AS FILED WITH THEAs filed with the Securities and Exchange Commission on August 28, 2008.
Subject to Amendment.
Registration No. 333-152895
SECURITIES AND EXCHANGE COMMISSION
ON JANUARY 28, 1998. SUBJECT TO AMENDMENT.REGISTRATION NOS. 333- 333- -01 333- -02 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON,Washington, D.C. 20549
--------------Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------- MISSISSIPPI POWER MISSISSIPPI 64-0205820 COMPANY DELAWARE 58-6344349 MISSISSIPPI POWER DELAWARE APPLIED FOR CAPITAL TRUST II (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER MISSISSIPPI POWER IDENTIFICATION NO.) CAPITAL TRUST III (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Mississippi Power Company (Exact name of registrant as | Mississippi (State or other jurisdiction of | 64-0205820 (I.R.S. Employer Identification No.) |
2992 WEST BEACH, GULFPORT, MISSISSIPPIWest Beach Boulevard
Gulfport, Mississippi 39501
(228) 864-1211
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
MICHAEL W. SOUTHERN
VICE PRESIDENT, SECRETARY, TREASURER AND CHIEF FINANCIAL OFFICER
MISSISSIPPI POWER COMPANY
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
VICKI L. PIERCE
Corporate Secretary
Mississippi Power Company
2992 WEST BEACH, GULFPORT, MISSISSIPPIWest Beach Boulevard
Gulfport, Mississippi 39501
(228) 864-1211
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF EACH REGISTRANT)
--------------
THE COMMISSION IS REQUESTED TO MAIL SIGNED COPIES OF ALL ORDERS, NOTICES AND
COMMUNICATIONS TO:
W. L. WESTBROOK JOHN D. MCLANAHAN, ESQ.
FINANCIAL VICE PRESIDENT TROUTMAN SANDERS LLP
THE SOUTHERN COMPANY 600 PEACHTREE STREET, N.E., SUITE 5200
270 PEACHTREE STREET, N.W., ATLANTA, ATLANTA, GEORGIA 30308-2216
GEORGIA 30303
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
(Name, address, including zip code, and telephone number, including area code, of agent for service of registrant)
The Commission is requested to mail signed copies of all orders, notices and communications to:
W. PAUL BOWERS Executive Vice President and Chief Financial Officer THE SOUTHERN COMPANY 30 Ivan Allen Jr. Blvd., N.W. Atlanta, Georgia 30308 | MELISSA K. CAEN Vice President, Associate General Counsel and Corporate Secretary SOUTHERN COMPANY SERVICES, INC. 30 Ivan Allen Jr. Blvd., N.W. Atlanta, Georgia 30308 | ERIC A. KOONTZ TROUTMAN SANDERS LLP 600 Peachtree Street, N.E. Suite 5200 Atlanta, Georgia 30308-2216 |
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If the only securities being registered on this Formform are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_]
¨
If any of the securities being registered on this Formform are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: [X]
x
If this Formform is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
¨
If this Formform is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
¨
If delivery ofthis form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the prospectus is expected to be madeCommission pursuant to Rule 434,
please462(e) under the Securities Act, check the following box. [_]
--------------
¨
If this form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer ¨ | Accelerated filer ¨ | |||||
Non-accelerated filer x | Smaller reporting company ¨ |
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
| Title of Each Class of Securities to be Registered | Amount to be Registered(1) | Proposed Maximum Offering Price Per Unit(1)(2)(3) | Proposed Maximum Aggregate Offering Price(1)(2)(3) | Amount of Registration Fee(1) | ||||
| Mississippi Power Company Senior Notes | ||||||||
| Mississippi Power Company Junior Subordinated Notes | ||||||||
Mississippi Power Company Preferred Stock, Cumulative, Par Value $100 Per Share | ||||||||
Depositary Preferred Shares, each representing one-fourth of a share of Preferred Stock | ||||||||
| Total | $85,000,000 | 100% | $85,000,000 | $3,341(4) |
| (1) | There are being registered hereunder such presently indeterminate number of Preferred |
| (2) | Estimated solely for the purpose of determining the registration fee. |
| (3) | Exclusive of accrued interest and distributions, if any. |
| (4) | Previously paid. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The within Prospectus contains the information required by Rule 429 of the Commission under the Securities Act of 1933 which permits the registration fee to be
calculated on the basis of the maximum offering price of all the
securities listed, the table does not specify by each class information aswith respect to the amount$215,000,000 of securities remaining unsold under Registration Statement No. 333-108156.
EXPLANATORY NOTE
This Pre-Effective Amendment No. 1 (this "Amendment") to be registered, proposed maximum offering price per unit
or proposed maximum aggregate offering price.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Exclusive of accrued interest and distributions, if any.
(4) No separate consideration will be received for the Mississippi Power
Company Guarantees. Pursuant to Rule 457(n) no separate fee is payable in
respect of the Mississippi Power Company Guarantees.
(5) Includes the obligationsRegistration Statement on Form S-3 (Registration No. 333-152895) (the "Registration Statement") of Mississippi Power Company under the respective
Trust Agreements, the Subordinated Note Indenture, the related series of
Junior Subordinated Notes, the respective Guarantees and the respective
Agreements as to Expenses and Liabilities, which include the Company's
covenant to pay any indebtedness, expenses or liabilities of the Trusts
(other than obligations pursuant to the terms of the Preferred Securities
or other similar interests), all as described in this registration
statement.
(6) Includes $20,000,000 of unsold securities previously registered under
Registration Statement No. 333-20469 and $41,596,000 of unsold securities
previously registered under Registration Statement No. 33-49649.
(7) Pursuant to Rule 429 under the Securities Act of 1933, the registration
fee consists of $99,830 paid herewith and $18,170 which has been
previously paid. See Note (6).
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
THE WITHIN PROSPECTUS CONTAINS THE INFORMATION REQUIRED BY RULE 429 OF THE
COMMISSION UNDER THE SECURITIES ACT OF 1933 WITH RESPECT TO THE $20,000,000 OF
SECURITIES REMAINING UNSOLD UNDER REGISTRATION STATEMENT NO. 333-20469 AND
$41,596,000 OF SECURITIES REMAINING UNSOLD UNDER REGISTRATION STATEMENT NO.
33-49649.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED JANUARY 28, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY , 1998
[ ] PREFERRED SECURITIES
MISSISSIPPI POWER CAPITAL TRUST [ ]
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
-----------
The % Trust Preferred Securities (the "Preferred Securities") offered
hereby evidence preferred undivided beneficial interests, representing 97%
undivided beneficial interests in the assets of Mississippi Power Capital Trust
[ ], a statutory business trust created under the laws of the State of
Delaware (the "Trust"). Mississippi Power Company, a Mississippi corporation
(the "Company"), will own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing the remaining 3% undivided beneficial interests in the assets of
the Trust. The Trust exists for the sole purpose of issuing the Preferred
Securities and Common Securities and investing the proceeds thereof in an
equivalent amount of the Company's Series % junior subordinated deferrable
interest notes due , (the "Series Junior Subordinated Notes").
The Series Junior Subordinated Notes will be unsecured obligations of the
Company and will be subordinate and junior in right of payment to Senior
Indebtedness of the Company, as described herein. See "Description of the
Junior Subordinated Notes--Subordination" in the accompanying Prospectus.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at the rate of % per annum (the "Securities Rate"), accruing
from the date of original issuance and payable, unless deferred, quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (each,
a "Distribution Date").
(continued on page S-2)
-----------
See "Risk Factors" beginning on page S-8 for certain information relevant to
an investment in the Preferred Securities, including the period and
circumstances during and under which payments of distributions on the Preferred
Securities may be deferred and the related United States federal income tax
consequences of such deferral.
-----------
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "NYSE"). If approved, trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. See "Underwriting."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2)(3) TRUST(2)(3)(4)
- -------------------------------------------------------------------------------
Per Preferred Security................. $ $ $
- -------------------------------------------------------------------------------
Total.................................. $ $ $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from the Issue Date.
(2) The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in Series Junior Subordinated Notes, the Company has agreed to
pay to the Underwriters, as compensation (the "Underwriters' Compensation")
for arranging the investment therein of such proceeds, $ per Preferred
Security, except for Preferred Securities sold to certain institutions, for
which the Underwriters' Compensation will be $ per Preferred Security.
Therefore, to the extent that Preferred Securities are sold to such
institutions, the actual amount of Underwriters' Compensation will be less
than and the Proceeds to Trust will be greater than the aggregate amounts
specified above. See "Underwriting."
(4) Expenses of the offering to be paid by the Company are estimated to be
approximately $ .
-----------
The Preferred Securities are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
delivery of the Preferred Securities will be made in book-entry only form
through the facilities of The Depository Trust Company on or about ,
(the "Issue Date").
, 199
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
(continued from page S-1)
The Securities Rate and the Distribution Dates for the Preferred Securities
will correspond to the interest rate and interest and other payment dates on
the Series Junior Subordinated Notes, which will constitute substantially
all the assets of the Trust. As a result, if principal or interest is not paid
on the Series Junior Subordinated Notes, no amounts will be paid on the
Preferred Securities. THE COMPANY HAS THE RIGHT TO DEFER PAYMENTS OF INTEREST
ON THE SERIES JUNIOR SUBORDINATED NOTES BY EXTENDING THE INTEREST PAYMENT
PERIOD ON THE SERIES JUNIOR SUBORDINATED NOTES, AT ANY TIME AND FROM TIME TO
TIME, FOR UP TO 20 CONSECUTIVE QUARTERS (EACH, AN "EXTENSION PERIOD"). If
interest payments are so deferred, distributions on the Preferred Securities
also will be deferred and the Company will not be permitted to declare or pay
any dividend or distribution on any of its capital stock or make any guarantee
payments with respect to the foregoing, or make any payment on any debt
securities issued by the Company which rank pari passu (equal in priority)
with or junior to the Series Junior Subordinated Notes. During any Extension
Period, holders of Preferred Securities will be requiredbeing filed solely to include income in
the form of original issue discount ("OID") in their gross income for United
States federal income tax purposes in advance of the receipt of the cash
payments attributable to such deferred interest. See "Description of the
Series Junior Subordinated Notes--Option to Extend Interest Payment Period,"
"Risk Factors--Option to Extend Interest Payment Period" and "Certain Federal
Income Tax Considerations--Original Issue Discount" and "--Market Discount."
Deferred installments of interest on the Series Junior Subordinated Notes
will bear interest, compounded quarterly, at a rate per annum equal to the
Securities Rate. The payment of such deferred interest, together with interest
thereon, will be distributed to the holders of the Preferred Securities as
received at the end of any Extension Period.
The Trust Securities are subject to mandatory redemption upon repayment of
the Series Junior Subordinated Notes at maturity or their earlier
redemption. The Series Junior Subordinated Notes are redeemable at the
option of the Company (in whole or in part), from time to time, on or after
, , or at any time in whole upon the occurrence of a Tax
Event or Investment Company Act Event (either, a "Special Event"). The Company
will have the right at any time to terminate the Trust and cause the Series
Junior Subordinated Notes to be distributed to the holders of the Preferred
Securities in liquidation of the Trust. See "Description of the Preferred
Securities--Special Event Redemption; Distribution of Series Junior
Subordinated Notes." The Series Junior Subordinated Notes are subordinated
and junior in right of payment to all Senior Indebtedness (as defined herein)
of the Company. See "Description of the Junior Subordinated Notes--
Subordination" in the accompanying Prospectus. As of , 199 ,
Senior Indebtedness of the Company aggregated approximately $ . If
the Series Junior Subordinated Notes are distributed to the holders of the
Preferred Securities, the Company will use its best efforts to have the Series
Junior Subordinated Notes listed on the NYSE or on such other exchange as
the Preferred Securities are then listed. See "Description of the Preferred
Securities--Special Event Redemption; Distribution of Series Junior
Subordinated Notes" and "Description of the Series Junior Subordinated
Notes."
The payment of distributions on the Preferred Securities is guaranteed by
the Company under the Guarantee Agreement, but only to the extent that the
Trust has funds legally and immediately available therefor (the "Guarantee").
If the Company fails to make required payments on the Series Junior
Subordinated Notes, the Trust will not have sufficient funds to pay such
distributions, and the Guaranteerevised Exhibit 5.1. This Amendment does not cover the payment of distributions
when the Trust does not have sufficient funds legally available therefor. In
such event, the remedy of a holder of Preferred Securities is to enforce the
Series Junior Subordinated Notes. See "Description of the Series Junior
Subordinated Notes" herein and "Description of the Junior Subordinated
Notes" in the accompanying Prospectus. The Company's obligations under the
Guarantee are subordinate and junior in right of payment to all of itsmodify any other
liabilities and will rank pari passu with the most senior preferred stock of
the Company. See "Description of the Guarantees" in the accompanying
Prospectus. The Company has, through the Guarantee, the Subordinated Note
Indenture, the Series Junior Subordinated Notes, the Trust Agreement and the
Agreement as to Expenses and Liabilities, fully and unconditionally
guaranteed, subject to certain subordination provisions, all the Trust's
obligations with respect to the Preferred Securities.
S-2
In the event of the redemption of the Series Junior Subordinated Notes or
the voluntary or involuntary dissolution, winding-up or termination of the
Trust, the holders of the Preferred Securities will be entitled to receive,
for each Preferred Security, a liquidation amount of $25 plus accrued and
unpaid distributions thereon (including interest thereon) to the date of
payment (the "Redemption Price"), unless in connection with such dissolution,
winding-up or termination, the Series Junior Subordinated Notes are
distributed to the holders of the Preferred Securities. See "Description of
the Preferred Securities--Liquidation Distribution Upon Dissolution."
The Preferred Securities initially will be represented by a global
certificate or certificates registered in the name of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in the Preferred
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by Participants (as defined herein) in DTC. Except
as described herein, Preferred Securities in certificated form will not be
issued in exchange for the global certificates. See "Description of the
Preferred Securities--Book-Entry Only Issuance--The Depository Trust Company."
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
S-3
SUMMARY OF OFFERING
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Capitalized terms not otherwise defined shall have
the meanings assigned in the Glossary.
The Company............... The Company was incorporated under the laws of the
State of Mississippi on July 12, 1972, was admitted
to do business in Alabama on November 28, 1972,
and, effective December 21, 1972, by the merger
into it of the predecessor Mississippi Power
Company, succeeded to the business and properties
of the latter company. The predecessor Mississippi
Power Company was incorporated under the laws of
the State of Maine on November 24, 1924, and was
admitted to do business in Mississippi on December
23, 1924, and in Alabama on December 7, 1962. The
Company has its principal office at 2992
West Beach, Gulfport, Mississippi 39501, telephone
(228) 864-1211. The Company is a wholly owned
subsidiary of The Southern Company.
The Company is a regulated public utility engaged
in the generation, transmission, distribution and
sale of electric energy within an approximately
1,200 square mile service area within the 23
counties of southeastern Mississippi.
The Trust................. Mississippi Power Capital Trust is a statutory
business trust created under Delaware law solely
for the purpose of holding the Company's Series
Junior Subordinated Notes and issuing Preferred
Securities and Common Securities evidencing the
entire beneficial interest therein (and engaging in
activities necessary, appropriate, convenient or
incidental thereto).
The Trustees.............. Bankers Trust Company will act as property trustee
(the "Property Trustee") of the Trust. Two officers
of the Company also will act as trustees (the
"Administrative Trustees") of the Trust. Bankers
Trust (Delaware) will be an additional trustee (the
"Delaware Trustee") of the Trust. Bankers Trust
Company also will act as trustee (the "Indenture
Trustee") under the Subordinated Note Indenture
pursuant to which the Series Junior Subordinated
Notes will be issued and will act as trustee under
the Guarantee (the "Guarantee Trustee").
The Property Trustee, Delaware Trustee and
Administrative Trustees are sometimes referred to
as the "Securities Trustees."
Preferred Securities The Trust will offer Preferred Securities
Offered................... evidencing preferred undivided beneficial interests
in the assets of the Trust. Holders of the
Preferred Securities are entitled to receive
cumulative cash distributions at the Securities
Rate, accruing from the date of original issuance
and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year,
commencing on , (each, a "Distribution
Date"). The Securities Rate and the Distribution
Dates for the Preferred Securities will correspond
to the interest rate and payment dates on the
Series Junior Subordinated Notes, which will
S-4
constitute substantially all the assets of the
Trust. As a result, if principal or interest is not
paid on the Series Junior Subordinated Notes, no
amounts will be paid on the Preferred Securities.
See "Description of the Preferred Securities"
herein.
Record Date............... The record date for each Distribution Date will be
the close of business on the 15th calendar day
prior to such Distribution Date.
Series Junior
Subordinated Notes........ The Trust will invest the proceeds from the
issuance of the Preferred Securities and Common
Securities in an equivalent amount of Series
% junior subordinated deferrable interest notes
due . The Series Junior Subordinated Notes
will be subordinate and junior in right of payment
to all indebtedness for borrowed money and other
obligations of the Company included in the
definition of Senior Indebtedness. See "Description
of the Junior Subordinated Notes--Subordination" in
the accompanying Prospectus.
Guarantee................. The payment of distributions on the Preferred
Securities is guaranteed by the Company under the
Guarantee, but only to the extent the Trust has
funds legally and immediately available to make
such distributions. If the Company does not make
principal or interest payments on the Series
Junior Subordinated Notes, the Trust will not have
sufficient funds to make distributions on the
Preferred Securities, in which event the Guarantee
will not apply to such distributions until the
Trust has sufficient funds legally available
therefor. The obligations of the Company under the
Guarantee will be subordinate and junior in right
of payment to all other liabilities of the Company
and will rank pari passu with the most senior
preferred stock issued by the Company. See "Risk
Factors--Ranking of and Rights Under the Guarantee"
herein and "Description of the Guarantees" in the
accompanying Prospectus. The Company has, through
the Guarantee, the Subordinated Note Indenture, the
Series Junior Subordinated Notes, the Trust
Agreement and the Agreement as to Expenses and
Liabilities, fully and unconditionally guaranteed,
subject to certain subordination provisions, all
the Trust's obligations with respect to the
Preferred Securities.
