under the trust agreement, as
defined below, resulting from an event of default with respect to the underlying
Debt Securities, the holders of Trust Common Securities will be deemed to have
waived any right to act with respect to any event of default under the related
trust agreement until the effects of all events of default with respect to the
related Trust Preferred Securities have been cured, waived or otherwise
eliminated. Until all events of default under the related trust agreement with
respect to the Trust Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will act solely on behalf of the
holders of the Trust Preferred Securities and not on behalf of the holders of
the Trust Common Securities, and only the holders of the Trust 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 liquidation of a trust, the applicable prospectus
supplement will state the amount payable on the Trust Preferred Securities
issued by that trust as a dollar amount per Trust Preferred Security plus
accumulated and unpaid distributions to the date of payment, subject to certain
exceptions, which may be in the form of a distribution of the amount in Debt
Securities held by that trust.
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The holders of all the outstanding Trust Common Securities of a trust
have the right at any time to dissolve the trust and, after satisfaction of
liabilities to creditors of the trust as provided by applicable law, cause the
Debt Securities held by that trust to be distributed in liquidation of the trust
to the holders of the Trust Preferred Securities and Trust Common Securities
issued by the trust.
Pursuant to the related trust agreement, unless the applicable
prospectus supplement states otherwise, a trust will automatically dissolve upon
expiration of its term or, if earlier, will dissolve on the first to occur of:
- events of bankruptcy, dissolution or liquidation involving us or the
holder of the Trust Common Securities, as specified in the trust
agreement;
- the giving by the holder of the Trust Common Securities issued by the
trust of written direction to the Property Trustee to dissolve the
trust, which direction, subject to the foregoing restrictions, is
optional and wholly within the discretion of the holder of the Trust
Common Securities;
- the redemption of all the Trust Preferred Securities issued by the trust
in connection with the repayment or redemption of all the Debt
Securities as described under "Redemption"; and
- the entry of an order for the dissolution of the trust by a court of
competent jurisdiction.
If dissolution of a trust occurs as described in the first, second or
fourth bullet point above, the trust will be liquidated by the Property Trustee
as expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the trust as
provided by applicable law, to the holders of the Trust Securities issued by the
trust a Like Amount of the related Debt Securities. If such distribution is not
practical, or, if a dissolution of a trust occurs as described in the third
bullet point above, the holders will be entitled to receive out of the assets of
the trust available for distribution to holders, after satisfaction of
liabilities to creditors of the trust as provided by applicable law, an amount
equal to, in the case of holders of the Trust Preferred Securities, the
aggregate of the liquidation amount plus accumulated and unpaid distributions to
the date of payment. In this prospectus we refer to this amount as the
"liquidation distribution." If 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 its Trust Preferred Securities shall be paid on a proportionate basis.
The holders of the Trust Common Securities issued by the trust will be entitled
to receive distributions upon any liquidation proportionately with the holders
of the Trust Preferred Securities, except that if a payment event of default has
occurred and is continuing on the related Debt Securities, the Trust Preferred
Securities shall have a priority over the Trust Common Securities. See
SUBORDINATION OF TRUST COMMON SECURITIES.
After the liquidation date is fixed for any distribution of Debt
Securities we have issued to a trust,
- the Trust Preferred Securities issued by that trust will no longer be
deemed to be outstanding,
- the depository or its nominee, as the registered holder of the Trust
Preferred Securities, will receive a registered global certificate or
certificates representing the Debt Securities to be
33
delivered upon the distribution with respect to the Trust Preferred
Securities held by the depository or its nominee, and
- any certificates representing the Trust Preferred Securities not held by
the depository or its nominee will be deemed to represent the Debt
Securities having a principal amount equal to the stated liquidation
amount of the Trust Preferred Securities and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid distributions
on the Trust Preferred Securities until the certificates are presented
to the security registrar for the Trust Securities for transfer or
reissuance.
If we do not redeem the Debt Securities we have issued to a trust prior
to the stated maturity and the trust is not liquidated and the Debt Securities
are not distributed to holders of the Trust Preferred Securities issued by that
trust, the Trust Preferred Securities will remain outstanding until the
repayment of the Debt Securities and the distribution of the liquidation
distribution to the holders of the Trust Preferred Securities.
There can be no assurance as to the market prices for Trust Preferred
Securities or the related Debt Securities that may be distributed in exchange
for Trust Preferred Securities if a dissolution and liquidation of a trust were
to occur. Accordingly, the Trust Preferred Securities that an investor may
purchase, or the related Debt Securities that the investor may receive on
dissolution and liquidation of a trust, may trade at a discount to the price
that the investor paid to purchase the Trust Preferred Securities offered
hereby.
CERTAIN COVENANTS
In connection with the issuance of Trust Preferred Securities by a
trust, we will agree:
- to continue to hold, directly or indirectly, 100% of the Trust Common
Securities of any trust to which Debt Securities have been issued while
such Debt Securities are outstanding, provided that certain successors
that are permitted pursuant to the applicable indenture may succeed to
our ownership of the Trust Common Securities;
- not to voluntarily dissolve, wind up or liquidate a trust to which Debt
Securities have been issued, other than in connection with a
distribution of Debt Securities to the holders of the Trust Preferred
Securities in liquidation of a trust or in connection with certain
mergers, consolidations or amalgamations permitted by the trust
agreements; and
- to use our reasonable efforts, consistent with the terms and provisions
of the trust agreements, to cause each trust to which Debt Securities
have been issued to continue not to be taxable other than as a grantor
trust for United States federal income tax purposes.
Unless the applicable prospectus supplement states otherwise, during any
extended interest period, or for so long as an event of default under the
applicable indenture or any payment default under the preferred security
Guarantee has occurred and is continuing, we will also agree that we will not,
except in limited circumstances, (1) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of our capital stock, (2) make any payment of principal of
or interest or premium, if any, on or repay, repurchase or redeem any Debt
Securities of ours that rank equally with, or junior to, the Debt Securities, or
(3) make any guarantee payments with respect to any guarantee issued by us if
such guarantee ranks equally with, or junior to, the applicable Debt Securities,
other than, in each case, repurchases, redemptions or other acquisitions of
shares of our:
34
- capital stock in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants or in connection with a
dividend reinvestment or shareholder stock purchase plan;
- as a result of an exchange or conversion of any class or series of our
capital stock, or any capital stock of a subsidiary of ours, for any
class or series of our capital stock or of any class or series of our
then outstanding indebtedness for any class or series of our capital
stock;
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of the capital stock
or the security being converted or exchanged;
- payments under any Guarantee executed and delivered by us concurrently
with the issuance of any Trust Preferred Securities;
- any declaration of a dividend in the form of capital stock in connection
with any shareholders' rights plan, or the issuance of rights to capital
stock under any shareholders' rights plan, or the redemption or
repurchase of rights pursuant to any such plan; or
- any dividend in the form of stock, warrants, options or other rights
where the dividend stock or the stock issuable upon exercise of the
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks on a parity with or junior to the stock,
if at such time
- we have actual knowledge of any event that (a) with the giving of notice
or the lapse of time, or both, would constitute an event of default
under the applicable indenture, and (b) we have not taken reasonable
steps to cure the same;
- we are in default with respect to our payment of any obligations under
any Guarantee executed and delivered by us concurrently with the
issuance of any Trust Preferred Securities; or
- an extension period is continuing.
