As filed with the Securities and Exchange Commission on June 3, 1996
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_____________________
ENTERGY ARKANSAS CAPITAL I
ENTERGY ARKANSAS, INC. ENTERGY ARKANSAS CAPITAL II
(Exact name of registrant as ENTERGY ARKANSAS CAPITAL III
specified in its charter) (Exact name of each registrant
as specified in Trust
Arkansas Agreements)
(State or other jurisdiction of
incorporation or organization) Delaware
(State or other jurisdiction of
72-0245590 incorporation or organization
(I.R.S. Employer Identification of each registrant)
Number)
Each to be Applied for
425 West Capitol Avenue (I.R.S. Employer Identification
Little Rock, Arkansas 72201 Numbers)
(501) 377-4000
(Address, including zip code, and c/o Entergy Arkansas, Inc.
telephone number, including 639 Loyola Avenue
area code, of registrant's New Orleans, Louisiana 70113
principal executive offices) 504-576-4308
(Address, including zip code,
and telephone number, including
area code, of each registrants'
principal executive offices)
R. DRAKE KEITH WILLIAM J. REGAN, JR.
President Vice President and Treasurer
Entergy Arkansas, Inc. Entergy Arkansas, Inc.
425 West Capitol Avenue 639 Loyola Avenue
Little Rock, Arkansas New Orleans, Louisiana 70113
501-377-4000 504-576-4308
LAURENCE M. HAMRIC, Esq. THOMAS J. IGOE, JR., Esq.
DENISE C. REDMANN, Esq. KEVIN STACEY, Esq.
Entergy Services, Inc. Reid & Priest LLP
639 Loyola Avenue 40 West 57th Street
New Orleans, Louisiana 70113 New York, New York 10019
504-576-2272 212-603-2000
(Names, addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
Approximate date of commencement of proposed sale to the public: From
time to time after this registration statement becomes effective when
warranted by market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
__________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier 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 maximum Proposed maximum
Title of each class of Amount to be offering price aggregate Amount of
securities being registered registered per unit(1) offering price(1) registration fee
Entergy Arkansas,Inc. Junior
Subordinated Deferrable Interest
Debentures
Entergy Arkansas Capital I, II and
III Preferred Securities
Entergy Arkansas,Inc. Guarantees
with respect to Entergy Arkansas
Capital I, II and III Preferred
Securities and Entergy Arkansas,
Inc. obligations with respect to
such Preferred Securities under a
Corresponding Indenture, Amended
and Restated Trust Agreements and
Expense Agreements
Total $150,000,000(2) 100% $150,000,000(2) $51,725
(1)Estimated solely for the purpose of computing the registration fee.
(2)Such amount represents the principal amount of the Junior Subordinated
Deferrable Interest Debentures. Such amount also represents the
proposed maximum aggregate initial public offering price of the Entergy
Arkansas Capital I, II and III Preferred Securities. No separate
consideration will be received for any Entergy Arkansas, Inc.
Guarantees and other obligations.
__________________
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED JUNE 3, 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED ___________________
__________________________ Preferred Securities
ENTERGY ARKANSAS CAPITAL I
___% Cumulative Quarterly Income Preferred Securities, Series A (QUIPSsm)*
(Liquidation preference $25 per preferred security)
Guaranteed to the extent the Series A Issuer has funds as set forth herein
by
ENTERGY ARKANSAS, INC.
The ___% Cumulative Quarterly Income Preferred Securities, Series A
(the "Series A Preferred Securities") offered hereby represent undivided
beneficial interests in the assets of Entergy Arkansas Capital I, a trust
created under the laws of the State of Delaware (the "Series A Issuer").
Entergy Arkansas, Inc. (formerly Arkansas Power & Light Company), an
Arkansas corporation (the "Company"), will be the owner of the beneficial
interests represented by common securities of the Series A Issuer (the
"Series A Common Securities"). The Bank of New York is the Property
Trustee of the Series A Issuer. The Series A Issuer exists for the sole
purpose of issuing the Series A Preferred Securities and the Series A
Common Securities and investing the proceeds thereof in ___% Junior
Subordinated Deferrable Interest Debentures, Series A, Due _____ (the
"Series A Debentures") to be issued by the Company. The Series A
Preferred Securities will have a preference under certain circumstances
with respect to cash distributions and amounts payable on liquidation,
redemption or otherwise over the Series A Common Securities. See
"Description of Preferred Securities--Subordination of Common Securities"
in the accompanying Prospectus.
(Continued on next page)
__________
SEE "RISK FACTORS" BEGINNING ON PAGE S-___ HEREOF FOR CERTAIN INFORMATION
RELEVANT TO INVESTMENT IN THE SERIES A PREFERRED SECURITIES.
___________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
__________
Proceeds to
Initial Public Underwriting the Series A
Offering Price Commission (1) Issuer (2)(3)
Per Series A Preferred Security (2)
Total (2)
__________
(1) The Series A Issuer and the Company have agreed to
indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting" .
(2) In view of the fact that the proceeds of the sale of the
Series A Preferred Securities will be used to purchase the
Series A Debentures, the Underwriting Agreement provides
that the Company will pay to the Underwriters, as
compensation ("Underwriters' Compensation") for their
arranging the investment therein of such proceeds, $_____
per Series A Preferred Security (or $ __ in the
aggregate). See "Underwriting" .
(3) Expenses of the offering, which are payable by the
Company, are estimated to be $________.
__________
The Series A Preferred Securities offered hereby are offered severally
by the Underwriters, as specified herein and subject to receipt and
acceptance by them and subject to their right to reject any order in whole
or in part. It is expected that delivery of the Series A Preferred
Securities will be made only in book entry form through the facilities of
The Depository Trust Company in New York, New York on or about ___________,
1996, against payment therefor in immediately available funds.
__________
*QUIPS is a servicemark of Goldman, Sachs & Co.
_________
Goldman, Sachs & Co.
The date of this Prospectus Supplement is _____________________.
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This Prospectus Supplement and the accompanying
Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
F1(Continued from previous page)
Holders of the Series A Preferred Securities will be entitled to receive
preferential cumulative cash distributions accruing from the date of original
issuance and payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing _____, 1996, at the annual rate of ___% of
the liquidation preference of $25 per Series A Preferred Security
("Distributions"). The Company has the right to defer the payment of interest
on the Series A Debentures at any time or from time to time for one or more
periods (each, an "Extension Period"), provided that such Extension Period,
together with all previous and further extensions thereof prior to its
termination, does not exceed 20 consecutive quarters and does not extend beyond
the maturity of the Series A Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Company may elect
to begin a new Extension Period subject to the requirements set forth herein.
If interest payments are so deferred, Distributions on the Series A Preferred
Securities will also be deferred and the Company will not be permitted, subject
to certain exceptions set forth herein, to declare or pay any cash distributions
with respect to the Company's capital stock or debt securities that rank pari
passu with or junior to the Series A Debentures or make any guarantee payments
with respect to the foregoing. During an Extension Period, interest on the
Series A Debentures will continue to accrue (and the Series A Preferred
Securities will accumulate additional Distributions thereon at the rate of ___%
per annum, compounded quarterly), and holders of Series A Preferred Securities
will be required to accrue interest income for United States Federal income tax
purposes. See "Certain Terms of the Series A Debentures--Option to Extend
Interest Payment Period" and "Certain United States Federal Income Tax
Considerations--Potential Extension of Interest Payment Period and Original
Issue Discount".
The Company has, through the Series A Guarantee, the Series A Trust
Agreement, the Series A Debentures, the Corresponding Indenture and the Series A
Expense Agreement (each as defined herein), taken together, fully, irrevocably
and unconditionally guaranteed all of the Series A Issuer's obligations under
the Series A Preferred Securities. The Series A Guarantee of the Company
guarantees the payment of Distributions and payments on liquidation of the
Series A Issuer or redemption of the Series A Preferred Securities as set forth
below, in each case out of funds held by the Series A Issuer, to the extent
described herein (the "Series A Guarantee"). See "Description of Guarantees" in
the accompanying Prospectus. If the Company does not make interest payments on
the Series A Debentures held by the Series A Issuer, the Series A Issuer will
have insufficient funds to pay Distributions on the Series A Preferred
Securities. The Series A Guarantee does not cover payment of Distributions when
the Series A Issuer does not have sufficient funds to pay such Distributions.
The obligations of the Company under the Series A Guarantee are subordinate and
junior in right of payment to all Senior Debt (as defined in "Description of
Junior Subordinated Debentures--Subordination" in the accompanying Prospectus)
of the Company.
The Series A Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series A Debentures at maturity or their
earlier redemption in an amount equal to the amount of related Series A
Debentures maturing or being redeemed at a redemption price equal to the
aggregate liquidation preference of such Series A Preferred Securities plus
accumulated and unpaid Distributions thereon to the date of redemption. The
Series A Debentures are redeemable prior to maturity at the option of the
Company (i) on or after ___________________, 2001, in whole at any time or
in part from time to time, at a redemption price equal to the accrued and unpaid
interest on the Series A Debentures so redeemed to the date fixed for redemption
plus 100% of the principal amount thereof, or (ii) at any time, in whole (but
not in part), upon the occurrence and continuation of a Special Event (as
defined herein), at a redemption price equal to the accrued and unpaid interest
on the Series A Debentures so redeemed to the date fixed for redemption plus
100% of the principal amount thereof, in each case subject to the further
conditions described under "Description of Junior Subordinated
Debentures--Redemption" and "Description of Corresponding Junior Subordinated
Debentures--Optional Redemption" in the accompanying Prospectus.
The Series A Debentures are subordinate and junior in right of payment to
all Senior Debt of the Company. As of March 31, 1996, the Company had
approximately $1.5 billion of Senior Debt outstanding. The terms of the Series
A Debentures place no limitation on the amount of Senior Debt that may be
incurred by the Company. See "Description of Junior Subordinated Debentures--
Subordination" in the accompanying Prospectus.
In the event of the liquidation of the Series A Issuer, the holders of the
Series A Preferred Securities will be entitled to receive a liquidation
preference of $25 per Series A Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Series A Debentures, subject to certain
limitations. See "Description of Preferred Securities--Liquidation Distribution
Upon Termination" in the accompanying Prospectus.
Application has been made to list the Series A Preferred Securities on the
New York Stock Exchange (the "NYSE"). If the Series A Debentures are
distributed to the holders of Series A Preferred Securities upon the liquidation
of the Series A Issuer, the Company will use its best efforts to list the Series
A Debentures on the NYSE or such other stock exchanges, if any, on which the
Series A Preferred Securities are then listed.
The Series A Preferred Securities will be represented by one or more global
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee. Beneficial interests in the Series A Preferred Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by participants in DTC. Except as described in the accompanying
Prospectus, Series A Preferred Securities in certificated form will not be
issued in exchange for the global certificates. See "Description of Preferred
Securities--Book-Entry Issuance" in the accompanying Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
__________________________
The following information supplements, and to the extent is inconsistent
with, replaces, the information contained in the accompanying Prospectus, and
should be read in conjunction therewith. As used herein, (i) the "Corresponding
Indenture" means the Indenture for Unsecured Subordinated Debt Securities
relating to Trust Securities, as the same may be amended and supplemented from
time to time, dated as of July 1, 1996, between the Company and The Bank of New
York, as Corresponding Debenture Trustee, pursuant to which the Series A
Debentures will be issued, and (ii) the "Series A Trust Agreement" means the
Amended and Restated Trust Agreement, dated as of ________________, 1996, among
the Company, as Depositor, The Bank of New York, as Property Trustee, The Bank
of New York (Delaware), as Delaware Trustee, and the Administrative Trustees
named therein (collectively, with the Property Trustee and the Delaware Trustee,
the "Issuer Trustees"). Each of the other capitalized terms used in this
Prospectus Supplement has the meaning set forth in this Prospectus Supplement or
in the accompanying Prospectus.
RISK FACTORS
Prospective purchasers of the Series A Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and in
the accompanying Prospectus and should particularly consider the following
matters.
Ranking of Subordinated Obligations Under the Series A Guarantee and the Series
A Debentures
The obligations of the Company under the Series A Guarantee issued by the
Company for the benefit of the holders of Series A Preferred Securities are
unsecured and rank subordinate and junior in right of payment to all Senior Debt
of the Company. The obligations of the Company under the Series A Debentures
are subordinate and junior in right of payment to all such Senior Debt. At
March 31, 1996, Senior Debt of the Company aggregated approximately $1.5
billion. None of the Corresponding Indenture, the Series A Guarantee or the
Series A Trust Agreement place any limitation on the amount of secured or
unsecured debt, including Senior Debt, that may be incurred by the Company. See
"Description of Guarantees--Status of the Guarantees" and "Description of Junior
Subordinated Debentures--Subordination" in the accompanying Prospectus.
The ability of the Series A Issuer to pay amounts due on the Series A
Preferred Securities is solely dependent upon the Company making payments on the
Series A Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences; Potential Market
Volatility During Extension Period
The Company has the right under the Corresponding Indenture to defer the
payment of interest on the Series A Debentures at any time or from time to time
for one or more Extension Periods, each of which, together with all previous and
further extensions of such Extension Period prior to its termination, may not
exceed 20 consecutive quarters and may not extend beyond the maturity of the
Series A Debentures. As a consequence of any such election, quarterly
Distributions on the Series A Preferred Securities would be deferred (but would
continue to accumulate additional Distributions thereon at the rate of ___% per
annum, compounded quarterly) by the Series A Issuer during any such Extension
Period. In the event that the Company exercises this right, during any such
Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including other Junior Subordinated Debentures) that rank pari
passu with or junior in interest to the Series A Debentures or make any
guarantee payments with respect to the foregoing (other than (a) dividends or
distributions in shares of capital stock of the Company and (b) payments under
any Guarantee). Upon the termination of any Extension Period and the payment of
all amounts then due, the Company may elect to begin a new Extension Period,
subject to the above requirements. Consequently, there could be multiple
Extension Periods of varying lengths throughout the term of the Series A
Debentures. See "Certain Terms of the Series A Preferred
Securities--Distributions" and "Certain Terms of the Series A Debentures--Option
to Extend Interest Payment Period".
Should an Extension Period occur, a holder of Series A Preferred Securities
will continue to accrue interest income in respect of its pro rata share of the
Series A Debentures held by the Series A Issuer for United States Federal income
tax purposes. As a result, a holder of Series A Preferred Securities will
include such interest in gross income for United States Federal income tax
purposes in advance of the receipt of cash, and will not receive the cash
related to such income from the Series A Issuer if the holder disposes of the
Series A Preferred Securities prior to the record date for the payment of
Distributions. See "Certain United States Federal Income Tax Considerations--
Potential Extension of Interest Payment Period and Original Issue Discount" and
"--Sale, Exchange and Redemption of the Series A Preferred Securities".
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Debentures. However, should the Company elect to exercise such right in the
future, the market price of the Series A Preferred Securities is likely to be
affected. A holder that disposes of its Series A Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Series A Preferred Securities. In
addition, as a result of the existence of the Company's right to defer interest
payments, the market price of the Series A Preferred Securities (which represent
a preferred undivided beneficial interest in the Series A Debentures) may be
more volatile than other securities on which original issue discount accrues
that do not have such rights.
Special Event Redemption or Distribution
Upon the occurrence and continuation of a Special Event, as described in
"Description of Preferred Securities--Redemption--Special Event Redemption or
Distribution" in the accompanying Prospectus, the Company has the right to (i)
redeem the Series A Debentures in whole (but not in part) and therefore cause a
mandatory redemption of the Series A Preferred Securities and Series A Common
Securities at a redemption price equal to the accrued and unpaid interest on the
Series A Debentures so redeemed to the date fixed for redemption plus 100% of
the principal amount thereof, within 90 days following the occurrence of such
Special Event, or (ii) terminate the Series A Issuer and, after satisfaction of
creditors of the Series A Issuer, if any, as provided by applicable law, cause
the Series A Debentures to be distributed to the holders of the Series A
Preferred Securities and Series A Common Securities in liquidation of the Series
A Issuer. If at any time the Series A Issuer is not or will not be taxed as a
grantor trust but a Tax Event (as defined in "Description of Preferred
Securities--Redemption--Special Event Redemption or Distribution" in the
accompanying Prospectus) in respect of the Series A Preferred Securities has not
occurred, the Company has the right to terminate the Series A Issuer and, after
satisfaction of creditors of the Series A Issuer, if any, as provided by
applicable law, cause the Series A Debentures to be distributed to the holders
of the Series A Preferred Securities in liquidation of the Series A Issuer. See
"Description of Preferred Securities--Redemption--Special Event Redemption or
Distribution" in the accompanying Prospectus.
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's budget proposal, was released. The Bill
would, among other things, generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum weighted average maturity
of more than 40 years. The Bill would also generally treat as equity an
instrument, issued by a corporation, that has a maximum term of more than 20
years and that is not shown as indebtedness on the separate balance sheet of the
issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. The above-described provisions were proposed to be effective
generally for instruments issued on or after December 7, 1995. If either
provision were to apply to the Series A Debentures, the Company would be unable
to deduct interest on the Series A Debentures. However, on March 29, 1996, the
Chairmen of the Senate Finance and House Ways and Means Committees issued a
joint statement to the effect that it was their intention that the effective
date of the President's legislative proposals, if adopted, would be no earlier
than the date of appropriate Congressional action. There can be no assurance,
however, that current or future legislative proposals or final legislation will
not affect the ability of the Company to deduct interest on the Series A
Debentures. If legislation were enacted limiting, in whole or in part, the
deductibility by the Company of interest on the Series A Debentures for United
States Federal income tax purposes, such enactment could give rise to a Tax
Event or a Debenture Tax Event. A Tax Event would permit the Company to cause a
redemption of the Series A Preferred Securities or a distribution of such Series
A Debentures in liquidation of the Series A Issuer, as described more fully
under "Description of Preferred Securities--Redemption--Special Event Redemption
or Distribution" in the accompanying Prospectus. A Debenture Tax Event would
permit the Company to redeem the Series A Debentures, as described more fully
under "Description of Corresponding Junior Subordinated Debentures--Optional
Redemption" and "Description of Junior Subordinated Debentures--Redemption" in
the accompanying Prospectus.
There can be no assurance as to the market prices for Series A Preferred
Securities or Series A Debentures that may be distributed in exchange for Series
A Preferred Securities if a termination or liquidation of the Series A Issuer
were to occur. Accordingly, the Series A Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Series A Debentures that a holder of Series A Preferred
Securities may receive on termination or liquidation of the Series A Issuer, may
trade at a discount to the price that the investor paid to purchase the Series A
Preferred Securities offered hereby. Because holders of Series A Preferred
Securities may receive Series A Debentures upon the occurrence of a Special
Event, prospective purchasers of Series A Preferred Securities are also making
an investment decision with regard to the Series A Debentures and should
carefully review all the information regarding the Series A Debentures contained
herein. See "Description of Preferred Securities--Redemption--Special Event
Redemption or Distribution" and "Description of Corresponding Junior
Subordinated Debentures--General" in the accompanying Prospectus.
Rights under the Series A Guarantee
The Series A Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as Guarantee Trustee for the
purposes of compliance with the Trust Indenture Act and will hold the Series A
Guarantee for the benefit of the holders of the Series A Preferred Securities.
