Filed Pursuant to Rule 424(b)(2)
Registration No. 333-40876
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 13, 2000
$200,000,000
Sunoco, Inc.
[SUNOCO, INC. LOGO]
6 3/4% Notes Due April 1, 2011
------------
We will pay interest on the Notes each April 1 and October 1. The first
interest payment will be made on October 1, 2001. We may redeem the Notes
prior to maturity.
Underwriting
Discounts
Price to and Proceeds to
Public(1) Commissions Sunoco(1)
------------ ------------ ------------
Per Note................................... 99.426% 0.65% 98.776%
Total...................................... $198,852,000 $1,300,000 $197,552,000
(1) Plus accrued interest, if any, from March 29, 2001.
Delivery of the Notes, in book-entry form only, will be made on or about
March 29, 2001.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the prospectus to which it relates is truthful
or complete. Any representation to the contrary is a criminal offense.
Credit Suisse First Boston
Lehman Brothers Salomon Smith Barney
First Union Securities, Inc.
McDonald Investments Inc.
A KeyCorp Company
Tokyo-Mitsubishi International plc
The date of this prospectus supplement is March 26, 2001.
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TABLE OF CONTENTS
Page
----
Prospectus Supplement
Sunoco.............................. S-3
Ratio of Earnings to Fixed Charges.. S-3
Use of Proceeds..................... S-3
Capitalization...................... S-4
Description of Notes................ S-5
Certain United States Federal Income
Tax Considerations................. S-7
Pennsylvania Taxes.................. S-8
Underwriting........................ S-9
Notice to Canadian Residents........ S-10
Forward-Looking Information......... S-11
Page
----
Prospectus
About This Prospectus.............. 2
Where You Can Find More
Information....................... 3
Incorporation of Certain Documents
by Reference...................... 3
Forward-Looking Information........ 4
About Sunoco....................... 5
About Sunoco Capital I and Sunoco
Capital II........................ 6
Use of Proceeds.................... 6
Ratio of Earnings to Fixed Charges. 7
Description of the Debt Securities. 7
Description of the Equity
Securities........................ 15
Description of the Warrants........ 18
Description of the Trust Preferred
Securities........................ 18
Description of the Trust Preferred
Securities Guarantees............. 20
Plan of Distribution............... 23
Legal Opinions..................... 24
Experts............................ 24
------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may be used only where it is
legal to sell these securities. The information in this document may only be
accurate on the date of this document.
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SUNOCO
As used in this Prospectus Supplement and the accompanying Prospectus,
except as the context otherwise requires, references to "us," "we," "our" and
"Sunoco" mean Sunoco, Inc., together with its consolidated subsidiaries.
Our headquarters are at 1801 Market Street, Philadelphia, PA 19103-1699. Our
telephone number is (215) 977-3000 and our Internet website address is
www.SunocoInc.com.
We were incorporated in Pennsylvania in 1971. We or our predecessors have
been active in the petroleum industry since 1886. We operate seven business
units that compete in three primary market segments--as a leading independent
domestic refiner-marketer of petroleum products; as a significant and growing
manufacturer of targeted, high growth petrochemicals; and as a unique
technologically-advantaged manufacturer of coke for use in the steel industry.
RATIO OF EARNINGS TO FIXED CHARGES
The following are the ratios of earnings to fixed charges for each of the
fiscal years in the five-year period ended December 31, 2000.
Years Ended December 31,
----------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
5.71 2.26 4.36 4.25 N/A
The ratio of earnings to fixed charges has been computed using principally
pretax earnings from continuing operations before deducting fixed charges.
Fixed charges consist of interest cost and debt expense of continuing
operations (including amounts capitalized), the proportionate share of
interest cost and debt expense of 50 percent-owned-but-not-controlled
affiliated companies and one-third of rental expense relating to operating
leases (which is that portion deemed to be interest). For the year ended
December 31, 1996, earnings were inadequate to cover fixed charges by $407
million, largely as a result of the $356 million provision for write-down of
assets and other matters in 1996.
USE OF PROCEEDS
The net proceeds from the sale of the Notes, after deducting underwriting
compensation and estimated fees and expenses, are expected to be approximately
$197 million and will be used (1) to repay at maturity $150,000,000 aggregate
principal amount of our 7.95% Notes due 2001, (2) to repay certain of our
short-term debt and/or (3) for general corporate purposes. Pending these uses,
the net proceeds may be invested temporarily in cash and cash equivalents or
short-term investments or used to reduce our other short-term indebtedness.
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CAPITALIZATION
The following table sets forth our capitalization as of December 31, 2000
(1) on an historical basis and (2) as adjusted to reflect the issuance of $200
million of commercial paper and the assumption of $166 million of long-term
debt in connection with the acquisition of Aristech Chemical Corporation,
effective January 1, 2001, and to reflect this offering of Notes and the
application of the net proceeds from this offering to repay our $150 million
7.95% Notes due 2001 and $50 million of short-term borrowings. You should read
this table in conjunction with our consolidated financial statements and
related notes that we have incorporated by reference in the accompanying
Prospectus.
As of December 31, 2000
-----------------------
Historical As Adjusted
----------- -----------
(in millions)
Debt:
Short-term borrowings.................................. $ -- $ 150
Current portion of long-term debt...................... 2 2
Long-term debt:
7.95% Notes due 2001.................................. 150 --
6 3/4% Notes due 2011................................. -- 200
Aristech debt assumed................................. -- 166
Other long-term debt.................................. 783 783
------ ------
Total debt.......................................... 935 1,301
------ ------
Shareholders' equity:
Common stock, par value $1 per share................... 132 132
Capital in excess of par value......................... 1,403 1,403
Earnings employed in the business...................... 1,950 1,950
------ ------
3,485 3,485
Less common stock held in treasury, at cost............ 1,783 1,783
------ ------
Total shareholders' equity.......................... 1,702 1,702
------ ------
Total capitalization................................ $2,637 $3,003
====== ======
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DESCRIPTION OF NOTES
General
The following description of the terms of the 6 3/4% Notes due April 1, 2011
(the "Notes") offered hereby supplements and modifies the description of the
general terms and provisions of the Debt Securities set forth in the
accompanying Prospectus, to which reference is hereby made. The Notes will be
issued under the Indenture dated as of June 30, 2000 between Sunoco and
Citibank, N.A., as Trustee (the "Senior Indenture"). The Notes will mature on
April 1, 2011. The Notes will bear interest at the rate of 6 3/4% per annum
from March 29, 2001 or from the most recent interest payment date to which
interest has been paid or provided for, payable semiannually on April 1 and
October 1, of each year, commencing on October 1, 2001 to the persons in whose
names the Notes are registered at the close of business on March 15 or
September 15, as the case may be, next preceding such interest payment date.
Interest will be calculated on the basis of a 360-day year, consisting of
twelve 30-day months. The Notes will be issued only in registered form without
coupons in denominations of $1,000 and integral multiples thereof. Principal
and interest will be payable, and the Notes will be transferable or
exchangeable, at the office or agency of Sunoco maintained for such purposes
in the Borough of Manhattan, The City of New York, provided that payment of
interest on any Notes may, at the option of Sunoco, be made by check mailed to
the registered holders thereof.
Optional Redemption
The Notes will be redeemable in whole or in part, at our option at any time,
at a redemption price equal to the greater of (1) 100% of the principal amount
of such Notes to be redeemed or (2) the sum of the present values of the
Remaining Scheduled Payments (as hereinafter defined) on such Notes,
discounted to the redemption date on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate (as hereinafter
defined) plus 30 basis points, plus accrued interest on the principal amount
being redeemed to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes to be redeemed that would be used, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the arithmetic average of the bid and ask prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day before such redemption date, as published in the daily
statistical release (or any successor release) by the Federal Reserve Bank of
New York and designated "Composite 3:30 p.m. Quotations for U.S. Government
Securities" or (2) if such release (or any successor release) is not available
or does not contain such prices on such business day, the arithmetic average
of the Reference Treasury Dealer Quotations for such redemption date.
"Reference Treasury Dealer" means Credit Suisse First Boston Corporation and
its successors; provided, however, that if Credit Suisse First Boston
Corporation ceases to be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
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"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the arithmetic average, as determined
by the Trustee, of the bid and ask prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer by 5:00 p.m. on the
third business day before such redemption date.
"Remaining Scheduled Payments" means, the remaining scheduled payments of
the principal of the Notes to be redeemed and interest thereon that would be
due after the related redemption date but for such redemption, provided,
however, that, if such redemption date is not an interest payment date, the
amount of the next succeeding scheduled interest payment thereon will be
reduced by the amount of interest accrued thereon to such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the Notes or portions thereof
called for redemption.
Defeasance
The defeasance provisions of the Senior Indenture shall apply to the Notes.
Additional Notes
The Notes will initially be limited to $200,000,000 aggregate principal
amount. We may, without the consent of the holders of the Notes, create and
issue additional notes ranking equally with the Notes in all respects so that
such additional notes shall be consolidated and form a single series with the
Notes and shall have the same terms as to status, redemption or otherwise as
such Notes. No additional notes may be issued if an Event of Default has
occurred with respect to the Notes.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations for beneficial owners of the Notes that hold the Notes as
capital assets and are "non-United States persons" under the Internal Revenue
Code of 1986, as amended (which we refer to as the "Code"). Under the Code, a
"non-United States person" means a person that is not any of the following:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in or under the laws
of the United States or any political subdivision thereof;
. an estate the income of which is subject to United States federal income
taxation regardless of its source; or
. a trust that either (1) is subject to the primary supervision of a court
within the United States and the control of one or more United States
persons, or (2) has a valid election in effect under applicable United
States Treasury regulations to be treated as a United States person.
