As filed with the Securities and Exchange Commission on December 5, 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DPL INC.
(Exact name of registrant as specified in its charter)
OHIO 4931 31-1163136
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Code Number) Identification No.)
DPL CAPITAL TRUST II
(Exact name of registrant as specified in its charter)
DELAWARE 6719 31-6674982
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Code Number) Identification No.)
COURTHOUSE PLAZA SOUTHWEST
DAYTON, OHIO 45402
(937) 224-6000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Stephen F. Koziar, Jr., Esq. J. Michael Parish, Esq.
DPL Inc. Thelen Reid & Priest LLP
Courthouse Plaza Southwest 40 West 57th Street
Dayton, Ohio 45402 New York, New York 10019
(937) 224-6000 (212) 603-2154
(Names and addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
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Approximate date of commencement of proposed sale of the securities
to the public:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule
462(d) 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. [ ]
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CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AGGREGATE
TO BE AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
8 1/8% Capital Securities of DPL 300,000 $1,000 $300,000,000 $71,700
Capital Trust II
8 1/8% Junior Subordinated -- -- --
Deferrable Interest Debentures
of DPL Inc. (2)
DPL Inc. Guarantee with respect -- -- --
to 8 1/8% Capital Securities(2)
Total (3) 300,000 $1,000 $300,000,000 (4) $71,700
(1) Determined solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(2) promulgated under the Securities Act.
(2) No separate consideration will be received for the 8 1/8% Junior
Subordinated Deferrable Interest Debentures of DPL Inc. distributed
upon any liquidation of DPL Capital Trust II, and no separate
consideration will be received for the DPL Inc. Guarantee.
(3) This Registration Statement is deemed to cover rights of holders of 8 1/8%
Junior Subordinated Deferrable Interest Debentures under the Indenture, the
rights of the holders of 8 1/8% Capital Securities of DPL Capital Trust II
under an Amended and Restated Declaration of Trust, the rights of holders
of such 8 1/8% Capital Securities under the Guarantee and certain backup
undertakings as described in this Registration Statement.
(4) Such amount represents the liquidation amount of the 8 1/8% Capital
Securities to be exchanged hereunder and the principal amount of 8 1/8%
Junior Subordinated Deferrable Interest Debentures that may be distributed
to holders of such 8 1/8% Capital Securities upon any liquidation of DPL
Capital Trust II.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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RED HERRING
The information in this prospectus is not complete and may be changed. We may
not sell these sexurities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to exchange these securities and it is not soliciting an offer to exchange
these securities in any jurisdiction in which the offer or exchange is not
permitted.
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Subject to completion, dated , 2002
PROSPECTUS
DPL CAPITAL TRUST II
EXCHANGE OFFER
DPL CAPITAL TRUST II IS OFFERING TO EXCHANGE ITS
8 1/8% CAPITAL SECURITIES (REGISTERED)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FOR ANY AND ALL OF ITS OUTSTANDING
8 1/8% CAPITAL SECURITIES (UNREGISTERED)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE EXTENT PROVIDED
IN THIS PROSPECTUS, BY
DPL INC.
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, , 200_ UNLESS EXTENDED
DPL Capital Trust II is offering upon the terms and subject to the
conditions set forth in the prospectus, as amended and supplemented from time to
time, and in the accompanying letter of transmittal, which together constitute
the exchange offer, to exchange up to and including $300,000,000 aggregate
liquidation amount of its 8 1/8% Capital Securities, referred to in this
prospectus as the exchange capital securities, which have been registered under
the Securities Act of 1933, as amended, by a registration statement of which
this prospectus is a part, for a like amount of its outstanding 8 1/8% Capital
Securities, referred to in this prospectus as the old capital securities, which
have not been registered and of which $300,000,000 aggregate liquidation amount
are issued and outstanding. The old capital securities and the exchange capital
securities are collectively referred to in this prospectus as the capital
securities.
This prospectus and the letter of transmittal are first being mailed to
all holders of the old capital securities on or about , 200_
See "Risk Factors" beginning on page 9 to read about the risks that you
should consider in deciding whether to tender the old capital securities in the
exchange offer.
These securities are not deposits or accounts and are not insured by
the Federal Deposit Insurance Corporation or any other government agency.
Neither the Securities and Exchange Commission nor any state securities
commission or regulator has approved or disapproved these securities or
determined that this prospectus is accurate or complete. It is illegal for
anyone to tell you otherwise.
The date of this prospectus is , 2002.
This prospectus incorporates by reference important business and financial
information about DPL Inc. that is not included in or delivered with this
prospectus. See "Where You Can Find More Information". You may obtain copies of
documents containing such information from us, without charge, by either calling
or writing to us at:
DPL Inc.
Financial Activities
Box 8825
Dayton, Ohio 45401
(937) 259-7150
In order to obtain timely delivery, you must request documents from us no later
than ___, 200_, which is five days before the expiration date of the exchange
offer on ______, 200_.
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TABLE OF CONTENTS
Page Page
---- ----
WHERE YOU CAN FIND MORE DESCRIPTION OF EXCHANGE
INFORMATION...............................4 DEBENTURES.............................30
FORWARD-LOOKING STATEMENTS................5 DESCRIPTION OF EXCHANGE
GUARANTEE..............................38
DPL INC...................................5
DESCRIPTION OF OLD SECURITIES..........42
RATIOS OF EARNINGS TO FIXED
CHARGES...................................5 RELATIONSHIP AMONG THE EXCHANGE
CAPITAL SECURITIES, THE EXCHANGE
CAPITALIZATION............................6 DEBENTURES AND THE EXCHANGE
GUARANTEE..............................42
DPL CAPITAL TRUST II......................6
CERTAIN UNITED STATES FEDERAL
ACCOUNTING TREATMENT FOR THE INCOME TAX CONSEQUENCES................43
TRUST.....................................7
CERTAIN ERISA CONSIDERATIONS...........48
RISK FACTORS..............................7
PLAN OF DISTRIBUTION...................49
USE OF PROCEEDS..........................10
LEGAL MATTERS..........................50
THE EXCHANGE OFFER.......................10
EXPERTS................................50
DESCRIPTION OF EXCHANGE CAPITAL
SECURITIES...............................17
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR IN THE LETTER OF TRANSMITTAL IN CONNECTION WITH
THE EXCHANGE OFFER.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OTHER THAN
THIS PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR
INCORPORATED IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE AFTER THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO EXCHANGE THE OLD NOTES FOR
THE EXCHANGE NOTES AND IT IS NOT SOLICITING AN OFFER TO EXCHANGE THE OLD NOTES
IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER IS NOT PERMITTED.
3
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-4 under the Securities
Act of 1933, as amended, with the Securities and Exchange Commission to register
the exchange capital securities to be issued in the exchange offer. This
prospectus is a part of that registration statement. As allowed by Commission
rules, this prospectus does not contain all of the information that you can find
in the registration statement or the exhibits to the registration statement.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, and in accordance therewith, we file annual, quarterly and
current reports, proxy statements and other information with the SEC. You may
read and copy any documents we file at the SEC's public reference room, 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our SEC
filings are also available to the public on the SEC's web site at
http://www.sec.gov and through the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, on which our common stock is listed.
We incorporate by reference into this prospectus the following
documents that we have filed with the SEC:
o Annual Report on Form 10-K for the fiscal year ended December 31,
2000;
o Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2001;
o Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2001;
o Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2001;
o Current Report on Form 8-K dated August 23, 2001;
o Current Report on Form 8-K dated August 31, 2001; and
o Current Report on Form 8-K dated September 25, 2001.
In addition, all documents filed by us pursuant to Section 13, 14 or
15(d) of the Exchange Act, subsequent to the date of this prospectus and prior
to the termination of this offering, shall be deemed to be incorporated by
reference in this prospectus and to be a part of this prospectus from the date
of filing of such documents.
You may obtain copies of these documents from us, without charge, by
calling or writing to us at:
DPL Inc.
Financial Activities
Box 8825
Dayton, Ohio 45401
(937) 259-7150
Unless we have indicated otherwise, or the context otherwise requires,
for purposes of this prospectus (1) references to "DPL," "we," "us," and "our,"
or similar terms, are to DPL Inc., an Ohio corporation, (2) references to "DPL
Capital Trust II" or the "trust" are to DPL Capital Trust II, a statutory
business trust formed under the laws of the State of Delaware, (3) "indenture"
means the Junior Subordinated Indenture, as amended and supplemented by the
First Supplemental Indenture between DPL and The Bank of New York, as indenture
trustee relating to the junior subordinated debentures acquired by the trust in
connection with issuance of the old capital securities, referred to in this
prospectus as the "old debentures", and the junior subordinated debentures being
exchanged for the old debentures, referred to in this prospectus as the
"exchange debentures", (4) "trust agreement" means the Amended and Restated
Trust Agreement relating to the trust among DPL, 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, (5) "exchange guarantee" means
the registered Capital Securities Guarantee Agreement between DPL and The Bank
4
of New York, as guarantee trustee, relating to the DPL guarantee with respect to
the exchange capital securities and (6) "expense agreement" means the Agreement
as to Expenses and Liabilities between DPL and the trust.
FORWARD-LOOKING STATEMENTS
We caution you that this prospectus and the periodic reports and other
documents that are incorporated by reference in this prospectus contain
forward-looking statements. They are statements about future performance or
results (such as statements including, but not limited to, the terms
"potential," "estimate," "believe," "expect" and "anticipate" and similar words)
when we discuss our financial condition, results of operations and business.
Investors are cautioned that actual outcomes and results may vary materially
from those projected due to various factors beyond our control, including
abnormal weather, unusual maintenance or repair requirements, changes in fuel
costs, increased competition, regulatory changes and decisions, changes in
accounting rules, litigation affecting us and our subsidiaries (including with
respect to environmental matters) and adverse economic or capital markets
conditions.
DPL INC.
DPL Inc. was organized in 1985 as a holding company and is a
diversified regional merchant energy company. Our principal subsidiary is The
Dayton Power and Light Company, a public utility incorporated under the laws of
the State of Ohio in 1911. Dayton Power and Light sells electricity to
residential, commercial and governmental customers in a 6,000 square mile area
of West Central Ohio. Electricity for its 24 county service area is generated at
eight power plants and is distributed to 500,000 retail customers. Principal
industries served include electrical machinery, automotive and other
transportation equipment, non-electrical machinery, agriculture, paper, and
rubber and plastic products. Dayton Power and Light's sales reflect the general
economic conditions and seasonal weather patterns of the area.
DPL and its subsidiaries are exempt from registration with the
Securities and Exchange Commission under the Public Utility Holding Company Act
of 1935 because its utility business operates solely in the State of Ohio.
Our principal executive offices are located at Courthouse Plaza
Southwest, Dayton, Ohio 45402. Our telephone number is (937) 224-6000.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our historical ratios of earnings to
fixed charges for the periods indicated.
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
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2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
Ratios of Earnings to Fixed
Charges.................................. 3.24 2.06 2.95 4.00 4.33 4.32 4.10
For purposes of computing the foregoing ratios:
o Earnings consist of pre-tax income from continuing operations plus
fixed charges; and
o Fixed charges consist of interest on indebtedness, trust preferred
distributions by our subsidiary (including original issue discount
amortization) and the portion of rental payments on operating
leases estimated to represent an interest component.
5
We recognized original issue discount of $50 million in 2000 related to
the February 2000 issuance by our subsidiary, DPL Capital Trust I, of $550
million trust preferred securities. Excluding this original issue discount
amortization and the $183 million pre-tax gain on the October 2000 sale of our
natural gas retail distribution business, the ratio of earnings to fixed charges
for the nine months ended September 30, 2000 and the year ended December 31,
2000 was 2.47 and 2.47, respectively.
CAPITALIZATION
The following table shows our consolidated capitalization at September
30, 2001. Our consolidated capitalization numbers will not be affected by this
exchange offer.
SEPTEMBER 30, 2001
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Long-Term Debt (excluding current portion)................ $2,150.9 65.1%
Company Obligated Mandatorily Redeemable
Trust Preferred Securities of Subsidiary Holding
Solely Parent Debentures................................ 292.3 8.8%
Preferred Stock:
With Mandatory Redemption Provisions................. 0.1 ---
Without Mandatory Redemption Provisions.............. 22.9 0.7%
Common Shareholders' Equity............................... 838.1 25.4%
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Total Capitalization................................. $3,304.3 100.0%
======== ======
DPL CAPITAL TRUST II
DPL Capital Trust II is a statutory business trust formed under the
laws of the State of Delaware, governed by a trust agreement among us, as
depositor, The Bank of New York, as property trustee, The Bank of New York
(Delaware), as Delaware trustee, and two individual administrative trustees who
are employees or officers affiliated with us. The trust exists for the exclusive
purposes of:
o issuing and selling the common securities, the old capital
securities and the exchange capital securities representing
undivided beneficial interests in the assets of the trust;
o using the proceeds from the sale of the old capital securities to
acquire the old debentures;
o exchanging the old debentures for exchange debentures in the
exchange offer pursuant to the indenture; and
o engaging in only those other activities necessary, convenient or
incidental to these purposes.
Therefore, following the exchange offer, the exchange debentures will
be the sole assets of the trust and payments by us under the exchange debentures
will be the sole revenues of the trust. We will own all of the common securities
of the trust. The common securities rank equally, and will be paid pro rata,
with the capital securities. However, upon the occurrence and continuation of an
event of default under the trust agreement resulting from our default on the
exchange debentures, our rights to payment as holder of the common securities
will be subordinated to the rights of the holders of the capital securities. The
liquidation amount of the common securities is equal to approximately 3% of the
total capital of the trust.
The trust has a term of approximately 31 years, but may terminate
earlier as provided in the trust agreement. As holder of the common securities,
we will appoint the trustees to conduct the business and affairs of the trust.
We have paid all fees and expenses related to the formation of the trust and the
offering of the old capital securities, will pay all fees and expenses related
to the exchange offer and issuance of the exchange capital securities and will
pay, directly or indirectly, all ongoing costs, expenses and liabilities of the
trust under the expense agreement.
6
Pursuant to the expense agreement, we have irrevocably and
unconditionally guaranteed to each person or entity to whom the trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the trust, other than obligations of the trust to pay to the holders of any
capital securities the amounts due such holders pursuant to the terms of the
capital securities.
The principal executive office of the trust is c/o DPL Inc., Courthouse
Plaza Southwest, Dayton, Ohio 45402 and the telephone number is (937) 224-6000.
ACCOUNTING TREATMENT FOR THE TRUST
For financial reporting purposes, the trust is treated as our
subsidiary and, accordingly, the accounts of the trust will be included in our
consolidated financial statements. The capital securities will be presented as a
separate line item in our consolidated balance sheet and appropriate disclosures
about the capital securities, the exchange guarantee and the exchange debentures
will be included in the notes to the consolidated financial statements. For
financial reporting purposes, we will record distributions payable on the
capital securities as a charge in the consolidated statement of results of
operations.
We will not prepare separate financial statements of the trust and
therefore none are included in this prospectus. We do not consider that these
financial statements will be material to the holders of capital securities
because the trust is a special purpose entity owned by us with no operating
history or independent operations and has not engaged in and does not propose to
engage in any activity other than as described under "DPL Capital Trust II"
above.
RISK FACTORS
An investment in the exchange capital securities involves a number of
risks. You should carefully consider the following information, together with
the other information in this prospectus and the documents that are incorporated
by reference in this prospectus, about risks concerning the exchange capital
securities, before exchanging your old capital securities for any exchange
capital securities.
IF WE DO NOT MAKE PAYMENTS ON THE EXCHANGE DEBENTURES, THE TRUST WILL NOT BE
ABLE TO PAY DISTRIBUTIONS AND OTHER AMOUNTS DUE ON THE EXCHANGE CAPITAL
SECURITIES AND THE EXCHANGE GUARANTEE WILL NOT APPLY.
The trust will depend solely upon our payment of amounts when due on
the exchange debentures in order to pay amounts due to you on the exchange
capital securities. If we fail to pay principal or interest when due on the
exchange debentures, the trust will not have funds to pay distributions on, or
amounts due on redemption or liquidation of, the exchange capital securities or
amounts due on the liquidation of the trust. If this happens, holders of
exchange capital securities will not be able to rely upon the exchange guarantee
for payment of those amounts because the exchange guarantee only guarantees that
we will make distributions and redemption payments on the exchange capital
securities if the trust has the funds to do so itself but does not. Instead, you
or the property trustee may proceed directly against us for payment of any
amounts due on the exchange capital securities.
HOLDERS OF OUR SENIOR INDEBTEDNESS WILL GET PAID BEFORE YOU WILL GET PAID UNDER
THE EXCHANGE DEBENTURES OR THE EXCHANGE GUARANTEE.
Our obligations under the exchange debentures are unsecured and rank
subordinate and junior in right of payment to all of our senior indebtedness.
Our obligations under the exchange guarantee are unsecured and rank subordinate
and junior in right of payment to all of our liabilities, including our
obligations under the exchange debentures, other than any liabilities which
expressly rank equally with, or are subordinate to our obligations under, the
exchange guarantee. At September 30, 2001, our aggregate outstanding senior
indebtedness was approximately $1,084 million. None of the indenture, the
exchange guarantee or the trust agreement places any limitation on the amount of
secured or unsecured debt, including senior indebtedness, that we or our
subsidiaries may incur.