The Bank of New York will also act as Debenture Trustee for the Series A
Debentures and as Property Trustee under the Series A Trust Agreement. The Bank
of New York (Delaware) will act as Delaware Trustee under the Series A Trust
Agreement. The Series A Guarantee guarantees to the holders of the Series A
Preferred Securities the following payments, to the extent not paid by the
Series A Issuer: (i) any accumulated and unpaid Distributions required to be
paid on the Series A Preferred Securities, to the extent that the Series A
Issuer has funds on hand available therefor, (ii) the redemption price with
respect to any Series A Preferred Securities called for redemption to the extent
that the Series A Issuer has funds on hand available therefor, and (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Series A
Issuer (unless the Series A Debentures are distributed to holders of the Series
A Preferred Securities), the lesser of (a) the aggregate of the liquidation
preference amount and all accumulated and unpaid Distributions to the date of
payment and (b) the amount of assets of the Series A Issuer remaining available
for distribution to holders of the Series A Preferred Securities. The holders
of not less than a majority in aggregate liquidation preference amount of the
Series A 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 Series A Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Series A Guarantee
without first instituting a legal proceeding against the Series A Issuer, the
Guarantee Trustee or any other person or entity. If the Company were to default
on its obligation to pay amounts payable under the Series A Debentures, the
Series A Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series A Preferred Securities or otherwise, and, in
such event, holders of the Series A Preferred Securities would not be able to
rely upon the Series A Guarantee for payment of such amounts. If the Property
Trustee fails to enforce its rights under the Series A Debentures or the Series
A Trust Agreement, a holder of Series A Preferred Securities may institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Series A Debentures or the Series A Trust Agreement, to the
fullest extent permitted by law, without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, a holder of Series A Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder of principal of or interest
on the Series A Debentures having a principal amount equal to the aggregate
liquidation preference amount of the Series A Preferred Securities of such
holder on or after the due dates specified in the Series A Debentures. See
"Description of Guarantees" and "Description of Corresponding Junior
Subordinated Debentures" in the accompanying Prospectus. The Series A Trust
Agreement provides that each holder of Series A Preferred Securities, by
acceptance thereof, agrees to the provisions of the Series A Guarantee and the
Corresponding Indenture.
Limited Voting Rights
Holders of Series A Preferred Securities will generally have limited voting
rights relating only to the modification of the Series A Preferred Securities
and the dissolution, winding-up or termination of the Series A Issuer. Holders
of Series A Preferred Securities will not be entitled to vote to appoint, remove
or replace the Property Trustee or the Delaware Trustee, which voting rights are
vested exclusively in the holder of the Series A Common Securities except upon
the occurrence of certain events described herein. The Administrative Trustees
and the Company may amend the Series A Trust Agreement to ensure that the Series
A Issuer will be classified for United States Federal income tax purposes as a
grantor trust without the consent of holders, unless such action adversely
affects in any material respect the interests of holders. See "Description of
Preferred Securities--Voting Rights; Amendment of Trust Agreement" and "--
Removal of Issuer Trustees" in the accompanying Prospectus.
Trading Characteristics of Series A Preferred Securities
Application will be made to list the Series A Preferred Securities on the
NYSE. If approved for listing, the Series A Preferred Securities may trade at a
price that does not fully reflect the value of accrued but unpaid interest with
respect to the underlying Series A Debentures. A holder of Series A Preferred
Securities who disposes of its Series A Preferred Securities between record
dates for payments of Distributions will nevertheless be required to include
accrued but unpaid interest on the Series A Debentures through the date of
disposition in income as ordinary income and to add such amount to its adjusted
tax basis in its Series A Preferred Securities disposed of. Such holder will
recognize a capital loss to the extent that the selling price (which may not
fully reflect the value of accrued but unpaid interest) is less than its
adjusted tax basis (which will include accrued but unpaid interest). Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States Federal income tax purposes. See "Certain United
States Federal Income Tax Considerations--Sale, Exchange and Redemption of the
Series A Preferred Securities".
ENTERGY ARKANSAS CAPITAL I
Entergy Arkansas Capital I is a statutory business trust created under
Delaware law pursuant to (i) a trust agreement executed by the Company, as
depositor of the Series A Issuer, the Property Trustee, the Delaware Trustee and
an Administrative Trustee who is an officer of the Company and (ii) the filing
of a certificate of trust with the Delaware Secretary of State. Such trust
agreement will be amended and restated in its entirety substantially in the form
of the Series A Trust Agreement filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part. The Series A Trust
Agreement will be qualified as an indenture under the Trust Indenture Act. The
Series A Issuer's business and affairs will be conducted by five Issuer
Trustees: The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and three individual Administrative Trustees
who are employees or officers of or affiliated with the Company. The Series A
Issuer exists for the exclusive purposes of (i) issuing and selling the Series A
Preferred Securities and Series A Common Securities, (ii) using the proceeds
from the sale of such securities to acquire Series A Debentures issued by the
Company and (iii) engaging in only those other activities necessary, convenient
or incidental thereto. Accordingly, the Series A Debentures will be the sole
assets of the Series A Issuer, and payments under the Series A Debentures will
be the sole revenue of the Series A Issuer. All of the Series A Common
Securities will be owned by the Company. The Series A Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the Series A
Preferred Securities, except that upon the occurrence and continuance of a
Debenture Event of Default, the rights of the Company as holder of the Series A
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Series A Preferred Securities. See "Description of Preferred
Securities--Subordination of Common Securities" in the accompanying Prospectus.
The Company will acquire Series A Common Securities having an aggregate
liquidation amount equal to 3% of the total capital of the Series A Issuer. The
Series A Issuer has a term of approximately 54 years, but may terminate earlier
as provided in the Series A Trust Agreement. The principal executive office of
the Series A Issuer is 639 Loyola Avenue, New Orleans, LA 70113, Attention:
Treasurer, and its telephone number is (504) 576-4308. See "The Issuers" in the
accompanying Prospectus.
USE OF PROCEEDS
All of the proceeds from the sale of the Series A Preferred Securities will
be invested by the Series A Issuer in Series A Debentures. The Company intends
to use the proceeds from the sale of such Series A Debentures to redeem shares
of its preferred stock as follows: [ ].
__________________
SELECTED FINANCIAL INFORMATION
(Dollars in Thousands)
The selected financial information of the Company set forth below has been
derived from and should be read in conjunction with the financial statements and
other financial information contained in the Incorporated Documents.
For the Twelve Months Ended
December 31
March 31,
1996 1995 1994 1993 1992 1991
Operating Revenues $1,691,718 $1,648,233 $1,590,742 $1,591,568, $1,521,129 $1,528,270
Operating Income 226,613 217,931 216,633 236,222 179,773 219,418
Interest Expense 108,793 112,914 107,138 117,172 120,728 132,300
(net)
Net Income 145,219 172,080(1) 142,263 205,297(2) 130,529 143,451
Ratio of Earnings to
Fixed Charges 2.70 2.56 2.32 3.11(2) 2.28 2.25
(1) Net income for the year ended December 31, 1995 includes $58 million ($35
million after tax) related to a change in the method of accounting for
nuclear refueling outage costs.
(2) Net income for the year ended December 31, 1993 includes $81 million ($50
million after tax) related to a change in accounting principle to provide
for the accrual of estimated unbilled revenues.
CAPITALIZATION
(Dollars in Thousands)
The following table sets forth the consolidated capitalization of the
Company as of March 31, 1996. The following data is qualified in its entirety
by the financial statements of the Company and other information contained
elsewhere in this Prospectus Supplement and the accompanying Prospectus or
incorporated herein or therein by reference.
As of March 31, 1996
Actual
Amount Percent
Common Stock and Paid-in Capital $ 591,264 23.1
Retained Earnings 491,896 19.2
Total Common Shareholder's Equity 1,083,160 42.3
Preferred Stock (without sinking fund) 176,350 6.9
Preferred Stock (with sinking fund) 49,027 1.9
Company Obligated Mandatorily
Redeemable Preferred Securities
of Subsidiary Trust (1) - -
First Mortgage Bonds (2) 850,136 33.2
Other Long-Term Debt (2) 399,986 15.7
Total Capitalization $ 2,558,659 100.0
(1) As described herein, all of the assets of the Series A Issuer will be $____
million of the Series A Debentures. The Company owns all of the Series A
Common Securities of the Series A Issuer.
(2) Excludes current maturities of First Mortgage Bonds and Other Long-Term
Debt of $113.3 million and $2.5 million, respectively.
CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES
General
The following summary of certain terms and provisions of the Series A
Preferred Securities supplements, and, to the extent inconsistent with,
replaces, the description of the terms and provisions of the Preferred
Securities set forth in the accompanying Prospectus under the heading
"Description of Preferred Securities", to which description reference is hereby
made. This summary of certain terms and provisions of the Series A Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Series A Trust Agreement. The form of the
Series A Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and accompanying Prospectus are a
part.
Distributions
The Series A Preferred Securities represent undivided beneficial interests
in the assets of the Series A Issuer and Distributions on each Series A
Preferred Security will be payable at the annual rate of ___% of the stated
liquidation preference amount of $25, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year. Distributions that are in
arrears for more than one quarter will accumulate additional Distributions
thereon at the rate per annum of _____% thereof, compounded quarterly
("Additional Amounts"). The term "Distributions" as used herein shall include
any such Additional Amounts. Distributions will accumulate from ____________,
1996, the date of original issuance. The first Distribution payment date for
the Series A Preferred Securities will be _______ __, 1996, and such
Distribution will be cumulative from the date of original issuance. The amount
of Distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. See "Description of Preferred Securities-
- -Distributions" in the accompanying Prospectus.
So long as no Debenture Event of Default under the Corresponding Indenture
has occurred and is continuing, the Company has the right under the
Corresponding Indenture to defer the payment of interest on the Series A
Debentures at any time and from time to time, for one or more Extension Periods,
each of which, together with all previous and further extensions of such
Extension Period prior to its termination, may not exceed 20 consecutive
quarters and may not extend beyond the maturity of the Series A Debentures. As
a consequence of any election, quarterly Distributions on the Series A Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate of ___% per annum, compounded quarterly) by
the Series A Issuer during any such Extension Period. In the event that the
Company exercises this right, during any such Extension Period, the Company may
not (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities (including other
Junior Subordinated Debentures) that rank pari passu with or junior in interest
to the Series A Debentures or make any guarantee payments with respect to the
foregoing (other than (a) dividends or distributions in shares of capital stock
of the Company and (b) payments under any Guarantee). Upon the termination of
any such Extension Period and the payment of all amounts then due, the Company
may elect to begin a new Extension Period, subject to the above requirements.
See "Certain Terms of the Series A Debentures--Option to Extend Interest Payment
Period" and "Certain United States Federal Income Tax Consequences--Potential
Extension of Interest Payment Period and Original Issue Discount".
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Debentures.
Redemption
Upon the repayment or redemption, in whole or in part, of the Series A
Debentures, whether at maturity or upon earlier redemption as provided in the
Corresponding Indenture, the proceeds from such repayment or redemption shall be
applied by the Property Trustee to redeem a Like Amount of the Series A
Preferred Securities, upon not less than 30 nor more than 60 days notice, at a
Redemption Price equal to the aggregate liquidation preference of such Series A
Preferred Securities plus accumulated and unpaid Distributions thereon to the
Redemption Date. See "Description of Preferred Securities--Redemption" in the
accompanying Prospectus and "Certain Terms of the Series A Debentures--
Redemption". The Company will have the right to redeem the Series A Debentures
(i) on or after ___________, 2001, in whole at any time or in part from time to
time, at a redemption price equal to the accrued and unpaid interest on the
Series A Debentures so redeemed to the date fixed for redemption plus 100% of
the principal amount thereof, or (ii) at any time, in whole (but not in part),
upon the occurrence of a Special Event, at a redemption price equal to the
accrued and unpaid interest on the Series A Debentures so redeemed to the date
fixed for redemption plus 100% of the principal amount thereof, in each case
subject to the further conditions described under "Description of Junior
Subordinated Debentures--Redemption" and "Description of Corresponding Junior
Subordinated Debentures--Optional Redemption" in the accompanying Prospectus.
Liquidation Value
The amount payable on the Series A Preferred Securities in the event of any
liquidation of the Series A Issuer is $25 per Series A Preferred Security plus
accumulated and unpaid Distributions, unless, subject to certain exceptions, in
connection with such liquidation, the Series A Debentures are distributed to the
holders of the Series A Preferred Securities. See "Description of Preferred
Securities--Liquidation Distribution upon Termination" in the accompanying
Prospectus.
CERTAIN TERMS OF THE SERIES A DEBENTURES
General
The following summary of certain terms and provisions of the Series A
Debentures supplements, and to the extent inconsistent with, replaces, the
description of the terms and provisions of the Corresponding Junior Subordinated
Debentures set forth in the accompanying Prospectus under the headings
"Description of Junior Subordinated Debentures" and "Description of
Corresponding Junior Subordinated Debentures", to which description reference is
hereby made. The summary of certain terms and provisions of the Series A
Debentures set forth below does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Corresponding Indenture. The
Corresponding Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and accompanying Prospectus are a
part.
Concurrently with the issuance of the Series A Preferred Securities, the
Series A Issuer will invest the proceeds thereof and the consideration paid by
the Company for the Series A Common Securities in the Series A Debentures issued
by the Company. The Series A Debentures will bear interest at the annual rate
of ____% of the principal amount thereof, payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, an "Interest
Payment Date"), commencing _______ __, 1996, to the person in whose name each
Series A Debenture is registered, subject to certain exceptions, at the close of
business on the Business Day (as defined in the Corresponding Indenture) next
preceding such Interest Payment Date. Each Series A Debenture will be held in
the name of the Series A Property Trustee in trust for the benefit of the
holders of the Series A Preferred Securities. The amount of interest payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on the Series A
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on the date such payment was originally
payable. Interest that is in arrears for more than one quarter will bear the
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of ___% thereof, compounded quarterly. The term "interest"
as used herein shall include quarterly interest payments, interest on quarterly
interest payments in arrears and Additional Interest, as applicable.
The Series A Debentures will be issued as a series of Junior Subordinated
Debentures under the Corresponding Indenture. The Series A Debentures will
mature on ____________, _____. The Series A Debentures will be unsecured and
will rank junior and be subordinate in right of payment to all Senior Debt of
the Company. The Corresponding Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, whether under the
Corresponding Indenture, any other indenture that the Company may enter into in
the future or otherwise. See "Description of Junior Subordinated
Debentures--Subordination" in the accompanying Prospectus.
Option to Extend Interest Payment Period
So long as no Debenture Event of Default under the Corresponding Indenture
has occurred and is continuing, the Company has the right under the
Corresponding Indenture at any time during the term of the Series A Debentures
to defer the payment of interest at any time or from time to time for one or
more Extension Periods, each of which, together with all previous and further
extensions of such Extensions Period prior to its termination, may not exceed 20
consecutive quarters and may not extend beyond the maturity of the Series A
Debentures. At the end of such Extension Period, the Company must pay all
interest then accrued and unpaid (together with interest thereon at the annual
rate of _____% to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Series A Debentures will
be required to accrue interest income for United States Federal income tax
purposes. See "Certain United States Federal Income Tax Considerations-
Potential Extension of Interest Payment Period and Original Issue Discount".
In the event that the Company exercises this right, during any such
Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including other Junior Subordinated Debentures) that rank pari
passu with or junior in interest to the Series A Debentures or make any
guarantee payments with respect to the foregoing (other than (a) dividends or
distributions in shares of capital stock of the Company and (b) payments under
any Guarantee). Upon the termination of any such Extension Period and the
payment of all amounts then due, the Company may elect to begin a new Extension
Period, subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Company must give
the Property Trustee, the Administrative Trustees and the Corresponding
Debenture Trustee notice of its selection of such Extension Period at least one
Business Day prior to the earlier of (i) the date the Distributions on the
Series A Preferred Securities are payable and (ii) the date the Administrative
Trustees are required to give notice to the NYSE or other applicable
self-regulatory organization or to holders of such Series A 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. An Administrative
Trustee shall give notice of the Company's election to begin such Extension
Period to the holders of the Series A Preferred Securities within five Business
Days of the receipt of notice thereof. See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Period" in the accompanying
Prospectus.
Redemption
The Series A Debentures are redeemable prior to maturity at the option of
the Company (i) on or after ________, 2001, in whole at any time or in part from
time to time, at a redemption price equal to the accrued and unpaid interest on
the Series A Debentures so redeemed to the date fixed for redemption plus 100%
of the principal amount thereof, or (ii) at any time, in whole (but not in
part), upon the occurrence of a Special Event, at a redemption price equal to
the accrued and unpaid interest on the Series A Debentures so redeemed to the
date fixed for redemption plus 100% of the principal amount thereof, in each
case subject to the further conditions described under "Description of Junior
Subordinated Debentures--Redemption" and "Description of Corresponding Junior
Subordinated Debentures--Optional Redemption" in the accompanying Prospectus.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States Federal income tax
consequences relevant to the purchase, ownership and disposition of the Series A
Preferred Securities as of the date hereof and represents the opinion of Reid &
Priest LLP, counsel to the Company, insofar as it relates to matters of law or
legal conclusions. Except where noted, it deals only with Series A Preferred
Securities held as capital assets and does not deal with special situations,
such as those of dealers in securities or currencies, financial institutions,
life insurance companies, persons holding Series A Preferred Securities as part
of a hedging or conversion transaction or a straddle, United States Holders (as
defined herein) whose "functional currency" is not the United States dollar, or
persons who are not United States Holders. In addition, this discussion does
not address the tax consequences to persons who purchase Series A Preferred
Securities other than pursuant to their initial issuance and distribution.
Furthermore, the discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified at any time so as to result in United States
Federal income tax consequences different from those discussed below. These
authorities are subject to various interpretations and it is therefore possible
that the United States Federal income tax treatment of the Series A Preferred
Securities may differ from the treatment described below.
PROSPECTIVE PURCHASERS OF SERIES A PREFERRED SECURITIES, INCLUDING PERSONS
WHO ARE NOT UNITED STATES HOLDERS AND PERSONS WHO PURCHASE SERIES A PREFERRED
SECURITIES IN THE SECONDARY MARKET, ARE ADVISED TO CONSULT WITH THEIR TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A PREFERRED SECURITIES IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR
OTHER TAX LAWS.
United States Holders
As used herein, a "United States Holder" means a Series A Preferred
Security holder that is a citizen or a resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or an estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source.
Classification of Entergy Arkansas Capital I
Reid & Priest LLP, counsel to the Company and the Series A Issuer, is of
the opinion that, under current law and assuming full compliance with the terms
of the Corresponding Indenture and the instruments establishing the Series A
Issuer (and certain other documents), the Series A Issuer will be classified as
a "grantor trust" for United States Federal income tax purposes and will not be
classified as an association taxable as a corporation. Each United States
Holder will be treated as owning an undivided beneficial interest in the Series
A Debentures. Accordingly, each United States Holder will be required to
include in its gross income interest (in the form of original issue discount
("OID")) accrued with respect to its allocable share of Series A Debentures as
described below. No amount included in income with respect to the Series A
Preferred Securities will be eligible for the dividends received deduction.
Investors should be aware that the opinion of Reid & Priest LLP is not binding
on the Internal Revenue Service (the "IRS") or the courts.
Classification of the Series A Debentures
Based on the advice of its counsel, the Company believes and intends to
take the position that the Series A Debentures will constitute indebtedness for
United States Federal income tax purposes. No assurance can be given that such
position will not be challenged by the IRS, or, if challenged, that such
challenge will not be successful. By purchasing and accepting Series A
Preferred Securities, each holder thereof covenants to treat the Series A
Debentures as indebtedness and the Series A Preferred Securities as evidence of
an indirect beneficial ownership in the Series A Debentures. The remainder of
this discussion assumes that the Series A Debentures will be classified as
indebtedness of the Company for United States Federal income tax purposes.