This summary is based on current law that is subject to change (perhaps
retroactively), is for general purposes only and should not be considered tax
advice. This summary does not represent a detailed description of the federal
income tax consequences to you in light of your particular circumstances. In
addition, it does not represent a detailed description of the United States
federal income tax consequences applicable to you if you are subject to
special treatment under the United States federal income tax laws (including
if you are a "controlled foreign corporation," "passive foreign investment
company" or "foreign personal holding company"). We cannot assure you that a
change in law will not alter significantly the tax considerations that we
describe in this summary.
If a partnership holds the Notes, the tax treatment of a partner will
generally depend upon the status of the partner and the activities of the
partnership. If you are a partner of a partnership holding the Notes, you
should consult your tax advisor.
You should consult your own tax advisor concerning the particular United
States federal income tax consequences to you of the ownership of the Notes,
as well as the consequences to you arising under the laws of any other taxing
jurisdiction.
United States Federal Withholding Tax
The 30% United States federal withholding tax will not apply to any payment
of principal or interest on the Notes provided that:
. you do not actually (or constructively) own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and the United States Treasury regulations;
. you are not a controlled foreign corporation that is related to us
through stock ownership;
. you are not a bank whose receipt of interest on the Notes is described
in section 881(c)(3)(A) of the Code; and
. (1) you provide your name and address on an Internal Revenue Service
Form W-8BEN (or successor form), and certify, under penalties of
perjury, that you are not a United States person, or (2) you hold your
Notes through certain foreign intermediaries and you satisfy the
certification requirements of applicable United States Treasury
regulations. Special certification rules apply to certain non-United
States holders that are entities rather than individuals.
If you cannot satisfy the requirements described above, payments of interest
made to you will be subject to the 30% United States federal withholding tax,
unless you provide us with a properly executed (1) Internal Revenue Service
Form W-8BEN (or successor form) claiming an exemption from or reduction in
withholding under the benefit of an applicable tax treaty or (2) Internal
Revenue Service Form W-8ECI (or successor form)
S-7
stating that interest paid on a Note is not subject to withholding tax because
it is effectively connected with your
conduct of a trade or business in the United States (see "United States
Federal Income Tax" below).
The 30% United States federal withholding tax will generally not apply to
any gain or income that you realize on the sale, exchange, retirement or other
disposition of your Notes.
United States Federal Estate Tax
Your estate will not be subject to United States federal estate tax on Notes
beneficially owned by you at the time of your death, provided that (1) you do
not own 10% or more of the total combined voting power of all classes of our
voting stock (within the meaning of the Code and the United States Treasury
regulations) and (2) interest on the Notes would not have been, if received at
the time of your death, effectively connected with your conduct of a trade or
business in the United States.
United States Federal Income Tax
If you are engaged in a trade or business in the United States and interest
on the Notes is effectively connected with the conduct of that trade or
business, you will be subject to United States federal income tax on that
interest on a net income basis (although exempt from the 30% withholding tax)
in the same manner as if you were a United States person as defined under the
Code. In addition, if you are a foreign corporation, you may be subject to a
branch profits tax equal to 30% (or lower applicable treaty rate) of your
earnings and profits for the taxable year, subject to certain adjustments. For
this purpose, interest on the Notes will be included in earnings and profits.
Any gain realized on the disposition of a Note generally will not be subject
to United States federal income tax unless (1) that gain is effectively
connected with your conduct of a trade or business in the United States, or
(2) you are an individual who is present in the United States for 183 days or
more in the taxable year of that disposition, and certain other conditions are
met.
Information Reporting and Backup Withholding
In general, you will not be subject to information reporting or backup
withholding with respect to payments that we make to you provided that we do
not have actual knowledge that you are a United States person and we have
received from you the certification described above in the fourth bullet point
under "United States Federal Withholding Tax."
In addition, you will not be subject to information reporting or backup
withholding with respect to the proceeds of the sale of a Note within the
United States or conducted through certain United States-related financial
intermediaries, provided that the payor receives the certification described
above and does not have actual knowledge that you are a United States person,
as defined under the Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against your United States federal income tax liability
provided the required information is furnished to the Internal Revenue
Service.
PENNSYLVANIA TAXES
Individuals who are residents of Pennsylvania and who hold debt securities
for their own account (either directly or indirectly) will not be subject to
existing county personal property taxes in Pennsylvania with respect to the
debt securities, but we are required to deduct from interest paid to
individual owners of debt securities who are residents of Pennsylvania and to
remit to Pennsylvania the Corporate Loans Tax, which is presently at the
annual rate of four mills ($.004) per $1 principal amount of debt securities
owned by such individuals, subject to adjustment if interest paid in any year
represents more or less than interest for a full year. The Corporate Loans Tax
also will be imposed on interest payments received by (1) Pennsylvania
resident partnerships and (2) by Pennsylvania resident corporations that
receive such interest payments not for their own account, but rather as
trustees, executors, administrators or guardians.
S-8
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement which consists of a terms agreement dated March 26, 2001 and the
underwriting agreement basic provisions dated July 13, 2000, we have agreed to
sell to the underwriters named below, for whom Credit Suisse First Boston
Corporation is acting as a representative, the following principal amounts of
the Notes:
Principal
Underwriters Amount of Notes
------------ ---------------
Credit Suisse First Boston Corporation....................... $120,000,000
Lehman Brothers Inc. ........................................ 20,000,000
Salomon Smith Barney Inc. ................................... 20,000,000
First Union Securities, Inc. ................................ 13,334,000
McDonald Investments Inc..................................... 13,333,000
Tokyo-Mitsubishi International plc........................... 13,333,000
------------
Total...................................................... $200,000,000
============
The underwriting agreement provides that the underwriters are obligated to
purchase all of the Notes if any are purchased. The underwriting agreement
also provides that if an underwriter defaults, the purchase commitments of
non-defaulting underwriters may be increased or the offering of Notes may be
terminated.
The underwriters propose to offer the Notes initially at the offering price
on the cover page of this Prospectus Supplement and to selling group members
at that price less a concession of 0.40% of the principal amount per Note. The
underwriters and selling group members may allow a discount of 0.25% of such
principal amount per Note on sales to certain other broker/dealers. After the
initial public offering, the public offering price and concession and discount
to broker/dealers may be changed by the representative.
We estimate that our out-of-pocket expenses for this offering will be
approximately $275,000.
The Notes are a new issue of securities with no established trading market.
One or more of the underwriters intends to make a secondary market for the
Notes. However, they are not obligated to do so and may discontinue making a
secondary market for the Notes at any time without notice. No assurance can be
given as to how liquid the trading market for the Notes will be.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act or to contribute to payments which the underwriters may be
required to make in respect thereof.
The representative, on behalf of the underwriters, may engage in over-
allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Syndicate covering transactions involve purchases of the Notes in the
open market after the distribution has been completed in order to cover
syndicate short positions.
. Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the Notes originally sold by such syndicate
member are purchased in a stabilizing transaction or a syndicate
covering transaction to cover syndicate short positions.
S-9
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
Notes or preventing or retarding a decline in the market price of the Notes.
As a result, the price of the Notes may be higher than the price that might
otherwise exist in the open market. These transactions, if commenced, may be
discontinued at any time.
The underwriters and/or their affiliates have in the past and may in the
future provide investment and commercial banking and other related services to
Sunoco in the ordinary course of business for which the underwriters and/or
their affiliates have received or may receive customary fees and reimbursement
of their out-of-pocket expenses.
Any sales to U.S. investors by Tokyo-Mitsubishi International plc will be
made through its affiliate, Tokyo-Mitsubishi Securities (USA), Inc.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Notes are made. Any resale of the Notes in Canada must be made under
applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of the Notes.
Representations of Purchasers
By purchasing Notes in Canada and accepting a purchase confirmation, a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that
. the purchaser is entitled under applicable provincial securities laws to
purchase the Notes without the benefit of a prospectus qualified under
those securities laws,
. where required by law, that the purchaser is purchasing as principal and
not as agent, and
. the purchaser has reviewed the text above under "Resale Restrictions."
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.
Notice to British Columbia Residents
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any
S-10
Notes acquired by such purchaser in this offering. The report must be in the
form attached to British Columbia Securities Commission Blanket Order BOR
#95/17, a copy of which may be obtained from us. Only one report must be filed
for Notes acquired on the same date and under the same prospectus exemption.
Taxation and Eligibility for Investment
Canadian purchasers of Notes should consult their own legal and tax advisors
with respect to the tax consequences of an investment in the Notes in their
particular circumstances and about the eligibility of the Notes for investment
by the purchaser under relevant Canadian legislation.
FORWARD-LOOKING INFORMATION
Statements and financial discussion and analysis contained in this
Prospectus Supplement and the accompanying Prospectus (including documents
incorporated therein by reference) that are not historical facts are forward-
looking statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements generally will be
accompanied by words such as "anticipate," "believe," "estimate," "expect,"
"forecast," "intend," "possible," "potential," "predict," "project," or other
similar words that convey the uncertainty of future events or outcomes.
Although we believe these forward-looking statements are reasonable, they are
based upon a number of assumptions concerning future conditions, any or all of
which may ultimately prove to be inaccurate. Forward-looking statements
involve a number of risks and uncertainties. The important factors that could
cause actual results to differ materially from the forward-looking statements
include, without limitation:
. changes in industry-wide refined product and chemical margins;
. variation in commodity prices and crude oil supply;
. volatility in the marketplace which may affect market supply and demand
for our products;
. increased competition;
. changes in the reliability and efficiency of our operating facilities,
or those of third parties;
. changes in the level of operating expenses and hazards common to
operating facilities (including equipment malfunction, explosions,
fires, oil spills, and the effects of severe weather conditions);
. changes in the expected level of environmental remediation spending;
. delays related to work on facilities and the issuance of applicable
permits;
. changes in product specifications;
. availability and pricing of oxygenates such as MTBE;
. phase-outs or restrictions on the use of MTBE;
. political and economic conditions in international markets in which we
operate;
. changes in the availability of debt and equity financing resulting in
increased costs or reduced liquidity;
. risks related to labor relations;
. nonperformance by major customers or suppliers;
. general economic, financial and business conditions which could affect
our financial condition and results of operations;
. changes in applicable statutes and government regulations or their
interpretations;
. claims of our noncompliance with statutory and regulatory requirements;
and
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. changes in the status of litigation to which we are a party.