Interest Deferral......... The Company has the right to defer payments of
interest on the Series Junior Subordinated Notes
by extending the interest payment period on the
Series Junior Subordinated Notes, at any time and
from time to time, for up to 20 consecutive
quarters (each, an "Extension Period"). The only
restrictions on the Company's ability to defer
payments of interest are that during the Extension
Period the Company may not (i) pay dividends on or
redeem any of its capital stock or (ii) pay
principal or interest on any debt securities
ranking pari passu with or subordinate to the
Series Junior Subordinated Notes. There could be
multiple Extension Periods of varying lengths
throughout the term of the Series Junior
Subordinated Notes.
If interest payments on the Series Junior
Subordinated Notes are deferred, distributions on
the Preferred Securities will also be deferred.
S-5
During an Extension Period, holders of Preferred
Securities will be required to include income in
the form of OID in their gross income for federal
income tax purposes in advance of the receipt of
the cash payments attributable to such deferred
interest. See "Description of the Series Junior
Subordinated Notes--Option to Extend Interest
Payment Period" and "Certain Federal Income Tax
Considerations--Original Issue Discount" and "--
Market Discount." Deferred interest will bear
interest, compounded quarterly, at a rate per annum
equal to the Securities Rate from the date of
deferral to the date of payment.
Redemption; The Preferred Securities are subject to mandatory
Distribution.............. redemption upon repayment of the Series Junior
Subordinated Notes at maturity or their earlier
redemption. The Series Junior Subordinated Notes
are redeemable by the Company (in whole or in
part), from time to time on or after , or at
any time in whole upon the occurrence of a Special
Event. If a partial redemption of the Series
Junior Subordinated Notes would result in the
delisting of the Preferred Securities, the Company
may only redeem the Series Junior Subordinated
Notes in whole. Any partial redemption of the
Series Junior Subordinated Notes will be effected
by the redemption of an equivalent amount of Trust
Securities, to be allocated approximately 97% to
the Preferred Securities and 3% to the Common
Securities. See "Description of the Preferred
Securities--Redemption" and "--Special Event
Redemption; Distribution of Series Junior
Subordinated Notes."
The Company will have the right at any time to
terminate the Trust and cause the Series Junior
Subordinated Notes to be distributed to the holders
of the Preferred Securities in liquidation of the
Trust. This right is optional and wholly within the
discretion of the Company. Circumstances under
which the Company may determine to exercise such
right could include the occurrence of an Investment
Company Act Event or a Tax Event, adverse tax
consequences to the Company or the Trust that are
not within the definition of a Tax Event because
they do not result from an amendment or change
described in such definition, and changes in the
accounting requirements applicable to the Preferred
Securities as described under "Accounting
Treatment." See "Description of the Preferred
Securities--Special Event Redemption; Distribution
of Series Junior Subordinated Notes."
Special Event............. A Special Event means a Tax Event or an Investment
Company Act Event. A "Tax Event" means that the
Administrative Trustees and the Company shall have
received an opinion from independent tax counsel
experienced in such matters (which may be counsel
to the Company) to the effect that, as a result of
(a) any amendment to, or change (including any
announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any
political subdivision or taxing authority thereof
or therein or (b) any amendment to, or change in,
an interpretation or application of such laws or
regulations, there is more than an insubstantial
risk that (i) the Trust would be
S-6
subject to United States federal income tax with
respect to income accrued or received on the Series
Junior Subordinated Notes, (ii) interest payable
on the Series Junior Subordinated Notes would not
be deductible by the Company for United States
federal income tax purposes, or (iii) the Trust
would be subject to more than a de minimis amount
of other taxes, duties or other governmental
charges, which change or amendment becomes
effective on or after the Issue Date. An
"Investment Company Act Event" means that the
Administrative Trustees and the Company shall have
received an opinion of independent counsel (which
may be counsel to the Company) to the effect that,
as a result of a change in law or regulation or a
written change in interpretation or application of
law or regulation by any legislative body, court,
governmental agency or regulatory authority after
the Issue Date, there is more than an insubstantial
risk that the Trust is or will be considered an
investment company under the Investment Company Act
of 1940, as amended (the "1940 Act").
Redemption Price..........
In the event of the redemption of the Trust
Securities or other termination of the Trust
without distribution of the Series Junior
Subordinated Notes, each Preferred Security shall
be entitled to receive a liquidation amount of $25
plus accrued and unpaid distributions thereon
(including interest thereon) to the date of
payment.
S-7
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should consider particularly the following
matters:
RANKING OF AND RIGHTS UNDER THE SERIES JUNIOR SUBORDINATED NOTES
No amounts will be available to make payments on the Preferred Securities
except from payments made on the Series Junior Subordinated Notes. The
obligations of the Company under the Series Junior Subordinated Notes are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company. At , 199 , Senior Indebtedness of the
Company aggregated approximately $ . There are no terms in the Preferred
Securities, the Series Junior Subordinated Notes or the Guarantee that limit
the Company's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Series Junior Subordinated Notes. See "Description
of the Guarantees" and "Description of the Junior Subordinated Notes--
Subordination" in the accompanying Prospectus.
RANKING OF AND RIGHTS UNDER THE GUARANTEE
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all liabilities of the Company and will be pari passu with
the most senior preferred stock issued by the Company. If the Company were to
default in its obligation to pay amounts payable on the Series Junior
Subordinated Notes, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Subordinated Note Indenture, and at any
time, and from time to time, to defer payments of interest on the Series
Junior Subordinated Notes for a period of up to 20 consecutive quarters (each,
an "Extension Period"), but not beyond the stated maturity of the Series
Junior Subordinated Notes. Prior to the termination of any Extension Period,
the Company may further defer payments of interest, provided that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
select a new Extension Period, subject to the above requirements. There could
be multiple Extension Periods of varying lengths throughout the term of the
Series Junior Subordinated Notes. Deferred installments of interest on the
Series Junior Subordinated Notes will bear interest, compounded quarterly,
at a rate per annum equal to the Securities Rate. The payment of such deferred
interest, together with interest thereon, will be passed through to the
holders of the Preferred Securities as received at the end of any Extension
Period.
The only restrictions on the Company's ability to defer payments of interest
are that during any Extension Period the Company may not (i) pay dividends on
or redeem any of its capital stock or (ii) pay principal or interest on any
debt securities ranking pari passu with or subordinate to the Series Junior
Subordinated Notes. See "Description of the Preferred Securities--
Distributions" and "Description of the Series Junior Subordinated Notes--
Option to Extend Interest Payment Period."
Should the Company exercise its rights to defer payments of interest, each
holder of Preferred Securities will be required to include income in the form
of OID in their gross income for United States federal income tax purposes in
respect of the deferred interest allocable to its Preferred Securities. As a
result, holders of Preferred Securities will recognize income for United
States federal income tax purposes in advance of the receipt of cash and will
not receive the cash from the Trust related to such income if such holders
dispose of their Preferred Securities prior to the record date for the date on
which distributions of such amounts are made. See "Certain
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Federal Income Tax Considerations--Original Issue Discount" and "--Sale of
Preferred Securities." INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS
WITH RESPECT TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE PREFERRED
SECURITIES.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series
Junior Subordinated Notes. However, should the Company determine to exercise
such right in the future, the market price of the Preferred Securities is
likely to be affected. A holder that disposes of its Preferred Securities
during an Extension Period, therefore, might not receive the same return on
its investment as a holder that continues to hold its Preferred Securities. In
addition, as a result of the existence of the Company's right to defer
interest payments, the market price of the Preferred Securities (which
represent an undivided beneficial interest in the Series Junior Subordinated
Notes) may be more volatile than other similar securities that do not have
such rights.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES JUNIOR SUBORDINATED NOTES
If a Special Event shall occur and be continuing, the Company will have the
option to redeem the Series Junior Subordinated Notes in cash (with the
result that the Preferred Securities shall be redeemed). In addition, the
Company will have the right at any time to terminate the Trust and cause the
Series Junior Subordinated Notes to be distributed to the holders of the
Preferred Securities in liquidation of the Trust. See "Description of the
Preferred Securities--Special Event Redemption; Distribution of Series
Junior Subordinated Notes."
There can be no assurance as to the market price for the Series Junior
Subordinated Notes that may be distributed in exchange for Preferred
Securities if a termination or liquidation of the Trust were to occur.
Accordingly, the Series Junior Subordinated Notes that the investor may
receive on termination and liquidation of the Trust may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. See "Description of the Series Junior Subordinated Notes."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Substitute
Property Trustee upon the occurrence of certain events described herein, will
not be entitled to vote to appoint, remove or replace the Securities Trustees,
which voting rights are vested exclusively in the holder of the Common
Securities.
TRADING CHARACTERISTICS OF PREFERRED SECURITIES
The Preferred Securities are expected to be listed on the NYSE, subject to
official notice of issuance. The Preferred Securities are expected to trade at
a price that takes into account the value, if any, of accrued but unpaid
distributions; thus, purchasers will not pay and sellers will not receive
accrued and unpaid interest with respect to the Preferred Securities that is
not included in the trading price thereof. If a Preferred Security is disposed
of prior to the occurrence of an Extension Period, any portion of the amount
received that is attributable to accrued interest will be treated as interest
income to a U.S. holder for tax purposes and will not be treated as part of the amount realized for purposes of determining gain or loss on the
dispositionRegistration Statement. The contents of the Preferred Security. If an Extension Period occurs, interest
on the Series Junior Subordinated Notes will be included in the gross income
of U.S. holders of Preferred Securities as it accrues rather than when it is
paid. Should an Extension Period occur, a holder who disposes of his Preferred
Securities between record dates for payments of distributions thereon would be
required to include accrued but unpaid interest on the Series Junior
Subordinated Notes through the date of disposition in income as OID, and to
add such amount to his adjusted tax basis in his pro rata share of the related
Series Junior Subordinated Notes deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will
include, in the form of OID, all accrued but unpaid interest), a holder
generally 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. See "Certain Federal Income Tax
Considerations--Original Issue Discount" and "--Sale of Preferred Securities."
The trading price of the Preferred Securities is likely to be sensitive to
the level of interest rates generally. If interest rates rise in general, the
trading price of the Preferred Securities may decline to reflect the
additional
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yield requirements of the purchasers. Conversely, a decline in interest rates
may increase the trading price of the Preferred Securities, although any
increase will be moderated by the Company's ability to call the Series
Junior Subordinated Notes at any time on or after at a redemption price
equal to 100% of the principal amount to be redeemed plus accrued but unpaid
interest. In addition, because holders of Preferred Securities will be paid
only from payments on the Series Junior Subordinated Notes and may receive
Series Junior Subordinated Notes upon the termination of the Trust,
prospective purchasers of Preferred SecuritiesRegistation Statement are making an investment
decision with regard to the Series Junior Subordinated Notes and should
carefully review all the information regarding the Series Junior
Subordinated Notes contained herein. See "Description of the Preferred
Securities--Special Event Redemption; Distribution of Series Junior
Subordinated Notes" and "Description of the Series Junior Subordinated
Notes."
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MISSISSIPPI POWER CAPITAL TRUST [ ]
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State
on , 199 . The Trust's business is defined in a trust agreement,
executed by the Company, as Depositor, and the Delaware Trustee thereunder.
This trust agreement will be amended and restated in its entirety on the Issue
Date substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part (the "Trust Agreement"). The Trust Agreement will be qualified as
an indenture under the Trust Indenture Act of 1939, as amended (the "1939
Act"). The Trust exists for the exclusive purposes of (i) issuing the Trust
Securities representing undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the Series
Junior Subordinated Notes, and (iii) engaging in only those other activities
necessary, appropriate, convenient or incidental thereto. The Trust has a term
of approximately years, but may terminate earlier as provided in the Trust
Agreement.
Upon issuance of the Preferred Securities, the purchasers thereof will own
all of the Preferred Securities. The Company will acquire all of the Common
Securities, which will have an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the
Preferred Securities, except that upon the occurrence and continuance of a
Subordinated Note Indenture Event of Default, the rights of the holders of
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Preferred Securities.
The Trust's business and affairs will be conducted by the Securities
Trustees, which shall be appointed by the Company as the holder of the Common
Securities. Two officers of the Company initially will serve as Administrative
Trustees. Bankers Trust Company will serve as Property Trustee and will hold
legal title to the Series Junior Subordinated Notes issued by the Company on
behalf of the Trust and the holders of the Trust Securities. Bankers Trust
(Delaware) will serve as Delaware Trustee. In certain circumstances, the
holders of a majority in liquidation amount of the Preferred Securities will
be entitled to appoint a Substitute Property Trustee. See "Description of the
Preferred Securities--Voting Rights."
The Property Trustee will hold legal title to the Series Junior
Subordinated Notes for the benefit of the Trust and the holders of the Trust
Securities and will have the power to exercise all rights, powers and
privileges under the Subordinated Note Indenture as the holder of the Series
Junior Subordinated Notes. The Property Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities. Subject to the right of the holders of the
Preferred Securities to appoint a Substitute Property Trustee in certain
instances, the Company, as the holder of all of the Common Securities, will
have the right to appoint, remove or replace all the Securities Trustees.
The Series Junior Subordinated Notes will constitute substantially all of
the assets of the Trust. Other assets that may constitute "Trust Property" (as
that term is defined in the Trust Agreement) include any cash on deposit in,
or owing to, the payment account as established under the Trust Agreement, as
well as any other property or assets held by the Property Trustee pursuant to
the Trust Agreement. In addition, the Trust may, from time to time, receive
cash pursuant to the Agreement as to Expenses and Liabilities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the Trust
Agreement, the Delaware Business Trust Act, and the 1939 Act. See "Description
of the Preferred Securities."
The Trust's registered office in the State of Delaware is c/o Bankers Trust
(Delaware), E.A. Delle Donne Corporate Center, Montgomery Building, 1011
Centre Road, Suite 200, Wilmington, Delaware 19805-1266. The principal place
of business of the Trust shall be c/o the Company, 2992 West Beach, Gulfport,
Mississippi 39501, telephone (228) 864-1211, Attn: Treasurer.
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CAPITALIZATION
The following table sets forth the capitalization of the Company as of ,
199 , and as adjusted to reflect the issuances described in note (2) below.
The following data is qualified in its entirety by reference to and,
therefore, should be read together with the detailed information and financial
statements appearing in the documents incorporated herein by reference. See
also "Selected Information" in the accompanying Prospectus.
AS OF
--------------------------
ACTUAL AS ADJUSTED(2)
-------- -----------------
(THOUSANDS, EXCEPT
PERCENTAGES)
Common Stock Equity.................................... $ $ %
Cumulative Preferred Stock.............................
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Company Junior
Subordinated Notes(1).................................
Senior Notes...........................................
Junior Subordinated Notes..............................
Other Long-Term Debt...................................
-------- --------- ----
Total, excluding amounts due within one year......... $ $ 100%
======== ========= ====
- --------
(1) As described herein and in the accompanying Prospectus, substantially all
of the assets of the respective Trusts will be Junior Subordinated Notes
of the Company, and upon redemption of such debt, the related Preferred
Securities will be mandatorily redeemable.
(2) Reflects .
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The Preferred Securities
will be presented as a separate line item in the consolidated balance sheet of
the Company, and appropriate disclosures concerning the Preferred Securities,
the Guarantee and the Series Junior Subordinated Notes will be included in
the notes to the consolidated financial statements. For financial reporting
purposes, the Company will record distributions payable on the Preferred
Securities as an expense.
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DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the
1939 Act. The Property Trustee will act as the indenture trustee with respect
to the Trust, as well as the Guarantee, for purposes of compliance with the
provisions of the 1939 Act. The terms of the Preferred Securities will include
those stated in the Trust Agreement, the Delaware Business Trust Act, and
those made part of the Trust Agreement by the 1939 Act. The following summary
of the principal terms and provisions of the Preferred Securities does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Trust Agreement, the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus are a part, as well as the 1939 Act.
GENERAL
The Trust Agreement authorizes the Administrative Trustees, on behalf of the
Trust, to issue the Preferred Securities, which represent preferred undivided
beneficial interests in the assets of the Trust, and the Common Securities,
which represent common undivided beneficial interests in the assets of the
Trust. All of the Common Securities will be owned by the Company. The Common
Securities rank pari passu, and payments will be made thereon on a pro rata
basis, with the Preferred Securities, except that upon the occurrence of a
Subordinated Note Indenture Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments
upon liquidation, redemption and otherwise will be subordinated to the rights
of the holders of the Preferred Securities. The Trust Agreement does not
permit the issuance by the Trust of any securities other than the Trust
Securities or the incurrence of any indebtedness by the Trust. Pursuant to the
Trust Agreement, the Property Trustee will own and hold the Series Junior
Subordinated Notes for the benefit of the Trust and the holders of the Trust
Securities. The payment of distributions out of money held by the Trust, and
payments upon redemption of the Preferred Securities or liquidation of the
Trust, are guaranteed by the Company on a subordinated basis as and to the
extent described under "Description of the Guarantees" in the accompanying
Prospectus. The Guarantee does not cover payment of distributions on the
Preferred Securities when the Trust does not have legally and immediately
available funds sufficient to make such distributions. In such event, the
remedy of a holder of Preferred Securities is to direct the Property Trustee
to enforce its rights under the Series Junior Subordinated Notes. In
addition, a holder of Preferred Securities may institute a legal proceeding
directly against the Company, without first instituting a legal proceeding
against the Property Trustee or any other person or entity, for enforcement of
payment to such holder of principal of or interest on the Series Junior
Subordinated Notes having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Series Junior Subordinated Notes. The above
mechanisms and obligations, together with the Company's obligations under the
Agreement as to Expenses and Liabilities, constitute a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See "--
Voting Rights" below.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at the Securities
Rate and will accrue from the Issue Date and, except in the event of an
Extension Period, will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year. In the event that any date on which
distributions are to be made on the Preferred Securities is not a Business
Day, then payment of the distributions payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" shall mean any day other than
a Saturday or Sunday, a day on which banks in New York City are authorized or
obligated by law or executive order to remain closed or a day on which the
principal corporate trust office of the Property Trustee or the Indenture
Trustee is closed for business.
