<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 19, 1995
REGISTRATION NO. 33-58891
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BROWNING-FERRIS INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 74-1673682
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
757 N. ELDRIDGE
HOUSTON, TEXAS 77079
(713) 870-8100
(ADDRESS, INCLUDING ZIP CODES, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
GERALD K. BURGER
VICE PRESIDENT AND SECRETARY
BROWNING-FERRIS INDUSTRIES, INC.
757 N. ELDRIDGE
HOUSTON, TEXAS 77079
(713) 870-7820
(NAME ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
FULBRIGHT & JAWORSKI L.L.P. VINSON & ELKINS L.L.P.
1301 MCKINNEY STREET 1001 FANNIN STREET
HOUSTON, TEXAS 77010 2500 FIRST CITY TOWER
(713) 651-5421 HOUSTON, TEXAS 77002-6760
ATTN: ARTHUR H. ROGERS (713) 758-2128
ATTN: MICHAEL P. FINCH
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
----------------
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY +
+NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 19, 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995
10,000,000 SECURITIES
BROWNING-FERRIS INDUSTRIES, INC.
LOGO
% AUTOMATIC COMMON EXCHANGE SECURITIES
----------
Each Security has a Stated Amount of $ . Payments of % of the
Stated Amount per annum will be made on each Security on and
of each year, commencing , 1995, until the Final
Settlement Date of , 1998. These payments will consist of interest
on Treasury Notes payable by the United States Government at the rate of %
per annum and unsecured Contract Fees payable by the Company at the rate of
% per annum. On the Final Settlement Date, the Stated Amount will
automatically be applied to the purchase of between of a share and one
share of Common Stock of the Company (depending on the Applicable Market Value
of the Common Stock on the Final Settlement Date, as described herein), subject
to adjustment under certain circumstances. The last reported per share sale
price of the Common Stock on the New York Stock Exchange on , 1995
was equal to the Stated Amount. See "Price Range of Common Stock and
Dividends".
Each Security will consist of (a) a Purchase Contract under which (i) the
holder will purchase from the Company on the Final Settlement Date, for an
amount in cash equal to the Stated Amount, a number of shares of Common Stock
equal to the Settlement Rate described herein and (ii) the Company will pay the
holder the Contract Fees described herein, and (b) % United States Treasury
Notes having a principal amount equal to the Stated Amount and maturing on the
Final Settlement Date. The Treasury Notes will be pledged with the Collateral
Agent to secure the holder's obligation to purchase Common Stock under the
Purchase Contract. Unless a holder of Securities settles the underlying
Purchase Contracts early through the delivery of cash to the Purchase Contract
Agent in the manner described herein, principal of the Treasury Notes
underlying such Securities, when paid at maturity, will automatically be
applied to satisfy in full the holder's obligation to purchase Common Stock
under the Purchase Contracts. For so long as a Purchase Contract remains in
effect, such Purchase Contract and the Treasury Notes securing it will not be
separable and may be transferred only as an integrated Security. See
"Description of the Securities".
SEE "CERTAIN CHARACTERISTICS OF THE SECURITIES" FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE SECURITIES.
Prior to the offering made hereby there has been no public market for the
Securities. Application has been made for listing the Securities on the New
York Stock Exchange (subject to official notice of issuance) under the symbol
"BFE".
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------
<TABLE>
<CAPTION>
PURCHASE
INITIAL PUBLIC UNDERWRITING PRICE OF PROCEEDS (DEFICIT)
OFFERING PRICE COMMISSION(1) TREASURY NOTES TO THE COMPANY(2)
-------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Per Security....
Total(3)........
</TABLE>
- -----
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $ payable by the Company. Does
not include proceeds per Security and total proceeds of $ and
$ , respectively ($ and $ , respectively, if the
Underwriters' over-allotment option is exercised in full), receivable by
the Company upon settlement of Purchase Contracts.
(3) The Company has granted the Underwriters an option for 30 days with respect
to an additional 1,500,000 Securities, solely to cover over-allotments. If
such option is exercised in full, the total initial public offering price,
underwriting commission and proceeds (deficit) to the Company will be
$ , $ and $ , respectively. See "Underwriting".
----------
The Securities are offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that the Securities will
be ready for delivery in book entry form only through the facilities of The
Depository Trust Company in New York, New York, on or about , 1995.
GOLDMAN, SACHS & CO. CS FIRST BOSTON
----------
The date of this Prospectus Supplement is , 1995
<PAGE>
IN CONNECTION WITH THE OFFERING MADE HEREBY, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES, THE COMMON STOCK OR OTHER SECURITIES OF THE COMPANY AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE CHICAGO STOCK EXCHANGE, THE
PACIFIC STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by, and shall be read in
conjunction with, the other information appearing elsewhere in this Prospectus
Supplement, in the accompanying Prospectus and in the documents incorporated by
reference therein. Unless otherwise indicated, all numbers of Securities
appearing in this Prospectus Supplement are presented assuming no exercise of
the Underwriters' over-allotment option. The Company's operations are conducted
through its subsidiaries and affiliates. The terms "BFI" and "Company" refer to
Browning-Ferris Industries, Inc., a Delaware corporation, and its subsidiaries
and affiliates, unless the context requires otherwise.
THE COMPANY
The Company is one of the largest publicly-held companies engaged in
providing waste services. The Company collects, transports, treats and/or
processes, recycles and disposes of commercial, residential and municipal solid
waste and industrial wastes. The Company is also involved in resource recovery,
medical waste services, portable restroom services and municipal and commercial
sweeping operations. The Company (including unconsolidated affiliates) operates
in approximately 430 locations in North America and approximately 280 locations
outside of North America, and employs approximately 40,000 persons. In addition
to operations in the United States, Canada and Puerto Rico, the Company has
operations in Australia, the Dominican Republic, Finland, Germany, Hong Kong,
Israel, Italy, Kuwait, the Netherlands, New Zealand, Spain, Switzerland and the
United Kingdom.
The business strategies currently being implemented by BFI management are
designed to:
. Continue expansion, both domestically and internationally, through an
aggressive acquisition and business development program.
. Capitalize on opportunities resulting from regulatory, legislative,
competitive and economic developments.
. Expand participation and pursue new business opportunities (such as
recycling, composting and medical waste) resulting from the continued
segmentation of the municipal and industrial waste streams.
. Continue to improve both operating efficiencies and management of costs
while effectively allocating resources.
. Continue to focus on the quality of pricing across all service lines.
. Continue to selectively implement uniform operating procedures when
management believes it will improve operating efficiency.
S-3
<PAGE>
SELECTED FINANCIAL DATA
The following is a summary of certain consolidated financial information
regarding the Company for the periods indicated. The selected financial
information set forth below for the years ended September 30, 1990 through 1994
is summarized or prepared from the Company's audited consolidated financial
statements for such periods. The financial information set forth for the six
months ended March 31, 1994 and 1995 is summarized or prepared from the
Company's unaudited consolidated financial statements for such periods, which
have been prepared on a basis substantially consistent with the audited
consolidated financial statements, and reflect, in the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
a fair presentation of the financial position and results of operations for
such periods. The results for the six months ended March 31, 1995 are not
necessarily indicative of the results for the full year. The data presented
below should be read in conjunction with the Company's consolidated financial
statements and the notes thereto incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
------------- -------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT FOR RATIOS AND PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT
DATA:
Revenues(1)........... $2,702 $1,912 $4,315 $3,479 $3,278 $3,175 $2,958
Income from continuing
operations before
special charges and
extraordinary item... $ 182 $ 121 $ 284 $ 214 $ 176 $ 222 $ 298
Income from continuing
operations before
extraordinary item... $ 182 $ 121 $ 284 $ 197 $ 176 $ 65 $ 257
Net income (loss)..... $ 182 $ 116 $ 279 $ 197 $ 176 $ 65 $ (45)
Income (loss) per
common and common
equivalent share--
Income from
continuing
operations before
extraordinary item. $ .92 $ .68 $ 1.52 $ 1.15(3) $ 1.11 $ .42(4) $ 1.68(5)
Net income (loss)... $ .92 $ .65(2) $ 1.49(2) $ 1.15 $ 1.11 $ .42 $ (.29)
Cash dividends per
common share......... $ .34 $ .34 $ .68 $ .68 $ .68 $ .68 $ .64
CASH FLOW DATA:
Capital expenditures--
continuing
operations........... $ 427 $ 321 $ 694 $ 606 $ 531 $ 478 $ 441
Cash flows from
operating activities. $ 425 $ 279 $ 694 $ 614 $ 577 $ 686 $ 593
BALANCE SHEET DATA:
Property and
equipment, net....... $3,496 $2,889 $3,050 $2,516 $2,264 $2,140 $1,988
Total assets.......... $7,270 $5,441 $5,797 $4,296 $4,068 $3,656 $3,574
Senior long-term debt,
excluding current
maturities........... $1,704 $ 499 $ 714 $ 334 $ 349 $ 407 $ 448
Convertible
subordinated
debentures........... $ 745 $ 745 $ 745 $ 745 $ 745 $ 745 $ 745
Common stockholders'
equity............... $2,639 $2,180 $2,392 $1,533 $1,460 $1,114 $1,162
OTHER DATA:
Ratio of earnings to
fixed charges (6).... 4.01 3.95 4.25 3.31(7) 3.08 1.76(8) 4.21
</TABLE>
(footnotes on next page)
S-4
<PAGE>
- --------
(1) Certain reclassifications have been made in prior period amounts to conform
to the current year presentation.
(2) Includes extraordinary charge of $5 million, net of tax ($.03 per share)
related to the loss on early retirement of debt.
(3) $1.25 per share before a special charge of $.10 per share taken in fiscal
1993 to cover the estimated expense of reorganizing the Company's regional
structure in the United States.
(4) $1.44 per share before a special charge of $1.02 per share taken in fiscal
1991 to establish additional landfill closure and post-closure accruals.
(5) $1.94 per share before special charges of $.27 per share taken in fiscal
1990 to provide primarily for additional landfill market development
reserves and in connection with the settlement of a series of private civil
lawsuits.
(6) For the purposes of computing the ratio of earnings to fixed charges,
"earnings" has been calculated by adding to the income statement caption
"income before income taxes, minority interest and extraordinary item",
fixed charges, excluding capitalized interest, and by deducting equity in
earnings of affiliates less than 50% owned. "Fixed Charges" consists of
interest expense whether capitalized or expensed, amortization of debt
costs, and one-third of rental expense, which the Company considers
representative of the interest factor in the rentals. The interest expense
portion of fixed charges includes interest expense and interest costs
capitalized related to the Company's proportionate share of unconsolidated
50%-owned affiliates and has been reduced by capitalized interest income
earned on proceeds primarily from tax-exempt financings of certain of such
50%-owned affiliates.
(7) Excluding the effects of the fiscal 1993 reorganization charge of $27.0
million, the ratio of earnings to fixed charges for fiscal 1993 was 3.51.
(8) Excluding the effects of the fiscal 1991 special charge of $246.5 million,
the ratio of earnings to fixed charges for fiscal 1991 was 3.63.
S-5
<PAGE>
THE OFFERING
Securities Offered..........
10,000,000 % Automatic Common Exchange
Securities
Stated Amount............... $ per Security
Payments.................... % of the Stated Amount per annum, payable
semi-annually in arrears. These payments will
consist of interest on the Treasury Notes (as
defined below) payable by the United States
Government at the rate of % per annum and
unsecured Contract Fees (as defined below)
payable by the Company at the rate of % per
annum. See "Certain Characteristics of the
Securities--Right to Defer Contract Fees".
Payment Dates............... and of each year,
commencing , 1995, through and
including the Final Settlement Date referred to
below (each, a "Payment Date").
Final Settlement Date.......
, 1998 (the "Final Settlement Date").
On the Final Settlement Date, the Stated Amount
per Security will automatically be applied to the
purchase of between of a share and one
share of Common Stock, par value $.16 2/3 per
share ("Common Stock"), of the Company (depending
on the Applicable Market Value of the Common
Stock on the Final Settlement Date, as described
below), subject to adjustment under certain
circumstances.
Components of the
Securities.................. The Securities will be issued under a Purchase
Contract Agreement, to be dated as of ,
1995 (the "Purchase Contract Agreement"), between
the Company and First Chicago Trust Company of
New York, as agent for the holders of the
Securities (together with any successor thereto
in such capacity, the "Purchase Contract Agent").
Each Security offered hereby (each, a "Security"
and collectively, the "Securities") will consist
of (a) a purchase contract ("Purchase Contract")
under which (i) the holder will purchase from the
Company on the Final Settlement Date, for an
amount in cash equal to the Stated Amount, a
number of shares of Common Stock equal to the
Settlement Rate described below and (ii) the
Company will pay the holder % of the Stated
Amount per annum, payable semi-annually from
, 1995 to the Final Settlement Date
("Contract Fees"), and (b) % United States
Treasury Notes due , 1998 ("Treasury
Notes") having a principal amount equal to the
Stated Amount and maturing on the Final
Settlement Date. The Treasury Notes will be
pledged with Texas Commerce Bank National
Association, as collateral agent for the Company
(together with any successor thereto in such
capacity, the "Collateral Agent"), to secure the
S-6
<PAGE>
holder's obligation to purchase Common Stock
under the Purchase Contract. Unless a holder of
Securities settles the underlying Purchase
Contracts early through the delivery of cash to
the Purchase Contract Agent in the manner
described below, principal of the Treasury Notes
underlying such Securities, when paid at
maturity, will automatically be applied to
satisfy in full the holder's obligation to
purchase Common Stock under the Purchase
Contracts. For so long as a Purchase Contract
remains in effect, such Purchase Contract and the
Treasury Notes securing it will not be separable
and may be transferred only as an integrated
Security. See "Certain Characteristics of the
Securities" and "Description of the Securities".
Settlement Rate............. The number of shares of Common Stock issuable
upon settlement of each Purchase Contract (the
"Settlement Rate") will be calculated as follows
(subject to adjustment under certain
circumstances): (a) if the Applicable Market
Value (as defined below) is greater than $
(the "Threshold Appreciation Price"), the
Settlement Rate will be , (b) if the
Applicable Market Value is less than or equal to
the Threshold Appreciation Price but greater than
the Stated Amount, the Settlement Rate will equal
the Stated Amount divided by the Applicable
Market Value and (c) if the Applicable Market
Value is less than or equal to the Stated Amount,
the Settlement Rate will be one. "Applicable
Market Value" means the average of the Closing
Prices (as defined) per share of Common Stock on
each of the twenty consecutive Trading Days (as
defined) ending on the last Trading Day
immediately preceding the Final Settlement Date.
Early Settlement............
A holder of Securities may settle the underlying
Purchase Contracts prior to the Final Settlement
Date in the manner described herein, but only in
denominations of and integral multiples
thereof. Upon such early settlement, (a) the
holder will purchase, for an amount in cash equal
to the Stated Amount per Security minus any
deferred Contract Fees payable thereon, of a
share of Common Stock per Security (regardless of
the market price of the Common Stock on the date
of purchase), subject to adjustment under certain
circumstances, (b) the Treasury Notes underlying
such Securities will thereupon be transferred to
the holder free and clear of the Company's
security interest therein and (c) the holder's
right to receive additional Contract Fees will
terminate and, except as contemplated by clause
(a) above, no payment or adjustment will be made
to or for the holder on account of current or
deferred amounts accrued in respect thereof.
Termination................. The Purchase Contracts (including the right to
receive accrued or deferred Contract Fees and the
obligation to purchase
S-7
<PAGE>
Common Stock) will automatically terminate upon
the occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to the
Company. Upon such termination, the Collateral
Agent will release the Treasury Notes held by it
to the Purchase Contract Agent for distribution
to the holders.
Relationship to Common
Stock....................... The aggregate of the Contract Fees and interest
payments on the Treasury Notes will be paid at a
rate per annum that is greater than the current
dividend yield on the Common Stock. However,
since the number of shares of Common Stock
issuable upon settlement of each Purchase
Contract may decline by up to % as the
Applicable Market Value increases, the
opportunity for equity appreciation afforded by
an investment in the Securities is less than that
afforded by a direct investment in the Common
Stock.
Listing.....................
Application has been made for listing the
Securities on the New York Stock Exchange subject
to notice of issuance, under the symbol "BFE".
Federal Income Tax
Consequences................ Holders will include interest on the Treasury
Notes in income when received or accrued, in
accordance with the holder's method of
accounting. The Company intends to report the
Contract Fees as income to holders, but holders
should consult their tax advisors concerning the
possibility that the Contract Fees may be treated
as a reduction in the holders' basis in the
Securities rather than included in income on a
current basis. Additional income, gain or loss
may be realized on maturity of the Treasury Notes
to the extent that the Treasury Notes are
purchased at a premium or discount, and certain
elections should be considered in this regard.
See "Certain Federal Income Tax Consequences".
Use of Proceeds............. All or substantially all of the proceeds from the
sale of the Securities offered hereby will be
used by the Underwriters to purchase the
underlying Treasury Notes. Net proceeds to the
Company from such sale (if any), and amounts
received by the Company upon settlement of
Purchase Contracts, are expected to be used for
general corporate purposes. See "Use of
Proceeds".
S-8
<PAGE>
CERTAIN CHARACTERISTICS OF THE SECURITIES
Prospective purchasers of Securities should consider, in addition to the
other information contained or incorporated by reference in this Prospectus
Supplement or the accompanying Prospectus, the following characteristics of the
Securities.
INVESTMENT IN SECURITIES WILL BECOME INVESTMENT IN COMMON STOCK
Although holders of Securities will be the beneficial owners of the
underlying Treasury Notes prior to the Final Settlement Date, principal of the
Treasury Notes, when paid at maturity, will automatically be applied to the
purchase of a specified number of shares of Common Stock on behalf of such
holders. Thus, following the Final Settlement Date, holders will own shares of
Common Stock rather than a beneficial interest in Treasury Notes, and the
market value of those shares of Common Stock on the Final Settlement Date may
be materially different than the principal amount of such Treasury Notes.
LESS APPRECIATION POTENTIAL
Since the number of shares of Common Stock issuable upon settlement of each
Purchase Contract may decline by up to % as the Applicable Market Value
increases, the opportunity for equity appreciation afforded by an investment in
the Securities is less than that afforded by a direct investment in the Common
Stock.
TREASURY NOTES ENCUMBERED
Although holders of Securities will be beneficial owners of the underlying
Treasury Notes, those Treasury Notes will be pledged with the Collateral Agent
to secure the obligations of the holders under the Purchase Contracts. Thus,
rights of the holders to their Treasury Notes will be subject to the Company's
security interest and no holder will be permitted to withdraw Treasury Notes
except in connection with the early settlement or termination of the related
Purchase Contracts.
RIGHT TO DEFER CONTRACT FEES
The Company may, at its option, defer the payment of Contract Fees on the
Purchase Contracts until the Final Settlement Date or, with respect to any
particular Purchase Contract, earlier settlement. However, deferred
installments of Contract Fees will bear additional Contract Fees at the rate of
% per annum (compounding on each succeeding Payment Date) until paid. If
the Purchase Contracts are terminated (upon the occurrence of certain events of
bankruptcy, insolvency or reorganization with respect to the Company), the
right to receive Contract Fees, including deferred installments of Contract
Fees, will terminate.
PURCHASE CONTRACT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF PURCHASE CONTRACT AGENT
The Purchase Contract Agreement will not be qualified as an indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the Purchase Contract Agent will not be required to qualify as a trustee
thereunder. Accordingly, holders of the Securities will not have the benefits
of the protections of the Trust Indenture Act. Under the terms of the Purchase
Contract Agreement, the Purchase Contract Agent will have only limited
obligations to the holders of the Securities. See "Certain Provisions of the
Purchase Contract Agreement and the Pledge Agreement--Information Concerning
the Purchase Contract Agent".
S-9
<PAGE>
THE COMPANY
GENERAL
The Company is one of the largest publicly-held companies engaged in
providing waste services. The Company collects, transports, treats and/or
processes, recycles and disposes of commercial, residential and municipal solid
waste and industrial wastes. The Company is also involved in resource recovery,
medical waste services, portable restroom services and municipal and commercial
sweeping operations. The Company (including unconsolidated affiliates) operates
in approximately 430 locations in North America and approximately 280 locations
outside of North America, and employs approximately 40,000 persons. In addition
to operations in the United States, Canada and Puerto Rico, the Company has
operations in Australia, the Dominican Republic, Finland, Germany, Hong Kong,
Israel, Italy, Kuwait, the Netherlands, New Zealand, Spain, Switzerland and the
United Kingdom.
The business strategies currently being implemented by BFI management are
designed to:
. Continue expansion, both domestically and internationally, through an
aggressive acquisition and business development program.
. Capitalize on opportunities resulting from regulatory, legislative,
competitive and economic developments.
. Expand participation and pursue new business opportunities (such as
recycling, composting and medical waste) resulting from the continued
segmentation of the municipal and industrial waste streams.
. Continue to improve both operating efficiencies and management of costs
while effectively allocating resources.
. Continue to focus on the quality of pricing across all service lines.
. Continue to selectively implement uniform operating procedures when
management believes it will improve operating efficiency.
The table below reflects the total revenues contributed by the Company's
principal lines of business for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,(1)
----------------- -------------------------------
1995 1994(1) 1994 1993 1992
------ ------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NORTH AMERICAN OPERATIONS
(INCLUDING CANADA)--
Collection Services--Solid
Waste...................... $1,334 $1,143 $ 2,360 $ 2,138 $ 2,038
Disposal and Transfer--Solid
Waste...................... 492 391 885 787 753
Medical Waste Services...... 92 80 161 146 119
Recycling Services.......... 290 144 359 240 175
Services Group and Other.... 39 35 83 79 106
Elimination of Affiliated
Companies' Revenues........ (230) (176) (392) (339) (304)
------ ------ --------- --------- ---------
Total North American
Operations................. 2,017 1,617 3,456 3,051 2,887
INTERNATIONAL OPERATIONS.... 685(2) 295 859 428 391
------ ------ --------- --------- ---------
Total Company............. $2,702 $1,912 $ 4,315 $ 3,479 $ 3,278
====== ====== ========= ========= =========
</TABLE>
- --------
(1) Certain reclassifications have been made in prior years' amounts to conform
to the current year presentation.
(2) The largest international markets for the six months ended March 31, 1995
were: Germany--$317 million; the Netherlands--$151 million; and the United
Kingdom--$75 million.
S-10
<PAGE>
SOLID WASTE SERVICES
Collection. BFI collects solid waste in approximately 470 operating locations
in 45 states, Australia, Canada, the Dominican Republic, Finland, Germany,
Israel, Italy, Kuwait, the Netherlands, New Zealand, Puerto Rico, Spain,
Switzerland and the United Kingdom. These operations provide solid waste
collection services for numerous commercial establishments, industrial plants
and governmental and residential units. BFI uses approximately one million
steel containers and approximately 14,000 specially equipped collection trucks
in its waste collection operations.
Transfer and Disposal. BFI operates 121 solid waste transfer stations, 50 of
which it owns, where solid waste is compacted for transfer to final disposal
facilities. Transfer stations are used for the purpose of (i) reducing costs
associated with transporting waste to final disposal sites, and (ii) better
utilizing the Company's disposal sites. Where practical, transfer and recycling
functions are combined at the same transfer station to form
"Trancycleries."(TM)
Sanitary landfilling is the primary method employed by the Company for final
disposal of the solid waste stream which is not recycled. BFI currently
operates 102 solid waste sanitary landfill sites in North America, 73 of which
are wholly-owned. Four are either owned jointly with others or partially owned
and partially leased; the remainder are leased or operated pursuant to various
agreements. BFI currently operates 69 solid waste sanitary landfill sites in
its international operations (including those operated through unconsolidated
affiliates).
MEDICAL WASTE
The Company is the largest provider of medical waste services in North
America. Approximately 100 of the Company's operating locations provide medical
waste services involving the collection and disposal of infectious and
pathological waste materials from approximately 130,000 customers. In the last
five years, most states have enacted laws regulating medical waste, and the
Company is pursuing new opportunities to provide needed services created by
these regulations. The Company owns or operates 34 medical waste processing
sites using either incineration or autoclaving (steam decontamination)
technology.
RECYCLING
The Company provides recycling collection services for certain materials
streams in approximately 250 of its North American operating locations for
approximately 6.4 million households, including curbside customers. Recycling
continued as one of the fastest-growing parts of the Company's business in
fiscal 1994 and the first six months of fiscal 1995. The Company's recycling
business has 132 recycleries in North American and approximately 30 such
facilities in its international operations. The Company also engages in the
organic materials recycling and/or disposal business, tire recycling and other
alternative energy concepts such as biomass fuels.
OTHER SERVICES
The Company is also involved in street and parking lot sweeping and the
rental and servicing of portable restroom facilities. During fiscal 1993 and
the first quarter of 1994, the Company sold a portion of its portable restroom
and sweeping businesses, but has retained most of those operations located on
the southern and western coasts of the United States. These locations are
operated as part of the solid waste regions.
INTERNATIONAL OPERATIONS
The Company is involved in waste collection, processing, disposal and/or
recycling operations in approximately 280 locations (including unconsolidated
affiliates) in Australia, the Dominican Republic, Finland, Germany, Israel,
Italy, Hong Kong, Kuwait, the Netherlands, New Zealand, Spain, Switzerland and
the United Kingdom.
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RESOURCE RECOVERY
The Company and Air Products and Chemicals, Inc. jointly market their
combined capabilities to design, build, own and operate facilities that burn
unprocessed solid waste and recover energy and other materials under the name
American Ref-Fuel Company(TM) ("American Ref-Fuel"). American Ref-Fuel
currently operates four facilities and is evaluating a number of other domestic
and international development projects.
CERTAIN LEGAL AND ENVIRONMENTAL MATTERS
The Company is involved in a number of legal, administrative and other
proceedings relating to various matters, including environmental matters. While
the final resolution of any such matter may have an impact on the Company's
consolidated financial results for a particular reporting period, the Company
believes that the ultimate disposition of these matters will not have a
materially adverse effect upon the consolidated financial position of the
Company.
USE OF PROCEEDS
All or substantially all of the proceeds from the sale of the Securities
offered hereby will be used by the Underwriters to purchase the underlying
Treasury Notes. In the event the total initial public offering price of the
Securities exceeds the sum of the total underwriting commission and the total
purchase price of the Treasury Notes, the Company will receive net proceeds
from the sale of Securities in the offering made hereby. Any such net proceeds
will be used for general corporate purposes.
The foregoing amounts do not include proceeds receivable by the Company upon
settlement of Purchase Contracts. Such proceeds, when received, are expected to
be used for general corporate purposes, including reduction of indebtedness,
acquisitions and capital expenditures.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the New York, Chicago and Pacific Stock
Exchanges and traded under the symbol "BFI". The Common Stock is also listed on
The International Stock Exchange of the United Kingdom and Republic of Ireland
Ltd. The following table sets forth, for the periods indicated, (i) the high
and low sales prices of the Common Stock as reported on the New York Stock
Exchange Composite Tape, and (ii) the dividends declared on the Common Stock.
<TABLE>
<CAPTION>
PRICE RANGE
---------------
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C>
Fiscal Year Ended September 30, 1993
First Quarter....................................... $27 1/8 $21 5/8 $.17
Second Quarter...................................... 28 5/8 25 3/4 .17
Third Quarter....................................... 28 24 .17
Fourth Quarter...................................... 27 7/8 22 3/8 .17
Fiscal Year Ended September 30, 1994
First Quarter....................................... $27 1/2 $20 7/8 $.17
Second Quarter...................................... 30 1/4 24 1/4 .17
Third Quarter....................................... 32 1/4 24 5/8 .17
Fourth Quarter...................................... 32 7/8 29 .17
Fiscal Year Ending September 30, 1995
First Quarter....................................... $32 3/8 $25 5/8 $.17
Second Quarter...................................... 34 1/4 27 1/8 .17
Third Quarter (through June 16, 1995)............... 37 7/8 32 3/4 .17
</TABLE>
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For a recent closing sales price for the Common Stock, as reported on the New
York Stock Exchange, see the cover page of this Prospectus Supplement. As of
June 8, 1995, the approximate number of holders of record of Common Stock was
19,000.
The Company has paid cash dividends on its Common Stock each year since 1950
and intends to continue the payment of dividends, although future dividend
payments will depend upon the Company's level of earnings, financial
requirements and other relevant factors, including dividend restrictions
contained in the Company's debt instruments. The amount available for payment
of dividends on the Common Stock pursuant to the most restrictive of such
limits was approximately $1.07 billion at March 31, 1995, after giving effect
to cash dividends paid or declared through March 31, 1995.
DESCRIPTION OF THE SECURITIES
The following description of certain terms of the Securities offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Securities set forth in the
accompanying Prospectus, to which reference is hereby made. The summaries of
certain provisions of documents described below do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of such documents (including the definitions therein of certain
terms), forms of which are on file with the Commission. Wherever particular
Sections of, or terms defined in, such documents are referred to herein, such
Sections or defined terms are incorporated by reference herein. Capitalized
terms not defined herein have the meanings assigned to such terms in the
accompanying Prospectus.
GENERAL
Each Security will have a Stated Amount of $ and will be issued under
the Purchase Contract Agreement between the Company and the Purchase Contract
Agent. Each Security will consist of (a) a Purchase Contract under which (i)
the holder will purchase from the Company on the Final Settlement Date of
, 1998, for an amount in cash equal to the Stated Amount, a number of
shares of Common Stock equal to the Settlement Rate described below and (ii)
the Company will pay the holder Contract Fees of % of the Stated Amount per
annum, payable semi-annually from , 1995 to the Final Settlement Date, and
(b) Treasury Notes having a principal amount equal to the Stated Amount and
maturing on the Final Settlement Date. The Treasury Notes will be pledged with
the Collateral Agent to secure the holder's obligation to purchase Common Stock
under the Purchase Contract. Unless a holder of Securities settles the
underlying Purchase Contracts early through the delivery of cash to the
Purchase Contract Agent in the manner described below, principal of the
Treasury Notes underlying such Securities, when paid at maturity, will
automatically be applied to satisfy in full the holder's obligation to purchase
Common Stock under the Purchase Contracts. For so long as a Purchase Contract
remains in effect, such Purchase Contract and the Treasury Notes securing it
will not be separable and may be transferred only as an integrated Security.