The factors identified above are believed to be important factors (but not
necessarily all of the important factors) that could cause actual results to
differ materially from those expressed in any forward-looking statement made
by us. Unpredictable or unknown factors not discussed herein could also have
material adverse effects on forward-looking statements. All forward-looking
statements included in this Prospectus Supplement and the accompanying
Prospectus (including documents incorporated therein by reference) are
expressly qualified in their entirety by the foregoing cautionary statements.
We undertake no obligation to update publicly any forward-looking statement
(or its associated cautionary language) whether as a result of new information
or future events.
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PROSPECTUS
$1,500,000,000
SUNOCO, INC.
Debt Securities
Preference Stock
Common Stock
Warrants
SUNOCO CAPITAL I
SUNOCO CAPITAL II
Trust Preferred Securities
Sunoco, Inc. may offer and sell from time to time:
. unsecured debt securities consisting of senior notes and debentures
and subordinated notes and debentures,
. shares of preference stock in one or more series, which may be
converted into or exchanged for debt securities or common stock,
. shares of common stock, or
. warrants to purchase debt securities, preference stock, common stock
or other securities.
Sunoco Capital I and Sunoco Capital II may offer and sell from time to time:
. trust preferred securities.
The aggregate initial offering price of the securities that we will offer
will not exceed $1,500,000,000. We will offer these securities in amounts, at
prices and on terms to be determined by market conditions at the time of our
offering.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any prospectus
supplements carefully before you invest in these securities. This prospectus
may not be used to consummate sales of these securities unless accompanied by
a prospectus supplement.
These securities may be sold to underwriters, including Credit Suisse First
Boston, or directly to purchasers, agents, dealers or through brokers. The
names of any other underwriters or of any dealers or agents will be identified
in the prospectus supplement.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------
The date of this prospectus is July 13, 2000.
TABLE OF CONTENTS
Page
----
About this Prospectus...................................................... 2
Where You Can Find More Information........................................ 3
Incorporation of Certain Documents by Reference............................ 3
Forward-Looking Information................................................ 4
About Sunoco............................................................... 5
About Sunoco Capital I and Sunoco Capital II............................... 6
Use of Proceeds............................................................ 6
Ratio of Earnings to Fixed Charges......................................... 7
Description of the Debt Securities......................................... 7
Description of the Equity Securities....................................... 15
Description of the Warrants................................................ 18
Description of the Trust Preferred Securities.............................. 18
Description of the Trust Preferred Securities Guarantees................... 20
Plan of Distribution....................................................... 23
Legal Opinions............................................................. 24
Experts.................................................................... 24
1
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may from time to time sell any combination of the securities described in this
prospectus in one or more offerings up to a total offering amount of
$1,500,000,000.
We provide information to you about the securities in two separate documents
that progressively provide more specific detail:
. this prospectus, which contains general information, some of which may
not apply to your securities, and
. the accompanying prospectus supplement, which describes the specific
terms of your securities and may also add, update or change information
contained in this prospectus.
If the terms of your securities vary between the accompanying prospectus
supplement and this prospectus, you should rely on the different information
contained in the prospectus supplement.
You should read both this prospectus and any prospectus supplement together
with the additional information described below under "Where You Can Find More
Information" to learn more about us and the securities we are offering.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at our web site www.SunocoInc.com or at the SEC's web site
www.sec.gov. You may also read and copy any document we file at the SEC's
public reference rooms at:
. 450 Fifth Street, NW, Washington, DC 20549;
. Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and
. Seven World Trade Center, New York, New York 10048.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
We have not included any separate financial information for our wholly-owned
trusts, Sunoco Capital I and Sunoco Capital II, which have no independent
operations and for which we guarantee the fee obligations relating to the
trust preferred securities. Although the trusts would normally be required to
file information with the SEC on an ongoing basis, we expect that the SEC will
exempt the trusts from this filing obligation for as long as we continue to
file our financial information with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents we have filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the SEC will automatically
update and may supersede this information. We are incorporating by reference
the documents listed below and any future filings that we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 until our offering is completed, will be automatically incorporated by
reference.
. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999, including any amendment(s) or report(s) filed for the purpose of
updating such filing; and
. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.
You may request a copy of any of the documents that we incorporate by
reference in this prospectus, at no cost, by writing or telephoning us at the
following address:
Sunoco, Inc.
Investor Relations
Ten Penn Center
1801 Market Street
Philadelphia, Pennsylvania 19103-1699
Telephone: (215) 977-6440
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with other information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on
the front of these documents.
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FORWARD-LOOKING INFORMATION
Statements and financial discussion and analysis contained in this
prospectus or any accompanying prospectus supplement that are not historical
facts are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
statements generally will be accompanied by words such as "anticipate,"
"believe," "estimate," "expect," "forecast," "intend," "possible,"
"potential," "predict," "project," or other similar words that convey the
uncertainty of future events or outcomes. Although we believe these forward-
looking statements are reasonable, they are based upon a number of assumptions
concerning future conditions, any or all of which may ultimately prove to be
inaccurate. Forward-looking statements involve a number of risks and
uncertainties. The important factors that could cause actual results to differ
materially from the forward-looking statements include, without limitation:
. changes in the reliability and efficiency of our operating facilities;
. delays related to work on facilities and the issuance of applicable
permits;
. increased competition;
. changes in industry-wide refining margins;
. changes in the level of operating expenses and hazards common to
operating facilities (including equipment malfunction, explosions,
fires, oil spills, and the effects of severe weather conditions);
. changes in the expected level of environmental remediation spending;
. changes in product specifications;
. volatility in the marketplace which may affect market supply and demand
for our products;
. availability and pricing of oxygenates such as MTBE;
. phase-outs or restrictions on the use of MTBE;
. variation in commodity prices and crude oil supply;
. political and economic conditions in international markets in which we
operate;
. changes in the availability of debt and equity financing resulting in
increased costs or reduced liquidity;
. risks related to labor relations;
. nonperformance by major customers;
. general economic, financial and business conditions which could affect
our financial condition and results of operations;
. changes in applicable statutes and government regulations or their
interpretations;
. claims of our noncompliance with statutory and regulatory requirements;
and
. changes in the status of litigation to which we are a party.
The factors identified above are believed to be important factors (but not
necessarily all of the important factors) that could cause actual results to
differ materially from those expressed in any forward-looking statement made
by us. Unpredictable or unknown factors not discussed herein could also have
material adverse effects on forward-looking statements. All forward-looking
statements included in this prospectus or any accompanying prospectus
supplement are expressly qualified in their entirety by the foregoing
cautionary statements. We undertake no obligation to update publicly any
forward-looking statement (or its associated cautionary language) whether as a
result of new information or future events.
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ABOUT SUNOCO
Our headquarters are at 1801 Market Street, Philadelphia, PA 19103-1699. Our
telephone number is (215) 977-3000, and our Internet web site address is
www.SunocoInc.com.
We were incorporated in Pennsylvania in 1971. We or our predecessors have
been active in the petroleum industry since 1886. As one of the largest
independent refining and marketing companies in the United States, we operate
five domestic refineries with a total of 730,000 barrels per day of crude oil
processing capacity, market gasoline under the Sunoco(R) brand through more
than 3,500 service stations in 17 states, sell lubricants and petrochemicals
worldwide, and operate domestic pipelines and terminals. We also manufacture
coke at facilities in Virginia and Indiana, and produce coal from mines in
Virginia.
Our operations are organized into the following seven business units:
. Sun Northeast Refining. Sun Northeast Refining manufactures gasoline,
diesel fuel, home heating oil, jet fuel, residual fuel, chemical
feedstocks and other petroleum products at refineries in Philadelphia
and Marcus Hook, Pennsylvania. Sun Northeast Refining also supplies
Sunoco Northeast Marketing and Sunoco Chemicals and sells to third-party
customers.
. Sunoco Northeast Marketing. Sunoco Northeast Marketing markets gasoline
and other petroleum products in twelve Northeastern states through
Sunoco(R) retail outlets. We also offer a broad range of merchandise at
APlus(R) convenience stores and provide automotive diagnosis and repair
at Ultra Service Centers SM.
. Sunoco Chemicals. Sunoco Chemicals manufactures aromatics, olefins and
derivatives at our Northeast refining complex and phenol plant and at
Brandenburg, Kentucky. These petrochemicals, plus others from our Toledo
refinery, are marketed primarily to customers in North America who use
them to make fibers, plastics and specialty chemicals. Sunoco Chemicals
also has a one-third interest in a Texas plant that produces MTBE, an
oxygenate additive used in reformulated gasoline.
. Sun Lubricants. Sun Lubricants manufactures base oils at facilities in
Tulsa, Oklahoma, and Yabucoa, Puerto Rico, and either sells them to
third parties or upgrades them into a full range of lubricant products--
including Sunoco(R) and Kendall(R) brands--that are marketed worldwide.
Sun Lubricants sells related fuels production into wholesale markets.
. Sunoco MidAmerica Marketing & Refining. Sunoco MidAmerica Marketing &
Refining is a regional petroleum marketer-refiner serving Ohio,
Michigan, Indiana, Kentucky and West Virginia through Sunoco(R) retail
outlets. Sunoco MidAmerica Marketing & Refining manufactures fuels and
petrochemicals at Sunoco's refinery in Toledo, Ohio, where it is also
headquartered.
. Sunoco Logistics. Sunoco Logistics manages all of the company's
transportation functions, including crude oil and product pipelines,
product terminals and trucking, rail and tank car transport, and marine
chartering. Sunoco Logistics acquires domestic crude oil and operates a
10-million-barrel crude oil import terminal in Nederland, Texas.