7
In addition, we are a holding company that derives substantially all of
our income from our operating subsidiaries. Our operating subsidiaries are
separate and distinct legal entities and will have no obligation, contingent or
otherwise, to pay any dividends or make any other distributions to us or to
otherwise pay amounts due with respect to the exchange debentures or the
exchange guarantee or to make funds available for such payments. Therefore, the
exchange debentures will also be effectively subordinated to all existing and
future debt, liabilities and preferred stock at the subsidiary level. As of
September 30, 2001, our subsidiaries, including The Dayton Power and Light
Company, had approximately $690 million of aggregate outstanding debt and
preferred stock. Holders of exchange debentures and claimants under the exchange
guarantee should look only to our assets for payments on the exchange debentures
or the exchange guarantee.
WE MAY EXTEND THE INTEREST PAYMENT PERIOD ON THE EXCHANGE DEBENTURES.
So long as no event of default under the indenture has occurred and is
continuing, we have the right to defer the payment of interest on the exchange
debentures, from time to time, for a period not exceeding 10 consecutive
semi-annual periods. During the extension period, we have the right to make
partial payments of interest on any interest payment date. No extension period
may extend beyond the stated maturity of the exchange debentures or any earlier
redemption date. Semi-annual distributions on the exchange capital securities by
the trust will be deferred during any extension period, and unpaid distributions
will accumulate additional distributions at the rate of 8 1/8% per annum,
compounded semi-annually from the relevant payment date.
At the end of any extension period, we may further extend the extension
period, provided that this extension does not exceed 10 consecutive semi-annual
periods or extend beyond the stated maturity of the exchange debentures or any
earlier redemption date. At any time following the termination of an extension
period and the payment of all amounts then due, we may elect to begin a new
extension period, subject to the foregoing requirements. There is no limitation
on the number of times that we may elect to begin an extension period.
If we exercise this extension right, the exchange capital securities
may trade at a price that does not fully reflect the value of the accumulated
but unpaid distributions. If you dispose of the exchange capital securities
during an extension period, you might not recover the same return on your
investment as someone who continues to hold the exchange capital securities.
Even if we do not exercise this right, our right to do so could mean that the
market price for the exchange capital securities may be more volatile than that
for debt instruments or other securities without similar deferral rights.
YOU COULD HAVE ADVERSE TAX CONSEQUENCES IF WE EXTEND THE INTEREST PAYMENT PERIOD
ON THE EXCHANGE DEBENTURES.
If we extend the interest payment period on the exchange debentures,
you will be required to accrue interest income as original issue discount in
respect of the deferred distributions on your exchange capital securities. As a
result, for United States federal income tax purposes, you will be required to
include that original issue discount in gross income before you receive the
deferred distributions, regardless of your regular method of tax accounting.
If you sell your exchange capital securities before the record date for
the payment of deferred distributions at the end of an extension period, you
will not receive those distributions. Instead, the deferred and any accumulated
distributions will be paid to the holder of record on the record date,
regardless of who the holder of record may have been on any other date during
the extension period. Moreover, accrued original issue discount will be added to
your adjusted tax basis in the exchange capital securities but may not be
reflected in the amount you realize on the sale. To the extent the amount
realized is less than your adjusted tax basis, you will recognize a capital loss
for United States federal income tax purposes. The deductibility of capital
losses is subject to limitations.
WE CAN REDEEM THE EXCHANGE DEBENTURES IF WE SUFFER ADVERSE TAX CONSEQUENCES OR
IF THE STATUS OF THE TRUST UNDER THE INVESTMENT COMPANY ACT CHANGES, WHICH COULD
SUBJECT YOU TO TAX.
If a tax event or an investment company event as described in this
prospectus occurs, we have the right to prepay the exchange debentures in whole
(but not in part) within 90 days, which would cause a mandatory redemption of
all exchange capital securities at the redemption price described under
"Description of exchange Capital Securities--Redemption of exchange Capital
8
Securities" in this prospectus. The redemption of the exchange capital
securities under any circumstances would be a taxable event to you for United
States federal income tax purposes.
WE CAN DISSOLVE THE TRUST AND DISTRIBUTE THE EXCHANGE DEBENTURES TO YOU.
We have the right to dissolve the trust at any time and, after
satisfaction of liabilities to creditors as required by applicable law, cause
the exchange debentures to be distributed to the holders of the exchange capital
securities in liquidation of the trust. The exercise of such right is subject to
our receipt of an opinion of nationally recognized independent tax counsel to
the effect that such distribution will not constitute a taxable exchange of the
exchange capital securities for United States federal income tax purposes.
THERE IS NO CERTAINTY WITH RESPECT TO THE MARKET PRICES OF THE CAPITAL
SECURITIES OR THE EXCHANGE DEBENTURES.
There can be no assurance as to the market prices for the capital
securities or the exchange debentures that may be distributed in exchange for
capital securities if a liquidation of the trust occurs. Accordingly, the
exchange capital securities that an investor may purchase whether pursuant to
this offering or in the secondary market, or the exchange debentures that a
holder of exchange capital securities may receive in liquidation of the trust,
may trade at a discount from the price that the investor paid to purchase the
exchange capital securities. Because holders of capital securities may receive
exchange debentures on termination of the trust and because distributions are
otherwise limited to payments on the exchange debentures, prospective purchasers
of exchange capital securities are also making an investment decision with
regard to the exchange debentures and should carefully review all the
information regarding the exchange debentures contained in this prospectus.
YOU WILL ONLY HAVE LIMITED VOTING RIGHTS.
Holders of exchange capital securities will generally have limited
voting rights relating only to the modification of the exchange capital
securities and the exercise of the trust's rights as holder of exchange
debentures. Holders of exchange capital securities will have limited authority
to vote to remove or replace the trustees under the trust agreement. We, the
property trustee, the Delaware trustee and the administrative trustees may amend
the trust agreement without the consent of holders of exchange capital
securities to ensure that the trust will be classified for United States federal
income tax purposes as a grantor trust or to ensure that the trust will not be
required to register as an "investment company" under the Investment Company
Act.
YOUR FAILURE TO EXCHANGE OLD CAPITAL SECURITIES MAY ADVERSELY AFFECT YOUR
ABILITY TO SELL SUCH SECURITIES.
The old capital securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption from the applicable securities laws or in a transaction
not subject to such laws, and in each case in compliance with certain other
conditions and restrictions. Old capital securities which remain outstanding
after consummation of the exchange offer will continue to bear a legend
reflecting such restrictions on transfer. In addition, upon consummation of the
exchange offer, holders of old capital securities which remain outstanding will
not be entitled to any rights to have such old capital securities registered
under the Securities Act or to any similar rights under the exchange and
registration rights agreement, subject to certain limited exceptions. We and the
Trust do not intend to register under the Securities Act any old capital
securities which remain outstanding after consummation of the exchange offer,
subject to such limited exceptions, if applicable. To the extent that old
capital securities are tendered and accepted in the exchange offer, your ability
to sell untendered old capital securities could be adversely affected.
THERE IS NO CURRENT ESTABLISHED TRADING MARKET FOR THE EXCHANGE CAPITAL
SECURITIES AND NO ASSURANCE THAT AN ACTIVE MARKET WILL DEVELOP.
There is no existing market for the exchange capital securities and
there can be no assurance as to the liquidity of any market that may develop,
the ability of holders to sell, or the price that can be obtained for, the
exchange capital securities. Future trading prices of the exchange capital
securities will depend on many factors including, among other things, prevailing
9
interest rates, our operating results and prospects and the market for similar
securities.
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the exchange
capital securities in exchange for the old capital securities tendered pursuant
to the exchange offer. In consideration for the issuance of the exchange capital
securities as contemplated by this prospectus, we will receive in exchange an
identical aggregate liquidation amount of outstanding old capital securities,
which have terms substantially identical to the exchange capital securities. We
will retire and cancel all of the outstanding old capital securities surrendered
in exchange for the exchange capital securities, and such outstanding old
capital securities may not be reissued.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER; TERMS OF THE EXCHANGE OFFER
We issued and sold the old capital securities on August 31, 2001 to an
initial purchaser in a private transaction not subject to the registration
requirements of the Securities Act. The initial purchaser then offered and sold
the old capital securities only
o to "Qualified Institutional Buyers" (as defined in Rule 144A under
the Securities Act) in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule
144A,
o to a limited number of institutional "Accredited Investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that, prior to their purchase of old capital securities,
executed and delivered to the initial purchaser a letter
containing certain representations and agreements and
o outside the United States to non-U.S. persons in offshore
transactions (as defined in Regulation S under the Securities Act)
in compliance with Regulation S under the Securities Act.
In connection with the sale of the old capital securities, we entered
into an exchange and registration rights agreement with the initial purchaser
which obligated us to:
o file a registration statement with the Commission for an offer to
exchange the old capital securities for the exchange capital
securities within 120 days after the issuance of the old capital
securities;
o use our reasonable best efforts to cause the registration
statement to be declared effective within 180 days after the
issuance of the old capital securities;
o promptly after the registration statement has been declared
effective, offer exchange capital securities in exchange for
surrender of the old capital securities; and
o use our reasonable best efforts to keep the exchange offer open
for at least 30 days after the date notice of the exchange offer
has been mailed to the holders of the old capital securities.
The exchange capital securities have terms identical to the old capital
securities, except that the exchange capital securities do not have transfer
restrictions or any terms relating to registration rights and do not provide for
the liquidated damages set forth in the exchange and registration rights
agreement payable by us in the event that we are unable to fulfill certain of
our obligations under the exchange and registration rights agreement. A holder
that tenders old capital securities pursuant to the exchange offer and does not
withdraw it will receive exchange capital securities having an identical
liquidation amount to the old capital securities tendered.
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Under the exchange offer, we will exchange as soon as practicable after the date
of this prospectus our $309,300,000 aggregate principal amount of old debentures
for a like aggregate principal amount exchange debentures. We refer to the old
debentures and the exchange debentures collectively as the junior subordinated
debentures.
We are also exchanging our guarantee, also referred to as the exchange
guarantee, of payments of cash distributions and payments in liquidation of the
trust or redemption of the exchange capital securities for the existing
guarantee, also referred to as the old guarantee, in respect of the old capital
securities. We refer to the old guarantee and the exchange guarantee
collectively as the guarantees.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
The tender to us of old capital securities by a holder as set forth
below and the acceptance of the old capital securities by us will constitute a
binding agreement between the tendering holder and us upon the terms and subject
to the conditions set forth in this prospectus and in the accompanying letter of
transmittal. Except as set forth below, a holder who wishes to tender old
capital securities for exchange pursuant to the exchange offer must transmit a
properly completed and duly executed letter of transmittal, including all other
documents required by such letter of transmittal, to Bank One Trust Company,
National Association, who is acting as our exchange agent, at the address set
forth below under "Exchange Agent" on or prior to the expiration date. In
addition, on or prior to the expiration date,
o certificates for such old capital securities must be received by
the exchange agent; or
o a timely confirmation of a book-entry transfer of these old
capital securities, if this procedure is available, into the
exchange agent's account at DTC pursuant to the procedure for
book-entry transfer described below, must be received by the
exchange agent; or
o the holder must comply with the guaranteed delivery procedures
described below.
The method of delivery of old capital securities, letters of
transmittal and all other required documents is at the election and risk of the
holders. If such delivery is by mail, we recommend that you use registered mail,
properly insured, with return receipt requested. In all cases, sufficient time
should be allowed to assure timely delivery. No letters of transmittal or old
capital securities should be sent to DPL.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old capital securities surrendered
for exchange pursuant thereto are tendered:
o by a registered holder of the old capital securities who has not
completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the letter of transmittal; or
o for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantees must be by an
eligible institution, which is a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States. If old capital securities are registered in
the name of a person other than the person signing the letter of transmittal,
the old capital securities surrendered for exchange must be endorsed by, or be
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by us in our sole discretion, duly executed by
the registered holder with the signature thereon guaranteed by an eligible
institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of old capital securities tendered for exchange will be
determined by us in our sole discretion, and our determination will be final and
binding on all parties. We reserve the absolute right:
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o to reject any and all tenders of any particular old capital
securities not properly tendered or to not accept any particular
old capital securities which acceptance might, in our judgment or
the judgment of our counsel, be unlawful; and
o to waive any defects or irregularities or conditions of the
exchange offer as to any particular old capital securities either
before or after the expiration date (including the right to waive
the ineligibility of any holder who seeks to tender old capital
securities in the exchange offer).
Unless waived, any defects or irregularities in connection with the
tender of old capital securities for exchange must be cured within such
reasonable period of time as we determine. Neither we, the exchange agent nor
any other person will be under any duty to give notification of any defect or
irregularity with respect to any tender of old capital securities for exchange,
nor will we or any of them incur any liability for failure to give such
notification.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD CAPITAL SECURITIES
Upon the terms and subject to the conditions set forth in this
prospectus and in the accompanying letter of transmittal, we will:
o accept for exchange old capital securities, which are properly
tendered on or prior to the expiration date and not withdrawn as
permitted below; and
o use our reasonable best efforts to keep the exchange offer open
for not less than 30 days, or longer if required by applicable
law, after the date notice of the exchange offer is mailed to the
holders of the old capital securities.
The term "expiration date" means 5:00 p.m., New York City time, on
_______, 200_; provided, however, that if we, in our sole discretion, have
extended the period of time for which the exchange offer is open, the term
"expiration date" means the latest time and date to which the exchange offer is
extended.
As of the date of this prospectus, $300,000,000 in aggregate
liquidation amount of the old capital securities were outstanding. The exchange
offer is not conditioned upon any minimum principal amount of old capital
securities being tendered. This prospectus, together with the letter of
transmittal, is first being sent on or about the date set forth on the cover
page to all holders of old capital securities at the addresses set forth in the
security register maintained by the trustee.
We expressly reserve the right:
o at any time or from time to time, to extend the period of time
during which the exchange offer is open, and thereby delay
acceptance of any old capital securities; and
o to amend or terminate the exchange offer, and not to accept for
exchange any old capital securities not previously accepted for
exchange, upon the occurrence of any of the conditions of the
exchange offer specified below under "Certain Conditions to the
Exchange Offer."
We will give written notice of any extension, amendment, non-acceptance
or termination to the holders of the old capital securities as promptly as
practicable, such notice in the case of any extension to be issued by means of a
press release or other public announcement no later than 5:00 p.m., New York
City time, on the previous expiration date. Without limiting the manner in which
we may choose to make any public announcement and subject to applicable law, we
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
Old capital securities that are not tendered for exchange or are
tendered but not accepted in connection with the exchange offer will remain
outstanding and be entitled to the benefits of the indenture, but will not be
entitled to any further registration rights under the exchange and registration
rights agreement, except under limited circumstances. We intend to conduct the
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exchange offer in accordance with the applicable requirements of the Exchange
Act and the relevant rules and regulations of the SEC.
If the letter of transmittal is signed by a person or persons other
than the registered holder or holders of old capital securities, such old
capital securities must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders that appear on the old capital securities.
By executing, or otherwise becoming bound by, a letter of transmittal,
each holder of the old capital securities, other than certain specified holders,
will represent that:
o it is not our affiliate;
o any exchange capital securities to be received by it were acquired
in the ordinary course of its business; and
o it has no arrangement with any person to participate in the
distribution, within the meaning of the Securities Act, of the
exchange capital securities.
If the tendering holder is a broker-dealer that will receive exchange
capital securities for its own account in exchange for the old capital
securities that were acquired as a result of market-making activities or other
trading activities, it will be required to acknowledge that it will deliver a
prospectus in connection with any resale of such exchange capital securities.
See "--Resale of the Exchange Capital Securities."
ACCEPTANCE OF OLD CAPITAL SECURITIES FOR EXCHANGE; DELIVERY OF EXCHANGE CAPITAL
SECURITIES
Upon satisfaction or waiver of all of the conditions to the exchange
offer, we will accept, promptly after the expiration date, all old capital
securities properly tendered and will issue exchange capital securities promptly
after acceptance of the old capital securities. See "Certain Conditions to the
Exchange Offer" below. For purposes of the exchange offer, we will be deemed to
have accepted properly tendered old capital securities for exchange if and when
we have given oral (confirmed in writing) or written notice thereof to the
exchange agent.
In all cases, issuance of exchange capital securities for the old
capital securities that are accepted for exchange pursuant to the exchange offer
will be made only after timely receipt by the exchange agent of certificates for
such old capital securities or a timely book-entry confirmation of such old
capital securities into the exchange agent's account at DTC pursuant to the
book-entry transfer procedures described below, a properly completed and duly
executed letter of transmittal and all other required documents. If any tendered
old capital securities are not accepted for any reason set forth in the terms
and conditions of the exchange offer or if certificates representing old capital
securities are submitted for a greater principal amount than the holder desires
to exchange, such unaccepted or non-exchanged old capital securities will be
returned without expense to the tendering holder thereof (or, in the case of old
capital securities tendered by book-entry transfer into the exchange agent's
account at DTC pursuant to the book-entry transfer procedures described below,
such non-exchanged old capital securities will be credited to an account
maintained with DTC) as promptly as practicable after the expiration or
termination of the exchange offer.
BOOK-ENTRY TRANSFER
Promptly after the date of this prospectus, the exchange agent will
make a request to establish an account with respect to the old capital
securities at DTC for purposes of the exchange offer. Any financial institution
that is a participant in DTC's systems may make book-entry delivery of old
capital securities by causing DTC to transfer such old capital securities into
the exchange agent's account in accordance with DTC's Automated Tender Offer
Program ("ATOP"), procedures for transfer. However, the exchange for the old
capital securities so tendered will only be made after timely confirmation of
such book-entry transfer of old capital securities into the exchange agent's
account, and timely receipt by the exchange agent of an agent's message and any
other documents required by the letter of transmittal. The term "agent's
message" means a message, transmitted by DTC and received by the exchange agent
and forming a part of a book-entry confirmation, which states that DTC has
received an express acknowledgment from a participant tendering old capital
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securities that are the subject of such book-entry confirmation, that such
participant has received and agrees to be bound by the terms of the letter of
transmittal, and that we may enforce such agreement against such participant.