We will also agree that, if and for so long as a trust is the holder of
all Debt Securities issued by us in connection with the issuance of Trust
Preferred Securities by that trust and that trust is required to pay any
additional taxes, duties or other governmental charges, including in connection
with a Tax Event, we will pay as additional sums on the Debt Securities the
amounts that may be required so that the distributions payable by that trust
will not be reduced as a result of any additional taxes, duties or other
governmental charges.
EVENTS OF DEFAULT
Any one of the following events constitutes an event of default with
respect to the Trust Preferred Securities issued by a trust under the related
trust agreement:
- default by the trust in the payment of any distribution when it becomes
due and payable, and continuation of the default for a period of 30
days;
- default by the trust in the payment of any redemption price of any trust
security issued by that trust when it becomes due and payable;
- default in the performance, or breach, in any material respect, of any
covenant or warranty of the Property Trustee and the Delaware Trustee in
the trust agreement, other than as described above, and continuation of
the default or breach for a period of 60 days after there has been
given, by registered or certified mail, to the appropriate trustees and
to us by the
35
holders of at least 33% in aggregate liquidation amount of the
outstanding Trust Preferred Securities, a written notice specifying the
default or breach and requiring it to be remedied and stating that the
notice is a "Notice of Default" under the trust agreement;
- the occurrence of an event of default under the applicable indenture
relating to the Debt Securities held by a trust (see DESCRIPTION OF THE
SENIOR NOTES--EVENTS OF DEFAULT and DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES--EVENTS OF DEFAULT);
- the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee or all or substantially all of its
property if a successor Property Trustee has not been appointed within
90 days of the occurrence; or
- the occurrence of certain events of bankruptcy or insolvency with
respect to the trust.
Within five business days after the occurrence of certain events of
default actually known to the respective Property Trustee, the Property Trustee
will transmit notice of the event of default to the respective holders of Trust
Securities and the respective Administrative Trustees, unless the event of
default has been cured or waived. Within five business days after the receipt of
notice that we intend to exercise our right under the applicable indenture to
defer the payment of interest on the related Debt Securities, the Property
Trustee must notify the holders and the Administrative Trustees that we intend
to defer these interest payments, unless we have revoked our determination to do
so.
The applicable trust agreement includes provisions as to the duties of
the Property Trustee in case an event of default occurs and is continuing.
Consistent with these provisions, the Property Trustee will be under no
obligation to exercise any of its rights or powers at the request or direction
of any of the holders unless those holders have offered to the Property Trustee
reasonable indemnity. Subject to these provisions for indemnification, the
holders of a majority in liquidation amount of the related outstanding Trust
Preferred Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred on the Property Trustee, with respect to the related
Trust Preferred Securities.
The holders of at least a majority in aggregate liquidation amount of
the outstanding Trust Preferred Securities issued by a trust may waive any past
default under the applicable trust agreement except:
- a default in the payment of any distribution when it becomes due and
payable or any redemption price;
- a default with respect to certain covenants and provisions of the
applicable trust agreement that cannot be modified or amended without
consent of the holder of each outstanding Trust Preferred Security; and
- a default under the applicable indenture that the holders of a majority
in liquidation amount of the
Trust Preferred Securities would not be entitled to waive under the
applicable trust agreement.
If an event of default under the applicable indenture has occurred and
is continuing as a result of any failure by us to pay any amounts when due in
respect of the related Debt Securities issued by us to a trust, the related
Trust Preferred Securities will have a preference over the related Trust Common
Securities with respect to payments of any amounts in respect of the Trust
Preferred Securities as described above. See SUBORDINATION OF TRUST COMMON
SECURITIES, LIQUIDATION
36
DISTRIBUTION UPON DISSOLUTION, DESCRIPTION OF THE SENIOR NOTES--EVENTS OF
DEFAULT and DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES--EVENTS OF DEFAULT.
We must furnish annually to each Property Trustee a statement by an
appropriate officer as to that officer's knowledge of our compliance with all
conditions and covenants under the respective trust agreement. Also, the
Administrative Trustees for each trust must file, on behalf of the respective
trust, a statement as to our compliance with all conditions and covenants under
the respective trust agreement.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under RESIGNATION, REMOVAL OF PROPERTY
TRUSTEE AND DELAWARE TRUSTEE; APPOINTMENT OF SUCCESSORS and DESCRIPTION OF
GUARANTEES--AMENDMENTS AND ASSIGNMENT and as otherwise required by law and the
applicable trust agreement, the holders of the Trust Preferred Securities issued
by a trust will have no voting rights.
The trust agreement applicable to a trust may be amended from time to
time by the holders of a majority in liquidation amount of its Trust Common
Securities and the respective Property Trustee, without the consent of the
holders of the Trust Preferred Securities issued by the trust:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreements that may be inconsistent with any other provision, or to make
any other provisions with respect to matters or questions arising under
the trust agreements, provided that any such amendment does not
adversely affect in any material respect the interests of any holder of
Trust Securities;
- to facilitate the tendering, remarketing and settlement of the Trust
Preferred Securities, as contemplated in the trust agreement;
- to modify, eliminate or add to any provisions of the trust agreements to
the extent as may be necessary to ensure that a trust will not be
taxable other than as a grantor trust for United States federal income
tax purposes at any time that any Trust Securities are outstanding or to
ensure that a trust will not be required to register as an "investment
company" under the Investment Company Act; or
- to reflect the appointment of a successor trustee.
The trust agreement may be amended by the holders of a majority in
aggregate liquidation amount of the Trust Common Securities and the Property
Trustee with the consent of holders representing not less than a majority in
aggregate liquidation amount of the outstanding Trust Preferred Securities and
receipt by the Property Trustee and the Delaware Trustee of an opinion of
counsel to the effect that the amendment or the exercise of any power granted to
the trustees in accordance with the amendment will not affect the trust's not
being taxable other than as a grantor trust for United States federal income tax
purposes or the trust's exemption from status as an "investment company" under
the Investment Company Act.
Without the consent of each holder of Trust Preferred Securities
affected by the amendment or related exercise of power, the trust agreement
applicable to a trust may not be amended to change the amount or timing of any
distribution on the Trust Securities or otherwise adversely affect the amount of
any distribution required to be made in respect of the Trust Securities as of a
specified date or restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any payment due.
37
So long as any Debt Securities are held by a trust, the respective
Property Trustee will not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the trustee for the Debt Securities under the
related indenture, or execute any trust or power conferred on the
Property Trustee with respect to the related Debt Securities;
- waive any past default that is waivable under the applicable indenture;
- exercise any right to rescind or annul a declaration that the Debt
Securities shall be due and payable; or
- consent to any amendment, modification or termination of the applicable
indenture or the related Debt Securities, where consent shall be
required;
without, in each case, obtaining the prior approval of the holders of at least a
majority in aggregate liquidation amount of the Trust Preferred Securities,
except that, if a consent under the applicable indenture would require the
consent of each holder of Debt Securities affected by the consent, no consent
will be given by the Property Trustee without the prior written consent of each
holder of the Trust Preferred Securities.
