<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 9, 1997.
REGISTRATION NO. 333-26595
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
<TABLE>
<S> <C> <C>
CNF TRANSPORTATION INC. DELAWARE 94-1444798
(ORMERLY CONSOLIDATED FREIGHTWAYS, INC.)F
CNF TRUST I DELAWARE APPLIED FOR
</TABLE>
3240 HILLVIEW AVENUE, PALO ALTO, CALIFORNIA 94304
(415) 494-2900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
EBERHARD G. H. SCHMOLLER
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CNF TRANSPORTATION INC.
3240 HILLVIEW AVENUE, PALO ALTO, CALIFORNIA 94304
(415) 494-2900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
---------------
COPIES TO:
ERIC S. HAUETER
BROWN & WOOD LLP
555 CALIFORNIA STREET, SAN FRANCISCO, CALIFORNIA 94104
(415) 772-1200
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined
by market conditions.
---------------
If the only securities being registered on this Form are being 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, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, please check the
following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED(1) PER UNIT(1) PRICE(1)(2) FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior and Subordinated Debt Securities of
CNF Transportation Inc. (the
"Company")(3)(4)......................... --
Preferred Stock of the Company(5)......... --
Common Stock of the Company(5)(6)......... --
Common Stock Warrants of the Company(7)... (10) -- (10) (10)*
Depositary Shares(5)(8)................... --
Preferred Securities of CNF Trust I (the
"Trust")(5).............................. --
Guarantee of Preferred Securities(9)...... --
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
* Paid previously. (Footnotes on next page)
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Pursuant to Rule 429 under the Securities Act, the prospectus included in this
Registration Statement is a combined prospectus relating also to Registration
Statement No. 33-29793 and Registration Statement No. 33-60619 previously filed
by the Company under the Securities Act. This Registration Statement also con-
stitutes post-effective amendment No. 3 to such Registration Statement No. 33-
29793 and post-effective amendment No. 2 to such Registration Statement No. 33-
60619 and such post-effective amendments shall hereafter become effective con-
currently with the effectiveness of this Registration Statement and in accor-
dance with Section 8(c) of the Securities Act.
(Footnotes continued from previous page)
(1) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3. Securities registered hereby may be
offered for U.S. dollars or the equivalent thereof in foreign currencies,
currency units or composite currencies. Securities registered hereby may
be sold separately, together or in units with other securities registered
hereby.
(2) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(o). The proposed maximum offering price will be
determined from time to time by the applicable Registrant in connection
with the issuance by such Registrant of the securities registered
hereunder.
(3) If any Debt Securities are issued at an original issue discount, then such
greater amount as may be sold for an aggregate initial offering price of
up to the proposed maximum aggregate offering price.
(4) In addition to any Debt Securities that may be issued directly under this
Registration Statement, there is being registered hereunder such
indeterminate amount of Debt Securities as may be issued upon conversion
or exchange of other Debt Securities, Preferred Stock or Depositary
Shares, for which no consideration will be received by the Registrants,
and such aggregate principal amount of Debt Securities as may be issued
and sold to the Trust in connection with the issuance by the Trust of
Preferred Securities. Any Debt Securities sold to the Trust as aforesaid
may be distributed, under certain circumstances, to the holders of
Preferred Securities for no additional consideration.
(5) Such indeterminate number of shares of Preferred Stock and Common Stock,
and such indeterminate number of Depositary Shares and Preferred
Securities, as may be issued from time to time at indeterminate prices. In
addition to any Preferred Stock, Depositary Shares, Common Stock and
Preferred Securities that may be issued directly under this Registration
Statement, there are being registered hereunder such indeterminate number
of shares of Preferred Stock and Common Stock, and such indeterminate
number of Depositary Shares, as may be issued upon conversion or exchange
of Debt Securities, Preferred Stock, Depositary Shares or Preferred
Securities, as the case may be, for which no separate consideration will
be received by the Registrants.
(6) The aggregate amount of Common Stock registered hereunder is limited,
solely for purposes of any at the market offerings, to that which is
permissible under Rule 415(a)(4) of the Securities Act of 1933, as
amended.
(7) Common Stock Warrants will represent rights to purchase Common Stock
registered hereby.
(8) Depositary Shares will represent fractional interests in shares of
Preferred Stock registered hereby.
(9) Includes the rights of holders of the Preferred Securities under the
Guarantee and certain back-up undertakings consisting of obligations of
the Company with respect to such Preferred Securities under the Trust's
Amended and Restated Declaration of Trust (the "Declaration") and the
Company's Indenture relating to subordinated Debt Securities, as the same
may be amended or supplemented from time to time (the "Subordinated
Indenture"). No separate consideration will be received for such
Guarantee. The obligations of the Company under the subordinated Debt
Securities held by the Trust, the Subordinated Indenture, the Declaration
and the Guarantee, when taken together, will provide a full and
unconditional guarantee, on a subordinated basis, by the Company of the
Preferred Securities of the Trust.