. Sun Coke. Sun Coke makes high-quality coke, using environmentally
superior cokemaking technology at plants in Vansant, Virginia, and East
Chicago, Indiana. Sun Coke mines metallurgical coal in Virginia, used
predominantly to supply our Vansant coke facility.
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ABOUT SUNOCO CAPITAL I AND SUNOCO CAPITAL II
Sunoco Capital I and Sunoco Capital II are Delaware business trusts formed
to raise capital for us by issuing preferred securities through this
prospectus and one or more prospectus supplements and by investing the
proceeds in subordinated debt securities issued by us.
We will directly or indirectly own all of the common securities of the
trusts. The trusts' common securities will rank equally with, and the trusts
will make payments on their common securities in proportion to, their trust
preferred securities. If an event of default occurs in respect of one of the
trusts, however, our rights as holder of the common securities to payments by
the trust will be subordinated to your rights as holder of the trust preferred
securities. We will directly acquire common securities of the trusts in an
aggregate liquidation amount equal to at least 3 percent of the total capital
of each trust.
Each of the trusts shall have a perpetual existence unless dissolved and
terminated in accordance with its declaration of trust. Each trust's business
and affairs will be conducted by the trustees we appoint. We, as sole owner of
the common securities of the trusts, are entitled to appoint, remove or
replace any of, or increase or decrease the number of, trustees for each of
the trusts. The trustees' duties and obligations are governed by the
declarations of trust. We will ensure that a majority of the trusts' trustees
are persons who are our employees or officers or affiliates and that one
trustee for each trust is a financial institution that will not be our
affiliate and that will act as property trustee and indenture trustee for
purposes of the Trust Indenture Act of 1939, pursuant to the terms set forth
in a prospectus supplement. In addition, unless the property trustee maintains
a principal place of business in the State of Delaware and meets the other
requirements of applicable law, one additional trustee for each trust will
have its principal place of business or reside in the State of Delaware.
We will pay all of the trusts' fees and expenses, including those relating
to any offering of their trust preferred securities. In addition, we have
guaranteed payments on the trust preferred securities to the extent the trusts
cannot themselves make payments on those trust preferred securities.
The office of the Delaware trustee for each of the trusts is Bankers Trust
(Delaware), E.A. Delle Donne Corporate Center, Montgomery Building, 1011
Centre Road, Suite 200, Wilmington, DE 19805-1266.Each trust's principal place
of business is c/o Sunoco, Inc., Ten Penn Center, 1801 Market Street,
Philadelphia, PA 19103-1699.
USE OF PROCEEDS
Unless we specify otherwise in any prospectus supplement, the net proceeds
(after the payment of offering expenses and underwriting discounts and
commissions) from the sale of securities offered from time to time using this
prospectus will be used for Sunoco's general corporate purposes, which may
include:
. paying or refinancing our indebtedness;
. funding working capital, capital expenditures or acquisitions;
. investing in or lending money to our subsidiaries; and
. repurchasing or redeeming our securities.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
Three Months
Ended March 31, Years Ended December 31,
--------------- ------------------------
2000 1999 1999 1998 1997 1996 1995
------- ------- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges..... 4.40 1.94 2.26 4.36 4.25 N/A .76
We have computed the ratio of earnings to fixed charges using principally
pretax earnings from continuing operations before the cumulative effect of a
change in accounting principles and before deducting fixed charges. Fixed
charges consist of interest cost and debt expense of continuing operations
(including amounts capitalized) and one-third of rental expense relating to
operating leases (which is that portion deemed to be interest). For the years
ended December 31, 1996 and 1995, earnings were inadequate to cover fixed
charges by $407 million and $36 million, respectively, largely as a result of
the $356 million and $93 million provisions for write-down of assets and other
matters in 1996 and 1995, respectively.
DESCRIPTION OF THE DEBT SECURITIES
The unsecured debt securities will either rank as senior debt or
subordinated debt, and may be issued as convertible debt securities. The
senior debt securities will be issued under an indenture dated as of June 30,
2000 between us and Citibank, N.A., as trustee. The subordinated debt
securities will be issued under an indenture dated as of May 15, 1994 between
us and Bankers Trust Company, as trustee. In this prospectus, we may refer to
the senior debt indenture and the subordinated debt indenture as the
"indentures" and the senior debt trustee and the subordinated debt trustee as
the "trustees." The following description summarizes the terms and provisions
of the indentures and debt securities, and is not complete. For more
information, you should read the indentures, copies of which have been filed
as exhibits to the registration statement which contains this prospectus.
Further terms of the debt securities will be set forth in the prospectus
supplement.
General
The debt securities will be our direct unsecured obligations. The indentures
do not limit the aggregate principal amount of debt securities that may be
issued. The debt securities may be issued from time to time in one or more
series as authorized from time to time by our board of directors or by any of
our authorized officers. The particular terms of the debt securities being
offered by this prospectus and any changes or additions to the general terms
of the debt securities will be described in the prospectus supplement relating
to the debt securities. The prospectus supplement will include the following:
. the title of the debt securities;
. the aggregate principal amount of the debt securities;
. the price of the debt securities;
. the date or dates on which the debt securities will mature and the
right, if any, to extend such date or dates;
. the rate or rates at which the debt securities will bear interest, if
any, or the method by which such rate or rates shall be determined;
. the date or dates from which interest shall accrue or the method by
which such date or dates shall be determined, the interest payment dates
on which interest shall be payable, the record dates for the
determination of holders to whom interest is payable, and, in the case
of floating rate debt securities, the notice, if any, to holders
regarding the determination of interest and the manner of giving such
notice;
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. the place or places (other than the corporate trust office of the
applicable trustee) where principal, premium or interest on the debt
securities shall be payable, and the manner in which any such principal,
premium or interest will be paid;
. any mandatory or optional sinking fund or purchase fund or similar
provisions;
. the terms and conditions upon which, including when and at what price,
the debt securities may be redeemed pursuant to any optional or
mandatory redemption provisions;
. any terms pursuant to which the debt securities may be convertible into
equity or other securities;
. whether the debt securities are to be issued in whole or in part in the
form of one or more global securities and, if so, the depositary or any
common depositary for such global securities;
. the terms and conditions, if any, upon which any global securities may
be exchanged in whole or in part for definitive debt securities;
. any index used to determine the amount of payment of principal or any
premium or interest on the debt securities;
. the application of any defeasance provisions to the debt securities;
. whether the debt securities of a series are to be issued as original
issue discount securities and the amount of discount at which they may
be issued, and the portion of the principal amount of the debt
securities which shall be payable upon declaration of acceleration of
the maturity upon an event of default (if different than the principal
amount);
. if other than U.S. dollars, the currency or currency units in which the
debt securities shall be denominated or in which payment of principal,
premium and interest on the debt securities may be made;
. any applicable U.S. federal income tax considerations;
. the date of any series of debt securities; and
. any other relevant terms of the debt securities.
All of the debt securities of a series need not be issued at the same time,
and may vary as to interest rate, maturity and other provisions. Unless
otherwise provided, a series may be reopened for issuance of additional debt
securities of such series.
The indentures contain no provisions to afford you protection if there is a
highly leveraged transaction or a change of control of Sunoco, except as may
be described under "Consolidation, Merger and Sale" below.
Senior Debt Securities
Senior debt securities will rank equally with all of our other unsecured
debt other than subordinated debt securities or other indebtedness which by
its terms is subordinated to our senior debt securities.
Subordinated Debt Securities
Subordinated debt securities will be subordinate and junior in the right of
payment to all of our present or future senior indebtedness. "Senior
indebtedness" is:
. indebtedness for borrowed money, including senior debt securities, and
. renewals, extensions, and modifications of such borrowed money,
unless it is specifically provided that such borrowed money or renewal,
extension or modification is not senior indebtedness. If we are offering
subordinated debt securities, the accompanying prospectus supplement or the
information incorporated therein by reference will set forth the approximate
amount of senior indebtedness outstanding as of a recent date.
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Upon any distribution of our assets upon our dissolution, winding up,
liquidation or reorganization, the payment of principal, premium and interest
on our subordinated debt securities will be subordinated in right of payment
to the prior payment in full of all of our senior indebtedness. By reason of
such subordination, in the event of a distribution of assets upon insolvency,
our general creditors may recover ratably more than holders of our
subordinated debt securities. However, subordination shall not apply to money
and securities held in trust to satisfy and discharge any subordinated debt
securities by legal defeasance.
If subordinated debt securities are issued to a trust in connection with the
issuance of trust preferred securities by that trust, those subordinated debt
securities subsequently may be distributed proportionately to the holders of
the trust preferred securities in connection with the dissolution of the trust
if certain events described in the prospectus supplement relating to those
trust preferred securities occur. Only one series of subordinated debt
securities will be issued to a trust in connection with the issuance of trust
preferred securities by that trust.
If subordinated debt securities are issued to a trust in connection with the
issuance of trust preferred securities by that trust, for so long as the trust
preferred securities remain outstanding we covenant:
. to maintain 100 percent ownership of the common securities of the trust
(but any permitted successor of ours under the indenture may succeed to
our ownership of the common securities);
. to use our reasonable efforts (a) to maintain the trust as a statutory
business trust (except in connection with the distribution of
subordinated debt securities to the holders of trust securities in
liquidation of the trust, the redemption of all of the trust securities
of the trust, or certain mergers, consolidations or amalgamations) and
(b) to prevent the trust from being classified as an association taxable
as a corporation or partnership for U.S. federal income tax purposes;
and
. to use our reasonable efforts to cause each holder of trust securities
to be treated as owning an undivided beneficial interest in the
subordinated debt securities.
Convertible Debt Securities
Debt securities issued under either of the indentures may provide for a
right of conversion into equity securities. The terms and conditions governing
any such conversion will be set forth in the prospectus supplement relating to
the convertible debt securities, including:
. the designation of the equity securities into which such debt securities
are convertible;
. the conversion price;
. the conversion period;
. whether conversion will be at our option or at the option of the holder
of the convertible debt securities;
. the events requiring an adjustment of the conversion price; and
. the provisions affecting conversion in the event of the redemption of
such debt securities.