Possible Tax Law Changes
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"),
the revenue portion of President Clinton's budget proposal, was released. The
Bill would, among other things, generally deny interest deductions for interest
on an instrument issued by a corporation that has a maximum weighted average
maturity of more than 40 years. The Bill would also generally treat as equity
an instrument, issued by a corporation, that has a maximum term of more than 20
years and that is not shown as indebtedness on the separate balance sheet of the
issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. The above-described provisions were proposed to be effective
generally for instruments issued on or after December 7, 1995. If either
provision were to apply to the Series A Debentures, the Company would be unable
to deduct interest on the Series A Debentures. However, on March 29, 1996, the
Chairmen of the Senate Finance and House Ways and Means Committees issued a
joint statement to the effect that it was their intention that the effective
date of the President's legislative proposals, if adopted, will be no earlier
than the date of appropriate Congressional action. There can be no assurance,
however, that current or future legislative proposals or final legislation will
not affect the ability of the Company to deduct interest on the Series A
Debentures. If legislation were enacted limiting, in whole or in part, the
deductibility by the Company of interest on the Series A Debentures for United
States Federal income tax purposes, such enactment could give rise to a Tax
Event or a Debenture Tax Event. A Tax Event would permit the Company to cause a
redemption of the Series A Preferred Securities or a distribution of such Series
A Debentures in liquidation of the Series A Issuer, as described more fully
under "Description of Preferred Securities--Redemption-Special Event Redemption
or Distribution". A Debenture Tax Event would permit the Company to redeem the
Series A Debentures, as described more fully under "Description of Corresponding
Junior Subordinated Debentures--Optional Redemption" and "Description of Junior
Subordinated Debentures--Redemption" in the accompanying Prospectus.
Potential Extension of Interest Payment Period and Original Issue Discount
Under the terms of the Series A Debentures, the Company has the option to
defer payments of interest for up to 20 consecutive quarterly interest payment
periods and to pay as a lump sum at the end of such period all of the interest
that has accrued during such period. During any such Extension Period,
Distributions on the Series A Preferred Securities will also be deferred.
Because of this option to extend the interest payment periods, the Series A
Debentures will be treated as having been issued with OID for United States
Federal income tax purposes. As a result, United States Holders will be
required to accrue interest income (in the form of OID) on an economic accrual
basis even if they use the cash method of accounting. In the event of an
Extension Period, a United States Holder will be required to continue to include
OID in income notwithstanding that the Series A Issuer will not make any
Distribution on the Series A Preferred Securities during such Extension Period.
As a result, any United States Holder who disposes of Series A Preferred
Securities prior to the record date for the payment of Distributions following
such Extension Period will include interest in gross income but will not receive
any Distributions related thereto from the Series A Issuer. The tax basis of a
Series A Preferred Security will be increased by the amount of any OID that is
included in income, and will be decreased when and if Distributions are
subsequently received from the Series A Issuer by such holders.
Receipt of Series A Debentures or Cash Upon Liquidation of the Series A Issuer
Under certain circumstances, as described under the caption "Description of
Preferred Securities--Redemption-Special Event Redemption or Distribution" in
the accompanying Prospectus, Series A Debentures may be distributed to holders
of Series A Preferred Securities in exchange for the Series A Preferred
Securities and in liquidation of the Series A Issuer. Under current law, for
United States Federal income tax purposes, if the Series A Issuer is treated as
a grantor trust at the time of distribution, such distribution would be treated
as a non-taxable event to each United States Holder, and each United States
Holder would receive an aggregate tax basis in the Series A Debentures equal to
such Holder's aggregate tax basis in its Series A Preferred Securities. A
United States Holder's holding period for the Series A Debentures received in
liquidation of the Series A Issuer would include the period during which such
holder held the Series A Preferred Securities.
Under certain circumstances, as described under the caption "Description of
Preferred Securities--Redemption" in the accompanying Prospectus, the Series A
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders of Series A Preferred Securities in redemption of the
Series A Preferred Securities. Under current law, such a redemption would, for
United States Federal income tax purposes, constitute a taxable disposition of
the Series A Preferred Securities, and a United States Holder would recognize
gain or loss as if such holder had sold such redeemed Series A Preferred
Securities. See "Sale, Exchange and Redemption of the Series A Preferred
Securities" below.
Sale, Exchange and Redemption of the Series A Preferred Securities
Upon the sale, exchange or redemption of Series A Preferred Securities, a
United States Holder will recognize gain or loss equal to the difference between
the amount realized upon the sale, exchange or redemption and such holder's
adjusted tax basis in the Series A Preferred Securities. A United States
Holder's adjusted tax basis will, in general, be the issue price of the Series A
Preferred Securities, increased by the OID previously included in income by the
United States Holder and reduced by any Distributions on the Series A Preferred
Securities. Such gain or loss will be capital gain or loss and will be long-
term capital gain or loss if at the time of sale, exchange or redemption, the
Series A Preferred Securities have been held for more than one year. Under
current law, net capital gains of individuals are, under certain circumstances,
taxed at lower rates than items of ordinary income. The deductibility of
capital losses is subject to limitations.
Information Reporting and Backup Withholding
Subject to the qualification discussed below, income on the Series A
Preferred Securities will be reported to holders on Form 1099, which should be
mailed to such holders by January 31 following each calendar year.
The Series A Issuer will be obligated to report annually to Cede & Co., as
holder of record of the Series A Preferred Securities, the OID related to the
Series A Debentures that accrued during the year. The Series A Issuer currently
intends to report such information on Form 1099 prior to January 31 following
each calendar year. The Underwriters have indicated to the Series A Issuer
that, to the extent that they hold Series A Preferred Securities as nominees for
beneficial holders, they currently expect to report the OID that accrued during
the calendar year on such Series A Preferred Securities to such beneficial
holders on Form 1099 by January 31 following each calendar year. Under current
law, holders of Series A Preferred Securities who hold as nominees for
beneficial holders will not have any obligation to report information regarding
the beneficial holders to the Series A Issuer. The Series A Issuer, moreover,
will not have any obligation to report to beneficial holders who are not also
record holders. Thus, beneficial holders of Series A Preferred Securities who
hold their Series A Preferred Securities through the Underwriters will receive
Forms 1099 reflecting the income on their Series A Preferred Securities from
such Underwriters rather than from the Series A Issuer.
Payments made in respect of, and proceeds from the sale of, Series A
Preferred Securities (or Series A Debentures distributed to holders of Series A
Preferred Securities) may be subject to "backup" withholding tax of 31% unless
the holder complies with certain identification requirements or if such holder
has previously failed to report in full dividend and interest income. Any
withheld amounts will be allowed as a refund or a credit against the holder's
United States Federal income tax liability, provided the required information is
provided to the IRS.
These information reporting and backup withholding tax rules are subject to
temporary Treasury Regulations. Accordingly, the application of such rules to
the Series A Preferred Securities could be changed.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Series A Issuer have agreed that the Series A Issuer will sell
to each of the Underwriters named below (for whom Goldman, Sachs & Co.,
__________________________ and _________________________ are acting as
Representatives) and each of the Underwriters has severally agreed to purchase
from the Series A Issuer the respective number of Series A Preferred Securities
set forth opposite its name below:
Number of
Series A
Preferred
Underwriters Securities
Goldman, Sachs & Co.
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Series A Preferred
Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series A Preferred Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and in part to certain securities
dealers at such price less a concession of $_______ per Series A Preferred
Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $_______ per Series A Preferred Security to certain
brokers and dealers. After the Series A Preferred Securities are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the Representatives.
In view of the fact that the proceeds from the sale of the Series A
Preferred Securities will be used to purchase the Series A Debentures, the
Underwriting Agreement provides that the Company will pay as Underwriters'
Compensation for the Underwriters arranging the investment therein of such
proceeds an amount of $ _______ per Series A Preferred Security for the accounts
of the several Underwriters.
The Company and the Series A Issuer have agreed, during the period beginning
from the date of the Underwriting Agreement and continuing to and including the
earlier of (i) the termination of trading restrictions on the Series A Preferred
Securities, as determined by the Underwriters, and (ii) 30 days after the
closing date, not to offer, sell, contract to sell or otherwise dispose of any
Series A Preferred Securities, any other beneficial interests in the assets of
the Series A Issuer, or any preferred securities or any other securities of the
Series A Issuer or the Company that are substantially similar to the Series A
Preferred Securities, including any guarantee of such securities, or any
securities convertible into or exchangeable for or that represent the right to
receive securities, preferred securities or any such substantially similar
securities of either the Series A Issuer or the Company, without the prior
written consent of the Representatives.
The Company and the Series A Issuer have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
Prior to this offering, there has been no public market for the Series A
Preferred Securities. Application will be made to list the Series A Preferred
Securities on the NYSE. In order to meet one of the requirements for listing
the Series A Preferred Securities on the NYSE, the Underwriters will undertake
to sell lots of 100 or more Series A Preferred Securities to a minimum of 400
beneficial holders. Trading of the Series A Preferred Securities on the NYSE is
expected to commence within a seven-day period after the initial delivery of the
Series A Preferred Securities. The Representatives have advised the Company
that they intend to make a market in the Series A Preferred Securities prior to
commencement of trading on the NYSE, but are not obligated to do so and may
discontinue any such market making at any time without notice.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Company and its affiliates, for which such Underwriters or their
affiliates have received or will receive customary fees and commissions.
EXPERTS
The Company's balance sheets as of December 31, 1995 and 1994 and the
statements of income, retained earnings, and cash flows and the related
financial statement schedule for each of the two years ended December 31, 1995,
incorporated by reference in the Prospectus accompanying this Prospectus
Supplement, have been incorporated by reference therein in reliance on the
reports, which include an emphasis paragraph relating to the Company's 1995
change in its method of accounting for incremental nuclear plant outage
maintenance costs, of Coopers & Lybrand L.L.P., independent accountants, given
on the authority of that firm as experts in accounting and auditing.
The statements of income, retained earnings, and cash flows and the related
financial statement schedule for the year ended December 31, 1993, incorporated
in the Prospectus accompanying this Prospectus Supplement by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports dated February 11, 1994, which expressed an unqualified opinion and
included an explanatory paragraph relating to the Company's change in method of
accounting for revenues, also incorporated by reference therein and have been so
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the Series A
Preferred Securities, the enforceability of the Series A Trust Agreement and the
creation of the Series A Issuer are being passed upon by Richards, Layton &
Finger, P.A., special Delaware counsel to the Company and the Series A Issuer.
The validity of the Series A Guarantee and the Series A Debentures will be
passed upon for the Company by Friday, Eldredge & Clark, general counsel to the
Company and by Reid & Priest LLP, New York counsel to the Company. Matters
pertaining to New York law will be passed upon by Reid & Priest LLP, New York
counsel to the Company, and matters pertaining to Arkansas law will be passed
upon by Friday, Eldredge & Clark, Arkansas counsel to the Company. Certain
legal matters will be passed upon for the Underwriters by Winthrop, Stimson,
Putnam & Roberts, New York, New York. Certain matters relating to United States
Federal income tax considerations are being passed upon by Reid & Priest LLP,
special counsel to the Company and the Series A Issuer.
SUBJECT TO COMPLETION, DATED JUNE 3, 1996
P R O S P E C T U S
$150,000,000
ENTERGY ARKANSAS CAPITAL I
ENTERGY ARKANSAS CAPITAL II
ENTERGY ARKANSAS, INC. ENTERGY ARKANSAS CAPITAL III
Junior Subordinated Deferrable Preferred Securities guaranteed
Interest Debentures to the extent the Issuer has
funds as set forth herein by
ENTERGY ARKANSAS, INC.
Entergy Arkansas, Inc. (formerly Arkansas Power & Light Company), an
Arkansas corporation (the "Company"), may from time to time offer in one or
more series or issuances its junior subordinated deferrable interest
debentures (the "Junior Subordinated Debentures"). The Junior Subordinated
Debentures will be unsecured and subordinate and junior in right of payment
to Senior Debt (as defined in "Description of Junior Subordinated Debentures
- -- Subordination") of the Company. If provided in an accompanying Prospectus
Supplement, the Company will have the right to defer payments of interest on
any series of Junior Subordinated Debentures by extending the interest
payment period thereon at any time or from time to time for such number of
consecutive interest payment periods (which shall not extend beyond the
maturity of the Junior Subordinated Debentures) with respect to each deferral
period as may be specified in such Prospectus Supplement (each, an "Extension
Period"). See "Description of Junior Subordinated Debentures -- Option to
Extend Interest Payments".
Entergy Arkansas Capital I, Entergy Arkansas Capital II and Entergy
Arkansas Capital III, each a statutory business trust created under the laws
of the State of Delaware (each, an "Issuer", and collectively, the
"Issuers"), may severally offer, from time to time, its respective preferred
securities (the "Preferred Securities") representing preferred undivided
beneficial interests in the assets of each Issuer. The Company will be the
owner of the common securities (the "Common Securities") representing common
undivided beneficial interests in the assets of each Issuer. The payment of
periodic cash distributions ("Distributions") with respect to the Preferred
Securities of each Issuer and payments on liquidation or redemption with
respect to such Preferred Securities, in each case out of funds held by such
Issuer, are each irrevocably guaranteed by the Company to the extent
described herein (each, a "Guarantee", and collectively, the "Guarantees").
See "Description of Guarantees". The obligations of the Company under each
Guarantee will be subordinate and junior in right of payment to all Senior
Debt of the Company. Concurrently with the issuance by an Issuer of its
Preferred Securities, such Issuer will invest the proceeds thereof and any
contributions made in respect of the Common Securities in a corresponding
series of the Company's Junior Subordinated Debentures (the "Corresponding
Junior Subordinated Debentures") with terms corresponding to the terms of
that Issuer's Preferred Securities. The Corresponding Junior Subordinated
Debentures will be the sole assets of each Issuer, and payments under the
Corresponding Junior Subordinated Debentures will be the only revenue of each
Issuer. Upon the occurrence of certain events as described herein and in an
accompanying Prospectus Supplement, the Company may redeem the Corresponding
Junior Subordinated Debentures or may terminate each Issuer and, after
satisfaction of creditors of each Issuer, if any, as required by applicable
law, cause the Corresponding Junior Subordinated Debentures to be distributed
to the holders of Preferred Securities in liquidation of their interest in
such Issuer. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination".
Holders of the Preferred Securities will be entitled to receive
preferential cumulative Distributions accruing from the date of original
issuance and payable periodically as specified in an accompanying Prospectus
Supplement. If provided in an accompanying Prospectus Supplement, the
Company will have the right to defer payments of interest on any series of
Corresponding Junior Subordinated Debentures by extending the interest
payment period thereon at any time or from time to time for one or more
Extension Periods (which shall not extend beyond the maturity of the
Corresponding Junior Subordinated Debentures). If interest payments are so
deferred, Distributions on the corresponding series of Preferred Securities
will also be deferred and the Company will not be permitted, subject to
certain exceptions set forth herein, to declare or pay any cash distributions
with respect to the Company's capital stock or debt securities that rank pari
passu with or junior to the Corresponding Junior Subordinated Debentures or
make any guarantee payments with respect to the foregoing. During an
Extension Period, Distributions will continue to accumulate (and the
Preferred Securities will accumulate additional Distributions thereon at the
rate per annum set forth in the related Prospectus Supplement). See
"Description of Preferred Securities -- Distributions".
The Junior Subordinated Debentures and Preferred Securities may be
offered in amounts, at prices and on terms to be determined at the time of
offering provided, however, that the aggregate initial public offering price
of all Junior Subordinated Debentures (other than Corresponding Junior
Subordinated Debentures) and Preferred Securities (including the
Corresponding Junior Subordinated Debentures) issued pursuant to the
Registration Statement of which this Prospectus forms a part shall not exceed
$150,000,000. Certain specific terms of the Junior Subordinated Debentures
or Preferred Securities in respect of which this Prospectus is being
delivered will be described in an accompanying Prospectus Supplement,
including without limitation and where applicable and to the extent not set
forth herein, (a) in the case of Junior Subordinated Debentures, the specific
designation, aggregate principal amount, denominations, maturity, interest
payment dates, interest rate (which may be fixed or variable) or method of
calculating interest, applicable Extension Period or interest deferral terms,
if any, place or places where principal, premium, if any, and interest, if
any, will be payable, any terms of redemption, any sinking fund provisions,
terms for any conversion or exchange into other securities, initial offering
or purchase price, methods of distribution and any other special terms, and
(b) in the case of Preferred Securities, the identity of the Issuer, specific
title, aggregate amount, stated liquidation preference, number of securities,
Distribution rate, applicable Extension Period or Distribution deferral
terms, if any, place or places where Distributions will be payable, any terms
of redemption, initial offering or purchase price, methods of distribution
and any other special terms.
An accompanying Prospectus Supplement also will contain information, as
applicable, about certain United States Federal income tax considerations
relating to the Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold
to or through underwriters, through dealers, remarketing firms or agents
involved in the sale of Junior Subordinated Debentures or Preferred
Securities in respect of which this Prospectus is being delivered and any
applicable fee, commission or discount arrangements with them will be set
forth in an accompanying Prospectus Supplement. Such Prospectus Supplement
will state whether the Junior Subordinated Debentures or Preferred Securities
will be listed on any national securities exchange. If the Junior
Subordinated Debentures or Preferred Securities are not listed on any
national securities exchange, there can be no assurance that there will be a
secondary market for the Junior Subordinated Debentures or Preferred
Securities.
This Prospectus may not be used to consummate sales of Junior
Subordinated Debentures or Preferred Securities unless accompanied by a
Prospectus Supplement.
__________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996.
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements
and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the
regional offices of the Commission located at 7 World Trade
Center, 13th Floor, Suite 1300, New York, New York 10048 and
Suite 1400, Citicorp Center, 14th Floor, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. In addition, such reports, proxy
statements and other information concerning the Company can be
inspected at the offices of The New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005 (the "NYSE").
The Company and the Issuers have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus does
not contain all the information set forth in the Registration
Statement and the exhibits thereto, certain portions of which
have been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to the
Company, the Issuers and the securities offered hereby, reference
is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof
or incorporated by reference therein, which may be inspected at
the public reference facilities of the Commission, at the
addresses set forth above. Statements made in this Prospectus
concerning the contents of any documents referred to herein are
not necessarily complete, and in each instance are qualified in
all respects by reference to the copy of such document filed as
an exhibit to the Registration Statement.
No separate financial statements of any Issuer have been
included herein. The Company and the Issuers do not consider
that such financial statements would be material to holders of
the Preferred Securities because each Issuer is a newly formed
special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage
in any activity other than its holding, as trust assets, the
Corresponding Junior Subordinated Debentures of the Company and
its issuance of the Preferred and Common Securities. The Issuers
intend not to file separate reports under the Exchange Act but
must apply for and be granted relief by the Commission to avoid
the requirement to file such reports. See "The Issuers",
"Description of Preferred Securities", "Description of
Guarantees" and "Description of Corresponding Junior Subordinated
Debentures".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated into this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
2. The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
In addition, each document or report filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date hereof and prior to the termination of the
offering described herein shall be deemed to be incorporated by
reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such document (such
documents, and the documents enumerated above, being herein
referred to as "Incorporated Documents"). Any statement
contained herein, or in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of the
Registration Statement and this Prospectus to the extent that a
statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide without charge to any person to whom
this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the foregoing documents
incorporated by reference herein (other than exhibits not
specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to:
Christopher T. Screen, P.O. Box 61000, New Orleans, Louisiana
70161, telephone: (504) 576-4212.
THE COMPANY
Entergy Arkansas, Inc. (formerly Arkansas Power & Light
Company) was incorporated under the laws of the State of Arkansas
in 1926. The Company's principal executive offices are located
at 425 West Capitol Avenue, Little Rock, Arkansas 72201. Its
telephone number is 501-377-4000.
The Company is an electric public utility company with
substantially all of its operations in the State of Arkansas.
The Company also has minor operations in the State of Tennessee.
All of the outstanding common stock of the Company is owned by
Entergy Corporation ("Entergy"), a Delaware corporation. Entergy
is a registered public utility holding company under the Public
Utility Holding Company Act of 1935, as amended ("Holding Company
Act"). The Company, Entergy Gulf States, Inc., Entergy
Louisiana, Inc., Entergy Mississippi, Inc. and Entergy New
Orleans, Inc. are operating electric utility subsidiaries of
Entergy. Entergy also owns, among other things, all of the
common stock of System Energy Resources, Inc., a generating
company, Entergy Operations, Inc., a nuclear management services
company, Entergy Power, Inc., through which Entergy provides
wholesale electricity to other utilities and indirectly all of
the common stock of CitiPower Ltd., a retail electric
distribution company serving Melbourne, Australia and surrounding
suburbs.