(10) No additional amount of securities is being registered hereby. As
described elsewhere on the cover page of this Registration Statement,
$45,000,000 and $105,000,000 proposed maximum aggregate offering price of
securities or, if any such securities are issued at an original issue
discount, such greater amount as may be sold for an aggregate initial
offering price of up to $45,000,000 and $105,000,000 (or the equivalent
thereof in foreign currencies, currency units or composite currencies) are
being carried forward from Registration Statement Nos. 33-29793 and 33-
60619, respectively, previously filed by the Company under the Securities
Act; filing fees of $9,000 and $36,206.90 were previously paid to register
such securities under such prior registration statements.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
CNF TRANSPORTATION INC.
Debt Securities, Preferred Stock, Depositary Shares,
Common Stock and Common Stock Warrants
CNF TRUST I
Preferred Trust Securities fully and unconditionally guaranteed
as set forth herein by CNF Transportation Inc.
CNF Transportation Inc. (the "Company") may from time to time offer and sell
(i) its unsecured debt securities, which may be either senior (the "Senior Debt
Securities") or subordinated (the "Subordinated Debt Securities" and, together
with the Senior Debt Securities, the "Debt Securities"), (ii) shares of its
preferred stock, no par value (the "Preferred Stock"), in one or more series;
(iii) depositary shares (the "Depositary Shares") evidenced by depositary
receipts; (iv) shares of its common stock, par value $.625 per share (the
"Common Stock"); and (v) warrants to purchase shares of Common Stock (the
"Common Stock Warrants"), for an aggregate initial public offering price of up
to $150,000,000 (or the equivalent in foreign currencies, currency units or
composite currencies (each, a "Currency")).
CNF Trust I (the "Trust"), a statutory business trust created under the laws of
the State of Delaware, may offer preferred securities representing undivided
beneficial interests in the assets of the Trust ("Trust Preferred Securities").
The payment of periodic cash distributions ("distributions") with respect to
Trust Preferred Securities out of moneys held by the Trust, and payment on
liquidation, redemption or otherwise with respect to such Trust Preferred
Securities, will be guaranteed by the Company to the extent described herein
(the "Trust Preferred Securities Guarantee"). See "Description of Trust
Preferred Securities Guarantee." The Company's obligations under the Trust
Preferred Securities Guarantee will be subordinate and junior in right of
payment to all other liabilities of the Company and will rank pari passu in
right of payment with the most senior preferred stock, if any, issued from time
to time by the Company. A series of Subordinated Debt Securities may be issued
and sold to the Trust, or a trustee of the Trust, in connection with the
investment of the proceeds from the offering of Trust Preferred Securities and
Trust Common Securities (as defined herein, together the "Trust Securities") of
the Trust. The Subordinated Debt Securities purchased by the Trust may be
subsequently distributed pro rata to holders of Trust Preferred Securities and
Trust Common Securities in connection with the dissolution of the Trust upon
the occurrence of certain events as may be described in an accompanying
supplement to this Prospectus (a "Prospectus Supplement"). The Trust Preferred
Securities Guarantee, when taken together with the Company's other obligations
under the Subordinated Debt Securities, the Subordinated Indenture (as defined
herein) and the Declaration (as defined herein), including its obligations to
pay certain costs, expenses, debts and liabilities of the Trust (other than
with respect to the Trust Securities), will provide a full and unconditional
guarantee on a subordinated basis by the Company of payments due on the Trust
Preferred Securities.
The Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Common
Stock Warrants and Preferred Securities (collectively, the "Securities") may be
offered independently or together in any combination for sale directly to
purchasers or through dealers, underwriters or agents to be designated. The
Debt Securities, Preferred Stock and Preferred Securities may be convertible
into or exchangeable for other Securities. The Securities will be offered to
the public at prices and on terms determined at the time of offering. The
Securities may be sold for U.S. dollars or other Currencies and any amounts
payable by the Company or the Trust, as the case may be, in respect of the
Securities may likewise be payable in U.S. dollars or other Currencies.
The Senior Debt Securities will rank on a parity in right of payment with all
other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities will be subordinated to all existing and future
Senior Indebtedness (as defined herein) of the Company. See "Description of
Debt Securities."
(continued on following page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is May 9, 1997.