Form, Exchange, Payment and Transfer
Unless otherwise specified in a prospectus supplement, we will issue the
debt securities in fully registered form without coupons and in denominations
of $1,000 (or multiples of $1,000). We will not impose a service charge for
any transfer or exchange of the debt securities, but we or the trustee may
require you to make a payment to cover any associated tax or other government
charge.
If we issue debt securities in bearer form, we will describe in the
applicable prospectus supplement the special restrictions and considerations,
including special offering restrictions and special U.S. federal income tax
considerations, applicable to those debt securities and to payment on and
transfer and exchange of those debt securities. Bearer debt securities will be
transferable by delivery.
9
Unless otherwise provided in a prospectus supplement, we will pay principal,
premium or interest, and you may surrender for payment or transfer the debt
securities, at the offices of the trustee. Alternatively, we may pay interest
by check mailed to you at your address as it appears in the security register.
We will make payment on debt securities in bearer form at such non-U.S. paying
agencies as we may choose.
Book-Entry
We may issue the debt securities of a series in whole or in part in the form
of one or more global securities that will be deposited with, or on behalf of,
a global depositary, or its nominee, identified in the prospectus supplement.
In this case, we will issue global securities in a denomination equal to the
portion of the aggregate principal amount of outstanding debt securities of
the series to be represented by such global security or securities. Unless and
until it is exchanged in whole or in part for debt securities in definitive
registered form, a global security may not be registered for transfer or
exchange except by the global depositary to a nominee for that global
depositary and except in the circumstances described in the prospectus
supplement.
A prospectus supplement will provide the specific terms of the depositary
arrangement concerning any portion of a series of debt securities to be
represented by a global security and a description of a global depositary.
Certain Restrictive Covenants in the Senior Indenture
Limitations on Liens
Nothing in the senior indenture, the subordinated indenture or the debt
securities in any way restricts or prevents us or any of our subsidiaries from
incurring any indebtedness. However, the senior indenture provides that
neither we nor any restricted domestic subsidiary will issue, assume or
guarantee any mortgage upon any restricted property without effectively
providing that the senior debt securities of all series, and any other
indebtedness or obligation then existing or thereafter created ranking equally
with the senior debt securities, shall be secured equally and ratably with or
prior to such indebtedness. This restriction does not, however, apply to:
. mortgages on property to secure all or part of the cost of exploration,
drilling or development of such property or all or part of the cost of
altering or repairing equipment used in connection therewith or the cost
of improvement of property which, in the opinion of the board of
directors, is substantially unimproved for the use intended by us or to
secure indebtedness incurred to provide funds for any such purpose;
. mortgages which secure only indebtedness owing by a subsidiary to us, or
to one or more subsidiaries, or to us and one or more subsidiaries;
. mortgages on the property of any corporation existing at the time such
corporation becomes a subsidiary;
. mortgages on any property to secure indebtedness incurred in connection
with the construction, installation or financing of pollution control or
abatement facilities or other forms of industrial revenue bond financing
or indebtedness issued or guaranteed by the United States, any State or
any department, agency or instrumentality of either; and
. any extension, renewal or replacement of any mortgage referred to in the
foregoing clauses or, with respect to the debt securities of any series,
of any mortgage existing on the date debt securities of such series are
first issued.
Notwithstanding the foregoing, we and any restricted domestic subsidiary
may, without securing any senior debt securities, issue, assume or guarantee
indebtedness secured by mortgages which would otherwise be subject to the
foregoing restrictions in an aggregate principal amount which, together with
all other such indebtedness and the aggregate value of all sale and leaseback
transactions described below, does not at the time such indebtedness is
incurred exceed five percent (5%) of the consolidated shareholders' equity set
forth in the latest
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audited consolidated balance sheet contained in our most recent Annual Report
on Form 10-K. The following types of transactions are not deemed to create
indebtedness secured by mortgages:
. the sale or other transfer of crude oil, natural gas or other petroleum
hydrocarbons in place for a period of time until, or in an amount such
that, the transferee will realize therefrom a specified amount (however
determined) of money or such crude oil, natural gas or other petroleum
hydrocarbons, or the sale or other transfer of any other interest in
property of the character commonly referred to as a production payment
or overriding royalty; and
. mortgages required by any contract or statute in order to permit us or
any subsidiary to perform any contract or subcontract made by it with or
at the request of the United States, any State or any department, agency
or instrumentality of either, or to secure partial, progress, advance or
other payments to us or a subsidiary by such governmental unit pursuant
to the provisions of any contract or statute.
The senior indenture contains no limitation on mortgages on property
presently owned that is not restricted property or, with respect to any series
of debt securities, property acquired or constructed after the date debt
securities of such series are first issued.
Limitation on Sale and Lease-Back Transactions
The senior indenture provides that neither we nor any of our restricted
domestic subsidiaries will enter into any arrangement with any person
providing for the leasing of any restricted property which has been or is to
be sold or transferred by us or any restricted domestic subsidiary to such
person (or to any other person in respect of which funds have been or are to
be advanced by such person) on the security of the leased property for a
period of more than three years, unless either:
. we or such restricted domestic subsidiary would be entitled under the
senior indenture to incur indebtedness in a principal amount equal to or
exceeding the value of such sale and leaseback transactions secured by a
mortgage on the property to be leased without equally and ratably
securing all series of the senior debt securities with respect to which
such property is restricted property, or
. during or immediately after the expiration of four months after the
effective date of such transaction, we apply to the voluntary retirement
of our funded debt an amount equal to the greater of the net proceeds of
the sale or transfer of the property leased in such transaction or the
fair value in the opinion of the board of directors of the property at
the time of such transaction.
The senior indenture contains no limitation on the sale and lease-back of
any property presently owned which is not restricted property or, with respect
to any series of debt securities, property acquired or constructed after the
date of issuance of any series of debt securities.
Certain Definitions
The term "mortgage" means notes, bonds, debentures or other similar
evidences of indebtedness for borrowed money secured by a mortgage, lien,
pledge or other encumbrance.
The term "restricted domestic subsidiary" means any subsidiary which owns
restricted property, except "restricted domestic subsidiary" does not mean:
. a subsidiary substantially all the real property, plants and equipment
of which are located outside the continental United States,
. a subsidiary the assets of which constitute less than five percent (5%)
of our assets on a consolidated basis, and
. a subsidiary the major part of the business of which consists of
finance, banking, credit, leasing, real estate, financial services or
similar operations, coal or coke operations, or any combination thereof.
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The term "restricted property" means on the date any series of debt
securities is issued:
. any property interest owned by us or any subsidiary in land located in
the continental United States and then classified as productive of crude
oil, natural gas or other petroleum hydrocarbons in paying quantities,
. any refining plant or manufacturing plant owned by us or any subsidiary
and located in the continental United States (except related facilities
which in the opinion of the board of directors are transportation or
marketing facilities, and a refining plant or manufacturing plant which
in the opinion of the board of directors is not one of our or one of our
subsidiary's principal plants), and
. any shares of capital stock, partnership interests or indebtedness of a
restricted domestic subsidiary.
The term "subsidiary" means any corporation more than 50% of the outstanding
voting stock of which is owned directly or indirectly by us or by one or more
of our subsidiaries, or by us and one or more of our subsidiaries. For
purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
Consolidation, Merger and Sale
Nothing contained in either indenture or any of the debt securities prevents
our consolidation or merger with or into any other corporation or any sale or
conveyance of all or substantially all of our property to any other
corporation; provided that upon any such transaction, other than a
consolidation or merger in which we are the continuing corporation, the
payment of principal, premium and interest on all of the debt securities, and
the performance and observance of all of the covenants and conditions of the
indenture to be performed by us, is expressly assumed by the corporation
formed by such consolidation or into which we shall have been merged, or by
the corporation which shall have acquired such property.
The senior indenture provides that if, as a result of any of the above
transactions, any of our or our subsidiary's property would become subject to
any mortgage, lien or pledge which would not otherwise be permitted by the
senior indenture without first ratably securing the outstanding debt
securities of any series, we will secure such series equally and ratably.
Waiver of Compliance with Covenants
We may not comply with the covenants in the indentures (including any
covenant not set forth in the indentures but specified in the prospectus
supplement to be applicable to the debt securities of any series) if before
the time for such compliance the holders of at least a majority in principal
amount of outstanding debt securities of such series waive our compliance with
such covenants. However, no such waiver may extend to or affect any term,
provision or condition of the debt securities except to the extent expressly
so waived, and, until such waiver becomes effective, our obligations and the
duties of the applicable trustee in respect of any such covenant will remain
in full force and effect.
Events of Default
The following are events of default under each indenture with respect to
debt securities of any series issued thereunder:
. a failure to pay principal or premium on any debt security of that
series when due;
. a failure to pay for 30 days any interest on any debt security of that
series when due;
. a failure to perform any other covenant 90 days after there has been
given to us by the applicable trustee or to us and the applicable
trustee by the holders of at least 25% in principal amount of the
outstanding debt securities of such series, a written notice specifying
such default or breach and requiring it to be remedied;
. the acceleration of debt securities of another series or any other
indebtedness for borrowed money in an aggregate principal amount greater
than $10,000,000 if such acceleration is not annulled within 30 days
after written notice of such acceleration;
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. certain events of bankruptcy, insolvency or reorganization; and
. any other event of default provided with respect to debt securities of a
series.
If an event of default with respect to debt securities of any series occurs
and is continuing, either the trustee or the holders of at least 25% in
aggregate principal amount outstanding of the debt securities of that series
may declare the principal amount of all the debt securities of that series to
be due and payable immediately. At any time after such a declaration of
acceleration has been made, but before a judgment or decree based on
acceleration has been obtained, the holders of a majority in aggregate
principal amount of outstanding debt securities of that series may rescind and
annul such acceleration.