A Property Trustee may not revoke any action previously authorized or
approved by a vote of the holders of the Trust Preferred Securities issued by
its respective trust except by subsequent vote of the holders of the Trust
Preferred Securities. The Property Trustee will notify each holder of Trust
Preferred Securities of any notice of default with respect to the Debt
Securities. In addition, before taking any of the foregoing actions, the
Property Trustee will obtain an opinion of counsel experienced in relevant
matters to the effect that the trust will not be taxable other than as a grantor
trust for United States federal income tax purposes on account of the action.
Any required approval of holders of Trust Preferred Securities issued by
a trust may be given at a meeting of holders of those Trust Preferred Securities
convened for the purpose or pursuant to written consent. The Property Trustee
will cause a notice of any meeting at which holders of Trust Preferred
Securities are entitled to vote, or of any matter upon which action by written
consent of the holders is to be taken, to be given to each registered holder of
Trust Preferred Securities in the manner set forth in the applicable trust
agreement.
No vote or consent of the holders of Trust Preferred Securities issued
by a trust will be required to redeem and cancel those Trust Preferred
Securities in accordance with the applicable trust agreement. See above under
REDEMPTION.
Notwithstanding that holders of Trust Preferred Securities issued by a
trust are entitled to vote or consent under any of the circumstances described
above, any of those Trust Preferred Securities that are owned by us, the
respective Property Trustee or Delaware Trustee, or any affiliate of us or
either trustee, will, for purposes of the vote or consent, be treated as if they
were not outstanding.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an event of default has occurred and is continuing under the
applicable indenture, and the trustee for the related Debt Securities and the
holders of those Debt Securities have failed to declare the principal due and
payable, the holders of at least 33% in aggregate liquidation amount of the
related outstanding Trust Preferred Securities shall have this right.
38
If an event of default has occurred and is continuing under a trust
agreement and the event is attributable to our failure to pay any amounts
payable in respect of Debt Securities on the date the amounts are otherwise
payable, a registered holder of Trust Preferred Securities may institute a
direct action against us for enforcement of payment to the holder of an amount
equal to the amount payable in respect of Debt Securities having a principal
amount equal to the aggregate liquidation amount of the Trust Preferred
Securities held by the holder, which we refer to in this discussion as a "Direct
Action". We will have the right under the applicable indenture to set-off any
payment made to the holders of Trust Preferred Securities by us in connection
with a Direct Action.
We may not amend the applicable indenture to remove the foregoing right
to bring a Direct Action without the prior written consent of the holders of all
the Trust Preferred Securities. Furthermore, so long as any of the Trust
Preferred Securities are outstanding:
- no modification of the applicable indenture may be made that adversely
affects the holders of the Trust Preferred Securities in any material
respect,
- no termination of the applicable indenture may occur and
- no waiver of any event of default or compliance with any covenant under
the applicable indenture may be effective,
without the prior consent of the holders of at least a majority of the aggregate
liquidation amount of the outstanding Trust Preferred Securities unless and
until the principal of, accrued and unpaid interest on and premium, if any, on
the related Debt Securities have been paid in full and certain other conditions
are satisfied.
With certain exceptions, the holders of the Trust Preferred Securities
would not be able to exercise directly any remedies available to the holders of
the Debt Securities except under the circumstances described in this section.
RESIGNATION, REMOVAL OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE; APPOINTMENT OF
SUCCESSORS
The Property Trustee or the Delaware Trustee of a trust may resign at
any time by giving written notice to us or may be removed at any time by an
action of the holders of a majority in liquidation amount of that trust's
outstanding Trust Preferred Securities delivered to the trustee to be removed
and to us. No resignation or removal of either of the trustees and no
appointment of a successor trustee will become effective until a successor
trustee accepts appointment in accordance with the requirements of the trust
agreement. So long as no event of default or event that would become an event of
default has occurred and is continuing, and except with respect to a trustee
appointed by an action of the holders, if we have delivered to either the
Property Trustee or the Delaware Trustee a resolution of our board of directors
appointing a successor trustee and the successor trustee has accepted the
appointment in accordance with the terms of the trust agreement, the Property
Trustee or the Delaware Trustee, as the case may be, will be deemed to have
resigned and the successor trustee will be deemed to have been appointed as
trustee in accordance with the trust agreement.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF A TRUST
A trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any entity, except as
39
described below or as otherwise set forth in the applicable trust agreement. A
trust may, at the request of the holders of its Trust Common Securities and
without the consent of the holders of the outstanding Trust Preferred
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any state, so long as:
- the successor entity either expressly assumes all the obligations of the
trust with respect to its Trust Preferred Securities or substitutes for
the Trust Preferred Securities other securities having substantially the
same terms as the Trust Preferred Securities, which we refer to in this
prospectus as the successor securities, so long as the successor
securities have the same priority as the Trust Preferred Securities with
respect to distributions and payments upon liquidation, redemption and
otherwise;
- a trustee of the successor entity, possessing the same powers and duties
as the Property Trustee, is appointed to hold the related Debt
Securities;
- the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Trust Preferred Securities,
including any successor securities, to be downgraded by any nationally
recognized statistical rating organization;
- the Trust Preferred Securities or any successor securities are listed or
quoted, or any successor securities will be listed or quoted upon
notification of issuance, on any national securities exchange or with
another organization on which the Trust Preferred Securities are then
listed or quoted;
- the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Trust Preferred Securities, including
any successor securities, in any material respect;
- the successor entity has a purpose substantially identical to that of
the trust;
- prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Property Trustee has received an
opinion from independent counsel experienced in relevant matters to the
effect that such transaction does not adversely affect the rights,
preferences and privileges of the holders of the Trust Preferred
Securities, including any successor securities, in any material respect
and following such transaction, neither the trust nor the successor
entity will be required to register as an investment company under the
Investment Company Act; and
- we or any permitted successor or assignee owns all the Trust Common
Securities of the successor entity and guarantees the obligations of the
successor entity under the successor securities at least to the extent
provided by the applicable Guarantee.
Notwithstanding the foregoing, a trust may not, except with the consent
of holders of 100% in aggregate liquidation amount of the Trust Preferred
Securities, 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 other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it if the consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the trust or the
successor entity to be taxable other than as a grantor trust for United States
federal income tax purposes.
INFORMATION CONCERNING THE PROPERTY TRUSTEES
Each Property Trustee, other than during the occurrence and continuance
of an event of default, undertakes to perform only the duties as are
specifically set forth in the applicable trust agreement and, after an event of
default, must exercise the same degree of care and skill as a
40
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, each Property Trustee is under no obligation to
exercise any of the powers vested in it by the trust agreements at the request
of any holder of Trust Preferred Securities issued by the respective trust
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred by exercising these powers.
CONCERNING THE PROPERTY TRUSTEE
We and our affiliates use or will use some of the services of the
Property Trustee in the normal course of business.