<PAGE>
(continued from cover page)
The Prospectus Supplement to this Prospectus sets forth (where applicable),
with respect to the series or issue of Securities (the "Offered Securities")
for which such Prospectus Supplement is being delivered: (i) the terms of any
Debt Securities offered, including, where applicable, their title, ranking, ag-
gregate principal amount, maturity, rate of interest (or method of calculation)
and time of payment thereof, any redemption or repayment terms, the Currency or
Currencies in which such Debt Securities will be denominated or payable, any
index, formula or other method pursuant to which principal, premium, if any, or
interest, if any, may be determined, any conversion or exchange provisions, the
right of the Company, if any, to defer payment of interest on such Debt Securi-
ties and the maximum length of any such deferral period, and other specific
terms not described in this Prospectus; (ii) the terms of any Preferred Stock
offered, including, where applicable, the specific designation, number of
shares, dividend rate (or method of calculation) and time of payment thereof,
liquidation preference, any redemption or repayment terms, any conversion or
exchange provisions, any voting rights, and other specific terms not described
in this Prospectus; (iii) the terms of any Depositary Shares offered which are
not described in this Prospectus, including the fraction of a share of Pre-
ferred Stock represented by each such Depositary Share; (iv) the terms of any
Common Stock Warrants offered, including where applicable, the exercise price,
detachability, duration and other specific terms not described in this Prospec-
tus; (v) the initial public offering price and the net proceeds to the Company
and other specific terms related to the Offered Securities; and (vi) the terms
of any Trust Preferred Securities offered, including, where applicable, the
specific designation, number of Trust Preferred Securities, distribution rate
(or method of calculation) and time of payment thereof, liquidation amount, any
redemption or repayment terms, any conversion or exchange provisions, any vot-
ing rights, the right of the Trust, if any, to defer payment of distributions
on the Trust Preferred Securities and the maximum length of any such deferral
period, and other specific terms not described in this Prospectus.
This Prospectus may not be used to consummate sales of Securities unless accom-
panied or, to the extent permitted by applicable law, preceded by a Prospectus
Supplement.
The Securities may be offered through dealers, underwriters or agents desig-
nated from time to time, as set forth in the accompanying Prospectus Supple-
ment. Net proceeds from the sale of Securities will be equal to the purchase
price in the case of a dealer, the public offering price less discount in the
case of an underwriter or the purchase price less commission in the case of an
agent in each case, less other expenses attributable to the issuance and dis-
tribution of the Securities. The Company may also sell Securities directly to
investors on its own behalf. In the case of sales made directly by the Company,
no commission will be payable. See "Plan of Distribution" for possible indemni-
fication arrangements for dealers, underwriters and agents.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities Ex-
change Act of 1934, as amended (the "Exchange Act"), and, in accordance there-
with, files reports, proxy statements and other information with the Securi-
ties and Exchange Commission (the "Commission"). Such reports, proxy state-
ments and other information may be inspected and copied at the public refer-
ence facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's Re-
gional Offices in New York (Seven World Trade Center, 13th Floor, New York,
New York 10048), and Chicago (Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661). Copies of these materials may be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W., Wash-
ington, D.C. 20549, at prescribed rates. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. Reports, proxy statements and other information concerning
the Company may also be inspected at the offices of the New York Stock Ex-
change, 20 Broad Street, New York, New York 10005 and at the offices of the
Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104.
This Prospectus constitutes a part of a registration statement on Form S-3
(the "Registration Statement") filed by the Company and the Trust with the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus omits certain of the information contained in the Reg-
istration Statement in accordance with the rules and regulations of the Com-
mission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company, the Trust and
the Securities. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed or incorporated by reference as an exhibit
to the Registration Statement or otherwise filed with the Commission. Each
such statement is qualified in its entirety by such reference.
No separate financial statements of the Trust have been included herein. The
Company does not consider that such financial statements would be material to
holders of the Trust Preferred Securities because (i) all of the voting secu-
rities of the Trust will be owned, directly or indirectly, by the Company, a
reporting company under the Exchange Act, (ii) the Trust has no independent
operations but exists for the sole purpose of issuing securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in Subordinated Debt Securities issued by the Company, and
(iii) the Company's obligations described herein and in any accompanying Pro-
spectus Supplement under the Declaration, the Trust Preferred Securities Guar-
antee, the Subordinated Debt Securities purchased by the Trust and the Subor-
dinated Indenture, taken together, constitute a full and unconditional guaran-
tee of payments due on the Trust Preferred Securities. See "Description Of
Debt Securities" and "Description Of Trust Preferred Securities Guarantee."
The Trust is not currently subject to the information reporting requirements
of the Exchange Act. The Trust will become subject to such requirements upon
the effectiveness of the Registration Statement, although it intends to seek
and expects to receive exemptions therefrom.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document has been filed by the Company with the Commission and is
incorporated herein by reference: the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering of the Securities shall be deemed to be in-
corporated by reference into this Prospectus and to be a part hereof from the
respective dates 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 other subsequently filed
document which also is or is deemed to be incorporated by reference herein mod-
ifies or supersedes such statement. Any statement or document so modified or
superseded shall not be deemed, except as so modified or superseded, to consti-
tute part of this Prospectus.
The Company will furnish without charge to each person to whom this Prospectus
is delivered, upon request, a copy of any and all of the documents described
above that are incorporated by reference herein other than exhibits to such
documents which are not specifically incorporated by reference in such docu-
ments. Written or telephone requests should be directed to: CNF Transportation
Inc., Office of the Corporate Secretary, at 3240 Hillview Avenue, Palo Alto,
California 94304 (telephone (415) 494-2900).
No person has been authorized to give any information or to make any represen-
tations other than those contained or incorporated by reference in this Pro-
spectus and, if given or made, such information or representations must not be
relied upon as having been authorized. This Prospectus does not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the securities described in this Prospectus or an offer to sell or the solici-
tation of an offer to buy such securities in any jurisdiction where or to any
person to whom it is unlawful to make such an offer or solicitation. 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 or the Trust since
the date hereof or thereof or that the information contained or incorporated by
reference herein or therein is correct as of any time subsequent to its date.