The semi-annual payments on the Securities set forth on the cover page of
this Prospectus Supplement will consist of interest on the Treasury Notes
payable by the United States Government at the rate of % per annum and
unsecured Contract Fees payable by the Company at the rate of % per annum.
The Company may, at its option, defer the payment of Contract Fees on the
Purchase Contracts until the Final Settlement Date or, with respect to any
particular Purchase Contract, earlier settlement thereof. However, deferred
installments of Contract Fees will bear additional Contract Fees at the rate of
% per annum (compounding on each succeeding Payment Date) until paid.
DESCRIPTION OF THE PURCHASE CONTRACTS
GENERAL
Each Purchase Contract underlying a Security (unless earlier terminated or
settled at the holder's option) will obligate the holder of the Security to
purchase, and the Company to sell, on the Final
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<PAGE>
Settlement Date, for an amount in cash equal to the Stated Amount, a number of
shares of Common Stock equal to the Settlement Rate. The Settlement Rate will
be calculated as follows (subject to adjustment under certain circumstances):
(a) if the Applicable Market Value is greater than the Threshold Appreciation
Price of $ , the Settlement Rate will be , (b) if the Applicable
Market Value is less than or equal to the Threshold Appreciation Price but
greater than the Stated Amount, the Settlement Rate will equal the Stated
Amount divided by the Applicable Market Value and (c) if the Applicable Market
Value is less than or equal to the Stated Amount, the Settlement Rate will be
one. "Applicable Market Value" means the average of the Closing Prices (as
defined) per share of Common Stock on each of the twenty consecutive Trading
Days (as defined) ending on the last Trading Day immediately preceding the
Final Settlement Date.
No fractional shares of Common Stock will be issued by the Company pursuant
to the Purchase Contracts. In lieu of fractional shares otherwise issuable in
respect of Purchase Contracts being settled by a holder of Securities, the
holder will be entitled to receive an amount of cash equal to the value of such
fractional shares at the Closing Price per share on the Trading Day immediately
preceding the date of purchase.
Unless a holder of Securities settles the underlying Purchase Contracts prior
to the Final Settlement Date through the delivery of cash to the Purchase
Contract Agent in the manner described under "--Early Settlement" below or an
event described under "--Termination" below occurs, principal of the Treasury
Notes underlying such Securities, when paid at maturity, will automatically be
transferred to the Company to satisfy in full the holder's obligation to
purchase Common Stock under the Purchase Contracts. Such stock will then be
issued and delivered to such holder or such holder's designee, upon
presentation and surrender of the certificate evidencing such Securities (a
"Security Certificate") and payment by the holder of any transfer or similar
taxes payable in connection with the issuance of the stock to any person other
than such holder.
Prior to the date on which shares of Common Stock are issued in settlement of
a Purchase Contract, the Common Stock underlying the related Security will not
be deemed to be outstanding for any purpose and the holder thereof will not
have any voting rights, rights to dividends or other distributions or other
rights or privileges of a stockholder by virtue of holding such Security.
Each holder of Securities, by acceptance thereof, will under the terms of the
Purchase Contract Agreement and the Securities be deemed to have (a)
irrevocably agreed to be bound by the terms of the related Purchase Contracts
for so long as such holder remains a holder of such Securities and (b)
irrevocably appointed the Purchase Contract Agent as such holder's attorney-in-
fact to enter into and perform the related Purchase Contracts on behalf of and
in the name of such holder.
EARLY SETTLEMENT
A holder of Securities may settle the underlying Purchase Contracts prior to
the Final Settlement Date by presenting and surrendering the Security
Certificate evidencing such Securities at the offices of the Purchase Contract
Agent with the form of "Election to Settle Early" on the reverse side of the
certificate completed and executed as indicated, accompanied by payment (in the
form of a certified or cashier's check payable to the order of the Company in
immediately available funds) of an amount equal to (a) the Stated Amount times
the number of Purchase Contracts being settled less (b) the aggregate amount of
any deferred Contract Fees payable thereon. HOLDERS MAY SETTLE SECURITIES EARLY
ONLY IN DENOMINATIONS OF AND INTEGRAL MULTIPLES THEREOF.
Upon early settlement of Purchase Contracts underlying any Securities, (a)
the holder will receive of a share of Common Stock per Security
(regardless of the market price of the Common Stock on the date of purchase),
subject to adjustment under certain circumstances, (b) the Treasury Notes
underlying such Securities will thereupon be transferred to the holder free and
clear of the Company's security interest therein and (c) the holder's right to
receive additional Contract Fees will terminate and,
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<PAGE>
except as contemplated by the first sentence of the preceding paragraph, no
payment or adjustment will be made to or for the holder on account of current
or deferred amounts accrued in respect thereof.
If the Purchase Contract Agent receives the Security Certificate, accompanied
by the completed Election to Settle Early and requisite check, from a holder of
Securities by 5:00 p.m., New York City time, on a Business Day, that day will
be considered the settlement date. If the Purchase Contract Agent receives the
foregoing after 5:00 p.m., New York City time, on a Business Day or at any time
on a day that is not a Business Day, the next Business Day will be considered
the settlement date.
Upon early settlement of Purchase Contracts in the manner described above,
presentation and surrender of the Security Certificate evidencing the related
Securities and payment of any transfer or similar taxes payable by the holder
in connection with the issuance of the stock to any person other than the
holder of such Securities, the Company will cause the shares of Common Stock
being purchased to be issued, and the Treasury Notes securing such Purchase
Contracts to be released from the pledge under the Pledge Agreement described
below and transferred, within three Business Days following the settlement
date, to the purchasing holder or such holder's designee.
CONTRACT FEES
Contract Fees will be payable semi-annually on each Payment Date to the
persons in whose names the related Securities are registered at the close of
business on the or , as the case may be, immediately
preceding such Payment Date (the "Record Date"). Contract Fees will be computed
on the basis of actual days elapsed in a year of 365 or 366 days, as the case
may be. If a Payment Date falls on a day that is not a Business Day, the
Contract Fee may be paid on the next succeeding Business Day with the same
force and effect as if made on such Payment Date, and no additional amounts
will accrue as a result of such delayed payment. "Business Day" means any day
that is not a Saturday, a Sunday or a day on which the New York Stock Exchange
or banking institutions or trust companies in The City of New York are
authorized or obligated by law or executive order to be closed.
The Company may, at its option and upon prior written notice to the holders
of Securities and the Purchase Contract Agent, defer the payment of Contract
Fees on the Purchase Contracts until the Final Settlement Date or, with respect
to any particular Purchase Contract, earlier settlement thereof. However,
deferred installments of Contract Fees will bear additional Contract Fees at
the rate of % per annum (compounding on each succeeding Payment Date) until
paid.
ANTI-DILUTION ADJUSTMENTS
The formula for determining the Settlement Rate will be subject to adjustment
upon the occurrence of certain events, including: (a) the payment of dividends
(and other distributions) of Common Stock on Common Stock; (b) the issuance to
all holders of Common Stock of rights, warrants or options entitling them, for
a period of up to 45 days, to subscribe for or purchase Common Stock at less
than the Current Market Price (as defined) thereof; (c) subdivisions and
combinations of Common Stock; (d) distributions to all holders of Common Stock
of evidences of indebtedness of the Company, shares of capital stock,
securities, cash or property (excluding any dividend or distribution covered by
clause (a) or (b) above and any dividend or distribution paid exclusively in
cash); (e) distributions consisting exclusively of cash to all holders of
Common Stock in an aggregate amount that, together with (i) other all-cash
distributions made within the preceding 12 months and (ii) any cash and the
fair market value, as of the expiration of the tender or exchange offer
referred to below, of consideration payable in respect of any tender or
exchange offer by the Company or a subsidiary for the Common Stock concluded
within the preceding 12 months, exceeds 10% of the Company's aggregate market
capitalization (such aggregate market capitalization being the product of the
Current Market Price (as defined) of the Common Stock multiplied by the number
of shares of Common Stock then outstanding) on the date of such distribution;
and (f)
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<PAGE>
the successful completion of a tender or exchange offer made by the Company or
any subsidiary for the Common Stock which involves an aggregate consideration
that, together with (i) any cash and the fair market value of other
consideration payable in respect of any tender or exchange offer by the Company
or a subsidiary for the Common Stock concluded within the preceding 12 months
and (ii) the aggregate amount of any all-cash distributions to all holders of
the Company's Common Stock made within the preceding 12 months, exceeds 10% of
the Company's aggregate market capitalization on the expiration of such tender
or exchange offer.
In the case of certain reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which the Common Stock is
converted into the right to receive other securities, cash or property, each
Purchase Contract then outstanding would, without the consent of the holders of
Securities, become a contract to purchase only the kind and amount of
securities, cash and other property receivable upon the transaction by a holder
of the number of shares of Common Stock which would have been received by the
holder of the related Security immediately prior to such transaction if such
holder had then settled such Purchase Contract.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (i.e., distributions of evidences of indebtedness
or assets of the Company, but generally not stock dividends or rights to
subscribe to capital stock) and, pursuant to the Settlement Rate formula
adjustment provisions of the Purchase Contract Agreement, the Settlement Rate
is increased, such increase may be deemed to be the receipt of taxable income
to holders of Securities. See "Certain Federal Income Tax Consequences--
Adjustment of Settlement Rate."
In addition, the Company may make such increases in the Settlement Rate as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of shares of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes or for any other reasons.
Adjustments to each component of the Settlement Rate formula will be
calculated to the nearest 1/10,000th of a share. No adjustment in the
Settlement Rate formula shall be required unless such adjustment would require
an increase or decrease of at least one percent in the Settlement Rate;
provided, however, that any adjustments which by reason of the foregoing are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment.
The Company will be required, within ten Business Days following the
occurrence of an event that requires or permits an adjustment in the Settlement
Rate formula, to provide written notice to the Purchase Contract Agent of the
occurrence of such event and a statement in reasonable detail setting forth the
method by which the adjustment to the Settlement Rate formula was determined
and setting forth the revised Settlement Rate formula.
Each adjustment to the Settlement Rate formula will result in a corresponding
adjustment to the number of shares of Common Stock issuable upon early
settlement of a Purchase Contract.
TERMINATION
The Purchase Contracts, and the rights and obligations of the Company and of
the holders of the Securities thereunder (including the right to receive
accrued or deferred Contract Fees and the right and obligation to purchase
Common Stock), will automatically terminate upon the occurrence of certain
events of bankruptcy, insolvency or reorganization with respect to the Company.
Upon such termination, the Collateral Agent will release the Treasury Notes
held by it to the Purchase Contract Agent for distribution to the holders.
TREASURY NOTES AND PLEDGE AGREEMENT; INTEREST ON TREASURY NOTES
The Treasury Notes underlying the Securities will be pledged to the
Collateral Agent, for the benefit of the Company, pursuant to a pledge
agreement, to be dated as of , 1995 (the "Pledge
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<PAGE>
Agreement"), to secure the obligations of the holders to purchase Common Stock
under the Purchase Contracts. The rights of holders of Securities to the
underlying Treasury Notes will be subject to the Company's security interest
therein created by the Pledge Agreement; no holder of Securities will be
permitted to withdraw the Treasury Notes underlying such Securities from the
pledge arrangement except upon the termination or early settlement of the
related Purchase Contracts. Subject to such security interest, however, holders
of Securities will have full beneficial ownership of the underlying Treasury
Notes. The Company will have no interest in the Treasury Notes other than its
security interest.
The Collateral Agent will, upon receipt of interest payments on the Treasury
Notes, distribute such payments to the Purchase Contract Agent who will in turn
distribute those payments to the persons in whose names the related Securities
are registered at the close of business on the Record Date immediately
preceding the date of such distribution.
THE TREASURY NOTES WILL BE OBLIGATIONS OF THE UNITED STATES GOVERNMENT AND
NOT OF THE COMPANY.
BOOK-ENTRY SYSTEM
The Securities will be issued in the form of one or more global security
certificates (the "Global Security Certificates") deposited with The Depository
Trust Company (the "Depositary") and registered in the name of a nominee of the
Depositary and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to Section 17A of the Exchange Act. The Depositary
was created to hold securities of its participants (defined below) and to
facilitate the clearance and settlement of transactions among its participants
in such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of
certificates. The Depositary's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
No Securities represented by Global Security Certificates may be exchanged in
whole or in part for Securities registered, and no transfer of Global Security
Certificates in whole or in part may be registered, in the name of any person
other than the Depositary or any nominee of the Depositary unless the
Depositary has notified the Company that it is unwilling or unable to continue
as depositary for such Global Security Certificates or has ceased to be
qualified to act as such as required by the Purchase Contract Agreement or
there shall have occurred and be continuing a default by the Company in respect
of its obligations under one or more Purchase Contracts. All Securities
represented by one or more Global Security Certificates or any portion thereof
will be registered in such names as the Depositary may direct.
The laws of some jurisdictions require that certain potential purchasers of
Securities take physical delivery of such Securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in Securities so
long as such Securities are represented by Global Security Certificates.
As long as the Depositary, or its nominee, is the registered owner of the
Global Security Certificates, such Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the Global Security
Certificates and all Securities represented thereby for all purposes under the
Securities and the Purchase Contract Agreement. Except in the limited
circumstances
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referred to above, owners of beneficial interests in Global Security
Certificates will not be entitled to have such Global Security Certificates or
the Securities represented thereby registered in their names, will not receive
or be entitled to receive physical delivery of Security Certificates in
exchange therefor and will not be considered to be owners or holders of such
Global Security Certificates or any Securities represented thereby for any
purpose under the Securities or the Purchase Contract Agreement. All payments
on the Securities represented by the Global Security Certificates and all
transfers and deliveries of Treasury Notes and Common Stock with respect
thereto will be made to the Depositary or its nominee, as the case may be, as
the holder thereof.
Ownership of beneficial interests in the Global Security Certificates will be
limited to participants or persons that may hold beneficial interests through
institutions that have accounts with the Depositary or its nominee
("participants"). Ownership of beneficial interests in Global Security
Certificates will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
or its nominee (with respect to participants' interests) or any such
participant (with respect to interests of persons held by such participants on
their behalf). Procedures for settlement of Purchase Contracts on the Final
Settlement Date or upon Early Settlement will be governed by arrangements among
the Depositary, participants and persons that may hold beneficial interests
through participants designed to permit such settlement without the physical
movement of certificates. Payments, transfers, deliveries, exchanges and other
matters relating to beneficial interests in Global Security Certificates may be
subject to various policies and procedures adopted by the Depositary from time
to time. None of the Company, the Purchase Contract Agent or any agent of the
Company or the Purchase Contract Agent will have any responsibility or
liability for any aspect of the Depositary's or any participant's records
relating to, or for payments made on account of, beneficial interests in Global
Security Certificates, or for maintaining, supervising or reviewing any of the
Depositary's records or any participant's records relating to such beneficial
ownership interests.
CERTAIN PROVISIONS OF THE PURCHASE CONTRACT AGREEMENT AND THE PLEDGE AGREEMENT
PAYMENT OF INTEREST AND CONTRACT FEES; TRANSFER OF SECURITIES;
DELIVERY OF COMMON STOCK OR TREASURY NOTES
Interest on the Treasury Notes and Contract Fees will be payable, Purchase
Contracts (and documents related thereto) will be settled and transfers of the
Securities will be registrable at the office of the Purchase Contract Agent in
the Borough of Manhattan, The City of New York. In addition, in the event that
the Securities do not remain in book-entry form, payment of interest on the
Treasury Notes and Contract Fees may be made, at the option of Company, by
check mailed to the address of the person entitled thereto as shown on the
Security Register.
Payments in respect of principal of the Treasury Notes on the Final
Settlement Date will be applied in satisfaction of the obligations of the
holders of the Securities under the Purchase Contracts and shares of Common
Stock will be delivered, or, if the Purchase Contracts have terminated,
Treasury Notes will be delivered, in each case upon presentation and surrender
of the Security Certificates evidencing the related Securities at the office of
the Purchase Contract Agent.
If a holder of outstanding Securities fails to present and surrender the
Security Certificate evidencing such Securities to the Purchase Contract Agent
on the Final Settlement Date, the shares of Common Stock issuable in settlement
of the applicable Purchase Contract will be registered in the name of and,
together with any distributions thereon, shall be held by the Purchase Contract
Agent in trust, for the benefit of such holder, until such Security Certificate
is presented and surrendered or the holder provides satisfactory evidence that
such certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Purchase Contract Agent and the Company.
If the Purchase Contracts have terminated prior to the Final Settlement Date,
the Treasury Notes have been transferred to the Purchase Contract Agent for
distribution to the holders entitled thereto
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and a holder fails to present and surrender the Security Certificate evidencing
such holder's Securities to the Purchase Contract Agent, the Treasury Notes
delivered to the Purchase Contract Agent and payments thereon shall be held by
the Purchase Contract Agent in trust, for the benefit of such holder, until
such Security Certificate is presented or the holder provides the evidence and
indemnity described above.
The Purchase Contract Agent will have no obligation to invest or to pay
interest on any amounts held by the Purchase Contract Agent pending
distribution, as described above.
No service charge will be made for any registration of transfer or exchange
of the Securities, except for any tax or other governmental charge that may be
imposed in connection therewith.
MODIFICATION
The Purchase Contract Agreement and the Pledge Agreement will contain
provisions permitting the Company and the Purchase Contract Agent or Collateral
Agent, as the case may be, with the consent of the holders of not less than 66
2/3% of the Securities at the time outstanding, to modify the terms of the
Purchase Contracts, the Purchase Contract Agreement and the Pledge Agreement,
except that no such modification may, without the consent of the holder of each
outstanding Security affected thereby, (a) change any Payment Date, (b) change
the amount or type of Treasury Notes underlying a Security, impair the right of
the holder of any Security to receive interest payments on the underlying
Treasury Notes or otherwise adversely affect the holder's rights in or to such
Treasury Notes, (c) change the place or currency of payment or reduce any
Contract Fees, (d) impair the right to institute suit for the enforcement of
any Purchase Contract, (e) reduce the amount of Common Stock purchasable under
any Purchase Contract, increase the price to purchase Common Stock on
settlement of any Purchase Contract, change the Final Settlement Date or
otherwise adversely affect the holder's rights under any Purchase Contract or
(f) reduce the above-stated percentage of outstanding Securities, the consent
of whose holders is required for the modification or amendment of the
provisions of the Purchase Contracts, the Purchase Contract Agreement or the
Pledge Agreement.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Company will covenant in the Purchase Contract Agreement that it will not
merge or consolidate with any other entity or sell or convey all or
substantially all of its assets to any person, firm or corporation unless the
Company is the continuing corporation or the successor corporation is a
corporation organized under the laws of the United States of America or a state
thereof and such corporation expressly assumes the obligations of the Company
under the Purchase Contracts, the Purchase Contract Agreement and the Pledge
Agreement, and the Company or such successor corporation is not, immediately
after such merger, consolidation, sale or conveyance, in default in the
performance of any of its obligations thereunder.
TITLE
The Company, the Purchase Contract Agent and the Collateral Agent may treat
the registered owner of any Security as the absolute owner thereof for the
purpose of making payment and settling the Purchase Contracts and for all other
purposes.
REPLACEMENT OF SECURITY CERTIFICATES
Any mutilated Security Certificate will be replaced by the Company at the
expense of the holder upon surrender of such certificate to the Purchase
Contract Agent. Security Certificates that become destroyed, lost or stolen
will be replaced by the Company at the expense of the holder upon delivery to
the Company and the Purchase Contract Agent of evidence of the destruction,
loss or theft thereof satisfactory to the Company and the Purchase Contract
Agent. In the case of a destroyed, lost or stolen
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Security Certificate, an indemnity satisfactory to the Purchase Contract Agent
and the Company may be required at the expense of the holder of the Securities
evidenced by such certificate before a replacement will be issued.
Notwithstanding the foregoing, the Company will not be obligated to issue any
Security on or after the Final Settlement Date or after the Purchase Contracts
have terminated. The Purchase Contract Agreement will provide that, in lieu of
the delivery of a replacement Security Certificate following the Final
Settlement Date, the Purchase Contract Agent, upon delivery of the evidence and
indemnity described above, will deliver the Common Stock issuable pursuant to
the Purchase Contracts included in the Securities evidenced by such
certificate, or, if the Purchase Contracts have terminated prior to the Final
Settlement Date, transfer the principal amount of the Treasury Notes included
in the Securities evidenced by such certificate.
GOVERNING LAW
The Purchase Contract Agreement, the Pledge Agreement and the Purchase
Contracts will be governed by, and construed in accordance with, the laws of
the State of New York.
INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT
First Chicago Trust Company of New York will be the Purchase Contract Agent.
The Purchase Contract Agent will act as the agent for the holders of Securities
from time to time. The Purchase Contract Agreement will not obligate the
Purchase Contract Agent to exercise any discretionary actions in connection
with a default under the terms of the Securities or the Purchase Contract
Agreement.
The Purchase Contract Agreement will contain provisions limiting the
liability of the Purchase Contract Agent. The Purchase Contract Agreement will
contain provisions under which the Purchase Contract Agent may resign or be
replaced. Such resignation or replacement would be effective upon the
appointment of a successor.
First Chicago Trust Company of New York is also the transfer agent and
registrar for the Common Stock.
INFORMATION CONCERNING THE COLLATERAL AGENT
Texas Commerce Bank National Association will be the Collateral Agent. The
Collateral Agent will act solely as the agent of the Company and will not
assume any obligation or relationship of agency or trust for or with any of the
holders of the Securities except for the obligations owed by a pledgee of
property to the owner thereof under the Pledge Agreement and applicable law.
The Pledge Agreement will contain provisions limiting the liability of the
Collateral Agent. The Pledge Agreement will contain provisions under which the
Collateral Agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.
For information concerning the relationship between the Company and Texas
Commerce Bank National Association, see "Description of Debt Securities--
Provisions Applicable to Senior Debt Securities--Regarding the Senior Trustee"
in the accompanying Prospectus.
LISTING
Application has been made for listing the Securities on the New York Stock
Exchange (subject to official notice of issuance) under the symbol "BFE".
S-20
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal U.S. federal income tax
consequences of the purchase, ownership and disposition of Securities. The
summary represents the opinion of Sullivan & Cromwell, special tax counsel to
the Company and the Underwriters, insofar as it relates to matters of law and
legal conclusions. The summary deals only with Securities held as capital
assets by purchasers who or which are (i) citizens or residents of the United
States, (ii) domestic corporations or (iii) otherwise subject to U.S. federal
income taxation on a net income basis in respect of income and gain from
securities. It does not deal with Securities held by specially treated classes
of holders, such as dealers in securities or life insurance companies.
Prospective purchasers of Securities should consult their own tax advisors
concerning the U.S. federal income tax consequences to Security holders in
their particular situations, as well as any consequences under the laws of any
other taxing jurisdiction.
The following summary assumes that the Treasury Notes will be purchased on,
or immediately prior to, an interest payment date for such Treasury Notes and
will, therefore, not include any right to accrued interest.
INCOME FROM SECURITIES
A holder will include interest on the Treasury Notes in income when received
or accrued, in accordance with the holder's method of accounting.
There is no authority for the treatment of the Contract Fees under current
law, but the Company intends to file information returns on the basis that the
Contract Fees are income to holders. Holders should consult their own tax
advisors concerning the treatment of Contract Fees, including the possibility
that Contract Fees may be treated as a reduction in the holders' basis in the
Securities, rather than included in income upon receipt, by analogy to the
treatment of rebates or of option premiums. The Company does not intend to
deduct the Contract Fees for federal income tax purposes because it views them
as a cost of issuing the Common Stock. Contract Fees received by a regulated
investment company should be treated as income derived with respect to the
company's business of investing in stock and securities.
SALE OR DISPOSITION OF SECURITIES
If a holder sells, exchanges or otherwise disposes of a Security before the
maturity of the Treasury Notes, the holder will generally recognize capital
gain or loss equal to the difference between the holder's tax basis in the
Security (generally equal to the amount paid for the Security, reduced by the
sum of any Contract Fees received by the holder and not previously included in
income) and the amount realized from the disposition of the Security. If a
holder sells a Security between interest payment dates, a portion of the
proceeds of the sale will be treated as a receipt of interest accrued since the
last interest payment date, rather than as an amount realized from the sale of
the Security, consistent with the general treatment of proceeds from the sale
of debt instruments such as Treasury Notes.
GAIN OR LOSS ON MATURITY OF THE TREASURY NOTES
The tax basis of the Treasury Notes will equal the fair market value of the
Treasury Notes at the time of purchase of a Security. If such fair market value
equals the amount payable at maturity of the Treasury Notes, the holder will
not realize gain or loss upon payment of the Treasury Notes at maturity. If
such fair market value is less than the amount payable at maturity of the
Treasury Notes, the holder will generally realize gain equal to the difference
upon payment of the Treasury Notes at maturity. This gain will be treated as
ordinary interest income (i.e., market discount) unless it is "de minimis", in
which case it will be treated as capital gain. The gain will be "de minimis" if
it is less than 1/4 of one percent of the amount payable at maturity of the
Treasury Notes multiplied by the number of complete years
S-21
<PAGE>
remaining to maturity of the Treasury Notes. A holder may instead elect to
accrue market discount into income on a current basis over the remaining life
of the Treasury Notes.
If such fair market value is greater than the amount payable at maturity of
the Treasury Notes, the excess will be "bond premium". A holder may either
recognize the bond premium as a capital loss upon payment of the Treasury Notes
at maturity or make an election to amortize it over the term of the Treasury
Notes. If the election is made, the bond premium will generally reduce the
interest income on the Treasury Notes on a constant yield basis over the
remaining term of the Treasury Notes and will reduce the basis of the Treasury
Notes by the amount of the amortization. An election to amortize bond premium
may apply to other debt instruments acquired at a premium by the holder, and a
holder should consult a tax advisor before making the election.
TAX BASIS OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT
The tax basis of the Common Stock acquired under the Purchase Contract will
equal the amount paid for the Security (a) increased by the amount of any gain
recognized on receipt of principal of the Treasury Notes, or market discount
included in income, as set forth above, (b) reduced by the amount of any loss
recognized on receipt of principal of the Treasury Notes, or bond premium
amortized over the term of the Treasury Notes, as set forth above, (c) reduced
by the amount of any Contract Fees received by the holder and not previously
included in income, and (d) reduced by the amount of any cash received in lieu
of fractional shares of Common Stock.
OWNERSHIP OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT
Assuming that the Company has current or accumulated earnings and profits at
least equal to the amount of the dividends, a holder will include a dividend on
the Common Stock in income when paid, and the dividend will be eligible for the
dividends received deduction if received by an otherwise qualifying corporate
holder which meets the holding period and other requirements for the dividends
received deduction.
Upon the sale, exchange or other disposition of Common Stock, the holder will
recognize gain or loss equal to the difference between the holder's tax basis
in the Common Stock and the amount realized on the disposition. The gain or
loss will be capital gain or loss, and will be long-term capital gain or loss
if the holder has held the stock for more than one year at the time of
disposition.
ADJUSTMENT OF SETTLEMENT RATE
Holders of Securities might be treated as receiving a constructive
distribution from the Company if (i) the Settlement Rate is adjusted and as a
result of such adjustment, the proportionate interest of holders of Securities
in the assets or earnings and profits of the Company is increased, and (ii) the
adjustment is not made pursuant to a bona fide, reasonable antidilution
formula. An adjustment in the Settlement Rate would not be considered made
pursuant to such a formula if the adjustment were made to compensate for
certain taxable distributions with respect to Common Stock. Thus, under certain
circumstances, an increase in the Settlement Rate is likely to be taxable to
holders of Securities as a dividend to the extent of the current or accumulated
earnings and profits of the Company. Holders of Securities would be required to
include their allocable share of such constructive dividend in gross income but
would not receive any cash related thereto.
S-22
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, (a) the
Company has agreed to (i) enter into the Purchase Contracts with each of the
Underwriters named below (the "Underwriters") underlying the respective number
of Securities set forth opposite its name below and (ii) if the proceeds to the
Company from the offering made hereby as set forth on the cover page of this
Prospectus Supplement are negative, pay to such Underwriters an amount
(including underwriting commission) equal to the deficit to the Company in
respect of such Securities as so set forth, and (b) each of such Underwriters,
for whom Goldman, Sachs & Co. and CS First Boston Corporation are acting as
representatives, has severally agreed to (i) enter into such Purchase Contracts
and purchase and pledge under the Pledge Agreement the Treasury Notes
underlying such Securities and (ii) if the proceeds to the Company from the
offering made hereby as set forth on the cover page of this Prospectus
Supplement are positive, pay to the Company a net amount (after underwriting
commission) equal to the proceeds to the Company in respect of such Securities
as so set forth:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Goldman, Sachs & Co. ...........................................
CS First Boston Corporation.....................................
----------
Total....................................................... 10,000,000
==========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to enter into Purchase Contracts and purchase and
pledge Treasury Notes underlying all of the Securities offered hereby, if any
Purchase Contracts are entered into.
The Underwriters propose to offer the Securities in part directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus Supplement, and in part to certain securities dealers at such price
less a concession of $ per Security. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per Security to
certain brokers and dealers. After the Securities are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the representatives.
The Company has granted the Underwriters an option exercisable for 30
calendar days after the date of this Prospectus Supplement to enter into
Purchase Contracts underlying up to an aggregate of 1,500,000 additional
Securities solely to cover over-allotments, if any; if Purchase Contracts
underlying any such additional Securities are entered into, the Underwriters
would purchase and pledge under the Pledge Agreement the Treasury Notes
underlying such Securities and the Company or the Underwriters, as appropriate,
would pay a net amount equal to the proceeds (deficit) to the Company in
respect of such Securities as set forth on the cover page of this Prospectus
Supplement. If the Underwriters exercise their over-allotment option, each of
the Underwriters has severally agreed, subject to certain conditions, to effect
the foregoing transactions with respect to approximately the same percentage of
such Securities that the respective number of Securities set forth opposite its
name in the foregoing table bears to the 10,000,000 Securities offered hereby.