Each indenture provides that, subject to the duty of the applicable trustee
during a default to act with the required standard of care, the trustee will
be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any holder unless such holder shall
have offered the trustee reasonable indemnity. Subject to such indemnification
provisions, the holders of a majority in aggregate principal amount of
outstanding debt securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the trustee, or exercising any trust or power conferred on the trustee,
with respect to the debt securities of that series.
Each indenture requires us to furnish to the applicable trustee annually a
statement as to the performance by us of our obligations under each indenture
and as to any default in such performance.
Modification and Waiver
Modifications and amendments of either indenture may be made by us and the
applicable trustee with the consent of the holders of a majority in aggregate
principal amount of outstanding debt securities of each series affected by
such modifications or amendments; provided, however, that no modification or
amendment may, without the consent of the holder of each outstanding debt
security affected thereby:
. change the stated maturity date of the principal of, or any installment
of principal of, or premium or interest, if any, on any debt security;
. reduce the principal amount of or premium or interest, if any, on any
debt security;
. reduce the amount of principal of a discount debt security payable upon
acceleration of its maturity;
. change the currency of payment of principal of or premium or interest,
if any, on any debt security;
. impair the right to institute suit for the enforcement of any payment on
or with respect to any debt security;
. reduce the percentage in principal amount of outstanding debt securities
of any series the consent of whose holders is required for modification
or amendment of such indenture or for waiver of compliance with certain
provisions of such indenture or for waiver of certain defaults; or
. limit our obligations to maintain a paying agency outside the United
States pursuant to Section 12.03 of each indenture.
The holders of a majority in aggregate principal amount of outstanding debt
securities of each series may, on behalf of all holders of that series, waive,
insofar as that series is concerned, our compliance with certain restrictive
covenants of the indentures. The holders of a majority in aggregate principal
amount of outstanding debt securities of each series may, on behalf of all
holders of that series, waive any past default under the indentures with
respect to debt securities of that series, except:
. a default in the payment of principal, premium or interest, or
. in respect of a covenant or provision of the applicable indenture which
cannot be modified or amended without the consent of the holder of each
outstanding debt security of such series affected.
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Discharge, Legal Defeasance and Covenant Defeasance
Each indenture provides that, at our option, we shall:
. be deemed to have been discharged from our obligations with respect to
all debt securities of any series (except for our obligations to
register the transfer or exchange of debt securities or replace lost or
stolen debt securities), or
. cease to be under any obligation to comply with the restrictive
covenants of the indentures (including those described in this
prospectus)
if, in each case,
. we shall have deposited in trust with the applicable trustee,
specifically pledged as security for the benefit of, and dedicated
solely to, the holders of the debt securities of such series money, or
U.S. government obligations that through the payment of interest and
principal will provide money, sufficient (in the opinion of a nationally
recognized firm of independent auditors expressed in a written
certification delivered to the applicable trustee) to pay and discharge
each installment of principal (including any mandatory sinking fund
payments) of and premium, if any, and interest on, the outstanding debt
securities of such series on the dates such installments of interest or
principal and premium are due;
. such deposit will not result in a breach or violation of, or constitute
a default under the applicable indenture or any other agreement or
instrument to which we are a party or by which we are bound;
. if the debt securities of such series are then listed on any national
securities exchange, we shall have delivered to the applicable trustee
an opinion of counsel or a letter or other document from such exchange
to the effect our exercise of our defeasance option would not cause such
debt securities to be delisted;
. no event of default or event (including such deposit) which, with the
giving of notice or lapse of time, or both, would become an event of
default with respect to the debt securities of such series shall have
occurred and be continuing on the date of such deposit; and
. we shall have delivered to the applicable trustee an opinion of counsel
or a ruling of the Internal Revenue Service to the effect that the
holders of the debt securities of such series will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit
or defeasance.
Pennsylvania Taxes
Individuals who are residents of Pennsylvania and who hold debt securities
for their own account (either directly or indirectly) will not be subject to
existing county personal property taxes in Pennsylvania with respect to the
debt securities, but we are required to deduct from interest paid to
individual owners of debt securities who are residents of Pennsylvania and to
remit to Pennsylvania the Corporate Loans Tax, which is presently at the
annual rate of four mills ($.004) per $1 principal amount of debt securities
owned by such individuals, subject to adjustment if interest paid in any year
represents more or less than interest for a full year.
Regarding the Trustees
Citibank, N.A., trustee under the senior indenture also is trustee under an
indenture covering certain other of our securities. We maintain deposit
accounts and conduct other banking transactions with Citibank, including
borrowing in the ordinary course of business. Citibank is a participating
lender in a revolving credit agreement with us.
Bankers Trust Company, trustee under the subordinated indenture also is
trustee under an indenture covering certain of our other securities. We
maintain deposit accounts and conduct other banking transactions with Bankers
Trust Company, including borrowing in the ordinary course of business. Bankers
Trust Company is the agent and a participating lender in a revolving credit
agreement with us.
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DESCRIPTION OF THE EQUITY SECURITIES
Our authorized stock consists of:
. 200,000,000 shares of common stock, $1 par value, of which 88,491,880
shares were outstanding on March 31, 2000, and
. 15,000,000 shares of cumulative preference stock without par value, none
of which are outstanding on the date of this prospectus.
Preference Stock
Our board of directors is authorized without further stockholder action to
provide for the issuance of preference stock in one or more series and to
determine the designations, preferences, dividend rates, liquidation rights,
voting rights, conversion rights, redemption rights, sinking funds, stated
value and such other provisions as may be determined by the board of directors
in accordance with Pennsylvania law. However, each share of any convertible
preference stock may not be converted into more than one share of common stock
or entitle the holder thereof to more than one vote.
The prospectus supplement will describe the designations, preferences,
dividend rates, liquidation rights, voting rights, conversion rights,
redemption rights and such other provisions determined by our board of
directors to apply to the preference stock.
The following description summarizes certain general terms and provisions of
the preference stock, is not complete and is qualified in its entirety by
reference to all of the provisions of our Articles of Incorporation. A copy of
our Articles of Incorporation is filed as an exhibit to the registration
statement which contains this prospectus.
Ranking
All shares of the same series of preference stock shall be identical in all
respects, except that each share of a series issued at different times may
differ as to the dates from which dividends on such shares shall be
cumulative. All series of preference stock shall rank equally with and be
identical in all respects to each other series, unless otherwise determined by
our board of directors.
Our preference stock shall rank as to dividends and upon liquidation,
dissolution or winding up prior to our common stock and prior to our other
capital stock, except for capital stock which by its terms ranks prior to or
equal with our preference stock and which shall be authorized by a vote of the
holders of at least two-thirds of our then outstanding preference stock.
Dividend Rights
Before any dividends shall be declared and set apart for payment or paid on
any class of our stock ranking junior to our preference stock, holders of our
preference stock shall be entitled to receive cash dividends payable quarterly
and at the annual rate fixed in the resolution adopted by our board of
directors providing for the issue of that preference stock. Dividends paid on
each series of our preference stock shall be cumulative from the date we issue
such series. We shall not declare or pay or set apart for payment dividends on
any series of our preference stock unless we shall have declared and paid or
set apart for payment like dividends on all shares of each other series of our
outstanding preference stock. Accruals of dividends on our preference stock
shall not bear interest.
Redemption
We may redeem all or any part of any series of our preference stock at the
times and redemption prices set forth in the resolutions adopted by our board
of directors providing for the issue of that series. In the event of a
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partial redemption, the shares to be redeemed may be selected by lot or by
such other equitable method as our board of directors in its discretion may
determine.
Unless we default in making payment of the redemption price plus accrued and
unpaid dividends, upon redemption, the redeemed preference shares shall cease
to be outstanding and the holders thereof shall cease to be stockholders with
respect to such shares and shall have no interest in or claim against us
except the right to receive the redemption price plus accrued and unpaid
dividends. Conversion rights, if any, of preference shares called for
redemption shall terminate at the close of business on the business day prior
to the redemption date.
We shall not declare or set apart for payment or pay any dividends or make
any distribution on or redeem, purchase or otherwise acquire, or permit any
subsidiary to purchase or acquire, any other class of our stock ranking junior
to our preference stock as to dividends or upon liquidation, if at such time
we would be in default with respect to any dividend payable on, or any
obligation to purchase, shares of any series of preference stock. However, we
may under such circumstances redeem, purchase, or otherwise acquire shares of
stock of any such junior class in exchange for, or out of the proceeds from
the sale of, other shares of stock of any junior class.
Voting Rights
Except as described below, or as may be required by law, the holders of our
preference stock shall have no voting rights. If we shall fail to pay or
declare and set apart for payment dividends on our preference stock in an
aggregate amount equal to six full quarterly dividends on all shares of
preference stock then outstanding, the number of our directors shall be
increased by two at the first annual meeting of our shareholders held
thereafter. At such meeting and at each subsequent annual meeting until
dividends payable for all past quarterly dividend periods on all outstanding
shares of preference stock shall have been paid, or declared and set apart for
payment, in full, the holders of shares of our preference stock shall have the
exclusive and special voting right, voting as a class without regard to
series, to elect two additional members of our board of directors to hold
office for a term of one year. Upon the payment or declaration and setting
apart for payment in full of all dividends that we have previously failed to
pay or declare and set apart for payment, the term of each additional director
so elected shall terminate and the voting rights of the holders of shares of
our preference stock shall cease.
We shall not, without the affirmative vote of the holders of at least two-
thirds of our preference stock outstanding, voting as a class without regard
to series:
. create any class of stock ranking prior to or on a parity with our
preference stock as to dividends or upon liquidation or increase the
authorized number of shares of any such previously authorized class of
stock;
. alter or change any of the terms and provisions of our preference stock
to adversely affect the preferences, special rights or powers given to
such preference stock; or
. increase the number of shares of our preference stock which we are
authorized to issue.