4
<PAGE>
THE COMPANY
CNF Transportation Inc. (the "Company") is a holding company which partici-
pates through subsidiaries in domestic and international air cargo delivery
services, regional less-than-truckload highway trucking services, truckload
and intermodal rail services, ocean forwarding, contract logistics and related
transportation activities. These operations are organized into three primary
business segments: air freight and ocean forwarding (Emery Worldwide); re-
gional trucking and full-service truckload services (Con-Way Transportation
Services); and a third segment which is comprised of a third-party contract
logistics company (Menlo Logistics), Road Systems, a trailer manufacturer, and
VantageParts, a wholesale truck parts distributor.
The Company was incorporated in Delaware in 1958 as a successor to a business
originally established in 1929. The Company's principal executive offices are
located at 3240 Hillview Avenue, Palo Alto, California 94304 (telephone (415)
494-2900). Unless otherwise indicated or unless the context otherwise re-
quires, all references in this Prospectus to the Company include CNF Transpor-
tation Inc. and its subsidiaries.
THE TRUST
CNF Trust I (the "Trust") is a statutory business trust created under Delaware
law pursuant to (i) a trust agreement (as the same may be amended, supple-
mented or restated from time to time, the "Declaration") executed by the Com-
pany, as sponsor for the trust (the "Sponsor"), and certain of the CNF Trust-
ees (as defined herein) for the trust and (ii) the filing of a certificate of
trust with the Delaware Secretary of State on May 6, 1997. The Trust exists
for the exclusive purposes of (i) issuing the Trust Preferred Securities and
common securities representing undivided beneficial interests in the assets of
the Trust (the "Trust Common Securities" and, together with the Trust Pre-
ferred Securities, the "Trust Securities"), (ii) investing the gross proceeds
of the Trust Securities in a specific series of Subordinated Debt Securities
and (iii) engaging in only those other activities necessary or incidental
thereto. All of the Trust Common Securities will be directly or indirectly
owned by the Company. The Trust Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Trust Preferred Securities
except that upon an event of default under the Declaration, the rights of the
holders of the Trust Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be subordinated
to the rights of the holders of the Trust Preferred Securities. The Company
will, directly or indirectly, acquire Trust Common Securities in an aggregate
liquidation amount equal to approximately 3% of the total capital of the
Trust. The Trust's business and affairs will be conducted by the trustees (the
"CNF Trustees") appointed by the Company, as the direct or indirect holder of
all the Trust Common Securities. Except in certain limited circumstances, the
holder of the Trust Common Securities will be entitled to appoint, remove or
replace any of, and to increase or reduce the number of, the CNF Trustees. The
duties and obligations of the CNF Trustees shall be governed by the Declara-
tion. A majority of the CNF Trustees (the "Regular Trustees") will be persons
who are employees or officers of or affiliated with the Company. One CNF
Trustee will be a financial institution which will be unaffiliated with the
Company and which shall act as property trustee and as indenture trustee (the
"Property Trustee") for purposes of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). In addition, unless the Property Trustee
maintains a principal place of business in the State of Delaware, and other-
wise meets the requirements of applicable law, one CNF Trustee will have its
principal place of business or reside in the State of Delaware (the "Delaware
Trustee"). The Company will pay all fees and expenses related to the Trust and
the offering of Trust Securities. The payment of periodic distributions with
respect to the Trust Preferred Securities out of moneys held by the Trust, and
payment on liquidation, redemption or otherwise with respect to the Trust Pre-
ferred Securities, will be guaranteed by the Company to the extent described
herein. See "Description of Trust Preferred Securities Guarantee." The
Company's obligations under the Trust Preferred Securities Guarantee will be
subordinate and junior in right of payment to all other liabilities of the
Company and rank pari passu in right of payment with the most senior preferred
stock, if any, issued from time to time by the Company. The principal place of
business of the Trust shall be c/o CNF Transportation Inc., 3240 Hillview Ave-
nue, Palo Alto, California 94304 (telephone (415) 494-2900).
5
<PAGE>
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the Company
intends to use the net proceeds from the sale of the Securities offered hereby
for general corporate purposes, which may include the repayment of indebted-
ness, capital expenditures and working capital. Pending such application, such
proceeds may be invested in short-term investments and marketable securities or
used to temporarily repay indebtedness under credit facilities. The proceeds
from the sale of Trust Securities will be invested by the Trust in Subordinated
Debt Securities.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratios of earnings to fixed charges and of earnings
to combined fixed charges and preferred stock dividends for each of the periods
indicated are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)............. 2.3x 2.6x 2.9x 1.7x 0.5x(2)
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends(3)................. 2.3x 2.5x 2.5x 1.5x 0.4x(4)
</TABLE>
- --------
(1) The ratio of earnings to fixed charges is unaudited for all periods
presented. The ratio of earnings to fixed charges was derived by dividing
earnings before fixed charges and income taxes by fixed charges. For this
purpose, "earnings" represents income from continuing operations before
consolidated income taxes and fixed charges (excluding capitalized interest
and dividends on all of the Company's preferred stock). "Fixed charges"
represents interest on capital leases and short-term and long-term debt,
capitalized interest, dividends on shares of the Company's Series B
Cumulative Convertible Preferred Stock used to pay debt service on notes
issued by the Company's Thrift and Stock Plan (the "TASP"), and the
applicable portion of the consolidated rent expense which approximates the
interest portion of lease payments. All of the outstanding shares of such
Series B Cumulative Convertible Preferred Stock are held by the TASP.