The price to the Underwriters of the Treasury Notes underlying Securities with
respect to which an over-allotment option is exercised may be different from
that set forth on the cover page of this Prospectus Supplement. Any such
difference will be for the account of the Underwriters and will not affect the
amount of the proceeds
S-23
<PAGE>
(deficit) to the Company in respect of such Securities as shown on the cover
page of this Prospectus Supplement. The Underwriters may enter into certain
hedge transactions for their own account to reduce or eliminate their risk in
this regard.
The Company has agreed that, for a period of 90 days after the date of this
Prospectus Supplement, it will not, and it will use its best efforts to cause
its executive officers and directors and Otto Holding International B.V. not
to, offer, sell, contract to sell or otherwise dispose of any Securities or
shares of Common Stock or any rights to purchase or acquire Securities or
Common Stock without the prior written consent of the representatives of the
Underwriters, except pursuant to the conversion of existing convertible
securities, the Company's Dividend Reinvestment Plan, existing employee benefit
or stock option plans or the acquisition of any business or properties in the
Company's ongoing acquisition program and except for the shares of Common Stock
underlying the Purchase Contracts.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
LEGAL MATTERS
The validity of the Purchase Contracts and the Common Stock issuable upon
settlement thereof and of the interest of Holders of Securities in the Treasury
Notes pursuant to the Pledge Agreement will be passed upon for the Company by
Fulbright & Jaworski L.L.P., Houston, Texas, and certain legal matters will be
passed upon for the Underwriters by Vinson & Elkins L.L.P., Houston, Texas.
Fulbright & Jaworski L.L.P. has represented certain of the Underwriters in
various legal matters from time to time. Vinson & Elkins L.L.P. has represented
the Company in various legal matters from time to time. In addition, Sullivan &
Cromwell, New York, New York, acted as special tax counsel for the Company and
the Underwriters, and special counsel for the Underwriters with respect to
certain corporate law matters, in connection with the Securities.
S-24
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THEY RELATE OR
ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Prospectus Supplement Summary.............................................. S-3
Certain Characteristics of the Securities.................................. S-9
The Company................................................................ S-10
Use of Proceeds............................................................ S-12
Price Range of Common Stock and
Dividends................................................................. S-12
Description of the Securities.............................................. S-13
Certain Federal Income Tax Consequences.................................... S-21
Underwriting............................................................... S-23
Legal Matters.............................................................. S-24
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Application of Proceeds.................................................... 3
Description of Debt Securities............................................. 3
Capital Stock.............................................................. 13
Description of Warrants.................................................... 15
Description of Stock Purchase Contracts
and Stock Purchase Units.................................................. 16
Plan of Distribution....................................................... 17
Legal Opinions............................................................. 17
Experts.................................................................... 18
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10,000,000 SECURITIES
BROWNING-FERRIS INDUSTRIES, INC.
% AUTOMATIC COMMON EXCHANGE SECURITIES
------------
(LOGO OF BFI APPEARS HERE)
------------
GOLDMAN, SACHS & CO.
CS FIRST BOSTON
REPRESENTATIVES OF THE UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 19, 1995
LOGO
(LOGO OF BROWNING-FERRIS INDUSTRIES, INC. APPEARS HERE)
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
Browning-Ferris Industries, Inc. (the "Company") may offer and sell from time
to time, either jointly or separately, at prices and on terms to be determined
at or prior to the time of sale, up to an aggregate initial offering price of
not more than $949,775,000 (or, if applicable, the equivalent thereof in other
currencies) of its (i) unsecured debt securities ("Debt Securities") consisting
of debentures, notes and/or other unsecured evidences of indebtedness in one or
more series, (ii) shares of preferred stock, without par value ("Preferred
Stock"), in one or more series, (iii) shares of common stock, par value $.16
2/3 per share ("Common Stock"), (iv) Warrants ("Warrants") to purchase Debt
Securities, Preferred Stock or Common Stock, (v) Stock Purchase Contracts
("Stock Purchase Contracts") to purchase Preferred Stock or Common Stock or
(vi) Stock Purchase Units ("Stock Purchase Units"), each representing ownership
of a Stock Purchase Contract and Debt Securities or debt obligations of third
parties, including U.S. Treasury securities, securing the holder's obligation
to purchase the Preferred Stock or Common Stock under the Stock Purchase
Contract (the Debt Securities, Preferred Stock, Common Stock, Warrants, Stock
Purchase Contracts and Stock Purchase Units are collectively referred to as
"Securities"). A minimum of $100,000,000 of the aggregate securities that may
be offered hereunder must be offered in the form of Debt Securities.
Specific terms of the Securities ("Offered Securities") in respect of which
this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement ("Prospectus Supplement"), together with the terms of the
offering of the Offered Securities and the initial price and net proceeds to
the Company from the sale thereof. The Prospectus Supplement will set forth
with regard to the particular Offered Securities, without limitation, the
following: (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, ranking as senior or subordinated debt, authorized
denomination, maturity, rate or rates of interest (or method of calculation
thereof) and dates for payment thereof, any exchangeability, conversion,
redemption, prepayment or sinking fund provisions, and the currency or
currencies or currency unit or currency units in which principal, premium, if
any, or interest, if any, is payable, (ii) in the case of Preferred Stock, the
designation, number of shares, liquidation preference per share, initial public
offering price, dividend rate (or method of calculation thereof), dates on
which dividends shall be payable and dates from which dividends shall accrue,
any redemption or sinking fund provisions, any voting rights, and any
conversion or exchange rights, (iii) in the case of Common Stock, the number of
shares of Common Stock and the terms of the offering and sale thereof, (iv) in
the case of Warrants, the number and terms thereof, the designation and number
of Securities issuable upon their exercise, the exercise price, the terms of
the offering and sale thereof and, where applicable, the duration and
detachability thereof, (v) in the case of Stock Purchase Contracts, the
designation and number of shares of Preferred Stock or Common Stock issuable
thereunder, the purchase price of the Preferred Stock or Common Stock, the date
or dates on which the Preferred Stock or Common Stock is required to be
purchased by the holders of the Stock Purchase Contracts, any periodic payments
required to be made by the Company to the holders of the Stock Purchase
Contract or visa versa, and the terms of the offering and sale thereof, and
(vi) in the case of Stock Purchase Units, the specific terms of the Stock
Purchase Contracts and any Debt Securities or debt obligations of third parties
securing the holder's obligation to purchase the Preferred Stock or Common
Stock under the Stock Purchase Contracts, and the terms of the offering and
sale thereof.
The Company may sell the Securities directly, through agents designated from
time to time or through underwriters or dealers. If any agents of the Company
or any underwriters or dealers are involved in the sale of the Securities, the
names of such agents, underwriters or dealers and any applicable commissions
and discounts will be set forth in the Prospectus Supplement.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
This Prospectus may not be used to consummate sales of the Securities unless
accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS , 1995
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFERING MADE
HEREBY AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OTHER PERSON.
THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR
RESPECTIVE DATES.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission may be inspected at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Offices
of the Commission: New York Regional Office, Seven World Trade Center, New
York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
may also be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports,
proxy statements and other information can also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005,
at the offices of the Chicago Stock Exchange, Inc., 440 S. LaSalle Street,
Chicago, Illinois 60605, and at the offices of the Pacific Stock Exchange,
Inc., 301 Pine Street, San Francisco, California 94104.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act
of 1933, as amended (the "Securities Act"). This Prospectus omits certain of
the information contained in the Registration Statement, and reference is
hereby made to the Registration Statement for further information with respect
to the Company and the Securities offered hereby. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed with the Commission by the Company
pursuant to the Exchange Act, are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1994 and March 31, 1995; and
(c) The Company's Current Reports on Form 8-K dated January 24, 1995 (as
amended), dated March 2, 1995 and dated March 14, 1995.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus, and prior to the termination of the offering of the Securities,
shall be deemed to be incorporated by reference in the Prospectus and
2
<PAGE>
to be a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in the accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
Copies of all documents incorporated by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
in such documents) will be provided without charge to each person, including
any beneficial owner, who receives a copy of this Prospectus on the written
request of such person addressed to the Secretary's Department, Browning-Ferris
Industries, Inc., P.O. Box 3151, Houston, Texas 77253, or upon the oral request
of such person directed to the Secretary's Department at (713) 870-7027.
THE COMPANY
The Company is one of the largest publicly-held companies engaged in
providing waste services. Subsidiaries and affiliates collect, transport, treat
and/or process, recycle and dispose of commercial, residential and municipal
solid waste and industrial wastes. The Company's subsidiaries are also involved
in resource recovery, medical waste services, portable restroom services and
municipal and commercial sweeping operations. The Company's subsidiaries and
affiliates (including unconsolidated affiliates) operate in approximately 430
locations in North America and approximately 280 locations outside of North
America, and employ approximately 40,000 persons. In addition to operations in
the United States, Canada and Puerto Rico, subsidiaries of the Company own
interests in subsidiaries or affiliates with operations in Australia, the
Dominican Republic, Finland, Germany, Hong Kong, Israel, Italy, Kuwait, the
Netherlands, New Zealand, Spain, Switzerland and the United Kingdom.
The term "Company" refers to Browning-Ferris Industries, Inc., a Delaware
corporation, and its subsidiaries, affiliates and predecessors unless the
context requires otherwise. The Company's executive offices are located at 757
N. Eldridge, Houston, Texas 77079. The Company's mailing address is P.O. Box
3151, Houston, Texas 77253, and its telephone number is (713) 870-8100.
APPLICATION OF PROCEEDS
Unless otherwise indicated in a Prospectus Supplement with respect to the
proceeds from the sale of the particular Securities to which such Prospectus
Supplement relates, the net proceeds to be received by the Company from the
sale of the Securities will be added to the Company's general funds and are
expected to be used for general corporate purposes, including reduction of
indebtedness, acquisitions and capital expenditures.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate ("Offered Debt Securities"). The particular terms of the Offered
Debt Securities and the extent to which such general provisions may apply will
be described in a Prospectus Supplement relating to such Offered Debt
Securities.
The Debt Securities will be general unsecured obligations of the Company and
will constitute either senior debt securities or subordinated debt securities.
In the case of Debt Securities that will be senior debt securities ("Senior
Debt Securities" and "Offered Senior Debt Securities"), the Debt Securities
3
<PAGE>
will be issued under a Restated Indenture dated as of September 1, 1991,
between the Company and Texas Commerce Bank National Association, as Trustee
(successor trustee to First City, Texas-Houston, National Association, which
was formerly First City National Bank of Houston) (the "Senior Trustee"), (the
"Senior Indenture"). In the case of Debt Securities that will be subordinated
debt securities ("Subordinated Debt Securities" and "Offered Subordinated Debt
Securities"), the Debt Securities will be issued under an Indenture dated as of
August 1, 1987, as amended (the "Subordinated Indenture"), between the Company
and NationsBank of Texas, National Association, as Trustee (successor trustee
to First RepublicBank Houston, National Association, as Trustee) (the
"Subordinated Trustee"). The Senior Indenture and the Subordinated Indenture
are sometimes referred to herein individually as an "Indenture" and
collectively as the "Indentures". The Senior Trustee and the Subordinated
Trustee are sometimes referred to herein individually as a "Trustee" and
collectively as the "Trustees". The statements under this caption relating to
the Debt Securities and the Indentures are summaries only and do not purport to
be complete. Such summaries make use of terms defined in the Indentures.
Wherever such terms are used herein or particular provisions of the Indentures
are referred to, such terms or provisions, as the case may be, are incorporated
by reference as part of the statements made herein, and such statements are
qualified in their entirety by such reference. Certain defined terms in the
Indentures are capitalized herein. The references below apply to the section
numbers in each of the Indentures, unless otherwise indicated. Both the Senior
Indenture and the Subordinated Indenture, and the Securities issued thereunder,
are governed by Texas law.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
GENERAL. The Indentures do not limit the aggregate principal amount of the
Debt Securities issuable thereunder or of any particular series of the Debt
Securities and provide that Debt Securities may be issued thereunder from time
to time in one or more series with the same or various maturities at par, at a
premium or at a discount. Offered Debt Securities bearing no interest or
interest at a rate which at the time of issuance is below market rate
("Original Issue Discount Securities") will be sold at a discount (which may be
substantial) from their stated principal amount. Federal income tax
consequences and other special considerations applicable to any such Original
Issue Discount Securities will be described in the Prospectus Supplement
relating thereto. Other than as may be set forth in any Prospectus Supplement,
the Indentures and the Debt Securities will not contain any covenants or other
provisions that are intended to afford holders of the Debt Securities special
protection in the event of a highly leveraged transaction by the Company.
Reference is made to the Prospectus Supplement for the following terms of the
Offered Debt Securities: (i) the title and the limit on the aggregate principal
amount of Offered Debt Securities; (ii) the percentage of the principal amount
at which the Offered Debt Securities will be sold; (iii) the date or dates on
which the principal of (and premium, if any, on) the Offered Debt Securities
will be payable; (iv) the rate or rates (which may be fixed or variable) per
annum, if any, at which the Offered Debt Securities will bear interest or the
method of determining such rate or rates; (v) the date or dates from which such
interest, if any, shall accrue, the date or dates on which such interest, if
any, will be payable and the regular record date for interest payable on any
payment date; (vi) the place or places where the principal of (and premium, if
any) and interest, if any, on the Offered Debt Securities will be payable;
(vii) the terms for redemption or early payment, if any, including any
mandatory or optional sinking fund or analogous provision; (viii) the principal
amount of any Offered Debt Securities that are Original Issue Discount
Securities, which would be payable upon declaration of acceleration of the
maturity of the Offered Debt Securities; (ix) any modifications of the Events
of Default or covenants of the Company contained in the Indenture pertaining to
the Offered Debt Securities; (x) information with respect to book-entry
procedures, if any; (xi) as to Subordinated Debt Securities only, whether the
offered Subordinated Debt Securities are convertible into Common Stock of the
Company and, if so, the initial conversion price; and (xii) any other terms of
the Offered Debt Securities not inconsistent with the Indenture under which
they are issued. (Section 301)
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Unless otherwise indicated in the Prospectus Supplement relating thereto,
principal of and any premium and interest on the Offered Debt Securities will
be payable, and the Offered Debt Securities will be exchangeable and transfer
thereof will be registrable, at the corporate trust office of the Trustee or at
the office of each paying agent, if any, identified in the Prospectus
Supplement with respect to the Offered Debt Securities; provided that, at the
option of the Company, payment of any interest may be made by check mailed to
the address of the Person entitled thereto as it appears in the Security
Register. The Corporate Trust Office of the Senior Trustee is located at 712
Main Street, Houston, Texas 77002, and the Corporate Trust Office of the
Subordinated Trustee is located at 700 Louisiana Street, Houston, Texas 77002.
(Sections 301, 305 and 1002)
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
Offered Debt Securities will be issued in only fully registered form without
coupons in denominations of $1,000 or any integral multiple thereof, and no
service charge will be made for any transfer or exchange of such Offered Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. (Sections
302 and 305)
GLOBAL SECURITIES. The Offered Debt Securities of a series may be issued in
whole or in part in the form of one or more global securities ("Global
Securities") that will be issued to and registered in the name of the
depositary (the "Depositary") identified in the Prospectus Supplement, or its
nominee, relating to such series. Global Securities may be issued only in
fully-registered form and in either temporary or permanent form. Unless and
until a Global Security is exchanged in whole or in part for the individual
Debt Securities represented thereby, such Global Security may not be
transferred except as a whole by the Depositary to its nominee or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary or
by such Depositary or any such nominee to a successor Depositary or nominee of
such successor Depositary. (Section 305)
The specific terms of the depositary arrangement with respect to a series of
Offered Debt Securities will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary or its nominee will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the individual Debt Securities represented by such Global
Security to the accounts of persons that have accounts with the Depositary.
Such accounts shall be designated by the dealers, underwriters or agents with
respect to such Debt Securities or by the Company if such Debt Securities are
offered and sold directly by the Company. Ownership of beneficial interests in
a Global Security will be limited to persons that have accounts with the
Depositary ("Participants") or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary or its nominee (with respect to interests
of Participants) and the records of Participants (with respect to interests of
persons other than Participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary or its nominee is the registered owner of a Global
Security, such registered owner will be considered the sole owner or holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in a
Global Security will not be entitled to have any of the individual Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Debt
Securities in definitive form and will not be considered the owners or holders
thereof under the Indenture.
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Payments of principal of and premium, if any, and interest, if any, on Debt
Securities represented by a Global Security registered in the name of the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. None of the Company, the Trustee, any Paying Agent or the
Security Registrar for such Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Global Security for such Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects the Depositary or its nominee, immediately upon receipt
of any payment of principal, premium or interest in respect of a Global
Security, will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of the Depositary or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interests in such Global Security held through such Participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name". Such payments will be the sole responsibility of
such Participants. The Company has no control over the practices of the
Depositary or the Participants and there can be no assurance that these
practices will not be changed.
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is
not appointed by the Company within 90 days, the Company will issue individual
Debt Securities of such series in exchange for the Global Security representing
such series of Debt Securities. In addition, the Company may at any time and in
its sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of a series represented by one or more Global Securities and, in
such event, will issue individual Debt Securities of such series in exchange
for the Global Security representing such series of Debt Securities. Further,
if there shall have occurred and be continuing an Event of Default, or an event
which, with the giving of notice or lapse of time, or both, would constitute an
Event of Default with respect to any series of Debt Securities represented by a
Global Security, such Global Security shall be exchangeable for individual Debt
Securities of such series. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to a physical delivery of
individual Debt Securities of the series represented by such Global Security
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name. Individual Debt Securities of such series so
issued will be issued in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof.
CONSOLIDATION, MERGER AND SALE OF ASSETS. Each Indenture provides that the
Company, without the consent of the holders of any of the outstanding Debt
Securities, may consolidate with or merge into any other corporation or
transfer or lease its assets substantially as an entirety to any Person or may
acquire or lease the assets of any Person substantially as an entirety or may
permit any corporation to merge into the Company provided that (i) the
successor is a corporation organized under the laws of any domestic
jurisdiction; (ii) the successor corporation, if other than the Company,
assumes the Company's obligations under the Indenture and the Debt Securities
issued thereunder; (iii) after giving effect to the transaction, no Event of
Default and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing; and (iv)
certain other conditions are met. (Section 801)
MODIFICATION OF THE INDENTURES. Each Indenture provides that the Company and
the Trustee may, without the consent of any holders of Debt Securities, enter
into supplemental indentures for the purposes, among other things, of adding to
the Company's covenants, adding additional Events of Default, establishing the
form or terms of Debt Securities, curing ambiguities or inconsistencies in the
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Indenture or making any other provisions with respect to matters arising under
the Indenture if such action shall not adversely affect the interests of the
holders of any series of Debt Securities in any material respect or to change
or eliminate any of the provisions of the Indenture with respect to a series of
Debt Securities if such series is not then outstanding. (Section 901)
Each Indenture also contains provisions permitting the Company, with the
consent of the holders of not less than a majority in principal amount of the
outstanding Debt Securities of the affected series, to execute supplemental
indentures adding any provisions to or changing or eliminating any of the
provisions of the Indenture or modifying the rights of the holders of the Debt
Securities of such series, except that no such supplemental indenture may,
without the consent of the holders of all of the outstanding Debt Securities
affected thereby, among other things: (i) change the maturity of the principal
of or any installment of principal or interest on any of the Debt Securities;
(ii) reduce the principal amount thereof or the rate of interest, if any,
thereon or any premium payable on the redemption thereof; (iii) reduce the
amount of the principal of Original Issue Discount Securities payable on any
date; (iv) change the place of payment where, or the coin or currency in which,
any of the Debt Securities or any premium or interest thereon is payable; (v)
impair the right to institute suit for the enforcement of any such payment on
or after the applicable maturity date; (vi) reduce the percentage in principal
amount of the Debt Securities of any outstanding series the consent of the
holders of which is required for any such supplemental indenture or for any
waiver of compliance with certain provisions of, or of certain defaults under,
the Indenture; (vii) as to the Subordinated Indenture only, adversely affect
the right to convert the Subordinated Debt Securities (if convertible) or
modify the subordination provisions of the Subordinated Indenture in a manner
adverse to the holders of Subordinated Debt Securities; or (viii) with certain
exceptions, modify the foregoing requirements. (Section 902)
EVENTS OF DEFAULT, NOTICE AND WAIVER. Unless otherwise indicated in the
Prospectus Supplement relating to a particular series of Debt Securities, an
Event of Default with respect to any series of Debt Securities is defined in
each Indenture to be a (i) default for 30 days in the payment of any
installment of interest upon any of the Debt Securities of such series when
due; (ii) default in the payment of principal of (or premium, if any, on) any
of the Debt Securities of such series when due; (iii) default in the making or
satisfaction of any sinking fund payment when the same becomes due by the terms
of the Debt Securities of such series; (iv) default by the Company in the
performance, or breach, of any of its other covenants in the Indenture which
shall not have been remedied for a period of 60 days after notice by the
Trustee or the holders of at least 25% in principal amount of the Debt
Securities of such series; (v) certain events of bankruptcy, insolvency or
reorganization of the Company; and (vi) such other events as may be specified
for each series. (Section 501)
A default under other indebtedness of the Company or any of its subsidiaries
will not be a default under either Indenture, and an Event of Default under one
series of Debt Securities will not necessarily be an Event of Default under
another series of Debt Securities issued under the same Indenture.
Each Indenture provides that if an Event of Default specified therein with
respect to any outstanding series of Debt Securities issued thereunder shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the Debt Securities of such series may declare
the principal (or, if the Debt Securities of such series are Original Issue
Discount Securities, such portion of the principal amount as may be specified
by the terms of such series) of all of the Debt Securities of such series to be
immediately due and payable. Such declaration may be rescinded if certain
conditions are satisfied. (Section 502)
Each Indenture also provides that the holders of not less than a majority in
principal amount of the Debt Securities of any outstanding series may 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 such series, provided that the
Trustee may take any other proper action not inconsistent with such direction
and may decline to act if such direction is contrary to law or to the Indenture
or would involve the Trustee in personal liability. (Section 512)
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In addition, each Indenture also provides that the holders of not less than a
majority in principal amount of the Debt Securities of any outstanding series
thereunder may on behalf of the holders of all of the Debt Securities of such
series waive any past default with respect to such series and its consequences,
except a default (i) in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series or (ii) in respect of a
covenant or provision of the Indenture which, under the terms thereof, cannot
be modified or amended without the consent of the holders of all of the Debt
Securities of such series. (Section 513)
Each Indenture contains provisions entitling the Trustee, subject to the duty
of the Trustee during an Event of Default in respect of any series of Debt
Securities issued thereunder to act with the required standard of care, to be
indemnified by the holders of the Debt Securities of such series before
proceeding to exercise any right or power under the Indenture at the request of
the holders of the Debt Securities of such series. (Sections 601 and 603)
Each Indenture also provides that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Debt Securities issued
thereunder give to the holders of the Debt Securities of such series notice of
all uncured and unwaived defaults known to it; provided, however, that, except
in the case of a default in the payment of the principal of, or premium, if
any, or interest on, or any sinking fund installment with respect to, any Debt
Securities of such series, the Trustee will be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interest of the holders of the Debt Securities of such series; and provided
further, that such notice shall not be given until at least 30 days after the
occurrence of an Event of Default regarding the performance or breach of any
covenant or warranty of the Company under the Indenture other than for the
payment of the principal of, or premium, if any, or interest on, or any sinking
fund installment with respect to, any of the Debt Securities of such series.
The term default for the foregoing purpose only means any event which is, or
after notice or lapse of time, or both, would become, an Event of Default with
respect to the Debt Securities of such series. (Section 602)
Each Indenture requires the Company to file annually with the Trustee a
certificate, executed by an officer of the Company, indicating whether the
Company has fulfilled all of its obligations or is in default under certain
covenants under the Indenture. (Section 1004)
PROVISIONS APPLICABLE TO SENIOR DEBT SECURITIES
GENERAL. The Senior Debt Securities will be unsecured obligations of the
Company issued under the Senior Indenture and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company.
LIMITATIONS ON LIENS. The Senior Indenture does not contain any covenant
restricting the amount of indebtedness which may be incurred by the Company or
any of its Subsidiaries. The Senior Indenture, however, provides, in general,
that except as provided in this and in the following paragraph, the Company
will not, and will not permit any Restricted Subsidiary to, issue, assume or
guarantee any Debt secured by a Lien upon any Principal Property of the Company
or any Restricted Subsidiary or upon any shares of stock or Debt of any
Restricted Subsidiary (whether such Principal Property, shares of stock or Debt
are now owned or hereafter acquired) without in any such case effectively
providing concurrently with the issuance, assumption or guaranty of any such
Debt that the Senior Debt Securities (together with, if the Company shall so
determine, any other indebtedness of or guaranty by the Company or such
Restricted Subsidiary then existing or thereafter created which is not
subordinate to the Senior Debt Securities) shall be secured equally and ratably
with (or, at the option of the Company, prior to) such Debt, so long as such
Debt shall be so secured; provided, however, that the foregoing restrictions
shall not apply to Debt secured by: (1) Liens on property, shares of stock or
indebtedness of any corporation existing at the time such corporation becomes a
Restricted Subsidiary; (2) Liens on
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any property (including shares of stock or Debt) existing at the time of
acquisition thereof or securing the payment of all or any part of the purchase
price or construction cost thereof or securing any Debt incurred prior to, at
the time of or within 180 days after, the acquisition of such property or the
completion of any such construction for the purpose of financing all or any
part of the purchase price or construction cost thereof; (3) Liens on any
property to secure all or any part of the cost of development, operation,
construction, alteration, repair or improvement of all or any part of such
property, or to secure Debt incurred prior to, at the time of or within 180
days after, the completion of such development, operation, construction,
alteration, repair or improvement for the purpose of financing all or any part
of such cost; (4) Liens which secure Debt owing by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary or by the Company to a
Restricted Subsidiary; (5) Liens securing indebtedness of a corporation which
becomes a successor of the Company by reason of a consolidation, merger or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety; (6) Liens on property of the Company or a
Restricted Subsidiary in favor of governmental authorities to secure partial,
progress, advance or other payments or to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or the cost of
construction of the property subject to such Liens, or in favor of any trustee
or mortgagee for the benefit of holders of indebtedness of any such entity
incurred for any such purpose; (7) Liens incurred in connection with pollution
control, sewage or solid waste disposal, industrial revenue or similar
financing; (8) Liens existing at January 15, 1985; and (9) any extension,
renewal or replacement (or successive extensions, renewals or replacements), in
whole or in part, of any Lien referred to in the foregoing clauses (1) to (8),
inclusive, or of any Debt secured thereby; provided that such extension,
renewal or replacement Lien shall be limited to all or any part of the same
property that secured the Lien extended, renewed or replaced (plus any
improvements on such property) and shall secure no larger amount of Debt than
that existing at the time of such extension, renewal or replacement. (Section
1005)
The Company and any one or more Restricted Subsidiaries may issue, assume or
guarantee Debt secured by a Lien which would otherwise be subject to the
foregoing restrictions if at the time it does so (the "Incurrence Time") such
Debt plus all other Debt of the Company and its Restricted Subsidiaries secured
by a Lien which would otherwise be subject to the foregoing restrictions (not
including Debt permitted to be secured as described in clauses (1) through (9)
in the preceding paragraph), plus the aggregate Attributable Debt (determined
as of the Incurrence Time) of Sale and Leaseback Transactions (other than Sale
and Leaseback Transactions described in clauses (a) and (b) of the first
paragraph under the caption "Limitation on Sale and Leaseback Transactions"
herein) entered into after January 15, 1985 and in existence at the Incurrence
Time (less the aggregate amount of proceeds of such Sale and Leaseback
Transactions which shall have been applied as described in clause (d) of the
first paragraph under the caption "Limitation on Sale and Leaseback
Transactions" herein), does not exceed 10% of the Consolidated Net Tangible
Assets. (Section 1005)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Senior Indenture provides,
in general, that the Company will not itself, and will not permit any
Restricted Subsidiary to, enter into any arrangements with any bank, insurance
company or other lender or investor (other than the Company or another
Restricted Subsidiary) providing for the leasing as lessee by the Company or
any such Restricted Subsidiary of any Principal Property (except a lease for a
temporary period not to exceed three years by the end of which it is intended
the use of such Principal Property by the lessee will be discontinued), which
was or is owned by the Company or a Restricted Subsidiary and which has been or
is to be sold or transferred by the Company or a Restricted Subsidiary, more
than 180 days after the completion of construction and commencement of full
operation thereof by the Company or such Restricted Subsidiary, to such lender
or investor or to any person to whom funds have been or are to be advanced by
such lender or investor on the security of such Principal Property (herein
called a "Sale and Leaseback Transaction") unless: (a) the Company or such
Restricted Subsidiary would (at the time of entering into such arrangement) be
entitled, as described in clauses (1) through (9) of the first paragraph under
the caption "Limitations on Liens" herein, without equally and ratably securing
the Senior Debt
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Securities, to issue, assume or guarantee indebtedness secured by a Lien on
such Principal Property, or (b) such Sale and Leaseback Transaction relates to
a landfill or other waste disposal site (excluding any plant or similar
facility located thereon) owned by the Company or such Restricted Subsidiary or
which the Company or such Restricted Subsidiary has the right to use, or (c)
the Attributable Debt of the Company and its Restricted Subsidiaries in respect
of such Sale and Leaseback Transaction and all other Sale and Leaseback
Transactions entered into after January 15, 1985 (other than such Sale and
Leaseback Transactions as are referred to in clauses (a), (b) or (d) of this
paragraph), plus the aggregate principal amount of Debt secured by Liens on
Principal Properties then outstanding (excluding any such Debt secured by Liens
described in clauses (1) through (9) of the first paragraph under the caption
"Limitations on Liens" herein) which do not equally and ratably secure the
Senior Debt Securities, would not exceed 10% of Consolidated Net Tangible
Assets or (d) the Company, within 180 days after the sale or transfer, applies
or causes a Restricted Subsidiary to apply (subject to certain reductions
described in the Senior Indenture) an amount equal to the greater of the net
proceeds of such sale or transfer or fair market value of the Principal
Property so sold and leased back at the time of entering into such Sale and
Leaseback Transaction to the retirement of Senior Debt Securities or other
indebtedness of the Company (other than indebtedness subordinated to the Senior
Debt Securities) or indebtedness of a Restricted Subsidiary, for money
borrowed, having a stated maturity more than 12 months from the date of such
application or which is extendible at the option of the obligor thereon to a
date more than 12 months from the date of such application. (Section 1006)
DEFINITIONS. Certain terms used in the above described restrictions are given
the following definitions in Section 101 of the Senior Indenture:
"Attributable Debt" in respect of a Sale and Leaseback Transaction means, as
of any particular time, the present value (discounted at the rate of interest
implicit in the terms of the lease involved in such Sale and Leaseback
Transaction, as determined in good faith by the Company) of the obligation of
the lessee thereunder for net rental payments (excluding, however, any amounts
required to be paid by such lessee, whether or not designated as rent or
additional rent, on account of maintenance and repairs, services, insurance,
taxes, assessments, water rates and similar charges or any amounts required to
be paid by such lessee thereunder contingent upon monetary inflation or the
amount of sales, maintenance and repairs, insurance, taxes, assessments, water
rates or similar charges) during the remaining term of such lease (including
any period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Consolidated Net Tangible Assets" means the aggregate amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (a) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles and (b) all current
liabilities, all as reflected in the Company's latest audited consolidated
balance sheet contained in the Company's most recent annual report to its
stockholders prior to the time as of which "Consolidated Net Tangible Assets"
shall be determined.