Distributions payable on any Distribution Date will be payable to the
holders of record on the Record Date for such Distribution Date, which is the
close of business on the fifteenth calendar day preceding such
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Distribution Date. Subject to any applicable laws and regulations and the
provisions of the Trust Agreement, each such payment will be made as described
under "--Book-Entry Only Issuance--The Depository Trust Company" below. The
amount of distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company has the right under the Subordinated Note Indenture to defer
payments of interest on the Series Junior Subordinated Notes by extending
the interest payment period from time to time on the Series Junior
Subordinated Notes (each, an "Extension Period") which, if exercised, would
defer quarterly distributions on the Preferred Securities during any such
extended interest payment period. Deferred installments of interest on the
Series Junior Subordinated Notes will bear interest, compounded quarterly,
at a rate per annum equal to the Securities Rate. If distributions are
deferred, the deferred distributions and accrued interest thereon shall be
paid, if funds are legally available therefor, to holders of record of the
Preferred Securities as they appear on the books and records of the Trust on
the Record Date next following the termination of such Extension Period. See
"Description of the Series Junior Subordinated Notes--Interest" and "--
Option to Extend Interest Payment Period."
Distributions on the Preferred Securities must be paid on the Distribution
Dates to the extent that the Trust has funds legally and immediately available
for the payment of such distributions. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Series Junior Subordinated Notes. See
"Description of the Series Junior Subordinated Notes."
REDEMPTION
The Preferred Securities are subject to mandatory redemption upon repayment
of the Series Junior Subordinated Notes at maturity or their earlier
redemptions. The Series Junior Subordinated Notes will mature on ,
and may be redeemed, in whole or in part, at the option of the Company,
at any time on or after , or at any time in whole upon the
occurrence of a Special Event. Upon the repayment of the Series Junior
Subordinated Notes, whether at maturity or upon redemption, the proceeds from
such repayment or payment shall simultaneously be applied to redeem a like
amount of Trust Securities upon not less than 30 nor more than 60 days'
notice, at the Redemption Price (as defined below). See "Description of the
Series Junior Subordinated Notes--Optional Redemption." If a partial
redemption of the Series Junior Subordinated Notes would result in the
delisting of the Preferred Securities, the Company may only redeem the Series
Junior Subordinated Notes in whole. In the event that fewer than all of the
outstanding Trust Securities are to be redeemed, the Preferred Securities to
be redeemed will be selected as described under "--Book-Entry Only Issuance--
The Depository Trust Company" below. If the Preferred Securities are no longer
in book-entry only form, the Preferred Securities to be redeemed will be
selected by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or integral multiples thereof) of the aggregate liquidation
amount of Preferred Securities of a denomination larger than $25; provided,
however, that before undertaking the redemption of the Preferred Securities on
other than a pro rata basis, the Property Trustee shall have received an
opinion of counsel that the status of the Trust as a grantor trust for federal
income tax purposes would not be adversely affected.
The Redemption Price for each Preferred Security shall equal the stated
liquidation amount of $25 plus accrued and unpaid distributions thereon to the
date of payment.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES JUNIOR SUBORDINATED NOTES
Upon the occurrence of a Special Event at any time, the Company will have
the option to redeem the Series Junior Subordinated Notes in whole (and thus
cause the redemption of the Preferred Securities in whole). A Special Event is
either an Investment Company Act Event or a Tax Event.
An "Investment Company Act Event" means that the Administrative Trustees and
the Company shall have received an opinion of independent counsel (which may
be counsel to the Company) to the effect that, as a result
S-14
of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority after the Issue Date, there is more than an
insubstantial risk that the Trust is or will be considered an investment
company under the 1940 Act.
"Tax Event" means that the Administrative Trustees and the Company shall
have received an opinion from independent tax counsel experienced in such
matters (which may be counsel to the Company) to the effect that, as a result
of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or application of such laws or
regulations, there is more than an insubstantial risk that (i) the Trust would
be subject to United States federal income tax with respect to income accrued
or received on the Series Junior Subordinated Notes, (ii) interest payable
on the Series Junior Subordinated Notes would not be deductible by the
Company for United States federal income tax purposes or (iii) the Trust would
be subject to more than a de minimis amount of other taxes, duties or other
governmental charges, which change or amendment becomes effective on or after
the Issue Date.
The Company will have the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust, if any, cause the
Series Junior Subordinated Notes to be distributed to the holders of the
Preferred Securities in liquidation of the Trust. See "--Liquidation
Distribution Upon Dissolution" below. This right is optional and wholly within
the discretion of the Company. Circumstances under which the Company may
determine to exercise such right could include the occurrence of an Investment
Company Act Event or a Tax Event, adverse tax consequences to the Company or
the Trust that are not within the definition of a Tax Event because they do
not result from an amendment or change described in such definition, and
changes in the accounting requirements applicable to the Preferred Securities
as described under "Accounting Treatment."
If Series Junior Subordinated Notes are distributed to the holders of the
Preferred Securities, the Company will use its best efforts to have the Series
Junior Subordinated Notes listed on the NYSE or on such other exchange as
the Preferred Securities are then listed. After the date for any distribution
of Series Junior Subordinated Notes upon termination of the Trust, (i) the
Preferred Securities and the Guarantee will no longer be deemed to be
outstanding, (ii) the depositary or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Series Junior Subordinated Notes to be
delivered upon such distribution and (iii) any certificates representing
Preferred Securities and the Guarantee not held by the depositary or its
nominee will be deemed to represent Series Junior Subordinated Notes having
an aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the Securities Rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, such Preferred
Securities, until such certificates are presented to the Company or its agent
for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Series Junior Subordinated Notes that may be distributed
in exchange for the Preferred Securities if a termination and liquidation of
the Trust were to occur. Accordingly, the Preferred Securities that an
investor may purchase, or the Series Junior Subordinated Notes that the
investor may receive on termination and liquidation of the Trust, may trade at
a discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
In the event that fewer than all of the Trust Securities are to be redeemed,
then the aggregate liquidation amount of the Trust Securities to be redeemed
shall be allocated 97% to the Preferred Securities and 3% to the Common
Securities.
The Preferred Securities redeemed on each redemption date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption
of the Series Junior Subordinated Notes. The Redemption Price of Preferred
Securities shall be deemed payable on each redemption date only to the extent
that the Trust has funds legally and immediately available for payment of such
Redemption Price.
S-15
If the Property Trustee gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 2:00 P.M., New York
City time, on the redemption date, subject to the immediately preceding
paragraph, the Property Trustee will irrevocably deposit with the securities
depositary, so long as the Preferred Securities are in book-entry only form,
sufficient funds to pay the applicable Redemption Price. See "--Book-Entry
Only Issuance--The Depository Trust Company" below. If the Preferred
Securities are no longer in book-entry only form, the Property Trustee,
subject to the immediately preceding paragraph, shall irrevocably deposit with
the Paying Agent funds sufficient to pay the applicable Redemption Price and
will give the Paying Agent irrevocable instructions to pay the Redemption
Price to the holders thereof upon surrender of their Preferred Securities
certificates. If notice of redemption shall have been given and funds
deposited as required, then immediately prior to the close of business on the
date of such deposit, distributions will cease to accrue and all rights of
holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price. In the event
that any date fixed for redemption of Preferred Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities is improperly withheld or refused and not paid
either by the Trust or by the Company pursuant to the Guarantee, distributions
on such Preferred Securities will continue to accrue at the then applicable
rate, from such redemption date originally established by the Trust for such
Preferred Securities to the date such Redemption Price is actually paid. See
"--Events of Default" below, "Relationship Among the Preferred Securities, the
Series Junior Subordinated Notes and the Guarantee" and "Description of the
Guarantees--Events of Default" in the accompanying Prospectus.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Preferred Securities. The Preferred Securities will be
issued only as fully registered securities registered in the name of Cede &
Co., DTC's nominee. One or more fully registered global Preferred Securities
certificates will be issued, representing in the aggregate the total number of
Preferred Securities, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or maintain
a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser
of Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect
S-16
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred
Securities. Transfers of ownership interests in the Preferred Securities are
to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Preferred Securities, except in the
event that use of the book-entry system for the Preferred Securities is
discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Preferred
Securities are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in the Preferred Securities in accordance with its
procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with
securities held for the account of customers registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trust, any
trustee or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of distributions to DTC is the
responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Preferred Security.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates will be printed
and delivered to the holders of record. Additionally, the Company may decide
to discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Preferred Securities. In that event,
certificates for the Preferred Securities will be printed and delivered to the
holders of record.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but the Company and the Trust take no responsibility for the
accuracy thereof. The Trust has no responsibility for the performance by DTC
or its Participants of their respective obligations as described herein or
under the rules and procedures governing their respective operations.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, the Trust shall terminate on , or
earlier upon (i) the occurrence of a Bankruptcy Event (as defined in the Trust
Agreement) in respect of the Company, dissolution or liquidation of the
Company, or dissolution of the Trust pursuant to a judicial decree; (ii) the
delivery of written direction to the Property Trustee by the Company, as
Depositor, at any time (which direction is optional and wholly within the
discretion of the Company, as Depositor) to terminate the Trust and distribute
the Series Junior Subordinated Notes to the holders of the Preferred
Securities in liquidation of the Trust (see "--Special Event Redemption;
Distribution of Series Junior Subordinated Notes" above); or (iii) the
payment at maturity or redemption of all of the Series Junior Subordinated
Notes, and the consequent payment of the Trust Securities.
If an early termination occurs as described in clause (i) or (ii) above, the
Trust shall be liquidated, and the Property Trustee shall distribute to each
holder of Preferred Securities and Common Securities a like amount of Series
Junior Subordinated Notes, unless in the case of an event described in clause
(i) such distribution is determined by the Administrative Trustees not to be
practical, in which event such holders will be entitled to receive, out of the
assets of the Trust available for distribution to holders after satisfaction
of liabilities to creditors, an amount equal to the aggregate of the stated
liquidation preference of $25 per Trust Security plus accrued and unpaid
distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then subject to the next succeeding
sentence, the amounts payable directly by the Trust on the Trust Securities
shall be paid on a pro rata basis. The holder of the Common Securities will be
entitled to receive distributions upon any such dissolution pro rata with the
holders of the Preferred Securities, except that if a Subordinated Note
Indenture Event of Default has occurred and is continuing, the holders of
Preferred Securities shall have a preference over the holders of Common
Securities.
EVENTS OF DEFAULT
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement ("Trust Agreement Event of Default") with respect to the Trust
Securities issued thereunder (whatever the reason for such Event of Default,
and whether it shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(i) the occurrence of an "Event of Default" as defined in Section 501 of
the Subordinated Note Indenture ("Subordinated Note Indenture Event of
Default") (see "Description of the Junior Subordinated Notes--Events of
Default" in the accompanying Prospectus); or
(ii) default by the Trust in the payment of any distribution when it
becomes due and payable, and the continuation of such default for a period
of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price of any
Preferred Security or Common Security when it becomes due and payable; or
(iv) default in the performance, or breach, of any covenant or warranty
of the Securities Trustees in the Trust Agreement (other than a covenant or
warranty a default in performance of which or the breach of which is dealt
with in clause (ii) or (iii) above), and continuation of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to such Securities Trustees by the holders of at least 10%
in liquidation amount of the outstanding Preferred Securities a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the Trust
Agreement; or
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(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust.
Within 90 days after the occurrence of any Trust Agreement Event of Default,
the Property Trustee shall transmit notice of any default known to the
Property Trustee to the holders of Trust Securities and the Company, unless
such Trust Agreement Event of Default shall have been cured or waived.
If a Trust Agreement Event of Default occurs and is continuing, then,
pursuant to the Trust Agreement, holders of a majority in aggregate
liquidation amount of Preferred Securities have the right to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Trust Agreement, including the right to direct the Property Trustee under the
Trust Agreement to exercise the remedies available to it as holder of the
Series Junior Subordinated Notes. If the Property Trustee fails to enforce
its rights under the Series Junior Subordinated Notes, a holder of Preferred
Securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding directly against the Company to enforce its rights under the
Trust Agreement without first instituting any legal proceeding against the
Property Trustee or the Trust. Notwithstanding the foregoing, a holder of
Preferred Securities may institute a legal proceeding directly against the
Company, without first instituting a legal proceeding against the Property
Trustee or any other person or entity, for enforcement of payment to such
holder of principal of or interest on the Series Junior Subordinated Notes
having a principal amount equal to the aggregate stated liquidation amount of
the Preferred Securities of such holder on or after the due dates specified in
the Series Junior Subordinated Notes. See "Relationship Among the Preferred
Securities, the Series Junior Subordinated Notes and the Guarantee" herein
and "Description of the Guarantees--Events of Default" in the accompanying
Prospectus.
Unless a Subordinated Note Indenture Event of Default shall have occurred
and be continuing, the Securities Trustees may be removed at any time by act
of the holder of the Common Securities. If a Subordinated Note Indenture Event
of Default has occurred and is continuing, any Securities Trustee may be
removed at such time by act of the holders of a majority in liquidation amount
of the Preferred Securities, delivered to the appropriate Securities Trustee
(in its individual capacity and on behalf of the Trust). No resignation or
removal of any Securities Trustee and no appointment of a successor shall be
effective until the acceptance of appointment by the successor Trustee in
accordance with the requirements of the Trust Agreement.
If a Subordinated Note Indenture Event of Default has occurred and is
continuing, the holders of Preferred Securities shall have a preference over
the holders of Common Securities upon dissolution of the Trust as described
above. See "--Liquidation Distribution Upon Dissolution."
VOTING RIGHTS
Except as provided below and under "Description of the Guarantees--
Amendments and Assignment" in the accompanying Prospectus and as otherwise
required by law and the Trust Agreement, the holders of the Preferred
Securities will have no voting rights.
If any proposed amendment to the Trust Agreement provides for, or the
Securities Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Trust Agreement or otherwise,
or (ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the Trust Agreement, then the holders of outstanding Preferred
Securities will be entitled to vote as a class on such amendment or proposal
of the Securities Trustees, and such amendment or proposal shall not be
effective except with the approval of the holders of at least 66 2/3% in
liquidation amount of such outstanding Preferred Securities.
So long as any Series Junior Subordinated Notes are held by the Property
Trustee, the Securities Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee (as defined herein), or executing any trust or power conferred on the
Indenture Trustee with respect to the Series Junior Subordinated Notes, (ii)
waive any past default which is waivable under Section 513 of the Subordinated
Note Indenture, (iii) exercise any right to rescind or annul a declaration
that the
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principal of all the Series Junior Subordinated Notes shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Subordinated Note Indenture or the Series Junior Subordinated Notes, where
such consent shall be required, or to any other action, as the holder of the
Series Junior Subordinated Notes, under the Subordinated Note Indenture,
without, in each case, obtaining the prior approval of the holders of at least
66 2/3% in liquidation amount of the outstanding Preferred Securities;
provided, however, that where a consent under the Subordinated Note Indenture
would require the consent of each holder of Series Junior Subordinated Notes
affected thereby, no such consent shall be given by the Securities Trustees
without the prior consent of each holder of Preferred Securities. The
Securities Trustees shall not revoke any action previously authorized or
approved by a vote of the holders of the Preferred Securities, except pursuant
to a subsequent vote of such holders. The Property Trustee shall notify all
holders of the Preferred Securities of any notice of default received from the
Indenture Trustee with respect to the Series Junior Subordinated Notes. In
addition to obtaining the foregoing approvals of the holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Securities
Trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust will not be classified as other than a grantor trust for
federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
separate meeting of holders of Preferred Securities convened for such purpose
or pursuant to written consent. The Administrative Trustees will cause a
notice of any meeting at which holders of Preferred Securities are entitled to
vote to be given to each holder of record of Preferred Securities in the
manner set forth in the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Securities Trustees or any
affiliate of the Company or any Securities Trustee, shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
CO-PROPERTY TRUSTEES AND SEPARATE PROPERTY TRUSTEE
At any time or times, for the purpose of meeting the legal requirements of
the 1939 Act or of any jurisdiction in which any part of the Trust Property
(as defined in the Trust Agreement) may at the time be located, the holder of
the Common Securities and the Property Trustee shall have power to appoint,
and upon the written request of the Property Trustee, the Company, as
Depositor, shall for such purpose join with the Property Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more persons approved by the Property
Trustee either to act as co-property trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such person or
persons in such capacity, any property, title, right or power deemed necessary
or desirable, subject to the provisions of the Trust Agreement. If the
Company, as Depositor, does not join in such appointment within 15 days after
the receipt by it of a request so to do, or in case a Subordinated Note
Indenture Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make such appointment.
AMENDMENT OF THE TRUST AGREEMENT
The Trust Agreement may be amended from time to time by the Company and the
Securities Trustees without the consent of the holders of the Trust Securities
(i) to cure any ambiguity, correct or supplement any provision therein which
may be inconsistent with any other provision therein, or to make any other
provisions with respect to matters or questions arising under the Trust
Agreement, which shall not be inconsistent with the other provisions of the
Trust Agreement, provided that the amendment does not adversely affect in any
material respect the interests of any holder of Trust Securities, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that the Trust will not be classified
as other than a grantor trust for federal income tax purposes. Except as
provided in the succeeding paragraph, other amendments to the Trust Agreement
may be made (i) upon approval of the holders of not less than 66 2/3% in
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aggregate liquidation amount of the Trust Securities then outstanding and (ii)
upon receipt by the Securities Trustees of an opinion of counsel to the effect
that such amendment will not affect the Trust's status as a grantor trust or
the Trust's exemption from the 1940 Act.