The Company, Entergy Louisiana, Inc., Entergy Mississippi,
Inc. and Entergy New Orleans, Inc. own all of the capital stock
of System Fuels, Inc., a special purpose company which implements
and/or maintains certain programs for the procurement, delivery
and storage of fuel supplies for Entergy subsidiaries, including
the Company.
The foregoing information relating to the Company does not
purport to be comprehensive and should be read together with the
financial statements and other information contained in the
Incorporated Documents.
THE ISSUERS
Each Issuer is a statutory business trust created under
Delaware law pursuant to (i) a trust agreement executed by the
Company, as depositor of each Issuer, the Property Trustee and
the Delaware Trustee (each as defined herein) and an
Administrative Trustee (as defined herein) of each Issuer and
(ii) the filing of a certificate of trust with the Delaware
Secretary of State. Each trust agreement will be amended and
restated in its entirety (each, as so amended and restated, a
"Trust Agreement" and collectively, the "Trust Agreements")
substantially in the forms filed as exhibits to the Registration
Statement of which this Prospectus forms a part. Each Trust
Agreement will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
Each Issuer exists for the exclusive purposes of (i) issuing and
selling its Preferred Securities and Common Securities, (ii)
using the proceeds from the sale of such Preferred Securities and
Common Securities to acquire the related series of Corresponding
Junior Subordinated Debentures and (iii) engaging in only those
other activities necessary, convenient or incidental thereto.
Accordingly, the Corresponding Junior Subordinated Debentures
will be the sole assets of each Issuer, and payments under the
Corresponding Junior Subordinated Debentures will be the sole
source of revenue of each Issuer.
All of the Common Securities will be owned by the Company.
The Common Securities of an Issuer will rank pari passu, and
payments will be made thereon pro rata, with the Preferred
Securities of such Issuer, except that upon the occurrence and
continuance of a Debenture Event of Default, the rights of the
Company as holder of the Common Securities to payment in respect
of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of
the Preferred Securities of such Issuer. See "Description of
Preferred Securities--Subordination of Common Securities". The
Company will acquire Common Securities in an aggregate
liquidation amount equal to not less than 3% of the total capital
of each Issuer.
Unless otherwise specified in the applicable Prospectus
Supplement, each Issuer has a term of approximately 54 years, but
may terminate earlier as provided in the applicable Trust
Agreement. Each Issuer's business and affairs are conducted by
its trustees, each appointed by the Company as holder of the
Common Securities: The Bank of New York, as the Property Trustee
(the "Property Trustee"), The Bank of New York (Delaware), as the
Delaware Trustee (the "Delaware Trustee"), and three individual
trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with the Company (collectively, the
"Issuer Trustees"). The Bank of New York, as Property Trustee,
will act as sole indenture trustee under each Trust Agreement for
purposes of compliance with the Trust Indenture Act. The Bank of
New York will also act as Guarantee Trustee under the Guarantees,
and Corresponding Debenture Trustee under the Corresponding
Indenture (each as defined herein). See "Description of
Guarantees" and "Description of Junior Subordinated Debentures".
The holder of the Common Securities, or the holders of a majority
in liquidation preference of the Preferred Securities, if a
Debenture Event of Default has occurred and is continuing, will
be entitled to appoint, remove or replace the Property Trustee
and/or the Delaware Trustee. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees; such voting rights are
vested exclusively in the holder of the Common Securities. The
duties and obligations of each Issuer Trustee are governed by the
applicable Trust Agreement. The Company will pay all fees and
expenses related to each Issuer and the offering of the Preferred
Securities and will pay, directly or indirectly, all ongoing
costs, expenses and liabilities of each Issuer. The principal
executive office of each Issuer is 425 West Capitol Avenue,
Little Rock, Arkansas 72201, Attention: Treasurer, and its
telephone number is (501) 377-4000.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus
Supplement, the Company intends to use the proceeds from the sale
of the Junior Subordinated Debentures (including Corresponding
Junior Subordinated Debentures issued to the Issuers in
connection with the investment by the Issuers of all of the
proceeds from the sale of Preferred Securities) for general
corporate purposes, including working capital, capital
expenditures, refinancing of debt, including outstanding
commercial paper and other short term bank indebtedness, the
redemption of outstanding series of preferred stock, the
satisfaction of other obligations or for such other purposes as
may be specified in the applicable Prospectus Supplement. Except
as otherwise set forth in the applicable Prospectus Supplement,
all of the proceeds from the sale of Preferred Securities will be
invested by the Issuers in Corresponding Junior Subordinated
Debentures to be issued by the Company. A more detailed
description of the use of proceeds of any specific offering shall
be set forth in the Prospectus Supplement pertaining to such
offering.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or
more series under the Indenture for Unsecured Subordinated Debt
Securities, dated as of June 1, 1996 (the "Indenture") between
the Company and The Bank of New York, as debenture trustee (the
"Debenture Trustee"). The Corresponding Junior Subordinated
Debentures are to be issued in one or more series of Junior
Subordinated Debentures under the Indenture for Unsecured
Subordinated Debt Securities relating to Trust Securities dated
as of June 1, 1996 (the "Corresponding Indenture") between the
Company and The Bank of New York, as corresponding debenture
trustee (the "Corresponding Debenture Trustee"). This summary of
certain terms and provisions of the Junior Subordinated
Debentures and the Indenture does not purport to be complete and
is subject to, and is qualified in its entirety by reference to
the Indenture, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and
to the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Except as otherwise provided herein, this
summary of certain terms and provisions of Junior Subordinated
Debentures and the Indenture is also applicable to the
Corresponding Junior Subordinated Debentures and the
Corresponding Indenture. For additional terms and provisions
applicable only to the Corresponding Junior Subordinated
Debentures, see "Description of Corresponding Junior Subordinated
Debentures". Whenever particular defined terms of the Indenture
(as supplemented or amended from time to time) are referred to
herein or in a Prospectus Supplement, such defined terms are
incorporated herein or therein by reference.
General
Each series of Junior Subordinated Debentures will rank pari
passu with all other series of Junior Subordinated Debentures,
will be unsecured and subordinate and junior in right of payment
to the extent and in the manner set forth in the Indenture to all
Senior Debt (as defined below) of the Company. See
"Subordination". Except as otherwise provided in the applicable
Prospectus Supplement, the Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the
Company, whether under the Indenture, any other indenture that
the Company may enter into in the future or otherwise. See
"Subordination" and the Prospectus Supplement relating to any
offering of Preferred Securities or Junior Subordinated
Debentures.
The Junior Subordinated Debentures will be issuable in one or
more series pursuant to an indenture supplemental to the
Indenture or a resolution of the Board of Directors or an
Officer's Certificate.
The applicable Prospectus Supplement or Prospectus
Supplements will describe the following terms of the Junior
Subordinated Debentures: (1) the title of the Junior Subordinated
Debentures; (2) any limit upon the aggregate principal amount of
the Junior Subordinated Debentures; (3) the date or dates on
which the principal of the Junior Subordinated Debentures is
payable or the method of determination thereof; (4) the rate or
rates, if any, or the method by which such rate or rates shall be
determined, at which the Junior Subordinated Debentures shall
bear interest, if any, the date or dates from which any such
interest will accrue, the Interest Payment Dates on which any
such interest shall be payable, the right, if any, of the Company
to defer or extend an Interest Payment Date, and the Regular
Record Date for any interest payable on any Interest Payment Date
and the person or persons to whom interest on such Junior
Subordinated Debentures shall be payable on any Interest Payment
Date, if other than the persons in whose names such Junior
Subordinated Debentures are registered at the close of business
on the Regular Record Date for such interest; (5) the place or
places where, subject to the terms of the Indenture as described
below under "Payment and Paying Agents", the principal of and
premium, if any, and interest on the Junior Subordinated
Debentures will be payable and where, subject to the terms of the
Indenture as described below under "Denominations, Registration
and Transfer", the Junior Subordinated Debentures may be
presented for registration of transfer or exchange and the place
or places where notices and demands to or upon the Company in
respect of the Junior Subordinated Debentures and the Indenture
may be served; the Security Registrar and Paying Agents for such
Junior Subordinated Debentures and, if such is the case, that the
principal of such Junior Subordinated Debentures shall be payable
without presentation or surrender thereof; (6) any period or
periods within, or date or dates on, which, the price or prices
at which and the terms and conditions upon which Junior
Subordinated Debentures may be redeemed, in whole or in part, at
the option of the Company; (7) the obligation or obligations, if
any, of the Company to redeem or purchase any of the Junior
Subordinated Debentures pursuant to any sinking fund or other
analogous mandatory redemption provisions or at the option of
holder thereof, and the period or periods within which, the price
or prices at which, and the terms and conditions upon which the
Junior Subordinated Debentures shall be redeemed or purchased, in
whole or in part, pursuant to such obligation, and applicable
exceptions to the requirements of a notice of redemption in the
case of mandatory redemption or redemption at the option of the
holder; (8) the denominations in which any Junior Subordinated
Debentures shall be issuable if other than denominations of
$1,000 and any integral multiple thereof (in the case of
Corresponding Junior Subordinated Debentures, the denominations
in which any Corresponding Junior Subordinated Debentures shall
be issuable if other than denominations of $25 and any integral
multiple thereof); (9) if other than in U.S. Dollars, the
currency or currencies (including composite currencies) in which
the principal of and premium, if any and interest, if any, on the
Junior Subordinated Debentures shall be payable; (10) if the
principal of or any premium or interest on any of the Junior
Subordinated Debentures is to be payable, at the election of the
Company or the holder thereof, in a coin or currency other than
in which such Junior Subordinated Debentures are stated to be
payable, the period or periods within which and the terms and
conditions upon which, such election is to be made; (11) if the
principal of or premium or interest on such Junior Subordinated
Debentures are to be payable, or are to be payable at the
election of the Company or a holder thereof, in securities or
other property, the type and amount of such securities or other
property, or the methods by which such amount shall be
determined, and the period or periods within which, and the terms
and conditions upon which, any such election is to be made;
(12) if the amount payable in respect of principal of or any
premium or interest on any of such Junior Subordinated Debentures
may be determined with reference to an index or other fact
ascertainable outside the Indenture, the manner in which such
amounts are determined; (13) if other than the principal amount
thereof, the portion of the principal amount of Junior
Subordinated Debentures that shall be payable upon declaration of
acceleration of the Maturity thereof; (14) any additions to the
Events of Default or covenants of the Company with respect to the
Junior Subordinated Debentures; (15) the terms, if any, pursuant
to which the Junior Subordinated Debentures may be converted into
or exchanged for shares of capital stock or other securities of
the Company or any other Person; (16) the obligations or
instruments, if any, which shall be considered to be Government
Obligations in respect of the Junior Subordinated Debentures
denominated in a currency other than Dollars or in a composite
currency, and any additional or alternative provisions for the
reinstatement of the Company's indebtedness in respect of such
Junior Subordinated Debentures after such satisfaction and
discharge thereof; (17) if the Junior Subordinated Debentures are
to be issued in global form, any limitations on the rights of the
holder or holders of such Junior Subordinated Debentures to
transfer or exchange the same or to obtain the registration of
transfer thereof, any limitations of the rights of the holder or
holders thereof to obtain certificates therefor in definitive
form in lieu of a temporary Global Security and any and all other
matters incidental to such Junior Subordinated Debentures; (18)
if such Junior Subordinated Debentures are to be issuable as
bearer securities; (19) any limitations on the rights of the
holders of the Junior Subordinated Debentures to transfer or
exchange such Junior Subordinated Debentures or to obtain the
registration of transfer thereof, and if a service charge will be
made for the registration of transfer or exchange of the Junior
Subordinated Debentures, the amount or terms thereof; (20) any
exceptions to the provisions governing payments due on legal
holidays or any variations in the definition of Business Day with
respect of such Junior Subordinated Debentures; (21) in the case
of Corresponding Junior Subordinated Debentures, the designation
of the Issuer to which Corresponding Junior Subordinated
Debentures are to be issued; and (22) any other terms of the
Junior Subordinated Debentures not inconsistent with the
provisions of the Indenture.
Junior Subordinated Debentures may be sold at a substantial
discount below their stated principal amount, bearing no interest
or interest at a rate which at the time of issuance is below
market rates. Certain Federal income tax consequences and
special considerations applicable to any such Junior Subordinated
Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated
Debentures is payable in one or more foreign currencies or
currency units or if any Junior Subordinated Debentures are
denominated in one or more foreign currencies or currency units
or if the principal of, premium, if any, or interest, if any, on
any Junior Subordinated Debentures is payable in one or more
foreign currencies or currency units, the restrictions,
elections, certain Federal income tax considerations, specific
terms and other information with respect to such issue of Junior
Subordinated Debentures and such foreign currency or currency
units will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of
principal of, premium, if any, or interest on any series of
Junior Subordinated Debentures, special Federal income tax,
accounting and other considerations applicable thereto will be
described in the applicable Prospectus Supplement.
Denominations, Registration and Transfer
Unless otherwise specified in the applicable Prospectus
Supplement, the Junior Subordinated Debentures will be issuable
only in registered form without coupons in denominations of
$1,000 and any integral multiple thereof ($25 in the case of
Corresponding Junior Subordinated Debentures). Junior
Subordinated Debentures of any series will be exchangeable for
other Junior Subordinated Debentures of the same series, of any
authorized denominations, and of like tenor and aggregate
principal amount.
Subject to the terms of the Indenture and the limitations
applicable to Global Junior Subordinated Debentures, Junior
Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with
the form of transfer endorsed thereon, or a satisfactory written
instrument of transfer, duly executed), at the office of the
appropriate Securities Registrar or at the office of any transfer
agent designated by the Company for such purpose with respect to
any series of Junior Subordinated Debentures and referred to in
the applicable Prospectus Supplement, without service charge, but
the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
If the applicable Prospectus Supplement refers to any transfer
agents (in addition to the Securities Registrar) initially
designated by the Company with respect to any series of Junior
Subordinated Debentures, the Company may at any time rescind the
designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, provided
that the Company maintains a transfer agent in each Place of
Payment for such series. The Company may at any time designate
additional transfer agents with respect to any series of Junior
Subordinated Debentures.
In the event of any redemption, the Company shall not be
required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during a period
beginning at the opening of business 15 days before the day of
selection for redemption of Junior Subordinated Debentures of
that series and ending at the close of business on the day of
mailing of the relevant notice of redemption or (ii) register the
transfer or exchange of any Junior Subordinated Debentures so
selected for redemption, except, in the case of any Junior
Subordinated Debentures being redeemed in part, any portion
thereof not to be redeemed.
Global Junior Subordinated Debentures
The Junior Subordinated Debentures of a series may be issued
in whole or in part in the form of one or more global securities
("Global Junior Subordinated Debentures") that will be deposited
with, or on behalf of, a depositary (the "Depositary") identified
in the Prospectus Supplement relating to such series. Global
Junior Subordinated Debentures may be issued only in fully
registered form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the
individual Junior Subordinated Debentures represented thereby, a
Global Junior Subordinated Debenture may not be transferred
except as a whole by the Depositary for such Global Junior
Subordinated Debenture to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee
of such Depositary or by the Depositary or any nominee to a
successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect
to a series of Junior Subordinated Debentures will be described
in the Prospectus Supplement relating to such series. The
Company anticipates that the following provisions will generally
apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture,
and the deposit of such Global Junior Subordinated Debenture with
or on behalf of the Depositary, the Depositary for such Global
Junior Subordinated Debenture or its nominee will credit on its
book-entry registration and transfer system, the respective
principal amounts of the individual Junior Subordinated
Debentures represented by such Global Junior Subordinated
Debenture to the accounts of persons that have accounts with such
Depositary ("Participants"). Such accounts shall be designated
by the dealers, underwriters or agents with respect to such
Junior Subordinated Debentures or by the Company if such Junior
Subordinated Debentures are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Junior
Subordinated Debenture will be limited to Participants or persons
that may hold interests through Participants. Ownership of
beneficial interests in such Global Junior Subordinated Debenture
will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of
Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of
some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer
beneficial interests in a Global Junior Subordinated Debenture.
So long as the Depositary for a Global Junior Subordinated
Debenture, or its nominee, is the registered owner of such Global
Junior Subordinated Debenture, such Depositary or such nominee,
as the case may be, will be considered the sole owner or holder
of the Junior Subordinated Debentures represented by such Global
Junior Subordinated Debenture for all purposes under the
Indenture governing such Junior Subordinated Debentures. Except
as provided below, owners of beneficial interests in a Global
Junior Subordinated Debenture will not be entitled to have any of
the individual Junior Subordinated Debentures of the series
represented by such Global Junior Subordinated Debenture
registered in their names, will not receive or be entitled to
receive physical delivery of any such Junior Subordinated
Debentures of such series in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest
on individual Junior Subordinated Debentures represented by a
Global Junior Subordinated Debenture registered in the name of a
Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the
Global Junior Subordinated Debenture representing such Junior
Subordinated Debentures. None of the Company, the Debenture
Trustee, any Paying Agent, or the Securities Registrar for such
Junior Subordinated Debentures will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interest of the Global
Junior Subordinated Debenture for such Junior Subordinated
Debentures or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depositary for a series of
Junior Subordinated Debentures or its nominee, upon receipt of
any payment of principal, premium or interest in respect of a
permanent Global Junior Subordinated Debenture representing any
of such Junior Subordinated Debentures, immediately will credit
Participants' accounts with payments in amounts proportionate to
their respective beneficial interest in the principal amount of
such Global Junior Subordinated Debenture for such Junior
Subordinated Debentures as shown on the records of such
Depositary or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in
such Global Junior Subordinated Debenture held through such
Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for
the accounts of customers in bearer form or registered in "street
name." Such payments will be the responsibility of such
Participants.
Unless otherwise specified in the applicable Prospectus
Supplement, if a Depositary for a series of Junior Subordinated
Debentures is at any time unwilling, unable or ineligible to
continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue
individual Junior Subordinated Debentures of such series in
exchange for the Global Junior Subordinated Debenture
representing such series of Junior Subordinated Debentures. In
addition, the Company may at any time and in its sole discretion,
subject to any limitations described in the Prospectus Supplement
relating to such Junior Subordinated Debentures, determine not to
have any Junior Subordinated Debentures of such series
represented by one or more Global Junior Subordinated Debentures
and, in such event, will issue individual Junior Subordinated
Debentures of such series in exchange for the Global Junior
Subordinated Debenture or Securities representing such series of
Junior Subordinated Debentures. Further, if the Company so
specifies with respect to the Junior Subordinated Debentures of a
series, an owner of a beneficial interest in a Global Junior
Subordinated Debenture representing Junior Subordinated
Debentures of such series may, on terms acceptable to the
Company, the Debenture Trustee and the Depositary for such Global
Junior Subordinated Debenture, receive individual Junior
Subordinated Debentures of such series in exchange for such
beneficial interests, subject to any limitations described in the
Prospectus Supplement relating to such Junior Subordinated
Debentures. In any such instance, an owner of a beneficial
interest in a Global Junior Subordinated Debenture will be
entitled to physical delivery of individual Junior Subordinated
Debentures of the series represented by such Global Junior
Subordinated Debenture equal in principal amount to such
beneficial interest and to have such Junior Subordinated
Debentures registered in its name. Individual Junior
Subordinated Debentures of such series so issued will be issued
in denominations, unless otherwise specified by the Company, of
$1,000 and integral multiples thereof ($25 in the case of
Corresponding Junior Subordinated Debentures).