"Debt" means indebtedness for borrowed money.
"Lien" means any mortgage, pledge, security interest, lien or other
encumbrance.
"Principal Property" means any waste processing, waste disposal or resource
recovery plant or similar facility located within the United States of America
(other than its territories and possessions and Puerto Rico) and owned by, or
leased to, the Company or any Restricted Subsidiary, except (a) any such plant
or facility (i) owned or leased jointly or in common with one or more persons
other than the Company and its Subsidiaries, in which the interest of the
Company and its Restricted Subsidiaries does not exceed 50%, or (ii) which the
Board of Directors determines in good faith is not of material importance to
the total business conducted, or assets owned, by the Company and its
Subsidiaries as an entirety, or (b) any portion of any such plant or facility
which the Board of Directors determines in good faith not to be of material
importance to the use or operation thereof.
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"Restricted Subsidiary" means any Subsidiary substantially all the property
of which is located, or substantially all the business of which is carried on,
within the United States of America (excluding its territories and possessions
and Puerto Rico).
"Subsidiary" means any corporation of which the Company directly or
indirectly owns or controls stock which under ordinary circumstances (not
dependent upon the happening of a contingency) has voting power to elect a
majority of the board of directors of such corporation.
DEFEASANCE. If so provided in the Prospectus Supplement accompanying the
Offered Senior Debt Securities, the Company may discharge its indebtedness and
its obligations under the Senior Indenture with respect to such series by
depositing funds or obligations issued or guaranteed by the United States of
America with the Senior Trustee. The Prospectus Supplement will more fully
describe the provisions, if any, relating to such discharge. (Section 403)
REGARDING THE SENIOR TRUSTEE. The Senior Trustee is a lending bank under an
unsecured variable interest rate bank credit agreement with the Company. The
Company has and may from time to time in the future have other banking
relationships with the Senior Trustee in the ordinary course of business. Marc
J. Shapiro, a director of the Company, is also the President and Chief
Executive Officer of the Senior Trustee and an executive officer of Chemical
Banking Corporation, the parent corporation of the Senior Trustee. William D.
Ruckelshaus, Chairman of the Board of Directors and Chief Executive Officer of
the Company, is also an advisory director of the Senior Trustee. Marina v.N.
Whitman, a director of the Company, is also a director of Chemical Banking
Corporation.
PROVISIONS APPLICABLE TO SUBORDINATED DEBT SECURITIES
GENERAL. The Subordinated Debt Securities will be unsecured obligations of
the Company to be issued under the Subordinated Indenture, and will be
subordinate in right of payment to certain other indebtedness of the Company as
described under "Subordination".
SUBORDINATION. The Subordinated Debt Securities will be subordinate and
junior in right of payment, as set forth in the Subordinated Indenture, to the
prior payment in full of all Senior Debt of the Company. "Senior Debt" is
defined in the Subordinated Indenture as the principal of (and premium, if any)
and interest on any indebtedness, whether outstanding at the date of the
Subordinated Indenture or thereafter created or incurred, which is for (a)
money borrowed by the Company, (b) obligations of the Company evidencing the
purchase price for acquisitions by the Company or a subsidiary other than in
the ordinary course of business, (c) money borrowed by others and assumed or
guaranteed by the Company, (d) capitalized lease obligations of the Company,
(e) obligations under performance guarantees, support agreements and other
agreements in the nature thereof relating to the obligations of any subsidiary
of the Company with respect to waste-to-energy facilities and (f) renewals,
extensions, refundings, amendments and modifications of any indebtedness, of
the kind described in the foregoing clauses (a), (b), (c), (d) and (e) or of
the instruments creating or evidencing such indebtedness, unless, in each case,
by the terms of the instrument creating or evidencing such indebtedness or such
renewal, extension, refunding, amendment and modification, it is provided that
such indebtedness is not senior in right of payment to the Subordinated Debt
Securities. (Section 1311)
In the event of any distribution of assets of the Company upon its
dissolution, winding up, liquidation or reorganization, the holders of Senior
Debt shall first be paid in full in respect of principal, premium (if any) and
interest before any such payments are made on account of the Subordinated Debt
Securities. In addition, in the event that (a) the Subordinated Debt Securities
or any other debt securities issued under the Subordinated Indenture are
declared due and payable because of an Event of Default (other than under the
circumstances described in the preceding sentence) or (b) any default by the
Company has occurred and is continuing in the payment of principal, premium (if
any), sinking funds or interest on any Senior Debt, then no payment shall be
made on account of principal, premium (if any), sinking
11
<PAGE>
funds or interest on the Subordinated Debt Securities until all such payments
due in respect of such Senior Debt have been paid full. (Sections 1301 and
1304)
By reason of such subordination, creditors of the Company who are not holders
of Senior Debt may, subject to any subordination provisions that may be
applicable to such creditors, recover more ratably than holders of the
Subordinated Debt Securities.
As of March 31, 1995, the Company had outstanding approximately $2.6 billion
principal amount of indebtedness which would constitute "Senior Debt". The
Company also has unused lines of credit for up to a maximum of $1.5 billion at
March 31, 1995. The amount of Senior Debt may change in the future, and the
Subordinated Indenture contains no limitations on the incurrence of Senior
Debt.
CONVERSION. The Subordinated Indenture provides that a series of Subordinated
Debt Securities may be convertible into Common Stock. The following provisions
will apply to convertible Subordinated Debt Securities unless otherwise
provided in the Prospectus Supplement for such series of Subordinated Debt
Securities.
The holder of any convertible Subordinated Debt Securities will have the
right, exercisable at any time prior to maturity, subject to prior redemption
by the Company, to convert any portion of such Subordinated Debt Securities
that is $1,000 in principal amount or any integral multiple thereof, into
shares of Common Stock at the conversion price or conversion rate set forth in
the Prospectus Supplement, subject to adjustment.
In certain events, the conversion price or conversion rate will be subject to
adjustment as set forth in the Subordinated Indenture. Such events include the
issuance of shares of Common Stock as a dividend or distribution on the Common
Stock; subdivisions, combinations and reclassifications of the Common Stock;
the fixing of a record date for the issuance to all holders of Common Stock of
rights or warrants entitling the holders thereof (for a period expiring within
45 days of the record date) to subscribe for or purchase shares of Common Stock
at a price per share less than the then current market price per share of
Common Stock (as determined pursuant to the Subordinated Indenture); and the
fixing of a record date for the distribution to all holders of Common Stock of
evidences of indebtedness or assets (excluding cash dividends paid from
surplus) of the Company or subscription rights or warrants (other than those
referred to above). No adjustment of the conversion price or conversion rate
will be required unless an adjustment would require a cumulative increase or
decrease of at least 1% in such price or rate. (Section 1404)
Fractional shares of Common Stock will not be issued upon conversion, but, in
lieu thereof, the Company will pay a cash adjustment based on the then current
market price for the Common Stock. Upon conversion, no adjustments will be made
for accrued interest or dividends, and, accordingly, convertible Subordinated
Debt Securities surrendered for conversion between the record date for an
interest payment and the interest payment date (except convertible Subordinated
Debt Securities called for redemption on a redemption date during such period)
must be accompanied by payment of an amount equal to the interest thereon which
the registered holder is to receive. (Sections 1403 and 1405)
In the case of any reclassification or change in the outstanding shares of
Common Stock, any consolidation or merger of the Company (with certain
exceptions) or any conveyance, transfer or lease of the property and assets of
the Company substantially as an entirety, the holder of convertible
Subordinated Debt Securities, after the consolidation, merger, conveyance,
transfer or lease, will have the right to convert such convertible Subordinated
Debt Securities into the kind and amount of securities, cash and other property
which the holder would have been entitled to receive upon or in connection with
such consolidation, merger, conveyance, transfer or lease, if the holder had
held the Common Stock issuable upon conversion of such convertible Subordinated
Debt Securities immediately prior to such consolidation, merger, conveyance,
transfer or lease. (Section 1406)
12
<PAGE>
REGARDING THE SUBORDINATED TRUSTEE. The Subordinated Trustee is a lending
bank under an unsecured variable interest rate bank credit agreement with the
Company. The Company has and may from time to time in the future have other
banking relationships with the Subordinated Trustee in the ordinary course of
business.
CAPITAL STOCK
Pursuant to its Restated Certificate of Incorporation, the Company is
authorized to issue (i) 400,000,000 shares of Common Stock, $.16 2/3 par value
and (ii) 25,000,000 shares of Preferred Stock, without par value, of which
4,000,000 shares have been designated by the Board of Directors as Series A
Participating Preferred Stock which may be issued upon the exercise of Rights
(hereinafter defined) associated with the Common Stock as discussed below.
On June 1, 1988, the Board of Directors of the Company declared a dividend
distribution of one right (a "Right") on each share of Common Stock outstanding
at the close of business on June 13, 1988, and in connection therewith entered
into a Rights Agreement, dated as of June 1, 1988 (as amended, the "Rights
Agreement") with Texas Commerce Bank National Association (subsequently
succeeded by First Chicago Trust Company of New York) as Rights Agent. In
addition, the Board authorized the issuance of one Right with respect to each
share of Common Stock that becomes outstanding between June 13, 1988 and the
earliest of the dates on which separate Right certificates are distributed or
the Rights expire or are redeemed. The Rights distribution was not taxable to
stockholders.
When exercisable, each Right will entitle the registered holder to purchase
one one-hundredth of a share of Series A Participating Preferred Stock at an
exercise price of $110.00, subject to adjustment. The Rights will not be
exercisable prior to the expiration of the Company's right to redeem the
Rights. The Company is entitled to redeem the Rights at $.05 per Right (subject
to adjustment) up to and including the tenth business day (twentieth business
day if the Board of Directors so determines) after the acquisition by a person
of beneficial ownership of shares of the Company's stock having 10% or more of
the general voting power of the Company. The Rights will expire on June 13,
1998, unless earlier redeemed.
In general, the Rights Agreement provides that if the Company is acquired in
a merger or other business combination transaction on or at any time after the
date on which a person obtains ownership of stock having 10% more of the
Company's general voting power ("Stock Acquisition Date"), provision must be
made prior to the consummation of such transaction to entitle each holder of a
Right (except as provided in the Plan) to purchase at the exercise price a
number of the acquiring company's common shares having a market value
(determined as provided in the Rights Agreement) at the time of such
transaction of two times the exercise price of the Right. The Rights Agreement
also provides that in the event of (i) the acquisition of the Company on or at
any time after the Stock Acquisition Date in a merger or other business
combination transaction in which the Company's Common Stock remains outstanding
and unchanged, (ii) certain self-dealing transactions by a 10% or greater
stockholder, (iii) the acquisition by a person of at least 15% of the general
voting power of the Company or (iv) an increase in the ownership interest of a
10% or greater stockholder by more than 1% as a result of the occurrence of any
of certain events specified in the Rights Agreement, then, in each such case,
each holder of a Right (except as provided in the Rights Agreement) will have
the right to receive, upon payment of the exercise price, a number of shares of
Series A Participating Preferred Stock having a market value (determined as
provided in the Rights Agreement) at the time of such transaction of two times
the exercise price of a Right.
Certain provisions in the Company's Restated Certificate of Incorporation and
By-laws may have the effect of delaying, deferring or preventing a change in
control of the Company. These provisions
13
<PAGE>
require that the Company's Board of Directors be divided into three classes
that are elected for staggered three-year terms; provide that stockholders may
act only at annual or special meetings and may not act by written consent;
provide that special meetings of stockholders may be called only by the Board
of Directors; authorize the directors of the Company to determine the size of
the Board of Directors; require that stockholder nominations for directors be
made to the Nominating Committee of the Company prior to a meeting of
stockholders; provide that directors may be removed only for cause and only by
a supermajority vote (80% of shares outstanding) of the stockholders (a
"Supermajority Vote"), including a majority in interest of the holders
("Minority Holders") of voting stock held by persons other than any person who,
together with its affiliates and associates, owns more than 10% of the voting
stock; provide for certain minimum price and procedural requirements in
connection with certain business combinations, in the absence of which the
business combination would require approval by a Supermajority Vote, including
a majority in interest of the Minority Holders; require a Supermajority Vote,
including a majority in interest of the Minority Holders, for the amendment of
any of the foregoing provisions unless approved by a majority of the Board of
Directors in certain events; and authorize the Board of Directors to establish
one or more series of Preferred Stock, without any further stockholder
approval, having rights, preferences, privileges and limitations that could
impede or discourage the acquisition of control of the Company.
DESCRIPTION OF COMMON STOCK. At March 31, 1995, 212,648,092 shares of Common
Stock were issued and outstanding and 35,504,439 shares were reserved for
issuance (i) pursuant to the Company's Dividend Reinvestment Plan and employee
benefit plans (including stock option plans), (ii) upon conversion of
debentures, and (iii) in connection with the acquisition of businesses and
properties in the normal course of business. Subject to the dividend
preferences of any outstanding shares of Preferred Stock, all shares of Common
Stock are entitled to participate in such dividends as may be declared by the
Board of Directors out of assets available for such payment. Holders of Common
Stock are entitled to one vote for each share held. All outstanding shares are,
and shares issuable hereunder will be, validly issued, fully paid and
nonassessable. Holders of Common Stock have no cumulative voting rights or
preemptive rights. In the event of a liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in the
distribution of assets remaining after payment of debts and expenses and of any
preference due to holders of any preferred stock of the Company then
outstanding. As described above, one Right will be issued in respect of each
share of Common Stock issued before the earliest of the dates on which separate
Right certificates are distributed or the Rights expire or are redeemed.
The Common Stock Transfer Agent and Registrar is First Chicago Trust Company
of New York, Stock Transfer Department, Mail Suite 4694, Post Office Box 2536,
Jersey City, New Jersey 07303-2536.
DESCRIPTION OF PREFERRED STOCK. Under the Company's Restated Certificate of
Incorporation, the Board of Directors may provide for the issuance of up to
25,000,000 shares of Preferred Stock in one or more series. The rights,
preferences, privileges and restrictions, including liquidation preferences, of
the Preferred Stock of each series will be fixed or designated by the Board of
Directors pursuant to a certificate of designation without any further vote or
action by the Company's stockholders. The issuance of Preferred Stock could
have the effect of delaying, deferring or preventing a change in control of the
Company. Upon issuance against full payment of the purchase price therefor,
shares of Preferred Stock offered hereby will be fully paid and nonassessable.
The specific terms of a particular series of Preferred Stock offered hereby
will be described in a Prospectus Supplement relating to such series and will
include the following:
(i) The maximum number of shares to constitute the series and the
distinctive designation thereof;
14
<PAGE>
(ii) The annual dividend rate, if any, on shares of the series, whether
such rate is fixed or variable or both, the date or dates from which
dividends will begin to accrue or accumulate and whether dividends will be
cumulative;
(iii) Whether the shares of the series will be redeemable and, if so, the
price at and the terms and conditions on which the shares of the series may
be redeemed, including the time during which shares of the series may be
redeemed and any accumulated dividends thereon that the holders of shares
of the series shall be entitled to receive upon the redemption thereof;
(iv) The liquidation preference, if any, applicable to shares of the
series;
(v) Whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any
such fund shall be applied to the purchase or redemption of the shares of
the series for retirement or for other corporate purposes, and the terms
and provisions relating to the operation of such fund;
(vi) The terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other class
or classes of capital stock of the Company or another corporation or any
series of any other class or classes, or of any other series of the same
class, including the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same;
(vii) The voting rights, if any, on the shares of the series; and
(viii) Any other preferences and relative, participating, optional or
other special rights or qualifications, limitations or restrictions
thereof.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants") and Warrants to purchase Common Stock or Preferred
Stock ("Stock Warrants"). Warrants may be issued independently of or together
with any other Securities and may be attached to or separate from such
Securities. Each series of Warrants will be issued under a separate Warrant
Agreement (each a "Warrant Agreement") to be entered into between the Company
and a Warrant Agent ("Warrant Agent"). The Warrant Agent will act solely as an
agent of the Company in connection with the Warrant of such series and will not
assume any obligation or relationship of agency for or with holders or
beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants
and the applicable Warrant Agreement will be set forth in the applicable
Prospectus Supplement.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of any Debt
Warrants, including the following: (i) the title of such Debt Warrants; (ii)
the offering price for such Debt Warrants, if any; (iii) the aggregate number
of such Debt Warrants; (iv) the designation and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants; (v) if applicable, the
designation and terms of the Securities with which such Debt Warrants are
issued and the number of such Debt Warrants issued with each such Security;
(vi) if applicable, the date from and after which such Debt Warrants and any
Securities issued therewith will be separately transferable; (vii) the
principal amount of Debt Securities purchasable upon exercise of a Debt Warrant
and the price at which such principal amount of Debt Securities may be
purchased upon exercise; (viii) the date on which the right to exercise such
Debt Warrants shall commence and the date on which such right shall expire;
(ix) if applicable, the minimum or maximum amount of such Debt Warrants that
may be exercised at any one time; (x) whether the Debt Warrants represented by
the Debt Warrant certificates or Debt Securities that may be issued upon
exercise of the Debt Warrants will be issued in registered or bearer form; (xi)
information with respect
15
<PAGE>
to book-entry procedures, if any; (xii) the currency, currencies or currency
units in which the offering price, if any, and the exercise price are payable;
(xiii) if applicable, a discussion of certain United States federal income tax
considerations; (xiv) the antidilution provisions of such Debt Warrants, if
any; (xv) the redemption or call provisions, if any, applicable to such Debt
Warrants; and (xvi) any additional terms of the Debt Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such Debt
Warrants.
STOCK WARRANTS
The applicable Prospectus Supplement will describe the terms of any Stock
Warrants, including the following: (i) the title of such Stock Warrants; (ii)
the offering price of such Stock Warrants, if any; (iii) the aggregate number
of such Stock Warrants; (iv) the designation and terms of the Common Stock or
Preferred Stock purchasable upon exercise of such Stock Warrants; (v) if
applicable, the designation and terms of the Securities with which such Stock
Warrants are issued and the number of such Stock Warrants issued with each such
Security; (vi) if applicable, the date from and after which such Stock Warrants
and any Securities issued therewith will be separately transferrable; (vii) the
number of shares of Common Stock or Preferred Stock purchasable upon exercise
of a Stock Warrant and the price at which such shares may be purchased upon
exercise; (viii) the date on which the right to exercise such Stock Warrants
shall commence and the date on which such right shall expire; (ix) if
applicable, the minimum or maximum amount of such Stock Warrants that may be
exercised at any one time; (x) the currency, currencies or currency units in
which the offering price, if any, and the exercise price are payable; (xi) if
applicable, a discussion of certain United States federal income tax
considerations; (xii) the antidilution provisions of such Stock Warrants, if
any; (xiii) the redemption or call provisions, if any, applicable to such Stock
Warrants; and (xiv) any additional terms of such Stock Warrants, including
terms, procedures and limitations relating to the exchange and exercise of such
Stock Warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, including contacts obligating
holders to purchase from the Company, and the Company to sell to the holders, a
specified number of shares of Common Stock or Preferred Stock at a future date
or dates. The price per share of Preferred Stock or Common Stock may be fixed
at the time the Stock Purchase Contracts are issued or may be determined by
reference to a specific formula set forth in the Stock Purchase Contracts. The
Stock Purchase Contracts may be issued separately or as a part of units ("Stock
Purchase Units") consisting of a Stock Purchase Contract and Debt Securities or
debt obligations of third parties, including U.S. Treasury securities, securing
the holders' obligations to purchase the Preferred Stock or the Common Stock
under the Purchase Contracts. The Stock Purchase Contracts may require the
Company to make periodic payments to the holders of the Stock Purchase Units or
visa versa, and such payments may be unsecured or prefunded on some basis. The
Stock Purchase Contracts may require holders to secure their obligations
thereunder in a specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not purport to be complete and will be qualified in its
entirety by reference to the Stock Purchase Contracts, and, if applicable,
collateral arrangements and depositary arrangements, relating to such Stock
Purchase Contracts or Stock Purchase Units.
16
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in and/or outside
the United States (i) through underwriters or a group of underwriters or
dealers, (ii) through agents designated from time to time or (iii) directly to
purchasers.
If an underwriter or underwriters are utilized in the sale, the Company will
enter into an underwriting agreement with such underwriters at the time of sale
to them, and the names of the underwriters and the terms and conditions of the
transaction (including underwriting discounts and commissions and other items
constituting underwriting compensation and discounts and commissions to be
allowed or paid to any dealers) will be set forth in the Prospectus Supplement,
which will be used by the underwriters to make sales of the Offered Securities
in respect of which this Prospectus is delivered to the public. The
underwriters may be entitled, under the underwriting agreement, to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act. Only underwriters named in the Prospectus
Supplement are deemed to be underwriting in connection with the Offered
Securities in respect of which such Prospectus Supplement and this Prospectus
are delivered and any firms not named therein are not parties to the
underwriting agreement in respect of such Offered Securities and will have no
direct or indirect participation in the underwriting thereof, although they may
participate in the distribution of such Securities under circumstances where
they may be entitled to a dealer's commission.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters to solicit offers by certain institutions to purchase Offered
Securities from the Company at the price set forth in the Prospectus Supplement
pursuant to delayed delivery contracts for payment and delivery at a future
date. The Prospectus Supplement will set forth the commission payable to the
underwriters for solicitation of such contracts.
Offers to purchase Offered Securities may be solicited directly by the
Company or by agents designated by the Company from time to time. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment. Agents may be
entitled under agreements which may be entered into with the Company to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act.
If an agent or agents are utilized in the sale, such persons may be deemed to
be "underwriters", and any discounts, commissions or concessions received by
them from the Company or any profit on the resale of Offered Securities by them
may be deemed to be underwriting discounts and commissions under the Securities
Act. Any such person who may be deemed to be an underwriter and any such
compensation received from the Company will be described in the Prospectus
Supplement.
The time and place for delivery of the Offered Securities in respect of which
this Prospectus is delivered are set forth in the Prospectus Supplement.
LEGAL OPINIONS
The legality of the Securities to be offered hereby will be passed upon for
the Company by Fulbright & Jaworski L.L.P., 1301 McKinney Street, Houston,
Texas 77010, and for any underwriters or agents of a particular issue of
Offered Securities, by Vinson & Elkins L.L.P., 1001 Fannin Street, First City
Tower, Houston, Texas 77002 or by other counsel identified in the relevant
Prospectus Supplement as passing on the same for any such underwriters and
agents. Vinson & Elkins L.L.P. has represented the Company in various legal
matters from time to time.
17
<PAGE>
EXPERTS
The consolidated financial statements and schedules included in the Annual
Report of the Company on Form 10-K for the year ended September 30, 1994
incorporated herein by reference, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said report.
The consolidated financial statements of Attwoods plc included in the
Company's Current Report on Form 8-K dated January 24, 1995 incorporated herein
by reference have been audited by Binder Hamlyn, Chartered Accountants,
Registered Auditors, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said report.
18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................... $ 241,380
Printing and Engraving Expenses....................................... 50,000
Accounting Fees and Expenses.......................................... 100,000
Legal Fees and Expenses............................................... 100,000
Trustee Fees.......................................................... 40,000
Fees of Rating Agencies............................................... 170,000
Blue Sky Fees and Expenses............................................ 10,000
Miscellaneous......................................................... 28,620
---------
TOTAL............................................................... $ 740,000
=========
</TABLE>
- --------
*Estimated, except for the SEC Registration Fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware empowers
the Company to, and the By-laws of the Company provide that it shall, indemnify
any person who was or is a party or is threatened to be made a party to, or
otherwise becomes involved in, any threatened, pending or completed action,
suit or proceeding (other than an action, suit or proceeding by or in the right
of the Company) by reason of the fact that he is or was a director, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; except that, in the case of an action or suit by or in
the right of the Company, no indemnification may be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Company unless and only to the extent that the Court of Chancery
of the State of Delaware or the court in which such action or suit was brought
shall determine that such person is fairly and reasonably entitled to indemnity
for proper expenses.
The Company's By-laws provide, pursuant to Section 145 of the General
Corporation Law of the State of Delaware, for indemnification of officers,
directors, employees and agents of the Company and persons serving at the
request of the Company in such capacities for other business organizations
against certain losses, costs, liabilities and expenses incurred by reason of
their positions with the Company or such other business organizations.
The Company's Restated Certificate of Incorporation contains a provision
which eliminates, to the fullest extent permitted by law, director liability
for monetary damages for breaches of fiduciary duty of care.
At the annual meeting of stockholders held on March 4, 1987, the Company's
stockholders adopted a resolution authorizing the Company to enter into an
Indemnity Agreement (the "Indemnity Agreement") with each director of the
Company and with certain officers of the Company designated by the Board of
Directors or its Executive Committee. The Indemnity Agreement requires that the
Company indemnify directors and designated officers who are parties thereto in
all cases to the fullest extent permitted by applicable law.
Pursuant to a policy of directors' and officers' liability and corporation
reimbursement insurance, the Company's officers and directors are insured,
subject to the limits, retention, exceptions and other terms and conditions of
such policy, against liability for any actual or alleged breach of duty,
neglect, error,
II-1
<PAGE>
misstatement, misleading statement, omission or other act done or wrongfully
attempted while acting in their capacities as directors or officers of the
Company.
Pursuant to a number of agreements by which the Company acquired ownership of
businesses, the former owners of those businesses individually agreed to
indemnify each officer of the Company, each person who may be liable as a
director of the Company or as a person who controls or shall have controlled
the Company within the meaning of the Securities Act of 1933, as amended (the
"Securities Act") against certain liabilities that such officers, directors or
controlling persons might incur. Generally, such former owners have agreed to
indemnify such officers, directors or controlling persons against any and all
damages or liabilities to which such officers, directors or control persons may
become subject under the Securities Act, the Securities Exchange Act of 1934,
as amended, state securities laws, the common law or otherwise, including legal
and other expenses incurred in connection therewith, but only insofar as such
liabilities arise out of or are based upon any untrue statement or omission or
alleged omission based upon information furnished to the Company by or on
behalf of such former owner for use in certain registration statements filed by
the Company under the Securities Act or upon failure of such former owner to
provide such information.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
SEC FILE OR EXHIBIT
REGISTRATION NUMBER NUMBER
------------------- -------
<C> <S> <C> <C>
1(a) Form of Underwriting Agreement 33-51879 1(a)
(for equity securities).
1(b) Form of Underwriting Agreement 33-51879 1(b)
(for debt securities).
4(a) Restated Certificate of 1-6805 3(a)
Incorporation dated December 7, (10-K, September 30, 1993)
1991
**4(b) Bylaws, as amended through March
1, 1995
4(c) Rights Agreement, dated June 1, 1-6805 3.3
1988, between the Registrant and (10-K, September 10, 1988)
Texas Commerce Bank National
Association.
4(d) First Amendment, dated March 1, 1-6805 10.1
1989, to Rights Agreement, dated (10-Q, June 30, 1989)
as of June 1, 1988, between the
Company and Texas Commerce Bank
National Association.
4(e) Second Amendment, dated March 7, 1-6805 4.1
1990, to Rights Agreement, dated (10-Q, March 31, 1990)
as of June 1, 1988, between the
Registrant and First Chicago
Trust Company of New York as
successor Rights Agent.
4(f) Restated Indenture, dated as of 1-6805 4.8
September 1, 1991, between First (10-K, September 10, 1991)
City, Texas-Houston, National
Association, Trustee, and the
Registrant.
4(g) Indenture, dated as of August 1, 33-16537 4.1
1987, between First RepublicBank
Houston, National Association,
Trustee, and the Registrant.
4(h) First Supplemental Indenture, 33-51879 4(f)
dated as of January 11, 1994,
between the Registrant and
NationsBank of Texas, National
Association, as Trustee.
*4(i) Form of Purchase Contract
Agreement, dated as of ,
1995, between the Registrant and
First Chicago Trust Company of
New York, as Purchase Contract
Agent (including as Exhibit A
thereto the form of Security
Certificate).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
SEC FILE OR EXHIBIT
REGISTRATION NUMBER NUMBER
------------------- -------
<C> <S> <C> <C>
*4(j) Form of Pledge Agreement, dated
as of , 1995, among the
Registrant, Texas Commerce
Bank National Association, as
Collateral Agent, and First
Chicago Trust Company of New
York, as Purchase Contract
Agent.