MISCELLANEOUS
The Administrative Trustees and the Property Trustee relating to each
trust are authorized and directed to conduct the affairs of and to operate the
trust in such a way that the trust will not be deemed to be an "investment
company" required to be registered under the Investment Company Act or taxable
other than as a grantor trust for United States federal income tax purposes and
so that the Debt Securities held by that trust will be treated as indebtedness
of ours for United States federal income tax purposes. In this regard, each
Property Trustee and the holders of Trust Common Securities issued by the
respective trust are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the trust or the applicable trust
agreement, that the Property Trustee and the holders of Trust Common Securities
determine in their discretion to be necessary or desirable for these purposes,
as long as this action does not materially adversely affect the interests of the
holders of the Trust Preferred Securities.
Holders of the Trust Preferred Securities have no preemptive or similar
rights.
A trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
GOVERNING LAW
The trust agreement and the Trust Preferred Securities will be governed
by Delaware law.
DESCRIPTION OF GUARANTEES
Each Guarantee will be executed and delivered by us concurrently with
the issuance of Trust Preferred Securities by a trust for the benefit of the
holders from time to time of the Trust Preferred Securities. We will appoint The
Bank of New York as Guarantee Trustee under each Guarantee. Each Guarantee
Trustee will hold the respective Guarantee for the benefit of the holders of the
Trust Preferred Securities issued by the related trust. Each Guarantee will be
qualified as an indenture under the Trust Indenture Act of 1939. We have
summarized below certain provisions of the Guarantees. This summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Guarantee, including the definitions in
the Guarantee of certain terms. The form of guarantee agreement will be filed as
an exhibit to the registration statement of which this prospectus is a part.
41
GENERAL
Unless otherwise provided in a prospectus supplement, we will fully and
unconditionally agree, to the extent described herein, to pay the Guarantee
payments, as defined below, to the holders of the Trust Preferred Securities
issued by each trust, as and when due, regardless of any defense, right of
set-off or counterclaim that a trust may have or assert other than the defense
of payment. The following payments with respect to the Trust Preferred
Securities, to the extent not paid or made by or on behalf of the respective
trust, which payments we refer to in this discussion as the "Guarantee
payments," will be subject to the respective Guarantee:
- any accumulated and unpaid distributions required to be paid on the
Trust Preferred Securities, to the extent that the trust has funds on
hand available therefor;
- the redemption price with respect to any Trust Preferred Securities
called for redemption, to the extent that the trust has funds on hand
available therefor; and
- upon a voluntary or involuntary dissolution, winding up or liquidation
of the trust, unless the related Debt Securities are distributed to
holders of the Trust Preferred Securities, the lesser of:
(1) the aggregate of the liquidation amount and all accumulated and
unpaid distributions to the date of payment, to the extent that the trust
has funds on hand available therefor; and
(2) the amount of assets of the trust remaining available for
distribution to holders of the Trust Preferred Securities on liquidation of
the trust.
Our obligation to make a Guarantee payment may be satisfied by direct
payment of the required amounts by us to the holders of the Trust Preferred
Securities or by causing the trust to pay these amounts to the holders.
Each Guarantee will be an irrevocable guarantee of the obligations of
the respective trust under its Trust Preferred Securities, but will apply only
to the extent that the trust has funds sufficient to make these payments.
If we do not make payments on the Debt Securities held by a trust, the
trust will not be able to pay any amounts payable in respect of its Trust
Preferred Securities and will not have funds legally available for these
payments. The applicable prospectus supplement will describe the ranking of the
Guarantee. See STATUS OF THE GUARANTEES. The Guarantees do not limit our
incurrence or issuance of other secured or unsecured debt, including Senior
Indebtedness, whether under the applicable indenture, any other indenture that
we may enter into in the future or otherwise.
We will enter into an agreement as to expenses and liabilities with each
trust to provide funds to such trust as needed to pay obligations of the trust
to parties other than the holders of the Trust Preferred Securities. We have,
through the Guarantees, the trust agreements, the agreements as to expenses and
liabilities, the applicable Debt Securities and the related indenture, taken
together, fully, irrevocably and unconditionally guaranteed all of each trust's
obligations under its Trust Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all the other documents
constitutes the Guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
42
of each trust's obligations in respect of its Trust Preferred Securities. See
RELATIONSHIP AMONG TRUST PREFERRED SECURITIES, DEBT SECURITIES AND GUARANTEES.
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of ours. The
applicable prospectus supplement will describe the ranking of each Guarantee.
Each Guarantee will constitute a guarantee of payment and not of
collection; specifically, the Guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under the Guarantee without
first instituting a legal proceeding against any other person or entity. Each
Guarantee will be held by the respective Guarantee Trustee for the benefit of
the holders of the related Trust Preferred Securities. A Guarantee will not be
discharged except by payment of the applicable Guarantee payments in full to the
extent not paid or distributed by the respective trust.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely
affect the rights of holders of the related Trust Preferred Securities, in which
case no vote will be required, a Guarantee may not be amended without the prior
approval of the holders of not less than a majority of the aggregate liquidation
amount of the related Trust Preferred Securities. The manner of obtaining this
type of approval will be as set forth under DESCRIPTION OF TRUST PREFERRED
SECURITIES--VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT. All Guarantees and
agreements contained in each Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of ours and shall inure to the benefit
of the holders of the related Trust Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under a Guarantee will occur upon our failure to
perform any of our payment obligations under the Guarantee, or to perform any
other obligation if such default remains unremedied for 30 days.
The holders of not less than a majority in aggregate liquidation amount
of the related Trust 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. Any
registered holder of Trust Preferred Securities may institute a legal proceeding
directly against us to enforce its rights under the related Guarantee without
first instituting a legal proceeding against the related trust, the Guarantee
Trustee or any other person or entity.
We, as guarantor, are required to file annually with each Guarantee
Trustee a certificate as to whether or not we are in compliance with all the
conditions and covenants applicable to us under each Guarantee.
43
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We may merge or consolidate with any entity or sell substantially all of
our assets as an entirety as long as the successor or purchaser expressly
assumes our obligations under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance
of a default by us in performance of the Guarantee, undertakes to perform only
such duties as are specifically set forth in the guarantee agreement. After a
default with respect to the Guarantee, the Guarantee Trustee must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
guarantee agreement at the request of any holder of the Trust Preferred
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that it might thereby incur.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the related Trust Preferred Securities,
upon full payment of the amounts payable with respect to the Trust Preferred
Securities upon liquidation of the respective trust and upon distribution of the
related Debt Securities to the holders of the Trust Preferred Securities. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the related Trust Preferred Securities must
restore payment of any sums paid under the Trust Preferred Securities or the
Guarantee.
GOVERNING LAW
Each Guarantee will be governed by New York law.
CONCERNING THE TRUSTEE
We and our affiliates use or will use some of the banking services of
the Guarantee Trustee in the normal course of business.
We must furnish annually to each Property Trustee a statement by an
appropriate officer as to that officer's knowledge of our compliance with all
conditions and covenants under the respective trust agreement. Also, the
Administrative Trustees for each trust must file, on behalf of the respective
trust, a statement as to our compliance with all conditions and covenants under
the respective trust agreement.