(2) Earnings were inadequate to cover fixed charges for the period shown; the
deficiency was $39.4 million for the year ended December 31, 1992.
(3) The ratio of earnings to combined fixed charges and preferred stock
dividends is unaudited for all periods presented. The ratio of earnings to
combined fixed charges and preferred stock dividends was derived by
dividing earnings before fixed charges and income taxes by combined fixed
charges and dividends on the Company's Series C Conversion Preferred Stock.
For this purpose, earnings and fixed charges are computed as described in
note (1) above. The Series C Conversion Preferred Stock was issued in March
1992 and all of the outstanding shares thereof were converted into Common
Stock in March 1995.
(4) Earnings were inadequate to cover combined fixed charges and preferred
stock dividends for the period shown; the deficiency was $47.8 million for
the year ended December 31, 1992.
DESCRIPTION OF DEBT SECURITIES
The Company may issue Debt Securities either separately, or together with, or
upon the conversion of or in exchange for, other Securities. The Debt Securi-
ties are to be either senior unsecured obligations (the "Senior Debt Securi-
ties") of the Company issued in one or more series under an Indenture (the "Se-
nior Indenture") to be entered into between the Company and a trustee (the "Se-
nior Trustee") whose name will be set forth in the applicable Prospectus Sup-
plement, or subordinated unsecured obligations (the
6
<PAGE>
"Subordinated Debt Securities") of the Company issued in one or more series
under an Indenture (the "Subordinated Indenture" and, together with the Senior
Indenture, the "Indentures") to be entered into between the Company and a
trustee (the "Subordinated Trustee" and, together with the Senior Trustee, the
"Trustees") whose name will be set forth in the applicable Prospectus Supple-
ment. The forms of the Indentures have been filed as exhibits to the Registra-
tion Statement. The terms of any series of Debt Securities will be those set
forth in the applicable Indenture and such Debt Securities and those made part
of such Indenture by the Trust Indenture Act. The summary of certain provi-
sions of the Indentures and the Debt Securities set forth below and the sum-
mary of certain terms of a particular series of Debt Securities set forth in
the applicable Prospectus Supplement do not purport to be complete and are
subject to and are qualified in their entirety by reference to all of the pro-
visions of the Indentures, which provisions of the Indentures (including de-
fined terms) are incorporated herein by reference. Certain capitalized terms
used herein and not defined are defined in the Indentures. As used in this
"Description of Debt Securities," all references to the "Company" shall mean
CNF Transportation Inc., excluding, unless the context shall otherwise re-
quire, its subsidiaries.
In the event that Subordinated Debt Securities are issued to the Trust or a
trustee of the Trust in connection with the issuance of Trust Securities, such
Subordinated Debt Securities will be issued pursuant to the Subordinated In-
denture and subsequently may be distributed pro rata to the holders of such
Trust Securities in connection with the dissolution of the Trust upon the oc-
currence of certain events described in the Prospectus Supplement relating to
such Trust Securities. Only one series of Subordinated Debt Securities will be
issued to the Trust or a trustee of the Trust in connection with the issuance
of Trust Securities by the Trust.
The following description of Debt Securities sets forth certain general terms
and provisions of the series of Debt Securities to which any Prospectus Sup-
plement may relate. Certain other specific terms of any particular series of
Debt Securities will be described in the applicable Prospectus Supplement. To
the extent that any particular terms of the Debt Securities described in a
Prospectus Supplement differ from any of the terms described herein, then such
terms described herein shall be deemed to have been superseded by such Pro-
spectus Supplement.
GENERAL
The Debt Securities may be issued from time to time in one or more series of
Senior Debt Securities and one or more series of Subordinated Debt Securities.