**5 Opinion of Fulbright & Jaworski
L.L.P. as to legality of the
securities being registered.
12(a) Computation of Ratios of 1-6805 12.1
Earnings to Fixed Charges (for (10-K, September 30, 1994)
last five fiscal years).
12(b) Computation of Ratios of 1-6805 12.1
Earnings to Fixed Charges (for (10-Q, December 31, 1994)
quarter ended December 31,
1994)
12(c) Computation of Ratios of 1-6805 12.1
Earnings to Fixed Charges (for (10-Q, March 31, 1995)
quarter ended March 31, 1995)
**23(a) Consent of Arthur Andersen LLP
**23(b) Consent of Binder Hamlyn
**23(c) Consent of Fulbright & Jaworski
L.L.P. (included in their
opinion filed as Exhibit 5).
**24 Powers of Attorney (included
under the caption "Power of
Attorney and Signatures").
**25(a) Form T-1 Statement of
Eligibility and Qualification
under the Trust Indenture Act
of 1939 of Texas Commerce Bank
National Association relating
to the Senior Indenture.
**25(b) Form T-1 Statement of
Eligibility and Qualification
under the Trust Indenture Act
of 1939 of NationsBank of
Texas, National Association
relating to the Subordinated
Indenture.
</TABLE>
- --------
* Filed with this amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the
matter has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by a final adjudication of such issue.
II-3
<PAGE>
(c) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 and Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(5) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for the filing on Form S-3 and has duly caused this
Amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Houston, State of Texas,
on this 19th day of June, 1995.
BROWNING-FERRIS INDUSTRIES, INC.
(Registrant)
By: /s/ Jeffrey E. Curtiss
----------------------------------
Jeffrey E. Curtiss,
Senior Vice President and
Chief Financial Officer
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
William D. Ruckelshaus*
-----------------------------------
William D. Ruckelshaus,
Chairman of the Board,
Chief Executive Officer
and Director
Bruce E. Ranck*
-----------------------------------
Bruce E. Ranck,
President, Chief Operating
Officer and Director
Norman A. Myers*
-----------------------------------
Norman A. Myers
Vice Chairman, Chief Marketing
Officer and Director
/s/ Jeffrey E. Curtiss
-----------------------------------
Jeffrey E. Curtiss,
Senior Vice President and
Chief Financial Officer
David R. Hopkins*
-----------------------------------
David R. Hopkins,
Vice President, Controller and
Chief Accounting Officer
William T. Butler*
-----------------------------------
William T. Butler, Director
C. Jackson Grayson, Jr.*
-----------------------------------
C. Jackson Grayson, Jr., Director
Gerald Grinstein*
-----------------------------------
Gerald Grinstein, Director
Ulrich Otto*
-----------------------------------
Ulrich Otto, Director
Harry J. Phillips, Sr.*
-----------------------------------
Harry J. Phillips, Sr., Director
Joseph L. Roberts, Jr.*
-----------------------------------
Joseph L. Roberts, Jr., Director
II-6
<PAGE>
Marc J. Shapiro*
-----------------------------------
Marc J. Shapiro, Director
Robert M. Teeter*
-----------------------------------
Robert M. Teeter, Director
Louis A. Waters*
-----------------------------------
Louis A. Waters, Director
Marina v.N. Whitman*
-----------------------------------
Marina v.N. Whitman, Director
Peter S. Willmott*
-----------------------------------
Peter S. Willmott, Director
*By
/s/ Jeffrey E. Curtiss
- -----------------------------------
Jeffrey E. Curtiss
Attorney-in-Fact
June 19, 1995.
II-7
<PAGE>
EXHIBIT 4(I)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BROWNING-FERRIS INDUSTRIES, INC.
AND
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
AS PURCHASE CONTRACT AGENT
------------------
PURCHASE CONTRACT AGREEMENT
------------------
DATED AS OF , 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions................................................... 1
Act...................................................................... 1
Affiliate................................................................ 2
Agent.................................................................... 2
Agreement................................................................ 2
Applicable Market Value.................................................. 2
Board of Directors....................................................... 2
Board Resolution......................................................... 2
Business Day............................................................. 2
Closing Price............................................................ 2
Collateral Agent......................................................... 2
Common Stock............................................................. 2
Company.................................................................. 3
Contract Fee............................................................. 3
Corporate Trust Office................................................... 3
Current Market Price..................................................... 3
Depositary............................................................... 3
Early Settlement......................................................... 3
Early Settlement Amount.................................................. 3
Early Settlement Date.................................................... 3
Early Settlement Rate.................................................... 3
Exchange Act............................................................. 3
Excess Treasury Notes.................................................... 3
Expiration Date.......................................................... 3
Expiration Time.......................................................... 3
Final Settlement Date.................................................... 3
Global Security Certificate.............................................. 3
Holder................................................................... 4
Issuer Order............................................................. 4
Issuer Request........................................................... 4
NYSE..................................................................... 4
Officers' Certificate.................................................... 4
Opinion of Counsel....................................................... 4
Outstanding Securities................................................... 4
Outstanding Security Certificates........................................ 5
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Payment Date............................................................. 5
Person................................................................... 5
Pledge................................................................... 5
Pledge Agreement......................................................... 5
Predecessor Security Certificate......................................... 5
Purchase Contract........................................................ 5
Purchased Shares......................................................... 6
Record Date.............................................................. 6
Reorganization Event..................................................... 6
Responsible Officer...................................................... 6
Security................................................................. 6
Security Certificate..................................................... 6
Security Register........................................................ 6
Security Registrar....................................................... 6
Settlement Rate.......................................................... 6
Stated Amount............................................................ 6
Termination Date......................................................... 6
Termination Event........................................................ 6
Threshold Appreciation Price............................................. 7
TIA...................................................................... 7
Trading Day.............................................................. 7
Treasury Notes........................................................... 7
Underwriting Agreement................................................... 7
Vice President........................................................... 7
Section 102. Compliance Certificates and Opinions.......................... 7
Section 103. Form of Documents Delivered to Agent.......................... 8
Section 104. Acts of Holders; Record Dates................................. 9
Section 105. Notices, etc., to Agent and the Company....................... 10
Section 106. Notice to Holders; Waiver..................................... 11
Section 107. Effect of Headings and Table of Contents...................... 11
Section 108. Successors and Assigns........................................ 12
Section 109. Separability Clause........................................... 12
Section 110. Benefits of Agreement......................................... 12
Section 111. Governing Law................................................. 12
Section 112. Legal Holidays................................................ 12
Section 113. Counterparts.................................................. 13
Section 114. Inspection of Agreement....................................... 13
ARTICLE TWO
Security Certificate Forms
Section 201. Forms of Security Certificates Generally...................... 13
Section 202. Form of Agent's Certificate of Authentication................. 14
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
ARTICLE THREE
The Securities
<S> <C>
Section 301. Title and Terms; Denominations............................... 14
Section 302. Rights and Obligations Evidenced by the Security Certifi-
cates................................................................... 14
Section 303. Execution, Authentication, Delivery and Dating............... 15
Section 304. Temporary Security Certificates.............................. 16
Section 305. Registration; Registration of Transfer and Exchange.......... 16
Section 306. Mutilated, Destroyed, Lost and Stolen Security Certificates.. 19
Section 307. Persons Deemed Owners........................................ 20
Section 308. Cancellation................................................. 20
Section 309. Securities Not Separable..................................... 21
ARTICLE FOUR
The Treasury Notes
Section 401. Payment of Interest; Interest Rights Preserved............... 21
Section 402. Transfer of Treasury Notes Upon Occurrence of Termination
Event....................................................... 22
ARTICLE FIVE
The Purchase Contracts
Section 501. Purchase of Shares of Common Stock........................... 23
Section 502. Contract Fees................................................ 25
Section 503. Deferral of Payment Dates For Contract Fee................... 26
Section 504. Payment of Purchase Price.................................... 26
Section 505. Issuance of Shares of Common Stock........................... 26
Section 506. Adjustment of Settlement Rate................................ 27
Section 507. Notice of Adjustments and Certain Other Events............... 34
Section 508. Termination Event; Notice.................................... 34
Section 509. Early Settlement............................................. 35
Section 510. No Fractional Shares......................................... 37
Section 511. Charges and Taxes............................................ 37
ARTICLE SIX
Remedies
Section 601. Unconditional Right of Holders to Receive Contract Fee....... 38
Section 602. Restoration of Rights and Remedies........................... 38
Section 603. Rights and Remedies Cumulative............................... 38
Section 604. Delay or Omission Not Waiver................................. 39
Section 605. Undertaking for Costs........................................ 39
Section 606. Waiver of Stay or Extension Laws............................. 39
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
ARTICLE SEVEN
The Agent
<S> <C>
Section 701. Certain Duties and Responsibilities.......................... 40
Section 702. Notice of Default............................................ 41
Section 703. Certain Rights of Agent...................................... 41
Section 704. Not Responsible for Recitals or Issuance of Securities....... 42
Section 705. May Hold Securities.......................................... 42
Section 706. Money Held in Trust.......................................... 42
Section 707. Compensation and Reimbursement............................... 42
Section 708. Corporate Agent Required; Eligibility........................ 43
Section 709. Resignation and Removal; Appointment of Successor............ 43
Section 710. Acceptance of Appointment by Successor....................... 44
Section 711. Merger, Conversion, Consolidation or Succession to Business.. 45
Section 712. Preservation of Information; Communications to Holders....... 45
Section 713. No Obligations of Agent...................................... 46
Section 714. Tax Compliance............................................... 46
ARTICLE EIGHT
Supplemental Agreements
Section 801. Supplemental Agreements Without Consent of Holders........... 47
Section 802. Supplemental Agreements with Consent of Holders.............. 48
Section 803. Execution of Supplemental Agreements......................... 48
Section 804. Effect of Supplemental Agreements............................ 49
Section 805. Reference to Supplemental Agreements......................... 49
ARTICLE NINE
Consolidation, Merger, Sale or Conveyance
Section 901. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions............................. 49
Section 902. Rights and Duties of Successor Corporation................... 50
Section 903. Opinion of Counsel to Agent.................................. 50
ARTICLE TEN
Covenants
Section 1001. Performance Under Purchase Contracts........................ 51
Section 1002. Maintenance of Office or Agency............................. 51
Section 1003. Company to Reserve Common Stock............................. 52
Section 1004. Covenants as to Common Stock................................ 52
Section 1005. Statements of Officers of the Company as to Default......... 52
TESTIMONIUM............................................................... 52
SIGNATURES................................................................ 52
EXHIBIT A Form of Security Certificate
</TABLE>
iv
<PAGE>
PURCHASE CONTRACT AGREEMENT, dated as of , 1995, between BROWNING-
FERRIS INDUSTRIES, INC., a Delaware corporation (the "Company"), and FIRST
CHICAGO TRUST COMPANY OF NEW YORK, acting as purchase contract agent for the
Holders of Securities from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this Agreement
and the Security Certificates evidencing the Securities.
All things necessary to make the Company's obligations under the Securities,
when the Security Certificates are executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Agent, as in this
Agreement provided, the valid obligations of the Company, and to constitute
these presents a valid agreement of the Company, in accordance with its terms,
have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular; and
(2) the words "herein," "hereof" and "hereunder" and other words of sim-
ilar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Act" when used with respect to any Holder, has the meaning specified in
Section 104.
<PAGE>
"Affiliate" of any specified Person means any other Person directly or indi-
rectly controlling or controlled by or under direct or indirect common control
with such specified Person. For the purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the forego-
ing.
"Agent" means the Person named as the "Agent" in the first paragraph of this
instrument until a successor Agent shall have become such pursuant to the ap-
plicable provisions of this Agreement, and thereafter "Agent" shall mean the
Person who is then the Agent hereunder.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 501.
"Board of Directors" means the board of directors of the Company or a duly
authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of Directors,
a copy of which has been certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be
in full force and effect on the date of such certification and delivered to
the Agent.
"Business Day" means any day that is not a Saturday, Sunday or a day on
which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to be closed.
"Closing Price" has the meaning specified in Section 501.
"Collateral Agent" means Texas Commerce Bank National Association, as Col-
lateral Agent under the Pledge Agreement until a successor Collateral Agent
shall have become such pursuant to the applicable provisions of the Pledge
Agreement, and thereafter "Collateral Agent" shall mean the Person who is then
the Collateral Agent thereunder.
"Common Stock" means the Common Stock, par value $0.16 2/3 per share, of the
Company.
2
<PAGE>
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor shall have become such, and thereafter "Com-
pany" shall mean such successor.
"Contract Fee" means the fee payable by the Company in respect of each Pur-
chase Contract, equal to % per annum of the Stated Amount, accruing from
, 1995, computed on the basis of the actual number of days elapsed
in a year of 365 or 366 days, as the case may be, plus any additional fees ac-
crued pursuant to Section 503.
"Corporate Trust Office" means the principal office of the Agent in the Bor-
ough of Manhattan, The City of New York, at which at any particular time its
corporate trust business shall be administered, which office at the date
hereof is located at , New York, New York .
"Current Market Price" has the meaning specified in Section 506(a)(8).
"Depositary" means a clearing agency registered under the Exchange Act that
is designated to act as Depositary for the Securities as contemplated by Sec-
tion 305.
"Early Settlement" has the meaning specified in Section 509(a).
"Early Settlement Amount" has the meaning specified in Section 509(a).
"Early Settlement Date" has the meaning specified in Section 509(a).
"Early Settlement Rate" has the meaning specified in Section 509(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Excess Treasury Notes" has the meaning specified in Section 402.
"Expiration Date" has the meaning specified in Section 104.
"Expiration Time" has the meaning specified in Section 506(a)(6).
"Final Settlement Date" means , 1998.
"Final Settlement Fund" has the meaning specified in Section 505.
"Global Security Certificate" means a Security Certificate that evidences
all or part of the Securities and is registered in the name of a Depositary or
a nominee thereof.
3
<PAGE>
"Holder," when used with respect to a Security Certificate (or a Security),
means a Person in whose name the Security evidenced by such Security Certifi-
cate (or the Security Certificate evidencing such Security) is registered in
the Security Register.
"Issuer Order" or "Issuer Request" means a written order or request signed
in the name of the Company by its Chairman of the Board, any Vice Chairman,
its President or a Vice President and by its Treasurer, an Assistant Treasur-
er, its Secretary or an Assistant Secretary, and delivered to the Agent.
"NYSE" has the meaning specified in Section 501.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, any Vice Chairman, the President or any Vice President and by the Trea-
surer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the
Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by legal counsel,
who may be an employee of or counsel to the Company.
"Outstanding Securities" means, as of the date of determination, all Securi-
ties evidenced by then Outstanding Security Certificates, except:
(i) If a Termination Event has occurred, Securities for which the under-
lying Treasury Notes have been theretofore deposited with the Agent in
trust for the Holders of such Securities; and
(ii) On and after the applicable Early Settlement Date, Securities as to
which the Holder has elected to effect Early Termination of the related
Purchase Contracts;
provided, however, that in determining whether the Holders of the requisite
number of Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
Affiliate of the Company shall be disregarded and deemed not to be outstand-
ing, except that, in determining whether the Agent shall be protected in rely-
ing upon any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which the Agent knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Agent the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any Affiliate of the Company.
4
<PAGE>
"Outstanding Security Certificates" means, as of the date of determination,
all Security Certificates theretofore authenticated, executed and delivered
under this Agreement, except:
(i) Security Certificates theretofore cancelled by the Agent or deliv-
ered to the Agent for cancellation; and
(ii) Security Certificates in exchange for or in lieu of which other Se-
curity Certificates have been authenticated, executed on behalf of the
Holder and delivered pursuant to this Agreement, other than any such Secu-
rity Certificate in respect of which there shall have been presented to
the Agent proof satisfactory to it that such Security Certificate is held
by a bona fide purchaser in whose hands the Securities evidenced by such
Security Certificate are valid obligations of the Company.
"Payment Date" means each and , commencing ,
1995.
"Person" means any individual, corporation, limited liability company, part-
nership, joint venture, association, joint-stock company, trust, unincorpo-
rated organization or government or any agency or political subdivision there-
of.
"Pledge" means the pledge under the Pledge Agreement of the Treasury Notes
constituting a part of the Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the date hereof,
among the Company, the Collateral Agent and the Agent, on its own behalf and
as attorney-in-fact for the Holders from time to time of the Securities.
"Predecessor Security Certificate" of any particular Security Certificate
means every previous Security Certificate evidencing all or a portion of the
rights and obligations of the Holder under the Securities evidenced thereby;
and, for the purposes of this definition, any Security Certificate authenti-
cated and delivered under Section 306 in exchange for or in lieu of a mutilat-
ed, destroyed, lost or stolen Security Certificate shall be deemed to evidence
the same rights and obligations of the Holder as the mutilated, destroyed,
lost or stolen Security Certificate.
"Purchase Contract," when used with respect to any Security, means the con-
tract obligating the Company to sell and the Holder of such Security to pur-
chase Common Stock on the terms and subject to the conditions set forth in Ar-
ticle Five hereof.
5
<PAGE>
"Purchased Shares" has the meaning specified in Section 506(a)(6).
"Record Date" for the interest and Contract Fees payable on any Payment Date
means the or (whether or not a Business Day), as the case may
be, next preceding such Payment Date.
"Reorganization Event" has the meaning specified in Section 506(b).
"Responsible Officer," when used with respect to the Agent, means any offi-
cer of the Agent assigned by the Agent to administer its corporate trust mat-
ters.
"Security" means the collective rights and obligations of a Holder of a Se-
curity Certificate in respect of Treasury Notes with a principal amount equal
to the Stated Amount, subject to the Pledge thereof, and a Purchase Contract.
"Security Certificate" means a certificate evidencing the rights and obliga-
tions of a Holder in respect of the number of Securities specified on such
certificate.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Settlement Rate" has the meaning specified in Section 501.
"Stated Amount" means $ .
"Termination Date" means the date, if any, on which a Termination Event oc-
curs.
"Termination Event" means the occurrence of any of the following events: (i)
at any time on or prior to the Final Settlement Date, a decree or order by a
court having jurisdiction in the premises shall have been entered adjudging
the Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization of the Company under the United States Bankruptcy Code
or any other similar applicable Federal or State law, and, unless such decree
or order shall have been entered within 60 days prior to the Final Settlement
Date, such decree or order shall have continued undischarged and unstayed for
a period of 60 days; or (ii) a decree or order of a court having jurisdiction
in the premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company or of its property, or for
the winding up or liquidation of its affairs, shall have been entered, and,
unless such decree or order shall have been entered within 60
6
<PAGE>
days prior to the Final Settlement Date, such decree or order shall have con-
tinued undischarged and unstayed for a period of 60 days, or (iii) at any time
on or prior to the Final Settlement Date the Company shall institute proceed-
ings to be adjudicated a bankrupt, or shall consent to the filing of a bank-
ruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization under the United States Bankruptcy Code or any other
similar applicable Federal or State law, or shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of it or of its property,
or shall make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in Section 501.
"TIA" means the Trust Indenture Act of 1939, as amended, or any successor
statute.
"Trading Day" has the meaning specified in Section 501.
"Treasury Notes" means % United States Treasury Notes due ,
1998.
"Underwriting Agreement" means the Underwriting Agreement dated ,
1995 between the Company and Goldman, Sachs & Co. and CS First Boston Corpora-
tion, as representatives of the several Underwriters named therein.
"Vice President" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
Section 102. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any applica-
tion or request by the Company to the Agent to take any action under any pro-
vision of this Agreement, the Company shall furnish to the Agent an Officers'
Certificate stating that all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all such con-
ditions precedent, if any, have been complied with, except that in the case of
any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to
7
<PAGE>
such particular application or request, no additional certificate or opinion
need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such cer-
tificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condi-
tion has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or cov-
ered by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person,
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, inso-
far as it relates to legal matters, upon a certificate or opinion of, or rep-
resentations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representa-
tions with respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the in-
formation with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect
to such matters are erroneous.
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Where any Person is required to make, give or execute two or more applica-
tions, requests, consents, certificates, statements, opinions or other instru-
ments under this Agreement, they may, but need not, be consolidated and form
one instrument.
Section 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially simi-
lar tenor signed by such Holders in person or by agent duly appointed in writ-
ing; and, except as herein otherwise expressly provided, such action shall be-
come effective when such instrument or instruments are delivered to the Agent
and, where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing ap-
pointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 701) conclusive in favor of the Agent and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
a certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instru-
ment or writing acknowledged to him the execution thereof. Where such execu-
tion is by a signer acting in a capacity other than his individual capacity,
such certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writ-
ing, or the authority of the Person executing the same, may also be proved in
any other manner which the Agent deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security Certificate evidencing such
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered
to be done by the Agent or the Company in reliance thereon, whether or not no-
tation of such action is made upon such Security Certificate.
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(e) The Company may set any day as a record date for the purpose of deter-
mining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Agreement to be given, made or
taken by Holders of Securities. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date; provided that no such ac-
tion shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite number of Outstanding Securities
on such record date. Nothing in this paragraph shall be construed to prevent
the Company from setting a new record date for any action for which a record
date has previously been set pursuant to this paragraph (whereupon the record
date previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite number of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own ex-
pense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Agent in writing and to
each Holder of Securities in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the Company
may designate any date as the "Expiration Date" and from time to time may
change the Expiration Date to any earlier or later day; provided that no such
change shall be effective unless notice of the proposed new Expiration Date is
given to the Agent in writing, and to each Holder of Securities in the manner
set forth in Section 106, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the Company shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this para-
graph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
Section 105. Notices, etc., to Agent and the Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Agreement to be
made upon, given or furnished to, or filed with,
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(1) the Agent by any Holder or by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, to the Agent at P.O. Box 2500, Jersey
City, New Jersey 07303-2500, Attention: Stock Transfer Department, or at
any other address previously furnished in writing by the Agent to the
Holders and the Company, or
(2) the Company by the Agent or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, to the Company at Browning-Ferris
Building, 757 North Eldridge, P.O. Box 3151, Houston, Texas 77253, Atten-
tion: Treasurer, or at any other address previously furnished in writing
to the Agent by the Company.
Section 106. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such no-
tice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with
the Agent, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Agent shall con-
stitute a sufficient notification for every purpose hereunder.
Section 107. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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Section 108. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall bind its
successors and assigns, whether so expressed or not.
Section 109. Separability Clause.
In case any provision in this Agreement or in the Securities shall be inval-
id, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
Section 110. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereun-
der and the Holders, any benefits or any legal or equitable right, remedy or
claim under this Agreement. The Holders from time to time shall be beneficia-
ries of this Agreement and shall be bound by all of the terms and conditions
hereof and of the Securities evidenced by their Security Certificates by their
acceptance of delivery thereof.
Section 111. Governing Law.
This Agreement and the Securities shall be governed by and construed in ac-
cordance with the laws of the State of New York.
Section 112. Legal Holidays.
In any case where any Payment Date, any Early Settlement Date or the Final
Settlement Date shall not be a Business Day, then (notwithstanding any other
provision of this Agreement or of the Securities) payment in respect of inter-
est on Treasury Notes or Contract Fees shall not be made, Purchase Contracts
shall not be performed and Early Settlement shall not be effected on such
date, but such payments shall be made, or the Purchase Contracts shall be per-
formed or Early Settlement effected, as applicable, on the next succeeding
Business Day with the same force and effect as if made on such Payment Date,
Early Settlement Date or Final Settlement Date, as the case may be; provided,
that no interest shall accrue or be payable by the Company or any Holder for
the period from and after any such Payment Date, Early Settlement Date or Fi-
nal Settlement Date, as the case may be.
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Section 113. Counterparts.
This Agreement may be executed in any number of counterparts, each of which,
when so executed, shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument.
Section 114. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times at the
Corporate Trust Office for inspection by any Holder.
ARTICLE TWO
Security Certificate Forms
Section 201. Forms of Security Certificates Generally.
The Security Certificates (including the form of Purchase Contracts forming
part of the Securities evidenced thereby) shall be in substantially the form
set forth in Exhibit A hereto, with such letters, numbers or other marks of
identification or designation and such legends or endorsements printed, litho-
graphed or engraved thereon as may be required by the rules of any securities
exchange on which the Securities are listed or Depositary therefor, or as may,
consistently herewith, be determined by the officers of the Company executing
such Security Certificates, as evidenced by their execution of the Security
Certificates.
The definitive Security Certificates shall be printed, lithographed or en-
graved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing the Security Certifi-
cates, consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
Every Global Security Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the fol-
lowing form:
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY CER-
13
<PAGE>
TIFICATE REGISTERED, AND NO TRANSFER OF THIS SECURITY CERTIFICATE IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH
DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DE-
SCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Section 202. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Securities
shall be in substantially the form set forth on the form of the Security Cer-
tificates.
ARTICLE THREE
The Securities
Section 301. Title and Terms; Denominations.
The aggregate number of Securities evidenced by Security Certificates au-
thenticated, executed on behalf of the Holders and delivered hereunder is lim-
ited to 10,000,000 (subject to increase up to a maximum of 1,500,000 to the
extent the over-allotment option of the underwriters under the Underwriting
Agreement is exercised), except for Security Certificates authenticated, exe-
cuted and delivered upon registration of transfer of, in exchange for, or in
lieu of, other Security Certificates pursuant to Section 304, 305, 306, 509 or
805.
The Security Certificates shall be issuable only in registered form and only
in denominations of a single Security and any integral multiple thereof.
Section 302. Rights and Obligations Evidenced by the Security Certificates.
Each Security Certificate shall evidence the number of Securities specified
therein, with each such Security representing the ownership by the Holder
thereof of Treasury Notes with a principal amount equal to the Stated Amount,
subject to the Pledge of such Treasury Notes by such Holder pursuant to the
Pledge Agreement, and the rights and obligations of the Holder under one Pur-
chase Contract. Prior to the purchase, if any, of shares of Common Stock under
the Purchase Contracts, the Securities shall not entitle the Holders to any of
the rights of a holder of shares of Common Stock, including, without limita-
tion, the right to vote or receive any dividends or other payments or to con-
sent or to receive notice as stockholders in respect of the meetings of
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<PAGE>
stockholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as stockholders of the Company, except
to the extent otherwise expressly provided in this Agreement.
Section 303. Execution, Authentication, Delivery and Dating.
Upon the execution and delivery of this Agreement, and at any time and from
time to time thereafter, the Company may deliver Security Certificates exe-
cuted by the Company to the Agent for authentication, execution on behalf of
the Holders and delivery, together with its Issuer Order for authentication of
such Security Certificates, and the Agent in accordance with such Issuer Order
shall authenticate, execute on behalf of the Holder and deliver such Security
Certificates.
The Security Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Security Certificates may be manual or facsimile.
Security Certificates bearing the manual or facsimile signatures of individ-
uals who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Security
Certificates or did not hold such offices at the date of such Security Certif-
icates.
No Purchase Contract underlying a Security evidenced by a Security Certifi-
cate shall be valid until such Security Certificate has been executed on be-
half of the Holder by the manual signature of an authorized signatory of the
Agent, as such Holder's attorney-in-fact. Such signature by an authorized sig-
natory of the Agent shall be conclusive evidence that the Holder of such Secu-
rity Certificate has entered into the Purchase Contracts underlying the Secu-
rities evidenced by such Security Certificate.
Each Security Certificate shall be dated the date of its authentication.
No Security Certificate shall be entitled to any benefit under this Agree-
ment or be valid or obligatory for any purpose unless there appears on such
Security Certificate a certificate of authentication substantially in the form
provided for herein executed by an authorized signatory of the Agent by
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<PAGE>
manual signature, and such certificate upon any Security Certificate shall be
conclusive evidence, and the only evidence, that such Security Certificate has
been duly authenticated and delivered hereunder.
Section 304. Temporary Security Certificates.
Pending the preparation of definitive Security Certificates, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate, exe-
cute on behalf of the Holders, and deliver, in lieu of such definitive Secu-
rity Certificates, temporary Security Certificates which are in substantially
the form set forth in Exhibit A hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements print-
ed, lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Securities are listed, or as may, consist-
ently herewith, be determined by the officers of the Company executing such
Security Certificates, as evidenced by their execution of the Security Certif-
icates.
If temporary Security Certificates are issued, the Company will cause defin-
itive Security Certificates to be prepared without unreasonable delay. After
the preparation of definitive Security Certificates, the temporary Security
Certificates shall be exchangeable for definitive Security Certificates upon
surrender of the temporary Security Certificates at the Corporate Trust Of-
fice, at the expense of the Company and without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Security Certificates,
the Company shall execute and deliver to the Agent, and the Agent shall au-
thenticate, execute on behalf of the Holder, and deliver in exchange therefor,
one or more definitive Security Certificates of authorized denominations and
evidencing a like number of Securities as the temporary Security Certificate
or Security Certificates so surrendered. Until so exchanged, the temporary Se-
curity Certificates shall in all respects evidence the same benefits and the
same obligations with respect to the Securities evidenced thereby as defini-
tive Security Certificates.
Section 305. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a register (the register
maintained in such office being herein referred to as the "Security Register")
in which, subject to such reasonable regulations as it may prescribe, the
Agent shall provide for the registration of Security Certificates and of
transfers of Security Certificates (the Agent, in such capacity, the "Security
Registrar").
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Upon surrender for registration of transfer of any Security Certificate at
the Corporate Trust Office, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the designated
transferee or transferees, and deliver, in the name of the designated trans-
feree or transferees, one or more new Security Certificates of any authorized
denominations and evidencing a like number of Securities.
At the option of the Holder, Security Certificates may be exchanged for
other Security Certificates, of any authorized denominations and evidencing a
like number of Securities, upon surrender of the Security Certificates to be
exchanged at the Corporate Trust Office. Whenever any Security Certificates
are so surrendered for exchange, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver the Security Certificates which the Holder making the exchange is en-
titled to receive.
All Security Certificates issued upon any registration of transfer or ex-
change of a Security Certificate shall evidence the ownership of the same num-
ber of Securities and be entitled to the same benefits and subject to the same
obligations, under this Agreement as the Securities evidenced by the Security
Certificate surrendered upon such registration of transfer or exchange.