44
RELATIONSHIP AMONG TRUST PREFERRED SECURITIES,
DEBT SECURITIES AND GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the Trust Preferred
Securities issued by a trust, to the extent the trust has funds available for
the payment, are irrevocably Guaranteed by us as and to the extent set forth
under DESCRIPTION OF GUARANTEES. Taken together, our obligations under the
related Debt Securities, the applicable indenture, an agreement as to expenses
and liabilities, the related trust agreement and the related Guarantee provide,
in the aggregate, a full, irrevocable and unconditional Guarantee of payments of
distributions and other amounts due on the Trust Preferred Securities issued by
a trust. No single document standing alone or operating in conjunction with
fewer than all the other documents constitutes the Guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional Guarantee of each trust's obligations in respect
of the related Trust Preferred Securities. If and to the extent that we do not
make payments on the Debt Securities issued to a trust, the trust will not have
sufficient funds to pay distributions or other amounts due on its Trust
Preferred Securities. A Guarantee does not cover payment of amounts payable with
respect to the Trust Preferred Securities issued by a trust when the trust does
not have sufficient funds to pay these amounts. In this event, the remedy of a
holder of the Trust Preferred Securities is to institute a legal proceeding
directly against us for enforcement of payment of our obligations under Debt
Securities having a principal amount equal to the liquidation amount of the
Trust Preferred Securities held by the holder.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Debt Securities issued to a
trust, these payments will be sufficient to cover distributions and other
payments distributable on the Trust Preferred Securities issued by that trust,
primarily because:
- the aggregate principal amount of the Debt Securities will be equal to
the sum of the aggregate stated liquidation amount of the Trust
Preferred Securities and Trust Common Securities;
- the interest rate and interest and other payment dates on the Debt
Securities will match the distribution rate, distribution dates and
other payment dates for the Trust Preferred Securities;
- we will pay for any and all costs, expenses and liabilities of the trust
except the trust's obligations to holders of the related Trust
Securities; and
- the applicable trust agreement further provides that the trust will not
engage in any activity that is not consistent with the limited purposes
of the trust.
Notwithstanding anything to the contrary in the applicable indenture, we
have the right to set-off any payment we are otherwise required to make under
that indenture against and to the extent we have previously made, or are
concurrently on the date of the payment making, a payment under a Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
Under the circumstances set forth under DESCRIPTION OF TRUST PREFERRED
SECURITIES--ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED
SECURITIES, holders of Trust Preferred Securities may bring a Direct Action
against us.
A holder of any Trust Preferred Security may institute a legal
proceeding directly against us to enforce its rights under the related Guarantee
without first instituting a legal proceeding against
45
the related Guarantee Trustee, the related trust or any other person or entity.
See DESCRIPTION OF GUARANTEES.
LIMITED PURPOSE OF TRUST
The Trust Preferred Securities issued by a trust represent preferred
undivided beneficial interests in the assets of the trust, and the trust exists
for the sole purpose of issuing its Trust Preferred Securities and Trust Common
Securities and investing the proceeds of these Trust Securities in Debt
Securities. A principal difference between the rights of a holder of a Trust
Preferred Security and a holder of a debt security is that a holder of a debt
security is entitled to receive from us payments on Debt Securities held, while
a holder of Trust Preferred Securities is entitled to receive distributions or
other amounts distributable with respect to the Trust Preferred Securities from
a trust, or from us under a Guarantee, only if and to the extent the trust has
funds available for the payment of the distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of a trust, other than any
dissolution involving the distribution of the related Debt Securities, after
satisfaction of liabilities to creditors of the trust as required by applicable
law, the holders of the Trust Preferred Securities issued by the trust will be
entitled to receive, out of assets held by the trust, the liquidation
distribution in cash. See DESCRIPTION OF TRUST PREFERRED SECURITIES--LIQUIDATION
DISTRIBUTION UPON DISSOLUTION. Since we are the guarantor under each of the
Guarantees and have agreed to pay for all costs, expenses and liabilities of
each trust, other than each trust's obligations to the holders of the respective
Trust Securities, the positions of a holder of Trust Preferred Securities and a
holder of Debt Securities relative to other creditors and to our shareholders in
the event of our liquidation or bankruptcy are expected to be substantially the
same.
BOOK-ENTRY SYSTEM
Unless otherwise stated in a prospectus supplement, book-entry
notessecurities of a series will be issued in the form of a global notesecurity that the
Trustee will deposit with The Depository Trust Company, New York, New York
("DTC"). This means that we will not issue notesecurity certificates to each holder.
One or more global notessecurities will be issued to DTC who will keep a computerized
record of its participants (for example, your broker) whose clients have
purchased the notes.securities. The participant will then keep a record of its clients
who purchased the notes.securities. Unless it is exchanged in whole or in part for a
note certificate, a global notesecurity may not be transferred;transferred, except that DTC, its
nominees, and their successors may transfer a global notesecurity as a whole to one
another.
Beneficial interests in global notessecurities will be shown on, and
transfers of global notessecurities will be made only through, records maintained by
DTC and its participants.
DTC has provided us the following information: 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 United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also records the settlement among Direct Participants of securities
transactions, such as transfers and
46
pledges, in deposited securities through computerized records for Direct
Participants'Participant's accounts. This eliminates the need to exchange notesecurity
certificates. Direct Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations.
Other organizations such as securities brokers and dealers, banks and
trust companies that work through a Direct Participant also use DTC's book-entry
system. The rules that apply to DTC and its participants are on file with the
SEC.
A number of its Direct Participants and the New York Stock Exchange,
Inc., The American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. own DTC.
We will wire principal and interest payments to DTC's nominee. We and
the Trusteeapplicable trustee will treat DTC's nominee as the owner of the global
notessecurities for all purposes. Accordingly, we, the Trusteetrustee and any paying agent
will have no direct responsibility or liability to pay amounts due on the global
notessecurities to owners of beneficial interests in the global notes.securities.
It is DTC's current practice, upon receipt of any payment of principal
or interest, to credit Direct Participants' accounts on the payment date
according to their respective holdings of beneficial interests in the global
notessecurities as shown on DTC's records. In addition, it is DTC's current practice
to assign any consenting or voting rights to Direct Participants whose accounts
are credited with notessecurities on a record date. The customary practices between
the participants and owners of beneficial interests will govern payments by
participants to owners of beneficial interests in the global notessecurities and
voting by participants, as is the case with notessecurities held for the account of
customers registered in "street name." However, payments will be the
responsibility of the participants and not of DTC, the Trustee or us.
According to DTC, the foregoing information with respect to DTC has been
provided to the Direct Participants and other members of the financial community
for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
NotesSecurities represented by a global notecertificate will be exchangeable for
note
certificatesdefinitive securities with the same terms in authorized denominations only if:
-
- DTC notifies us that it is unwilling or unable to continue as depositary
or if DTC ceases to be a clearing agency registered under applicable law
and a successor depositary is not appointed by us within 90 days; or
- - we determine not to require all of the notessecurities of a series to be
represented by a global notesecurity and notify the Trustee of our decision.
Note Certificates-Registration, Transfer, and Payment of
Interest and Principal
If we issue note certificates, they will be registered in the name of the
noteholder. The notes may be transferred or exchanged, pursuant to
administrative procedures in the indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent. Payments on note certificates will be made by check.