The Indentures do not limit the aggregate principal amount of Debt Securities
which may be issued thereunder and provide that Debt Securities of any series
may be issued thereunder up to an aggregate principal amount which may be au-
thorized from time to time by the Company. Reference is made to the applicable
Prospectus Supplement relating to the series of Debt Securities offered
thereby for specific terms, including (where applicable): (1) the title or
designation of such Debt Securities; (2) any limit on the aggregate principal
amount of such Debt Securities; (3) the price or prices (expressed as a per-
centage of the principal amount thereof) at which such Debt Securities will be
issued; (4) the date or dates on which the principal of and premium, if any,
on such Debt Securities will be payable, or the method or methods, if any, by
which such date or dates will be determined; (5) the rate or rates (which may
be fixed or variable) at which such Debt Securities will bear interest, if
any, or the method or methods, if any, by which such rate or rates are to be
determined, the date or dates, if any, from which such interest will accrue,
or the method or methods, if any, by which such date or dates are to be deter-
mined, and whether and under what circumstances Additional Amounts on such
Debt Securities will be payable, and the basis upon which interest will be
calculated if other than that of a 360-day year of twelve 30-day months; (6)
the dates on which such interest, if any, will be payable and the record
dates, if any, therefor; (7) the place or places where the principal of, pre-
mium, if any, and interest, if any, on such Debt Securities will be payable
and the place or places where such Debt Securities may be surrendered for reg-
istration of transfer and exchange, if other than The City of New York; (8) if
applicable, the date or dates on which, the period or periods within which,
the price or prices at which and the other terms and conditions upon which
such Debt Securities may be
7
<PAGE>
redeemed at the option of the Company or are subject to repurchase at the op-
tion of the holders; (9) the terms of any sinking fund or analogous provision;
(10) if other than U.S. dollars, the Currency for which the Debt Securities
may be purchased and the Currency in which the payment of principal thereof
and premium, if any, and interest, if any, thereon may be made, and the abili-
ty, if any, of the Company or the holders of Debt Securities to have payments
made in any Currency other than those in which the Debt Securities are stated
to be payable; (11) any addition to, or modification or deletion of, any cove-
nant or Event of Default with respect to such Debt Securities; (12) whether
any such Debt Securities are to be issuable in registered or bearer form or
both and, if in bearer form, the terms and conditions relating thereto and any
limitations on issuance of such Bearer Securities (including in exchange for
Registered Securities of the same series); (13) whether any such Debt Securi-
ties will be issued in temporary or permanent global form and, if so, the
identity of the depositary for such global Debt Security; (14) whether and un-
der what circumstances the Company will pay Additional Amounts (as contem-
plated by the relevant Indenture) on such Debt Securities to any holder who is
a United States Alien (as defined in the relevant Indenture, as such defini-
tion may be modified) in respect of any tax, assessment or other governmental
charge and, if so, whether the Company will have the option to redeem such
Debt Securities rather than pay such Additional Amounts; (15) the person to
whom any interest on any Registered Securities of the series shall be payable,
if other than the person in whose name the Registered Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, the manner in which, or the person to whom, any
interest on any Bearer Security of the series shall be payable, if other than
upon presentation and surrender of the coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any inter-
est payable on a temporary global Debt Security will be paid if other than in
the manner provided in the relevant Indenture; (16) the portion of the princi-
pal amount of such Debt Securities which shall be payable upon acceleration
thereof if other than the full principal amount thereof; (17) the authorized
denominations in which such Debt Securities will be issuable, if other than
denominations of $1,000 and any integral multiple thereof (in the case of Reg-
istered Securities) or $5,000 (in the case of Bearer Securities); (18) the
terms, if any, upon which such Debt Securities may be convertible into or ex-
changeable for other Securities; (19) whether such Debt Securities will be Se-
nior Debt Securities or Subordinated Debt Securities; (20) whether the amount
of payments of principal of, premium, if any, and interest, if any, on such
Debt Securities may be determined with reference to an index, formula or other
method or methods (any such Debt Securities being hereinafter called "Indexed
Securities") and the manner in which such amounts will be determined; and (21)
any other terms of such Debt Securities.
As used in this Prospectus and any Prospectus Supplement relating to the of-
fering of any Debt Securities, references to the principal of and premium, if
any, and interest, if any, on such Debt Securities will be deemed to include
mention of the payment of Additional Amounts, if any, required by the terms of
such Debt Securities in such context.
Debt Securities may be issued as Original Issue Discount Securities (as de-
fined in the Indentures) to be sold at a substantial discount below their
principal amount. In the event of an acceleration of the maturity of any Orig-
inal Issue Discount Security, the amount payable to the holder thereof upon
such acceleration will be determined in the manner described in the applicable
Prospectus Supplement. Material federal income tax and other considerations
applicable to Original Issue Discount Securities will be described in the ap-
plicable Prospectus Supplement.
If the purchase price of any Debt Securities is payable in a Currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the Debt Securities is payable in any Currency other than U.S. dol-
lars, the specific terms and other information with respect to such Debt Secu-
rities and such foreign Currency will be specified in the Prospectus Supple-
ment relating thereto.
Under the Indenture, the terms of the Debt Securities of any series may differ
and the Company, without the consent of the holders of the Debt Securities of
any series, may reopen a previous series of Debt Securities and issue addi-
tional Debt Securities of such series or establish additional terms of such
series.