Every Security Certificate presented or surrendered for registration of
transfer or for exchange shall (if so required by the Agent) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Agent duly executed, by the Holder thereof or his attorney
duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange
of a Security Certificate, but the Company and the Agent may require payment
from the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Security Certificates, other than any exchanges pursuant to Sec-
tions 306 and 805 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to execute
and deliver to the Agent, and the Agent shall not be obligated to authenti-
cate, execute on behalf of the Holder and deliver any Security Certificate
presented or surrendered for registration of transfer or for exchange on
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or after the Final Settlement Date or the Termination Date. In lieu of deliv-
ery of a new Security Certificate, upon satisfaction of the applicable condi-
tions specified above in this Section and receipt of appropriate registration
or transfer instructions from such Holder, the Agent shall (i) if the Final
Settlement Date has occurred, deliver the shares of Common Stock issuable in
respect of the Purchase Contracts forming a part of the Securities evidenced
by such Security Certificate, or (ii) if a Termination Event shall have oc-
curred prior to the Final Settlement Date, transfer the principal amount of
the Treasury Notes evidenced thereby, in each case subject to the applicable
conditions and in accordance with the applicable provisions of Article Five
hereof.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Security Certificates:
(1) Each Global Security Certificate authenticated and executed on be-
half of the Holders under this Agreement shall be registered in the name
of the Depositary designated for such Global Security Certificate or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security Certificate shall con-
stitute a single Security Certificate for all purposes of this Agreement.
(2) Notwithstanding any other provision in this Agreement, no Global Se-
curity Certificate may be exchanged in whole or in part for Security Cer-
tificates registered, and no transfer of a Global Security Certificate in
whole or in part may be registered, in the name of any Person other than
the Depositary for such Global Security Certificate or a nominee thereof
unless (A) such Depositary (i) has notified the Company that it is unwill-
ing or unable to continue as Depositary for such Global Security Certifi-
cate or (ii) has ceased to be a clearing agency registered under the Ex-
change Act or (b) there shall have occurred and be continuing a default by
the Company in respect to its obligations under one or more Purchase Con-
tracts.
(3) Subject to Clause (2) above, any exchange of a Global Security Cer-
tificate for other Security Certificates may be made in whole or in part,
and all Security Certificates issued in exchange for a Global Security
Certificate or any portion thereof shall be registered in such names as
the Depositary for such Global Security Certificate shall direct.
(4) Every Security Certificate authenticated and delivered upon regis-
tration of transfer of, or in exchange for or in lieu of, a Global Secu-
rity Certificate or any portion thereof, whether pursuant to this Section,
Section 304, 306, 509 or 805 or otherwise, shall be authenticated, exe-
cuted on behalf of the Holders and delivered in the form of, and shall be,
a Global Security Certificate, unless such Security Certificate is regis-
tered
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<PAGE>
in the name of a Person other than the Depositary for such Global Security
Certificate or a nominee thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Security Certificates.
If any mutilated Security Certificate is surrendered to the Agent, the Com-
pany shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a new Secu-
rity Certificate, evidencing the same number of Securities and bearing a num-
ber not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence to
their satisfaction of the destruction, loss or theft of any Security Certifi-
cate, and (ii) such security or indemnity as may be required by them to save
each of them and any agent of any of them harmless, then, in the absence of
notice to the Company or the Agent that such Security Certificate has been ac-
quired by a bona fide purchaser, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen Security
Certificate, a new Security Certificate, evidencing the same number of Securi-
ties and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to execute
and deliver to the Agent, and the Agent shall not be obligated to authenti-
cate, execute on behalf of the Holder, and deliver to the Holder, a Security
Certificate on or after the Final Settlement Date or the Termination Date. In
lieu of delivery of a new Security Certificate, upon satisfaction of the ap-
plicable conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall (i) if
the Final Settlement Date has occurred, deliver the shares of Common Stock is-
suable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Security Certificate, or (ii) if a Termination Event shall
have occurred prior to the Final Settlement Date, transfer the principal
amount of the Treasury Notes evidenced thereby, in each case subject to the
applicable conditions and in accordance with the applicable provisions of Ar-
ticle Five hereof.
Upon the issuance of any new Security Certificate under this Section, the
Company and the Agent may require the payment by the Holder of a sum suffi-
cient to cover any tax or other governmental charge that may be imposed
19
<PAGE>
in relation thereto and any other expenses (including the fees and expenses of
the Agent) connected therewith.
Every new Security Certificate issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security Certificate shall constitute an origi-
nal additional contractual obligation of the Company and of the Holder,
whether or not the destroyed, lost or stolen Security Certificate shall be at
any time enforceable by anyone, and shall be entitled to all the benefits and
be subject to all the obligations of this Agreement equally and proportion-
ately with any and all other Security Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the ex-
tent lawful) all other rights and remedies with respect to the replacement or
settlement of mutilated, destroyed, lost or stolen Security Certificates.
Section 307. Persons Deemed Owners.
Prior to due presentment of a Security Certificate for registration of
transfer, the Company and the Agent, and any agent of the Company or the
Agent, may treat the Person in whose name such Security Certificate is regis-
tered as the owner of the Securities evidenced thereby, for the purpose of re-
ceiving payments of interest on the Treasury Notes, receiving payments of Con-
tract Fees, performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not the payment of interest on the Treasury Notes or
any Contract Fee payable in respect of the Purchase Contracts constituting a
part of the Securities evidenced thereby shall be overdue and notwithstanding
any notice to the contrary, and neither the Company nor the Agent, nor any
agent of the Company or the Agent, shall be affected by notice to the con-
trary.
Notwithstanding the foregoing, with respect to any Global Security Certifi-
cate, nothing herein shall prevent the Company, the Agent or any agent of the
Company or the Agent, from giving effect to any written certification, proxy
or other authorization furnished by any Depositary (or its nominee), as a
Holder, with respect to such Global Security Certificate or impair, as between
such Depositary and owners of beneficial interests in such Global Security
Certificate, the operation of customary practices governing the exercise of
rights of such Depositary (or its nominee) as Holder of such Global Security
Certificate.
Section 308. Cancellation.
All Security Certificates surrendered for delivery of shares of Common Stock
on or after the Final Settlement Date, transfer of Treasury Notes after
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<PAGE>
the occurrence of a Termination Event or pursuant to an Early Settlement or
registration of transfer or exchange shall, if surrendered to any Person other
than the Agent, be delivered to the Agent and, if not already cancelled, shall
be promptly cancelled by it. The Company may at any time deliver to the Agent
for cancellation any Security Certificates previously authenticated, executed
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Security Certificates so delivered shall, upon Issuer Or-
der, be promptly cancelled by the Agent. No Security Certificates shall be au-
thenticated, executed on behalf of the Holder and delivered in lieu of or in
exchange for any Security Certificates cancelled as provided in this Section,
except as expressly permitted by this Agreement. All cancelled Security Cer-
tificates held by the Agent shall be disposed of as directed by Issuer Order.
If the Company or any Affiliate of the Company shall acquire any Security
Certificate, such acquisition shall not operate as a cancellation of such Se-
curity Certificate unless and until such Security Certificate is delivered to
the Agent cancelled or for cancellation.
Section 309. Securities Not Separable.
Notwithstanding anything contained herein or in the Security Certificates to
the contrary, for so long as the Purchase Contract underlying a Security re-
mains in effect such Security shall not be separable into its constituent
parts, and the rights and obligations of the Holder of such Security in re-
spect of the Treasury Notes and Purchase Contracts constituting such Security
may be acquired, and may be transferred and exchanged, only as a Security.
Other than a Security Certificate evidencing a Security, no Holder of a Secu-
rity, or any transferee thereof, shall be entitled to receive a certificate
evidencing the ownership of Treasury Notes or the rights and obligations of
the Holder and the Company under a Purchase Contract for so long as the Pur-
chase Contract underlying the Security remains in effect.
ARTICLE FOUR
The Treasury Notes
Section 401. Payment of Interest; Interest Rights Preserved.
Interest on any Treasury Note which is paid on any Payment Date shall, sub-
ject to receipt thereof by the Agent from the Collateral Agent as provided by
the terms of the Pledge Agreement, be paid to the Person in whose name the Se-
curity Certificate (or one or more Predecessor Security Certificates) of which
such Treasury Note is a part is registered at the close of business on the
Record Date next preceding such Payment Date.
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Each Security Certificate evidencing Treasury Notes delivered under this
Agreement upon registration of transfer of or in exchange for or in lieu of
any other Security Certificate shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by the Treasury Notes underlying
such other Security Certificate.
In the case of any Security with respect to which Early Settlement of the
underlying Purchase Contract is effected on an Early Settlement Date after any
Record Date and on or prior to the next succeeding Payment Date, interest on
the Treasury Notes underlying such Security otherwise payable on such Payment
Date shall be payable on such Payment Date notwithstanding such Early Settle-
ment, and such interest shall, subject to receipt thereof by the Agent, be
paid to the Person in whose name the Security Certificate (or one or more
Predecessor Security Certificates) is registered at the close of business on
the Record Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Security with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early Settle-
ment Date, interest on the related Treasury Notes that would otherwise be pay-
able after the Early Settlement Date shall not be payable hereunder to the
Holder of such Security.
Section 402. Transfer of Treasury Notes Upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer to the Agent of
the Treasury Notes underlying such Securities pursuant to the terms of the
Pledge Agreement, the Agent shall request transfer instructions with respect
to such Treasury Notes from each Holder of Securities by written request
mailed to such Holder at his address as it appears in the Security Register,
in respect of the Treasury Notes underlying the Security Certificate held by
such Holder. Upon surrender to the Agent of a Security Certificate with such
transfer instructions in proper form for transfer of the Treasury Notes by
Federal Reserve Bank-Wire or other appropriate procedure, the Agent shall
transfer the Treasury Notes evidenced by such Security Certificate to such
Holder in accordance with such instructions. If a Security Certificate is not
duly surrendered to the Agent with appropriate transfer instructions, the
Agent shall hold the Treasury Notes evidenced by such Security Certificate as
custodian for the Holder of such Security Certificate.
Treasury Notes shall be transferred only in denominations of $1,000 and in-
tegral multiples thereof. As promptly as practicable following the occurrence
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of a Termination Event, the Agent shall determine the excess of (i) the aggre-
gate principal amount of Treasury Notes underlying the Outstanding Securities
over (ii) the aggregate principal amount of Treasury Notes in denominations of
$1,000 and integral multiples thereof transferrable to Holders of record on
the date of such Termination Event (such excess being herein referred to as
the "Excess Treasury Notes"). As soon as practicable after transfer to the
Agent of the Treasury Notes underlying the Outstanding Securities as provided
in the Pledge Agreement, the Agent shall sell the Excess Treasury Notes to or
through one or more U.S. Government securities dealers at then prevailing
prices. The Agent shall deduct from the proceeds of such sales all commissions
and other out-of-pocket transaction costs incurred in connection with such
sales of Excess Treasury Notes and, until the net proceeds of such sale or
sales have been distributed to Holders of the Securities, the Agent shall hold
such proceeds in trust for the Holders of Securities. Each Holder shall be en-
titled to receive a portion, if any, of such net proceeds in lieu of Treasury
Notes with a principal amount of less than $1,000 determined by multiplying
the aggregate amount of such net proceeds by a fraction, the numerator of
which is the fraction of $1,000 in principal amount of Treasury Notes to which
such Holder would otherwise be entitled (after taking into account all Securi-
ties then held by such Holder) and the denominator of which is the aggregate
principal amount of Excess Treasury Notes.
ARTICLE FIVE
The Purchase Contracts
Section 501. Purchase of Shares of Common Stock.
Each Purchase Contract shall obligate the Holder of the related Security to
purchase, and the Company to sell, on the Final Settlement Date at a price
equal to the Stated Amount, a number of shares of Common Stock equal to the
Settlement Rate, unless, on or prior to the Final Settlement Date, there shall
have occurred a Termination Event or an Early Settlement with respect to the
Security of which such Purchase Contract is a part. The "Settlement Rate" is
equal to (a) if the Applicable Market Value (as defined below) is greater than
$ (the "Threshold Appreciation Price"), of a share of Common Stock
per Purchase Contract, (b) if the Applicable Market Value is less than or
equal to the Threshold Appreciation Price but is greater than the Stated
Amount, a fractional share of Common Stock per Purchase Contract equal to the
Stated Amount divided by the Applicable Market Value (rounded upward or down-
ward to the nearest 1/10,000th of a share) and (c) if
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the Applicable Market Value is less than or equal to the Stated Amount, one
share of Common Stock per Purchase Contract, in each case subject to adjust-
ment as provided in Section 506. As provided in Section 510, no fractional
shares of Common Stock will be issued upon settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the twenty consecutive Trading Days ending on
the last Trading Day immediately preceding the Final Settlement Date. The
"Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed, or if the
Common Stock is not so listed on a United States national or regional securi-
ties exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock
is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or simi-
lar organization, or, if such bid price is not available, the market value of
the Common Stock on such date as determined by a nationally recognized inde-
pendent investment banking firm retained for this purpose by the Company. A
"Trading Day" means a day on which the Common Stock (A) is not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or over-
the-counter market that is the primary market for the trading of the Common
Stock.
Each Holder of a Security Certificate evidencing Securities, by his accept-
ance thereof, irrevocably authorizes the Agent to enter into and perform the
related Purchase Contracts on his behalf as his attorney-in-fact, agrees to be
bound by the terms and provisions thereof, covenants and agrees to perform his
obligations under such Purchase Contracts, consents to the provisions hereof,
irrevocably authorizes the Agent as his attorney-in-fact to enter into and
perform the Pledge Agreement on his behalf as his attorney-in-fact, and con-
sents to and agrees to be bound by the Pledge of the Treasury Notes underlying
such Security Certificate pursuant to the Pledge Agreement. Each Holder of a
Security, by his acceptance thereof, further irrevocably covenants and agrees,
that, to the extent and in the manner provided in Section 504 and
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the Pledge Agreement, but subject to the terms thereof, payments in respect of
principal of the Treasury Notes on the Final Settlement Date shall be paid by
the Collateral Agent to the Company in satisfaction of such Holder's obliga-
tions under such Purchase Contract and such Holder shall acquire no right, ti-
tle or interest in such payments.
Upon registration of transfer of a Security Certificate evidencing Purchase
Contracts, the transferee shall be bound (without the necessity of any other
action on the part of such transferee), under the terms of this Agreement, the
Purchase Contracts evidenced thereby and the Pledge Agreement and the trans-
feror shall be released from the obligations under the Purchase Contracts evi-
denced by the Security Certificates so transferred. The Company covenants and
agrees, and each Holder of a Security Certificate, by his acceptance thereof,
likewise covenants and agrees, to be bound by the provisions of this para-
graph.
Section 502. Contract Fees.
Subject to Section 503, the Company shall pay, on each Payment Date, the
Contract Fees payable in respect of each Purchase Contract to the Person in
whose name the Security Certificate (or one or more Predecessor Security Cer-
tificates) evidencing such Purchase Contract is registered at the close of
business on the Record Date next preceding such Payment Date. The Contract Fee
will be payable at the office of the Agent in The City of New York maintained
for that purpose or, at the option of the Company, by check mailed to the ad-
dress of the Person entitled thereto at such address as it appears on the Se-
curity Register.
Each Security Certificate delivered under this Agreement upon registration
of transfer of or in exchange for or in lieu of any other Security Certificate
shall carry the rights to Contract Fees accrued and unpaid, and to accrue,
which were carried by the Purchase Contracts evidenced by such other Security
Certificate.
In the case of any Security with respect to which Early Settlement of the
underlying Purchase Contract is effected on an Early Settlement Date after any
Record Date and on or prior to the next succeeding Payment Date, Contract Fees
otherwise payable on such Payment Date shall be payable on such Payment Date
notwithstanding such Early Settlement, and such Contract Fees shall be paid to
the Person in whose name the Security Certificate evidencing such Security (or
one or more Predecessor Security Certificates) is registered at the close of
business on such Record Date. Except as otherwise expressly
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provided in the immediately preceding sentence, in the case of any Security
with respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date, Contract Fees that would otherwise be
payable after the Early Settlement Date with respect to the Purchase Contract
underlying such Security shall not be payable.
Section 503. Deferral of Payment Dates For Contract Fee.
The Company shall have the right, at any time prior to the Final Settlement
Date, to defer the payment of any or all of the Contract Fees otherwise pay-
able on any Payment Date, but only if the Company shall give the Holders and
the Agent written notice of its election to defer such payment (specifying the
amount to be deferred) at least ten Business Days prior to the earlier of (i)
the next succeeding Payment Date or (ii) the date the Company is required to
give notice of the Record Date or Payment Date with respect to payment of such
Contract Fee to the New York Stock Exchange or other applicable self-regula-
tory organization or to Holders of the Securities, but in any event not less
than two Business Days prior to such Record Date. Any Contract Fees so de-
ferred shall bear additional Contract Fees thereon at the rate of per
annum (computed on the basis of the actual number of days elapsed in a year of
365 or 366 days, as the case may be), compounding on each succeeding Payment
Date, until paid in full. Deferred Contract Fees (and additional Contract Fees
accrued thereon) shall be due on the next succeeding Payment Date except to
the extent that payment is deferred pursuant to this Section. No Contract Fees
may be deferred to a date that is after the Final Settlement Date or, with re-
spect to any particular Purchase Contract, Early Settlement thereof.
Section 504. Payment of Purchase Price.
The purchase price for the shares of Common Stock purchased pursuant to a
Purchase Contract shall be paid by application of payments received by the
Company on the Final Settlement Date from the Collateral Agent pursuant to the
Pledge Agreement in respect of the principal of the Treasury Notes Pledged to
secure the obligations of the relevant Holder under such Purchase Contract.
Such application shall satisfy in full the obligations under such Purchase
Contract of the Holder of the Security of which such Purchase Contract is a
part. The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
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Section 505. Issuance of Shares of Common Stock.
Unless a Termination Event shall have occurred on or prior to the Final Set-
tlement Date, on the Final Settlement Date, upon its receipt of payment in
full of the purchase price for the shares of Common Stock purchased by the
Holders pursuant to the foregoing provisions of this Article, and subject to
Section 506(b), the Company shall deposit with the Agent, for the benefit of
the Holders of the Outstanding Securities, one or more certificates represent-
ing the shares of Common Stock registered in the name of the Agent (or its
nominee) as custodian for the Holders (such certificates for shares of Common
Stock, together with any dividends or distributions with respect thereto, be-
ing hereinafter referred to as the "Final Settlement Fund") to which the Hold-
ers are entitled hereunder. Subject to the foregoing, upon surrender of a Se-
curity Certificate to the Agent on or after the Final Settlement Date, to-
gether with settlement instructions thereon duly completed and executed, the
Holder of such Security Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Common
Stock which such Holder is entitled to receive pursuant to the provisions of
this Article Five (after taking into account all Securities then held by such
Holder) together with cash in lieu of fractional shares as provided in Section
510 and any dividends or distributions with respect to such shares constitut-
ing part of the Final Settlement Fund, but without any interest thereon, and
the Security Certificate so surrendered shall forthwith be cancelled. Such
shares shall be registered in the name of the Holder or the Holder's designee
as specified in the settlement instructions on the Security Certificate.
If any shares of Common Stock issued in respect of a Purchase Contract are
to be registered to a Person other than the Person in whose name the Security
Certificate evidencing such Purchase Contract is registered, no such registra-
tion shall be made unless the Person requesting such registration has paid any
transfer and other taxes required by reason of such registration in a name
other than that of the registered Holder of the Security Certificate evidenc-
ing such Purchase Contract or has established to the satisfaction of the Com-
pany that such tax either has been paid or is not payable.
Section 506. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other distribution
on any class of Common Stock of the Company in Common Stock, the
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Settlement Rate in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such div-
idend or other distribution shall be increased by dividing such Settlement
Rate by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other distribu-
tion, such increase to become effective immediately after the opening of busi-
ness on the day following the date fixed for such determination. For the pur-
poses of this paragraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu
of fractions of shares of Common Stock. The Company will not pay any dividend
or make any distribution on shares of Common Stock held in the treasury of the
Company.
(2) In case the Company shall issue rights, options or warrants to all hold-
ers of its Common Stock (not being available on an equivalent basis to Holders
of the Securities upon settlement of the Purchase Contracts underlying such
Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price per share of the
Common Stock on the date fixed for the determination of stockholders entitled
to receive such rights, options or warrants (other than pursuant to a dividend
reinvestment plan), the Settlement Rate in effect at the opening of business
on the day following the date fixed for such determination shall be increased
by dividing such Settlement Rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total number of shares
of Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of Com-
mon Stock outstanding at the close of business on the date fixed for such de-
termination plus the number of shares of Common Stock so offered for subscrip-
tion or purchase, such increase to become effective immediately after the
opening of business on the day following the date fixed for such determina-
tion. For the purposes of this paragraph (2), the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury
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of the Company but shall include shares issuable in respect of scrip certifi-
cates issued in lieu of fractions of shares of Common Stock. The Company shall
not issue any such rights, options or warrants in respect of shares of Common
Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Settlement Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller num-
ber of shares of Common Stock, the Settlement Rate in effect at the opening of
business on the day following the day upon which such combination becomes ef-
fective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in paragraph (2)
of this Section, any dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in paragraph (1) of this Section), the
Settlement Rate shall be adjusted so that the same shall equal the rate deter-
mined by dividing the Settlement Rate in effect immediately prior to the close
of business on the date fixed for the determination of stockholders entitled
to receive such distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Agent) of the portion of the assets or evidences of
indebtedness so distributed applicable to one share of Common Stock and the
denominator shall all be such Current Market Price per share of the Common
Stock, such adjustment to become effective immediately prior to the opening of
business on the day following the date fixed for the determination of stock-
holders entitled to receive such distribution. In any case in which this para-
graph (4) is applicable, paragraph (2) of this Section shall not be applica-
ble.
(5) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed in a
Reorganization Event to which Section 506(b) applies or as part of a distribu-
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tion referred to in paragraph (4) of this Section) in an aggregate amount
that, combined together with (I) the aggregate amount of any other distribu-
tions to all holders of its Common Stock made exclusively in cash within the
12 months preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to this paragraph (5) or paragraph (6) of this
Section has been made and (II) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) of consideration payable in
respect of any tender or exchange offer by the Company or any of its subsidi-
aries for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to this paragraph (5) or paragraph (6) of this
Section has been made, exceeds 10% of the product of the Current Market Price
per share of the Common Stock on the date for the determination of holders of
shares of Common Stock entitled to receive such distribution times the number
of shares of Common Stock outstanding on such date, then, and in each such
case, immediately after the close of business on such date for determination,
the Settlement Rate shall be increased so that the same shall equal the rate
determined by dividing the Settlement Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders en-
titled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the Current Market Price per share of the Common Stock on
the date fixed for such determination less an amount equal to the quotient of
(x) the excess of such combined amount over such 10% and (y) the number of
shares of Common Stock outstanding on such date for determination and (ii) the
denominator of which shall be equal to the Current Market Price per share of
the Common Stock on such date for determination.
(6) In case a tender or exchange offer made by the Company or any subsidiary
of the Company for all or any portion of the Common Stock shall expire and
such tender or exchange offer (as amended upon the expiration thereof) shall
require the payment to stockholders (based on the acceptance (up to any maxi-
mum specified in the terms of the tender or exchange offer) of Purchased
Shares) of an aggregate consideration having a fair market value (as deter-
mined by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) that combined together with (I) the aggregate
of the cash plus the fair market value (as determined by the Board of Direc-
tors, whose determination shall be conclusive and described in a Board Resolu-
tion), as of the expiration of such tender or exchange offer, of
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consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (II) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash within 12 months preceding the expiration of such tender
or exchange offer and in respect of which no adjustment pursuant to paragraph
(5) of this Section or this paragraph (6) has been made, exceeds 10% of the
product of the Current Market Price per share of the Common Stock as of the
last time (the "Expiration Time") tenders could have been made pursuant to
such tender or exchange offer (as it may be amended) times the number of
shares of Common Stock outstanding (including any tendered shares) on the Ex-
piration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Settlement
Rate shall be adjusted so that the same shall equal the rate determined by di-
viding the Settlement Rate immediately prior to close of business on the date
of the Expiration Time by a fraction (i) the numerator of which shall be equal
to (A) the product of (I) the Current Market Price per share of the Common
Stock on the date of the Expiration Time and (II) the number of shares of Com-
mon Stock outstanding (including any tendered shares) on the Expiration Time
less (B) the amount of cash plus the fair market value (determined as afore-
said) of the aggregate consideration payable to stockholders based on the ac-
ceptance (up to any maximum specified in the terms of the tender or exchange
offer) of Purchased Shares, and (ii) the denominator of which shall be equal
to the product of (A) the Current Market Price per share of the Common Stock
as of the Expiration Time and (B) the number of shares of Common Stock out-
standing (including any tendered shares) as of the Expiration Time less the
number of all shares validly tendered and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred to
as the "Purchased Shares").
(7) The reclassification of Common Stock into securities including securi-
ties other than Common Stock (other than any reclassification upon a Reorgani-
zation Event to which Section 506(b) applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders of Com-
mon Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within the
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meaning of paragraph (4) of this Section), and (b) a subdivision or combina-
tion, as the case may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of shares of Common
Stock outstanding immediately thereafter (and the effective date of such re-
classification shall be deemed to be "the day upon which such subdivision be-
comes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section).
(8) The "Current Market Price" per share of Common Stock on any day means
the average of the daily Closing Prices for the 5 consecutive Trading Days se-
lected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the day before
the "ex" date with respect to the issuance or distribution requiring such com-
putation. For purposes of this paragraph, the term "'ex' date", when used
with respect to any issuance or distribution, shall mean the first date on
which the Common Stock trades regular way on such exchange or in such market
without the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the near-
est 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require
an increase or decrease of at least one percent therein; provided, however,
that any adjustments which by reason of this subparagraph are not required to
be made shall be carried forward and taken into account in any subsequent ad-
justment. If an adjustment is made to the Settlement Rate pursuant to para-
graph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 506(a), an ad-
justment shall also be made to the Applicable Market Value solely to determine
which of clauses (a), (b) or (c) of the definition of Settlement Rate in Sec-
tion 501 will apply on the Final Settlement Date. Such adjustment shall be
made by multiplying the Applicable Market Value by a fraction of which the nu-
merator shall be the Settlement Rate immediately after such adjustment pursu-
ant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section
506(a) and the denominator shall be the Settlement Rate immediately before
such adjustment.
(10) The Company may make such increases in the Settlement Rate, in addition
to those required by this Section, as it considers to be advisable in order to
avoid or diminish any income tax to any holders of shares of Common
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Stock resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event. In
the event of (i) any consolidation or merger of the Company, with or into an-
other Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (ii) any sale, trans-
fer, lease or conveyance to another Person of the property of the Company as
an entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of
the Company (any such event, a "Reorganization Event"), the Settlement Rate
will be adjusted to provide that each Holder of Securities will receive on the
Final Settlement Date with respect to each Purchase Contract forming a part
thereof, the kind and amount of securities, cash and other property receivable
upon such Reorganization Event by a Holder of the number of shares of Common
Stock issuable on account of each Purchase Contract if the Final Settlement
Date had occurred immediately prior to such Reorganization Event, assuming
such Holder of Common Stock is not a Person with which the Company consoli-
dated or into which the Company merged or which merged into the Company or to
which such sale or transfer was made, as the case may be ("constituent Per-
son"), or an Affiliate of a constituent Person, and failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such Reorganization Event (provided that if the
kind or amount of securities, cash and other property receivable upon such Re-
organization Event is not the same for each share of Common Stock held immedi-
ately prior to such Reorganization Event by other than a constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then for the purpose of this Sec-
tion the kind and amount of securities, cash and other property receivable
upon such Reorganization Event by each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the non-
electing shares). In the event of such a Reorganization Event, the Person
formed by such consolidation, merger or exchange or the Person which acquires
the assets of the Company or, in the event of a liquidation or dissolution of
the Company, the Company or a liquidating trust created
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in connection therewith, shall execute and deliver to the Agent an agreement
supplemental hereto providing that the Holders of each Outstanding Security
shall have the rights provided by this Section 506. Such supplemental agree-
ment shall provide for adjustments which, for events subsequent to the effec-
tive date of such supplemental agreement, shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section. The above pro-
visions of this Section shall similarly apply to successive Reorganization
Events.
Section 507. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the Company
shall:
(i) forthwith compute the adjusted Settlement Rate in accordance with
Section 506 and prepare and transmit to the Agent an Officers' Certificate
setting forth the Settlement Rate, the method of calculation thereof in
reasonable detail, and the facts requiring such adjustment and upon which
such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an event that
permits or requires an adjustment to the Settlement Rate pursuant to Sec-
tion 506 (or if the Company is not aware of such occurrence, as soon as
practicable after becoming so aware), provide a written notice to the
Holders of the Securities of the occurrence of such event and a statement
in reasonable detail setting forth the method by which the adjustment to
the Settlement Rate was determined and setting forth the adjusted Settle-
ment Rate.
(b) The Agent shall not at any time be under any duty or responsibility to
any holder of Securities to determine whether any facts exist which may re-
quire any adjustment of the Settlement Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed in making the same. The Agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of Com-
mon Stock, or of any securities or property, which may at the time be issued
or delivered with respect to any Purchase Contract; and the Agent makes no
representation with respect thereto. The Agent shall not be responsible for
any failure of the Company to issue, transfer or deliver any shares of Common
Stock pursuant to a Purchase Contract or to comply with any of the duties, re-
sponsibilities or covenants of the Company contained in this Article.
Section 508. Termination Event; Notice.
The Purchase Contracts and the obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the
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Holders to receive and the obligation of the Company to pay any Contract Fee,
shall immediately and automatically terminate, without the necessity of any
notice or action by any Holder, the Agent or the Company, if, on or prior to
the Final Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall give written notice to
the Agent, the Collateral Agent and to the Holders, at their addresses as they
appear in the Security Register. Upon and after the occurrence of a Termina-
tion Event, the Securities shall thereafter represent the right to receive the
Treasury Notes forming a part of such Securities in accordance with the provi-
sions of Section 402 and the Pledge Agreement.