Interest Rate
The interest rate on the notes will either be fixed or floating. The
interest paid will include interest accrued to, but excluding, the date of
maturity or redemption. Interest is generally payable to the person in whose
name the note is registered at the close of business on the record date before
each interest payment date. Interest payable at maturity or redemption, however,
will be payable to the person to whom principal is payable.
If we issue a note after a record date but on or prior to the related
interest payment date, we will pay the first interest payment on the interest
payment date after the next record date. We will pay interest payments by check
or wire transfer, at our option.
Fixed Rate Notes
A pricing or prospectus supplement will designate the record dates,
payment dates and the fixed rate of interest payable on a note. We will pay
interest quarterly or semi-annually, and upon maturity or redemption. Unless an
applicable pricing or prospectus supplement states otherwise, if any payment
date falls on a day that is not a business day, we will pay interest on the next
business day and no additional interest will be paid. Interest payments will be
the amount of interest accrued to, but excluding, each payment date. Interest
will be computed using a 360-day year of twelve 30-day months.
Floating Rate Notes
Each floating rate note will have an interest rate formula. The applicable
pricing supplement will state the initial interest rate or interest rate formula
on each note effective until the first interest reset date. The applicable
pricing or prospectus supplement will state the method and dates on which the
interest rate will be determined, reset and paid.
Events of Default
"Event of Default" means any of the following:
failure to pay the principal of (or premium, if any, on)
any note of a series for three days after payment is due;
failure to pay any interest on any note of any series for
30 days after payment is due;
failure to perform any other requirements in such notes,
or in the Indenture in regard to such notes, for 90 days
after notice;
failure to pay any sinking fund installment for three
days after payment is due;
certain events of bankruptcy or insolvency; or
any other event of default specified in a series of notes.
An Event of Default for a particular series of notes does not necessarily
mean that an Event of Default has occurred for any other series of notes issued
under the Indenture. If an Event of Default occurs and continues, the Trustee or
the holders of at least 33% of the principal amount of the notes of the series
affected may require us to repay the entire principal of the notes of such
series within ten days after the date of such notice ("Repayment Acceleration").
In most instances, the holders of at least a majority in aggregate principal
amount of the notes of the affected series may rescind a previously triggered
Repayment Acceleration if we have first cured our default by depositing with the
Trustee enough money to pay all (unaccelerated) past due amounts and penalties,
if any.
The Trustee must within 90 days after a default occurs, notify the holders
of the notes of the series of default unless such default has been cured or
waived. We are required to file an annual certificate with the Trustee, signed
by an officer, concerning any default by us under any provisions of the
Indenture.
Subject to the provisions of the Indenture relating to its duties in case
of default, the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
holders unless such holders offer the Trustee reasonable indemnity. Subject to
the provisions for indemnification, the holders of a majority in principal
amount of the notes of any series may direct the time, method and place of
conducting any proceedings for any remedy available to, or exercising any trust
or power conferred on, the Trustee with respect to such notes.
Modification of Indenture
Under the Indenture, our rights and obligations and the rights of the
holders of any notes may be changed. Any change affecting the rights of the
holders of any series of notes requires the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding notes of all
series affected by the change, voting as one class. However, we cannot change
the terms of payment of principal or interest, or a reduction in the percentage
required for changes or a waiver of default, unless the holder consents. We may
issue additional series of notes and take other action that does not affect the
rights of holders of any series by executing supplemental indentures without the
consent of any noteholders.
Consolidation, Merger or Sale
We may merge or consolidate with any entity or sell our assets
substantially as an entirety as long as the successor or purchaser expressly
assumes the payment of principal, and premium, if any, and interest on the
notes.
Legal Defeasance
We will be discharged from our obligations on the notes of any series on
the 91st day after the date of the deposit referred to in the first item below
if, among other things:
- - we deposit with the Trustee sufficient cash or government securities to
pay (i) the principal, interest, any premium and any other sums due to the
stated maturity date or a redemption date of the note of the series and
(ii) any applicable mandatory sinking fund payments on the day such
payments are due;
- - we deliver to the Trustee an opinion of counsel to the effect that such
provision would not cause any outstanding notes then listed on a national
security exchange to be delisted; and
- - we deliver to the Trustee an opinion of counsel stating that the federal
income tax obligations of noteholders of that series will not change as a
result of our performing the action described above.
If this happens, the noteholders of the series will not be entitled to the
benefits of the Indenture except for registration of transfer and exchange of
notes and replacement of lost, stolen or mutilated notes.
Covenant Defeasance
We will be discharged from our obligations under certain restrictive
covenants applicable to the notes of a particular series if, among other things,
we perform all of the actions described above. See Legal Defeasance. If this
happens, any later breach of that particular restrictive covenant will not
result in Repayment Acceleration. If we cause an Event of Default apart from
breaching that restrictive covenant, there may not be sufficient money or
government obligations on deposit with the Trustee to pay all amounts due on the
notes of that series. In that instance, we would remain liable for such amounts.
Governing Law
The Indenture and notes of all series will be governed by the laws of the
State of New York.
Concerning the Trustee
We and our affiliates use or will use some of the banking services of the
Trustee and other services of its affiliates in the normal course of business.
PLAN OF DISTRIBUTION
We may sell the notessecurities (a) through agents; (b) through underwriters
or dealers; or (c) directly to one or more purchasers.
By Agents
NotesBY AGENTS
Securities may be sold on a continuing basis through agents designated
by us. The agents will agree to use their reasonable efforts to solicit
purchases for the period of their appointment.
47
The applicable prospectus supplement will set forth the terms under
which the securities are offered, including the name or names of any
underwriters, the purchase price of the securities and the proceeds to us from
the sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial offering price and any discounts, commissions or
concessions allowed or reallowed or paid to dealers.
Any initial offering price and any discounts, concessions or commissions
allowed or reallowed or paid to dealers may be changed from time to time.
The Agents will not be obligated to make a market in the notes.securities. We
cannot predict the amount of trading or liquidity of the notes.
By Underwriterssecurities.
BY UNDERWRITERS
If underwriters are used in the sale, the underwriters will acquire the
notessecurities for their own account. The underwriters may resell the notessecurities in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the notessecurities will be subject to
certain conditions. The underwriters will be obligated to purchase all the
notes of the seriessecurities offered if any of the notes are purchased. Any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers may be
changed from time to time.
Direct SalesDIRECT SALES
We may also sell notessecurities directly. In this case, no underwriters or
agents would be involved.
General InformationGENERAL INFORMATION
Underwriters, dealers, and agents that participate in the distribution
of the notessecurities may be underwriters as defined in the Securities Act of 1933
(the "Act"), and any discounts or commissions received by them from us and any
profit on the resale of the notessecurities by them may be treated as underwriting
discounts and commissions under the Act.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our affiliates in the ordinary course of their
businesses.
LEGAL OPINIONS
Our counsel, Simpson Thacher & Bartlett LLP, New York, NY, and one of
our lawyers will each issue an opinion about the legality of the notessecurities for
us. Dewey Ballantine LLP, New York, NY will issue an opinion for the agents or
underwriters. From time to time, Dewey Ballantine LLP acts as counsel to our
affiliates for some matters.