Although delivery of old capital securities may be effected through
book-entry transfer into the exchange agent's account at DTC, the letter of
transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case be delivered to and received by the exchange agent at its address set forth
under "--Exchange Agent" on or prior to the expiration date, or the guaranteed
delivery procedure set forth below must be complied with.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the old capital securities desires to tender
such old capital securities and (1) the old capital securities are not
immediately available, (2) time will not permit such holder's old capital
securities or other required documents to reach the exchange agent before the
expiration date of the exchange offer, or (3) the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if:
o the tender is made through an eligible institution;
o prior to the expiration date of the exchange offer, the exchange
agent receives from such eligible institution a properly completed
and duly executed letter of transmittal (or a facsimile letter of
transmittal) and notice of guaranteed delivery, substantially in
the form provided by us (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and
address of the holder of old capital securities and the amount of
old capital securities tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery, the certificates of all physically tendered
old capital securities, in proper form for transfer, or a
book-entry confirmation, as the case may be, and any other
documents required by the letter of transmittal will be deposited
by the eligible institution with the exchange agent; and
o the certificates for all physically tendered old capital
securities, in proper form for transfer, or a book-entry
confirmation, as the case may be, and all other documents required
by the letter of transmittal, are received by the exchange agent
within five New York Stock Exchange trading days after the date of
execution of the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
Tenders of old capital securities may be withdrawn at any time prior to
the expiration date.
For a withdrawal to be effective, a written notice of withdrawal must
be received by the exchange agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify:
o the name of the person having tendered the old capital securities
to be withdrawn;
o the old capital securities to be withdrawn (including the
principal amount of such old capital securities); and
o where certificates for old capital securities have been
transmitted, the name in which such old capital securities are
registered, if different from that of the withdrawing holder.
If certificates for old capital securities have been delivered or
otherwise identified to the exchange agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
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particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an eligible institution unless such holder is an
eligible institution. If old capital securities have been tendered pursuant to
the procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawn old capital securities and otherwise comply with the procedures of
such facility. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by us in our sole
discretion, and our determination will be final and binding on all parties.
Any old capital securities so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the exchange offer. Any old
capital securities which have been tendered for exchange but which are not
exchanged for any reason will be returned to its holder without cost to such
holder (or, in the case of old capital securities tendered by book-entry
transfer into the exchange agent's account at DTC pursuant to the book-entry
transfer procedures described above, such old capital securities will be
credited to an account maintained with DTC for the old capital securities) as
soon as practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn old capital securities may be re-tendered by
following one of the procedures described under "Procedures for Tendering Old
Capital Securities" above at any time on or prior to the expiration date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, we are not
required to accept for exchange, or to issue exchange capital securities in
exchange for old capital securities, and we may terminate or amend the exchange
offer, if at any time before the acceptance of such old capital securities for
exchange or the exchange of the exchange capital securities for such old capital
securities, such acceptance or issuance would violate applicable law or any
interpretation of the SEC's staff.
The condition in the paragraph immediately above is for our sole
benefit and may be asserted by us regardless of the circumstances giving rise to
such condition. Our failure at any time to exercise the foregoing rights is not
to be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any old capital securities
tendered, and no exchange capital securities will be issued in exchange for any
such old capital securities, if at such time any stop order is threatened or in
effect with respect to the registration statement of which this prospectus
constitutes a part or the qualification of the indenture under the Trust
Indenture Act.
EXCHANGE AGENT
Bank One Trust Company, National Association has been appointed as the
exchange agent for the exchange offer. All executed letters of transmittal
should be directed to the exchange agent at one of the addresses set forth
below. Questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent, addressed as
follows:
Deliver To:
Bank One Trust Company, National Association, Exchange Agent
By Registered or Certified Mail:
1 North State Street
9th Floor
Chicago, IL 60602
Attention: Exchanges
15
By Facsimile:
312-407-8853
To Confirm by Telephone or for Information:
(800) 524-9472
Delivery to an address other than as set forth above or transmission of
instructions via facsimile other than as set forth above does not constitute a
valid delivery.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telecopy, telephone or in person by our
officers, regular employees, affiliates and agents. We will not pay any
additional compensation to any such officers and employees who engage in
soliciting tenders. We will not make any payment to brokers, dealers, or others
soliciting acceptances of the exchange offer. However, we will pay the exchange
agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith.
The estimated cash expenses to be incurred in connection with the
exchange offer will be paid by us and are estimated in the aggregate to be
$200,000.
ACCOUNTING TREATMENT
The exchange capital securities will be recorded at the same carrying
value as the old capital securities. Accordingly, DPL will not recognize any
gain or loss for accounting purposes. DPL intends to amortize the expenses of
the exchange offer and issuance of the old capital securities over the term of
the exchange capital securities.
RESALE OF THE EXCHANGE CAPITAL SECURITIES
Based on an interpretation by the SEC's staff contained in several
no-action letters issued to third parties, we believe that the exchange capital
securities issued pursuant to the exchange offer may be offered for resale,
resold and otherwise transferred after the exchange offer by any holder of
exchange capital securities (other than a holder which is our "affiliate" within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, if such
holder:
o acquires the exchange capital securities in the ordinary course of
his or her business; and
o does not intend to participate, and has no arrangement with any
person to participate, in a distribution of the exchange capital
securities.
Any holder of the old capital securities who tenders in the exchange
offer with the intention to participate, or for the purpose of participating, in
a distribution of the exchange capital securities may not rely on the position
of the staff of the Commission enunciated in the "Exxon Capital Holdings
Corporation" or similar no-action letters (the Exxon Capital Letters) but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. In addition, any such
resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K of the Securities Act. Each broker-dealer that receives exchange
capital securities for its own account in exchange for the old capital
securities, where such old capital securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such exchange capital securities.
By tendering in the exchange offer, each holder will represent to us
(which representation may be contained in the Letter of Transmittal) to the
effect that:
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o it is not our affiliate;
o it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the exchange capital securities to be issued in
the exchange offer; and
o it is acquiring the exchange capital securities in its ordinary
course of business.
Each holder will acknowledge and agree that any broker-dealer and any
such holder using the exchange offer to participate in a distribution of the
exchange capital securities acquired in the exchange offer:
o could not under Commission policy as in effect on the date of the
exchange and registration rights agreement rely on the position of
the Commission enunciated in the Exxon Capital letters;
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary
resale transaction and that such secondary resale transaction must
be covered by an effective registration statement containing the
selling security holder information required by Item 507 of
Regulation S-K if the resales are of exchange capital securities
obtained by such Holder in exchange for old capital securities
acquired by such Holder directly from us or our affiliate.
DESCRIPTION OF EXCHANGE CAPITAL SECURITIES
The trust will issue the exchange capital securities under the trust
agreement. The exchange capital securities will represent undivided beneficial
interests in the trust's assets and entitle the holders to a preference in
certain circumstances over the common securities with respect to distributions
and amounts payable on redemption or liquidation, as well as other benefits
described in the trust agreement. Selected provisions of the trust agreement are
summarized below. This summary is not complete. You should read that document
for a better understanding of all of the provisions of the trust agreement that
may be important to you. The trust agreement will be qualified under the Trust
Indenture Act of 1939 upon effectiveness of the registration statement for the
exchange offer of which this prospectus forms a part.
GENERAL
The old capital securities were initially issued in the aggregate
liquidation amount of $300,000,000 (300,000 capital securities) and a like
amount of exchange capital securities will be issued in exchange for such
securities as described in this prospectus. Simultaneously with the issuance of
the old capital securities the trust also issued certain common securities for
which it received aggregate proceeds of $9,300,000. The capital securities and
common securities of the trust are collectively referred to in this prospectus
as the trust securities. The trust agreement permits the trust to "reopen" the
offering of capital securities and common securities and issue additional
capital securities and common securities without the consent of the holders of
the capital securities or the common securities. We will own all of the trust's
common securities, which rank equally, and will be paid pro rata, with the
capital securities except as described under "Subordination of Common
Securities" below. The property trustee will hold the exchange debentures in
trust for the benefit of the trust and the holders of the trust securities. The
old guarantee is, and the exchange guarantee will be, a full and unconditional
guarantee with respect to the capital securities but does not guarantee payment
of distributions or amounts payable on redemption or liquidation of the capital
securities when the trust does not have sufficient available funds to pay those
distributions.
DISTRIBUTIONS
Distributions on the exchange capital securities will:
o be payable in U.S. dollars at 8 1/8% per annum of the stated
liquidation amount of $1,000 per exchange capital security and
distributions that are in arrears for more than one semi-annual
17
period will accrue interest at the rate per annum of 8 1/8% and
interest so accrued at the end of each semi-annual period and
remaining unpaid will itself bear interest, to the extent
permitted by applicable law, until paid on the same basis
o begin to accrue from and including the date of original issuance
of the old capital securities;
o be cumulative and payable semi-annually in arrears on March 1 and
September 1 of each year, commencing March 1, 2002; and
o be payable to the holders of the exchange capital securities on
the relevant record dates, which are the immediately preceding
February 15 and August 15, respectively.
The term "distributions" as we use it in this prospectus includes semi-annual
distributions, any interest payable on distributions as described above, special
distributions or additional tax sums, in each case as described herein, unless
we state otherwise. We will compute the amount of distributions payable for any
period on the basis of a 360-day year of twelve 30-day months.
If any date on which a distribution is payable for any exchange capital
securities is not a business day, then the payment will be made on the following
business day, without any interest or other payment for the delay. Each date on
which distributions are otherwise payable in accordance with the foregoing is a
"distribution date." A "business day" means a day other than:
o a Saturday or a Sunday,
o a day on which banks in New York, New York are authorized or
obligated by law or executive order to remain closed, or
o a day on which the principal corporate trust office of the
property trustee or the indenture trustee is closed for business.
So long as no event of default under the indenture has occurred and is
continuing, we have the right to defer the payment of interest on the exchange
debentures, from time to time, for a period not exceeding 10 consecutive
semi-annual periods. During the extension period, we have the right to make
partial payments of interest on any interest payment date. No extension period
may extend beyond the stated maturity of the exchange debentures or any earlier
redemption date. Semi-annual distributions on the exchange capital securities by
the trust will be deferred during any extension period, and unpaid distributions
will accumulate additional distributions at the rate of 8 1/8% per annum,
compounded semi-annually from the relevant payment date.
During an extension period, we may not, and may not permit any
subsidiary to:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of our capital stock (which includes common and preferred
stock);
o make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities that rank equally
with or junior to the exchange debentures; or
o make any guarantee payments with respect to any guarantee issued
by us if such guarantee ranks equally with or junior to the
exchange debentures;
other than (a) dividends or distributions payable in our common stock, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of capital stock under any such plan,
or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the exchange guarantee and (d) purchases of common stock related
to the issuance of common stock or rights under any of our benefit plans for our
directors, officers, employees, consultants or advisors.
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At the end of any extension period, we may further extend the extension
period, provided that such extension does not exceed 10 consecutive semi-annual
periods or extend beyond the stated maturity of the exchange debentures or any
earlier redemption date. At any time following the termination of an extension
period and the payment of all amounts then due, we may elect to begin a new
extension period, subject to the foregoing requirements. There is no limitation
on the number of times that we may elect to begin an extension period.
The revenue of the trust available for distribution to holders of the
exchange capital securities will be limited to payments we make under the
exchange debentures. If we do not make interest payments on the exchange
debentures, the property trustee will not have funds available to pay
distributions on the exchange capital securities. We will guarantee the trust's
payment of distributions on a limited and subordinated basis, but only if and to
the extent the trust has funds legally available for the payment of those
distributions and cash sufficient to make those payments. See "Description of
Exchange Guarantee."
REDEMPTION OF EXCHANGE CAPITAL SECURITIES
The trust must redeem the exchange capital securities when the exchange
debentures are paid at maturity on September 1, 2031 (in which case the
redemption price you receive will be equal to the liquidation amount of $1,000
per exchange capital security plus accumulated and unpaid distributions on the
exchange capital security to the date of redemption) or if the exchange
debentures are redeemed before they mature. We may redeem the exchange
debentures before they mature (1) at any time, in whole but not in part, within
90 days after the occurrence of a special event at a redemption price equal to
the Special Event Redemption Make-Whole Amount, as described below, and (2) at
any time, in whole or in part, at a redemption price equal to the Optional
Redemption Make-Whole Amount, as described below, plus, in each case, accrued
interest, if any, to the redemption date. See "Right to Redeem Upon a Special
Event" below for a description of the term "special event."
Upon the repayment of the exchange debentures, whether at maturity or
upon redemption, the proceeds from such repayment or redemption shall
simultaneously be applied to redeem exchange capital securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
exchange debentures so repaid or redeemed at the applicable redemption price;
provided that holders of exchange capital securities shall be given not less
than 30 nor more than 60 days notice of such redemption.
The redemption price, other than at stated maturity of the exchange
debentures, shall equal, for each exchange capital security, the applicable
Make-Whole Amount for a corresponding $1,000 principal amount of exchange
debentures together with accrued distributions to but excluding the redemption
date.
"Comparable Treasury Issue" means, with respect to any redemption date,
the United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the time period from the redemption date to September 1,
2031 that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the time period. If no United States Treasury security
has a maturity which is within a period from three months before to three months
after September 1, 2031, the two most closely corresponding United States
Treasury securities will be used as the Comparable Treasury Issue, and the
Treasury Rate will be interpolated or extrapolated on a straight-line basis,
rounding to the nearest month using such securities.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of up to five Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest Reference Treasury
Dealer Quotations or (2) if the indenture trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such Quotations.
The "Optional Redemption Make-Whole Amount" will be equal to the
greater of (1) 100% of the principal amount of the exchange debentures being
redeemed or (2) as determined by a Quotation Agent as of the redemption date,
the sum of the present value of the scheduled payments of principal and interest
on such exchange debentures from the redemption date to September 1, 2031
discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at a discount rate equal to the
Treasury Rate plus 25 basis points.
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"Quotation Agent" means Morgan Stanley & Co. Incorporated and its
successors, as selected by us; provided, however, that if any of the foregoing
ceases to be a primary United States Government securities dealer in New York
City (a "Primary Treasury Dealer"), we will substitute therefor another Primary
Treasury Dealer.
"Reference Treasury Dealer" means (1) Morgan Stanley & Co. Incorporated
and its successors; provided, however, that if any of the foregoing ceases to be
a Primary Treasury Dealer, we will substitute therefor another Primary Treasury
Dealer and (2) up to four other Primary Treasury Dealers selected by the
indenture trustee after consultation with us.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the indenture trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the indenture trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding such redemption date.
The "Special Event Redemption Make-Whole Amount" will be equal to the
greater of (1) 100% of the principal amount of the exchange debentures being
redeemed or (2) as determined by a Quotation Agent as of the redemption date,
the sum of the present value of scheduled payments of principal and interest on
such exchange debentures from the redemption date to September 1, 2031,
discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at a discount rate equal to the
Treasury Rate plus 50 basis points.
"Treasury Rate" means (1) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the time period from the redemption date to September
1, 2031 (if no maturity is within three months before or after such time period,
yields for the two published maturities most closely corresponding to such time
period will be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the nearest
month) or (2) if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such yields, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date. The Treasury Rate will be
calculated on the third business day preceding the redemption date.
RIGHT TO REDEEM UPON A SPECIAL EVENT
We will have the right to redeem all, but not fewer than all, of the
exchange debentures, at the Special Event Redemption Make-Whole Amount, plus
accrued interest, at any time within 90 days after a tax event or an investment
company event (either, a special event) happens.
In the event of a redemption of the exchange debentures due to the
occurrence of a special event, the property trustee will use the proceeds to
redeem the exchange capital securities and common securities at a redemption
price equal to the Special Event Redemption Make-Whole Amount for a
corresponding $1,000 principal amount of exchange debentures together with
accrued distributions to but excluding the redemption date.
A "tax event" means that we and the trust have received an opinion of
nationally recognized independent tax counsel to the effect that, as a result
of:
o any amendment to, or change or announced proposed change in, the
laws or regulations of the United States or any of its political
subdivisions or taxing authorities, or
o any official written administrative pronouncement, action or
judicial decision interpreting or applying those laws or
regulations,
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which amendment or change becomes effective, or which proposed change,
pronouncement, action or decision is announced, on or after the date the capital
securities are issued and sold, there is more than an insubstantial risk that:
o the trust is, or within 90 days will be, subject to U.S. federal
income tax with respect to income accrued or received on the
exchange debentures,
o interest payable to the trust on the exchange debentures is not,
or within 90 days will not be, deductible, in whole or in part, by
us for U.S. federal income tax purposes, or
o the trust is, or within 90 days will be, subject to a material
amount of other taxes, duties or other governmental charges.
An "investment company event" means that we and the trust have received
an opinion of nationally recognized independent counsel to the effect that, as a
result of an amendment to or change in the Investment Company Act or regulations
thereunder, or a written change in the interpretation or application of a law or
regulation thereunder, on or after the date the old capital securities were
issued and sold, there is more than an insubstantial risk that the trust is or
will be considered an investment company and be required to be registered under
the Investment Company Act.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF EXCHANGE DEBENTURES
We will have the right at any time to dissolve the trust and, after
satisfaction of the liabilities of creditors of the trust as provided by
applicable law, cause the exchange debentures to be distributed to the holders
of the exchange capital securities. The exercise of such right is subject to
receipt of an opinion of nationally recognized independent tax counsel to the
effect that the distribution will not constitute a taxable exchange of the
exchange capital securities for United States federal income tax purposes.