Section 509. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section 509
at the option of the Holder thereof, any Purchase Contracts underlying Securi-
ties having an aggregate Stated Amount equal to $ or an integral
multiple thereof may be settled early ("Early Settlement") as provided herein.
In order to exercise the right to effect Early Settlement with respect to any
Purchase Contracts, the Holder of the Security Certificate evidencing such
Purchase Contracts shall deliver such Security Certificate to the Agent at the
Corporate Trust Office duly endorsed for transfer to the Company or in blank
with the form of Election to Settle Early on the reverse thereof duly com-
pleted and accompanied by payment in the form of a certified or cashier's
check payable to the order of the Company in immediately available funds in an
amount (the "Early Settlement Amount") equal to (i) the product of (A) the
Stated Amount times (B) the number of Purchase Contracts with respect to which
the Holder has elected to effect Early Settlement minus (ii) the aggregate
amount of Contract Fees, if any, otherwise payable on or prior to the immedi-
ately preceding Payment Date deferred at the option of the Company pursuant to
Section 503 and remaining unpaid as of such immediately preceding Payment Date
plus (iii) if such delivery is made with respect to any Purchase Contracts
during the period from the close of business on any Record Date next preceding
any Payment Date to the opening of business on such Payment Date, an amount
equal to the sum of (x) the Contract Fees payable on such Payment Date with
respect to such Purchase Contracts plus (y) the interest on the related Trea-
sury Notes payable on such Payment Date. Except as provided in the immediately
preceding sentence and subject to the last paragraph of Section 502, no pay-
ment or adjustment shall be made upon Early Settlement of any Purchase Con-
tract on account of any Contract Fees accrued
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on such Purchase Contract or on account of any dividends on the Common Stock
issued upon such Early Settlement. If the foregoing requirements are first
satisfied with respect to Purchase Contracts underlying any Securities at or
prior to 5:00 p.m., New York City time, on a Business Day, such day shall be
the "Early Settlement Date" with respect to such Securities and if such re-
quirements are first satisfied after 5:00 p.m., New York City time, on a Busi-
ness Day or on a day that is not a Business Day, the "Early Settlement Date"
with respect to such Securities shall be the next succeeding Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Company shall issue, and the Holder shall be entitled to re-
ceive, a number of shares of Common Stock on account of each Purchase Contract
as to which Early Settlement is effected equal to the Early Settlement Rate.
The Early Settlement Rate shall initially be equal to and shall be
adjusted in the same manner and at the same time as the Settlement Rate is ad-
justed. As promptly as practicable after Early Settlement of Purchase Con-
tracts in accordance with the provisions of this Section 509, the Company
shall issue and shall deliver to the Agent at the Corporate Trust Office a
certificate or certificates for the full number of shares of Common Stock is-
suable upon such Early Settlement together with payment in lieu of any frac-
tion of a share, as provided in Section 510.
(c) The Company shall cause the shares of Common Stock issuable, and Trea-
sury Notes deliverable, upon Early Settlement of Purchase Contracts to be is-
sued and delivered, in the case of such shares of Common Stock, and released
from the Pledge by the Collateral Agent and transferred, in the case of such
Treasury Notes, to the Agent, for delivery to the Holder thereof or its desig-
nee, no later than the third Business Day after the applicable Early Settle-
ment Date.
(d) Upon Early Settlement of any Purchase Contracts, and subject to receipt
thereof from the Company or the Collateral Agent, as applicable, the Agent
shall, in accordance with the instructions provided by the Holder thereof on
the applicable form of Election to Settle Early on the reverse of the Security
Certificate evidencing the related Securities, (i) transfer the Treasury Notes
forming a part of such Securities and (ii) deliver a certificate or certifi-
cates for the full number of shares of Common Stock issuable upon such Early
Settlement together with payment in lieu of any fraction of a share, as pro-
vided in Section 510.
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(e) In the event that Early Settlement is effected with respect to Purchase
Contracts underlying less than all the Securities evidenced by a Security Cer-
tificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, countersign and deliver to the Holder thereof, at the ex-
pense of the Company, a Security Certificate evidencing the Securities as to
which Early Settlement was not effected.
Section 510. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common Stock
shall be issued or delivered upon settlement on the Final Settlement Date or
upon Early Settlement of any Purchase Contracts. If Security Certificates evi-
dencing more than one Purchase Contract shall be surrendered for settlement at
one time by the same Holder, the number of full shares of Common Stock which
shall be delivered upon settlement shall be computed on the basis of the ag-
gregate number of Purchase Contracts evidenced by the Security Certificates so
surrendered. Instead of any fractional share of Common Stock which would oth-
erwise be deliverable upon settlement of any Purchase Contracts on the Final
Settlement Date or upon Early Settlement, the Company, through the Agent,
shall make a cash payment in respect of such fractional interest in an amount
equal to the value of such fractional shares at the Closing Price per share on
the Trading Day immediately preceding the Final Settlement Date or the related
Early Settlement Date, respectively. The Company shall provide the Agent from
time to time with sufficient funds to permit the Agent to make all cash pay-
ments required by this Section 510 in a timely manner.
Section 511. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the shares of Common Stock pursuant to
the Purchase Contracts; provided, however, that the Company shall not be re-
quired to pay any such tax or taxes which may be payable in respect of any ex-
change of or substitution for a Security Certificate evidencing a Purchase
Contract or any issuance of a share of Common Stock in a name other than that
of the registered Holder of a Security Certificate surrendered in respect of
the Purchase Contracts evidenced thereby, other than in the name of the Agent,
as custodian for such Holder, and the Company shall not be required to issue
or deliver such share certificates or Security Certificates unless or until
the Person or Persons requesting the transfer or issuance thereof shall have
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paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
ARTICLE SIX
Remedies
Section 601. Unconditional Right of Holders to Receive Contract Fee.
Notwithstanding any other provision in this Agreement, the Holder of any Se-
curity shall have the right, which is absolute and unconditional (subject to
the right of the Company to defer payment thereof pursuant to Section 503), to
receive payment of each installment of the Contract Fee with respect to the
Purchase Contract constituting a part of such Security on the respective Pay-
ment Date for such Security and to purchase Common Stock pursuant to such Pur-
chase Contract and, in each such case, to institute suit for the enforcement
of any such payment and right to purchase Common Stock, and such rights shall
not be impaired without the consent of such Holder.
Section 602. Restoration of Rights and Remedies.
If any Holder of Securities has instituted any proceeding to enforce any
right or remedy under this Agreement and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company and such Holder shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of
such Holder shall continue as though no such proceeding had been instituted.
Section 603. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement of mutilated,
destroyed, lost or stolen Security Certificates in the last paragraph of Sec-
tion 306, no right or remedy herein conferred upon or reserved to the Holders
of Securities is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employ-
ment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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Section 604. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy shall im-
pair any such right or remedy or constitute a waiver of any such right. Every
right and remedy given by this Article or by law to the Holders may be exer-
cised from time to time, and as often as may be deemed expedient, by such
Holders.
Section 605. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of any Security by his
acceptance of the Security Certificate evidencing such Security shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Agreement, or in
any suit against the Agent for any action taken, suffered or omitted by it as
Agent, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess rea-
sonable costs, including reasonable attorneys' fees, against any party liti-
gant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; provided that the provisions
of this Section shall not apply to any suit instituted by the Company, to any
suit instituted by the Agent, to any suit instituted by any Holder of Securi-
ties, or group of Holders, holding in the aggregate more than 10% of the Out-
standing Securities, or to any suit instituted by any Holder for the enforce-
ment of the payment of the interest on any Treasury Note or the Contract Fee
on any Purchase Contract on or after the respective Payment Date therefor con-
stituting a part of the Securities held by such Holder, or for enforcement of
the right to purchase shares of Common Stock under the Purchase Contracts con-
stituting a part of the Securities held by such Holder.
Section 606. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever en-
acted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Agreement; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Agent or the Holders, but will suffer and
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permit the execution of every such power as though no such law had been en-
acted.
ARTICLE SEVEN
The Agent
Section 701. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the Securities,
such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its part, the Agent
may, with respect to the Securities, conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Agent and conforming to the re-
quirements of this Agreement, but in the case of any certificates or opin-
ions which by any provision hereof are specifically required to be fur-
nished to the Agent, the Agent shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Agreement.
(b) No provision of this Agreement shall be construed to relieve the Agent
from liability for its own negligent action, its own negligent failure to act,
or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of Sub-
section (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Agent
was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to expend or
risk its own funds or otherwise incur any financial liability in the per-
formance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liabil-
ity is not reasonably assured to it.
(c) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Agent shall be subject to the provisions of this Section.
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Section 702. Notice of Default.
Within 90 days after the occurrence of any default by the Company hereunder,
of which a Responsible Officer of the Agent has actual knowledge, the Agent
shall transmit by mail to all Holders of Securities, as their names and ad-
dresses appear in the Security Register, notice of such default hereunder, un-
less such default shall have been cured or waived.
Section 703. Certain Rights of Agent.
Subject to the provisions of Section 701:
(a) the Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opin-
ion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may
be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evi-
dence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate of the Company;
(d) the Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instru-
ment, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or docu-
ment, but the Agent, in its discretion, may make reasonable further in-
quiry or investigation into such facts or matters related to the issuance
of the Securities and the execution, delivery and performance of the Pur-
chase Contracts as it may see fit, and, if the Agent shall determine to
make such further inquiry or investigation, it shall be entitled to exam-
ine the books, records and promises of the Company, personally or by agent
or attorney; and
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(f) the Agent may execute any of its powers hereunder or perform any du-
ties hereunder either directly or by or through agents or attorneys and
the Agent shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder.
Section 704. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Security Certificates shall be
taken as the statements of the Company and the Agent assumes no responsibility
for their correctness. The Agent makes no representations as to the validity
or sufficiency of this Agreement or of the Securities. The Agent shall not be
accountable for the use or application by the Company of the proceeds in re-
spect of the Purchase Contracts.
Section 705. May Hold Securities.
Any Security Registrar or any other agent of the Company, or the Agent, in
its individual or any other capacity, may become the owner or pledgee of Secu-
rities and may otherwise deal with the Company with the same rights it would
have if it were not Security Registrar or such other agent, or the Agent.
Section 706. Money Held in Trust.
Money held by the Agent in trust hereunder need not be segregated from the
other funds except to the extent required by law. The Agent shall be under no
obligation to invest or pay interest on any money received by it hereunder ex-
cept as otherwise agreed with the Company.
Section 707. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time reasonable compensation for
all services rendered by it hereunder;
(2) except as otherwise expressly provided herein, to reimburse the
Agent upon its request for all reasonable expenses, disbursements and ad-
vances incurred or made by the Agent in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, dis-
bursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Agent and any predecessor Agent for, and to hold
each of them harmless against, any loss, liability or expense incurred
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without negligence or bad faith on its part, arising out of or in connec-
tion with the acceptance or administration of its duties hereunder, in-
cluding the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
Section 708. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America,
any State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, subject to supervision or examination by Federal or State
authority and having its Corporate Trust Office in the Borough of Manhattan,
The City of New York, if there be such a corporation in the Borough of Manhat-
tan, The City of New York qualified and eligible under this Article and will-
ing to act on reasonable terms. If such corporation publishes reports of con-
dition at least annually, pursuant to law or to the requirements of said su-
pervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condi-
tion so published. If at any time the Agent shall cease to be eligible in ac-
cordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 709. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a successor
Agent pursuant to this Article shall become effective until the acceptance of
appointment by the successor Agent in accordance with the applicable require-
ments of Section 710.
(b) The Agent may resign at any time by giving written notice thereof to the
Company 60 days prior to the effective date of such resignation. If the in-
strument of acceptance by a successor Agent required by Section 710 shall not
have been delivered to the Agent within 30 days after the giving of such no-
tice of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a majority
in number of the Outstanding Securities delivered to the Agent and the Compa-
ny.
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(d) If at any time
(1) the Agent fails to comply with Section 310(b) of the TIA, as if the
Agent were an indenture trustee under an indenture qualified under the
TIA, after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six months, or
(2) the Agent shall cease to be eligible under Section 708 and shall
fail to resign after written request therefor by the Company or by any
such Holder, or
(3) the Agent shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Agent or of its property shall
be appointed or any public officer shall take charge or control of the
Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Agent for any cause, the Company, by
a Board Resolution, shall promptly appoint a successor Agent and shall comply
with the applicable requirements of Section 710. If no successor Agent shall
have been so appointed by the Company and accepted appointment in the manner
required by Section 710, any Holder who has been a bona fide Holder of a Secu-
rity for at least six months may, on behalf of himself and all others simi-
larly situated, petition any court of competent jurisdiction for the appoint-
ment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to give, no-
tice of each resignation and each removal of the Agent and each appointment of
a successor Agent by mailing written notice of such event by first-class mail,
postage prepaid, to all Holders of Securities as their names and addresses ap-
pear in the Security Register. Each notice shall include the name of the suc-
cessor Agent and the address of its Corporate Trust Office.
Section 710. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every such
successor Agent so appointed shall execute, acknowledge and deliver to the
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Company and to the retiring Agent an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or convey-
ance, shall become vested with all the rights, powers, agencies and duties of
the retiring Agent; but, on the request of the Company or the successor Agent,
such retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to
such successor Agent all property and money held by such retiring Agent here-
under.
(b) Upon request of any such successor Agent, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Agent all such rights, powers and agencies referred to in para-
graph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time of
such acceptance such successor Agent shall be qualified and eligible under
this Article.
Section 711. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any corpo-
ration succeeding to all or substantially all the corporate trust business of
the Agent, shall be the successor of the Agent hereunder, provided such corpo-
ration shall be otherwise qualified and eligible under this Article, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Security Certificates shall have been authen-
ticated and executed on behalf of the Holders, but not delivered, by the Agent
then in office, any successor by merger, conversion or consolidation to such
Agent may adopt such authentication and execution and deliver the Security
Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Securities.
Section 712. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably practi-
cable, the names and addresses of Holders received by the Agent in its capac-
ity as Security Registrar.
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(b) If three or more Holders (herein referred to as "applicants") apply in
writing to the Agent, and furnish to the Agent reasonable proof that each such
applicant has owned a Security for a period of at least six months preceding
the date of such application, and such application states that the applicants
desire to communicate with other Holders with respect to their rights under
this Agreement or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to trans-
mit, then the Agent shall, within five Business Days after the receipt of such
application, afford such applicants access to the information preserved at the
time by the Agent in accordance with Section 712(a).
(c) Every Holder of Securities, by receiving and holding the Security Cer-
tificates evidencing the same, agrees with the Company and the Agent that none
of the Company, the Agent nor any agent of any of them shall be held account-
able by reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 712(b), regardless of the
source from which such information was derived.
Section 713. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement, the Agent assumes
no obligations and shall not be subject to any liability under this Agreement
or any Purchase Contract in respect of the obligations of the Holder of any
Security thereunder. The Company agrees, and each Holder of a Security Certif-
icate, by his acceptance thereof, shall be deemed to have agreed, that the
Agent's execution of the Security Certificates on behalf of the Holders shall
be solely as agent and attorney-in-fact for the Holders, and that the Agent
shall have no obligation to perform such Purchase Contracts on behalf of the
Holders, except to the extent expressly provided in Article Five hereof.
Section 714. Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the Company, will comply
with all applicable certification, information reporting and withholding (in-
cluding "backup" withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i) any payments made
with respect to the Securities or (ii) the issuance, delivery, holding, trans-
fer, redemption or exercise of rights under the Securities. Such compliance
shall include, without limitation, the preparation and timely filing of
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required returns and the timely payment of all amounts required to be withheld
to the appropriate taxing authority or its designated agent.
(b) The Agent shall comply with any direction received from the Company with
respect to the application of such requirements to particular payments or
Holders or in other particular circumstances, and may for purposes of this
Agreement rely on any such direction in accordance with the provisions of Sec-
tion 701(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting compliance
with such requirements, and shall make such records available on request to
the Company or to its authorized representative.
ARTICLE EIGHT
Supplemental Agreements
Section 801. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the Agent, at any time
and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the fol-
lowing purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein
and in the Security Certificates; or
(2) to add to the covenants of the Company for the benefit of the Hold-
ers, or to surrender any right or power herein conferred upon the Company;
or
(3) to evidence and provide for the acceptance of appointment hereunder
by a successor Agent; or
(4) to make provision with respect to the rights of Holders pursuant to
the requirements of Section 506(b); or
(5) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein, or to
make any other provisions with respect to such matters or questions aris-
ing under this Agreement, provided such action shall not adversely affect
the interests of the Holders.
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Section 802. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% of the Outstanding
Securities, by Act of said Holders delivered to the Company and the Agent, the
Company when authorized by a Board Resolution, and the Agent may enter into an
agreement or agreements supplemental hereto for the purpose of modifying in
any manner the terms of the Securities, or the provisions of this Agreement or
the rights of the Holders in respect of the Securities; provided, however,
that no such supplemental agreement shall, without the consent of the Holder
of each Outstanding Security affected thereby,
(1) change any Payment Date;
(2) change the amount or type of Treasury Notes underlying a Security,
impair the right of the Holder of any Security to receive interest pay-
ments on the underlying Treasury Notes or otherwise adversely affect the
Holder's rights in or to such Treasury Notes;
(3) reduce any Contract Fee or change any place where, or the coin or
currency in which, any Contract Fee is payable;
(4) impair the right to institute suit for the enforcement of any Pur-
chase Contract;
(5) reduce the number of shares of Common Stock to be purchased pursuant
to any Purchase Contract, increase the price to purchase shares of Common
Stock upon settlement of any Purchase Contract, change the Final Settle-
ment Date or otherwise adversely affect the Holder's rights under any Pur-
chase Contract; or
(6) reduce the percentage of the Outstanding Securities the consent of
whose Holders is required for any such supplemental agreement.
It shall not be necessary for any Act of Holders under this Section to ap-
prove the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 803. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any supple-
mental agreement permitted by this Article or the modifications thereby of the
agencies created by this Agreement, the Agent shall be entitled to receive and
(subject to Section 701) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental agreement is autho-
rized or permitted by this Agreement. The Agent may, but shall not be obli-
gated to, enter into any such supplemental agreement which affects the Agent's
own rights, duties or immunities under this Agreement or otherwise.
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Section 804. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Holder of Security Certificates theretofore or thereafter authenticated, exe-
cuted on behalf of the Holders and delivered hereunder shall be bound thereby.
Section 805. Reference to Supplemental Agreements.
Security Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form ap-
proved by the Agent as to any matter provided for in such supplemental agree-
ment. If the Company shall so determine, new Security Certificates so modified
as to conform, in the opinion of the Agent and the Company, to any such sup-
plemental agreement may be prepared and executed by the Company and authenti-
cated, executed on behalf of the Holders and delivered by the Agent in ex-
change for Outstanding Security Certificates.
ARTICLE NINE
Consolidation, Merger, Sale or Conveyance
Section 901. Covenant Not to Merge, Consolidate, Sell or Convey Property Ex-
cept Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any other
Person or sell or convey all or substantially all of its assets to any Person,
except that the Company may merge or consolidate with, or sell or convey all
or substantially all of its assets to, any other Person, provided that (i) the
Company shall be the continuing corporation, or the successor (if other than
the Company) shall be a corporation organized and existing under the laws of
the United States of America or a State thereof and such corporation shall as-
sume the obligations of the Company under the Purchase Contracts, this Agree-
ment and the Pledge Agreement by one or more supplemental agreements in form
satisfactory to the Agent and the Collateral Agent, executed and delivered to
the Agent and the Collateral Agent by such corporation, and (ii) the Company
or such successor corporation, as the case may be, shall not,
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immediately after such merger or consolidation, or such sale or conveyance, be
in default in the performance of any covenant or condition hereunder, under
any of the Securities or under the Pledge Agreement.
Section 902. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale or conveyance and upon any
such assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company with the same effect as if it
had been named herein as the Company. Such successor corporation thereupon may
cause to be signed, and may issue either in its own name or in the name of
Browning-Ferris Industries, Inc., any or all of the Security Certificates evi-
dencing Securities issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Agent; and, upon the order of such
successor corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Agreement prescribed, the Agent shall au-
thenticate and execute on behalf of the Holders and deliver any Security Cer-
tificates which previously shall have been signed and delivered by the offi-
cers of the Company to the Agent for authentication and execution, and any Se-
curity Certificate evidencing Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Agent for that pur-
pose. All the Security Certificates so issued shall in all respects have the
same legal rank and benefit under this Agreement as the Security Certificates
theretofore or thereafter issued in accordance with the terms of this Agree-
ment as though all of such Security Certificates had been issued at the date
of the execution hereof.
In case of any such consolidation, merger, sale or conveyance such change in
phraseology and form (but not in substance) may be made in the Security Cer-
tificates evidencing Securities thereafter to be issued as may be appropriate.
Section 903. Opinion of Counsel to Agent.
The Agent, subject to Sections 701 and 703, may receive an Opinion of Coun-
sel as conclusive evidence that any such consolidation, merger, sale or con-
veyance, and any such assumption, complies with the provisions of this Arti-
cle.
50
<PAGE>
ARTICLE TEN
Covenants
Section 1001. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from time to
time of the Securities that it will duly and punctually perform its obliga-
tions under the Purchase Contracts in accordance with the terms of the Pur-
chase Contracts and this Agreement.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New York
an office or agency where Security Certificates may be presented or surren-
dered for acquisition of shares of Common Stock upon settlement or Early Set-
tlement and for transfer of Treasury Notes upon occurrence of a Termination
Event, where Security Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Agreement may be served. The Company will
give prompt written notice to the Agent of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Agent
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Company hereby
appoints the Agent as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where Security Certificates may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Agent of any such designation or rescission
and of any change in the location of any such other office or agency. The Com-
pany hereby designates as the place of payment for the Securities the Corpo-
rate Trust Office and appoints the Agent at its Corporate Trust Office as pay-
ing agent in such city.
51
<PAGE>
Section 1003. Company to Reserve Common Stock.
The Company shall at all times prior to the Final Settlement Date reserve
and keep available, free from preemptive rights, out of its authorized but
unissued Common Stock the full number of shares of Common Stock issuable
against tender of payment in respect of all Purchase Contracts constituting a
part of the Securities evidenced by Outstanding Security Certificates.
Section 1004. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of any Purchase Contract constituting a
part of the Outstanding Securities will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable.
Section 1005. Statements of Officers of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of each
fiscal year of the Company ending after the date hereof, an Officers' Certifi-
cate, stating whether or not to the best knowledge of the signers thereof the
Company is in default in the performance and observance of any of the terms,
provisions and conditions hereof, and if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which they
may have knowledge.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BROWNING-FERRIS INDUSTRIES, INC.
Attested by By:
- ----------------------- ---------------------------------------------------
FIRST CHICAGO TRUST COMPANY OF NEW YORK, as Agent
Attested by By:
- ----------------------- ---------------------------------------------------
52
<PAGE>
EXHIBIT A
BROWNING-FERRIS INDUSTRIES, INC.
% AUTOMATIC COMMON EXCHANGE SECURITIES
(STATED AMOUNT $ PER SECURITY)
No. Securities
This Security Certificate certifies that is the reg-
istered Holder of the number of Securities set forth above. Each Security rep-
resents ownership by the Holder of % United States Treasury Notes due
, 1998 ("Treasury Notes") with a principal amount equal to the
Stated Amount, subject to the Pledge of such Treasury Notes by such Holder
pursuant to the Pledge Agreement, and the rights and obligations of the Holder
under one Purchase Contract with Browning-Ferris Industries, Inc., a Delaware
corporation (the "Company").
Pursuant to the Pledge Agreement, the Treasury Notes constituting part of
each Security evidenced hereby have been pledged to the Collateral Agent to
secure the obligations of the Holder under the Purchase Contract constituting
part of such Security.
The Pledge Agreement provides that all payments of principal of, or interest
on, any Treasury Notes constituting part of the Securities received by the
Collateral Agent shall be paid by the Collateral Agent by wire transfer in
same day funds no later than , New York City time, on the Busi-
ness Day such payment is received by the Collateral Agent (provided that in
the event such payment is received by the Collateral Agent on a day that is
not a Business Day or after , New York City time, on a Business
Day, then such payment shall be made no later than , New York
City time, on the next succeeding Business Day) (i) in the case of (A) inter-
est payments and (B) any principal payments with respect to any Treasury Notes
that have been released from the Pledge pursuant to the Pledge Agreement, to
the Agent to the account designated by it for such purpose and (ii) in the
case of principal payments on any Pledged Treasury Notes (as defined in the
Pledge Agreement), to the Company, in full satisfaction of the respective ob-
ligations of the Holders of the Securities of which such Pledged
<PAGE>
Treasury Securities are a part under the Purchase Contracts forming a part of
such Securities. Interest on any Treasury Note forming part of a Security evi-
denced hereby which is paid on any or , commencing
, 1995 (a "Payment Date"), shall, subject to receipt thereof by
the Agent from the Collateral Agent, be paid to the Person in whose name this
Security Certificate (or a Predecessor Security Certificate) is registered at
the close of business on the Record Date next preceding such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this Secu-
rity Certificate to purchase, and the Company to sell, on , 1998
(the "Final Settlement Date"), at a price equal to $ (the "Stated
Amount"), a number of shares of Common Stock, par value $.16 2/3 per share
("Common Stock"), of the Company, equal to the Settlement Rate, unless on or
prior to the Final Settlement Date there shall have occurred a Termination
Event or Early Settlement with respect to the Security of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement and
more fully described on the reverse hereof. The purchase price for the shares
of Common Stock purchased pursuant to each Purchase Contract evidenced hereby,
if not paid earlier, shall be paid on the Final Settlement Date by application
of payment received in respect of the principal of the Treasury Notes pledged
to secure the obligations under such Purchase Contract of the Holder of the
Security of which such Purchase Contract is a part.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Security evidenced hereby a fee (the "Contract
Fee") equal to % per annum of the Stated Amount, from , 1995,
computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as the case may be, subject to deferral at the option of the Company
as provided in the Purchase Contract Agreement and more fully described on the
reverse hereof. Such Contract Fee shall be payable to the Person in whose name
this Security Certificate (or a Predecessor Security Certificate) is regis-
tered at the close of business on the Record Date next preceding such Payment
Date.
Interest on the Treasury Notes and the Contract Fee will be payable at the
office of the Agent in The City of New York or, at the option of the Company,
by check mailed to the address of the Person entitled thereto as such address
appears on the Security Register.
2
<PAGE>
Reference is hereby made to the further provisions set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect
as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Security Certificate shall not be entitled to
any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly exe-
cuted.
BROWNING-FERRIS INDUSTRIES, INC.
By:
-------------------------------------------------
Attest:
---------------------
HOLDER SPECIFIED ABOVE (as to obligations of such
Holder under the Purchase Contracts evidenced
hereby)
By: FIRST CHICAGO TRUST COMPANY OF NEW YORK
as Attorney-in-Fact of such Holder
By:
-------------------------------------------------
Dated:
This is one of the Security Certificates referred to in the within mentioned
Purchase Contract Agreement.
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
as Agent
By:
-----------------------
3
<PAGE>
[Form of Reverse of Security Certificate]
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of , 1995 (the "Purchase Contract Agreement"),
between the Company and First Chicago Trust Company of New York, as Agent
(herein called the "Agent"), to which Purchase Contract Agreement and supple-
mental agreements thereto reference is hereby made for a description of the
respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company, and the Holders and of the terms upon
which the Security Certificates are, and are to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this Secu-
rity Certificate to purchase, and the Company to sell, on the Final Settlement
Date at a price equal to the Stated Amount, a number of shares of Common Stock
of the Company equal to the Settlement Rate, unless, on or prior to the Final
Settlement Date, there shall have occurred a Termination Event or an Early
Settlement with respect to the Security of which such Purchase Contract is a
part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as
defined below) is greater than $ (the "Threshold Appreciation Price"),
of a share of Common Stock per Purchase Contract, (b) if the Applicable Market
Value is less than or equal to the Threshold Appreciation Price but is greater
than the Stated Amount, a fractional share of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value and
(c) if the Applicable Market Amount is less than or equal to the Stated Amount,
one share of Common Stock per Purchase Contract, in each case subject to
adjustment as provided in the Purchase Contract. No fractional shares of Common
Stock will be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the twenty consecutive Trading Days ending on
the last Trading Day immediately preceding the Final Settlement Date. The
"Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed, or if the
Common Stock is not so listed on a United States national or
4
<PAGE>
regional securities exchange, as reported by The Nasdaq Stock Market, or, if
the Common Stock is not so reported, the last quoted bid price for the Common
Stock in the over-the-counter market as reported by the National Quotation Bu-
reau or similar organization, or, if such bid price is not available, the mar-
ket value of the Common Stock on such date as determined by a nationally rec-
ognized independent investment banking firm retained for this purpose by the
Company. A "Trading Day" means a day on which the Common Stock (A) is not sus-
pended from trading on any national or regional securities exchange or associ-
ation or over-the-counter market at the close of business and (B) has traded
at least once on the national or regional securities exchange or association
or over-the-counter market that is the primary market for the trading of the
Common Stock.
The purchase price for the shares of Common Stock purchased pursuant to each
Purchase Contract shall be paid by application of payments received by the
Company on the Final Settlement Date from the Collateral Agent pursuant to the
Pledge Agreement in respect of the principal of the Treasury Notes Pledged to
secure the obligations of the relevant Holder under such Purchase Contract.
The Company shall not be obligated to issue any shares of Common Stock in re-
spect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
Subject to the next succeeding paragraph, the Company shall pay, on each
Payment Date, the Contract Fee payable in respect of each Purchase Contract to
the Person in whose name the Security Certificate evidencing such Purchase
Contract is registered at the close of business on the Record Date next pre-
ceding such Payment Date. Contract Fees will be payable at the office of the
Agent in The City of New York or, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such address as it ap-
pears on the Security Register.