Payment and Paying Agents
Unless otherwise indicated in the applicable Prospectus
Supplement, payment of principal of (and premium, if any) and any
interest on Junior Subordinated Debentures will be made at the
office of the Debenture Trustee in The City of New York or at the
office of such Paying Agent or Paying Agents as the Company may
designate from time to time in the applicable Prospectus
Supplement. Unless otherwise indicated in the applicable
Prospectus Supplement, payment of any interest on Junior
Subordinated Debentures will be made to the Person in whose name
such Junior Subordinated Debenture is registered at the close of
business on the Regular Record Date for such interest, except in
the case of Defaulted Interest. The Company may at any time
designate additional Paying Agents or rescind the designation of
any Paying Agent; however the Company will at all times be
required to maintain a Paying Agent in each Place of Payment for
each series of Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying
Agent, or then held by the Company in trust, for the payment of
the principal of (and premium, if any) or interest on any Junior
Subordinated Debenture and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become
due and payable shall, at the request of the Company, be repaid
to the Company and the holder of such Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor,
only to the Company for payment thereof.
Redemption
Unless otherwise indicated in the applicable Prospectus
Supplement, Junior Subordinated Debentures will not be subject to
any sinking fund and will not be redeemable prior to their Stated
Maturity except as described below.
Except as otherwise specified in the applicable Prospectus
Supplement, if a Debenture Tax Event (as defined below) in
respect of a series of Junior Subordinated Debentures shall occur
and be continuing, the Company may, at its option, redeem such
series of Junior Subordinated Debentures in whole (but not in
part) on any date within 90 days of the occurrence of such
Debenture Tax Event, at a redemption price equal to 100% of the
principal amount of such Junior Subordinated Debentures then
outstanding plus accrued and unpaid interest to the date fixed
for redemption.
"Debenture Tax Event" means the receipt by the Company of an
opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a
result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the
applicable series of Junior Subordinated Debentures under the
Indenture, there is more than an insubstantial risk that interest
payable by the Company on such series of Junior Subordinated
Debentures is not, or within 90 days of the date thereof, will
not be, deductible, in whole or in part, for United States
Federal income tax purposes.
Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder
of Junior Subordinated Debentures to be redeemed at his
registered address. Unless the Company defaults in payment of
the redemption price, on and after the redemption date interest
ceases to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption.
Option to Extend Interest Payment Period
If provided in the applicable Prospectus Supplement, the
Company shall have the right at any time or from time to time
during the term of any series of Junior Subordinated Debentures
to defer the payment of interest for such number of consecutive
interest payment periods with respect to each deferred period as
may be specified in the applicable Prospectus Supplement (each,
an "Extension Period"), subject to the terms, conditions and
covenants, if any, specified in such Prospectus Supplement,
provided that such Extension Period may not extend beyond the
maturity of the Junior Subordinated Debentures. Certain United
States Federal income tax consequences and special considerations
applicable to any such Junior Subordinated Debentures will be
described in the applicable Prospectus Supplement.
In the event that the Company exercises this right, during
any such Extension Period the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt
securities that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments
with respect to the foregoing (other than (a) dividends or
distributions in shares of capital stock of the Company and (b)
payments under Guarantee).
Modification of Indenture
Without the consent of any holder of Junior Subordinated
Debentures, the Company and the Debenture Trustee may enter into
one or more supplemental indentures for any of the following
purposes: (a) to evidence the assumption by any permitted
successor to the Company of the covenants of the Company in the
Indenture and in the Junior Subordinated Debentures; or (b) to
add one or more covenants of the Company or other provisions for
the benefit of the holders of outstanding Junior Subordinated
Debentures or to surrender any right or power conferred upon the
Company by the Indenture; or (c) to add any additional Debenture
Events of Default with respect to outstanding Junior Subordinated
Debentures; or (d) to change or eliminate any provision of the
Indenture or to add any new provision to the Indenture, provided
that if such change, elimination or addition will adversely
affect the interests of the holders of Junior Subordinated
Debentures of any series in any material respect, such change,
elimination or addition will become effective with respect to
such series only (1) when the consent of the holders of Junior
Subordinated Debentures of such series has been obtained in
accordance with the Indenture, or (2) when no Junior Subordinated
Debentures of such series remain outstanding under the Indenture;
or (e) to provide collateral security for all but not part of the
Junior Subordinated Debentures; or (f) to establish the form or
terms of Junior Subordinated Debentures of any other series as
permitted by the Indenture; or (g) to provide for the
authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and
for the procedures for the registration, exchange and replacement
thereof and for the giving of notice to, and the solicitation of
the vote or consent of, the holders thereof, and for any and all
other matters incidental thereto; or (h) to evidence and provide
for the acceptance of appointment of a successor Debenture
Trustee under the Indenture with respect to the Junior
Subordinated Debentures of one or more series and to add to or
change any of the provisions of the Indenture as shall be
necessary to provide for or to facilitate the administration of
the trusts under the Indenture by more than one trustee; or
(i) to provide for the procedures required to permit the
utilization of a noncertificated system of registration for the
Junior Subordinated Debentures of all or any series; or (j) to
change any place where (1) the principal of and premium, if any,
and interest, if any, on all or any series of Junior Subordinated
Debentures shall be payable, (2) all or any series of Junior
Subordinated Debentures may be surrendered for registration of
transfer or exchange and (3) notices and demands to or upon the
Company in respect of Junior Subordinated Debentures and the
Indenture may be served; or (k) to cure any ambiguity or
inconsistency or to add or change any other provisions with
respect to matters and questions arising under the Indenture,
provided such changes or additions shall not adversely affect the
interests of the holders of Junior Subordinated Debentures of any
series in any material respect. The Indenture contains
provisions permitting the Company and the Debenture Trustee, with
the consent of the holders of not less than a majority in
principal amount of each outstanding series of Junior
Subordinated Debentures affected, to modify the Indenture in a
manner affecting the rights of the holders of such series of the
Junior Subordinated Debentures; provided, that no such
modification may, without the consent of the holder of each
outstanding Junior Subordinated Debenture so affected, (i) change
the Stated Maturity of any series of Junior Subordinated
Debentures, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon (except
such extension as is contemplated thereby), (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures
of any series, the holders of which are required to consent to
any such modification of the Indenture, or (iii) modify certain
of the provisions of the Indenture relating to supplemental
indentures, waivers of certain covenants and waivers of past
defaults with respect to the Junior Subordinated Debentures of
any series, without the consent of the holder of each outstanding
Junior Subordinated Debentures affected thereby, provided that,
in the case of Corresponding Junior Subordinated Debentures, so
long as any of the corresponding series of Preferred Securities
remain outstanding, no such modification may be made that
adversely affects the holders of such Preferred Securities, and
no termination of the Indenture may occur, and no waiver of any
Debenture Event of Default or compliance with any covenant under
the Indenture may be effective, without the prior consent of the
holders of at least a majority of the aggregate liquidation
preference amount of such Preferred Securities unless and until
the principal of the Corresponding Junior Subordinated Debentures
and all accrued and unpaid interest thereon have been paid in
full and certain other conditions are satisfied.
Debenture Events of Default
The Indenture provides that any one or more of the following
described events with respect to a series of Junior Subordinated
Debentures that has occurred and is continuing constitutes a
"Debenture Event of Default" with respect to such series of
Junior Subordinated Debentures:
(i) failure for 60 days to pay any interest on such
series of the Junior Subordinated Debentures, when due and
payable (subject to the deferral of any interest payments in
the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on
such series of Junior Subordinated Debentures when due and
payable; or
(iii) failure to perform, or breach of, any covenant or
warranty of the Company contained in the Indenture for 60
days after written notice to the Company from the Debenture
Trustee or to the Company and the Debenture Trustee by the
holders of at least 33% in principal amount of such series of
outstanding Junior Subordinated Debentures as provided in the
Indenture; or
(iv) certain events in bankruptcy, insolvency or
reorganization of the Company; or
(v) any other Event of Default specified with respect to
the Junior Subordinated Debentures.
If a Debenture Event of Default due to the default in
payment of principal of, or interest on, any series of Junior
Subordinated Debentures or due to the default in the performance
or breach of any other covenant or warranty of the Company
applicable to the Junior Subordinated Debentures of such series
but not applicable to all series occurs and is continuing, then
either the Debenture Trustee or the holders of not less than 33%
in aggregate principal amount of the outstanding Junior
Subordinated Debentures of such series may declare the principal
of all of the Junior Subordinated Debentures of such series and
interest accrued thereon to be due and payable immediately
(subject to the subordination provisions of the Indenture). If a
Debenture Event of Default due to the default in the performance
of any other covenants or agreements in the Indenture applicable
to all outstanding Junior Subordinated Debentures or due to
certain events of bankruptcy, insolvency or reorganization of the
Company has occurred and is continuing, either the Debenture
Trustee or the holders of not less than 33% in aggregate
principal amount of all outstanding Junior Subordinated
Debentures, considered as one class, and not the holders of the
Junior Subordinated Debentures of any one of such series may make
such declaration of acceleration (subject to the subordination
provisions of the Indenture).
At any time after such a declaration of acceleration with
respect to the Junior Subordinated Debentures of any series has
been made and before a judgment or decree for payment of the
money due has been obtained, the Debenture Event or Events of
Default giving rise to such declaration of acceleration will,
without further act, be deemed to have been waived, and such
declaration and its consequences will, without further act, be
deemed to have been rescinded and annulled, if
(a) the Company has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(1) all overdue interest on all Junior Subordinated
Debentures of such series;
(2) the principal of and premium, if any, on any
Junior Subordinated Debentures of such series which have become
due otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed therefor in such
Junior Subordinated Debentures;
(3) interest upon overdue interest at the rate or
rates prescribed therefor in such Junior Subordinated Debentures,
to the extent that payment of such interest is lawful; and
(4) all amounts due to the Debenture Trustee under the
Indenture;
(b) any other Debenture Event or Events of Default with
respect to Junior Subordinated Debentures of such series, other
than the nonpayment of the principal of the Junior Subordinated
Debentures of such series which has become due solely by such
declaration of acceleration, have been cured or waived as
provided in the Indenture.
The holders of a majority in aggregate principal amount of
the Junior Subordinated Debentures of all series then outstanding
may waive compliance by the Company with certain restrictive
provisions of the Indenture. The holders of a majority in
outstanding principal amount of the Junior Subordinated
Debentures of any series may, on behalf of the holders of all the
Junior Subordinated Debentures of such series, waive any past
default under the Indenture with respect to such series, except a
default in the payment of principal or interest (unless such
default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a
default in respect of a covenant or provision which under the
Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture of
such series affected. With respect to the Corresponding Junior
Subordinated Debentures held by an Issuer, such Issuer may not
waive compliance by the Company with certain restrictive
provisions of the Corresponding Indenture or waive any past
defaults thereunder without the consent of a majority in
aggregate liquidation preference amount of the outstanding
Preferred Securities issued by such Issuer.
The Company is required to file annually with the Debenture
Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it
under the Indenture.
In case a Debenture Event of Default shall occur and be
continuing as to a series of Corresponding Junior Subordinated
Debentures, the Property Trustee will have the right to declare
the principal of and the interest on such Corresponding Junior
Subordinated Debentures and any other amounts payable under the
Corresponding Indenture, to be forthwith due and payable and to
enforce its other rights as a creditor with respect to such
Corresponding Junior Subordinated Debentures. If the Property
Trustee fails to enforce its rights with respect to the
Corresponding Junior Subordinated Debentures or the related Trust
Agreement, a holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Property
Trustee's rights with respect to the Corresponding Junior
Subordinated Debentures or such Trust Agreement, to the fullest
extent permitted by law, without first instituting any legal
proceeding against the Property Trustee or any other person. See
"Description of Preferred Securities--Voting Rights; Amendment of
Trust Agreement". Notwithstanding the foregoing, a holder of
Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of principal of or interest
on the Corresponding Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation preference
amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Debentures. See
"Description of Guarantees" and "Description of Corresponding
Junior Subordinated Debentures".
Certain Covenants of the Company
The Company will covenant, as to each series of Junior
Subordinated Debentures, that it will not, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or
make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt
securities (including other Junior Subordinated Debentures) that
rank par passu with or junior in interest to the Junior
Subordinated Debentures or make any guarantee payments with
respect to the foregoing (other than (a) dividends or
distributions in common stock of the Company, and (b) payments
under any Guarantee) if at such time (i) there shall have
occurred and be continuing a payment default (whether before or
after expiration of any period of grace) or a Debenture Event of
Default with respect to Junior Subordinated Debentures of such
(ii) the Company shall be in default with respect to its payment
of any obligations under the Guarantee relating to the Preferred
Securities of the Issuer to which Junior Subordinated Debentures
of such series have been issued or (iii) the Company shall have
given notice of its selection of an Extension Period as provided
in the Indenture with respect to Junior Subordinated Debentures
of such series and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing.
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Company shall not consolidate
with or merge into any other corporation or convey, transfer or
lease its properties and assets substantially as an entirety to
any person, unless (i) in case the Company consolidates with or
merges into another corporation or conveys or transfers its
properties and assets substantially as an entirety to any person,
the successor corporation is organized under the laws of the
United States or any State or the District of Columbia, and such
successor corporation expressly assumes the Company's obligations
on all Junior Subordinated Debentures issued under the Indenture;
(ii) immediately after giving effect thereto, no Debenture Event
of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have
occurred and be continuing; and (iii) certain other conditions as
prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders
of the Junior Subordinated Debentures protection in the event of
a highly leveraged or other transaction involving the Company
that may adversely affect holders of the Junior Subordinated
Debentures.
Satisfaction And Discharge
The principal amount of any series of Junior Subordinated
Debentures issued under the Indenture will be deemed to have been
paid for purposes of the Indenture and the entire indebtedness of
the Company in respect thereof will be deemed to have been
satisfied and discharged, if there shall have been irrevocably
deposited with the Debenture Trustee or any Paying Agent, in
trust: (a) money in an amount which will be sufficient, or
(b) in the case of a deposit made prior to the maturity of the
Junior Subordinated Debentures, Government Obligations (as
defined herein), which do not contain provisions permitting the
redemption or other prepayment thereof at the option of the
issuer thereof, the principal of and the interest on which when
due, without any regard to reinvestment thereof, will provide
moneys which, together with the money, if any, deposited with or
held by the Debenture Trustee, will be sufficient, or (c) a
combination of (a) and (b) which will be sufficient, to pay when
due the principal of and premium, if any, and interest, if any,
due and to become due on the Junior Subordinated Debentures of
such series that are outstanding. For this purpose, Government
Obligations, include direct obligations of, or obligations
unconditionally guaranteed by, the United States of America
entitled to the benefit of the full faith and credit thereof and
certificates, depositary receipts or other instruments which
evidence a direct ownership interest in such obligations or in
any specific interest or principal payments due in respect
thereof.
It is possible that for federal income tax purposes any
deposit contemplated in the preceding paragraph could be treated
as a taxable exchange of the Junior Subordinated Debentures
outstanding for an issue of obligations of a trust or a direct
interest in the cash and securities held in trust. In that case,
holders of the Junior Subordinated Debentures outstanding would
recognize a gain or loss for federal income tax purposes, as if
their share of trust obligations or the cash or securities
deposited, as the case may be, had actually been received by them
in exchange for their Junior Subordinated Debentures. In
addition, such holders thereafter would be required to include in
income a share of the income, gain or loss of the trust. The
amount so required to be included in income could be different
from the amount that would be includable in the absence of such
deposit. Prospective investors are urged to consult their own
tax advisors as to the specific consequences to them of such
deposit.
Conversion or Exchange
If so indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible
or exchangeable into other securities. The specific terms on
which Junior Subordinated Debentures of any series may be so
converted or exchanged will be set forth in the applicable
Prospectus Supplement. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Company, in which case the number
of shares of Preferred Securities or other securities to be
received by the holders of Junior Subordinated Debentures would
be calculated as of a time and in the manner stated in the
applicable Prospectus Supplement.
Subordination
In the Indenture, the Company has covenanted and agreed that
any Junior Subordinated Debentures issued thereunder will be
subordinate and junior in right of payment to all Senior Debt to
the extent provided in the Indenture. Upon any payment or
distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of the
Company, the holders of Senior Debt will first be entitled to
receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of
Junior Subordinated Debentures or, in the case of Corresponding
Junior Subordinated Debentures, the Property Trustee on behalf of
the holders, will be entitled to receive or retain any payment in
respect of the principal of (and premium, if any) or interest, if
any, on the Junior Subordinated Debentures.
In the event of the acceleration of the maturity of any
Junior Subordinated Debentures, the holders of all Senior Debt
outstanding at the time of such acceleration will first be
entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders
of Junior Subordinated Debentures will be entitled to receive any
payment upon the principal of (or premium, if any) or interest,
if any, on the Junior Subordinated Debentures.
No payments on account of principal (or premium, if any) or
interest, if any, in respect of the Junior Subordinated
Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Debt,
or an event of default with respect to any Senior Debt resulting
in the acceleration of the maturity thereof remaining uncured.
The term Senior Debt is defined in the Indenture to mean all
obligations (other than non-recourse obligations and the
indebtedness issued under the Indenture) of, or guaranteed or
assumed by, the Company for borrowed money, including both senior
and subordinated indebtedness for borrowed money (other than the
Junior Subordinated Debentures), or for the payment of money
relating to any lease which is capitalized on the consolidated
balance sheet of the Company and its subsidiaries in accordance
with generally accepted accounting principles as in effect from
time to time, or evidenced by bonds, debentures, notes or other
similar instruments, and in each case, amendments, renewals,
extensions, modifications and refundings of any such indebtedness
or obligations, whether existing as of the date of the Indenture
or subsequently incurred by the Company unless, in the case of
any particular indebtedness, renewal, extension or refunding, the
instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness,
renewal, extension or refunding is not superior in right of
payment to or is pari passu with the Junior Subordinated
Debentures; provided that the Company's obligations under any
Guarantee shall not be deemed to be Senior Debt.
The Indenture places no limitation on the amount of
additional Senior Debt that may be incurred by the Company. The
Company expects from time to time to incur additional
indebtedness constituting Senior Debt.
Governing Law
The Indenture and the Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the
State of New York.
Information Concerning the Debenture Trustee
The Debenture Trustee shall have and be subject to all the
duties and responsibilities specified with respect to an
indenture trustee under the Trust Indenture Act. Subject to such
provisions, the Debenture Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless
offered reasonable indemnity by such holder against the costs,
expenses and liabilities which might be incurred thereby. The
Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably
assured to it.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer,
the Issuer Trustees on behalf of such Issuer will issue the
Preferred Securities and the Common Securities. The Preferred
Securities of a particular issue will represent preferred
undivided beneficial interests in the assets of the related
Issuer and the holders thereof will be entitled to a preference
in certain circumstances with respect to Distributions and
amounts payable on redemption or liquidation over the Common
Securities of such Issuer, as well as other benefits as described
in the corresponding Trust Agreement. This summary of certain
provisions of each Trust Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of each Trust Agreement,
including the definitions therein of certain terms, and the Trust
Indenture Act. Wherever particular defined terms of the Trust
Agreement are referred to, such defined terms are incorporated
herein by reference. The form of the Trust Agreement has been
filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Each of the Issuers is a legally
separate entity and the assets of one are not available to
satisfy the obligations of any of the others.
General
The Preferred Securities of an Issuer will rank pari passu,
and payments will be made thereon pro rata, with the Common
Securities of that Issuer except as described under "--
Subordination of Common Securities". Legal title to the
Corresponding Junior Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the
related Preferred Securities and Common Securities. Each
Guarantee Agreement executed by the Company for the benefit of
the holders of an Issuer's Preferred Securities (each, a
"Guarantee") will be a guarantee on a subordinated basis with
respect to the related Preferred Securities but will not
guarantee payment of Distributions or amounts payable on
redemption or liquidation of such Preferred Securities when the
related Issuer does not have funds on hand available to make such
payments. See "Description of Guarantees".