8
<PAGE>
REGISTRATION, TRANSFER, PAYMENT AND PAYING AGENT
Unless otherwise indicated in the applicable Prospectus Supplement, each series
of Debt Securities will be issued in registered form only, without coupons. The
Indentures, however, provide that the Company may also issue Debt Securities in
bearer form only, or in both registered and bearer form. Bearer Securities
shall not be offered, sold, resold or delivered in connection with their origi-
nal issuance in the United States or to any United States person (as defined
below) other than offices located outside the United States of certain United
States financial institutions. As used herein, "United States person" means any
citizen or resident of the United States, any corporation, partnership or other
entity created or organized in or under the laws of the United States, any es-
tate the income of which is subject to United States federal income taxation
regardless of its source, or any trust whose administration is subject to the
primary supervision of a United States court and which has one or more United
States fiduciaries who have the authority to control all substantial decisions
of the trust, and "United States" means, except for purposes of the definition
of "Restricted Subsidiary" set forth below under "--Certain Covenants of the
Company--Definition of Certain Terms," the United States of America (including
the states thereof and the District of Columbia), its territories, its posses-
sions and other areas subject to its jurisdiction. Purchasers of Bearer Securi-
ties will be subject to certification procedures and may be affected by certain
limitations under United States tax laws. Such procedures and limitations will
be described in the Prospectus Supplement relating to the offering of the
Bearer Securities.
Unless otherwise indicated in the applicable Prospectus Supplement, Registered
Securities will be issued in denominations of $1,000 or any integral multiple
thereof, and Bearer Securities will be issued in denominations of $5,000.
Unless otherwise indicated in the applicable Prospectus Supplement, the princi-
pal, premium, if any, and interest, if any, of or on the Debt Securities will
be payable, and Debt Securities may be surrendered for registration of transfer
or exchange, at an office or agency to be maintained by the Company in the Bor-
ough of Manhattan, The City of New York, provided that payments of interest
with respect to any Registered Security may be made at the option of the Com-
pany by check mailed to the address of the person entitled thereto or by trans-
fer to an account maintained by the payee with a bank located in the United
States. No service charge shall be made for any registration of transfer or ex-
change of Debt Securities, but the Company may require payment of a sum suffi-
cient to cover any tax or other governmental charge and any other expenses that
may be imposed in connection therewith.
Unless otherwise indicated in the applicable Prospectus Supplement, payment of
principal of, premium, if any, and interest, if any, on Bearer Securities will
be made, subject to any applicable laws and regulations, at such office or
agency outside the United States as specified in the Prospectus Supplement and
as the Company may designate from time to time. Unless otherwise indicated in
the applicable Prospectus Supplement, payment of interest due on Bearer Securi-
ties on any Interest Payment Date will be made only against surrender of the
coupon relating to such Interest Payment Date. Unless otherwise indicated in
the applicable Prospectus Supplement, no payment of principal, premium or in-
terest with respect to any Bearer Security will be made at any office or agency
in the United States or by check mailed to any address in the United States or
by transfer to an account maintained with a bank located in the United States;
provided, however, that if amounts owing with respect to any Bearer Securities
shall be payable in U.S. dollars, payment with respect to any such Bearer Secu-
rities may be made at the Corporate Trust Office of the applicable Trustee or
at any office or agency designated by the Company in the Borough of Manhattan,
The City of New York, if (but only if) payment of the full amount of such prin-
cipal, premium or interest at all offices outside of the United States main-
tained for such purpose by the Company is illegal or effectively precluded by
exchange controls or similar restrictions.
Unless otherwise indicated in the applicable Prospectus Supplement, the Company
will not be required to (i) issue, register the transfer of or exchange Debt
Securities of any series during a period beginning at the opening of business
15 days before any selection of Debt Securities of that series of like tenor to
be redeemed and ending at the close of business on the day of that selection;
(ii) register the transfer of or exchange any Registered Security, or portion
thereof, called for redemption, except the unredeemed
9
<PAGE>
portion of any Registered Security being redeemed in part; (iii) exchange any
Bearer Security called for redemption, except to exchange such Bearer Security
for a Registered Security of that series and like tenor that is simultaneously
surrendered for redemption; or (iv) issue, register the transfer of or ex-
change any Debt Security which has been surrendered for repayment at the op-
tion of the holder, except the portion, if any, of such Debt Security not to
be so repaid.
RANKING OF DEBT SECURITIES; HOLDING COMPANY STRUCTURE
The Senior Debt Securities will be unsecured unsubordinated obligations of the
Company and will rank on a parity in right of payment with all other unsecured
and unsubordinated indebtedness of the Company. The Subordinated Debt Securi-
ties will be unsecured obligations of the Company and will be subordinated in
right of payment to all existing and future Senior Indebtedness (as defined
below) of the Company. See "--Subordination of Subordinated Debt Securities."
The Debt Securities are obligations exclusively of the Company. The Company is
a holding company, substantially all of whose consolidated assets are held by
its subsidiaries. Accordingly, the cash flow of the Company and the consequent
ability to service its debt, including the Debt Securities, are largely depen-
dent upon the results of operations of such subsidiaries.