The Company shall have the right, at any time prior to the Final Settlement
Date, to defer the payment of any or all of the Contract Fees otherwise pay-
able on any Payment Date, but only if the Company shall give the Holders and
the Agent written notice of its election to defer such payment (specifying the
amount to be deferred) as provided in the Purchase Contract Agreement. Any
Contract Fees so deferred shall bear additional Contract Fees thereon at the
rate of per annum (computed on the basis of the actual number of
5
<PAGE>
days elapsed in a year of 365 or 366 days, as the case may be), compounding on
each succeeding Payment Date, until paid in full. Deferred Contract Fees (and
additional Contract Fees accrued thereon) shall be due on the next succeeding
Payment Date except to the extent that payment is deferred pursuant to the
Purchase Contract Agreement. No Contract Fees may be deferred to a date that
is after the Final Settlement Date.
The Purchase Contracts and the obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay any Contract Fee, shall
immediately and automatically terminate, without the necessity of any notice
or action by any Holder, the Agent or the Company, if, on or prior to the Fi-
nal Settlement Date, a Termination Event shall have occurred. Upon the occur-
rence of a Termination Event, the Company shall give written notice to the
Agent and to the Holders, at their addresses as they appear in the Security
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Treasury Notes from the Pledge. The Securities shall
thereafter represent the right to receive the Treasury Notes forming a part of
such Securities in accordance with the provisions of the Purchase Contract
Agreement and the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase Contract
Agreement at the option of the Holder thereof, Purchase Contracts underlying
Securities having an aggregate Stated Amount equal to $ or an inte-
gral multiple thereof may be settled early ("Early Settlement") as provided in
the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this Se-
curity Certificate, the Holder of this Security Certificate shall deliver this
Security Certificate to the Agent at the Corporate Trust Office duly endorsed
for transfer to the Company or in blank with the form of Election to Settle
Early set forth below duly completed and accompanied by payment in the form of
a certified or cashier's check payable to the order of the Company in immedi-
ately available funds in an amount (the "Early Settlement Amount") equal to
(i) the product of (A) the Stated Amount times (B) the number of Purchase Con-
tracts with respect to which the Holder has elected to effect Early Settlement
minus (ii) the aggregate amount of Contract Fees, if any, otherwise payable on
or prior to the immediately preceding Payment Date deferred at the option of
the Company pursuant to the Purchase Contract Agreement and remaining unpaid
as of such immediately preceding Payment
6
<PAGE>
Date plus (iii) if such delivery is made with respect to any Purchase Con-
tracts during the period from the close of business on any Record Date next
preceding any Payment Date to the opening of business on such Payment Date, an
amount equal to the sum of (x) the Contract Fees payable on such Payment Date
with respect to such Purchase Contracts plus (y) the interest with respect to
the related Treasury Notes payable on such Payment Date. Upon Early Settlement
of Purchase Contracts by a Holder of the related Securities, the Treasury
Notes underlying such Securities shall be released from the Pledge as provided
in the Pledge Agreement and the Holder shall be entitled to receive, a number
of shares of Common Stock on account of each Purchase Contract forming part of
a Security as to which Early Settlement is effected equal to the Early Settle-
ment Rate. The Early Settlement Rate shall initially be equal to
and shall be adjusted in the same manner and at the same time as the Settle-
ment Rate is adjusted as provided in the Purchase Contract Agreement.
The Security Certificates are issuable only in registered form and only in
denominations of a single Security and any integral multiple thereof. The
transfer of any Security Certificate will be registered and Security Certifi-
cates may be exchanged as provided in the Purchase Contract Agreement. The Se-
curity Registrar may require a Holder, among other things, to furnish appro-
priate endorsements and transfer documents permitted by the Purchase Contract
Agreement. No service charge shall be required for any such registration of
transfer or exchange, but the Company and the Agent may require payment of a
sum sufficient to cover any tax or other governmental charge payable in con-
nection therewith. For so long as the Purchase Contract underlying a Security
remains in effect, such Security shall not be separable into its constituent
parts, and the rights and obligations of the Holder of such Security in re-
spect of the Treasury Notes and Purchase Contract constituting such Security
may be transferred and exchanged only as a Security.
Upon registration of transfer of this Security Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee, except as may be required by the Agent pursuant to the Purchase
Contract Agreement), under the terms of the Purchase Contract Agreement and
the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Security
Certificate. The Company covenants and agrees, and the Holder, by his accept-
ance hereof, likewise covenants and agrees, to be bound by the provisions of
this paragraph.
7
<PAGE>
The Holder of this Security Certificate, by his acceptance hereof, autho-
rizes the Agent to enter into and perform the related Purchase Contracts form-
ing part of the Securities evidenced hereby on his behalf as his attorney-in-
fact, agrees to be bound by the terms and provisions thereof, covenants and
agrees to perform his obligations under such Purchase Contracts, consents to
the provisions of the Purchase Contract Agreement, authorizes the Agent to en-
ter into and perform the Pledge Agreement on his behalf as his attorney-in-
fact, and consents to the Pledge of the Treasury Notes underlying this Secu-
rity Certificate pursuant to the Pledge Agreement. The Holder further cove-
nants and agrees, that, to the extent and in the manner provided in the Pur-
chase Contract Agreement and the Pledge Agreement, but subject to the terms
thereof, payments in respect of principal of the Treasury Notes on the Final
Settlement Date shall be paid by the Collateral Agent to the Company in satis-
faction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3%
of the Outstanding Securities.
All terms used herein which are defined in the Purchase Contract Agreement
have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
The Company, the Agent and any agent of the Company or the Agent may treat
the Person in whose name this Security Certificate is registered as the owner
of the Securities evidenced hereby for the purpose of receiving payments of
interest on the Treasury Notes, receiving payments of Contract Fees, perfor-
mance of the Purchase Contracts and for all other purposes whatsoever, whether
or not any payments in respect thereof be overdue and notwithstanding any no-
tice to the contrary, and neither the Company, the Agent nor any such agent
shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at the
offices of the Agent.
8
<PAGE>
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon settlement on or after the Final Settlement Date of the Pur-
chase Contracts underlying the number of Securities evidenced by this Security
Certificate be registered in the name of, and delivered, together with a check
in payment for any fractional share, to the undersigned at the address indi-
cated below unless a different name and address have been indicated below. If
shares are to be registered in the name of a Person other than the under-
signed, the undersigned will pay any transfer tax payable incident thereto.
Dated:
-------------------------- ------------------------------------------
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the Holder,
please print such Person's name
and address:
Please print name and address of Regis-
tered Holder:
------------------------------------------
- -------------------------------- Name
Name
------------------------------------------
- -------------------------------- Address
Address
------------------------------------------
- --------------------------------
Social Security or other Tax- ------------------------------------------
payer Identification Number, if
any
9
<PAGE>
ELECTION TO SETTLE EARLY
The undersigned Holder of this Security Certificate hereby irrevocably exer-
cises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts under-
lying the number of Securities evidenced by this Security Certificate speci-
fied below. The option to effect Early Settlement may be exercised only with
respect to Purchase Contracts underlying Securities with an aggregate Stated
Amount equal to $ or an integral multiple thereof. The undersigned
Holder directs that a certificate for shares of Common Stock deliverable upon
such Early Settlement be registered in the name of, and delivered, together
with a check in payment for any fractional share and any Security Certificate
representing any Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is not effected, to the undersigned at the ad-
dress indicated below unless a different name and address have been indicated
below. Treasury Notes deliverable upon such Early Settlement will be trans-
ferred in accordance with the transfer instructions set forth below. If shares
are to be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated:
------------------------- ------------------------------------------
Signature
10
<PAGE>
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected: .
If shares or Security Certifi- REGISTERED HOLDER
cates are to be registered in
the name of and delivered to
and Treasury Notes are to be
transferred to a Person other
than the Holder, please print
such Person's name and address:
Please print name and address of Regis-
tered Holder:
------------------------------------------
Name
- -------------------------------- ------------------------------------------
Name Address
- -------------------------------- ------------------------------------------
Address
- --------------------------------
Social Security or other Tax-
payer Identification Number, if
any
------------------
Transfer Instructions for Treasury Notes Transferable Upon Early Settlement or
a Termination Event:
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
11
<PAGE>
EXHIBIT 4(J)
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of , 1995 (this "Agreement"), among
Browning-Ferris Industries, Inc., a Delaware corporation (the "Company"), Texas
Commerce Bank National Association, as collateral agent (in such capacity,
together with its successors in such capacity, the "Collateral Agent"), and
First Chicago Trust Company of New York, as purchase contract agent and as
attorney-in-fact of the Holders (as hereinafter defined) from time to time of
the Securities (as hereinafter defined) (in such capacity, together with its
successors in such capacity, the "Purchase Contract Agent") under the Purchase
Contract Agreement (as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as modified and supplemented
and in effect from time to time, the "Purchase Contract Agreement"), pursuant
to which there will be issued % Automatic Common Exchange Securities (the
"Securities").
Each Security consists of (a) one Purchase Contract (as hereinafter defined)
and (b) % United States Treasury Notes due , 1998 ("Treasury
Notes") having a principal amount equal to $ (the "Stated Amount")
and maturing on , 1998 (the "Final Settlement Date"), subject to the
pledge of such Treasury Notes created hereby.
Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders (as defined in the Purchase Contract Agreement) from
time to time of the Securities have irrevocably authorized the Purchase
Contract Agent, as attorney-in-fact of such Holders, among other things to
execute and deliver this Agreement on behalf of such Holders and to grant the
pledge provided hereby of the Treasury Notes constituting part of such
Securities as provided herein and subject to the terms hereof.
Accordingly, the Company, the Collateral Agent and the Purchase Contract
Agent, on its own behalf and as attorney-in-fact of the Holders from time to
time of the Securities, agree as follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular; and
(2) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Act" has the meaning specified in the Purchase Contract Agreement.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Applicable Treasury Regulations" means Subpart O-Book-Entry Procedure of
Title 31 of the Code of Federal Regulations (31 CFR (S) 306.115 et. seq.) and
any other regulations of the United States Treasury Department from time to
time applicable to the transfer or pledge of book-entry U.S. Treasury
Securities.
"Board Resolution" has the meaning specified in the Purchase Contract
Agreement.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which the New York Stock Exchange or banking institutions or trust companies in
The City of New York are authorized or obligated by law or executive order to
be closed.
<PAGE>
"Collateral Agent" has the meaning specified in the first paragraph of this
instrument.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor shall have become such, and thereafter
"Company" shall mean such successor.
"Early Settlement" has the meaning specified in the Purchase Contract
Agreement.
"Early Settlement Amount" has the meaning specified in the Purchase Contract
Agreement.
"Final Settlement Date" has the meaning specified in the Recitals.
"Holder" when used with respect to a Security, or a Purchase Contract
constituting a part thereof, has the meaning specified in the Purchase Contract
Agreement.
"Opinion of Counsel" has the meaning specified in the Purchase Contract
Agreement.
"Outstanding Securities" has the meaning specified in the Purchase Contract
Agreement.
"Outstanding Security Certificates" has the meaning specified in the Purchase
Contract Agreement.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2 hereof.
"Pledged Treasury Notes" has the meaning specified in Section 2 hereof.
"Purchase Contract" has the meaning specified in the Purchase Contract
Agreement.
"Purchase Contract Agent" has the meaning specified in the first paragraph of
this instrument.
"Security" has the meaning specified in the Recitals.
"Security Certificate" has the meaning specified in the Purchase Contract
Agreement.
"Stated Amount" has the meaning specified in the Recitals.
"Termination Event" has the meaning specified in the Purchase Contract
Agreement.
"Treasury Notes" has the meaning specified in the Recitals.
Section 2. The Pledge. The Holders from time to time of the Securities acting
through the Purchase Contract Agent, as their attorney-in-fact, hereby pledge
and grant to the Collateral Agent, as collateral security for the performance
when due by such Holders of their respective obligations under the Purchase
Contracts constituting part of such Securities, for the benefit of the Company,
a security interest in all of the right, title and interest of such Holders in
the Treasury Notes constituting a part of such Securities. Prior to or
concurrently with the execution and delivery of this Agreement, the initial
Holders and the Collateral Agent shall (i) cause the Treasury Notes to be
delivered to the Collateral Agent by Federal Reserve Bank-Wire to the account
of the Collateral Agent designated by it for such purpose and (ii) take
appropriate action so that the applicable Federal Reserve Bank through which
such Treasury Notes have been purchased will reflect such transfer and the
Pledge by appropriate entries in its records in accordance with Applicable
Treasury Regulations. In addition, the execution and delivery hereof by the
Purchase Contract Agent and the Collateral Agent shall constitute (i) the
notification to the Collateral Agent (as bailee or otherwise) of the Pledge and
(ii) an acknowledgment by the Collateral Agent (as third party in possession or
otherwise) of the
2
<PAGE>
Pledge and of its holding of such Treasury Notes subject to the Pledge, in each
case, for purposes of perfecting the Pledge under Applicable Treasury
Regulations and other applicable law, including, to the extent applicable, the
Uniform Commercial Code as adopted and in effect in any applicable
jurisdiction. The pledge provided in this Section 2 is herein referred to as
the "Pledge" and the Treasury Notes subject to the Pledge, excluding any
Treasury Notes released from the Pledge as provided in Section 4 hereof, are
hereinafter referred to as the "Pledged Treasury Notes." Subject to the Pledge,
the Holders from time to time of the Securities shall have full beneficial
ownership of the Treasury Notes constituting a part of such Securities.
Section 3. Distribution of Principal and Interest. (a) All payments of
principal of, or interest on, any Treasury Notes constituting part of the
Securities received by the Collateral Agent shall be paid by the Collateral
Agent by wire transfer in same day funds no later than , New York
City time on the Business Day such interest payment is received by the
Collateral Agent (provided that in the event such interest payment is received
by the Collateral Agent on a day that is not a Business Day or after
, New York City time, on a Business Day, then such payment shall be
made no later than , New York City time, on the next succeeding
Business Day) (i) in the case of (A) interest payments and (B) any principal
payments with respect to any Treasury Notes that have been released from the
Pledge pursuant to Section 4 hereof, to the Purchase Contract Agent to the
account designated by it for such purpose and (ii) in the case of principal
payments on any Pledged Treasury Notes, to the Company, in full satisfaction of
the respective obligations of the Holders of the Securities of which such
Pledged Treasury Notes are a part under the Purchase Contracts forming a part
of such Securities. All such payments received by the Purchase Contract Agent
as provided herein shall be applied by the Purchase Contract Agent pursuant to
the provisions of the Purchase Contract Agreement. If, notwithstanding the
foregoing, the Purchase Contract Agent shall receive any payments of principal
on account of any Pledged Treasury Notes, the Purchase Contract Agent shall
hold the same as trustee of an express trust for the benefit of the Company
(and promptly deliver over to the Company) for application to the obligations
of the Holders of the Securities of which such Treasury Notes are a part under
the Purchase Contracts relating to the Securities of which such Treasury Notes
are a part, and such Holders shall acquire no right, title or interest in any
such payments of principal so received.
Section 4. Release of Pledged Treasury Notes. (a) Upon notice to the
Collateral Agent by the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Pledged
Treasury Notes from the Pledge and shall transfer all such Treasury Notes, free
and clear of any lien, pledge or security interest created hereby, to the
Purchase Contract Agent.
(b) Upon notice to the Collateral Agent by the Purchase Contract Agent that
one or more Holders of Securities have elected to effect Early Settlement of
their respective obligations under the Purchase Contracts forming a part of
such Securities in accordance with the terms of the Purchase Contracts and the
Purchase Contract Agreement, and that the Purchase Contract Agent has received
from such Holders, and paid to the Company, the related Early Settlement
Amounts pursuant to the terms of the Purchase Contracts and the Purchase
Contract Agreement and that all conditions to such Early Settlement have been
satisfied, then the Collateral Agent shall release from the Pledge Pledged
Treasury Notes with a principal amount equal to the product of (i) the Stated
Amount times (ii) the number of such Purchase Contracts as to which such
Holders have elected to effect Early Settlement.
(c) Transfers of Treasury Notes pursuant to Section 4(a) or (b) shall be by
Federal Reserve Bank-Wire or in another appropriate manner, (i) if the
Collateral Agent shall have received such notification at or prior to
, New York City time, on a Business Day, then no later than
, New York City time, on such Business Day and (ii) if the
Collateral Agent shall have received such notification on a day that is not a
Business Day or after , New York City time, on a Business Day, then
no later than , New York City time, on the next succeeding Business
Day.
Section 5. Rights and Remedies. (a) The Collateral Agent shall have all of
the rights and remedies with respect to the Pledged Treasury Notes of a secured
party under the Uniform Commercial Code as in effect in the State of New York
(the "Code") (whether or not said Code is in effect in the jurisdiction where
the rights
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<PAGE>
and remedies are asserted) and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction where
any rights and remedies hereunder may be asserted.
(b) Without limiting any rights or powers otherwise granted by this Agreement
to the Collateral Agent, in the event the Collateral Agent is unable to make
payments to the Company on account of principal payments of any Pledged
Treasury Notes as provided in Section 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which such Pledged Treasury
Notes are a part under the Purchase Contracts forming a part of such
Securities, the Collateral Agent shall have and may exercise, with reference to
such Pledged Treasury Notes and such obligations of such Holder, any and all of
the rights and remedies available to a secured party under the Code after
default by a debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this Agreement
to the Collateral Agent, the Collateral Agent is hereby irrevocably authorized
to receive and collect all payments of principal of or interest on the Pledged
Treasury Notes.
(d) The Purchase Contract Agent agrees that, from time to time, upon the
written request of the Collateral Agent, the Purchase Contract Agent shall
execute and deliver such further documents and do such other acts and things as
the Collateral Agent may reasonably request in order to maintain the Pledge,
and the perfection and priority thereof, and to confirm the rights of the
Collateral Agent hereunder.
Section 6. The Collateral Agent. The Collateral Agent and the Company hereby
agree between themselves as follows (it being understood and agreed that
neither the Purchase Contract Agent nor any Holder of Securities shall have any
rights under this Section 6):
6.01. Appointment, Powers and Immunities. The Collateral Agent shall act
as agent for the Company hereunder with such powers as are specifically
vested in the Collateral Agent by the terms of this Agreement, together
with such other powers as are reasonably incidental thereto. The Collateral
Agent: (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and no implied covenants or obligations shall
be inferred from this Agreement against the Collateral Agent, nor shall the
Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (b) shall not be responsible to
the Company for any recitals contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received
by it under, this Agreement, the Securities or the Purchase Contract
Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement (other than as against the
Collateral Agent), the Securities or the Purchase Contract Agreement or any
other document referred to or provided for herein or therein or for any
failure by the Company or any other Person (except the Collateral Agent) to
perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder (except pursuant to directions furnished under Section 6.02
hereof); (d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith or therewith, except for
its own negligence; and (e) shall not be required to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder. Subject
to the foregoing, during the term of this Agreement the Collateral Agent
shall take all reasonable action in connection with the safe keeping and
preservation of the Pledged Treasury Notes hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder. In no event shall the
Collateral Agent be liable for any amount in excess of the value of the
Pledged Treasury Notes.
6.02. Instructions of the Company. The Company shall have the right, by
one or more instruments in writing executed and delivered to the Collateral
Agent, to direct the time, method and place of conducting any proceeding
for any right or remedy available to the Collateral Agent, or of exercising
any power conferred on the Collateral Agent, or to direct the taking or
refraining from taking of any
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action authorized by this Agreement; provided, however, that (i) such
direction shall not conflict with the provisions of any law or of this
Agreement and (ii) the Collateral Agent shall be adequately indemnified as
provided herein. Nothing in this Section 6.02 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to take any
action which it deems proper and which is not inconsistent with such
direction.
6.03. Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely upon any certification, order, judgment, opinion, notice
or other communication (including, without limitation, any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons (without being required to determine the correctness of
any fact stated therein), and upon advice and statements of legal counsel
and other experts selected by the Collateral Agent. As to any matters not
expressly provided for by this Agreement, the Collateral Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder
in accordance with instructions given by the Company in accordance with
this Agreement.
6.04. Rights in Other Capacities. The Collateral Agent and its affiliates
may (without having to account therefor to the Company) accept deposits
from, lend money to, make investments in and generally engage in any kind
of banking, trust or other business with the Purchase Contract Agent and
any Holder of Securities (and any of their subsidiaries or affiliates) as
if it were not acting as the Collateral Agent, and the Collateral Agent and
its affiliates may accept fees and other consideration from the Purchase
Contract Agent and any Holder of Securities without having to account for
the same to the Company, provided that the Collateral Agent covenants and
agrees with the Company that the Collateral Agent shall not accept, receive
or permit there to be created in its favor any security interest, lien or
other encumbrance of any kind in or upon the Pledged Treasury Notes.
6.05. Non-Reliance on Collateral Agent. The Collateral Agent shall not be
required to keep itself informed as to the performance or observance by the
Purchase Contract Agent or any Holder of Securities of this Agreement, the
Purchase Contract Agreement, the Securities or any other document referred
to or provided for herein or therein or to inspect the properties or books
of the Purchase Contract Agent or any Holder of Securities. The Collateral
Agent shall not have any duty or responsibility to provide the Company with
any credit or other information concerning the affairs, financial condition
or business of the Purchase Contract Agent or any Holder of Securities (or
any of their affiliates) that may come into the possession of the
Collateral Agent or any of its affiliates.
6.06. Compensation and Indemnity. The Company agrees: (i) to pay the
Collateral Agent from time to time reasonable compensation for all services
rendered by it hereunder and (ii) to indemnify the Collateral Agent for,
and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of its powers and duties
under this Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of such powers and duties.
6.07. Failure to Act. In the event of any ambiguity in the provisions of
this Agreement or any dispute between or conflicting claims by or among the
undersigned and/or any other person or entity with respect to any funds or
property deposited hereunder, the Collateral Agent shall be entitled, at
its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute
or conflict shall continue, and the Collateral Agent shall not be or become
liable in any way to any of the undersigned for its failure or refusal to
comply with such conflicting claims, demands or instructions. The
Collateral Agent shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally determined
by a court of competent jurisdiction or settled by agreement between the
conflicting parties as evidenced in a writing, satisfactory to the
Collateral Agent or (ii) the Collateral Agent shall have received security
or an indemnity satisfactory to the Collateral Agent sufficient to save the
Collateral Agent harmless from and
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<PAGE>
against any and all loss, liability or expense which the Collateral Agent
may incur by reason of its acting. The Collateral Agent may in addition
elect to commence an interpleader action or seek other judicial relief or
orders as the Collateral Agent may deem necessary. Notwithstanding anything
contained herein to the contrary, the Collateral Agent shall not be
required to take any action that is in its opinion contrary to law or to
the terms of this Agreement, or which would in its opinion subject it or
any of its officers, employees or directors to liability.
6.08. Resignation of Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent as provided below, (a) the
Collateral Agent may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent, (b) the Collateral Agent may be
removed at any time by the Company and (c) if the Collateral Agent fails to
perform any of its material obligations hereunder in any material respect
for a period of not less than 20 days after receiving notice of such
failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent may be removed by the Purchase Contract
Agent. The Purchase Contract Agent shall promptly notify the Company of any
removal of the Collateral Agent pursuant to clause (c) of the immediately
preceding sentence. Upon any such resignation or removal, the Company shall
have the right to appoint a successor Collateral Agent. If no successor
Collateral Agent shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Collateral Agent's giving of
notice of resignation or such removal, then the retiring Collateral Agent
may petition any court of competent jurisdiction for the appointment of a
successor Collateral Agent. The Collateral Agent shall be a bank which has
an office in New York, New York with a combined capital and surplus of at
least $50,000,000. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, such successor Collateral
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall take all appropriate action to transfer any
money and property held by it hereunder (including the Pledged Treasury
Notes) to such successor Collateral Agent. The retiring Collateral Agent
shall, upon such succession, be discharged from its duties and obligations
as Collateral Agent hereunder. After any retiring Collateral Agent's
resignation hereunder as Collateral Agent, the provisions of this Section 6
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Collateral Agent.
Promptly following the removal or resignation of the Collateral Agent the
Company shall give written notice thereof to Moody's Investors Services, Inc.
6.09. Right to Appoint Agent or Advisor. The Collateral Agent shall have
the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by such agents or advisors selected in good faith.
The provisions of this Section 6 shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent.
Section 7. Amendment.
7.01. Amendment Without Consent of Holders. Without the consent of any
Holders, the Company, the Collateral Agent and the Purchase Contract Agent, at
any time and from time to time, may amend this Agreement, in form satisfactory
to the Company, the Collateral Agent and the Purchase Contract Agent, for any
of the following purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to evidence and provide for the acceptance of appointment hereunder
by a successor Collateral Agent or Purchase Contract Agent; or
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<PAGE>
(4) to cure any ambiguity, to correct or supplement any provisions herein
which may be inconsistent with any other such provisions herein, or to make
any other provisions with respect to such matters or questions arising
under this Agreement, provided such action shall not adversely affect the
interests of the Holders.
7.02. Amendment with Consent of Holders. With the consent of the Holders of
not less than 66 2/3% of the Outstanding Securities, by Act of said Holders
delivered to the Company, the Agent and the Collateral Agent, the Company, when
authorized by a Board Resolution, the Agent and the Collateral Agent may amend
this Agreement for the purpose of modifying in any manner the provisions of
this Agreement or the rights of the Holders in respect of the Securities;
provided, however, that no such supplemental agreement shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the amount or type of Treasury Notes underlying a Security,
impair the right of the Holder of any Security to receive interest payments
on the underlying Treasury Notes or otherwise adversely affect the Holder's
rights in or to such Treasury Notes; or
(2) otherwise effect any action that would require the consent of the
Holder of each Outstanding Security affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by an agreement
supplemental thereto; or
(3) reduce the percentage of Outstanding Securities the consent of whose
Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
7.03. Execution of Amendments. In executing any amendment permitted by this
Section, the Collateral Agent and the Purchase Contract Agent shall be entitled
to receive and (subject to Section 6.01 hereof, with respect to the Collateral
Agent, and Section 701 of the Purchase Contract Agreement, with respect to the
Purchase Contract Agent) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement.
7.04. Effect of Amendments. Upon the execution of any amendment under this
Section, this Agreement shall be modified in accordance therewith, and such
amendment shall form a part of this Agreement for all purposes; and every
Holder of Security Certificates theretofore or thereafter authenticated,
executed on behalf of the Holders and delivered under the Purchase Contract
Agreement shall be bound thereby.
7.05. Reference to Amendments. Security Certificates authenticated, executed
on behalf of the Holders and delivered after the execution of any amendment
pursuant to this Section may, and shall if required by the Collateral Agent or
the Purchase Contract Agent, bear a notation in form approved by the Purchase
Contract Agent and the Collateral Agent as to any matter provided for in such
amendment. If the Company shall so determine, new Security Certificates so
modified as to conform, in the opinion of the Collateral Agent, the Purchase
Contract Agent and the Company, to any such amendment may be prepared and
executed by the Company and authenticated, executed on behalf of the Holders
and delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security Certificates.
Section 8. Miscellaneous.
8.01. No Waiver. No failure on the part of the Collateral Agent or any of its
agents to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Collateral Agent or
any of its agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
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8.02. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Company, the Collateral
Agent and the Holders from time to time of the Securities, acting through the
Purchase Contract Agent as their attorney-in-fact, hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company, the Collateral
Agent and the Holders from time to time of the Securities, acting through the
Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
8.03. Notices. All notices, requests, consents and other communications
provided for herein (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have
been duly given when transmitted by telecopier or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
8.04. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the Company, the
Collateral Agent and the Purchase Contract Agent, and the Holders from time to
time of the Securities, by their acceptance of the same, shall be deemed to
have agreed to be bound by the provisions hereof and to have ratified the
agreements of, and the grant of the Pledge hereunder by, the Purchase Contract
Agent.
8.05. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.06. Severability. If any provision hereof is invalid and unenforceable in
any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction
and shall be liberally construed in order to carry out the intentions of the
parties hereto as nearly as may be possible and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
8.07. Expenses, etc. The Company agrees to reimburse the Collateral Agent
for: (a) all reasonable out-of-pocket costs and expenses of the Collateral
Agent (including, without limitation, the reasonable fees and expenses of
counsel to the Collateral Agent), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this Agreement and (ii)
any modification, supplement or waiver of any of the terms of this Agreement;
(b) all reasonable costs and expenses of the Collateral Agent (including,
without limitation, reasonable fees and expenses of counsel) in connection with
(i) any enforcement or proceedings resulting or incurred in connection with
causing any Holder of Securities to satisfy its obligations under the Purchase
Contracts forming a part of the Securities and (ii) the enforcement of this
Section 8.07; and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated hereby.
8.08. Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Holders from time to
time of the Securities hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or instrument
relating thereto;
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<PAGE>
(b) any change in the time, manner or place of payment of, or any other
term of, or any increase in the amount of, all or any of the obligations of
Holders of Securities under the related Purchase Contracts, or any other
amendment or waiver of any term of, or any consent to any departure from
any requirement of, the Purchase Contract Agreement or any Purchase
Contract or any other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a defense
available to, or discharge of, a borrower, a guarantor or a pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BROWNING-FERRIS INDUSTRIES, INC.
By:
----------------------------------
Name:
Title:
Address for Notices:
Browning-Ferris Building
757 North Eldridge
Post Office Box 3151
Houston, Texas 77253
Attention: Treasurer
Telecopy: (713) 870-7844
FIRST CHICAGO TRUST COMPANY
OF NEW YORK,
as Purchase Contract Agent and as
attorney-in-fact of the Holders from
time to time of the Securities
By:
----------------------------------
Name:
Title:
Address for Notices:
Post Office Box 2500
Jersey City, New Jersey 07303-2500
Attention: Stock Transfer Dept.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
as Collateral Agent
By:
----------------------------------
Name:
Title:
Address for Notices:
Post Office Box 2558
Houston, Texas 77252
Attention: Corporate Trust Dept.
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