After the date for any distribution of exchange debentures upon
dissolution of the trust:
o the exchange capital securities will no longer be deemed to be
outstanding,
o DTC or its nominee, as the record holder of the exchange capital
securities, will receive a registered global certificate or
certificates representing the exchange debentures to be delivered
upon the distribution, and
o any certificates representing exchange capital securities not held
by DTC or its nominee will be deemed to represent a like amount of
exchange debentures, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to the
accumulated and unpaid distributions on, those exchange capital
securities, until the certificates are presented to us or our
agent for transfer or reissuance.
If a dissolution and liquidation of the trust were to occur, we could
not assure you as to the market prices for the exchange debentures that may be
distributed in exchange for the exchange capital securities. Accordingly, the
exchange debentures that you may receive, if a dissolution and liquidation of
the trust were to occur, may trade at a discount to the price that you paid to
purchase the exchange capital securities.
As used in this prospectus, "like amount" means:
o with respect to a redemption of exchange capital securities,
capital securities having a liquidation amount equal to the
principal amount of exchange debentures to be contemporaneously
repaid or redeemed in accordance with the indenture and the
proceeds of which will be used to pay the applicable redemption
price of those capital securities, and
o with respect to a distribution to holders of exchange capital
securities of exchange debentures in connection with the trust's
liquidation, exchange debentures having a principal amount equal
to the liquidation amount of the exchange capital securities of
the holder to whom those exchange debentures are distributed.
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REDEMPTION PROCEDURES
Exchange capital securities redeemed on each redemption date will be
redeemed at the applicable redemption price with the proceeds from the
contemporaneous repayment or redemption of the exchange debentures. Redemptions
of exchange capital securities will be made and the applicable redemption price
will be deemed payable on each redemption date, but only to the extent that the
trust has funds legally available for the payment of that redemption price.
If the trust gives a notice of redemption for any exchange capital
securities, then, by 12:00 noon, New York time, on the redemption date, so long
as the exchange capital securities are in book-entry only form, the property
trustee will:
o irrevocably deposit with DTC funds sufficient to pay the
applicable redemption price, and
o give DTC irrevocable instructions and authority to pay the
applicable redemption price to the holders of those exchange
capital securities.
If any exchange capital securities are held in certificated form, the
trust will:
o irrevocably deposit with the paying agent for those exchange
capital securities funds sufficient to pay the applicable
redemption price, and
o give that paying agent irrevocable instructions and authority to
pay the applicable redemption price to holders of those exchange
capital securities upon surrender of their certificates evidencing
those exchange capital securities.
Distributions payable on or before the redemption date for any exchange
capital securities called for redemption will be payable to the holders of those
capital securities on the relevant record dates for the related distribution
dates. If notice of redemption is given and funds deposited as required, then
upon the redemption date:
o all rights of holders of those exchange capital securities called
for redemption will cease, except the right of the holders of
those exchange capital securities to receive the applicable
redemption price, but without interest on that redemption price,
and
o those exchange capital securities will cease to be outstanding.
If any date fixed for redemption of exchange capital securities is not
a business day, then payment of the redemption price payable on that date will
be made on the next business day, without any interest or other payment in
respect of the delay. If payment of the redemption price for any exchange
capital securities called for redemption is improperly withheld or refused and
not paid either by the trust or by us pursuant to the exchange guarantee,
distributions on those exchange capital securities will continue to accrue at
the then applicable distribution rate, from the original redemption date to the
date of payment. In that case, the actual payment date will be considered the
date fixed for redemption for purposes of calculating the applicable redemption
price.
Subject to applicable law, including United States federal securities
law, we or our subsidiaries may from time to time purchase outstanding exchange
capital securities by tender, in the open market or by private agreement.
Payment of the applicable redemption price on, and any distribution of
exchange debentures to holders of, the trust securities will be made to the
applicable recordholders thereof as they appear on the register therefor on the
relevant record date, which will be a date not more than 45 days nor less than
15 days prior to the redemption date or liquidation date, as applicable.
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 trust securities at
its registered address. Unless we default in payment of the applicable
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redemption price on, or in the repayment of, the exchange debentures, on and
after the redemption date, distributions will cease to accumulate on the trust
securities called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the exchange
capital securities and the common securities will be made pro rata based on the
liquidation amount of those trust securities. No distribution payment or other
payment on account of the redemption, liquidation or other acquisition of any
common security will be made, however, if an event of default under the
indenture has occurred and is continuing on the distribution, redemption or
other payment date unless payment in full in cash of all accumulated and unpaid
distributions on all outstanding exchange capital securities or the full
redemption price due on exchange capital securities, as applicable, is made or
provided for. The property trustee must first apply all available funds to
payment in full in cash of all exchange capital securities distributions or
redemption price then due and payable.
In the case of an event of default under the trust agreement resulting
from our default on the exchange debentures, the holder of common securities
will be deemed to have waived the trust agreement event of default until the
effect of all trust agreement events of default has been cured, waived or
otherwise eliminated. Until those trust agreement events of default have been so
cured, waived or otherwise eliminated, the property trustee will act solely on
behalf of the holders of the exchange capital securities and any old capital
securities outstanding and not the holder of the common securities, and only the
holders of the capital securities will have the right to direct the property
trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the trust agreement, the trust will dissolve and will be
liquidated by the trustees on the first to occur of:
o September 1, 2032, the expiration of the term of the trust;
o our bankruptcy, dissolution or liquidation;
o our election to dissolve the trust and to distribute a like amount
of the exchange debentures to the holders of the trust securities;
o the redemption of all of the capital securities in connection with
the repayment of all of the exchange debentures; and
o the entry by a court of an order for judicial dissolution of the
trust.
If an early dissolution occurs as described in the second, third and
fifth bullet points above, the trustees will expeditiously liquidate the trust
by causing the property trustee to distribute to each holder of capital
securities and common securities, after satisfaction of liabilities to creditors
of the trust, a like amount of exchange debentures, unless that distribution is
determined by the property trustee to be impractical. If that distribution is
impractical, the holders will be entitled to receive out of the available assets
of the trust, after satisfaction of liabilities of creditors to the trust, an
amount equal to the aggregate of the stated liquidation amount per capital
security plus accumulated and unpaid distributions to the date of payment. If
this liquidation distribution can be paid only in part because the trust has
insufficient assets to pay in full, then the amounts payable directly by the
trust on the capital securities will be paid on a pro rata basis. The holders of
the common securities will be entitled to receive distributions upon any
dissolution pro rata with the holders of the capital securities, except the
capital securities will have a preference over the common securities if a trust
agreement event of default has occurred and is continuing.
If there is no early dissolution of the trust, unless earlier redeemed
in part, the exchange capital securities will remain outstanding until the
repayment of the exchange debentures at stated maturity.
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EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes a trust agreement event of
default:
o the occurrence of an event of default under the indenture (see
"Description of Exchange Debentures(Y)Events of Default"); or
o default by the trust in the payment of any distribution for 30
days after it becomes due and payable; or
o default by the trust in the payment of any redemption price of any
exchange capital security or common security when it becomes due
and payable; or
o default in the performance, or breach, in any material respect, of
any covenant or warranty of the trustees in the trust agreement,
other than a default or breach referred to in the second and third
bullet points above, and continuation of that default or breach
for a period of 60 days after the defaulting trustee or trustees
have been given written notice thereof by the holders of at least
25% in liquidation amount of the outstanding capital securities;
or
o the occurrence of a bankruptcy event with respect to the property
trustee.
Within 90 business days after the occurrence of any trust agreement
event of default, the property trustee will send notice of any default actually
known to it to the holders of exchange capital securities, the administrative
trustees and us, as the depositor, unless the default has been cured or waived.
The holder of the common securities may remove the property trustee and
appoint a successor at any time unless a trust agreement event of default has
occurred and is continuing, in which case the holders of a majority in
liquidation amount of the capital securities may remove the property trustee and
appoint a successor. No registration or removal of the property trustee and no
appointment of a successor trustee will be effective until the successor
property trustee accepts the appointment in accordance with the trust agreement.
If an event of default under the indenture has occurred and is
continuing, the capital securities will have a preference over the common
securities with respect to payments of distributions or upon termination of the
trust as described above.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body except as
described below or under "Liquidation Distribution upon Dissolution."
The trust may, with the consent of the administrative trustees and
without the consent of the holders of the trust securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state, if it satisfies the following conditions:
o the successor entity either:
-- expressly assumes all of the obligations of the trust under
the trust securities, or
-- substitutes for the trust securities other securities having
substantially the same terms as the trust securities, so
long as the successor securities rank the same as the trust
securities with respect to distributions and payments upon
liquidation, redemption and otherwise,
o we expressly acknowledge a trustee of the successor entity as
possessing the same powers and duties as the property trustee, in
its capacity as the holder of the exchange debentures,
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o the exchange capital securities or any successor securities are
listed or quoted, or any successor securities will be listed or
quoted upon notification of issuance, on any national securities
exchange or with another organization on which the exchange
capital securities are then listed or quoted,
o the merger, consolidation, amalgamation or replacement does not
cause the capital securities, including any successor securities,
to be downgraded by any nationally recognized statistical rating
organization,
o the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
holders of the trust securities, including any successor
securities, in any material respect,
o the successor entity has a purpose substantially identical to that
of the trust, and
o prior to the merger, consolidation, amalgamation or replacement,
the trust has received an opinion of nationally recognized
independent counsel to the effect that:
-- the merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges
of the holders of the trust securities, including any
successor securities, in any material respect, and
-- following the merger, consolidation, amalgamation or
replacement, neither the trust nor the successor entity will
be required to register as an "investment company" under the
Investment Company Act, and
-- we guarantee the obligations of the successor entity under
the successor securities at least to the extent provided by
the exchange guarantee.
However, the trust will not, except with the consent of holders of 100%
in liquidation amount of the trust securities, consolidate, amalgamate, merge
with or into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to, any other person, or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if the
consolidation, amalgamation, merger or replacement would cause the trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Guarantee-Amendments
and Assignment" and as otherwise required by law and the trust agreement, the
holders of the exchange capital securities will have no voting rights.
We, the property trustee, the Delaware trustee or the administrative
trustees may amend the trust agreement from time to time, without the consent of
the holders of the trust securities, in order to:
o cure any ambiguity to correct or supplement any inconsistent
provisions in the trust agreement;
o modify, eliminate or add to any provisions of the trust agreement
to ensure that the trust will be classified for United States
federal income tax purposes as a grantor trust at all times that
any trust securities are outstanding or to ensure that the trust
will not be required to register as an "investment company" under
the Investment Company Act; or
o provide the property trustee with the authority to execute on
behalf of the administrative trustees capital securities
certificates in certificated, fully registered form,
provided, however, that, in the case of the first bullet, any such action shall
not adversely affect in any material respect the interests of any holder of
trust securities or the property trustee or the Delaware trustee, and that any
25
amendments of the trust agreement shall become effective when notice thereof is
given to the holders of the trust securities.
The trust agreement may be amended by us and by the trustees under the
trust agreement with:
o the consent of holders representing not less than a majority
(based upon liquidation amounts) of the outstanding trust
securities; and
o receipt by the trustees of an opinion of nationally recognized
independent counsel to the effect that such amendment or the
exercise of any power granted to the trustees in accordance with
such amendment will not affect the trust's status as a grantor
trust for United States federal income tax purposes or the trust's
exemption from status as an "investment company" under the
Investment Company Act.
The trust agreement may not be amended without the consent of each
holder of trust securities to:
o change the amount or timing of any distribution on the trust
securities or otherwise adversely affect the amount of any
distribution required to be made in respect of the trust
securities as of a specified date; or
o restrict the right of a holder of trust securities to institute
suit for the enforcement of any such payment on or after such
date.
So long as any exchange debentures are held by the property trustee,
the trustees under the trust agreement shall not:
o direct the time, method and place of conducting any proceeding for
any remedy available to the indenture trustee or executing any
trust or power conferred on the indenture trustee with respect to
the exchange debentures;
o waive any past default that is waivable under the indenture;
o exercise any right to rescind or annul a declaration that the
principal of all the exchange debentures is due and payable; or
o consent to any amendment, modification or termination of the
indenture or the exchange debentures, where the consent of the
holders of the junior subordinated debentures shall be required,
without, in each case, obtaining the prior approval of the holders of at least a
majority in liquidation amount of all outstanding capital securities; provided,
however, that where a consent under the indenture would require the consent of
each holder of exchange debentures affected thereby, no such consent shall be
given by the property trustee without the prior written consent of each holder
of the capital securities.
The trustees under the trust agreement shall not revoke any action
previously authorized or approved by a vote of the holders of the capital
securities, except by a subsequent vote of such holders. The property trustee
shall notify each holder of capital securities of any notice of default with
respect to the exchange debentures unless such default has been cured or waived.
In addition to obtaining the foregoing approvals of such holders of the exchange
capital securities, prior to taking any of the foregoing actions, the trustees
under the trust agreement shall obtain an opinion of nationally recognized
independent counsel to the effect that such action will not cause the trust to
fail or cease to be classified as a grantor trust for United States federal
income tax purposes.
Any required approval of holders of trust securities may be given at a
meeting of such holders convened for such purpose. Any action that may be taken
by holders of trust securities at a meeting may be taken without a meeting if
holders of trust securities holding a majority of outstanding trust securities
(based upon their liquidation amount) consent to the action in writing. The
property trustee will cause a notice of any meeting at which holders of trust
26
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
trust securities in the manner set forth in the trust agreement.
No vote or consent of the holders of exchange capital securities is
required for the trust to redeem and cancel the exchange capital securities in
accordance with the trust agreement.
Notwithstanding that holders of the exchange capital securities are
entitled to vote or consent under any of the circumstances described above, any
of the exchange capital securities that are owned by us or our affiliates, or
the trustees under the trust agreement or their affiliates, will, for all
purposes of such vote or consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
The exchange capital securities initially will be represented by one or
more capital securities in registered, global form (collectively, the global
capital securities"). Upon issuance, the global capital securities will be
deposited with the property trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or its
nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, the global capital securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the global capital
securities may not be exchanged for exchange capital securities in certificated
form except in the limited circumstances described below. See "--Exchange of
Book-Entry Exchange Capital Securities for Certificated Exchange Capital
Securities." Except in the limited circumstances described below, owners of
beneficial interests in the global capital securities will not be entitled to
receive physical delivery of capital securities in certificated form. In
addition, transfers of beneficial interests in the global capital securities
will be subject to the applicable rules and procedures of DTC and its direct or
indirect participants (including, if applicable, those of the Euroclear System
("Euroclear") and Clearstream Banking ("Clearstream")), which may change from
time to time.
Depositary Procedures
DTC has advised the trust and us that DTC is a limited-purpose trust
company created to hold securities for its participating organizations
(collectively, the "participants") and to facilitate the clearance and
settlement of transactions in those securities between participants through
electronic book-entry changes in accounts of its participants. The participants
include securities brokers and dealers (including the initial purchaser), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly (collectively,
the "indirect participants"). Persons who are not participants may beneficially
own securities held by or on behalf of DTC only through the participants or the
indirect participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the participants and indirect participants.
DTC has also advised the trust and us that, pursuant to procedures
established by it, (i) upon deposit of the global capital securities, DTC will
credit the accounts of participants designated by the initial purchaser with
portions of the liquidation amount of the global capital securities and (ii)
ownership of such interests in the global capital securities will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the participants) or by the participants and
the indirect participants (with respect to other owners of beneficial interests
in the global capital securities).
Investors in the global capital securities may hold their interests
therein directly through DTC if they are participants in such system, or
indirectly through organizations which are participants in such system. The laws
of some states require that certain persons take physical delivery in
certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in a global capital security to such persons will
be limited to that extent. Because DTC can act only on behalf of participants,
which in turn act on behalf of indirect participants and certain banks, the
ability of a person having beneficial interests in a global capital security to
pledge such interests to persons or entities that do not participate in the DTC
27
system, or otherwise take actions in respect of such interests, may be affected
by the lack of a physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL CAPITAL
SECURITIES WILL NOT HAVE CAPITAL SECURITIES REGISTERED IN THEIR NAME, WILL NOT
RECEIVE PHYSICAL DELIVERY OF EXCHANGE CAPITAL SECURITIES IN CERTIFICATED FORM
AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE
TRUST AGREEMENT FOR ANY PURPOSE.
Payments in respect of the global capital security registered in the
name of DTC or its nominee will be payable by the property trustee to DTC in its
capacity as the registered holder under the trust agreement. Under the terms of
the trust agreement, the property trustee will treat the persons in whose names
the exchange capital securities, including the global capital securities, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither we, the trust
nor the property trustee nor any agent thereof has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
participant's or indirect participant's records relating to or payments made on
account of beneficial ownership interests in the global capital securities, or
for maintaining, supervising or reviewing any of DTC's records or any
participant's or indirect participant's records relating to the beneficial
ownership interests in the global capital securities or (ii) any other matter
relating to the actions and practices of DTC or any of its participants or
indirect participants. DTC has advised the trust and us that its current
practice, upon receipt of any payment in respect of securities such as the
exchange capital securities, is to credit the accounts of the relevant
participants with the payment on the payment date, in amounts proportionate to
their respective holdings in liquidation amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
participants and the indirect participants to the beneficial owners of exchange
capital securities will be governed by standing instructions and customary
practices and will be the responsibility of the participants or the indirect
participants and will not be the responsibility of DTC, the property trustee or
the trust. Neither we, the trust nor the property trustee will be liable for any
delay by DTC or any of its participants in identifying the beneficial owners of
the exchange capital securities, and the trust and the property trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Except for trades involving only Euroclear and Clearstream
participants, interests in the global capital securities will trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants.