Liquidation
Upon our voluntary or involuntary liquidation, dissolution or winding up,
our preference stock shall be preferred as to our assets over our common stock
and any other class of stock ranking junior to our preference stock. Holders
of shares of our preference stock shall be entitled to be paid or to have set
apart for payment, before any distribution is made to holders of our common
stock and any other class of stock ranking junior to our preference stock, the
amount set forth in the resolutions providing for the issue of that preference
stock plus an amount equal to all dividends accrued and unpaid up to and
including the date fixed for such payment.
If upon our liquidation, dissolution or winding up, our net assets shall be
insufficient to permit the payment in full of the amounts to which the holders
of all outstanding shares of our preference stock are entitled, our entire
remaining net assets shall be distributed among the holders of our preference
stock in amounts proportionate to the full preferential amounts to which they
are respectively entitled.
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Common Stock
Holders of our common stock are entitled to one vote per share on any matter
submitted to our stockholders and do not have cumulative voting rights. Our
common stock is not redeemable or convertible and the holders of our common
stock do not have any preemptive right to purchase our securities. Upon our
dissolution, holders of our common stock are entitled to receive ratably all
of our assets, if any, which remain legally available for distribution to them
after distribution to the holders of our preference stock. Subject to the
prior dividend rights of holders of our preference stock, holders of our
common stock from time to time are entitled to receive dividends as and when
declared by our board of directors out of legally available funds.
Under our Articles of Incorporation, a business combination or other
specified transaction entered into with a holder of more than 10% of our
voting stock (a "Related Person") must either:
. be approved by a vote of the holders of not less than 75% of our
outstanding voting stock held by stockholders other than the Related
Person;
. be approved by two-thirds of the members of our board of directors not
affiliated with the Related Person; or
. satisfy certain minimum price criteria and procedural requirements with
respect to our remaining stockholders.
Shareholder Rights Plan
In February 1996, our board of directors adopted a shareholder rights plan
and declared a dividend of one right for, and to be attached to, each
outstanding share of common stock. The rights plan provides that as long as
the rights are attached to shares of common stock, as provided in the rights
agreement referred to below, one additional right will be issued and delivered
with each share of common stock that becomes outstanding after February 12,
1996. Each right entitles the holder to purchase one one-hundredth of a share
of preferred stock designated as the Series B Participating Cumulative
Preference Stock. The rights will expire on February 12, 2006 unless redeemed
earlier, and will not be exercisable or transferable separately from the
shares of common stock until the close of business on the distribution date,
which will occur on the earlier of:
. the tenth day following a public announcement that a person or group of
affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of our outstanding common
stock, or
. the close of business on the tenth business day after the date of the
commencement of a tender or exchange offer that would cause any person
or group to become a 15% shareholder.
Pursuant to the rights plan, 1,743,019 shares of Series B preference stock
were designated and reserved for issuance upon exercise of the rights. Our
board of directors may increase or decrease the number of shares of the Series
B preference stock that have been reserved for issuance, provided that no
decrease reduces the number of those shares to a number less than the number
of shares of Series B preference stock then outstanding plus the number of
shares of Series B preference stock issuable in connection with an issuance of
additional common stock, whether issued directly, or upon exercise or
conversion of outstanding rights, options or other securities issued by us.
The existence of the rights may, under certain circumstances, cause
substantial dilution to any person or group that attempts to acquire us
without the approval of our board of directors. As a result, the overall
effect of the rights may be to render more difficult or discourage any
attempts to acquire us.
A complete description of the rights and the Series B preference stock is
set forth in the amended Rights Agreement included as an exhibit to the
registration statement which contains this prospectus.
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DESCRIPTION OF THE WARRANTS
The following description summarizes certain general terms and provisions of
the warrants, is not complete and is qualified in its entirety by reference to
the warrant agreement under which the warrants are issued. A copy of a warrant
agreement is filed as an exhibit to the registration statement which contains
this prospectus.
We may issue warrants as separate securities or together with any of our
debt or equity securities. Unless otherwise specified in a prospectus
supplement, the warrants will be immediately exercisable upon issuance and may
be traded separately from any series of debt or equity securities with which
they are issued. The prospectus supplement will set forth the specific terms
of any warrants offered thereby, including, where applicable:
. the designation, aggregate principal amount, currencies, denominations,
and other terms of the series of debt securities purchasable upon
exercise of warrants and the price at which such debt securities may be
purchased upon such exercise;
. the designation, number of shares, stated value and terms (including
liquidation, dividend, conversion and voting rights) of the series of
preference stock purchasable upon exercise of warrants and the price at
which such number of shares of preference stock may be purchased upon
such exercise;
. the number of shares of common stock purchasable upon exercise of
warrants and the price at which such number of shares of common stock
may be purchased upon such exercise;
. the date on which the right to exercise warrants shall commence and the
date upon which such right shall expire;
. any United States federal income tax consequences applicable to the
warrants; and
. any other relevant terms of the warrants.
The exercise price of each warrant will be subject to adjustment upon the
occurrence of certain events as set forth in each prospectus supplement. Prior
to the exercise of any warrants, holders of warrants will not have any of the
rights of holders of the debt or equity securities purchasable upon their
exercise. Warrants will become void if by their expiration date they have not
been exercised.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
General
Each trust may issue trust preferred securities, which will have the terms
(including with regard to distributions, redemption, voting, liquidation
rights and other preferred, deferred or other special rights or restrictions)
as are described in each declaration of trust or made part of the declaration
by the Trust Indenture Act. These terms will mirror the terms of our
subordinated debt securities held by the trusts and described in the
applicable prospectus supplement. You should read the prospectus supplement
relating to the trust preferred securities for specific terms, including:
. the designation of the trust preferred securities;
. the number of trust preferred securities issued by the trust;
. the annual distribution rate (or method of determining that rate) for
trust preferred securities and the date or dates upon which
distributions will be payable (except that distributions on the trust
preferred securities will be payable on a periodic basis to holders of
the trust preferred securities as of a record date in each period during
which they are outstanding);
. whether distributions on trust preferred securities will be cumulative,
and, in the case of trust preferred securities that have cumulative
distribution rights, the date or dates or method of determining the date
or dates from which distributions on trust preferred securities will be
cumulative;
. the amount or amounts that will be paid out of the assets of the trusts
to the holders of trust preferred securities upon voluntary or
involuntary dissolution of the trusts;
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. the obligation, if any, of the trusts to purchase or redeem trust
preferred securities and the price or prices at which, the period or
periods within which, and the terms and conditions upon which, trust
preferred securities will be purchased or redeemed, in whole or in part
pursuant to that obligation;
. the voting rights, if any, of trust preferred securities in addition to
those required by law, including the number of votes per trust preferred
security and any requirement for the approval by the holders of trust
preferred securities, or of trust preferred securities issued by one or
more trusts, or of both, as a condition to specified action or
amendments to the declaration of trust;
. the terms and conditions, if any, upon which our subordinated debt
securities may be distributed to holders of trust preferred securities;
. if applicable, any securities exchange upon which the trust preferred
securities will be listed; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of trust preferred securities consistent with the
declaration of trust or with applicable law.
We will guarantee all trust preferred securities offered by this prospectus
to the extent set forth under "Description of the Trust Preferred Securities
Guarantees," beginning below on page 20. You should review carefully any
prospectus supplement relating to the trust preferred securities for a
description of certain United States federal income tax considerations
applicable to that offering of the trust preferred securities.
In connection with the issuance of trust preferred securities, each trust
will issue to us a series of common securities that have the terms, including
with regard to distributions, redemption, voting, liquidation rights or other
restrictions, that are described in the declaration. The terms of the common
securities issued to us by either trust will be substantially identical to the
terms of the trust preferred securities issued to you by that trust. The
common securities will rank equally, and payments will be made on them
proportionately, with the trust preferred securities, except that, upon an
event of default under the declaration, our rights to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to your rights as holders of the trust preferred securities.
Except in certain limited circumstances, the common securities will also carry
the right to vote to appoint, remove or replace any of the trustees of either
trust. We will directly or indirectly own all of the common securities of each
trust.
Enforcement of Certain Rights by Holders of Trust Preferred Securities
If an event of default under the declaration of trust occurs, the holders of
trust preferred securities would necessarily rely on the enforcement by the
trustee against us of the trust's rights as holder of our subordinated debt
securities. In addition, the holders of a majority in liquidation amount of
trust preferred securities may direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or direct the exercise
of any power conferred on the trustee under the declaration, including the
right to direct the trustee to exercise the remedies available to it as holder
of our subordinated debt securities. If the trustee does not enforce its
rights under the subordinated debt securities, a holder of trust preferred
securities may, to the fullest extent permitted by law, institute a legal
proceeding directly against us to enforce the trustee's rights under the
subordinated debt securities without first instituting any legal proceeding
against the trustee or any other person or entity.
Notwithstanding the above, if an event of default under the declaration
occurs and is attributable to our failure to pay to the trust interest or
principal due on our subordinated debt securities, then a holder of trust
preferred securities may directly institute a proceeding against us to enforce
our payment on the subordinated debt securities having a principal amount
equal to the aggregate liquidation amount of the trust preferred securities
held by that holder. In connection with any such action, we will be subrogated
to the rights of the holder of trust preferred securities under the
declaration of trust to the extent of any payment we make to that holder.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the trust preferred
securities guarantees which we will execute and deliver for the benefit of the
holders of trust preferred securities. Each guarantee will be qualified as an
indenture under the Trust Indenture Act. Bankers Trust Company will act as
indenture trustee under each guarantee for purposes of the Trust Indenture
Act. The terms of each guarantee will be set forth in the guarantee and made
part of the guarantee by the Trust Indenture Act.
Because the following is only a summary of the guarantee, it does not
contain all of the information that you may find useful. For more information,
you should read the form of guarantee, which is filed as an exhibit to the
registration statement which contains this prospectus. Each guarantee will be
held by the guarantee trustee for the benefit of the holders of the trust
preferred securities of the applicable trust.