Notwithstanding the foregoing, without the consent of each affected holder
of Trust Securities, the Trust Agreement may not be amended to (i) 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, (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date, or (iii) change the consent required to amend
the Trust Agreement.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
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. The Trust may at the request of the Company, 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; provided, that (i)
such successor entity either (A) expressly assumes all of the obligations of
the Trust with respect to the Trust Securities or (B) substitutes for the
Preferred Securities other securities having substantially the same terms as
the Trust Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Trust Securities rank in priority with respect
to distributions and payments upon liquidation, redemption and otherwise, (ii)
the Company expressly appoints a trustee of such successor entity possessing
the same powers and duties as the Property Trustee as the holder of the Junior
Subordinated Notes, (iii) the Preferred Securities or any Successor Securities
are listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which
the Preferred Securities are then listed, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation
or replacement does not adversely affect the rights, preferences and
privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect, (vi) such successor entity has a purpose
substantially identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation or replacement, the Company has received an
opinion of counsel to the effect that (A) such 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 (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be required to register as an investment company under
the 1940 Act, and (viii) the Company guarantees the obligations of such
successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall 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 any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or the successor entity to be classified as
other than a grantor trust for federal income tax purposes.
Any corporation or other body into which any of the Property Trustee, the
Delaware Trustee or any Administrative Trustee that is not a natural person
may be merged or converted or with which it may be consolidated, or any
corporation or other body resulting from any merger, conversion or
consolidation to which any such Securities Trustee shall be a party, or any
corporation or other body succeeding to all or substantially all the corporate
trust business of any such Securities Trustee, shall be the successor of such
Securities Trustee under the Trust Agreement, provided such corporation is
otherwise qualified and eligible under the Trust Agreement.
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PAYMENT AND PAYING AGENT
So long as DTC is acting as securities depositary for the Preferred
Securities, payments in respect of the Preferred Securities shall be made to
DTC, which is to credit the relevant accounts at DTC on the applicable
Distribution Dates. If the Preferred Securities are not held by DTC, such
payments shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the Securities Register (as such term
is defined in the Trust Agreement). The Paying Agent shall initially be the
Property Trustee. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Administrative Trustees and the
Company. In such event, the Administrative Trustees shall appoint a successor
to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
It is anticipated that the Property Trustee, or one of its affiliates, will
act as registrar and transfer agent (the "Securities Registrar") for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment in respect of any tax or
other governmental charges which may be imposed in relation to it.
The Securities Registrar will not be required to register or cause to be
registered any transfer of Preferred Securities after they have been called
for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a Trust Agreement Event of
Default with respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Trust Agreement and, after
default, shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to such provisions,
the Property Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Agreement at the request of any holder of Preferred
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby.
Bankers Trust Company, the Property Trustee, also serves as Subordinated
Note Indenture Trustee and Guarantee Trustee. The Company and certain of its
affiliates maintain deposit accounts and banking relationships with Bankers
Trust Company. Bankers Trust Company serves as trustee under other indentures
pursuant to which securities of the Company and affiliates of the Company are
outstanding.
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware;
provided that the immunities and standard of care of the Property Trustee
shall be governed by New York law.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate the Trust
so that the Trust will not be deemed to be an "investment company" required to
be registered under the 1940 Act or taxed as other than a grantor trust for
federal income tax purposes and so that the Series Junior Subordinated Notes
will be treated as indebtedness of the Company for federal income tax
purposes. In this connection, the Administrative Trustees and the Company are
authorized to take any action, not inconsistent with applicable law, the
Trust's certificate of trust or the Trust Agreement, that the Administrative
Trustees and the Company determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Preferred Securities.
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DESCRIPTION OF THE SERIES JUNIOR SUBORDINATED NOTES
Set forth below is a description of the specific terms of the Series
Junior Subordinated Notes. This description supplements, and should be read
together with, the description of the general terms and provisions of the
Junior Subordinated Notes set forth in the accompanying Prospectus under the
caption "Description of the Junior Subordinated Notes." The following
description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the description in the accompanying
Prospectus and the Subordinated Note Indenture (as defined therein).
GENERAL
The Series Junior Subordinated notes will be issued as a series of Junior
Subordinated Notes under the Subordinated Note Indenture. The Series Junior
Subordinated Notes will be limited in aggregate principal amount to $ ,
such amount being the approximate aggregate liquidation amount of the Trust
Securities.
The entire principal amount of the Series Junior Subordinated Notes will
mature and become due and payable, together with any accrued and unpaid
interest thereon, including Additional Interest, if any, on . The Series
Junior Subordinated Notes are not subject to any sinking fund provision.
The terms of the Series Junior Subordinated Notes correspond to those of
the Preferred Securities, as described herein.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Series Junior Subordinated
Notes, in whole or in part, without premium, from time to time, on or after
, or at any time in whole or upon the occurrence of a Special Event as
described under "Description of the Preferred Securities--Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest,
if any, to the Redemption Date. If a partial redemption of the Series Junior
Subordinated Notes would result in the delisting of the Preferred Securities,
the Company may only redeem the Series Junior Subordinated Notes in whole.
INTEREST
Each Series Junior Subordinated Note shall bear interest at the Securities
Rate from the Issue Date, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year to the person in whose name such
Series Junior Subordinated Note is registered at the close of business on
the fifteenth calendar day prior to such payment date. The amount of interest
payable will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on the Series
Junior Subordinated Notes is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, to
defer payments of interest on the Series Junior Subordinated Notes by
extending the interest payment period for up to 20 consecutive quarters, but
not beyond the stated maturity date. At the end of an Extension Period, the
Company shall pay all interest then accrued and unpaid (together with interest
thereon at the Securities Rate compounded quarterly) and all Additional
Interest; provided, that if the Company shall have given notice of its
election to select an Extension
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Period, (a) the Company shall not declare or pay any dividend or distribution
on, or redeem, purchase, acquire or make a liquidation payment with respect
to, any of its capital stock or make any guarantee payments with respect to
the foregoing, and (b) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees other than the Guarantee) issued by the
Company which rank pari passu with or junior to the Series Junior
Subordinated Notes. Prior to the termination of any Extension Period, the
Company may further defer payments of interest by extending the interest
payment period, provided that such Extension Period, together with all such
previous and further extensions thereof, may not exceed 20 consecutive
quarters. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may select a new Extension Period, subject to
the above requirements. The Company has no present intention of exercising its
rights to defer payments of interest by extending the interest payment period
on the Series Junior Subordinated Notes. See "Certain Federal Income Tax
Considerations--Original Issue Discount."
The Company shall give the holder or holders of the Series Junior
Subordinated Notes and the Indenture Trustee notice of its selection or
extension of an Extension Period at least one Business Day prior to the
earlier of (i) the record date relating to the interest payment date on which
the Extension Period is to commence or relating to the interest payment date
on which an Extension Period that is being extended would otherwise terminate
or (ii) the date the Company or the Trust is required to give notice to the
NYSE or other applicable self-regulatory organization of the record date or
the date such distributions are payable.
BOOK-ENTRY AND ISSUANCE
If distributed to holders of Trust Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust,
the Series Junior Subordinated Notes are expected to be issued in the form
of one or more global certificates registered in the name of the securities
depositary or its nominee. In such event, the procedures applicable to the
transfer and payment of the Series Junior Subordinated Notes are expected to
be substantially similar to those described with respect to the Preferred
Securities in "Description of the Preferred Securities--Book-Entry Only
Issuance--The Depository Trust Company."
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SERIES JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
As long as payments of interest and other payments are made when due on the
Series Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i)
the aggregate principal amount of Series Junior Subordinated Notes will be
equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and interest and other payment dates on the
Series Junior Subordinated Notes will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) the
Company shall pay for all costs and expenses of the Trust pursuant to the
Agreement as to Expenses and Liabilities; and (iv) the Trust Agreement
provides that the Securities Trustees shall not cause or permit the Trust to,
among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) are
guaranteed by the Company as and to the extent set forth under "Description of
the Guarantees" in the accompanying Prospectus. If the Company does not make
interest payments on the Series Junior Subordinated Notes, it is not
expected that the Trust will have sufficient funds to pay distributions on the
Preferred Securities. The Guarantee is a guarantee from the time of its
issuance, but does not apply to any payment of distributions unless and until
the Trust has sufficient funds legally and immediately available for the
payment of such distributions.
If the Company fails to make interest or other payments on the Series
Junior Subordinated Notes when due (taking into account any Extension Period),
the Trust Agreement provides a mechanism whereby the holders
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of the Preferred Securities may appoint a substitute Property Trustee. Such
holders may also direct the Property Trustee to enforce its rights under the
Series Junior Subordinated Notes, including proceeding directly against the
Company to enforce the Series Junior Subordinated Notes. If the Property
Trustee fails to enforce its rights under the Series Junior Subordinated
Notes, to the fullest extent permitted by applicable law, any holder of
Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Property Trustee's rights under the Series Junior
Subordinated Notes without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
a holder of Preferred Securities may institute a legal proceeding directly
against the Company, without first instituting a legal proceeding against the
Property Trustee or any other person or entity, for enforcement of payment to
such holder of principal of or interest on the Series Junior Subordinated
Notes having a principal amount equal to the aggregate stated liquidation
amount of the Preferred Securities of such holder on or after the due dates
specified in the Series Junior Subordinated Notes.
If the Company fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Preferred Securities may
direct the Guarantee Trustee to enforce its rights thereunder. In addition,
any holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce the Guarantee Trustee's rights under the
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee or any other person or entity.
The Guarantee, the Subordinated Note Indenture, the Series Junior
Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and
Liabilities, as described above, constitute a full and unconditional guarantee
by the Company of the payments due on the Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, unless the Series Junior Subordinated Notes are distributed in
connection therewith, the holders of Preferred Securities will be entitled to
receive, out of assets legally available for distribution to holders, the
Liquidation Distribution in cash. See "Description of the Preferred
Securities--Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Series Junior Subordinated Notes, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and
interest, before any stockholders of the Company receive payments or
distributions. Because the Company is guarantor under the Guarantee and has
agreed to pay for all costs, expenses and liabilities of the Trust (other than
the Trust's obligations to holders of the Preferred Securities) pursuant to
the Agreement as to Expenses and Liabilities, the positions of a holder of
Preferred Securities and a holder of Series Junior Subordinated Notes
relative to other creditors and to stockholders of the Company in the event of
liquidation or bankruptcy of the Company would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note
Indenture. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness, the subordination provisions of the Series Junior
Subordinated Notes provide that no payments may be made in respect of the
Series Junior Subordinated Notes 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 the Series Junior Subordinated Notes
would constitute an Event of Default under the Subordinated Note Indenture
except that failure to make interest payments on the Series Junior
Subordinated Notes will not be an Event of Default during an Extension Period;
provided, however, that any Extension Period may not exceed 20 consecutive
quarters or extend beyond the stated maturity of the Series Junior
Subordinated Notes.
S-25
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax consequences of the ownership and disposition of the Preferred Securities
and constitutes the opinion of Troutman Sanders LLP, counsel to the Company
and the Trust, insofar as it relates to matters of law and legal conclusions.
This summary deals only with Preferred Securities held as capital assets
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), by Holders (as defined herein).
Moreover, it does not discuss all of the tax consequences that may be relevant
to a Holder in light of his particular circumstances or to Holders subject to
special rules, such as certain financial institutions, insurance companies,
dealers in securities, individual retirement and certain tax deferred
accounts, and persons who engage in a straddle or a hedge relating to a
Preferred Security. Prospective investors should consult their own tax
advisors with regard to the application of the tax considerations discussed
below to their particular situations as well as the application of any state,
local or other tax laws. This summary is based on laws, existing and proposed
regulations, and applicable judicial and administrative determinations, all of
which are subject to change at any time, and any such changes may be
retroactively applied in a manner that could adversely affect Holders. As used
herein, the term "Holder" means a beneficial owner of a Preferred Security
that for the United States federal income tax purposes is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source or (iv) a
trust if (a) a court within the United States is able to exercise primary
supervision over the administration of the trust and (b) one or more U.S.
persons have the authority to control all substantial decisions of the trust.
Thus, the following summary does not address any tax consequences that apply
specifically to nonresident aliens or foreign entities.
TREATMENT OF THE TRUST AND PREFERRED SECURITIES FOR FEDERAL INCOME TAX
PURPOSES
The Trust will be treated as a "grantor trust" and not as an association
taxable as a corporation for federal income tax purposes. Thus, for federal
income tax purposes, each Holder will be treated as the beneficial owner of a
pro rata undivided interest in the Series Junior Subordinated Notes and,
consequently, will be required to include in income the Holder's pro rata
share of the entire income from the Series Junior Subordinated Notes. Each
Holder generally will determine its net income or loss with respect to the
Trust in accordance with its own method of accounting, although income arising
from OID, if any, must be taken into account under the accrual method of
accounting even if the Holder otherwise would use the cash receipts and
disbursements method.
PAYMENTS OF INTEREST
Except as set forth below, stated interest on a Series Junior Subordinated
Note will generally be taxable to a Holder as ordinary income at the time it
is paid or accrued in accordance with the Holder's own method of accounting.
ORIGINAL ISSUE DISCOUNT
Under income tax regulations that recently became effective, the Company
believes that the Series Junior Subordinated Notes will not be treated as
issued with OID. It should be noted that these regulations have not yet been
addressed in any rulings or other interpretations by the Internal Revenue
Service (the "IRS"). Accordingly, it is possible that the IRS could take a
position contrary to the interpretations described herein.
The terms of the Series Junior Subordinated Notes permit the Company to
defer the payment of interest on the Series Junior Subordinated Notes at any
time and from time to time by extending the interest payment period for up to
20 consecutive quarters with respect to each Extension Period; provided,
however, that no Extension Period may extend beyond the stated maturity date
of the Series Junior Subordinated Notes. Should the Company exercise this
option to defer payments of interest, the Series Junior Subordinated Notes
would at that time be treated as issued with OID and all the stated interest
payments on the Series Junior
S-26
Subordinated Notes would thereafter be treated as OID for so long as they
remained outstanding. As a result, all Holders would, in effect, be required
to accrue interest income even if such Holders are on a cash method of
accounting. Consequently, in the event that the payment of interest is
deferred, a Holder could be required to include OID in income on an economic
accrual basis, notwithstanding that the Company will not make any interest
payments during such period on the Series Junior Subordinated Notes.
MARKET DISCOUNT
A purchaser of a Preferred Security at a discount from the liquidation
amount at maturity of such purchaser's pro rata share of the Series Junior
Subordinated Notes acquires such Preferred Security with "market discount."
However, market discount with respect to a Preferred Security will be
considered to be zero if it is de minimis. Market discount will be de minimis
with respect to a Preferred Security if it is less than the product of (i)
0.25% of the adjusted issue price of the purchaser's pro rata share of the
Series Junior Subordinated Notes multiplied by (ii) the number of complete
years to maturity of such Series Junior Subordinated Notes after the date of
purchase. The purchaser of a Preferred Security with more than a de minimis
amount of market discount generally will be required to treat any gain on the
sale, exchange, redemption or other disposition of all or part of all
Preferred Securities (or related Series Junior Subordinated Notes) as
ordinary income to the extent of accrued (but not previously taxed) market
discount. Market discount generally will accrue ratably during the period from
the date of purchase of such Preferred Security to the maturity date of the
Series Junior Subordinated Notes unless the Holder irrevocably elects to
accrue such market discount on the basis of a constant interest rate.
A Holder who has acquired a Preferred Security at a market discount
generally will be required to defer any deductions of interest expense
attributable to any indebtedness incurred or continued to purchase or carry
the Preferred Security, to the extent such interest expense exceeds the
related interest income. Any such deferred interest expense generally will be
allowable as a deduction not later than the year in which the related market
discount income is recognized. As an alternative to the inclusion of market
discount in income upon disposition of all or a portion of a Preferred
Security or the related Series Junior Subordinated Notes (including
redemptions thereof), a Holder may make an election (which may not be revoked
without the Internal Revenue Service's consent) to include market discount in
income as it accrues on all market discount instruments acquired by the Holder
during or after the taxable year for which the election is made. In that case,
the preceding deferral rule for interest expense will not apply.
In lieu of the foregoing treatment of market discount and interest expense,
a Holder may elect to treat any market discount (including a de minimis
amount) as OID and accrue such discount on a constant-yield basis in the same
manner as the Holder accrues OID.
SALE OF PREFERRED SECURITIES
Upon the sale, retirement (including redemption) or other taxable
disposition of all or part of a Preferred Security, a Holder thereof will
recognize gain or loss equal to the difference between the amount realized on
such sale, retirement or other disposition and such Holder's adjusted tax
basis in the Preferred Security or part thereof. If the Holder disposes of a
Preferred Security prior to the occurrence of an Extension Period, any portion
of the amount received that is attributable to accrued interest will be
treated as interest income to the Holder and will not be treated as part of
the amount realized for purposes of determining gain or loss on the
disposition of the Preferred Security. Any recognized gain or loss will be
capital gain or loss, except to the extent of any accrued market discount (see
"Market Discount" above), and such capital gain or loss will be long-term if
the holding period for the Preferred Security is more than one year at the
time of sale, retirement or other disposition. In the case of individuals,
"net capital gain," i.e., the excess of net long-term capital gain over net
short-term capital loss, is generally subject to a reduced rate of federal
income tax. Capital gains and losses from property held for more than 18
months will be taken into account in determining "adjusted net capital gain,"
which is subject to a further reduction in the rate of tax pursuant to a
recent amendment of the Code. Also, in taxable years beginning after December
31, 2000, an additional reduction in the rate of tax may be available in
certain
S-27
circumstances for capital gains from property held by the taxpayer for more
than five years. A Holder's adjusted tax basis in a Preferred Security
acquired by purchase will equal the cost of such Preferred Security to the
Holder, increased by the amount of any related accrued OID and market discount
included in taxable income by the Holder and reduced by any prior payments on
the Series Junior Subordinated Notes distributed on the Preferred Security.
The redemption of only part of a Preferred Security will require an allocation
of the Holder's adjusted tax basis in his pro rata share of the related Series
Junior Subordinated Notes between the portion of the Series Junior
Subordinated Notes redeemed and retained by the Holder in order to determine
gain or loss.