Transfers between participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear and Clearstream will be effected in the ordinary way
in accordance with their respective rules and operating procedures.
Cross-market transfers between the participants in DTC, on the one
hand, and Euroclear or Clearstream participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant global capital
securities in DTC and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions directly
to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear
or Clearstream participant purchasing an interest in a global capital security
from a participant in DTC will be credited, and any such crediting will be
reported to the relevant Euroclear or Clearstream participant, during the
securities settlement processing day (which must be a business day for Euroclear
and Clearstream) immediately following the DTC settlement date. Cash received in
Euroclear or Clearstream as a result of sales of an interest in a global capital
security by or through a Euroclear or Clearstream participant to a participant
in DTC will be received with value on the DTC settlement date but will be
28
available in the relevant Euroclear or Clearstream cash account only as of the
business day for Euroclear or Clearstream following DTC's settlement date.
DTC has advised the trust and us that it will take any action permitted
to be taken by a holder of capital securities only at the direction of one or
more participants to whose account with DTC interests in the global capital
securities are credited and only in respect of such portion of the aggregate
liquidation amount of the capital securities as to which such participant or
participants has or have given such direction. However, if there is an event of
default under the trust agreement, DTC reserves the right to exchange the global
capital securities for legended capital securities in certificated form and to
distribute such capital securities to its participants.
The information in this section concerning DTC, Euroclear and
Clearstream and their book-entry systems has been obtained from sources that we
and the trust believe to be reliable, but neither we nor the trust take
responsibility for the accuracy thereof.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the global capital securities
among participants in DTC, Euroclear and Clearstream, no depositary is under any
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we, the trust nor the
property trustee will have any responsibility for the performance by DTC,
Euroclear or Clearstream or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Exchange of Book-Entry Exchange Capital Securities for Exchange Certificated
Capital Securities
A global capital security is exchangeable for exchange capital
securities in registered certificated form if (1) DTC (a) notifies us and the
property trustee that it is unwilling or unable to continue as depositary for
the global capital security or (b) has ceased to be a clearing agency registered
under the Exchange Act and we fail to appoint a successor depositary within 90
days, (2) we, in our sole discretion, elect to cause the issuance of the
exchange capital securities in certificated form or (3) there has occurred and
is continuing an event of default or any event which after notice or lapse of
time or both would be an event of default under the trust agreement. In all
cases, certificated exchange capital securities delivered in exchange for any
global capital security or beneficial interests therein will be registered in
the names, and issued in any approved denominations, requested by or on behalf
of the depositary (in accordance with its customary procedures).
PAYMENT AND PAYING AGENTS
Payments in respect of the exchange capital securities held in global
form will be made to DTC, which will credit the relevant accounts at DTC on the
applicable distribution dates or in respect of the exchange capital securities
that are not held by DTC, such payments will be made by check mailed to the
address of the holder entitled thereto as such address appears on the register.
The paying agent will initially be The Bank of New York and any co-paying agent
chosen by The Bank of New York and acceptable to the administrative trustees and
us. The paying agent will be permitted to resign as paying agent upon 30 days'
written notice to the administrative trustees, the property trustee and us. In
the event that the property trustee is no longer the paying agent, the
administrative trustees will appoint a successor (which will be a bank or trust
company acceptable to the administrative trustees and us) to act as paying
agent.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the
exchange capital securities. Registration of transfers of the exchange capital
securities may be effected without charge by or on behalf of the trust, but the
registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange. The trust will not be required to register or cause to be registered
the transfer of the exchange capital securities after they have been called for
redemption.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance
of an event of default under the trust agreement, undertakes to perform only
such duties as are specifically set forth in the 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 trust agreement at the request of any holder
of trust securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
If no event of default under the trust agreement has occurred and is
continuing, and the property trustee is required to decide between alternative
causes of action, construe ambiguous or inconsistent provisions in the trust
agreement or is unsure of the application of any provision of the trust
agreement, and the matter is not one on which holders of the capital securities
are entitled under the trust agreement to vote, then the property trustee will
take such action as is directed by us and if not so directed, will take such
action as it deems advisable and in the best interests of the holders of the
trust 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 trust in such a way that the trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as other than a grantor trust for United
States federal income tax purposes and so that the junior subordinated
debentures will be treated as our indebtedness for United States federal income
tax purposes. In this regard, we and the administrative trustees are authorized
to take any action, not inconsistent with applicable law, the certificate of
trust of the trust or the trust agreement, that we and the administrative
trustees determine in our 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 trust securities.
Holders of the trust securities have no preemptive or similar rights.
The trust may not borrow money or issue debt or mortgage or pledge any
of its assets.
DESCRIPTION OF EXCHANGE DEBENTURES
The trust invested the proceeds from the sale of the old capital
securities and the common securities in the old debentures. Under the exchange
offer, we will exchange as soon as practicable after the date of this prospectus
the exchange debentures for the old debentures. The exchange debentures will
have terms identical in all material respects to the old debentures, except that
exchange debentures will not contain terms with respect to transfer restrictions
under the Securities Act and will not provide for liquidated damages. Selected
provisions of the exchange debentures and the indenture are summarized below.
This summary is not complete. You should read those documents for a better
understanding of all of their provisions that may be important to you. The
indenture will be qualified under the Trust Indenture Act of 1939, upon
effectiveness of a registration statement for the exchange offer of which this
prospectus forms a part.
GENERAL
The old debentures and the exchange debentures are each a series of
debt securities under the indenture. The indenture provides for the issuance by
us of subordinated debt securities in series from time to time in an unlimited
amount. The indenture permits us to "reopen" each of these series of junior
subordinated debentures and issue additional junior subordinated debentures of
each series without the consent of the holders of junior subordinated
debentures. The exchange debentures will be issued in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof.
The exchange debentures will mature on September 1, 2031. The exchange
debentures will bear interest at the annual rate of 8 1/8% payable semi-annually
in arrears on March 1 and September 1 of each year, commencing March 1, 2002.
30
Payment will be made to the registered holder, subject to certain exceptions, at
the close of business on the business day next preceding such interest payment
date. We anticipate that until any liquidation of the trust, each exchange
debenture will be held in the name of the property trustee in trust for the
benefit of the holders of the trust 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.
If any date on which interest is payable on the exchange debentures is
not a business day, then the payment will be made on the following business day,
without any interest or other payment for the delay. Accrued interest that is
otherwise not paid on the applicable interest payment date will bear additional
interest (to the extent permitted by applicable law) at the rate per annum of 8
1/8%, compounded semi-annually. The term "interest" as we use it in this
prospectus includes semi-annual interest payments, additional interest,
additional tax sums and special interest, in each case as described herein,
unless we state otherwise.
The exchange debentures are unsecured and rank junior and subordinate
in right of payment to all of our senior indebtedness. Since we are a holding
company, our right to participate in any distribution of assets of any
subsidiary upon its liquidation or reorganization or otherwise (and thus the
ability of holders of exchange debentures and exchange capital securities to
benefit indirectly from such distribution) is subject to the prior claims of
creditors of that subsidiary, except to the extent that we ourselves may be
recognized as a creditor of that subsidiary. Claims on our subsidiaries by
creditors other than us include long-term debt and certain other short-term
borrowings. Accordingly, the exchange debentures will be subordinated to all of
our senior indebtedness and will be effectively subordinated to all existing and
future liabilities of our subsidiaries, including under any preferred stock, and
holders of the exchange debentures should look only to our assets for payments
thereunder. The indenture does not limit the incurrence or issuance by us or our
subsidiaries of secured or unsecured debt, including senior indebtedness.
DENOMINATIONS, REGISTRATION AND TRANSFER
The exchange debentures will initially be represented by one
certificate registered in the name of the property trustee. If distributed to
holders of exchange capital securities in connection with a liquidation of the
trust, the exchange debentures may be represented by one or more global
certificates registered in the name of Cede & Co. as the nominee of DTC and one
or more exchange debentures in certificated form. Beneficial interests in
exchange debentures in global form will be shown on, and transfers thereof will
be effected only through, records maintained by participants in DTC.
Payments on exchange debentures represented by a global security will
be made to DTC as the depositary for the exchange debentures. In the event
exchange debentures are issued in certificated form, payment, transfer and
exchange will occur at the corporate office of the indenture trustee in New
York, New York, or at the offices of any paying agent or transfer agent
appointed by us. In addition, if the exchange debentures are registered to a
holder other than the property trustee or a nominee of DTC, the record dates
will be the February 15 and August 15, respectively, immediately preceding the
related interest payment date.
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Description of Capital Securities--Form, Denomination,
Book-Entry Procedures and Transfer." If the exchange debentures are distributed
to the holders of the trust securities upon the termination of the trust, they
will have substantially the same form, denomination, book-entry and transfer
procedures as described under "Description of Capital Securities--Form,
Denomination, Book-Entry Procedures and Transfer."
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and any interest on
exchange debentures will be made at the office of The Bank of New York in The
City of New York or at the office of such paying agent or paying agents as we
may designate from time to time, except that at our option payment of any
interest may be made, except in the case of junior subordinated debentures in
global form, (i) by check mailed to the address of the person entitled thereto
as such address appears in the register for junior subordinated debentures or
(ii) by transfer to an account maintained by the person entitled thereto as
specified in such register, provided that proper transfer instructions have been
received by the relevant record date. Payment of any interest on any junior
subordinated debenture will be made to the person in whose name such junior
31
subordinated debenture is registered at the close of business on the record date
for such interest, except in the case of a call for redemption after a record
date and prior to such interest payment date and defaulted interest, which will
be paid as described in the indenture. We may at any time designate additional
paying agents or rescind the designation of any paying agent; however, we will
at all times be required to maintain a paying agent in each place of payment for
the junior subordinated debentures.
Any moneys deposited with The Bank of New York or any paying agent, or
then held by us in trust, for the payment of the principal of (and premium, if
any) or interest on any exchange debenture and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable may, at our request, be repaid to us and the holder of such exchange
debenture must thereafter look, as a general unsecured creditor, only to us for
payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the indenture has occurred and is
continuing, we have the right to defer the payment of interest on the exchange
debentures, from time to time, for a period not exceeding 10 consecutive
semi-annual periods. During the extension period, we have the right to make
partial payments of interest on any interest payment date. No extension period
may extend beyond the stated maturity of the exchange debentures or any earlier
redemption date. Semi-annual distributions on the exchange capital securities by
the trust will be deferred during any extension period, and unpaid distributions
will accumulate additional distributions at the rate of 8 1/8% per annum,
compounded semi-annually from the relevant payment date.
During an extension period, we may not, and may not permit any
subsidiary to:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of our capital stock (which includes common and preferred
stock);
o make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities that rank equally
with or junior to the exchange debentures; or
o make any guarantee payments with respect to any guarantee issued
by us if such guarantee ranks equally with or junior to the
exchange debentures,
other than (a) dividends or distributions payable in our common stock, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of capital stock under any such plan,
or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the exchange guarantee and (d) purchases of our common stock
related to the issuance of common stock or rights under any of our benefit plans
for our directors, officers, employees, consultants or advisors.
At the end of any extension period, we may further extend the extension
period, provided that such extension does not exceed 10 consecutive semi-annual
periods or extend beyond the stated maturity of the exchange debentures or any
earlier redemption date. At any time following the termination of an extension
period and the payment of all amounts then due, we may elect to begin a new
extension period, subject to the foregoing requirements. There is no limitation
on the number of times that we may elect to begin an extension period.
REDEMPTION
We may redeem the exchange debentures before they mature (1) at any
time, in whole but not in part, within 90 days after the occurrence of a special
event at a redemption price equal to the Special Event Redemption Make-Whole
Amount and (2) at any time, in whole or in part, at a redemption price equal to
the Optional Redemption Make-Whole Amount, plus, in each case, accrued interest,
if any, to the redemption date.
For the definitions of tax event and investment company event, see
"Description of Exchange Capital Securities -- Right to Redeem Upon a Special
32
Event" in this prospectus. For the definitions of Special Event Redemption
Make-Whole Amount and Optional Redemption Make-Whole Amount, see "Description of
Exchange Capital Securities -- Redemption of Exchange Capital Securities" in
this prospectus.
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 exchange debentures to
be redeemed at its registered address. Unless we default in payment of the
redemption price, on and after the redemption date, interest will cease to
accrue on such exchange debentures called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
We will covenant that we will not, nor will we permit any subsidiary
to:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of our capital stock (which includes common and preferred
stock);
o make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities that rank equally
with or junior to the exchange debentures; or
o make any guarantee payments with respect to any guarantee issued
by us if such guarantee ranks equally with or junior to the
exchange debentures;
other than (a) dividends or distributions payable in our common stock, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of capital stock under any such plan,
or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the exchange guarantee and (d) purchases of our common stock
related to the issuance of common stock or rights under any of our benefit plans
for our directors, officers, employees, consultants or advisors,
if at such time
o we have actual knowledge of any event that (a) with the giving of
notice or the lapse of time, or both, would constitute an event of
default under the indenture, and (b) we have not taken reasonable
steps to cure the same;
o we are in default with respect to our payment of any obligations
under the exchange guarantee; or
o we have given notice of our election of an extension period as
provided in the indenture and have not rescinded such notice, or
such extension period, or any extension thereof, is continuing.
ADDITIONAL TAX SUMS
As long as the trust is the holder of the exchange debentures, and the
exchange capital securities remain outstanding, we shall pay to the trust
"additional tax sums," which means any additional amounts that may be necessary
so that the amount of distributions then due and payable by the trust will not
be reduced as a result of any additional taxes, duties and other governmental
charges imposed on the trust.
MODIFICATION OF INDENTURE
From time to time, we and the indenture trustee may, without the
consent of the holders of the exchange debentures, amend, waive or supplement
the indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any such action does not
materially adversely affect the interest of the holders of the outstanding
exchange debentures or exchange capital securities) and qualifying, or
maintaining the qualification of, the indenture under the Trust Indenture Act.
The indenture contains a provision permitting us and the indenture
trustee, with the consent of the holders of a majority in principal amount of
the exchange debentures (together with any other series of debt securities under
33
the indenture voting as one class with the exchange debentures), to modify the
rights of the holders of exchange debentures (and such other series), provided
that no such modification may
o reduce or change, without the consent of the holder of all
outstanding junior subordinated debentures
- the fixed maturity of the exchange debentures, or
- the rate or extend the time of payment of any interest or
overdue principal amount, or
- the principal amount, or
- the amount payable upon redemption, or
- the currency of payment of principal or interest;
o reduce the percentage of exchange debentures required to consent
to any supplemental indenture, without the consent of the holders
of all outstanding junior subordinated debentures;
o modify certain provisions of the indenture relating to waiver of
compliance with covenants, waiver of defaults or modification of
the indenture, except to increase the percentage of holders
required for such waiver or modification, without the consent of
the holders of all outstanding exchange debentures; or
o modify the provisions of the indenture with respect to the
subordination of outstanding exchange debentures in a manner
adverse to the holders without the consent of the holders of all
outstanding exchange debentures.
In addition, so long as any of the exchange capital securities remain
outstanding, no such modification may be made that adversely affects the holders
of such exchange capital securities in any material respect, and no termination
of the indenture may occur, and no waiver of any 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
amount of such exchange capital securities unless and until the principal of the
underlying exchange debentures and all accrued and unpaid interest thereon have
been paid in full and certain other conditions are satisfied.
EVENTS OF DEFAULT
An event of default with respect to any series of debt securities under
the indenture, including the exchange debentures, is defined in the indenture as
being:
o default for 30 days in payment of any installment of interest on
the debt securities of that series (subject to the deferral of any
due date in the case of an extension period);
o default in payment of any principal or premium, if any, on the
debt securities of that series;
o our failure to materially perform any of the covenants or
agreements in the indenture specifically contained therein for the
benefit of the debt securities of that series which have not been
remedied for a period of 60 days after written notice to us by the
indenture trustee or to us and the indenture trustee by the
holders of not less than 25% in principal amount of the debt
securities of that series and all other series so benefited (all
series voting as one class); or
o certain events of bankruptcy, insolvency or reorganization
relating to us.
If an event of default under the first three bullets above has occurred
and is continuing (but, in the case of the third bullet, only if the default is
with respect to less than all series of debt securities outstanding under the
indenture), either the indenture trustee or the holders of not less than 25% in
principal amount of all the then outstanding debt securities of the series as to
which such event of default under the first three bullets has occurred (each
such series voting as a separate class in the case of an event of default under
34
the first two bullets, and all such affected series voting as one class in the
case of an event of default under the third bullet) may declare the principal of
all the debt securities of that series, together with any accrued interest, to
be immediately due and payable. If the trust does not make this declaration with
respect to the exchange debentures, the holders of at least 25% in aggregate
liquidation amount of the exchange capital securities will have such right.
If an event of default under the third or fourth bullet above has
occurred and is continuing (but, in the case of the third bullet, only if the
default is with respect to all debt securities outstanding under the indenture),
either the indenture trustee or the holders of not less than 25% in principal
amount of all the then outstanding debt securities of each series as to which
such event of default under the third or fourth bullets has occurred (voting as
one class) may declare the principal of all the debt securities under the
indenture as to which the event of default under the third or fourth bullets has
occurred, together with any accrued interest, to be immediately due and payable.