48
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities, the enforceability of the trust agreement and the creation
of the trusts will be passed upon by Richards Layton & Finger, P.A., Wilmington,
Delaware.
EXPERTS
The consolidated financial statements of the Company and the related consolidated
financial statement schedule as of December 31, 2001 and 2000 and for the years
then endedsubsidiaries
incorporated in this prospectus by reference in this prospectusfrom the Company's Current Report
on Form 8-K dated May 14, 2003 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports,report which areis incorporated herein by
reference (which report expresses an unqualified opinion and includes an
explanatory paragraph relating to the realignment of segments for financial
reporting purposes).
The consolidated financial statement schedule of the Company and
subsidiaries incorporated by reference herein, andin this prospectus from the Company's
Annual Report on Form 10-K (as updated by the Company's Current Report on Form
8-K dated May 14, 2003) has been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein.
The aforementioned reports have been so incorporated and included in
reliance upon the reports of such firm given upon their authority as experts in accounting and
auditing.
In connection with the audit by Arthur Andersen LLP ("Andersen") of our
consolidated financial statements for the year ended December 31, 1999
incorporated by reference in this prospectus, there were no disagreements
between Andersen and us on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Andersen would have caused
them to make reference thereto in their report on the financial statements for
such year.
We have not been able to obtain, after reasonable efforts, a consent from
Andersen to the inclusion of its report in this prospectus, and we have
dispensed with the requirement to file their consent in reliance upon Rule 437a
of the Securities Act. Because Andersen has not consented to the inclusion of
its report in this prospectus, you will not be able to recover against Andersen
under Section 11 of the Securities Act for any untrue statements of a material
fact contained in the financial statements audited by Andersen or any omissions
to state a material fact required to be stated therein.
Table of Contents
THE COMPANY................... 2
RISK FACTORS.................. 2
PROSPECTUS SUPPLEMENTS........ 13
RATIO OF EARNINGS TO
FIXED CHARGES.............. 13
WHERE YOU CAN FIND MORE
INFORMATION .............. 13
USE OF PROCEEDS .............. 14 $350,000,000 UNSECURED NOTES
DESCRIPTION OF THE NOTES ..... 14
General .................. 14
Redemptions ............... 15
Remarketed Notes........... 15
Book-Entry Notes -
Registration,
Transfer, and Payment of PROSPECTUS
Interest and Principal .. 15
Note Certificates -
Registration,
Transfer, and Payment of
Interest and Principal 17 The date of this
Interest Rate ............. 17 Prospectus is ________ __, 2002
Fixed Rate Notes ....... 17
Floating Rate Notes .... 18
Events of Default.......... 18
Modification of Indenture.. 19
Consolidation,
Merger or Sale.......... 19
Legal Defeasance........... 19
Covenant Defeasance........ 19
Governing Law.............. 20
Concerning the Trustee..... 20
PLAN OF DISTRIBUTION.......... 20
By Agents.................. 20
By Underwriters............ 20
Direct Sales............... 20
General Information........ 21
LEGAL OPINIONS................ 21
EXPERTS....................... 2149
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ItemITEM 14. Other Expenses of Issuance and Distribution.OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Estimation based upon the issuance of all of the unsecured notesSecurities in twofour
issuances:
Securities and Exchange Commission Filing Fees...........Fees ..................... $ 27,60028,315
Printing Registration Statement, Prospectus, etc......... 60,000etc ................... $ 40,000
Independent Auditors' fees............................... 70,000fees ......................................... $ 75,000
Charges of Trustee (including counsel fees).............. 25,000 ........................ $ 44,000
Legal fees............................................... 160,000fees ......................................................... $ 250,000
Rating Agency fees....................................... 181,000fees ................................................. $ 302,500
Miscellaneous expenses................................... 45,000
Total...............................................expenses ............................................. $ 568,60050,000
----------
Total ......................................................... $ 789,815
==========
* Estimated, except for filing fees.
ItemITEM 15. Indemnification of Directors and Officers.INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Bylaws of the Company provide that the Company shall indemnify each
person who is, was or has agreed to become a director or officer of the Company,
or who has agreed to serve as a director, officer, employee or agent of the
Company (or any other person or entity) at the request of the Board of Directors
against all loss, liability and expenses to the fullest extent permitted by the
General Corporation Law of Delaware. Notwithstanding the foregoing, no person
shall be indemnified for amounts paid in settlement unless the terms and
conditions of such settlement have been consented to by the Company, and no
indemnification for employees or agents shall be made without the express
authorization of the Board of Directors.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or officeragent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, for criminal proceedings,
had no reasonable cause to believe that his conduct was illegal. A Delaware
corporation may indemnify officers and directors and in an action by or in the
right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses (including attorney's fees)
which
such officer or director actually and reasonably incurred in connection
with such action or proceeding.incurred.
II-1
The above is a general summary of certain provisions of the Company's
Bylaws and the Delaware General Corporation Law and is subject in all respects
to the specific and detailed provisions of the Company's Bylaws and the Delaware
General Corporation Law.
Reference is made to the Selling Agency Agreement and the Underwriting AgreementAgreements filed as ExhibitsExhibit
1(a) and 1(b)-1(c) hereto, respectively, which provide for indemnification of the Company,registrant, certain
of its directors and officers, and persons who control the Company,registrant, under
certain circumstances.
The Companyregistrant maintains insurance policies insuring its directors and
officers against certain obligations that may be incurred by them.
ItemEach trust agreement limits the liability of such trust and certain
other persons and provides for the indemnification by the trust or us of the
trustees, their officers, directors and employees and certain other persons.
ITEM 16. Exhibits.EXHIBITS.
Reference is made to the information contained in the Exhibit Index
filed as part of this Registration Statement.
ItemITEM 17. Undertakings.UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
unsecured notessecurities offered (if the total dollar value of unsecured notessecurities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) of the Securities Act of 1933
if, in the aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however,II-2
PROVIDED, HOWEVER, that (i) and (ii) do not apply if the registration
statement is on Form S-3 Form S-8 or Form F-3,S-8, and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Sectionsection 13 or Sectionsection 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Sectionsection 13(a) or Sectionsection 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the unsecured notessecurities offered therein, and the
offering thereof at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the laws of the State of Delaware,New York, the
registrant's bylaws, or otherwise, the registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
said Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the unsecured notes,securities, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in said Act and will be governed by the
final adjudication of such issue.
(6) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable cause to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Columbus and State of Ohio, on the 18th14th day of
October, 2002.August, 2003.