RECEIPT OF SERIES JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
As described under "Description of the Preferred Securities--Special Event
Redemption; Distribution of Series Junior Subordinated Notes," Series
Junior Subordinated Notes may be distributed to Holders in exchange for the
Preferred Securities and in liquidation of the Trust. Such a distribution
would be treated as a non-taxable event to each Holder and each Holder would
receive an aggregate tax basis in the Holder's Series Junior Subordinated
Notes equal to the Holder's aggregate tax basis in its Preferred Securities. A
Holder's holding period with respect to the Series Junior Subordinated Notes
so received in liquidation of the Trust would include the period for which the
Preferred Securities were held by such Holder.
INFORMATION REPORTING TO HOLDERS
Income on the Preferred Securities will be reported to Holders on Form 1099,
which form should be mailed to Holders of Preferred Securities by January 31
following each calendar year.
BACKUP WITHHOLDING
A Holder may be subject to "backup withholding" under certain circumstances.
Backup withholding applies to a Holder if the Holder, among other things, (i)
fails to furnish his social security number or other taxpayer identification
number ("TIN") to the payor responsible for backup withholding (for example,
the Holder's securities broker), (ii) furnishes such payor an incorrect TIN,
(iii) fails to provide such payor with a certified statement, signed under
penalties of perjury, that the TIN provided to the payor is correct and that
the Holder is not subject to backup withholding, or (iv) fails to report
properly interest and dividends on his tax return. Backup withholding,
however, does not apply to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. The backup withholding rate is 31%
of "reportable payments," which generally will include distributions of
interest and principal payments on the Series Junior Subordinated Notes.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE APPLICABLE TO A
HOLDER, DEPENDING UPON A HOLDER'S PARTICULAR SITUATION, AND THEREFORE EACH
HOLDER SHOULD CONSULT HIS TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF
THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAW.
S-28
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to the
Underwriters named below, and the Underwriters, for whom is acting
as representative (the "Representative"), have severally agreed to purchase
the number of Preferred Securities set forth opposite their respective names
below. In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Preferred
Securities offered hereby if any of the Preferred Securities are purchased.
NUMBER OF
NAME PREFERRED SECURITIES
---- --------------------
--------
Total..............................................
========
The Underwriters have advised the Company and the Trust that they propose to
offer the Preferred Securities in part directly to the public at the price to
the public, as set forth on the cover page of this Prospectus Supplement, and
in part to certain securities dealers at such price less a concession not in
excess of $ per Preferred Security. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per Preferred
Security to certain other dealers. After the Preferred Securities are released
for sale to the public, the offering price and other selling terms may from
time to time be varied by the Underwriters.
The Preferred Securities are expected to be approved for listing on the
NYSE, subject to official notice of issuance. Trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after
the initial delivery of the Preferred Securities. The Representative has
advised the Company and the Trust that it intends to make a market in the
Preferred Securities prior to the commencement of trading on the NYSE. The
Representative will have no obligation to make a market in the Preferred
Securities, however, and may cease market making activities, if commenced, at
any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or
more Preferred Securities to a minimum of 400 beneficial holders.
In connection with the offering, the Underwriters may purchase and sell the
Preferred Securities in the open market. These transactions may include over-
allotment and stabilizing transactions and purchases to cover syndicate short
positions created in connection with the offering. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or
retarding a decline in the market price of the Preferred Securities; and
syndicate short positions involve the sale by the Underwriters of a greater
number of Preferred Securities than they are required to purchase from the
Trust in the offering. The Underwriters also may impose a penalty bid, whereby
selling concessions allowed to syndicate members or other broker dealers in
respect of the securities sold in the offering for their account may be
reclaimed by the syndicate if such Preferred Securities are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Preferred
Securities, which may be higher than the price that might otherwise prevail in
the open market; and these activities, if commenced, may be discontinued at
any time. These transactions may be effected on the NYSE, in the over-the-
counter market or otherwise.
S-29
The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the 1933 Act.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, the Company and its affiliates in the
ordinary course of business.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Company and the Trust by
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to the Company and the Trust. The validity of the Series Junior
Subordinated Notes, the Guarantee and certain matters relating thereto will be
passed upon on behalf of the Company by Eaton and Cottrell, P.A., Gulfport,
Mississippi, and by Troutman Sanders LLP, Atlanta, Georgia. Troutman Sanders
LLP will also pass upon certain matters relating to United States federal
income tax considerations. Certain legal matters will be passed upon for the
Underwriters by Dewey Ballantine LLP, New York, New York.
S-30
GLOSSARY
1933 Act................... The Securities Act of 1933, as amended.
1934 Act................... The Securities Exchange Act of 1934, as amended.
1939 Act................... The Trust Indenture Act of 1939, as amended.
1940 Act................... The Investment Company Act of 1940, as amended.
Additional Interest........ Amounts payable by the Company as defined under
"Description of the Junior Subordinated Notes--
Additional Interest" in the accompanying
Prospectus.
Administrative Trustees.... Vicki Pierce and Wayne Boston.
Agreement as to Expenses
and Liabilities........... The agreement between the Company and the Trust
pursuant to which the Company has agreed to pay
all indebtedness, expenses or liabilities of the
Trust, other than the Trust's obligations to pay
to the holders of the Preferred Securities the
amounts due such holders pursuant to the terms
thereof.
Code....................... The Internal Revenue Code of 1986, as amended.
Common Securities.......... The Trust Securities being sold to the Company.
Company.................... Mississippi Power Company.
Delaware Trustee........... Bankers Trust (Delaware)
DTC........................ The Depository Trust Company, a "clearing
corporation" that initially will hold (through
its agents) a global certificate evidencing the
Preferred Securities.
Distribution Dates......... March 31, June 30, September 30 and December 31
of each year.
Extension Period........... Any period during which interest is not paid on
the Series Junior Subordinated Notes (and,
consequently, on the Preferred Securities) at the
election of the Company to the extent permitted
under the terms of the Series Junior
Subordinated Notes.
Guarantee.................. The guarantee by the Company of the payments by
the Trust on the Preferred Securities from funds
available in the Trust.
Guarantee Payments......... Payments required to be made pursuant to the
Guarantee as described in "Description of the
Guarantees--General" in the accompanying
Prospectus.
Guarantee Trustee.......... The trustee under the Guarantee; initially,
Bankers Trust Company.
Indenture Trustee.......... The trustee under the Subordinated Note
Indenture; initially, Bankers Trust Company.
Issue Date.................
The date set forth on the cover page on which the
Series Junior Subordinated Notes and Preferred
Securities are scheduled to be issued.
S-31
Investment Company Act
Event..................... An event of the type described in "Description of
the Preferred Securities--Special Event
Redemption; Distribution of Series Junior
Subordinated Notes."
NYSE....................... New York Stock Exchange.
Preferred Securities....... The Trust Securities being offered to investors
pursuant to this Prospectus Supplement and the
accompanying Prospectus.
Property Trustee........... A trustee under the Trust designated to hold the
trust property; initially Bankers Trust Company.
Record Date................ The close of business on the 15th calendar day
prior to a Distribution Date.
Redemption Price........... The stated liquidation amount of $25 per
Preferred Security, plus accrued and unpaid
distributions thereon (and interest thereon) to
the date of payment.
Securities Rate............ The per annum interest rate expressed as a
percentage of the stated liquidation amount of
$25 per Preferred Security, and set forth on the
cover page of this Prospectus Supplement.
Securities Trustees........ The Property Trustee, Administrative Trustees and
Delaware Trustee.
Senior Indebtedness........ Indebtedness of the Company described hereunder
under "Description of the Junior Subordinated
Notes--Subordination" in the accompanying Pro-
spectus.
Series Junior
Subordinated Notes......... The Series % junior subordinated deferrable
interest notes of the Company due .
Special Event.............. A Tax Event or Investment Company Act Event.
Subordinated Note The indenture pursuant to which the Company's
Indenture.................. Series Junior Subordinated Notes will be
issued.
Subordinated Note
Indenture Event of As described under "Description of the Junior
Default.................... Subordinated Notes--Events of Default" in the
accompanying Prospectus.
Tax Event.................. An event of the type described in "Description of
the Preferred Securities--Special Event
Redemption; Distribution of Series Junior
Subordinated Notes."
Trust...................... Mississippi Power Capital Trust , a
Delaware business trust that will issue the Trust
Securities.
Trust Agreement............ The agreement pursuant to which the Trust is
organized as it may be amended and restated from
time to time.
Trust Agreement Event of As described under "Description of the Preferred
Default.................... Securities--Events of Default."
Trust Securities...........
The Preferred Securities and the Common
Securities.
S-32
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 28, 1998
PROSPECTUS
$400,000,000
MISSISSIPPI POWER COMPANY
SENIOR NOTES
JUNIOR SUBORDINATED NOTES
-----------
MISSISSIPPI POWER CAPITAL TRUST II
MISSISSIPPI POWER CAPITAL TRUST III
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
-----------
Mississippi Power Company, a Mississippi corporation (the "Company"), may
offer, from time to time, (i) its senior notes (the "Senior Notes") in one or
more series or (ii) its junior subordinated notes (the "Junior Subordinated
Notes") in one or more series. The Senior Notes will be unsecured obligations
of the Company and will rank pari passu (equal in priority) with all other
unsecured and unsubordinated debt of the Company. The Junior Subordinated Notes
will be unsecured obligations of the Company and will be subordinate and junior
in right of payment to Senior Indebtedness (as defined herein) of the Company.
Mississippi Power Capital Trust II and Mississippi Power Capital Trust III,
each a statutory business trust created under the laws of the State of Delaware
(individually, a "Trust" and collectively, the "Trusts"), may offer, from time
to time, trust preferred securities (collectively, the "Preferred Securities")
representing preferred undivided beneficial interests in the assets of the
respective Trusts. The Company will own all the common securities (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities") representing common undivided beneficial interests in the assets
of the respective Trusts. The payment of periodic cash distributions on the
Preferred Securities of each Trust and payments on liquidation or redemption
with respect to such Preferred Securities, in each case to the extent such
Trust has funds legally and immediately available therefor, will be guaranteed
by the Company as described herein (individually, a "Guarantee" and
collectively, the "Guarantees"). See "Description of Guarantees." The Company's
obligations under each Guarantee will be subordinate and junior in right of
payment to all of its other liabilities and will rank pari passu with the most
senior preferred stock of the Company. Concurrently with the issuance by a
Trust of its Preferred Securities, such Trust will invest the proceeds thereof
and of the Company's purchase of the Common Securities of such Trust in a
related series of Junior Subordinated Notes of the Company with terms
corresponding to the terms of such Trust's Preferred Securities. Junior
Subordinated Notes may subsequently be distributed pro rata to holders of the
Trust Securities of a Trust in connection with the termination of such Trust
upon the occurrence of certain events as may be described in an accompanying
Prospectus Supplement.
As described herein, the Company will, through each Guarantee, the
Subordinated Note Indenture, the Junior Subordinated Notes of the related
series, the related Trust Agreement and the related Agreement as to Expenses
and Liabilities, fully and unconditionally guarantee all of each Trust's
obligations with respect to its Preferred Securities.
Specific terms of the Senior Notes or the Junior Subordinated Notes of any
series or the Preferred Securities of any Trust in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement with respect to such securities, which will describe, without
limitation and where applicable, the following: (a) in the case of Senior Notes
or Junior Subordinated Notes, the specific designation, aggregate principal
amount, denominations, maturity, interest payment dates, interest rate (or the
method of determining such rate), any redemption, exchange or sinking fund
provisions, and any other specific terms of the offering, and (b) in the case
of Preferred Securities, the specific designation, number of Preferred
Securities, liquidation amount per security, distribution rate (or the method
of determining such rate), dates on which distributions will be payable, voting
rights, any redemption, exchange or sinking fund provisions, and any other
rights, preferences, privileges, limitations and restrictions.
The Senior Notes, Junior Subordinated Notes and Preferred Securities may be
offered in amounts, at prices and on terms to be determined at the time of
offering; provided, however, that the aggregate initial public offering price
of all Senior Notes, Junior Subordinated Notes and Preferred Securities shall
not exceed $400,000,000.
The Prospectus Supplement relating to any series of Senior Notes, Junior
Subordinated Notes or Preferred Securities will contain information concerning
certain United States federal income tax considerations, if applicable to such
Senior Notes, Junior Subordinated Notes or Preferred Securities.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The Senior Notes, Junior Subordinated Notes and Preferred Securities may be
sold directly, through agents, underwriters or dealers as designated from time
to time, or through a combination of such methods. See "Plan of Distribution."
If agents or any underwriters or dealers are involved in the sale of Senior
Notes, Junior Subordinated Notes or Preferred Securities in respect of which
this Prospectus is being delivered, the names of such agents, underwriters or
dealers and any applicable commissions or discounts will be set forth in or may
be calculated from the Prospectus Supplement with respect to such Senior Notes,
Junior Subordinated Notes or Preferred Securities.
-----------
February , 1998
AVAILABLE INFORMATION
The Company and the Trusts have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3
(the "Registration Statement," which term encompasses any amendments thereof
and exhibits thereto) under the Securities Act of 1933, as amended (the "1933
Act"). As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, to which
reference is hereby made.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Commission. Such reports and
other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants including the Company that file
electronically at http://www.sec.gov. In addition, reports and other material
concerning the Company can be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, on which Exchange certain
of the Company's securities are listed.
No separate financial statements of any Trust are included herein. The
Company considers that such statements would not be material to holders of the
Preferred Securities because each Trust has no independent operations and
exists for the sole purpose of investing the proceeds of the sale of its Trust
Securities in Junior Subordinated Notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated herein by reference and made a part of this
Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(c) the Company's Current Reports on Form 8-K dated February 12, 1997 and
February 20, 1997.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated herein by reference and made a part of this Prospectus from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN THE
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE). SUCH REQUESTS SHOULD BE DIRECTED TO MICHAEL W. SOUTHERN, VICE
PRESIDENT, SECRETARY, TREASURER AND CHIEF FINANCIAL OFFICER, MISSISSIPPI POWER
COMPANY, 2992 WEST BEACH, GULFPORT, MISSISSIPPI 39501, TELEPHONE: (228) 864-
1211.
2
SELECTED INFORMATION
The following material, which is presented herein solely to furnish limited
introductory information regarding the Company, has been selected from, or is
based upon, the detailed information and financial statements appearing in the
documents incorporated herein by reference or elsewhere in this Prospectus, is
qualified in its entirety by reference thereto and, therefore, should be read
together therewith.
MISSISSIPPI POWER COMPANY
Business......................... Generation, transmission, distribution and
sale of electric energy
Service Area..................... Approximately 1,200 square miles in the 23
counties of southeastern Mississippi,
containing an aggregate area of
approximately 11,500 square miles
Service Area Population
(1990 Census)................... Approximately 848,000
Customers at December 31, 1996... 185,835
Generating Capacity at December
31, 1996 (kilowatts)............ 2,085,552
Sources of Generation during 1996
(kilowatt-hours)................ Coal (85%), Gas and Oil (15%)
Sources of Generation Estimated
for 1997 (kilowatt-hours)....... Coal (83%), Gas and Oil (17%)
SELECTED FINANCIAL INFORMATION
12 MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------- DECEMBER 31,
1992 1993 1994 1995 1996 1997(1)
-------- -------- -------- -------- -------- ------------
(THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
Operating Revenues...... $434,447 $474,883 $499,162 $516,553 $544,029 $543,588
Income Before Interest
Charges................ 63,772 67,726 76,067 82,765 80,523 81,769
Net Income After
Dividends on Preferred
Stock.................. 36,790 42,436 49,157 52,531 52,723 54,010
Ratio of Earnings to
Fixed Charges(2)....... 3.47 4.47 4.72 4.61 4.86 4.62
Ratio of Earnings to
Fixed Charges Plus
Preferred Dividend
Requirements (Pre-
Income Tax Basis)(3)... 2.82 3.23 3.55 3.54 3.68 3.85
(Notes on following page)
3
CAPITALIZATION (UNAUDITED)
AS OF SEPTEMBER 30, 1997
--------------------------------
ACTUAL AS ADJUSTED(4)
--------------------------------
(THOUSANDS, EXCEPT PERCENTAGES)
Common Stock Equity........................... $ 396,560 $ 396,560 34.3%
Cumulative Preferred Stock.................... 39,414 31,896 2.8
Company Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trusts
Holding Company Junior Subordinated
Notes(5)..................................... 35,000 35,000 3.0
Senior Notes.................................. -- 400,000 34.6
Other Long-Term Debt.......................... 291,609 291,609 25.3
---------- ------------ -------
Total, excluding amounts due within one
year....................................... $ 762,583 $ 1,155,065 100.0%
========== ============ =======
- --------
(1) See "Recent Results of Operations" herein.
(2) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Income Before Interest Charges" all income taxes deducted
therefrom and the debt portion of allowance for funds used during
construction, and (ii) "Fixed Charges" consist of "Net Interest Charges"
plus the debt portion of allowance for funds used during construction.
(3) In computing this ratio, "Preferred Dividend Requirements" represent the
before tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(4) Reflects (i) the retirement of the shares of certain issues of preferred
stock in an amount aggregating $7,518,400 in connection with a tender
offer for certain series of the Company's preferred stock by The Southern
Company and (ii) the issuance of $400,000,000 of new Senior Notes. Does
not reflect the potential redemption of outstanding securities with
proceeds from new security issuances. The pro forma amounts used in
connection with this capitalization table are assumed solely for the
purpose of this calculation and the amounts and types of securities that
will be ultimately issued will depend upon market conditions and other
factors prevailing at the time of issuance.
(5) As described in this Prospectus, substantially all of the assets of the
respective Trusts will be the Junior Subordinated Notes of the Company,
and upon redemption of such debt, the related Preferred Securities will be
mandatorily redeemable.