If the trust does not make this declaration with respect to the junior
subordinated debentures, the holders of at least 25% in aggregate liquidation
amount of the capital securities will have such right.
Upon certain conditions, such declaration may be annulled by the
holders of at least a majority in principal amount of the applicable series of
debt securities (voting as one class). If this annulment is not made with
respect to the exchange debentures, the holders of a majority in aggregate
liquidation amount of the exchange capital securities will have such right. In
addition, past defaults may be waived by the holders of a majority in principal
amount of the debt securities of all series as to which an event of default has
occurred (all series voting as one class), except a default in the payment of
principal of or interest or in respect of a covenant or provision which cannot
be modified or amended without the consent of each affected holder. If the trust
does not make this waiver with respect to the exchange debentures, the holders
of a majority in aggregate liquidation amount of the exchange capital securities
will have such right.
Subject to the duty to act with the required standard of care during a
default, the indenture trustee may be indemnified by the holders of debt
securities before proceeding to exercise any right or power under the indenture
at the request of such holders. The holders of a majority in principal amount of
the affected debt securities of any one or more series may direct the time,
method and place of conducting any proceeding for any remedy available to the
indenture trustee, or exercising any trust or power conferred on the indenture
trustee.
We will annually file with the indenture trustee a certificate as to
the absence of any default or specifying any default that exists under the
indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a default has occurred and is continuing under the indenture and
such event is attributable to our failure to pay interest or principal on the
exchange debentures on the date due, a holder of exchange capital securities may
institute a legal proceeding directly against us for enforcement of payment to
such holder of the principal of or interest on such related exchange debentures
having a principal amount equal to the aggregate liquidation amount of the
related exchange capital securities of such holder. We may not amend the
indenture to remove the foregoing right to bring a direct action without the
prior written consent of the holders of all of the exchange capital securities.
Notwithstanding any payments made to a holder of exchange capital securities in
connection with a direct action, we will remain obligated to pay the principal
of or interest on the exchange debentures, and shall be subrogated to that
holder's rights with respect to any payments made in any direct action.
The holders of the exchange capital securities will not be able to
exercise directly any remedies, other than those set forth in the preceding
paragraph, available to the holders of exchange debentures unless there has been
an event of default under the trust agreement.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
o We may not merge or consolidate or sell or convey all or
substantially all of our assets unless:
35
o the successor entity (if other than us) is a U.S. entity that
assumes all of our obligations under the indenture and on the debt
securities issued under the indenture, including the exchange
debentures, and, after giving effect to such transaction, we or
the successor would not be in default under the indenture; and
o certain other conditions as prescribed in the indenture are met.
THE PROVISIONS OF THE INDENTURE DO NOT AFFORD HOLDERS OF THE EXCHANGE
DEBENTURES PROTECTION IN THE EVENT OF A HIGHLY LEVERAGED OR OTHER TRANSACTION
THAT MAY ADVERSELY AFFECT HOLDERS OF THE EXCHANGE DEBENTURES.
SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect (except as to certain
remaining rights), and we will be deemed to have satisfied and discharged the
indenture when
o all debt securities issued under the indenture not previously
delivered to the indenture trustee for cancellation have become
due and payable or will become due and payable at their stated
maturity within one year, and
o we deposit funds in trust with the indenture trustee in an amount
sufficient to pay and discharge the entire indebtedness on the
debt securities issued under the indenture not previously
delivered to the indenture trustee for cancellation.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our
obligations discharged with respect to the outstanding exchange debentures
(legal defeasance) except for:
o the rights of holders of outstanding exchange debentures to
receive payments in respect of the principal of, or interest or
premium, if any, on such exchange debentures when such payments
are due from the defeasance trust referred to below;
o our obligations with respect to the exchange debentures concerning
issuing temporary debentures, mutilated, destroyed, lost or stolen
exchange debentures and the maintenance of an office or agency for
payment and money for security payments held in the defeasance
trust;
o the rights, powers, trusts, duties and immunities of the indenture
trustee, and our obligations in connection therewith; and
o the defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to certain covenants that are described in the
indenture (covenant defeasance) and thereafter any omission to comply with those
covenants will not constitute a default or event of default with respect to the
exchange debentures. In the event covenant defeasance occurs, certain events
(not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described under "Events of Default" will no longer constitute
an event of default with respect to the exchange debentures.
In order to exercise either legal defeasance or covenant defeasance:
o we must irrevocably deposit with the indenture trustee, in a
defeasance trust, for the benefit of the holders of the exchange
debentures, cash in U.S. dollars, non-callable government
securities, or a combination of cash in U.S. dollars and
non-callable government securities, in amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or
interest and premium, if any, on the outstanding exchange
debentures on the stated maturity or on the applicable redemption
36
date, as the case may be, and we must specify whether the exchange
debentures are being defeased to maturity or to a particular
redemption date;
o in the case of legal defeasance, we must deliver to the indenture
trustee an opinion of nationally recognized independent tax
counsel reasonably acceptable to the indenture trustee confirming
that (a) we have received from, or there has been published by,
the Internal Revenue Service a ruling or (b) since the date of the
indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based
thereon such opinion of counsel will confirm that, the holders of
the outstanding exchange debentures will not recognize income,
gain or loss for federal income tax purposes as a result of such
legal defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would
have been the case if such legal defeasance had not occurred;
o in the case of covenant defeasance, we must deliver to the
indenture trustee an opinion of nationally recognized independent
tax counsel reasonably acceptable to the indenture trustee
confirming that the holders of the outstanding exchange debentures
will not recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred;
o no default or event of default has occurred and is continuing
under the indenture on the date of such deposit (other than a
default or event of default under the indenture resulting from the
borrowing of funds to be applied to such deposit);
o such legal defeasance or covenant defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture) to which we or
any of our subsidiaries is a party or by which we or any of our
subsidiaries is bound;
o we must deliver to the indenture trustee an officers' certificate
stating that the deposit was not made by us with the intent of
preferring the holders of exchange debentures over our other
creditors with the intent of defeating, hindering, delaying or
defrauding our creditors or others; and
o we must deliver to the indenture trustee an officers' certificate
and an opinion of counsel, each stating that all conditions
precedent relating to the legal defeasance or the covenant
defeasance have been complied with.
SUBORDINATION
We have covenanted and agreed that our obligations to make any payment
on the exchange debentures (and any other debt securities issued under the
indenture) will be subordinate and junior in right of payment to our obligations
to holders of our senior indebtedness to the extent described in the next two
paragraphs. Senior indebtedness with respect to the exchange debentures means:
o any of our indebtedness for borrowed money, whether or not
evidenced by bonds, debentures, notes or other written
instruments;
o any obligations under our letters of credit;
o any of our indebtedness or other obligations with respect to
commodity contracts, interest rate and currency swap agreements,
cap, floor and collar agreements, currency spot and forward
contracts, and other similar agreements or arrangements designed
to protect against fluctuations in currency exchange or interest
rates; and
o any guarantees, endorsements (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business) or other similar contingent obligations in respect of
obligations of others of a type described in the foregoing three
37
bullets, whether or not such obligation is classified as a
liability,
in each case, whether outstanding on the date of execution of the indenture or
thereafter incurred, other than obligations expressly ranking equally with or
junior to the exchange debentures. However the exchange debentures will not be
subordinate and junior in right of payment to trade creditors. As of September
30, 2001, we had approximately $1,084 million of senior indebtedness
outstanding. The indenture does not limit the amount of future increases in our
senior indebtedness. We expect from time to time to issue additional senior
indebtedness.
No payments in respect of the junior subordinated debentures may be
made if there has occurred and is continuing:
o a default in any payment with respect to senior indebtedness, or
o an event of default with respect to any senior indebtedness
resulting in the acceleration of the maturity thereof, or
o any judicial proceeding pending with respect to any such default.
In the case of any insolvency, receivership, conservatorship,
reorganization, readjustment of debt, marshaling of assets and liabilities or
similar proceedings or any liquidation or winding-up of or relating to us as a
whole, whether voluntary or involuntary, all of our obligations to holders of
our senior indebtedness will be entitled to be paid in full in cash before any
payment will be made in respect of the exchange debentures. In the event of any
such proceeding, after payment in full in cash of all sums owing with respect to
our senior indebtedness, the holders of the exchange debentures, together with
the holders of any of our obligations ranking equally with the exchange
debentures, will be entitled to be paid from our remaining assets. By reason of
such subordination, in the event of our insolvency, holders of our senior
indebtedness may receive more, ratably, and holders of the exchange debentures
having a claim pursuant to the exchange debentures may receive less, ratably,
than our other creditors. Such subordination will not prevent the occurrence of
any event of default in respect of the exchange debentures.
GOVERNING LAW
The indenture and the exchange debentures are governed by and are to be
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
Following the exchange offer and the qualification of the indenture
under the Trust Indenture Act, the indenture trustee will 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 indenture trustee is
under no obligation to exercise any of the powers vested in it by the indenture
at the request of any holder of exchange debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which it
might incur. The indenture trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of its
duties if the indenture trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
DESCRIPTION OF EXCHANGE GUARANTEE
We will execute and deliver the exchange guarantee at the same time the
exchange capital securities are issued. The terms of the exchange guarantee are
identical in all material respects to the terms of the old guarantee. Selected
provisions of the exchange guarantee agreement are summarized below. This
summary is not complete. You should read that document for a better
understanding of all of the provisions of the guarantee agreement that may be
important to you. The guarantee agreement will be qualified under the Trust
Indenture Act of 1939 upon effectiveness of the registration statement for the
exchange offer of which this prospectus forms a part. The guarantee trustee will
hold the guarantee for the benefit of the holders of all capital securities.
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GENERAL
We will fully and unconditionally agree, to the extent described
herein, to pay on a subordinated basis the guarantee payments described below to
the holders of all exchange capital securities, as and when due. We must make
these payments regardless of any defense, right of set-off or counterclaim that
the trust may have or assert, other than the defense of payment. We will make
the following payments with respect to the exchange capital securities to the
extent not paid by or on behalf of the trust:
o any accumulated and unpaid distributions required to be paid on
the exchange capital securities, to the extent that the trust has
sufficient funds on hand to make such payments,
o the applicable redemption price with respect to exchange capital
securities called for redemption, to the extent that the trust has
sufficient funds on hand to make such payments, and
o upon a voluntary or involuntary termination, dissolution,
winding-up or liquidation of the trust (unless the exchange
debentures are distributed to holders of the exchange capital
securities), the lesser of
- the aggregate of the liquidation amount plus accumulated and
unpaid distributions on the exchange capital securities to
but excluding the date of payment, to the extent that the
trust has sufficient funds on hand to make such payments,
and
- the amount of assets of the trust remaining available for
distribution to holders of exchange capital securities in
liquidation of the trust.
Our obligation to make a guarantee payment may be satisfied by our
direct payment of the required amounts to the holders of the exchange capital
securities or by causing the trust to pay those amounts to those holders.
The guarantee is an irrevocable guarantee on a subordinated basis of
the trust's related obligations under all capital securities, but will apply
only to the extent that the trust has funds sufficient to make such payments,
and is not a guarantee of collection. If we do not make interest payments on the
exchange debentures held by the trust, the trust will not have funds legally
available for, and will not be able to pay, distributions on the exchange
capital securities. In such event, holders of the exchange capital securities
would not be able to rely on the exchange guarantee for such payments.
The exchange guarantee will rank subordinate and junior in right of
payment to all of our liabilities, other than any liabilities which expressly by
their terms rank equally with or subordinate to our obligations under the
exchange guarantee. Since we are a holding company, our right to participate in
any distribution of assets of any subsidiary upon its liquidation or
reorganization or otherwise (and thus the ability of holders of exchange capital
securities to benefit indirectly from such distribution) is subject to the prior
claims of creditors of that subsidiary, except to the extent that we ourselves
may be recognized as a creditor of that subsidiary. Claims on our subsidiaries
by creditors other than ourselves include long-term debt and certain other
short-term borrowings. Accordingly, our obligations under the exchange guarantee
will be effectively subordinated to all existing and future liabilities of our
subsidiaries, including under any preferred stock, and claimants should look
only to our assets for payments thereunder. The exchange guarantee does not
limit the incurrence or issuance by us of secured or unsecured debt, including
senior indebtedness.
We have, through the exchange guarantee, the trust agreement, the
junior subordinated debentures, the indenture and the expense agreement, taken
together, fully, irrevocably and unconditionally guaranteed on a subordinated
basis all of the trust's obligations under the exchange capital 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 trust's obligations under the
exchange capital securities. See "Relationship Among the Exchange Capital
Securities, the Exchange Debentures and the Exchange Guarantee."
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STATUS OF THE EXCHANGE GUARANTEE
The exchange guarantee constitutes our unsecured obligation and ranks
subordinate and junior in right of payment to all our liabilities (including our
obligations under the junior subordinated debentures), other than any
liabilities expressly made equal with or subordinate to our obligations under
the exchange guarantee and our obligations under any similar guarantee of
preferred or capital securities of a trust.
The exchange guarantee constitutes a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against us to enforce its rights under the exchange guarantee without first
instituting a legal proceeding against any other person or entity). The
guarantee is held for the benefit of the holders of all capital securities. The
exchange guarantee will not be discharged except by payment or provision for
payment of the guarantee payments in full to the extent not paid by the trust or
upon distribution of the exchange debentures to the holders of the exchange
capital securities.
AMENDMENTS AND ASSIGNMENT
The exchange guarantee agreement may not be amended without the prior
approval of the holders of not less than a majority of the aggregate liquidation
amount of outstanding capital securities, except with respect to any changes
which do not adversely affect the rights of holders of the capital securities.
The manner of obtaining any such approval will be as set forth under
"Description of Exchange Capital Securities--Voting Rights; Amendment of the
Trust Agreement." All guarantees and agreements contained in the exchange
guarantee agreement shall bind our successors, assigns, receivers, trustees and
representatives and shall inure to the benefit of the holders of outstanding
capital securities.
EVENTS OF DEFAULT
Our failure to perform any of our payment or other obligations under
the exchange guarantee agreement will constitute an event of default under the
exchange guarantee agreement. The holders of not less than a majority in
aggregate liquidation amount of the capital securities will 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 exchange guarantee or to
exercise any trust or power under the exchange guarantee agreement conferred on
the guarantee trustee or to waive, on behalf of the holders, any past events of
default.
Any holder of the capital securities may institute a legal proceeding
directly against us to enforce its rights under the exchange guarantee without
first instituting a legal proceeding against the trust, the guarantee trustee or
any other person or entity.
We, as guarantor, are required to file annually with the guarantee
trustee a certificate as to whether or not we are in compliance with all the
conditions and covenants applicable to us under the exchange guarantee
agreement.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The exchange guarantee agreement provides that
o we will not consolidate with or merge into any other entity,
o we shall not convey, transfer or lease all or substantially all of
our properties and assets to any other entity, and
o no entity will consolidate with or merge into us or convey,
transfer or lease all or substantially all of its properties and
assets to us,
unless
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o either we are the continuing corporation, or the successor entity
is organized under the laws of the United States or any state or
the District of Columbia and such successor entity expressly
assumes our obligations under the guarantee,
o immediately after giving effect thereto, no event of default under
the exchange guarantee agreement and no event which, after notice
or lapse of time or both, would become an event of default under
the exchange guarantee agreement, has happened and is continuing,
and
o certain other conditions as prescribed in the exchange guarantee
agreement are met.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance
of a default by us in performance of the exchange guarantee, undertakes to
perform only such duties as are specifically set forth in the exchange guarantee
agreement. After a default with respect to the exchange guarantee, the guarantee
trustee must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the guarantee trustee is under no obligation to exercise any of the
powers vested in it by the exchange guarantee agreement at the request of any
holder of the capital securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that it might thereby incur.
TERMINATION OF THE EXCHANGE GUARANTEE
The exchange guarantee will terminate and be of no further force and
effect upon
o full payment of the applicable redemption price of the exchange
capital securities,
o full payment of the amounts payable upon liquidation of the trust,
o distribution of the exchange debentures to the holders of the
exchange capital securities upon liquidation of the trust, or
o the exchange capital securities ceasing to be outstanding
following the consummation of the exchange offer.
The exchange guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the exchange
capital securities must restore payment of any sums paid under the exchange
capital securities or the exchange guarantee.
GOVERNING LAW
The exchange guarantee is governed by and to be construed in accordance
with the laws of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to the expense agreement, we have irrevocably and
unconditionally guaranteed to each person or entity to whom the trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the trust, other than obligations of the trust to pay to the holders of any
trust securities the amounts due such holders pursuant to the terms of the trust
securities.
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DESCRIPTION OF OLD SECURITIES
We refer to the old capital securities, the guarantee issued by us in
connection with the old capital securities and the old debentures collectively
as the old securities and refer to the exchange capital securities, the exchange
guarantee and the exchange debentures collectively as the exchange securities.
The terms of the old securities are identical in all material respects
to the exchange securities, except that old securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the exchange and registration rights
agreement, which rights will terminate upon consummation of the exchange offer,
except under limited circumstances.
The old securities provide that, if we or the trust failed to take
certain steps to effect the exchange offer and complete the exchange within
certain prescribed time periods, then, as liquidated damages, special interest
of up to 50 basis points per annum would become payable in respect of the old
debentures and corresponding distributions would become payable on the old
capital securities for the period from the occurrence of such event until such
time as the exchange offer has been consummated. The exchange securities are
not, and upon consummation of the exchange offer, the original securities will
not be, entitled to any such additional interest or distribution. Accordingly,
holders of old capital securities should review the information set forth under
"Risk Factors -- Your failure to exchange old capital securities may adversely
affect your ability to sell such securities" and "Description of Exchange
Capital Securities."