Distributions
Each Issuer's Preferred Securities represent preferred
undivided beneficial interests in the assets of such Issuer, and
the Distributions on each Preferred Security will be payable at a
rate specified in the Prospectus Supplement for such Preferred
Securities. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day
months unless otherwise specified in the applicable Prospectus
Supplement. Distributions that are in arrears may bear interest
on the amount thereof at the rate per annum if and as specified
in the applicable Prospectus Supplement ("Additional Amounts").
The term "Distributions" as used herein includes any Additional
Amounts unless otherwise stated.
Distributions on the Preferred Securities will be cumulative,
will accumulate from the date of original issuance and will be
payable on such dates as specified in the applicable Prospectus
Supplement. In the event that any date on which Distributions
are payable on the Preferred Securities is not a Business Day (as
defined below), payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect to any such
delay) except that, if such Business Day is in the next
succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date (each date on
which Distributions are payable in accordance with the foregoing,
a "Distribution Date"). A "Business Day" shall mean any day
other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required
by law or executive order to remain closed or a day on which the
corporate trust office of the Property Trustee or the
Corresponding Debenture Trustee is closed for business.
If provided in the applicable Prospectus Supplement, the
Company has the right under the Corresponding Indenture to defer
the payment of interest on any series of the Corresponding Junior
Subordinated Debentures at any time or from time to time for one
or more Extension Periods, subject to the terms, conditions and
covenants, if any, specified in the applicable Prospectus
Supplement, provided that such Extension Period may not extend
beyond the maturity of the Corresponding Junior Subordinated
Debentures. As a consequence of any such deferral, Distributions
on the corresponding Preferred Securities would be deferred (but
would continue to accumulate additional Distributions thereon at
the rate per annum set forth in the Prospectus Supplement for
such Preferred Securities) by the Issuer of such Preferred
Securities during any such Extension Period. In the event that
the Company exercises this right, during such Extension Period
the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital
stock or (ii) make any payment of principal, interest or premium,
if any, on or repay, repurchase or redeem any debt securities
that rank pari passu with or junior in interest to the
Corresponding Junior Subordinated Debentures or make any
guarantee payments with respect to the foregoing (other than (a)
dividends or distributions in shares of capital stock of the
Company and (b) payments under any Guarantee).
It is anticipated that the revenue of each Issuer available
for distribution to holders of its Preferred Securities will be
limited to payments under the Corresponding Junior Subordinated
Debentures in which the Issuer will invest the proceeds from the
issuance and sale of its Preferred Securities and its Common
Securities. See "Description of Corresponding Junior
Subordinated Debentures". If the Company does not make interest
payments on such Corresponding Junior Subordinated Debentures,
the Property Trustee will not have funds available to pay
Distributions on the corresponding Preferred Securities. The
payment of Distributions (if and to the extent the Issuer has
funds available for the payment of such Distributions and cash
sufficient to make such payments) is guaranteed on a limited
basis as set forth herein under "Description of Guarantees".
Distributions on the Preferred Securities will be payable to
the holders thereof as they appear on the register of such Issuer
on the relevant record dates, which, as long as the Preferred
Securities remain in book-entry form, will be one Business Day
prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the
applicable Trust Agreement, each such payment will be made as
described under "--Book-Entry Issuance". In the event any
Preferred Securities are not in book-entry form, the relevant
record date for such Preferred Securities shall be the date 15
days prior to the relevant Distribution Date.
Redemption
Mandatory Redemption. Upon the repayment or redemption, in
whole or in part, of any Corresponding Junior Subordinated
Debentures, whether at maturity or upon earlier redemption as
provided in the Corresponding Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee
to redeem a Like Amount (as defined below) of the related
Preferred Securities and Common Securities, upon not less than 30
nor more than 60 days notice prior to the date fixed for
repayment or redemption (the "Redemption Date"), at a redemption
price equal to the aggregate liquidation preference amount of
such Preferred Securities plus accumulated and unpaid
Distributions thereon to the Redemption Date and the related
amount of the premium, if any, paid by the Company upon the
concurrent redemption of such Corresponding Junior Subordinated
Debentures (the "Redemption Price"). See "Description of
Corresponding Junior Subordinated Debentures--Optional
Redemption". If less than all of any series of Corresponding
Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the
Preferred Securities and the Common Securities. The amount of
premium, if any, paid by the Company upon the redemption of all
or any part of any series of any Corresponding Junior
Subordinated Debentures to be repaid or redeemed on a Redemption
Date shall be allocated to the redemption pro rata of the
Preferred Securities and the Common Securities.
The Company will have the right to redeem any series of
Corresponding Junior Subordinated Debentures (i) in whole at any
time or in part from time to time, subject to the conditions
described under "Description of Corresponding Junior Subordinated
Debentures--Optional Redemption", (ii) at any time, in whole (but
not in part), upon the occurrence of a Tax Event or an Investment
Company Event (each as defined below, a "Special Event") and
subject to the further conditions described under "Description of
Corresponding Junior Subordinated Debentures--Optional Re
demption", or (iii) as may be otherwise specified in the
applicable Prospectus Supplement.
Special Event Redemption or Distribution. Except as
otherwise specified in the applicable Prospectus Supplement, if a
Special Event in respect of a series of Preferred Securities and
Common Securities shall occur and be continuing, the Company has
the right to (i) redeem the Corresponding Junior Subordinated
Debentures in whole (but not in part) and therefore cause a
mandatory redemption of such Preferred Securities and Common
Securities in whole (but not in part) at the Redemption Price
within 90 days following the occurrence of such Special Event, or
(ii) terminate the related Issuer and, after satisfaction of
creditors of the Trust, if any, as provided by applicable law,
cause such Corresponding Junior Subordinated Debentures to be
distributed to the holders of such Preferred Securities and
Common Securities in liquidation of such Issuer. If at any time
an Issuer is not or will not be taxed as a grantor trust but a
Tax Event in respect of the related Preferred Securities has not
occurred, the Company has the right to terminate such Issuer and,
after satisfaction of creditors of the Trust, if any, as provided
by applicable law, cause the Corresponding Junior Subordinated
Debentures to be distributed to the holders of the Preferred
Securities in liquidation of such Issuer. If the Company does
not elect either option (i) or (ii) above, the applicable series
of Preferred Securities will remain outstanding and, in the event
a Tax Event has occurred and is continuing, Additional Interest
(as described under "Description of Corresponding Junior
Subordinated Debentures -- Certain Covenants of the Company")
will be payable on the Corresponding Junior Subordinated
Debentures.
"Tax Event" means the receipt by an Issuer of an opinion of
counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation, or as a result
of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the
series of Preferred Securities by such Issuer under the related
Trust Agreement, there is more than an insubstantial risk that
(i) such Issuer is, or will be within 90 days of the date
thereof, subject to United States Federal income tax with respect
to income received or accrued on the corresponding series of
Corresponding Junior Subordinated Debentures, (ii) interest
payable by the Company on such series of Corresponding Junior
Subordinated Debentures is not, or within 90 days of the date
thereof, will not be, deductible, in whole or in part, for United
States Federal income tax purposes, or (iii) such Issuer is, or
will be within 90 days of the date thereof, subject to more than
a de minimis amount of other taxes, duties or other governmental
charges.
"Investment Company Event" means the occurrence of a change
in law or regulation or a change in interpretation or application
of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law") to
the effect that the an Issuer is or will be considered an
"investment company" that is required to be registered under the
Investment Company Act of 1940, as amended (the "Investment
Company Act"), which Change in 1940 Act Law becomes effective on
or after the date of original issuance of the series of Preferred
Securities issued by such Issuer.
"Like Amount" means (i) with respect to a redemption of any
series of Preferred Securities, Preferred Securities and Common
Securities of such series having a Liquidation Preference Amount
(as defined below) equal to that portion of the principal amount
of Corresponding Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Corresponding
Indenture and the proceeds of which will be used to pay the
Redemption Price of such Preferred Securities and Common
Securities. "Liquidation Preference Amount" means the stated
amount of $25 per Preferred Security and Common Security.
After the liquidation date fixed for any distribution of
Corresponding Junior Subordinated Debentures for any series of
Preferred Securities (i) such series of Preferred Securities will
no longer be deemed to be outstanding, (ii) The Depository Trust
Company ("DTC") or its nominee, as the record holder of such
series of Preferred Securities, will receive a registered global
certificate or certificates representing the Corresponding Junior
Subordinated Debentures to be delivered upon such distribution
and (iii) any certificates representing such series of Preferred
Securities not held by DTC or its nominee will be deemed to
represent the Corresponding Junior Subordinated Debentures having
a principal amount equal to the stated liquidation preference of
such series of Preferred Securities, and bearing accrued and
unpaid interest in an amount equal to the accrued and unpaid
Distributions on such series of Preferred Securities until such
certificates are presented to the Administrative Trustees or
their agent for transfer or reissuance.
There can be no assurance as to the market prices for the
Preferred Securities or the Corresponding Junior Subordinated
Debentures that may be distributed in exchange for Preferred
Securities if a dissolution and liquidation of an Issuer were to
occur. Accordingly, the Preferred Securities that an investor
may purchase, or the Corresponding Junior Subordinated Debentures
that the investor may receive on dissolution and liquidation of
an Issuer, may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the applicable proceeds
from the contemporaneous redemption of the Corresponding Junior
Subordinated Debentures. Redemptions of the Preferred Securities
shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the related Issuer has
funds on hand available for the payment of such Redemption Price.
See also "--Subordination of Common Securities".
If an Issuer gives a notice of redemption in respect of its
Preferred Securities, then, by 12:00 noon, New York City time, on
the Redemption Date, to the extent funds are available, the
Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of such Preferred Securities. See
"--Book-Entry Issuance". If such Preferred Securities are no
longer in book-entry form, the Issuer, to the extent funds are
available, will irrevocably deposit with the paying agent for
such Preferred Securities funds sufficient to pay the applicable
Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the
holders thereof upon surrender of their certificates evidencing
such Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to
the holders of such Preferred Securities on the relevant record
dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required,
then upon the date of such deposit, all rights of the holders of
such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to
receive the Redemption Price, but without interest on such
Redemption Price, and such Preferred Securities will cease to be
outstanding. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest
or other payment in respect of any such delay), except that, if
such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of
Preferred Securities called for redemption is improperly withheld
or refused and not paid either by the Issuer or by the Company
pursuant to the related Guarantee as described under "Description
of Guarantees", Distributions on such Preferred Securities will
continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Issuer for such
Preferred Securities to the date such 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.
Subject to applicable law (including, without limitation,
United States Federal securities law), the Company or its
subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or
by private agreement.
Payment of the Redemption Price on the Preferred Securities
and any distribution of Corresponding Junior Subordinated
Debentures to holders of Preferred Securities shall be made to
the applicable recordholders thereof as they appear on the
register for such Preferred Securities on the relevant record
date, which shall be one Business Day prior to the relevant
Redemption Date or liquidation date, as applicable; provided,
however, that in the event that any Preferred Securities are not
in book-entry form, the relevant record date for such Preferred
Securities shall be the date 15 days prior to the Redemption Date
or liquidation date, as applicable.
If less than all of the Preferred Securities and Common
Securities issued by an Issuer are to be redeemed on a Redemption
Date, then the aggregate Liquidation Preference Amount of such
Preferred Securities and Common Securities to be redeemed shall
be allocated pro rata among the Preferred Securities and the
Common Securities. The particular Preferred Securities to be
redeemed shall be selected on a pro rata basis not more than 60
days prior to the Redemption Date by the Property Trustee from
the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem
fair and appropriate and which may provide for the selection for
redemption of portions (equal to $25 or an integral multiple of
$25 in excess thereof) of the Liquidation Preference Amount of
Preferred Securities of a denomination larger than $25. The
Property Trustee shall promptly notify the transfer agent and
registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected
for partial redemption, the Liquidation Preference Amount thereof
to be redeemed. For all purposes of each Trust Agreement, unless
the context otherwise requires, all provisions relating to the
redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part,
to the portion of the aggregate Liquidation Preference Amount of
Preferred Securities which has been or is to be redeemed.
Subordination of Common Securities
Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, each Issuer's
Preferred Securities and Common Securities, as applicable, shall
be made pro rata based on the Liquidation Preference Amount of
such Preferred Securities and Common Securities; provided,
however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default shall have occurred and be continuing,
no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any of the Issuer's
Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional
Amounts, if applicable) on all of the Issuer's outstanding
Preferred Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the
Issuer's outstanding Preferred Securities, shall have been made
or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on,
or Redemption Price of, the Issuer's Preferred Securities then
due and payable.
In the case of any Event of Default resulting from a
Debenture Event of Default, the Company, as holder of such
Issuer's Common Securities, will be deemed to have waived any
right to act with respect to any such Event of Default under the
related Trust Agreement until the effect of all such Events of
Default with respect to such Preferred Securities have been
cured, waived or otherwise eliminated. Until any such Events of
Default under such Trust Agreement with respect to such Preferred
Securities have been so cured, waived or otherwise eliminated,
the Property Trustee shall act solely on behalf of the holders of
such Preferred Securities and not on behalf of the Company as
holder of the related Issuer's Common Securities, and only the
holders of such Preferred Securities will have the right to
direct the Property Trustee to act on their behalf.
Liquidation Distribution upon Termination
Pursuant to each Trust Agreement, each Issuer shall
automatically terminate upon expiration of its term and shall be
terminated on the first to occur of: (i) the occurrence of
certain events of bankruptcy, dissolution or liquidation of the
Company; (ii) the distribution of a Like Amount of the
Corresponding Junior Subordinated Debentures to the holders of
its Preferred Securities and Common Securities following the
occurrence of a Special Event or in the event such Issuer is not
or will not be taxed as a grantor trust but a Tax Event has not
occurred; (iii) the redemption of all of such Issuer's Preferred
Securities; and (iv) an order for the termination of such Issuer
shall have been entered by a court of competent jurisdiction.
If an early termination occurs as described in clause (i),
(ii) or (iv) above, such Issuer shall be liquidated by the Issuer
Trustees as expeditiously as the Issuer Trustees determine to be
possible by distributing, after satisfaction of liabilities to
creditors of such Issuer, if any, as provided by applicable law,
to the holders of such Preferred Securities and Common Securities
a Like Amount of the Corresponding Junior Subordinated
Debentures, unless such distribution is determined by the
Property Trustee not to be practical, in which event such holders
will be entitled to receive out of the assets of such Issuer
available for distribution to holders, after satisfaction of
liabilities to creditors of such Issuer, if any, as provided by
applicable law, an amount equal to, in the case of holders of
Preferred Securities, the aggregate of the Liquidation Preference
Amount plus accrued and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution").
If such Liquidation Distribution can be paid only in part because
such Issuer has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable
directly by such Issuer on its Preferred Securities shall be paid
on a pro rata basis. The holder(s) of such Issuer's Common
Securities will be entitled to receive distributions upon any
such liquidation pro rata with the holders of its Preferred
Securities, except that if a Debenture Event of Default has
occurred and is continuing, the Preferred Securities shall have a
priority over the Common Securities. A supplemental indenture
may provide that if an early termination occurs as described in
clause (iv) above, the Corresponding Junior Subordinated
Debentures may be subject to optional redemption in whole (but
not in part).
Events of Default; Notice
Any one of the following events constitutes an "Event of
Default" under each Trust Agreement (an "Event of Default") with
respect to the Preferred Securities issued thereunder (whatever
the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
(i) the occurrence of a Debenture Event of Default under
the Corresponding Indenture (see "Description of Junior
Subordinated Debentures--Debenture Events of Default"); or
(ii) default by the Issuer in the payment of any
Distribution when it becomes due and payable, and
continuation of such default for a period of 30 days; or
(iii) default by the Issuer in the payment of any
Redemption Price of any Preferred Security or Common Security
when it becomes due and payable; or
(iv) default in the performance, or breach, in any
material respect, of any covenant or warranty of the Issuer
Trustees in such Trust Agreement (other than a covenant or
warranty a default in the performance of which or the breach
of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60
days after there has been given, by registered or certified
mail, to the defaulting Issuer Trustee or Trustees by the
holders of at least 10% in aggregate Liquidation Preference
Amount of the outstanding Preferred Securities of the
applicable Issuer, a written notice specifying such default
or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under such Trust
Agreement; or
(v) the occurrence of certain events of bankruptcy with
respect to the Issuer.
Within five Business Days after the occurrence of any Event
of Default known to the Property Trustee, the Property Trustee
shall transmit notice of such Event of Default to the holders of
such Issuer's Preferred Securities, the Administrative Trustees
and the Company, as depositor, unless such Event of Default shall
have been cured or waived. The Company, as depositor, and the
Administrative Trustees are required to file annually with the
Property Trustee a certificate as to whether or not they are in
compliance with all the conditions and covenants applicable to
them under the Trust Agreement.
If a Debenture Event of Default has occurred and is
continuing, the Preferred Securities shall have a preference over
the Common Securities upon termination of each Issuer as
described above. See "--Liquidation Distribution Upon
Termination".
Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and
be continuing, any Issuer Trustee may be removed at any time by
the holder of the Common Securities. If a Debenture Event of
Default has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the holders
of a majority in liquidation preference amount of the outstanding
Preferred Securities. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees, which voting rights are
vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of an Issuer Trustee and
no appointment of a successor trustee shall be effective until
the acceptance of appointment by the successor trustee in
accordance with the provisions of the Trust Agreement.
Co-trustees and Separate Property Trustee
Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the
time be located, the Company, as the holder of the Common
Securities, and the Property Trustee shall have the power to
appoint one or more persons either to act as a co-trustee,
jointly with the Property Trustee, of all or any part of such
Trust Property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in
the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power
deemed necessary or desirable, subject to the provisions of the
Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone shall have
power to make such appointment.
Merger or Consolidation of Issuer Trustees
Any entity into which the Property Trustee, the Delaware
Trustee or any Administrative Trustee that is not a natural
person may be merged or converted or with which it may be
consolidated, or any entity resulting from any merger, conversion
or consolidation to which such Trustee shall be a party, or any
entity succeeding to all or substantially all the corporate trust
business of such Trustee, shall be the successor of such Trustee
under any Trust Agreement, provided such entity shall be
otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the
Issuers
An Issuer 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
corporation or other body, except as described below. An Issuer
may, at the request of the Company, with the consent of the
Administrative Trustees and without the consent of the holders of
the related Preferred Securities, merge with or into,
consolidate, amalgamate, or be replaced by a trust organized as
such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the
obligations of such Issuer with respect to such Preferred
Securities or (b) substitutes for such Preferred Securities other
securities (the "Successor Securities") so long as the Successor
Securities rank the same as such Preferred Securities rank in
priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly
appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee
as the holder of the related Corresponding Junior Subordinated
Debentures, (iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other
organization on which such Preferred Securities are then listed,
if any, (iv) such merger, consolidation, amalgamation or
replacement does not cause such Preferred Securities (including
any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of
such Preferred Securities (including any Successor Securities) in
any material respect, (vi) such successor entity has a purpose
substantially identical to that of such Issuer, (vii) prior to
such merger, consolidation, amalgamation or replacement, the
Company has received an opinion from independent counsel to such
Issuer experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
holders of such Preferred Securities (including any Successor
Securities) in any material respect, and (b) following such
merger, consolidation, amalgamation or replacement, neither such
Issuer nor such successor entity will be required to register as
an investment company under the Investment Company Act and (viii)
the Company or any permitted successor or assignee owns all of
the related Common Securities of such successor entity and
guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the
related Guarantee. Notwithstanding the foregoing, an Issuer
shall not, except with the consent of holders of 100% in
liquidation preference amount of such Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause
such Issuer or the successor entity to be classified as other
than a grantor trust for United States Federal income tax
purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "Description of Guarantees-
- -Amendments and Assignment" and as otherwise required by law and
each Trust Agreement, the holders of the Preferred Securities
will have no voting rights.