MISSISSIPPI POWER COMPANY
The Company was incorporated under the laws of the State of Mississippi on
July 12, 1972, was admitted to do business in Alabama on November 28, 1972,
and, effective December 21, 1972, by the merger into it of the predecessor
Mississippi Power Company, succeeded to the business and properties of the
latter company. The predecessor Mississippi Power Company was incorporated
under the laws of the State of Maine on November 24, 1924, and was admitted to
do business in Mississippi on December 23, 1924, and in Alabama on December 7,
1962. The principal executive offices of the Company are located at 2992 West
Beach, Gulfport, Mississippi 39501, and the telephone number is (228) 864-
1211.
The Company is a wholly owned subsidiary of The Southern Company, a holding
company registered under the Public Utility Holding Company Act of 1935. The
Company is engaged in the generation and purchase of electricity and the
distribution and sale of such energy within the 23 counties of southeastern
Mississippi, at retail in 123 communities, as well as in rural areas, and at
wholesale to one municipality, six rural electric distribution cooperative
associations and one generating and transmitting cooperative.
4
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State
on January 24, 1997, with respect to Mississippi Power Capital Trust II, and
January 7, 1998, with respect to Mississippi Power Capital Trust III. Each
Trust's business is defined in a trust agreement, executed by the Company, as
Depositor, and the Delaware Trustee thereunder. This trust agreement of each
Trust will be amended and restated in its entirety substantially in the form
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part (the "Trust Agreement"). Each Trust Agreement will be qualified
as an indenture under the Trust Indenture Act of 1939, as amended (the "1939
Act"). Each Trust exists for the exclusive purposes of (i) issuing its Trust
Securities representing undivided beneficial interests in the assets of such
Trust, (ii) investing the gross proceeds of its Trust Securities in a related
series of Junior Subordinated Notes, and (iii) engaging in only those other
activities necessary, appropriate, convenient or incidental thereto.
Each Trust's business and affairs will be conducted by its trustees, which
shall be appointed by the Company as the holder of the Common Securities: two
officers of the Company as Administrative Trustees; Bankers Trust Company as
Property Trustee; and Bankers Trust (Delaware) as Delaware Trustee. The
Property Trustee of each Trust will act as the indenture trustee with respect
to such Trust for purposes of compliance with the provisions of the 1939 Act.
The principal place of business of each Trust shall be c/o the Company, 2992
West Beach, Gulfport, Mississippi 39501, telephone (228) 864-1211, Attn:
Treasurer.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a Trust for further information concerning such Trust.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trusts will be treated as subsidiaries
of the Company and, accordingly, the accounts of the Trusts will be included
in the consolidated financial statements of the Company. The Preferred
Securities will be presented as a separate line item in the consolidated
balance sheet of the Company, and appropriate disclosures concerning the
Preferred Securities, the Guarantees and the Junior Subordinated Notes will be
included in the notes to the consolidated financial statements. For financial
reporting purposes, the Company will record distributions payable on the
Preferred Securities as an expense.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its Preferred
Securities in Junior Subordinated Notes. Except as may be otherwise described
in an applicable Prospectus Supplement, the net proceeds received by the
Company from such investment and any proceeds received from the sale of its
Senior Notes or other sales of its Junior Subordinated Notes will be used in
connection with its ongoing construction program, to pay scheduled maturities
and/or refundings of its securities, to repay short-term indebtedness to the
extent outstanding and for other general corporate purposes.
RECENT RESULTS OF OPERATIONS
For the year ended December 31, 1997, the unaudited amounts for "Operating
Revenues," "Income Before Interest Charges" and "Net Income After Dividends on
Preferred Stock" were $543,588,000, $81,769,000 and $54,010,000, respectively.
In the opinion of the management of the Company, the above unaudited amounts
for the year ended December 31, 1997 reflect all adjustments (which were only
normal recurring adjustments) necessary to present fairly the results of
operations for such period. The "Ratio of Earnings to Fixed Charges" and the
"Ratio of Earnings to Fixed Charges Plus Preferred Dividend Requirements (Pre-
Income Tax Basis)" for the year ended December 31, 1997 were 4.62 and 3.85,
respectively.
5
DESCRIPTION OF THE SENIOR NOTES
Set forth below is a description of the general terms of the Senior Notes.
The following description does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the Senior Note Indenture, dated as of February 1, 1998,
between the Company and Bankers Trust Company, as trustee (the "Senior Note
Indenture Trustee"), as to be supplemented by a supplemental indenture thereto
establishing the Senior Notes of each series (the Senior Note Indenture, as so
supplemented, is hereinafter referred to as the "Senior Note Indenture"), the
forms of which are filed as exhibits to the Registration Statement of which
this Prospectus forms a part. The terms of the Senior Notes will include those
stated in the Senior Note Indenture and those made a part of the Senior Note
Indenture by reference to the 1939 Act. Certain capitalized terms used herein
are defined in the Senior Note Indenture.
GENERAL
The Senior Notes will be issued as unsecured senior debt securities under
the Senior Note Indenture and will rank pari passu with all other unsecured
and unsubordinated debt of the Company. The Senior Notes will be effectively
subordinated to all secured debt of the Company, including its first mortgage
bonds, aggregating approximately $248,800,000 outstanding at September 30,
1997. The Senior Note Indenture does not limit the aggregate principal amount
of Senior Notes that may be issued thereunder and provides that Senior Notes
may be issued from time to time in one or more series pursuant to an indenture
supplemental to the Senior Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Senior Notes being offered
thereby: (i) the title of such Senior Notes; (ii) any limit on the aggregate
principal amount of such Senior Notes; (iii) the date or dates on which the
principal of such Senior Notes is payable; (iv) the rate or rates at which
such Senior Notes shall bear interest, if any, or any method by which such
rate or rates will be determined, the date or dates from which such interest
will accrue, the interest payment dates on which such interest shall be
payable, and the regular record date for the interest payable on any interest
payment date; (v) the place or places where the principal of (and premium, if
any) and interest, if any, on such Senior Notes shall be payable; (vi) the
period or periods within which, the price or prices at which and the terms and
conditions on which such Senior Notes may be redeemed, in whole or in part, at
the option of the Company; (vii) the obligation, if any, of the Company to
redeem or purchase such Senior Notes; (viii) the denominations in which such
Senior Notes shall be issuable; (ix) if other than the principal amount
thereof, the portion of the principal amount of such Senior Notes which shall
be payable upon declaration of acceleration of the maturity thereof; (x) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company as provided in the Senior Note Indenture pertaining
to such Senior Notes; (xi) whether such Senior Notes shall be issued in whole
or in part in the form of a Global Security; and (xii) any other terms of such
Senior Notes.
The Senior Note Indenture does not contain provisions that afford holders of
Senior Notes protection in the event of a highly leveraged transaction
involving the Company.
EVENTS OF DEFAULT
The Senior Note Indenture provides that any one or more of the following
described events with respect to the Senior Notes of any series, which has
occurred and is continuing, constitutes an "Event of Default" with respect to
the Senior Notes of such series:
(a) failure for 10 days to pay interest on the Senior Notes of such
series, when due on an Interest Payment Date other than at maturity or upon
earlier redemption; or
(b) failure to pay principal or premium, if any, or interest on the
Senior Notes of such series when due at maturity or upon earlier
redemption; or
(c) failure for three Business Days to deposit any sinking fund payment
when due by the terms of a Senior Note of such series; or
6
(d) failure to observe or perform any other covenant or warranty of the
Company in the Senior Note Indenture (other than a covenant or warranty
which has expressly been included therein solely for the benefit of one or
more series of Senior Notes other than such series) for 90 days after
written notice to the Company from the Senior Note Indenture Trustee or the
holders of at least 25% in principal amount of the outstanding Senior Notes
of such series; or
(e) certain events of bankruptcy, insolvency, or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Indenture Trustee with respect to the Senior Notes of such series.
If a Senior Note Indenture Event of Default occurs and is continuing with
respect to the Senior Notes of any series, then the Senior Note Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Senior Notes of such series may declare the principal amount
thereof due and payable immediately by notice in writing to the Company (and
to the Senior Note Indenture Trustee if given by the holders), and upon any
such declaration such principal amount shall become immediately due and
payable. At any time after such a declaration of acceleration with respect to
the Senior Notes of any series has been made and before a judgment or decree
for payment of the money due has been obtained as provided in Article Five of
the Senior Note Indenture, the holders of not less than a majority in
aggregate outstanding principal amount of the Senior Notes of such series may
rescind and annul such declaration and its consequences if the default has
been cured or waived and the Company has paid or deposited with the Senior
Note Indenture Trustee a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration and all sums paid or
advanced by the Senior Note Indenture Trustee, including reasonable
compensation and expenses of the Senior Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series may, on behalf of the holders of all
the Senior Notes of such series, waive any past default with respect to such
series, except (i) a default in the payment of principal or interest or (ii) a
default in respect of a covenant or provision which under Article Nine of the
Senior Note Indenture cannot be modified or amended thereunder without the
consent of the holder of each outstanding Senior Note of such series affected
thereby.
REGISTRATION AND TRANSFER
The Company shall not be required to (i) issue, register the transfer of or
exchange Senior Notes of any series during a period of 15 days immediately
preceding the date notice is given identifying the Senior Notes of such series
called for redemption, or (ii) register the transfer of or exchange any Senior
Notes so selected for redemption, in whole or in part, except the unredeemed
portion of any Senior Note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Senior Notes will be made only against surrender to the
Paying Agent of such Senior Notes. Principal of and interest on Senior Notes
will be payable subject to any applicable laws and regulations, at the office
of such Paying Agent or Paying Agents as the Company may designate from time
to time, except that, at the option of the Company, payment of any interest
may be made by wire transfer or by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register with
respect to the Senior Notes. Payment of interest on Senior Notes on any
interest payment date will be made to the person in whose name the Senior
Notes (or predecessor security) are registered at the close of business on the
Record Date for such interest payment (the fifteenth calendar day before such
interest payment date).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Senior Indenture Trustee will act as Paying Agent with respect to the Senior
Notes. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents or approve a change in the office
through which any Paying Agent acts.
7
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Senior Notes of any series which remain
unclaimed at the end of two years after such principal or interest shall have
become due and payable will be repaid to the Company, and the holder of such
Senior Notes will thereafter look only to the Company for payment thereof.
MODIFICATION
The Senior Note Indenture contains provisions permitting the Company and the
Senior Indenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the outstanding Senior Notes of each series
affected thereby, to modify the Senior Note Indenture or the rights of the
holders of the Senior Note of such series; provided, that no such modification
may, without the consent of the holder of each outstanding Senior Note
affected thereby, (i) change the stated maturity of the principal of, or any
installment of principal of or interest on, any Senior Note, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change the method of calculating the
rate of interest thereon, or impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity thereof (or,
in the case of redemption, on or after the redemption date), or (ii) reduce
the percentage of principal amount of the outstanding Senior Notes of any
series, the consent of whose holders is required for any such supplemental
indenture, or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Senior Note Indenture or certain
defaults thereunder and their consequences) provided for in the Senior Note
Indenture, or (iii) modify any of the provisions of the Senior Note Indenture
relating to supplemental indentures, waiver of past defaults, or waiver of
certain covenants, except to increase any such percentage or to provide that
certain other provisions of the Senior Note Indenture cannot be modified or
waived without the consent of the holder of each outstanding Senior Note
affected thereby.
In addition, the Company and the Senior Note Indenture Trustee may execute,
without the consent of any holders of Senior Notes, any supplemental indenture
for certain other usual purposes, including the creation of any new series of
senior notes.
CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such other corporation or person
expressly assumes, by supplemental indenture executed and delivered to the
Senior Note Indenture Trustee, the payment of the principal of (and premium,
if any) and interest on all the Senior Notes and the performance of every
covenant of the Senior Note Indenture on the part of the Company to be
performed or observed; (2) immediately after giving effect to such
transactions, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and (3) the Company has delivered to the Senior Note Indenture
Trustee an officers' certificate and an opinion of counsel, each stating that
such transaction complies with the provisions of the Senior Note Indenture
governing consolidation, merger, conveyance, transfer or lease and that all
conditions precedent thereto have been complied with.
INFORMATION CONCERNING THE SENIOR NOTE INDENTURE TRUSTEE
The Senior Note Indenture Trustee, prior to an Event of Default with respect
to Senior Notes of any series, undertakes to perform, with respect to Senior
Notes of such series, only such duties as are specifically set forth in the
Senior Note Indenture and, in case an Event of Default with respect to Senior
Notes of any series has occurred and is continuing, shall exercise, with
respect to Senior Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Senior Note Indenture Trustee is under no obligation to
exercise any of the powers vested in it by the Senior Note Indenture at the
request of any holder of Senior Notes of any series, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The Senior Note Indenture
8
Trustee is not required to expend or risk its own funds or otherwise incur any
financial liability in the performance of its duties if the Senior Note
Indenture Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
Bankers Trust Company, the Senior Note Indenture Trustee, also serves as
Subordinated Note Indenture Trustee, as Property Trustee and as Guarantee
Trustee. The Company and certain of its affiliates maintain deposit accounts
and banking relationships with Bankers Trust Company. Bankers Trust Company
also serves as trustee under other indentures pursuant to which securities of
the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Senior Note Indenture to a direct or indirect wholly-
owned subsidiary of the Company; provided, that, in the event of any such
assignment, the Company will remain primarily liable for all such obligations.
Subject to the foregoing, the Senior Note Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors
and assigns.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the general terms of the Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of February 1, 1997, between the Company
and Bankers Trust Company, as trustee (the "Subordinated Note Indenture
Trustee"), as to be supplemented by a supplemental indenture thereto
establishing the Junior Subordinated Notes of each series (the Subordinated
Note Indenture, as so supplemented, is hereinafter referred to as the
"Subordinated Note Indenture"), the forms of which are filed as exhibits to
the Registration Statement of which this Prospectus forms a part. The terms of
the Junior Subordinated Notes will include those stated in the Subordinated
Note Indenture and those made a part of the Subordinated Note Indenture by
reference to the 1939 Act. Certain capitalized terms used herein are defined
in the Subordinated Note Indenture.
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior
subordinated debt securities under the Subordinated Note Indenture. The
Subordinated Note Indenture does not limit the aggregate principal amount of
Junior Subordinated Notes that may be issued thereunder and provides that
Junior Subordinated Notes may be issued from time to time in one or more
series pursuant to an indenture supplemental to the Subordinated Note
Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Junior Subordinated Notes
being offered thereby: (i) the title of such Junior Subordinated Notes; (ii)
any limit on the aggregate principal amount of such Junior Subordinated Notes;
(iii) the date or dates on which the principal of such Junior Subordinated
Notes is payable; (iv) the rate or rates at which such Junior Subordinated
Notes shall bear interest, if any, or any method by which such rate or rates
will be determined, the date or dates from which such interest will accrue,
the interest payment dates on which such interest shall be payable, and the
regular record date for the interest payable on any interest payment date; (v)
the place or places where the principal of (and premium, if any) and interest,
if any, on such Junior Subordinated Notes shall be
9
payable; (vi) the period or periods within which, the price or prices at which
and the terms and conditions on which such Junior Subordinated Notes may be
redeemed, in whole or in part, at the option of the Company; (vii) the
obligation, if any, of the Company to redeem or purchase such Junior
Subordinated Notes; (viii) the denominations in which such Junior Subordinated
Notes shall be issuable; (ix) if other than the principal amount thereof, the
portion of the principal amount of such Junior Subordinated Notes which shall
be payable upon declaration of acceleration of the maturity thereof; (x) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company as provided in the Subordinated Note Indenture
pertaining to such Junior Subordinated Notes; (xi) whether such Junior
Subordinated Notes shall be issued in whole or in part in the form of a Global
Security; (xii) the right, if any, of the Company to extend the interest
payment periods of such Junior Subordinated Notes; and (xiii) any other terms
of such Junior Subordinated Notes. The terms of each series of Junior
Subordinated Notes issued to a Trust will correspond to those of the related
Preferred Securities of such Trust as described in the Prospectus Supplement
relating to such Preferred Securities.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving the Company.
SUBORDINATION
The Junior Subordinated Notes are subordinated and junior in right of
payment to all Senior Indebtedness (as defined below) of the Company. No
payment of principal of (including redemption payments, if any), or premium,
if any, or interest on (including Additional Interest (as defined herein)) the
Junior Subordinated Notes may be made if (a) any Senior Indebtedness is not
paid when due and any applicable grace period with respect to such default has
ended with such default not being cured or waived or otherwise ceasing to
exist, or (b) the maturity of any Senior Indebtedness has been accelerated
because of a default, or (c) notice has been given of the exercise of an
option to require repayment, mandatory payment or prepayment or otherwise.
Upon any payment or distribution of assets of the Company to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities, or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due
or to become due on or in respect of all Senior Indebtedness before the
holders of the Junior Subordinated Notes are entitled to receive or retain any
payment or distribution. Subject to the prior payment of all Senior
Indebtedness, the rights of the holders of the Junior Subordinated Notes will
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions applicable to such Senior Indebtedness until all
amounts owing on the Junior Subordinated Notes are paid in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) any
payment due in respect of indebtedness of the Company, whether outstanding at
the date of execution of the Subordinated Note Indenture or thereafter
incurred, created or assumed, (a) in respect of money borrowed (including any
financial derivative, hedging or futures contract or similar instrument) and
(b) evidenced by securities, debentures, bonds, notes or other similar
instruments issued by the Company that, by their terms, are senior or senior
subordinated debt securities including, without limitation, all obligations
under its indentures with various trustees; (ii) all capital lease
obligations; (iii) all obligations issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all obligations of the
Company under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business and long-term purchase
obligations); (iv) all obligations for the reimbursement of any letter of
credit, banker's acceptance, security purchase facility or similar credit
transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) above of other persons the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of the Company (whether
or not such obligation is assumed by the Company), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Junior Subordinated Notes and (2) any unsecured indebtedness between or among
the Company or its affiliates. Such Senior Indebtedness shall continue to be
Senior Indebtedness and be entitled to the benefits of the subordination
provisions contained in the Subordinated Note Indenture irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
10
The Subordinated Note Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued by the Company. As of September 30,
1997, Senior Indebtedness of the Company aggregated approximately
$328,800,000.