RELATIONSHIP AMONG THE EXCHANGE CAPITAL SECURITIES, THE
EXCHANGE DEBENTURES AND THE EXCHANGE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the exchange capital
securities (to the extent the trust has funds available for the payment of such
distributions) are and will continue to be irrevocably guaranteed by us as set
forth under "Description of Guarantee." Taken together, our obligations under
the exchange debentures, the indenture, the trust agreement, the expense
agreement, the guarantee agreement and the guarantee provide a full, irrevocable
and unconditional guarantee of payments of distributions and other amounts due
on the exchange capital 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
trust's obligations under the exchange capital securities. If and to the extent
that we do not make payments on the exchange debentures, the trust will not pay
distributions or other amounts due on the exchange capital securities. The
exchange guarantee does not cover payment of distributions when the trust does
not have sufficient funds to pay those distributions. In that event, the remedy
of a holder of exchange capital securities is to institute a direct action. Our
obligations under the exchange guarantee are subordinate and junior in right of
payment to all our other liabilities as set forth in the exchange guarantee
agreement.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the exchange debentures, they
will be sufficient to cover distributions and other payments due on the trust
securities, primarily because
o the aggregate principal amount of the exchange debentures will be
equal to the sum of the aggregate liquidation amount or redemption
price, as applicable, of the trust securities;
o the interest rate and interest and other payment dates on the
exchange debentures will match the distribution rate and
distribution and other payment dates for the trust securities;
o under the expense agreement, we will pay for all and any costs,
expenses and liabilities of the trust except the trust's
obligations to holders of trust securities under such trust
securities; and
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o the trust agreement further provides that the trust will not
engage in any activity that is not consistent with the limited
purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF EXCHANGE CAPITAL SECURITIES
A holder of any exchange capital security may institute a legal
proceeding directly against us to enforce its rights under the exchange
guarantee without first instituting a legal proceeding against the guarantee
trustee, the trust or any other person or entity.
A default under any senior indebtedness would not constitute a default
under the trust agreement. Moreover, in the event of payment defaults under, or
acceleration of, senior indebtedness, the subordination provisions of the
indenture provide that no payments may be made in respect of the exchange
debentures until such senior indebtedness has been paid in full or any payment
default thereunder has been cured or waived. Failure to make required payments
on exchange debentures would constitute an event of default under the trust
agreement.
LIMITED PURPOSES OF THE TRUST
The exchange capital securities evidence an undivided beneficial
interest in the assets of the trust. The trust exists for the exclusive purposes
of issuing and selling the trust securities, using the proceeds from the sale of
the trust securities to acquire the exchange debentures, exchanging the old
debentures for exchange debentures in the exchange offer and engaging in only
those other activities necessary, convenient or incidental thereto (such as
registering the transfer of capital securities). A principal difference between
the rights of a holder of an exchange capital security and a holder of an
exchange debenture is that a holder of an exchange debenture is entitled to
receive from us the principal amount of and interest accrued on exchange
debentures held, while a holder of capital securities is entitled to receive
distributions from the trust (or from us under the guarantee) if and to the
extent the trust has funds available for the payment of such distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or
liquidation of the trust involving the liquidation of the exchange debentures,
after satisfaction of liabilities to creditors as required by applicable law,
the holders of the trust securities will be entitled to receive the liquidation
distribution in cash out of trust assets.
Upon our voluntary or involuntary liquidation or bankruptcy, the
property trustee, as holder of the exchange debentures, would be our creditor,
subordinated in right of payment to all senior indebtedness as set forth in the
indenture, but entitled to receive payment in full before our stockholders
receive payments or distributions. Since we are the guarantor under the exchange
guarantee and have agreed under the expense agreement to pay for all costs,
expenses and liabilities of the trust (other than the trust's obligations to the
holders of its trust securities), the positions of a holder of exchange capital
securities and a holder of exchange debentures relative to other creditors and
to our stockholders in the event of our liquidation or bankruptcy are expected
to be substantially the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income
tax consequences of the purchase, ownership and disposition of exchange capital
securities as of the date of this prospectus, and represents the opinion of
Thelen Reid & Priest LLP, our counsel, insofar as it relates to matters of law
or legal conclusions. Except where noted, it deals only with exchange capital
securities held as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended, and does not deal with special
situations, such as those of tax-exempt organizations, dealers in securities or
currencies, banks, financial institutions, life insurance companies, real estate
investment trusts, regulated investment companies, persons holding exchange
capital securities as part of a hedging or conversion transaction or a straddle,
persons who mark to market their securities, United States holders (as defined
below) whose "functional currency" is not the United States dollar, or persons
who are not United States holders. In addition, this discussion does not address
any tax consequences to persons who purchase capital securities other than
pursuant to their initial issuance and distribution. It also does not include
any description of any alternative minimum tax consequences or of the tax laws
43
of any state, local or foreign jurisdiction. Furthermore, the discussion below
is based upon the provisions of the Internal Revenue Code and income tax
regulations, administrative rulings and judicial decisions under the Internal
Revenue Code as of the date of this prospectus, and those authorities may be
repealed, revoked or modified, with either forward-looking or retroactive
effect, so as to result in United States federal income tax consequences
different from those discussed below.
PROSPECTIVE PURCHASERS OF EXCHANGE CAPITAL SECURITIES ARE ADVISED TO
CONSULT WITH THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SUCH EXCHANGE CAPITAL
SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECTS OF
ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
As used in this prospectus, a "United States holder" is a beneficial
owner of a capital security that is, for United States federal income tax
purposes:
o a citizen or resident of the United States,
o a corporation, or other entity treated as a corporation for United
States federal income tax purposes, created or organized in or
under the laws of the United States or any political subdivision
thereof,
o an estate, the income of which is subject to United States federal
income taxation regardless of its source, or
o a trust the administration of which is subject to the primary
supervision of a court within the United States and for which one
or more United States persons have the authority to control all
substantial decisions.
If a partnership holds exchange capital securities, the United States
federal income tax treatment of a partner generally will depend upon the status
of the partner and the activities of the partnership. Partners of partnerships
holding exchange capital securities should consult their tax advisors. As used
in this prospectus, a "non-United States holder" is a beneficial owner of an
exchange capital security that is not a United States holder.
CLASSIFICATION OF THE TRUST
Thelen Reid & Priest LLP, our counsel, is of the opinion that, under
current law and assuming full compliance with the terms of the trust agreement
and the indenture, the instruments establishing the trust, and certain other
documents, the trust 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. Accordingly, each United States holder will be treated as
owning an undivided beneficial interest in the exchange debentures. Investors
should be aware that the opinion of Thelen Reid & Priest LLP is not binding on
the Internal Revenue Service or the courts.
CLASSIFICATION OF THE EXCHANGE DEBENTURES
Based on the advice of Thelen Reid & Priest LLP, we believe and intend
to take the position that the exchange debentures will constitute indebtedness
for United States federal income tax purposes. No assurance can be given that
this position will not be challenged by the Internal Revenue Service or, if
challenged, that the challenge will not be successful. If the Internal Revenue
Service successfully challenged the treatment of the exchange debentures as
indebtedness, the exchange debentures would be subject to redemption at our
option as described under the caption "Description of Exchange
Debentures--Redemption." Such a redemption would cause a mandatory redemption of
the exchange capital securities as described under the caption "Description of
Capital Securities--Right to Redeem Upon a Special Event." By purchasing and
accepting capital securities, each United States holder covenants to treat the
exchange debentures as indebtedness and the capital securities as evidence of an
indirect beneficial ownership in the exchange debentures. The remainder of this
discussion assumes that the exchange debentures will be classified as
indebtedness for United States federal income tax purposes.
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UNITED STATES HOLDERS
Payments of Interest
Except as set forth below, stated interest on the exchange debentures
will generally be taxable to a United States holder as ordinary income at the
time it is paid or accrued in accordance with the United States holder's method
of accounting for tax purposes. No portion of that income will be eligible for
the dividends-received deduction.
Original Issue Discount
We have the right to extend the interest payment period on the exchange
debentures from time to time for a period not exceeding 10 consecutive
semi-annual periods prior to the stated maturity of the exchange debentures.
We believe that the likelihood of our extending the interest payment
period on the exchange debentures is "remote" within the meaning of applicable
income tax regulations, in part because doing so would prevent us from making
certain payments with respect to our capital stock and certain of our debt
securities. See "Description of Exchange Debentures--Option to Defer Interest
Payments." Consequently, we believe that the exchange debentures will not be
treated as having been issued with original issue discount for United States
federal income tax purposes. It should be noted that the regulations have not
yet been addressed in any rulings or other interpretations by the Internal
Revenue Service. Accordingly, it is possible that the Internal Revenue Service
could take a different position.
If we exercised our right to extend an interest payment period, the
exchange debentures would at that time be treated as having been retired and
reissued with original issue discount. As a result, United States holders would
be required, for the remaining term of the exchange debentures, to accrue
interest income even if they used the cash method of accounting. Consequently,
in the event that the payment of interest was deferred, a United States holder
would be required to include original issue discount in income on an economic
accrual basis, notwithstanding that we would not make any interest payments on
the exchange debentures during the extension period.
Exchange Offer; Registration Rights
Neither the exchange of capital securities for exchange capital
securities in the exchange offer nor the SEC registration of capital securities
will constitute a taxable exchange of the capital securities for United States
federal income tax purposes. Thus, there will be no material United States
federal income tax consequences to a United States holder as a result of (i)
exchanging old capital securities for exchange capital securities in the
exchange offer or (ii) the SEC registration of exchange capital securities.
Accordingly, the exchange capital securities should have the same issue price as
the capital securities, and a United States holder shall have the same adjusted
tax basis and holding period in the exchange capital securities as such holder
had in the capital securities immediately prior to the exchange.
Receipt of Exchange Debentures or Cash Upon Liquidation of the Trust
As described under the caption "Description of Exchange
Securities--Liquidation of the Trust and Distribution of Exchange Debentures,"
the exchange debentures may be distributed to holders in exchange for the
exchange capital securities in liquidation of the trust, provided that we have
first received an opinion of nationally recognized independent tax counsel to
the effect that the distribution will not constitute a taxable exchange of the
exchange capital securities for United States federal income tax purposes. In
the event of such a distribution, each United States holder would receive an
aggregate tax basis in the exchange debentures equal to the holder's aggregate
tax basis in its capital securities. A United States holder's holding period for
the exchange debentures received in liquidation of the trust would include the
period during which the holder held the exchange capital securities.
Under certain circumstances, as described under the captions
"Description of Exchange Debentures-Redemption" and "Description of Exchange
Capital Securities-Right to Redeem Upon a Special Event," the exchange
debentures may be redeemed for cash and the proceeds of the redemption
distributed to holders of exchange capital securities in redemption of the
45
exchange capital securities. Under current law, that redemption would constitute
a taxable disposition of the exchange capital securities, and a United States
holder would recognize gain or loss as if the holder had sold the redeemed
exchange capital securities.
Sale, Exchange and Redemption of the Exchange Capital Securities
Upon a sale, exchange, redemption or other taxable disposition of
exchange capital securities, a United States holder will recognize gain or loss
equal to the difference between the amount realized upon the disposition,
excluding amounts attributable to accrued and unpaid interest, and the holder's
adjusted tax basis in the exchange capital securities. A United States holder's
adjusted tax basis in an exchange capital security generally will equal such
holder's initial purchase price, increased by the amount of any original issue
discount previously includible in the gross income of the holder and decreased
by the amount of any subsequent payments received on the exchange capital
security. The gain or loss will be capital gain or loss and will be long-term
capital gain or loss if, at the time of the disposition, the exchange capital
securities have been held for more than one year. Generally, for non-corporate
United States holders, net long-term capital gains are subject to United States
federal income tax at a maximum rate of 20%.
The exchange capital securities may trade at a price that does not
fully reflect the value of accrued but unpaid interest with respect to the
underlying exchange debentures. If you sell your exchange capital securities
between record dates for payments of distributions, you will not receive
subsequent distributions but will nevertheless be required to include in gross
income for United States federal income tax purposes your ratable share of
accrued and unpaid interest on the exchange debentures through the date of the
sale. To the extent the selling price is less than your adjusted tax basis in
the exchange capital securities sold, you will recognize a capital loss. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
Information Reporting and Backup Withholding
In general, information reporting will apply to distributions paid and
original issue discount accrued on the exchange capital securities, and to the
proceeds of a sale of exchange capital securities, except in the case of an
exempt holder, such as a corporation. A 30.5% backup withholding tax (subject to
phased-in rate reductions) will apply to such payments if a holder fails to
provide a taxpayer identification number and to satisfy other requirements,
unless the holder has provided a certificate of exempt status.
NON-UNITED STATES HOLDERS
Payments of Interest
Subject to the discussion below concerning backup withholding, no
withholding of United States federal income tax will be required with respect to
distributions on exchange capital securities held by a non-United States holder
(or with respect to the underlying interest paid or accrued on the exchange
debentures), provided that the beneficial owner (1) does not actually or
constructively own 10% or more of the total combined voting power of all classes
of our stock entitled to vote within the meaning of Section 871(h)(3) of the
Internal Revenue Code and the regulations thereunder, (2) is not a controlled
foreign corporation related, directly or indirectly, to us through stock
ownership, (3) is not a bank whose receipt of interest in respect of the
exchange debentures is described in Section 881(c)(3)(A) of the Internal Revenue
Code, and (4) satisfies the statement requirement, described generally below,
set forth in Section 871(h) and Section 881(c) of the Internal Revenue Code and
the regulations thereunder.
To satisfy the requirement referred to in clause (4) above, the
beneficial owner of a exchange capital security, or a financial institution
holding the exchange capital security on behalf of such owner, must, in
accordance with specified procedures, provide the trust or its paying agent with
a statement to the effect that the beneficial owner is not a United States
person. These requirements will be met if (1) the beneficial owner provides its
name and address and certifies, under penalties of perjury, that it is not a
United States person, which certification should be made on an IRS Form W-8BEN,
or (2) a financial institution holding the capital security on behalf of the
46
beneficial owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof.
In the event that any of the above requirements is not satisfied, the
trust will nonetheless not withhold United States federal income tax on
distributions paid to a non-United States holder if it receives an IRS Form
W-8ECI from the non-United States holder, establishing that such income is
effectively connected with the conduct by the non-United States holder of a
trade or business in the United States, unless the trust has knowledge to the
contrary. Interest paid to a non-United States holder that is effectively
connected with the conduct by the holder of a trade or business in the United
States is generally taxed at the graduated rates that are applicable to United
States persons. In the case of a non-United States holder that is a corporation,
such effectively connected income may also be subject to the United States
federal branch profits tax, which is generally imposed on a foreign corporation
on the deemed repatriation from the United States of effectively connected
earnings and profits, at a 30% rate, unless the rate is reduced or eliminated by
an applicable income tax treaty and the non-United States holder is a qualified
resident of the treaty country.
Exchange Offer; Registration Rights
Neither the exchange of capital securities for exchange capital
securities in the exchange offer nor the SEC registration of capital securities
will constitute a taxable exchange of the capital securities for United States
federal income tax purposes. Thus, there will be no material United States
federal income tax consequences to a United States holder as a result of (i)
exchanging old capital securities for exchange capital securities in the
exchange offer or (ii) the SEC registration of exchange capital securities.
Accordingly, the exchange capital securities should have the same issue price as
the capital securities, and a non-United States holder shall have the same
adjusted tax basis and holding period in the exchange capital securities as such
holder had in the capital securities immediately prior to the exchange.
Sale, Exchange and Redemption of the Exchange Capital Securities
A non-United States holder generally will not be subject to United
States federal income tax with respect to gain recognized on a sale, exchange or
redemption of a exchange capital security unless (1) the gain is effectively
connected with a trade or business of the non-United States holder in the United
States, (2) in the case of a non-United States holder who is an individual, such
holder is present in the United States for 183 or more days in the taxable year
of the sale or other disposition and certain other conditions are met or (3) the
non-United States holder is subject to tax pursuant to certain provisions of the
Internal Revenue Code applicable to United States expatriates. However, any
amount attributable to accrued but unpaid interest will be treated in the same
manner as distributions made to such non-United States holder, as described
above.
Gain derived by a non-United States holder from the sale or other
disposition of a exchange capital security that is effectively connected with
the conduct by the holder of a trade or business in the United States is
generally taxed at the graduated rates that are applicable to United States
persons. In the case of a non-United States holder that is a corporation, such
effectively connected income may also be subject to the United States branch
profits tax. If any individual non-United States holder falls under clause (2)
of the preceding paragraph, such holder will be subject to a flat 30% tax on the
gain derived from the sale or other disposition, which may be offset by certain
United States source capital losses recognized within the same taxable year as
such sale or other disposition.
Information Reporting and Backup Withholding
Non-United States holders will not be subject to information reporting
or backup withholding on payments made by the trust or its paying agent if a
statement described in clause (4) under "Payments of Interest" has been received
and the payor has no actual knowledge that the beneficial owner is a United
States person.