General
Pursuant to each guarantee, we will irrevocably and unconditionally agree to
pay in full, to the holders of the trust preferred securities issued by a
trust, the guarantee payments (described below) (except to the extent paid by
that trust), as and when due, regardless of any defense, right of set-off or
counterclaim which that trust may have or assert. The following payments with
respect to trust preferred securities issued by a trust to the extent not paid
by that trust are called guarantee payments, and will be subject to the
guarantee (without duplication):
. any accrued and unpaid distributions that must be paid on the trust
preferred securities, to the extent the trust has funds available;
. the redemption price, including all accrued and unpaid distributions, to
the extent the trust has funds available, with respect to any trust
preferred securities called for redemption by that trust; and
. upon a voluntary or involuntary dissolution, winding-up or termination
of the trust (other than in connection with the distribution of
subordinated debt securities to the holders of trust preferred
securities or the redemption of trust preferred securities in full upon
the maturity or redemption of the subordinated debt securities), the
lesser of:
. the aggregate of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities to the date of
payment, to the extent the trust has funds available, and
. the amount of assets of the trust that remain available for
distribution to holders of the trust preferred securities in
liquidation of the trust.
The redemption price and liquidation amount will be fixed at the time the
trust preferred securities are issued. We may satisfy our obligation to make a
guarantee payment by directly paying the holders of trust preferred securities
or by causing the applicable trust to pay the holders.
Each guarantee will not apply to any payment of distributions except to the
extent the trust has funds available. If we do not make interest payments on
the subordinated debt securities purchased by a trust, the trust will not be
able to pay distributions on the trust preferred securities issued by it. The
guarantee, when taken together with our obligations under the subordinated
debt securities, the indenture and the declaration, including our obligations
to pay costs, expenses, debts and liabilities of the trust (other than with
respect to the trust's securities), will provide a full and unconditional
guarantee on a subordinated basis by us of payments due on the trust preferred
securities.
We have also agreed separately to irrevocably and unconditionally guarantee
the obligations of the trusts with respect to the common securities to the
same extent as the guarantees on the trust preferred securities, except that
upon an event of default under the indenture, holders of trust preferred
securities will have priority over holders of common securities with respect
to distributions and payments on liquidation, redemption or otherwise.
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Certain Covenants
In each guarantee, we will covenant that, so long as any trust preferred
securities issued by the applicable trust remain outstanding, if there is an
event of default under that guarantee or the declaration of that trust, then
. we will not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of our capital stock other than
. purchases or acquisitions of shares of our common stock in
connection with the satisfaction by us of our obligations under any
employee benefit plans, dividend re-investment plans, or direct
access plans or the satisfaction by us of our obligations pursuant
to any contract or security requiring us to purchase shares of our
common stock,
. as a result of a reclassification of our capital stock or the
exchange or conversion of one class or series of our capital stock
for another class or series of our capital stock,
. the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged,
. dividends or distributions in options, warrants, or rights to
subscribe for or purchase our common stock, or
. any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of shares under any
such plan in the future, or the redemption or repurchase of any
rights pursuant thereto,
or make any guarantee payments with respect to the above, and
. we will not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including
guarantees) issued by us which rank equally with or junior to such
subordinated debt securities.
Modification of the Trust Preferred Securities Guarantees; Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of trust preferred securities (in which case no vote
will be required), each guarantee may be amended only with the prior approval
of the guarantor, the guarantee trustee and the holders of at least a majority
in liquidation amount of the outstanding trust preferred securities issued by
the applicable trust. The manner of obtaining the approval of holders of trust
preferred securities will be set forth in an accompanying prospectus
supplement. All guarantees and agreements contained in a guarantee will bind
our successors, assigns, receivers, trustees and representatives and will
inure to the benefit of the holders of the trust preferred securities of the
applicable trust then outstanding.
Termination
Each guarantee will terminate as to the trust preferred securities issued by
the applicable trust:
. upon full payment of the redemption price of all trust preferred
securities of the trust,
. upon distribution of the subordinated debt securities held by the trust
to the holders of the trust preferred securities, or
. upon full payment of the amounts payable in accordance with the
declaration of the trust upon liquidation of the trust.
Each guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of trust preferred securities issued by
the applicable trust must restore payment of any sums paid under the trust
preferred securities or the guarantee.
Events of Default
An event of default under a guarantee will occur if we fail to perform any
of our payment or other obligations under it.
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The holders of a majority in liquidation amount of the trust preferred
securities relating to the guarantee may direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee in
respect of the guarantee or to direct the exercise of any trust or power
conferred on that trustee under those trust preferred securities. If that
trustee fails to enforce the guarantee, any holder of trust preferred
securities relating to that guarantee may institute a legal proceeding
directly against us to enforce its rights under the guarantee, without first
instituting a legal proceeding against the relevant trust, that trustee or any
other person or entity.
Notwithstanding the above, if we fail to make a guarantee payment, a holder
of trust preferred securities may directly institute a proceeding against us
for enforcement of the guarantee for that payment. We waive any right or
remedy to require that any action be brought first against the trust or any
other person or entity before proceeding directly against us.
The guarantee trustee, before the occurrence of a default with respect to a
guarantee, will perform only the duties specifically set forth in the
guarantee and, after default, will exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to the above, the guarantee trustee is under no obligation to exercise
any of the powers vested in it by a guarantee at the request of any holder of
trust preferred securities, unless offered reasonable indemnity against the
costs, expenses and liabilities which might be incurred.
Status of the Trust Preferred Securities Guarantees
The guarantees will constitute unsecured obligations of ours and will rank:
. subordinate and junior in right of payment to all other liabilities,
. equally with the most senior preferred or preference stock now or later
issued by us and with any guarantee now or later entered into by us in
respect of any preferred or preference stock of any affiliate of ours,
and
. senior to our common stock.
The terms of the trust preferred securities provide that each holder of
trust preferred securities issued by an applicable trust agrees to the
subordination provisions and other related terms of the guarantee.
Each guarantee will be 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 instituting a
legal proceeding against any other person or entity.
Information Concerning the Trust Preferred Securities Guarantee Trustee
We and certain of our affiliates maintain banking relationships with the
guarantee trustee.
Governing Law
The guarantees will be governed by and construed in accordance with the laws
of New York State.
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PLAN OF DISTRIBUTION
We or each of the trusts may sell the securities offered by this prospectus:
. to or through underwriters or dealers, including Credit Suisse First
Boston Corporation,
. directly to one or more institutional purchasers, or
. through agents.
The prospectus supplement with respect to the securities being offered will
set forth the terms of the offering of the securities, including:
. the name or names of any underwriters or agents,
. the purchase price of the securities and the proceeds to us from such
sale,
. any delayed delivery arrangements,
. any underwriting discounts and other items constituting underwriters'
compensation,
. any initial public offering price, and
. any discounts or concessions allowed or reallowed or paid to dealers and
any securities exchanges on which the securities may be listed.
Only underwriters named in the prospectus supplement are deemed to be
underwriters in connection with the securities offered by that prospectus
supplement.
If underwriters are used in any sale of the securities, those securities
will be acquired by the underwriters for their own account and may be resold
by them 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. The securities may be offered to the public either
through underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as underwriters. The
obligations of the underwriters to purchase any securities will be subject to
conditions precedent, and the underwriters will be obligated to purchase all
of the securities offered by the prospectus supplement if any such securities
are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time
to time.
We may also sell the securities directly or through agents designated by us.
Any agent involved in the offering and sale of the securities, and any
commissions payable by us to any agent, will be set forth in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, any agent
is acting on a best efforts basis for the period of its appointment.
We may authorize agents, underwriters or dealers to solicit offers by
institutional investors to purchase securities from us pursuant to contracts
providing for payment and delivery on a future date. Institutional investors
to which such offers may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions as may be approved by us. The
obligations of any purchasers under any such delayed delivery and payment
arrangements will be subject to the condition that the purchase of the offered
securities shall not at the time of delivery be prohibited under the laws of
any jurisdiction to which such institution is subject. The underwriters will
not have any responsibility with respect to the validity of such arrangements
or our performance or the performance of any institutional investors
thereunder.
The underwriters and agents who participate in the distribution of these
securities may be entitled under agreements entered into with us to
indemnification by us against certain liabilities, including liabilities under
the Securities Act. These underwriters and agents may engage in transactions
with, or perform services for, us in the ordinary course of business.
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LEGAL OPINIONS
The validity of the securities offered by this prospectus (other than the
trust preferred securities) will be passed upon for us by Michael S.
Kuritzkes, Esq., Vice President and General Counsel, or Ann C. Mule, Esq.,
General Attorney and Corporate Secretary. The validity of the trust preferred
securities offered by this prospectus will be passed upon for the trusts by
Richards, Layton & Finger, P.A., special Delaware counsel to the trusts and
us. The validity of the securities (other than the trust preferred securities)
offered by this prospectus will be passed upon for any underwriters, dealers
or agents by Simpson Thacher & Bartlett, New York, New York. Simpson Thacher &
Bartlett will rely upon the opinion of Mr. Kuritzkes or Ms. Mule, as the case
may be, as to all matters of Pennsylvania law. Mr. Kuritzkes and Ms. Mule
participate in various of our employee benefit plans and, in connection with
certain of such benefit plans, receive our common stock, options to purchase
our common stock, and our common stock units.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included or incorporated by reference in our
Annual Report on Form 10-K for the year ended December 31, 1999, as set forth
in their reports, which are incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements and schedule
are incorporated by reference in reliance on Ernst & Young LLP's reports,
given on their authority as experts in accounting and auditing.
Until our offering is completed, we also incorporate by reference into this
prospectus any future financial statements and schedules in subsequent SEC
filings we make under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, in reliance on the reports made by the firm acting as
our independent auditors, relating to these financial statements and
schedules, and given on the particular firm's authority as experts in
accounting and auditing, but only to the extent that such firm has audited
those financial statements and schedules, and consented to the use of their
reports.
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