ADDITIONAL INTEREST
"Additional Interest" is defined in the Subordinated Note Indenture as (i)
such additional amounts as may be required so that the net amounts received
and retained by a holder of Junior Subordinated Notes (if the holder is a
Trust) after paying taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other taxing authority will not be less than the amounts the holder would
have received had no such taxes, duties, assessments, or other governmental
charges been imposed; and (ii) any interest due and not paid on an interest
payment date, together with interest thereon from such interest payment date
to the date of payment, compounded quarterly, on each interest payment date.
CERTAIN COVENANTS
The Company covenants in the Subordinated Note Indenture, for the benefit of
the holders of each series of Junior Subordinated Notes, that, (i) if at such
time the Company shall have given notice of its election to extend an interest
payment period for such series of Junior Subordinated Notes and such extension
shall be continuing, (ii) if at such time the Company shall be in default with
respect to its payment or other obligations under the Guarantee with respect
to the Trust Securities, if any, related to such series of Junior Subordinated
Notes, or (iii) if at such time an Event of Default thereunder with respect to
such series of Junior Subordinated Notes shall have occurred and be
continuing, (a) the Company shall not declare or pay any dividend or make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, and (b) the
Company shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees
other than the Guarantees) issued by the Company which rank pari passu with or
junior to the Junior Subordinated Notes. None of the foregoing, however, shall
restrict (i) any of the actions described in the preceding sentence resulting
from any reclassifications of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, or (ii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged.
The Subordinated Note Indenture further provides that, for so long as the
Trust Securities of any Trust remain outstanding, the Company covenants (i) to
directly or indirectly maintain 100% ownership of the Common Securities of
such Trust; provided, however, that any permitted successor of the Company
under the Subordinated Note Indenture may succeed to the Company's ownership
of such Common Securities, and (ii) to use its reasonable efforts to cause
such Trust (a) to remain a statutory business trust, except in connection with
the distribution of Junior Subordinated Notes to the holders of Trust
Securities in liquidation of such Trust, the redemption of all of the Trust
Securities of such Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the related Trust Agreement, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes.
EVENTS OF DEFAULT
The Subordinated Note Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Notes of
any series, which has occurred and is continuing, constitutes an "Event of
Default" with respect to the Junior Subordinated Notes of such series:
(a) failure for 10 days to pay interest on the Junior Subordinated Notes
of such series, including any Additional Interest (as defined in clause
(ii) of the definition thereof in the Subordinated Note Indenture) in
respect thereof, when due on an Interest Payment Date other than at
maturity or upon earlier redemption; provided, however, that a valid
extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose; or
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(b) failure for 10 days to pay Additional Interest (as defined in clause
(i) of the definition thereof in the Subordinated Note Indenture); or
(c) failure to pay principal or premium, if any, or interest, including
Additional Interest (as defined in clause (ii) of the definition thereof in
the Subordinated Note Indenture), on the Junior Subordinated Notes of such
series when due at maturity or upon earlier redemption; or
(d) failure for three Business Days to deposit any sinking fund payment
when due by the terms of a Junior Subordinated Note of such series; or
(e) failure to observe or perform any other covenant or warranty of the
Company in the Subordinated Note Indenture (other than a covenant or
warranty which has expressly been included therein solely for the benefit
of one or more series of Junior Subordinated Notes other than such series)
for 90 days after written notice to the Company from the Subordinated Note
Indenture Trustee or the holders of at least 25% in principal amount of the
outstanding Junior Subordinated Notes of such series; or
(f) certain events of bankruptcy, insolvency, or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Subordinated Note Indenture Trustee with respect to the
Junior Subordinated Notes of such series. If a Subordinated Note Indenture
Event of Default occurs and is continuing with respect to the Junior
Subordinated Notes of any series, then the Subordinated Note Indenture Trustee
or the holders of not less than 25% in aggregate outstanding principal amount
of the Junior Subordinated Notes of such series may declare the principal
amount thereof due and payable immediately by notice in writing to the Company
(and to the Subordinated Note Indenture Trustee if given by the holders), and
upon any such declaration such principal amount shall become immediately due
and payable. At any time after such a declaration of acceleration with respect
to the Junior Subordinated Notes of any series had been made and before a
judgment or decree for payment of the money due has been obtained as provided
in Article Five of the Subordinated Note Indenture, the holders of not less
than a majority in aggregate outstanding principal amount of the Junior
Subordinated Notes of such series may rescind and annul such declaration and
its consequences if the default has been cured or waived and the Company has
paid or deposited with the Subordinated Note Indenture Trustee a sum
sufficient to pay all matured installments of interest (including any
Additional Interest) and principal due otherwise than by acceleration and all
sums paid or advanced by the Subordinated Note Indenture Trustee, including
reasonable compensation and expenses of the Subordinated Note Indenture
Trustee.
A holder of Preferred Securities may institute a legal proceeding directly
against the Company, without first instituting a legal proceeding against the
Property Trustee or any other person or entity, for enforcement of payment to
such holder of principal of or interest on the Junior Subordinated Notes of
the related series having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes of such series.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series may, on behalf of the
holders of all the Junior Subordinated Notes of such series, waive any past
default with respect to such series, except (i) a default in the payment of
principal or interest or (ii) a default in respect of a covenant or provision
which under Article Nine of the Subordinated Note Indenture cannot be modified
or amended thereunder without the consent of the holder of each outstanding
Junior Subordinated Note of such series affected thereby.
REGISTRATION AND TRANSFER
The Company shall not be required to (i) issue, register the transfer of or
exchange Junior Subordinated Notes of any series during a period of 15 days
immediately preceding the date notice is given identifying the Junior
Subordinated Notes of such series called for redemption, or (ii) register the
transfer of or exchange any Junior Subordinated Notes so selected for
redemption, in whole or in part, except the unredeemed portion of any Junior
Subordinated Note being redeemed in part.
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PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Junior Subordinated Notes will be made only against
surrender to the Paying Agent of such Junior Subordinated Notes. Principal of
and interest on Junior Subordinated Notes will be payable, subject to any
applicable laws and regulations, at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that, at the
option of the Company, payment of any interest may be made by wire transfer or
by check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register with respect to the Junior Subordinated
Notes. Payment of interest on Junior Subordinated Notes on any interest
payment date will be made to the person in whose name the Junior Subordinated
Notes (or predecessor security) are registered at the close of business on the
Record Date for such interest payment (the fifteenth calendar day before such
interest payment date).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Subordinated Note Indenture Trustee will act as Paying Agent with respect to
the Junior Subordinated Notes. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agents or
approve a change in the office through which any Paying Agent acts.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Junior Subordinated Notes of any series which
remain unclaimed at the end of two years after such principal or interest
shall have become due and payable will be repaid to the Company, and the
holder of such Junior Subordinated Notes will thereafter look only to the
Company for payment thereof.
MODIFICATION
The Subordinated Note Indenture contains provisions permitting the Company
and the Subordinated Note Indenture Trustee, with the consent of the holders
of not less than a majority in principal amount of the outstanding Junior
Subordinated Notes of each series affected thereby, to modify the Subordinated
Note Indenture or the rights of the holders of the Junior Subordinated Note of
such series; provided, that no such modification may, without the consent of
the holder of each outstanding Junior Subordinated Note affected thereby, (i)
change the stated maturity of the principal of, or any installment of
principal of or interest on, any Junior Subordinated Note, or reduce the
principal amount thereof or the rate of interest (including Additional
Interest) thereon or any premium payable upon the redemption thereof, or
change the method of calculating the rate of interest thereon, or impair the
right to institute suit for the enforcement of any such payment on or after
the stated maturity thereof (or, in the case of redemption, on or after the
redemption date), or (ii) reduce the percentage of principal amount of the
outstanding Junior Subordinated Notes of any series, the consent of whose
holders is required for any such supplemental indenture, or the consent of
whose holders is required for any waiver (of compliance with certain
provisions of the Subordinated Note Indenture or certain defaults thereunder
and their consequences) provided for in the Subordinated Note Indenture, or
(iii) modify any of the provisions of the Subordinated Note Indenture relating
to supplemental indentures, waiver of past defaults, or waiver of certain
covenants, except to increase any such percentage or to provide that certain
other provisions of the Subordinated Note Indenture cannot be modified or
waived without the consent of the holder of each outstanding Junior
Subordinated Note affected thereby, or (iv) modify the provisions of the
Subordinated Note Indenture with respect to the subordination of the Junior
Subordinated Notes in a manner adverse to such holder.
In addition, the Company and the Subordinated Note Indenture Trustee may
execute, without the consent of any holders of Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes, including the
creation of any new series of junior subordinated notes.
CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of
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Columbia and such other corporation or person expressly assumes, by
supplemental indenture executed and delivered to the Subordinated Note
Indenture Trustee, the payment of the principal of (and premium, if any) and
interest (including Additional Interest) on all the Junior Subordinated Notes
and the performance of every covenant of the Subordinated Note Indenture on
the part of the Company to be performed or observed; (2) immediately after
giving effect to such transactions, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have happened and be continuing; and (3) the Company has delivered to the
Subordinated Note Indenture Trustee an officers' certificate and an opinion of
counsel, each stating that such transaction complies with the provisions of
the Subordinated Note Indenture governing consolidation, merger, conveyance,
transfer or lease and that all conditions precedent thereto have been complied
with.
INFORMATION CONCERNING THE SUBORDINATED NOTE INDENTURE TRUSTEE
The Subordinated Note Indenture Trustee, prior to an Event of Default with
respect to Junior Subordinated Notes of any series, undertakes to perform,
with respect to Junior Subordinated Notes of such series, only such duties as
are specifically set forth in the Subordinated Note Indenture and, in case an
Event of Default with respect to Junior Subordinated Notes of any series has
occurred and is continuing, shall exercise, with respect to Junior
Subordinated Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Subordinated Note Indenture Trustee is under no obligation
to exercise any of the powers vested in it by the Subordinated Note Indenture
at the request of any holder of Junior Subordinated Notes of any series,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Subordinated Note
Indenture Trustee is not required to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties if the
Subordinated Note Indenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
Bankers Trust Company, the Subordinated Note Indenture Trustee, also serves
as Senior Note Indenture Trustee, as Property Trustee and as Guarantee
Trustee. The Company and certain of its affiliates maintain deposit accounts
and banking relationships with Bankers Trust Company. Bankers Trust Company
also serves as trustee under other indentures pursuant to which securities of
the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Subordinated Note Indenture and Junior Subordinated Notes will be
governed by, and construed in accordance with, the internal laws of the State
of New York.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Subordinated Note Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided, that, in the event of any
such assignment, the Company will remain primarily liable for all such
obligations. Subject to the foregoing, the Subordinated Note Indenture will be
binding upon and inure to the benefit of the parties thereto and their
respective successors and assigns.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue only one series of Preferred Securities having terms
described in the Prospectus Supplement relating thereto. The Trust Agreement
of each Trust will authorize the Administrative Trustees, on behalf of the
Trust, to issue the Preferred Securities of such Trust. The Preferred
Securities of each Trust will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferral or
other special rights or such restrictions as shall be set forth in the Trust
Agreement of such Trust. Reference is made to the Prospectus Supplement
relating to the Preferred Securities of a Trust for specific terms, including
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(i) the distinctive designation of such Preferred Securities; (ii) the number
of Preferred Securities issued by such Trust; (iii) the annual distribution
rate (or method of determining such rate) for Preferred Securities of such
Trust and the date or dates on which such distributions shall be payable; (iv)
whether distributions on such Preferred Securities shall be cumulative and, in
the case of Preferred Securities having cumulative distribution rights, the
date or dates, or method of determining the date or dates, from which
distributions on such Preferred Securities shall be cumulative; (v) the amount
or amounts that shall be paid out of the assets of such Trust to the holders
of the Preferred Securities of such Trust upon voluntary or involuntary
dissolution, winding-up or termination of such Trust; (vi) the obligation, if
any, of such Trust to purchase or redeem such Preferred Securities and the
price or prices at which, the period or periods within which, and the terms
and conditions upon which such Preferred Securities shall be purchased or
redeemed, in whole or in part, pursuant to such obligation; (vii) the voting
rights, if any, of such Preferred Securities in addition to those required by
law, including the number of votes per Preferred Security and any requirement
for the approval by the holders of Preferred Securities as a condition to
specified action or amendments to the Trust Agreement of such Trust; (viii)
the rights, if any, to defer distributions on the Preferred Securities by
extending the interest payment period on the related Junior Subordinated
Notes; and (ix) any other relative rights, preferences, privileges,
limitations or restrictions of such Preferred Securities not inconsistent with
the Trust Agreement of such Trust or applicable law. All Preferred Securities
offered hereby will be guaranteed by the Company to the extent set forth under
"Description of the Guarantees." Any material United States federal income tax
considerations applicable to an offering of Preferred Securities will be
described in the Prospectus Supplement relating thereto.
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders
of Preferred Securities of the respective Trusts from time to time. Each
Guarantee will be qualified as an indenture under the 1939 Act. Bankers Trust
Company will act as indenture trustee under each Guarantee (the "Guarantee
Trustee") for purposes of the 1939 Act. The terms of the respective Guarantees
will be those set forth therein and those made part thereof by the 1939 Act.
The following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the Guarantees, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the 1939
Act. Each Guarantee will be held by the Guarantee Trustee for the benefit of
holders of the Preferred Securities to which it relates.
GENERAL
Pursuant to each Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
related Preferred Securities, the Guarantee Payments (as defined herein), to
the extent not paid by, or on behalf of, the related Trust, regardless of any
defense, right of set-off or counterclaim that the Company may have or assert
against any person. The following payments or distributions with respect to
the Preferred Securities of any Trust to the extent not paid or made by, or on
behalf of, such Trust will be subject to the Guarantee related thereto
(without duplication): (i) any accrued and unpaid distributions required to be
paid on the Preferred Securities of such Trust but if and only if and to the
extent that such Trust has funds legally and immediately available therefor,
(ii) the redemption price, including all accrued and unpaid distributions to
the date of redemption (the "Redemption Price"), with respect to any Preferred
Securities called for redemption by such Trust, but if and only to the extent
such Trust has funds legally and immediately available therefor, and (iii)
upon a dissolution, winding-up or termination of such Trust (other than in
connection with the distribution of Junior Subordinated Notes to the holders
of Trust Securities of such Trust or the redemption of all of the Preferred
Securities of such Trust), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Preferred Securities of
such Trust to the date of payment, to the extent such Trust has funds legally
and immediately available therefor, and (b) the amount of assets of such Trust
remaining available for distribution to holders of Preferred Securities of
such Trust in liquidation of such Trust (the "Guarantee Payments"). The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the related
Preferred Securities or by causing the related Trust to pay such amounts to
such holders.
15
Each Guarantee will be a guarantee of the Guarantee Payments with respect to
the related Preferred Securities from the time of issuance of such Preferred
Securities, but will not apply to the payment of distributions and other
payments on such Preferred Securities when the related Trust does not have
sufficient funds legally and immediately available to make such distributions
or other payments. IF THE COMPANY DOES NOT MAKE INTEREST PAYMENTS ON THE
JUNIOR SUBORDINATED NOTES HELD BY THE PROPERTY TRUSTEE UNDER ANY TRUST, SUCH
TRUST WILL NOT MAKE DISTRIBUTIONS ON ITS PREFERRED SECURITIES.
SUBORDINATION
The Company's obligations under each Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
(i) subordinate and junior in right of payment to all other liabilities of the
Company, including the Junior Subordinated Notes, except those obligations or
liabilities made pari passu or subordinate by their terms, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Company and with any guarantee now or hereafter entered into by the
Company in respect of any preferred or preference securities of any affiliate
of the Company, and (iii) senior to all common stock of the Company. The terms
of the Preferred Securities will provide that each holder of Preferred
Securities by acceptance thereof agrees to the subordination provisions and
other terms of the Guarantee related thereto. The Company has outstanding
preferred stock that ranks pari passu to the Guarantees and common stock that
ranks junior to the Guarantees. See "Selected Information--Selected Financial
Information."
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly
against the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the related Preferred Securities (in which
case no consent will be required), each Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in liquidation amount
of such outstanding Preferred Securities. The manner of obtaining any such
approval of holders of the Preferred Securities will be as set forth in an
accompanying Prospectus Supplement. All guarantees and agreements contained in
each Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders
of the related Preferred Securities then outstanding.
TERMINATION
Each Guarantee will terminate and be of no further force and effect as to
the related Preferred Securities upon full payment of the Redemption Price of
all such Preferred Securities, upon distribution of Junior Subordinated Notes
to the holders of such Preferred Securities, or upon full payment of the
amounts payable upon liquidation of the related Trust. Each Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the related Preferred Securities must restore payment of
any sums paid with respect to such Preferred Securities or under such
Guarantee.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure by the
Company to perform any of its payment obligations thereunder. The holders of a
majority in liquidation amount of the Preferred Securities to which any
Guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee. Any holder of the
related Preferred Securities may institute a legal proceeding directly against
the Company to enforce its rights under such Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other
person or entity. The holders of a majority in liquidation amount of Preferred
Securities of any series may, by vote, on behalf of the holders of all the
Preferred Securities of such series, waive any past event of default and its
consequences.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to any Guarantee and after the curing or waiving of all events of
default with respect to such Guarantee, undertakes to perform only such duties
as are specifically set forth in such Guarantee and, in case an event of
default has occurred, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provisions, the Guarantee Trustee is under no obligation to exercise any
of the powers vested in it by any Guarantee at the request of any holder of
the related Preferred Securities, unless offered reasonable indemnity against
the costs, expenses and liabilities which might be incurred thereby.
Bankers Trust Company, the Guarantee Trustee, also serves as Property
Trustee, as Senior Note Indenture Trustee and as Subordinated Note Indenture
Trustee. The Company and certain of its affiliates maintain deposit accounts
and banking relationships with Bankers Trust Company. Bankers Trust Company
serves as trustee under other indentures pursuant to which securities of the
Company and affiliates of the Company are outstanding.