Each Trust Agreement may be amended from time to time by the
Company and the Administrative Trustees, without the consent of
the holders of the Preferred Securities (i) to cure any
ambiguity, correct or supplement any provisions in such Trust
Agreement which may be inconsistent with any other provision, or
to make any other provisions with respect to matters or questions
arising under such Trust Agreement, which shall not be
inconsistent with the other provisions of such Trust Agreement,
or (ii) to modify, eliminate or add to any provisions of such
Trust Agreement to such extent as shall be necessary to ensure
that such Issuer will be classified for United States Federal
income tax purposes as a grantor trust at all times that any of
its Preferred Securities and Common Securities are outstanding or
to ensure that such Issuer will not be required to register as an
"investment company" under the Investment Company Act; provided,
however, that in the case of clause (ii), such action shall not
adversely affect in any material respect the interests of any
holder of such Preferred Securities or Common Securities, and, in
the case of clause (i), any amendments of such Trust Agreement
shall become effective when notice thereof is given to the
holders of Preferred Securities and Common Securities. Each
Trust Agreement may be amended by the Administrative Trustees and
the Company with (i) the consent of holders representing not less
than a majority (based upon liquidation preference amounts) of
the related outstanding Preferred Securities and Common
Securities and (ii) receipt by the Issuer Trustees of an opinion
of counsel to the effect that such amendment or the exercise of
any power granted to the Issuer Trustees in accordance with such
amendment will not affect such Issuer's status as a grantor trust
for United States Federal income tax purposes or such Issuer's
exemption from status of an "investment company" under the
Investment Company Act, provided that without the consent of each
holder of such Preferred Securities and Common Securities, such
Trust Agreement may not be amended to (i) change the amount or
timing of any Distribution on such Preferred Securities and
Common Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of such Preferred
Securities and Common Securities as of a specified date or (ii)
restrict the right of a holder of such Preferred Securities and
Common Securities to institute suit for the enforcement of any
such payment on or after such date.
So long as any Corresponding Junior Subordinated Debentures
are held by the Property Trustee, the Issuer Trustees shall not
(i) direct the time, method and place of conducting any
proceeding for any remedy available to the Corresponding
Debenture Trustee, or executing any trust or power conferred on
the Property Trustee with respect to such Corresponding Junior
Subordinated Debentures, (ii) waive any past default that is
waiveable under Section 813 of the Corresponding Indenture, (iii)
exercise any right to rescind or annul a declaration that the
principal of all the Corresponding Junior Subordinated Debentures
shall be due and payable or (iv) consent to any amendment,
modification or termination of the Corresponding Indenture or
such Corresponding Junior Subordinated Debentures, where such
consent shall be required, without, in each case, obtaining the
prior approval of the holders of a majority in aggregate
liquidation preference amount of all related outstanding
Preferred Securities; provided, however, that where a consent
under the Corresponding Indenture would require the consent of
each holder of Corresponding Junior Subordinated Debentures
affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the
corresponding Preferred Securities. The Issuer Trustees shall
not revoke any action previously authorized or approved by a vote
of the Preferred Securities except by subsequent vote of the
holders of the Preferred Securities. The Property Trustee shall
notify all holders of any series of Preferred Securities of any
notice of default with respect to the related Corresponding
Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of such Preferred Securities,
prior to taking any of the foregoing actions, the Issuer Trustees
shall obtain an opinion of counsel experienced in such matters to
the effect that the related Issuer will be classified as a
"grantor trust" and not as an association taxable as a
corporation for United States Federal income tax purposes on
account of such action.
If the Property Trustee fails to enforce its rights under the
Corresponding Junior Subordinated Debentures or the related Trust
Agreement, a holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Property
Trustee's rights with respect to the Corresponding Junior
Subordinated Debentures or such Trust Agreement, to the fullest
extent permitted by law, without first instituting any legal
proceeding against the Property Trustee or any other person.
Notwithstanding the foregoing, a holder of Preferred Securities
may directly institute a proceeding for enforcement of payment to
such holder of principal of or interest on the Corresponding
Junior Subordinated Debentures having a principal amount equal to
the aggregate liquidation preference amount of the Preferred
Securities of such holder on or after the due dates specified in
the Junior Subordinated Debentures. See "Description of
Guarantees" and "Description of Corresponding Junior Subordinated
Debentures".
Any required approval of holders of one or more series of
Preferred Securities may be given at a meeting of holders of such
Preferred Securities convened for such purpose or pursuant to
written consent. The Property Trustee will cause a notice of any
meeting at which holders of such Preferred Securities are
entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be given to each
holder of record of such Preferred Securities in the manner set
forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities
will be required for an Issuer to redeem and cancel its Preferred
Securities in accordance with the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Preferred Securities that are owned
by the Company, the Issuer Trustees or any affiliate of the
Company or any Issuer Trustees, shall, for purposes of such vote
or consent, be treated as if they were not outstanding.
Payment and Paying Agency
Payments in respect of the Preferred Securities shall be made
to DTC, which shall credit the relevant accounts at DTC on the
applicable Distribution Dates or, if any Issuer's Preferred
Securities are not held by DTC, such payments shall be made by
check mailed to the address of the holder entitled thereto as
such address shall appear on the Securities Register. Unless
otherwise specified in the applicable Prospectus Supplement, the
paying agent (the "Paying Agent") shall initially be the Property
Trustee and any co-paying agent chosen by the Property Trustee
and acceptable to the Administrative Trustees and the Company.
The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the
Company. In the event that the Property Trustee shall no longer
be the Paying Agent, the Administrative Trustees shall appoint a
successor to act as Paying Agent (which shall be a bank or trust
company acceptable to the Administrative Trustees and the
Company).
Book-Entry Issuance
DTC will act as securities depositary for all of the
Preferred Securities. The Preferred Securities will be issued
only as fully-registered securities registered in the name of
Cede & Co. (DTC's nominee). One or more fully-registered global
certificates will be issued for the Preferred Securities of each
Issuer, representing the aggregate total number of such Issuer's
Preferred Securities, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number
of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships
with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must
be made by or through Direct Participants, which will receive a
credit for the Preferred Securities on DTC's records. The
ownership interest of each actual purchaser of each Preferred
Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or
Indirect Participants through which the Beneficial Owners
purchased Preferred Securities. Transfers of ownership interests
in the Preferred Securities are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Preferred Securities,
except in the event that use of the book-entry system for the
Preferred Securities of such Issuer is discontinued.
To facilitate subsequent transfers, all of the Preferred
Securities deposited by the Participants with DTC are registered
in the name of DTC's nominee, Cede & Co. The deposit of
Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has
no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Preferred Securities are
credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the
registered holder of the Preferred Securities. If less than all
of an Issuer's Preferred Securities are being redeemed, DTC's
current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is
limited to the holders of record of the Preferred Securities, in
those instances in which a vote is required, neither DTC nor Cede
& Co. will itself consent or vote with respect to Preferred
Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the relevant Issuer as
soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts such Preferred Securities are
credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Distribution payments on the Preferred Securities will be
made to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason
to believe that it will not receive payments on such payment
date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and
will be the responsibility of such Participant and not of DTC,
the Property Trustee, the Issuer thereof or the Company, subject
to any statutory or regulatory requirements as may be in effect
from time to time. Payment of Distributions to DTC is the
responsibility of the relevant Issuer, disbursement of such
payments to Direct Participants is the responsibility of DTC, and
disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities
depositary with respect to any of the Preferred Securities at any
time by giving reasonable notice to the relevant Issuer and the
Company. In the event that a successor securities depositary is
not obtained, definitive Preferred Security certificates
representing such Preferred Securities are required to be printed
and delivered. The Company, at its option, may decide to
discontinue use of the system of book-entry transfers through DTC
(or a successor depositary). In any such event, definitive
certificates for such Issuer's Preferred Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Issuers
and the Company believe to be accurate, but the Issuers and the
Company assume no responsibility for the accuracy thereof.
Neither the Issuers nor the Company has any responsibility for
the performance by DTC or its Participants of their respective
obligations as described herein or under the rules and procedures
governing their respective operations.
Registrar and Transfer Agent
Unless otherwise specified in the applicable Prospectus
Supplement, the Property Trustee will act as registrar and
transfer agent for the Preferred Securities.
Registration of transfers of Preferred Securities will be
effected without charge by or on behalf of each Issuer, but upon
payment of any tax or other governmental charges that may be
imposed in connection with any transfer or exchange. The Issuers
will not be required to register or cause to be registered the
transfer of their Preferred Securities after such Preferred
Securities have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only
such duties as are specifically set forth in each Trust Agreement
and, after such Event of Default, must exercise the same degree
of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the applicable Trust
Agreement at the request of any holder of Preferred Securities
unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby. If no
Event of Default has occurred and is continuing and the Property
Trustee is required to decide between alternative causes of
action, construe ambiguous provisions in a Trust Agreement or is
unsure of the application of any provision of the applicable
Trust Agreement, and the matter is not one on which holders of
Preferred Securities are entitled under such Trust Agreement to
vote, then the Property Trustee shall take such action as is
directed by the Company and if not so directed, shall take such
action as it deems advisable and in the best interests of the
holders of the Preferred Securities and the Common Securities and
will have no liability except for its own bad faith, negligence
or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to
conduct the affairs of and to operate the Issuers in such a way
that no Issuer will be deemed to be an "investment company"
required to be registered under the Investment Company Act or
classified other than as a "grantor trust" for United States
Federal income tax purposes and so that the Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the
Company for United States Federal income tax purposes. In this
connection, the Company and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable
law, the certificate of trust of each Issuer or each Trust
Agreement, that the Company and the Administrative Trustees
determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not materially
adversely affect the interests of the holders of the related
Preferred Securities.
Holders of the Preferred Securities have no preemptive or
similar rights.
No Issuer may borrow money or issue debt or mortgage or
pledge any of its assets.
DESCRIPTION OF GUARANTEES
Each Guarantee will be executed and delivered by the Company
concurrently with the issuance by each Issuer of its Preferred
Securities for the benefit of the holders from time to time of
such Preferred Securities. The Bank of New York will act as
indenture trustee (the "Guarantee Trustee") under each Guarantee
for the purposes of compliance with the Trust Indenture Act and
each Guarantee will be qualified as an Indenture under the Trust
Indenture Act. This summary of certain provisions of the
Guarantees does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions
of each Guarantee Agreement, including the definitions therein of
certain terms, and the Trust Indenture Act. The form of each
Guarantee has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Reference in
this summary to Preferred Securities means that Issuer's
Preferred Securities to which a Guarantee relates. The Guarantee
Trustee will hold each Guarantee for the benefit of the holders
of the related Issuer's Preferred Securities.
General
The Company will irrevocably agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee
Payments (as defined below) to the holders of the Preferred
Securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the related Issuer of such Preferred
Securities may have or assert other than the defense of payment.
The following payments with respect to the Preferred Securities,
to the extent not paid by or on behalf of the related Issuer (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such
Preferred Securities, to the extent that such Issuer has funds on
hand available therefor, (ii) the Redemption Price with respect
to any Preferred Securities called for redemption to the extent
that such Issuer has funds on hand available therefor, or (iii)
upon a voluntary or involuntary dissolution, winding up or
liquidation of such Issuer (unless the Corresponding Junior
Subordinated Debentures are distributed to holders of such
Preferred Securities), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of such Issuer
remaining available for distribution to holders of Preferred
Securities. The Company's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the
Company to the holders of the applicable Preferred Securities or
by causing the related Issuer to pay such amounts to such
holders.
Each Guarantee will be an irrevocable guarantee on a
subordinated basis of the related Issuer's obligations under the
Preferred Securities, but will apply only to the extent that such
related Issuer has funds sufficient to make such payments, and is
not a guarantee of collection.
If the Company does not make interest payments on the
Corresponding Junior Subordinated Debentures held by an Issuer,
it is expected that such Issuer will not pay Distributions on the
related Preferred Securities and will not have funds available
therefor. Each Guarantee will rank subordinate and junior in
right of payment to all Senior Debt. See "--Status of
Guarantees". Except as otherwise provided in the applicable
Prospectus Supplement, none of the Guarantees will limit the
incurrence or issuance of other secured or unsecured debt of the
Company, whether under the Corresponding Indenture, any other
indenture that the Company may enter into in the future or
otherwise. See the Prospectus Supplement relating to any
offering of Preferred Securities.
The Company has, through the Guarantees, the Trust
Agreements, the Corresponding Junior Subordinated Debentures, the
Corresponding Indenture and the Expense Agreements, taken
together, fully, irrevocably and unconditionally guaranteed all
of the Issuers' obligations under the Preferred Securities. No
single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee.
It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional
guarantee of the Issuers' obligations under the Preferred
Securities. See "Relationship Among the Preferred Securities,
the Corresponding Junior Subordinated Debentures and the
Guarantees--General".
Status of the Guarantees
Each Guarantee will constitute an unsecured obligation of the
Company and will rank subordinate and junior in right of payment
to all Senior Debt.
Each Guarantee will rank pari passu with all other Guarantees
issued by the Company. Each Guarantee will constitute a
guarantee of payment and not of collection (i.e., the guaranteed
party may institute a legal proceeding directly against the
guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or
entity). Each Guarantee will be held for the benefit of the
holders of the related Preferred Securities. Each Guarantee will
not be discharged except by payment of the related Guarantee
Payments in full to the extent not paid by the related Issuer or
upon distribution to the holders of the related Preferred
Securities of the related Corresponding Junior Subordinated
Debentures. None of the Guarantees places a limitation on the
amount of additional Senior Debt that may be incurred by the
Company. The Company expects from time to time to incur
additional indebtedness constituting Senior Debt.
Amendments and Assignment
Except with respect to any changes that do not materially
adversely affect the rights of holders of the related Preferred
Securities (in which case no vote will be required), no Guarantee
may be amended without the prior approval of the holders of not
less than a majority of the aggregate Liquidation Preference
Amount of such outstanding Preferred Securities. The manner of
obtaining any such approval is set forth under "Description of
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 the Company and shall inure to the benefit
of the holders of the related Preferred Securities then
outstanding.
Events of Default
An event of default under each Guarantee will occur upon the
failure of the Company to perform any of its payment or other
obligations thereunder. The holders of not less than a majority
in aggregate Liquidation Preference Amount of the related
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 such Guarantee or to
direct the exercise of any trust or power conferred upon the
Guarantee Trustee under such Guarantee.
Any holder of the related Preferred Securities may institute
a legal proceeding directly against the Company to enforce its
rights under such Guarantee without first instituting a legal
proceeding against the related Issuer, the Guarantee Trustee or
any other person or entity.
The Company, as guarantor, is required to file annually with
the Guarantee Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants
applicable to it under the Guarantees.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and
continuance of a default by the Company in performance of any
Guarantee, undertakes to perform only such duties as are
specifically set forth in each Guarantee and, after default with
respect to any Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision,
the Guarantee Trustee is under no obligation to exercise any of
the powers vested in it by any Guarantee at the request of any
holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
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
Preferred Securities, upon full payment of the amounts payable
upon liquidation of the related Issuer or upon distribution of
related Corresponding Junior Subordinated Debentures to the
holders of the related 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 Preferred Securities
must restore payment of any sums paid under such Preferred
Securities or such Guarantee.
Governing Law
Each Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
The Expense Agreements
Pursuant to the Expense Agreements entered into by the
Company under the Trust Agreements (the "Expense Agreements"),
the Company will irrevocably and unconditionally guarantee to
each person or entity to whom each Issuer becomes indebted or
liable, the full payment of any costs, expenses or liabilities of
such Issuer, other than obligations of such Issuer to pay to the
holders of the related Preferred Securities or other similar
interests in such Issuer the amounts due such holders pursuant to
the terms of such Preferred Securities or such other similar
interests, as the case may be.
DESCRIPTION OF CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures are to be
issued in one or more series of Junior Subordinated Debentures
under the Corresponding Indenture with terms corresponding to the
terms of the related Preferred Securities. For a summary of
certain terms and provisions of Junior Subordinated Debentures
that, except where noted, pertains in all respects to the
Corresponding Junior Subordinated Debentures, see "Description of
Junior Subordinated Debentures". This summary of certain
additional terms and provisions of the Corresponding Junior
Subordinated Debentures and the Corresponding Indenture pertains
only to the Corresponding Junior Subordinated Debentures and does
not purport to be complete and is subject to, and is qualified in
its entirety by reference to the Corresponding Indenture, the
form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and to the Trust
Indenture Act. Whenever particular defined terms of the
Corresponding Indenture (as supplemented or amended from time to
time) are referred to herein or in a Prospectus Supplement, such
defined terms are incorporated herein or therein by reference.
General
Concurrently with the issuance of each Issuer's Preferred
Securities, the Issuer will invest the proceeds thereof and the
consideration paid by the Company for the Common Securities in a
series of Corresponding Junior Subordinated Debentures issued by
the Company to the Issuer. Each series of Corresponding Junior
Subordinated Debentures will be in the principal amount equal to
the aggregate stated Liquidation Preference Amount of the related
Preferred Securities plus the Company's concurrent investment in
the Common Securities and will rank pari passu with all other
series of Junior Subordinated Debentures. The Corresponding
Junior Subordinated Debentures will be unsecured and subordinate
and junior in right of payment to the extent and in the manner
set forth in the Corresponding Indenture to all Senior Debt of
the Company. See "Description of Junior Subordinated
Debentures--Subordination" and the Prospectus Supplement relating
to any offering of Preferred Securities.
Optional Redemption
Unless otherwise specified in the applicable Prospectus
Supplement, the Company may, at its option, redeem the
Corresponding Junior Subordinated Debentures of any series on any
Interest Payment Date with respect thereto, in whole at any time
or in part from time to time. Except as otherwise set forth in
the applicable Prospectus Supplement, the redemption price for
any Corresponding Junior Subordinated Debentures so redeemed
shall be equal to 100% of the principal amount of such
Corresponding Junior Subordinated Debentures then outstanding
plus accrued and unpaid interest to the date fixed for
redemption. See "Description of Junior Subordinated
Debentures--Redemption".
If a Special Event in respect of an Issuer or a Debenture Tax
Event shall occur and be continuing, the Company may, at its
option, redeem the Corresponding Junior Subordinated Debentures
at any time within 90 days of the occurrence of such Special
Event or Debenture Tax Event, in whole but not in part, subject
to the provisions of the Corresponding Indenture. The redemption
price for any Corresponding Junior Subordinated Debentures shall
be equal to 100% of the principal amount of such Corresponding
Junior Subordinated Debentures then outstanding plus accrued and
unpaid interest to the date fixed for redemption.
For so long as the applicable Issuer is the holder of all the
outstanding series of Corresponding Junior Subordinated
Debentures, the proceeds of any such redemption will be used by
the Issuer to redeem the related Preferred Securities in
accordance with their terms. The Company may not redeem less
than all of Corresponding Junior Subordinated Debentures unless
all accrued and unpaid interest if any, has been paid in full on
all outstanding Corresponding Junior Subordinated Debentures for
all interest periods terminating on or prior to the Redemption
Date.
Certain Covenants of the Company
The Company will covenant in the Corresponding Indenture as
to each series of Corresponding Junior Subordinated Debentures,
that so long as any Preferred Securities remain outstanding, if
the Issuer which issued such Preferred Securities shall be
required to pay, with respect to its income derived from the
interest payments on the Corresponding Junior Subordinated
Debentures of any series, any amounts for or on account of any
taxes, duties, assessments or governmental charges of whatever
nature imposed by the United States, or any other taxing
authority, then, in any such case, the Company will pay as
interest on such series such Additional Interest as may be
necessary in order that the net amounts received and retained by
such Issuer after the payment of such taxes, duties, assessments
or governmental charges shall result in such Issuer's having such
funds as it would have had in the absence of the payment of such
taxes, duties, assessments or governmental charges.