SOUTHWESTERN ELECTRIC POWER COMPANY
E. Linn Draper, Jr.*
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act ofPURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title DateTHIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
(i) Principal Executive
OfficerPRINCIPAL EXECUTIVE OFFICER Chairman of the Board
and Chief Executive
E. Linn Draper, Jr.* Officer October 18, 2002August 14, 2003
(ii) Principal Financial
Officer:
_/s/PRINCIPAL FINANCIAL OFFICER:
/s/Susan Tomasky_____Tomasky
- -----------------------------------
Susan Tomasky Vice President October 18, 2002August 14, 2003
(iii) Principal Accounting
Officer:
_/s/ PRINCIPAL ACCOUNTING OFFICER:
/s/Joseph M. Buonaiuto
- ------------------------------------ Controller and Chief
Joseph M. Buonaiuto Accounting Officer October 18, 2002August 14, 2003
(iv) A Majority of the
Directors:MAJORITY OF THE DIRECTORS:
E. Linn Draper, Jr.*
G. S. Chatas*
J. D. Cross*
H. W. Fayne*
T. M. HaganHagan*
A. A. Pena*
Robert P. Powers*
Thomas V. Shockley, III*
Susan Tomasky October 18, 2002
*By_/s/ Susan Tomasky__
(Susan Tomasky, Attorney-in-Fact)August 14, 2003
*By /s/SUSAN TOMASKY
-------------------------------------
(SUSAN TOMASKY, ATTORNEY-IN-FACT)
II-4
SWEPCO CAPITAL TRUST I
SWEPCO CAPITAL TRUST II
SWEPCO CAPITAL TRUST III
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/Jeffrey D. Cross
- ------------------------- Administrative
Jeffrey D. Cross Trustee August 14, 2003
/s/Geoffrey S. Chatas
- ------------------------- Administrative
Geoffrey S. Chatas Trustee August 14, 2003
II-5
EXHIBIT INDEX
Certain of theThe following exhibits designated with an asterisk (*), are filed herewith.
The exhibits not so designated have heretofore been filed with
the Commission and, pursuant to 17 C.F.R. Sections 201.24 and 230.411, are
incorporated herein by reference to the documents indicated following the
descriptions of such exhibits.
Exhibit No. DescriptionEXHIBIT NO. DESCRIPTION
* 1(a) Copy of proposed form of Selling Agency Agreement for the
unsecured notes.
* 1(b) Copy of proposed1 Proposed form of Underwriting Agreement
**3(a) Restated Certificate of Incorporation, as amended through May 6,
1997, including Certificate of Amendment of Restated Certificate
of Incorporation [Quarterly Report on Form 10-Q of SWEPCo for
the quarter ended March 31, 1997, File No. 1-3146, Exhibit 3.4]
**3(b) By-Laws of SWEPCo (amended as of April 27, 2000) [Quarterly
Report on Form 10-Q of SWEPCo for the quarter ended March 31,
2000, File No. 1-3146, Exhibit 3.3]
**4(a) Indenture (for unsecured notes.
4(a) Copy of Indenture,debt securities), dated as of February
25, 2000, between the
CompanySWEPCo and The Bank of New York, as Trustee
[Registration Statement No. 333-87834, Exhibits 4(a) and 4(b);
Registration Statement No. 333-100632, Exhibit 4(b)].
* 4(b) Copy of Second Supplemental Indenture,Company Order and Officers' Certificate, dated June 26, 2002,April 11,
2003, establishing certain terms of the 4.50%5.375% Senior Notes,
Series B,C, Due 2005 [Form 8-K of the Company filed on June 26, 2002, File
No. 1-3146, Exhibit 4 (b)].2015
* 4(c) Copy of proposedProposed form of Third Supplemental Indenture for the unsecured notes.Senior Notes
* 54(d) Proposed form of Subordinated Indenture for the Junior
Subordinated Debentures
* 4(e) Proposed form of Supplemental Indenture for the Junior
Subordinated Debentures
* 4(f)(i) Trust Agreement for the Trust Preferred Securities for SWEPCo
Capital Trust I
* 4(f)(ii) Trust Agreement for the Trust Preferred Securities for SWEPCo
Capital Trust II
* 4(f)(iii) Trust Agreement for the Trust Preferred Securities for SWEPCo
Capital Trust III
* 4(g)(i) Trust Certificate for the Trust Preferred Securities for SWEPCo
Capital Trust I
* 4(g)(ii) Trust Certificate for the Trust Preferred Securities for SWEPCo
Capital Trust II
* 4(g)(iii) Trust Certificate for the Trust Preferred Securities for SWEPCo
Capital Trust III
* 4(h)(i) Proposed form of Amended and Restated Trust Agreement for the
Trust Preferred Securities for SWEPCo Capital Trust I
* 4(h)(ii) Proposed form of Amended and Restated Trust Agreement for the
Trust Preferred Securities for SWEPCo Capital Trust II
* 4(h)(iii) Proposed form of Amended and Restated Trust Agreement for the
Trust Preferred Securities for SWEPCo Capital Trust III
II-6
* 4(i)(i) Proposed form of Guarantee Agreement for SWEPCo Capital Trust I
* 4(i)(ii) Proposed form of Guarantee Agreement for SWEPCo Capital Trust II
* 4(i)(iii) Proposed form of Guarantee Agreement for SWEPCo Capital Trust
III
* 5(a) Opinion of Simpson Thacher & Bartlett with respectLLP
* 5(b) Opinion of Richards Layton & Finger, P.A.
**12 Computation of Consolidated Ratio of Earnings to the
unsecured notes.
12 Statement re Computations of RatiosFixed Charges
[Quarterly Report on Form 10-Q of the Company for the period
ended June 30, 2002,2003, File No. 1-3146,1-3457, Exhibit 12].
*23(a) Consent of Deloitte & Touche LLP.
23(b)LLP
*23(b) Consent of Simpson Thacher & Bartlett LLP (included in Exhibit
55(a) filed herewith).
*23(c) Consent of Richards Layton & Finger, P.A. (included in Exhibit
5(b) filed herewith)
*24 Powers of Attorney and resolutions of the Board of Directors of
the Company.
*25Company
*25(a) Form T-1 re eligibility of The Bank of New York to act as
Trustee under the Indenture.Indenture for the Senior Notes
*25(b) Form T-1 re eligibility of The Bank of New York to act as
Subordinated Indenture Trustee under the Subordinated Indenture
for the Junior Subordinated Debentures
*25(c)(i) Form T-1 re eligibility of The Bank of New York to act as
Guarantee Trustee for the Guarantees for the benefit of the
holders of the Trust Preferred Securities relating to SWEPCo
Capital Trust I
*25(c)(ii) Form T-1 re eligibility of The Bank of New York to act as
Guarantee Trustee for the Guarantees for the benefit of the
holders of the Trust Preferred Securities relating to SWEPCo
Capital Trust II
*25(c)(iii) Form T-1 re eligibility of The Bank of New York to act as
Guarantee Trustee for the Guarantees for the benefit of the
holders of the Trust Preferred Securities relating to SWEPCo
Capital Trust III
*25(d)(i) Form T-1 re eligibility of The Bank of New York to act as
Property Trustee for the Trust Preferred Securities relating to
SWEPCo Capital Trust I
*25(d)(ii) Form T-1 re eligibility of The Bank of New York to act as
Property Trustee for the Trust Preferred Securities relating to
SWEPCo Capital Trust II
II-7
*25(d)(iii) Form T-1 re eligibility of The Bank of New York to act as
Property Trustee for the Trust Preferred Securities relating to
SWEPCo Capital Trust III
Note: Reports of the Company on Forms 8-K, 10-Q and 10-K are on file with the
SEC under File No. 1-3146.
* Filed herewith
** Incorporated by reference herein as indicated
x To be filed by amendment or pursuant to a report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 if applicable.