GOVERNING LAW
Each Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
THE AGREEMENTS AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by the Company under each Trust Agreement, the Company will irrevocably and
unconditionally guarantee to each person or entity to whom each Trust becomes
indebted or liable the full payment of any indebtedness, expenses or
liabilities of such Trust, other than obligations of such Trust to pay to the
holders of the related Preferred Securities or other similar interests in such
Trust the amounts due such holders pursuant to the terms of such Preferred
Securities or such other similar interests, as the case may be.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED NOTES AND
THE GUARANTEES
As long as payments of interest and other payments are made when due on each
series of Junior Subordinated Notes issued to a Trust, such payments will be
sufficient to cover distributions and payments due on the related Trust
Securities of such Trust primarily because (i) the aggregate principal amount
of each series of Junior Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the related Trust Securities; (ii) the
interest rate and interest and other payment dates on each series of Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the related Preferred Securities; (iii) the Company shall
pay for all costs and expenses of each Trust pursuant to the Agreements as to
Expenses and Liabilities; and (iv) each Trust Agreement provides that the
Securities Trustees thereunder shall not cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes
of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) will be
guaranteed by the Company as and to the extent set forth under "Description of
the Guarantees." If the Company does not make interest payments on any series
of Junior Subordinated Notes, it is not expected that the related Trust will
have sufficient funds to pay distributions on its Preferred Securities. Each
Guarantee is a guarantee from the time of its issuance, but does not apply to
any payment of distributions unless and until the related Trust has sufficient
funds legally and immediately available for the payment of such distributions.
If the Company fails to make interest or other payments on any series of
Junior Subordinated Notes when due (taking into account any extension period
as described in the applicable Prospectus Supplement), the Trust
17
Agreement provides a mechanism whereby the holders of the related Preferred
Securities may appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Junior
Subordinated Notes of such series, including proceeding directly against the
Company to enforce such Junior Subordinated Notes. If the Property Trustee
fails to enforce its rights under any series of Junior Subordinated Notes, to
the fullest extent permitted by applicable law, any holder of related
Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Property Trustee's rights under such series of Junior
Subordinated Notes without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
a holder of Preferred Securities may institute a legal proceeding directly
against the Company, without first instituting a legal proceeding against the
Property Trustee or any other person or entity, for enforcement of payment to
such holder of principal of or interest on Junior Subordinated Notes of the
related series having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes of such series.
If the Company fails to make payments under any Guarantee, such Guarantee
provides a mechanism whereby the holders of the Preferred Securities to which
such Guarantee relates may direct the Guarantee Trustee to enforce its rights
thereunder. In addition, any holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce the Guarantee
Trustee's rights under the related Guarantee without first instituting a legal
proceeding against the Guarantee Trustee or any other person or entity.
Each Guarantee, the Subordinated Note Indenture, the Junior Subordinated
Notes of the related series, the related Trust Agreement and the related
Agreement as to Expenses and Liabilities, as described above, constitute a
full and unconditional guarantee by the Company of the payments due on the
related series of Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless Junior Subordinated Notes of the related series are
distributed in connection therewith, the holders of Preferred Securities of
such Trust will be entitled to receive, out of assets legally available for
distribution to holders, a liquidation distribution in cash as described in
the applicable Prospectus Supplement. Upon any voluntary or involuntary
liquidation or bankruptcy of the Company, the Property Trustee, as holder of
the related series of Junior Subordinated Notes, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and
interest, before any stockholders of the Company receive payments or
distributions. Because the Company is guarantor under each Guarantee and has
agreed to pay for all costs, expenses and liabilities of each Trust (other
than the Trust's obligations to holders of the Preferred Securities) pursuant
to the related Agreement as to Expenses and Liabilities, the positions of a
holder of Preferred Securities and a holder of Junior Subordinated Notes of
the related series relative to other creditors and to stockholders of the
Company in the event of liquidation or bankruptcy of the Company would be
substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note
Indenture. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness, the subordination provisions of the Junior
Subordinated Notes provide that no payments may be made in respect of the
Junior Subordinated Notes 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 the Junior Subordinated Notes of any series would
constitute an Event of Default under the Subordinated Note Indenture with
respect to the Junior Subordinated Notes of such series except that failure to
make interest payments on the Junior Subordinated Notes of such series will
not be an Event of Default during an extension period as described in the
applicable Prospectus Supplement.
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PLAN OF DISTRIBUTION
The Company may sell the Senior Notes and the Junior Subordinated Notes and
the Trusts may sell the Preferred Securities in one or more of the following
ways from time to time: (i) to underwriters for resale to the public or to
institutional investors; (ii) directly to institutional investors; or (iii)
through agents to the public or to institutional investors. The Prospectus
Supplement with respect to each series of Senior Notes, Junior Subordinated
Notes or Preferred Securities will set forth the terms of the offering of such
Senior Notes, Junior Subordinated Notes or Preferred Securities, including the
name or names of any underwriters or agents, the purchase price of such Senior
Notes, Junior Subordinated Notes or Preferred Securities and the proceeds to
the Company or the applicable Trust from such sale, any underwriting discounts
or agency fees and other items constituting underwriters' or agents'
compensation, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchange on which
such Senior Notes, Junior Subordinated Notes or Preferred Securities may be
listed.
If underwriters participate in the sale, such Senior Notes, Junior
Subordinated Notes or Preferred Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Senior Notes, Junior Subordinated
Notes or Preferred Securities will be subject to certain conditions precedent
and the underwriters will be obligated to purchase all of such series of
Senior Notes, Junior Subordinated Notes or Preferred Securities, if any are
purchased.
Underwriters and agents may be entitled under agreements entered into with
the Company and/or the applicable Trust to indemnification against certain
civil liabilities, including liabilities under the 1933 Act. Underwriters and
agents may engage in transactions with, or perform services for, the Company
in the ordinary course of business.
Each series of Senior Notes, Junior Subordinated Notes or Preferred
Securities will be a new issue of securities and will have no established
trading market. Any underwriters to whom Senior Notes, Junior Subordinated
Notes or Preferred Securities are sold for public offering and sale may make a
market in such Senior Notes, Junior Subordinated Notes or Preferred
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The Senior Notes,
Junior Subordinated Notes or Preferred Securities may or may not be listed on
a national securities exchange.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Company and the Trusts by
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to the Company and the Trusts. The validity of the Senior Notes, the
Junior Subordinated Notes, the Guarantees and certain matters relating thereto
will be passed upon on behalf of the Company by Eaton and Cottrell, P.A.,
Gulfport, Mississippi, and by Troutman Sanders LLP, Atlanta, Georgia. Certain
legal matters will be passed upon for the underwriters by Dewey Ballantine
LLP, New York, New York.
19
EXPERTS
The financial statements and schedules of the Company included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
Statements as to matters of law and legal conclusions in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, relating to
titles to property of the Company under "Item 2--Properties--Titles to
Property," and relating to the Company under "Item 1--Business--Regulation,"
"Item 1--Business--Rate Matters" and "Item 1--Business--Competition," have
been reviewed by Eaton and Cottrell, P.A., general counsel for the Company,
and such statements are made upon the authority of such firm as experts.
20
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, MISSISSIPPI POWER
CAPITAL TRUST [ ] OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR MISSISSIPPI POWER CAPITAL
TRUST [ ] SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Summary of Offering...................................................... S-4
Risk Factors............................................................. S-8
Mississippi Power Capital Trust [ ]..................................... S-11
Capitalization........................................................... S-12
Accounting Treatment..................................................... S-12
Description of the Preferred Securities.................................. S-13
Description of the Series C Junior Subordinated Notes.................... S-23
Relationship Among the Preferred Securities, the Series Junior
Subordinated Notes and the Guarantee.................................... S-24
Certain Federal Income Tax Considerations................................ S-26
Underwriting............................................................. S-29
Legal Opinions........................................................... S-29
Glossary................................................................. S-30
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 2
Selected Information..................................................... 3
Mississippi Power Company................................................ 4
The Trusts............................................................... 5
Accounting Treatment..................................................... 5
Use of Proceeds.......................................................... 5
Recent Results of Operations............................................. 5
Description of the Senior Notes.......................................... 6
Description of the Junior Subordinated Notes............................. 9
Description of the Preferred Securities.................................. 14
Description of the Guarantees............................................ 15
Relationship Among the Preferred Securities, the Junior Subordinated
Notes and the Guarantees................................................ 17
Plan of Distribution..................................................... 19
Legal Matters............................................................ 19
Experts.................................................................. 20
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[ ] PREFERRED SECURITIES
MISSISSIPPI POWER
CAPITAL TRUST [ ]
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT
$25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
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PROSPECTUS SUPPLEMENT
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of issuance and distribution, other than underwriting
discounts and commissions, to be borne by the Company are as follows:
EACH
INITIAL ADDITIONAL
SALE SALE
-------- ----------
*Filing Fees--Securities and Exchange Commission--
registration statement................................... $118,000 $ --
Charges of trustees (including counsel).................. 17,000 17,000
*Listing fees of New York Stock Exchange.................. 86,300 --
Printing and preparation of registration statement,
prospectus, etc. ........................................ 40,000 10,000
Rating fees--
Moody's Investors Service, Inc. ........................ 15,000 15,000
Standard & Poor's Corporation........................... 63,500 --
Duff and Phelps, Inc. .................................. 20,000 12,500
Services of Southern Company Services, Inc. ............. 40,000 10,000
Fees and expenses of counsel............................. 65,000 35,000
Blue sky fees and expenses............................... 3,500 3,500
Fees of accountants, Arthur Andersen LLP................. 40,000 20,000
Miscellaneous, including telephone charges and traveling
expenses................................................. 11,700 7,000
-------- --------
Total................................................. $520,000 $130,000
======== ========
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* The Prospectus Supplement will reflect actual filing fees and listing fees
based upon the amount of the related offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 79-4-8.51 of the Mississippi Business Corporation Act (the
"Act") gives a corporation the authority to indemnify an individual who was, is
or is threatened to be made a defendant or respondent in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative and whether formal or informal,
because he is or was a director of the corporation or, who, while a director of
the corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
entity, against liability incurred in the proceeding if he conducted himself in
good faith; and he reasonably believed, in the case of conduct in his official
capacity, that his conduct was in the best interests of the corporation, and, in
all other cases, that his conduct was at least not opposed to the best interests
of the corporation, and, in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful; or he engaged in conduct
which broader indemnification has been made permissible or obligatory under a
provision of the articles of incorporation. Said section also provides that
unless ordered by a court, a corporation may not indemnify a director thereunder
in connection with a proceeding by or in the right of the corporation, except
for reasonable expenses incurred in connection with the proceeding if it is
determined that the director has met the relevant standard of conduct, or in
connection with a proceeding with respect to conduct for which the director was
adjudged liable to the corporation on the basis that he received a financial
benefit to which he was not entitled, whether or not involving action in his
official capacity. Section 79-4-8.52 of the Act provides that a corporation
shall indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
was a director of the corporation against reasonable expenses incurred by him in
connection with the proceeding. Section 79-4-8.56 of the Act provides that a
corporation may indemnify an officer of the corporation who is a party to a
proceeding because he is an officer of the corporation to the same extent as to
a director; and if he is an officer but not a director or is an officer who is
also a director if the basis on which he is made a party to the proceeding is an
act or omission solely as an officer, to such further extent as may be provided
by the articles of incorporation, the by-laws, a resolution of the board of
directors or contract except for (A) liability in connection with a proceeding
by or in the right of the corporation other than for reasonable expenses
incurred in connection with the proceeding or (B) liability arising out of
conduct that constitutes (i) receipt by him of a financial benefit to
II-1
which he is not entitled, (ii) an intentional infliction of harm on the
corporation or the shareholders, or (iii) an intentional violation of criminal
law; and that an officer of the corporation who is not a director is entitled
to mandatory indemnification under Section 79-4-8.52 to the same extent to
which a director may be entitled to indemnification.
Section 4.01 of the By-laws of the Company provides in pertinent part as
follows:
To the fullest extent permitted by law, the Company shall indemnify each
person made, or threatened to be made, a party to any threatened, pending,
or completed claim, action, suit or proceeding, whether civil or criminal,
administrative or investigative, and whether by or in the right of the
Company or otherwise, by reason of the fact that such person, or such
person's testator or intestate, is or was a director, officer or was an
employee of the Company holding one or more management positions through
and inclusive of department managers (but not positions below the level of
department managers) (such positions being hereinafter referred to as
"Management Positions") or is or was serving at the request of the Company
as a director, officer, employee, agent or trustee of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise, in any capacity at the request of the Company, against all loss
and expense actually or reasonably incurred by him including, without
limiting the generality of the foregoing, judgments, fines, penalties,
liabilities, sanctions and amounts paid in settlement and attorney's fees
and disbursements actually and necessarily incurred by him in defense of
such action or proceeding, or any appeal therefrom. The indemnification
provided by this Section shall inure to the benefit of the heirs, executors
and administrators of such person.
In any case in which a director, officer of the Company or employee of
the Company holding one or more Management Positions requests
indemnification with respect to the defense of any such claim, action, suit
or proceedings, the Company may advance expenses (including attorney's
fees) incurred by such person prior to the final disposition of such claim,
action, suit or proceeding, as authorized by the Board of Directors in the
specific case, upon receipt of a written undertaking by or on behalf of
such person to repay amounts advanced if it shall ultimately be determined
that such person was not entitled to be indemnified by the Company under
this Section or otherwise; provided, however, that the advancement of such
expenses shall not be deemed to be indemnification unless and until it
shall ultimately be determined that such person is entitled to be
indemnified by the Company. Such a person claiming indemnification shall be
entitled to indemnification upon a determination that no judgment or other
final adjudication adverse to such person has established that such
person's acts were committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of action so
adjudicated, or such person personally obtained an economic benefit
including a financial profit or other advantage to which such person was
not legally entitled.
Without limiting the generality of the foregoing provision, no former,
present or future director or officer of the Company or employee of the
Company holding one or more management positions, or his heirs, executors
or administrators, shall be liable for any undertaking entered into by the
Company or its subsidiaries or affiliates as required by the Securities and
Exchange Commission pursuant to any rule or regulation of the Securities
and Exchange Commission now or hereafter in effect or orders issued
pursuant to the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any undertaking entered into by the Company due to
environmental requirements including all legally enforceable environmental
compliance obligations imposed by federal, state or local statute,
regulation, permit, judicial or administrative decree, order and judgment
or other similar means, or any undertaking entered into by the Company
pursuant to any approved Company compliance plan or any federal or state or
municipal ordinance which directly or indirectly regulates the Company, or
its parent by reason of their being holding or investment companies, public
utility companies, public utility holding companies or subsidiaries of
public utility holding companies.
The foregoing rights shall not be exclusive of any other rights to which
any such director, officer or employee may otherwise be entitled and shall
be available whether or not the director, officer or employee continues to
be a director, officer or employee at the time of incurring any such
expenses and liabilities.
The Company has an insurance policy covering its liabilities and expenses
which might arise in connection with its lawful indemnification of its
directors and officers for certain of their liabilities and expenses and also
covering its officers and directors against certain other liabilities and
expenses.
II-2
ITEM
Item 16. EXHIBITS.
Exhibits.
| Exhibit Number | ||
| 1.1 | —Form of Underwriting Agreement relating to | |
| 1.2 | —Form of Underwriting Agreement relating to | |
| 1.3 | —Form of Underwriting Agreement relating to | |
| 1.4 | —Form of Underwriting Agreement relating to the Junior Subordinated Notes.* | |
| 4.1 | —Senior Note Indenture dated as of May 1, 1998 between | |
| 4.2 | —Form of Supplemental Indenture to Senior Note Indenture to be used in connection with the issuance of Senior Notes.* | |
| 4.3 | —Form of Subordinated Note Indenture | |
| 4.4 | —Form of Supplemental Indenture to Subordinated Note Indenture to be used in connection with the issuance of Junior Subordinated | |
| 4.5 | —Articles of Incorporation of the Company, articles of merger of Mississippi Power Company (a Maine corporation) into the Company and articles of amendment to the articles of incorporation of the Company through April 4, 2004 (Designated in Registration No. | |
| 4.6 | —Form of | |
| 4.7 | —Form of | |
| 4.8 | —Form of Senior Note (included in Exhibit 4.2 above). | |
| 4.9 | —Form of Junior Subordinated Note (included in Exhibit 4.4 above). | |
| 5.1 | —Opinion of Troutman Sanders LLP. | |
| 12.1 | —Computation of ratio of earnings to fixed charges.*** | |
| 12.2 | —Computation of ratio of earnings to fixed charges plus preferred dividend requirements (pre-income tax basis).*** | |
| 23.1 | —Consent of | |
| 23.2 | —Consent of Troutman Sanders LLP (included in Exhibit | |
| 24.1 | —Powers of Attorney and Resolution.*** | |
| 25.1 | —Statement of Eligibility under Trust Indenture Act of 1939, as amended, of |
| 25.2 | —Statement of Eligibility under Trust Indenture Act of 1939, as amended, of |
II-1
Exhibits listed above which have heretofore been filed with the Commission and which were designated as noted above are hereby incorporated herein by reference and made a part hereof with the same effect as if filed herewith.
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* To be subsequently filed or incorporated by reference.
ITEM 17. UNDERTAKINGS.
(a) Undertaking related to Rule 415 offering:
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement; Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, S-8 or F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-4
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Undertaking related to filings incorporating subsequent Securities
Exchange Act of 1934 documents by reference:
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Undertaking related to acceleration of effectiveness:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrants
| * | To be subsequently filed or incorporated by reference. |
| ** | To be subsequently filed or incorporated by reference or filed separately pursuant to the
II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Mississippi Power Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this amendment to registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 28th day of August, 2008. MISSISSIPPI POWER COMPANY By: ANTHONY J. TOPAZI President and Chief Executive Officer By: /s/WAYNE BOSTON Attorney-in-fact II-3 Pursuant to the requirements of the Securities Act of 1933, this amendment to registration statement has been signed by the following directors and officers of Mississippi Power Company in the capacities and on the date indicated.
By /s/WAYNE BOSTON August 28, 2008 (Wayne Boston, Attorney-in-fact) II-4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||