In addition, backup withholding and information reporting will not
apply to payments of the liquidation amount of, or distributions on, the
exchange capital securities paid or collected by a foreign office of a
custodian, nominee or other foreign agent on behalf of a non-United States
holder, or if a foreign office of a broker pays the proceeds of the sale of
exchange capital securities to a non-United States holder. If, however, such
nominee, custodian, agent or broker is, for United States federal income tax
47
purposes, a United States person, a controlled foreign corporation, a foreign
person that derives 50% or more of its gross income for certain periods from the
conduct of a U.S. trade or business, or a foreign partnership with certain
connections to the United States, such payments will not be subject to backup
withholding (unless the payor has actual knowledge that the payee is a United
States person) but will be subject to information reporting unless (1) such
custodian, nominee, agent or broker has documentary evidence that the beneficial
owner is not a United States person and certain other conditions are met or (2)
the beneficial owner otherwise establishes an exemption.
Distributions on the exchange capital securities paid to a non-United
States holder by a United States office of a custodian, nominee or agent, or
payment of the proceeds of a sale of capital securities by the United States
office of a broker will be subject to backup withholding and information
reporting unless (1) the non-United States holder provides the statement
described above that such holder is not a United States person and the payor
does not have actual knowledge to the contrary or (2) the beneficial owner
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed
as a credit or a refund against the holder's United States federal income tax
liability, if certain required information is provided to the Internal Revenue
Service.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain requirements upon employee benefit plans subject
thereto ("ERISA Plans") and on those persons who are fiduciaries with respect to
ERISA Plans. In particular, investments by ERISA Plans are subject to ERISA's
general fiduciary requirements, including the requirements of investment
prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with its governing documents. A fiduciary of
an ERISA Plan should consider the fiduciary standards under ERISA in the context
of the particular circumstances of the investing ERISA Plan before authorizing
an investment in the exchange capital securities. Such fiduciary should
determine whether an investment in the exchange capital securities satisfies
ERISA's diversification and prudence requirements and whether the investment is
in accordance with the documents and instruments governing the plan.
In addition, ERISA and the Internal Revenue Code prohibit a wide range
of transactions ("Prohibited Transactions") involving ERISA Plans or other
employee benefit plans that are not subject to ERISA but that are subject to
Section 4975 of the Internal Revenue Code, such as individual retirement
accounts (together with ERISA Plans, "Plans") and persons who have certain
specified relationships to the Plan ("parties in interest," within the meaning
of ERISA, and "disqualified persons," within the meaning of the Internal Revenue
Code). If engaged in by a Plan, such transactions may require "correction" and
may cause a Plan fiduciary to incur certain liabilities and the parties in
interest or disqualified persons to be subject to excise taxes, unless a
statutory or administrative exemption is available.
The U.S. Department of Labor ("DOL") has promulgated a regulation, 29
C.F.R. Section 2510.3-101 (the "Plan Asset Regulation"), describing what
constitutes the assets of a Plan with respect to the Plan's investment in an
entity for purposes of ERISA and Section 4975 of the Internal Revenue Code.
Under the Plan Asset Regulation, if a Plan invests (directly or indirectly) in
an exchange capital security, the Plan's assets will include both the exchange
capital security and an undivided interest in each of the underlying assets of
the trust unless it is established that equity participation in the trust by
benefit plan investors (including, but not limited to, Plans and entities whose
underlying assets include plan assets by reason of an employee benefit plan's
investment in the entity) is not "significant" within the meaning of the Plan
Asset Regulation. In this regard, the extent of equity participation by benefit
plan investors in the trust will not be monitored. If any assets of the trust
are deemed to constitute the assets of a Plan, transactions involving the assets
of the trust could give rise to a Prohibited Transaction unless a statutory or
administrative exemption is available.
Certain statutory or administrative exemptions (each, a "Prohibited
Transaction Class Exemption" or "PTCE") may be available under ERISA to exempt
the purchase, holding and/or disposition of any exchange capital securities by a
Plan. Included among the administrative exemptions are: PTCE 90-1, regarding
investments by insurance company pooled separate accounts; PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 84-14, regarding
48
transactions effected by a qualified professional asset manager; PTCE 95-60,
regarding investments by insurance company general accounts; and PTCE 96-23,
regarding investments by an in-house professional asset manager. Certain of the
exemptions, however, do not afford relief from the prohibition on self-dealing
contained in Section 406(b) of ERISA and Section 4975(c)(1)(E)-(F) of the
Internal Revenue Code. In addition, there can be no assurance that any of these
administrative exemptions will be available with respect to any particular
transaction involving the exchange capital securities. In addition to the
Prohibited Transaction Class Exemptions, an individual exemption may apply to
the initial purchase, holding and secondary market resales of exchange capital
securities by a Plan, provided certain specified conditions are met.
As noted above, if a Plan acquires any exchange capital securities, the
Plan's assets may be deemed to include both the exchange capital securities
acquired and an undivided interest in the underlying assets of the trust, unless
the actual investment by benefit plan investors in the exchange capital
securities is not "significant" within the meaning of the Plan Asset Regulation.
Consequently, the trust assets could be deemed to be "plan assets" of such Plan
for purposes of the fiduciary responsibility provisions of ERISA and the
prohibited transaction rules. Any person who exercises any authority or control
with respect to the management or disposition of the assets of a Plan is
considered to be a fiduciary of such Plan. The trustees could, therefore, be
considered fiduciaries of Plans that have invested in the exchange capital
securities and be subject to the fiduciary responsibility provisions of ERISA
and the prohibited transaction rules in exercising its authority with respect to
the management of the assets of the trust. If any trustee is considered a
fiduciary with respect to the Plans purchasing the exchange capital securities,
there may be an improper delegation by such Plans of the responsibility to
manage plan assets. In order to avoid such improper delegation, each investing
Plan, by purchasing the exchange capital securities, will be deemed to have
directed the trustee to invest in the assets held in the trust. Any Plan
purchasing the exchange capital securities must ensure that any statutory or
administrative exemption from the Prohibited Transaction rules on which such
Plan relies with respect to its purchase or holding of the exchange capital
securities also applies to such Plan's indirect holding of the assets of the
trust.
Governmental plans and certain church plans (each as defined under
ERISA) are not subject to the prohibited transaction rules of ERISA or the
Internal Revenue Code. Such plans, however, may be subject to federal, state or
local laws or regulations that may affect their investment in the exchange
capital securities. Any fiduciary of such a governmental or church plan
considering a purchase of the exchange capital securities must determine the
need for, and the availability, if necessary, of any exemptive relief under any
such laws or regulations.
The foregoing discussion is general in nature and is not intended to be
all inclusive. Any fiduciary of an ERISA Plan, a Plan, a governmental plan or a
church plan considering the purchase and holding of the exchange capital
securities should consult with its legal advisors regarding the consequences of
such purchase and holding. By its purchase and acceptance of exchange capital
securities, each holder will be deemed to have represented and warranted that
either (1) no ERISA Plan assets have been used to purchase such exchange capital
securities, or (2) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such ERISA Plan assets to
purchase and hold such exchange capital securities and, indirectly, the assets
of the trust will not constitute a non-exempt Prohibited Transaction.
EACH ERISA PLAN FIDUCIARY (AND EACH FIDUCIARY FOR A GOVERNMENTAL OR
CHURCH PLAN SUBJECT TO RULES SIMILAR TO THOSE IMPOSED ON ERISA PLANS UNDER
ERISA) SHOULD CONSULT WITH ITS LEGAL ADVISOR CONCERNING AN INVESTMENT IN ANY OF
THE EXCHANGE CAPITAL SECURITIES.
PLAN OF DISTRIBUTION
As more fully discussed in the section of this prospectus entitled "THE
EXCHANGE OFFER - Resale of Exchange Capital Securities", based on an
interpretation by the SEC's staff contained in several no-action letters issued
to third parties, we believe that the exchange capital securities issued
pursuant to the exchange offer may be offered for resale, resold and otherwise
transferred after the exchange offer by any holder of exchange capital
securities (other than a holder which is our "affiliate" within the meaning of
Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, if such holder:
o acquires the exchange capital securities in the ordinary course of
his or her business; and
49
o does not intend to participate, and has no arrangement with any
person to participate, in a distribution of the exchange capital
securities.
Each participating broker-dealer in connection with the exchange offer
must acknowledge that it will deliver a prospectus in connection with any resale
of exchange capital securities. This prospectus, as it may be amended or
supplemented from time to time, may be used by a participating broker-dealer in
connection with resales of exchange capital securities received in exchange for
old capital securities where such old capital securities were acquired as a
result of market-making activities or other trading activities. We have agreed
that we will make this prospectus, as amended or supplemented, available to any
participating broker-dealer for use in connection with any such resale and
participating broker-dealers shall be authorized to deliver this prospectus for
a period ending upon the earlier of the expiration of the 90th day after the
exchange offer has been completed or such time as such broker-dealers no longer
own any registrable securities, which we define in the exchange and registration
rights agreement.
We will not receive any proceeds from any sales of the exchange capital
securities by participating broker-dealers. Exchange capital securities received
by participating broker-dealers for their own account pursuant to the exchange
offer may be sold from time to time, in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the exchange capital securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
the prevailing market prices or at negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any participating
broker-dealer that resells
LEGAL MATTERS
The validity of the exchange capital securities, the exchange
debentures and the exchange guarantee will be passed upon for us by Stephen F.
Koziar, Jr., Group Vice President and General Counsel of DPL and by Thelen Reid
& Priest LLP, New York, New York. In addition, matters of federal income tax law
and federal securities law will be passed upon by Thelen Reid & Priest LLP. In
giving these opinions, as to matters of Ohio law, Thelen Reid & Priest LLP may
rely on the opinion of Mr. Koziar and, as to matters of New York law, Mr. Koziar
may rely on the opinion of Thelen Reid & Priest LLP. Certain matters of Delaware
law relating to the validity of the exchange capital securities will be passed
upon on behalf of us and the Trust by Morris, Nichols, Arsht & Tunnell, special
Delaware counsel to the trust and us.
EXPERTS
The consolidated financial statements of DPL Inc. incorporated in this
prospectus by reference to the Annual Report on Form 10-K for the year ended
December 31, 2000 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
50
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Code of Regulations of DPL provides for
indemnification of directors, officers, employees or agents of DPL, or
individuals who server at the request of DPL in such capacities for other
entities, against any and all expenses, judgments, fines and settlements
incurred by them in connection with claims and/or litigation arising out of
their service. Article VII provides that indemnification shall be available to
the full extent permitted by law including, without limitation, Section
1701.13(E) of the Ohio Revised Code.
Under Ohio law, the liabilities against which a director or officer may
be indemnified and factors employed to determine whether a director or officer
is entitled to indemnification in a particular instance depend on whether the
proceeding in which the claim for indemnification arises was brought (a) other
than by and in the right of the corporation ("Category A Proceedings") or (b) by
and in the right of the corporation ("Category B Proceedings").
In Category A Proceedings, a corporation may indemnify each director
and officer against expenses, including attorneys' fees, judgements, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with any threatened or actual proceeding in which he may be
involved by reason of his having acted in such capacity, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, he had no reasonable cause to believe that his conduct was unlawful.
In Category B Proceedings, a corporation may indemnify each director
and officer against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense or settlement of any such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, except that no
indemnification is permitted with respect to (i) any matter as to which such
person has been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless a court determines such person
is entitled to indemnification; or (ii) any matter in which the only liability
asserted against a director or officer relates to an unlawful loan, dividend,
distribution of assets or purchase or redemption of shares.
Unless indemnification is ordered by a court, the determination as to
whether or not an individual has satisfied the applicable standards of conduct
(and therefore may be indemnified) is made by the corporation by a majority vote
of a quorum consisting of directors of the corporation who were not parties to
the action; or if such a quorum is not obtainable, or if a majority vote of a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion; or by the shareholders of the corporation; or by the court in
which such action was brought.
Article VII does not limit in any way other indemnification rights to
which those seeking indemnification may be entitled. Ohio law requires
indemnification against expenses where a directors or officer is successful on
the merits or otherwise in defense of any action. Consistent with Ohio law,
Article VII provides that expenses incurred by a director or officer in
defending any action may be paid by DPL in advance of final disposition, upon
receipt of an undertaking to repay such amount unless it is ultimately
determined that he is entitled to indemnification pursuant to Article VII.
DPL maintains insurance policies covering its officers and directors
against certain civil liabilities, including liabilities under the Securities
Act of 1933, as amended.
ITEM 21. EXHIBITS
Reference is made to the Exhibit Indix on page II-5 hereto.
ITEM 22. UNDERTAKINGS
Each undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's 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 herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(2) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to item 4,10(b),
11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of this registration
statement through the date of responding to the request.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange 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 that the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of such registrant
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 registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
POWER OF ATTORNEY
Each director and/or officer of the registrant whose signature appears
below hereby appoints each of the Agents for Service named in this registration
statement 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 registrant hereby also appoints each of the
Agents for Service as its attorney-in-fact with like authority to sign and file
any such amendments in its name and behalf.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrants each certify that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-4, and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dayton, and State of Ohio, on the 4th day of
December, 2001.
DPL Inc.
By /s/A.M. Hill
----------------------------------
A. M. Hill
President and
Chief Executive Officer
DPL CAPITAL TRUST II
By /s/A.M. Hill
----------------------------------
A.M. Hill
Administrative Trustee
By /s/S.F. Koziar, Jr.
----------------------------------
S.F. Koziar, Jr.
Administrative Trustee
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by or on behalf of the following
persons in the capacities indicated on the 4th day of December, 2001.
Signature Title
--------- -----
/s/T.J. Danis
---------------------------
T.J. Danis Director
/s/J.F. Dicke, II
---------------------------
J.F. Dicke, II Director
/s/P.H. Forster
---------------------------
P.H. Forster Director and Chairman
/s/E. Green
---------------------------
E. Green Director
II-3
Signature Title
--------- -----
/s/J.G. Haley
---------------------------
J.G. Haley Director
/s/A.M. Hill
---------------------------
A.M. Hill Director, President and Chief
Executive Officer (principal
executive officer)
W A. Hillenbrand
---------------------------
W A. Hillenbrand Director
/s/D.R. Holmes
---------------------------
D.R. Holmes Director
/s/E.M. McCarthy Officer
--------------------------- Group Vice President and Chief
E.M. McCarthy Officer Chief Financial (principal
financial and accounting officer)
/s/B.R. Roberts
---------------------------
B.R. Roberts Director
---------------------------
G.R. Roberts Director
---------------------------
S.M. Stuart Director
II-4
EXHIBIT INDEX
Exhibit No. Document
----------- --------
4(a) Indenture dated as of August 31, 2001 between DPL Inc.
and The Bank of New York, Trustee.
4(b) First Supplemental Indenture dated as of August 31, 2001
relating to the subordinated debentures between DPL Inc.
and The Bank of New York.
4(c) Amended and Restated Trust Agreement dated as of August
31, 2001 relating to DPL Capital Trust II, the Capital
Securities and the Common Securities among DPL Inc., the
depositor, The Bank of New York, as property trustee,
The Bank of New York (Delaware), as Delaware trustee,
and Allen M. Hill and Stephen F. Koziar, Jr., as
administrative trustees, and the holders, from time to
time, of undivided beneficial interests in DPL Capital
Trust II.
4(d) Exchange and Registration Rights Agreement dated as of
August 24, 2001 among DPL Inc., DPL Capital Trust II and
Morgan Stanley & Co., Incorporated.
4(e) Form of Certificate of Junior Subordinated Debentures.
4(f) Form of Capital Security Certificate for DPL Capital
Trust II.
4(g) Form of Capital Securities Guarantee Agreement between
DPL Inc. and The Bank of New York, as guarantee trustee
relating to the Guarantee to be delivered for the
benefit of the holders of the Capital Securities.
4(h) Agreement as to Expenses and Liabilities dated as of
August 31, 2001 between DPL Inc. and
DPL Capital Trust II.
5(a) Opinion of Mr. Koziar, Group Vice President and General
Counsel of DPL Inc., as to Junior Subordinated
Debentures and DPL Inc. Guarantee.
5(b) Opinion of Morris, Nichols, Arsht & Tunnel as to Capital
Securities.
5(c) Opinion of Thelen Reid & Priest LLP as to Junior
Subordinated Debentures and DPL Inc. Guarantee.
8 Opinion of Thelen Reid & Priest LLP as to certain
federal income tax matters (contained in their opinion
filed as Exhibit 5(c).
12 Computation of Ratio of Earnings to Fixed Charges.
23(a) Consent of Mr. Koziar (contained in his opinion filed as
Exhibit 5(a)).
23(b) Consent of Morris, Nichols, Arsht & Tunnell (contained
in their opinion filed as Exhibit 5(b)).
23(c) Consent of Thelen Reid & Priest LLP (contained in their
opinion filed as Exhibit 5(c)).
23(d) Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on the signature page of
this registration statement) 25(a) Form T-1 Statement of
Eligibility of The Bank of New York as Trustee for the
Capital Securities of DPL Capital Trust II.
25(a) Form T-1 Statement of of Eligibility of The Bank of New
York as Trustee for the Capital Securities of DPL
Capital Trust II.
25(b) Form T-1 Statement of Eligibility of The Bank of New
York as Trustee for the Junior Subordinated Debentures
of DPL Capital Trust II.
25(c) Form T-1 Statement of Eligibility of The Bank of New
York as Trustee for DPL Capital Trust II Guarantee with
respect to the Capital Securities.
99(a) Form of Exchange Agent Agreement.
99(b) Form of Notice of Guaranteed Delivery.
99(c) Form of Letter of Transmittal.
99(d) Form of Letter to Clients.
99(e) Form of Letter to Nominees.
99(f) Form of Instructions to Registered Holder and/or
Book-Entry Transfer Participant from Owner.
II-5