The Company will also covenant, as to each series of
Corresponding Junior Subordinated Debentures, (i) to maintain
directly or indirectly 100% ownership of the Common Securities of
the Issuer to which Corresponding Junior Subordinated Debentures
have been issued, provided that certain successors which are
permitted pursuant to the Corresponding Indenture may succeed to
the Company's ownership of the Common Securities, (ii) not to
voluntarily terminate, wind-up or liquidate any Issuer, except
(a) in connection with a distribution of Corresponding Junior
Subordinated Debentures to the holders of the Preferred
Securities in liquidation of such Issuer, or (b) in connection
with certain mergers, consolidations or amalgamations permitted
by the related Trust Agreement, (iii) to remain the sole
depositor under the related Trust Agreement of such Issuer and
timely perform in all material respects all of its duties as
depositor of such Issuer, and (iv) to use its reasonable efforts,
consistent with the terms and provisions of the related Trust
Agreement, to cause such Issuer to remain a business trust and
not to be classified as an association taxable as a corporation
for United States Federal income tax purposes.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES AND THE
GUARANTEES
As long as payments of interest and other payments are made
when due on each series of Corresponding Junior Subordinated
Debentures, such payments will be sufficient to cover Distribu
tions and other payments due on the corresponding Preferred
Securities, primarily because (i) the aggregate principal amount
of each series of Corresponding Junior Subordinated Debentures
will be equal to the sum of the aggregate Liquidation Preference
Amount of the corresponding Preferred Securities and
corresponding Common Securities; (ii) the interest rate and
interest and other payment dates on each series of Corresponding
Junior Subordinated Debentures will match the Distribution rate
and Distribution and other payment dates for the corresponding
Preferred Securities; (iii) the Company shall pay for all and any
costs, expenses and liabilities of the related Issuer except such
Issuer's obligations to holders of its Preferred Securities under
such Preferred Securities; and (iv) each Trust Agreement further
provides that such Issuer will not engage in any activity that is
not consistent with the limited purposes of such Issuer.
Payments of Distributions and other amounts due on the
Preferred Securities (to the extent the Issuer has funds
available for the payment of such Distributions) are irrevocably
guaranteed by the Company as and to the extent set forth under
"Description of Guarantees". Taken together, the Company's
obligations under each series of Corresponding Junior
Subordinated Debentures, the Corresponding Indenture, the related
Trust Agreement, the related Expense Agreement, and the related
Guarantee provide a full, irrevocable and unconditional guarantee
of payments of distributions and other amounts due on the related
series of Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of
providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Preferred Securities. If and to
the extent that the Company does not make payments on any series
of Corresponding Junior Subordinated Debentures, such Issuer will
not pay Distributions or other amounts due on its Preferred
Securities.
Notwithstanding anything to the contrary in the Corresponding
Indenture, the Company has the right to set-off any payment it is
otherwise required to make thereunder with and to the extent the
Company has theretofore made, or is concurrently on the date of
such payment making, a payment under the related Guarantee.
A holder of any related Preferred Security may institute a
legal proceeding directly against the Company to enforce its
rights under the related Guarantee without first instituting a
legal proceeding against the Guarantee Trustee, the related
Issuer or any other person or entity.
Each Issuer's Preferred Securities evidence the rights of the
holders thereof to the benefits of such Issuer, and each Issuer
exists for the sole purpose of issuing its Preferred Securities
and Common Securities and investing the proceeds thereof in
Corresponding Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security
and a holder of a Corresponding Junior Subordinated Debenture is
that a holder of a Corresponding Junior Subordinated Debenture
will accrue, and (subject to the permissible extension of the
interest period) is entitled to receive, interest on the
principal amount of Corresponding Junior Subordinated Debentures
held, while a holder of Preferred Securities is only entitled to
receive Distributions if and to the extent the related Issuer has
funds available for the payment of such Distributions.
Upon any voluntary or involuntary termination, winding-up or
liquidation of any Issuer involving the liquidation of the
Corresponding Junior Subordinated Debentures, after satisfaction
of creditors of such Issuer, if any, as provided by applicable
law, the holders of Preferred Securities will be entitled to
receive, out of assets held by such Issuer, the Liquidation
Distribution in cash. See "Description of Preferred Securities--
Liquidation Distribution Upon Termination". Upon any voluntary
or involuntary liquidation or bankruptcy of the Company, the
Property Trustee, as holder of the Corresponding Junior
Subordinated Debentures, would be a subordinated creditor of the
Company, subordinated in right of payment to all Senior Debt, but
entitled to receive payment in full of principal and interest,
before any stockholders of the Company receive payments or
distributions. Since the Company is the guarantor under each
Guarantee and has agreed to pay for all costs, expenses and
liabilities of each Issuer (other than the Issuer's obligations
to the holders of its Preferred Securities), the positions of a
holder of such Preferred Securities and a holder of such
Corresponding Junior Subordinated Debentures relative to other
creditors and to stockholders of the Company in the event of
liquidation or bankruptcy of the Company would be substantially
the same.
A default or event of default under any Senior Debt would not
constitute a default or Event of Default under the Corresponding
Indenture. However, in the event of payment defaults under, or
acceleration of, Senior Debt, the subordination provisions of the
Corresponding Indenture provide that no payments may be made in
respect of the Corresponding Junior Subordinated Debentures until
such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required
payments on any series of Corresponding Junior Subordinated
Debentures would constitute an event of default under the
Corresponding Indenture.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures and the Preferred
Securities may be sold in a public offering to or through
underwriters or dealers designated from time to time. The
Company and each Issuer may sell their respective Junior
Subordinated Debentures and Preferred Securities as soon as
practicable after effectiveness of the Registration Statement of
which this Prospectus is a part. The names of any underwriters
or dealers involved in the sale of the Junior Subordinated
Debentures and Preferred Securities in respect of which this
Prospectus is delivered, the amount or number of Junior
Subordinated Debentures and Preferred Securities to be purchased
by any such underwriters and any applicable commissions or
discounts will be set forth in the Prospectus Supplement.
Underwriters may offer and sell Junior Subordinated
Debentures and Preferred Securities at a fixed price or prices,
which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In connection
with the sale of Preferred Securities, underwriters may be deemed
to have received compensation from the Company and/or the
applicable Issuer in the form of underwriting discounts or
commissions and may also receive commissions. Underwriters may
sell Junior Subordinated Debentures and Preferred Securities to
or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the
underwriters.
Any underwriting compensation paid by the Company and/or the
applicable Issuer to underwriters in connection with the offering
of Junior Subordinated Debentures and Preferred Securities, and
any discounts, concessions or commissions allowed by such
underwriters to participating dealers, will be set forth in a
Prospectus Supplement. Underwriters and dealers participating in
the distribution of Junior Subordinated Debentures and Preferred
Securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them
on resale of such Junior Subordinated Debentures and Preferred
Securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. Underwriters and dealers
may be entitled, under agreement with the Company and the
applicable Issuer, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the
Securities Act, and to reimbursement by the Company for certain
expenses.
In connection with the offering of the Preferred Securities
of any Issuer, such Issuer may grant to the underwriters an
option to purchase additional Preferred Securities to cover
over-allotments, if any, at the initial public offering price
(with an additional underwriting commission), as may be set forth
in the accompanying Prospectus Supplement. If such Issuer grants
any over-allotment option, the terms of such over-allotment
option will be set forth in the Prospectus Supplement for such
Preferred Securities.
Underwriters and dealers may engage in transactions with, or
perform services for, the Company and/or the applicable Issuer
and/or any of their affiliates in the ordinary course of
business.
The Junior Subordinated Debentures and the Preferred
Securities will be a new issue of securities and will have no
established trading market. Any underwriters to whom Junior
Subordinated Debentures and Preferred Securities are sold for
public offering and sale may make a market in such Junior
Subordinated Debentures and Preferred Securities, but such
underwriters will not be obligated to do so and may discontinue
any market making at any time without notice. Such Junior
Subordinated Debentures and Preferred Securities may or may not
be listed on a national securities exchange. No assurance can be
given as to the liquidity of or the existence of trading markets
for any Junior Subordinated Debentures or Preferred Securities.
No person has been authorized to
give any information or to make
any representation not contained
in this Prospectus Supplement or _____ Preferred Securities
the Prospectus, and, if given or
made, such information or
representation must not be relied ENTERGY ARKANSAS
upon as having been authorized by
the Company, the Series A Issuer CAPITAL I
or any other person. This
Prospectus Supplement and the
Prospectus do not constitute an _____%
offer to sell or a solicitation of
any offer to buy any of the Cumulative Quarterly
securities offered hereby in any Income Preferred Securities,
jurisdiction to any person to whom Series A (QUIPSsm)
it is unlawful to make such offer
in such jurisdiction. Neither the Guaranteed to the extent the
delivery of this Prospectus Series A Issuer has funds as
Supplement and Prospectus nor any set forth herein by
sale made hereunder shall, under
any circumstances, create any ENTERGY ARKANSAS, INC.
implication that there has been no
change in the affairs of the
Company since the date of this
Prospectus Supplement or that the
information contained herein is
correct as of any time subsequent
to the date of such information.
TABLE OF CONTENTS
____________________
Prospectus Supplement
Risk Factors PROSPECTUS SUPPLEMENT
Entergy Arkansas Capital I
Use of Proceeds ____________________
Selected Financial Information
Capitalization Goldman, Sachs & Co.
Certain Terms of the Series A
Preferred Securities ___________________
Certain Terms of the Series A
Debentures ____________________
Certain United States Federal
Income Tax
Considerations
Underwriting
Experts Representatives of the
Legal Opinions Underwriters
Prospectus
Available Information
Incorporation of Certain
Documents by Reference.
The Company
The Issuers
Use of Proceeds
Description of Junior
Subordinated Debentures
Description of Preferred
Securities
Description of Guarantees
Description of Corresponding Junior
Subordinated Debentures
Relationship Among the Preferred
Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees
Plan of Distribution.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Each
Initial Additional
Sale Sale
Filing Fees_Securities and Exchange Commission:
Registration Statement $51,715 $ -
*Rating Agencies' fees 25,000 25,000
*Trustees' fees 6,000 3,000
*Fees of Company's Counsel:
Friday, Eldredge & Clark 20,000 20,000
Richards, Layton & Finger, P.A. 35,000 20,000
Reid & Priest LLP 50,000 30,000
*Fees of Entergy Services, Inc. 35,000 25,000
*Accounting fees 12,000 6,000
*Printing and engraving costs 40,000 25,000
*Miscellaneous expenses (including Blue-Sky 20,000 15,000
expenses)
*Total Expenses $294,725 $169,000
___________________
*Estimated
Item 15. Indemnification of Directors and Officers.
The Company has insurance covering its expenditures which
might arise in connection with its lawful indemnification of its
directors and officers for certain of their liabilities and
expenses. Directors and officers of the Company also have
insurance which insures them against certain other liabilities
and expenses. The corporation laws of Louisiana permit
indemnification of directors and officers in a variety of
circumstances, which may include liabilities under the Securities
Act of 1933, as amended (the "Securities Act"), and under the
Company's Restated and Amended Articles of Incorporation, its
officers and directors may generally be indemnified to the full
extent of such laws.
Item 16. Exhibits.
1.01 Form of Underwriting Agreement relating to Junior
Subordinated Debentures.
1.02 Form of Underwriting Agreement relating to Preferred
Securities.
**4.01 Amended and Restated Articles of Incorporation of the
Company and amendments thereto through April 22, 1996
(filed as Exhibit 3(a) to Form 10-Q for the quarter ended
March 31, 1996 in 1-10764).
**4.02 By-Laws of the Company as amended effective May 5, 1994,
and as presently in effect (filed as Exhibit 4(f) in 33-
50289).
4.03 Form of Indenture for Unsecured Subordinated Debt
Securities, dated as of July 1, 1996, between the Company
and The Bank of New York as Debenture Trustee.
4.04 Form of Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities, dated as of July
1, 1996, between the Company and The Bank of New York as
Corresponding Debenture Trustee.
4.05 Certificate of Trust of Entergy Arkansas Capital I.
4.06 Trust Agreement of Entergy Arkansas Capital I.
4.07 Certificate of Trust of Entergy Arkansas Capital II.
4.08 Trust Agreement of Entergy Arkansas Capital II.
4.09 Certificate of Trust of Entergy Arkansas Capital III.
4.10 Trust Agreement of Entergy Arkansas Capital III.
4.11 Form of Amended and Restated Trust Agreement for Entergy
Arkansas Capital I.
4.12 Form of Preferred Security Certificate for Entergy
Arkansas Capital I (included as Exhibit E of Exhibit 4.11
hereto).
4.13 Form of Guarantee Agreement in respect of Entergy Arkansas
Capital I.
4.14 Form of Amended and Restated Trust Agreement for Entergy
Arkansas Capital II.
4.15 Form of Preferred Security Certificate for Entergy
Arkansas Capital II (included as Exhibit E of Exhibit 4.14
hereto).
4.16 Form of Guarantee Agreement in respect of Entergy Arkansas
Capital II.
4.17 Form of Amended and Restated Trust Agreement for Entergy
Arkansas Capital III.
4.18 Form of Preferred Security Certificate for Entergy
Arkansas Capital III (included as Exhibit E of Exhibit
4.17 hereto).
4.19 Form of Guarantee Agreement in respect of Entergy Arkansas
Capital III.
5.01 Opinion of Friday, Eldredge & Clark, general counsel for
the Company, relating to the validity of the Junior
Subordinated Debentures and the Guarantees.
5.02 Opinion of Richards, Layton & Finger, P.A., special
Delaware counsel, relating to the validity of the
Preferred Securities of Entergy Arkansas Capital I.
5.03 Opinion of Richards, Layton & Finger, P.A., special
Delaware counsel, relating to the validity of the
Preferred Securities of Entergy Arkansas Capital II.
5.04 Opinion of Richards, Layton & Finger, P.A., special
Delaware counsel, relating to the validity of the
Preferred Securities of Entergy Arkansas Capital III.
5.05 Opinion of Reid & Priest LLP, relating to the validity of
the Junior Subordinated Debentures and the Guarantees.
8.01 Opinion of Reid & Priest LLP, as to United States tax
matters (included in Exhibit 5.05 hereto).
12.01 Statement Re: Computation of Ratio of Earnings to Fixed
Charges (filed as Exhibit 99(c) to Form 10-Q for the
quarter ended March 31, 1996 in 1-8474).
23.01 Consent of Coopers & Lybrand L.L.P.
23.02 Consent of Deloitte & Touche LLP.
23.03 Consent of Friday, Eldredge & Clark (included in Exhibit
5.01 hereto).
23.04 Consent of Richards, Layton & Finger, P.A., special
Delaware counsel (included in Exhibit 5.02 hereto).
23.05 Consent of Richards, Layton & Finger, P.A., special
Delaware counsel (included in Exhibit 5.03 hereto).
23.06 Consent of Richards, Layton & Finger, P.A., special
Delaware counsel (included in Exhibit 5.04 hereto).
23.07 Consent of Reid & Priest LLP (included in Exhibit 5.05
hereto).
24.01 Powers of Attorney of certain officers and directors of
the Company.
25.01 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Trustee for the Indenture
for Unsecured Subordinated Debt Securities.
25.02 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Trustee for the Indenture
for Unsecured Subordinated Debt Securities relating to
Trust Securities.
25.03 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Property Trustee for the
Amended and Restated Trust Agreement of Entergy Arkansas
Capital I.
25.04 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Guarantee Trustee for the
Guarantee for Entergy Arkansas Capital I.
25.05 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Property Trustee for the
Amended and Restated Trust Agreement of Entergy Arkansas
Capital II.
25.06 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Guarantee Trustee for the
Guarantee for Entergy Arkansas Capital II.
25.07 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Property Trustee for the
Amended and Restated Trust Agreement of Entergy Arkansas
Capital III.
25.08 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Guarantee Trustee for the
Guarantee for Entergy Arkansas Capital III.
__________
**Incorporated by reference herein.
Item 17. Undertakings.
The undersigned registrants hereby undertake:
(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;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this 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 this registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
registration statement or any material change to such information
in this registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above
do not apply if 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
registrants pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered herein, 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, each filing of the registrants' annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, for purposes of determining any liability under
the Securities Act, 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 registrants 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.
(6) That, for the purpose of determining any liability
under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(7) To provide to the underwriters at the closing specified
in the underwriting agreements certificates in such denominations
and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
(8) That, insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors,
officers and controlling persons of the registrants pursuant to
the foregoing provisions, or otherwise, the registrants have been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrants of expenses incurred or paid
by a director, officer or controlling person of the registrants
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants
will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
EXHIBIT 24.01
POWER OF ATTORNEY
Each director and/or officer of the registrant whose
signature appears below hereby appoints Gerald D. McInvale,
William J. Regan, Jr., Laurence M. Hamric and Denise C. Redmann,
and each of them severally, as his attorney-in-fact to sign in
his name and behalf, in any and all capacities stated below, and
to file with the Securities and Exchange Commission, any and all
amendments, including post-effective amendments, to this
registration statement, and the registrants hereby also appoint
each such named person as their attorney-in-fact with like
authority to sign and file any such amendments in their name and
behalf.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Little Rock, State of
Arkansas, on the 31st day of May, 1996.
ENTERGY ARKANSAS, INC.
By /s/ R. Drake Keith
R. Drake Keith
President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Edwin Lupberger Chairman of the Board, May 31, 1996
Edwin Lupberger Chief Executive
Officer and Director
(Principal Executive
Officer)
/s/ Gerald D. McInvale Executive Vice President May 31, 1996
Gerald D. McInvale Chief Financial Officer,
and Director
(Principal Financial Officer)
/s/ Louis E. Buck, Jr. Vice President and May 31, 1996
Louis E. Buck, Jr. Chief Accounting Officer
(Principal Accounting
Officer)
/s/ Michael B. Bemis Director May 31, 1996
Michael B. Bemis
/s/ Jerry L. Maulden Director May 31, 1996
Jerry L. Maulden
/s/ Donald C. Hintz Director May 31, 1996
Donald C. Hintz
/s/ Jerry D. Jackson Director May 31, 1996
Jerry D. Jackson
/s/ R. Drake Keith Director May 31, 1996
R. Drake Keith
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the registrants, Entergy Arkansas Capital I,
Entergy Arkansas Capital II and Entergy Arkansas Capital III,
each certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New
Orleans, State of Louisiana, on the 31st day of May, 1996.
Entergy Arkansas Capital I
By: Entergy Arkansas, Inc., as
depositor
By: /s/ William J. Regan, Jr.
Name: William J. Regan, Jr.
Title: Vice President and Treasurer
Entergy Arkansas Capital II
By: Entergy Arkansas, Inc., as
depositor
By: /s/ William J. Regan, Jr.
Name: William J. Regan, Jr.
Title: Vice President and Treasurer
Entergy Arkansas Capital III
By: Entergy Arkansas, Inc., as
depositor
By: /s/ William J. Regan, Jr.
Name: William J. Regan, Jr.
Title: Vice President and Treasurer
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this
registration statement on Form S-3 of our reports dated February
14, 1996, on our audits of the financial statements and financial
statement schedule of Entergy Arkansas, Inc. (formerly Arkansas
Power & Light Company) as of and for the years ended December 31,
1995 and 1994, which reports are included in the Company's Annual
Report on Form 10-K. We also consent to the reference to our
firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
May 30, 1996
EXHIBIT 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement of Entergy Arkansas, Inc. (formerly
Arkansas Power & Light Company) on Form S-3 of our reports dated
February 11, 1994, which expressed an unqualified opinion and
included an explanatory paragraph relating to the Company's
change in method of accounting for revenues, appearing in the
Annual Report on Form 10-K of the Company for the year ended
December 31, 1995 and to the reference to us under the heading
"Experts" in the Prospectus Supplement which is part of this
Registration Statement.
Deloitte & Touche LLP
New Orleans, Louisiana
May 30, 1996
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