Because the Company is a holding company, the Debt Securities will be effec-
tively subordinated to all existing and future indebtedness, trade payables,
guarantees, lease obligations and letter of credit obligations of the
Company's subsidiaries. Therefore, the Company's rights and the rights of its
creditors, including the holders of the Debt Securities, to participate in the
assets of any subsidiary upon the latter's liquidation or reorganization will
be subject to the prior claims of such subsidiary's creditors, except to the
extent that the Company may itself be a creditor with recognized claims
against the subsidiary, in which case the claims of the Company would still be
effectively subordinate to any security interest in, or mortgages or other
liens on, the assets of such subsidiary and would be subordinate to any in-
debtedness of such subsidiary senior to that held by the Company. Although
certain debt instruments to which the Company and its subsidiaries are parties
impose limitations on the incurrence of additional indebtedness, both the Com-
pany and its subsidiaries retain the ability to incur substantial additional
indebtedness and lease and letter of credit obligations.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the form
of one or more global securities that will be deposited with, or on behalf of,
a depositary (the "Depositary") identified in the Prospectus Supplement relat-
ing to such series. Global Debt Securities may be issued in either registered
or bearer form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for individual certificates evidencing Debt
Securities in definitive form represented thereby, a global Debt Security may
not be transferred except as a whole by the Depositary for such global Debt
Security to a nominee of such Depositary 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 of such Depositary or a nominee of such suc-
cessor.
The specific terms of the depositary arrangement with respect to a series of
global Debt Securities and certain limitations and restrictions relating to a
series of global Bearer Securities will be described in the Prospectus Supple-
ment relating to such series.
OUTSTANDING DEBT SECURITIES
In determining whether the holders of the requisite principal amount of out-
standing Debt Securities have given any request, demand, authorization, direc-
tion, notice, consent or waiver under the relevant Indenture, (i) the portion
of the principal amount of an Original Issue Discount Security that shall be
10
<PAGE>
deemed to be outstanding for such purposes shall be that portion of the prin-
cipal amount thereof that could be declared to be due and payable upon a dec-
laration of acceleration thereof pursuant to the terms of such Original Issue
Discount Security as of the date of such determination, (ii) the principal
amount of any Indexed Security that shall be deemed to be outstanding for such
purpose shall be the principal face amount of such Indexed Security determined
on the date of its original issuance, (iii) the principal amount of a Debt Se-
curity denominated in a Currency other than U.S. dollars shall be the U.S.
dollar equivalent, determined on the date of original issue of such Debt Secu-
rity, of the principal amount of such Debt Security and (iv) any Debt Security
owned by the Company or any obligor on such Debt Security or any Affiliate of
the Company or such other obligor shall be deemed not to be outstanding.
REDEMPTION AND REPURCHASE
The Debt Securities of any series may be redeemable at the option of the Com-
pany, may be subject to mandatory redemption pursuant to a sinking fund or
otherwise, or may be subject to repurchase by the Company at the option of the
holders, in each case upon the terms, at the times and at the prices set forth
in the applicable Prospectus Supplement.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are convertible into
or exchangeable for Common Stock, Preferred Stock, Depositary Shares or other
Debt Securities will be set forth in the applicable Prospectus Supplement.
Such terms may include provisions for conversion or exchange, either mandato-
ry, at the option of the holders or at the option of the Company.
CERTAIN COVENANTS OF THE COMPANY
The Indentures do not limit the amount of indebtedness, guarantees or lease
obligations that may be incurred by the Company and its subsidiaries. The In-
dentures do not contain provisions which would give holders of the Debt Secu-
rities the right to require the Company to repurchase their Debt Securities in
the event of a decline in the credit rating of the Company's debt securities
resulting from a takeover, recapitalization or similar restructuring. Holders
of certain of the Company's outstanding indebtedness (including its 9 1/8%
Notes due 1999, notes issued by the Company's Thrift and Stock Plan which are
guaranteed by the Company, and indebtedness under the Company's $350 million
bank credit facility, which is guaranteed by certain subsidiaries of the Com-
pany), have the right to require the Company to repurchase or repay such in-
debtedness upon the occurrence of certain changes in control of the Company or
similar events and/or declines in the credit rating on such indebtedness.
Covenant in the Senior Indenture--Limitation on Liens. The following covenant
will be applicable to Senior Debt Securities but not to Subordinated Debt Se-
curities. In the Senior Indenture, the Company covenants that, so long as any
of the Senior Debt Securities remains outstanding, it will not, nor will it
permit any Restricted Subsidiary (as defined below) to, create, assume or
guarantee any Indebtedness (as defined below) that is secured by a mortgage,
pledge, lien, security interest or other encumbrance (a "Lien") on any prop-
erty or shares of capital stock or Indebtedness of the Company or any Re-
stricted Subsidiary without in any such case effectively providing, concur-
rently with the creation, assumption or guarantee of any such Indebtedness,
that the Senior Debt Securities shall, so long as such other Indebtedness is
so secured (and, if the Company shall so determine, any other existing Indebt-
edness (or Indebtedness thereafter in existence) created, assumed or guaran-
teed by the Company or any Restricted Subsidiary), be secured by any such Lien
equally and ratably with or prior to the Indebtedness thereby secured; pro-
vided that Indebtedness secured by such Liens may be created, assumed or guar-
anteed if immediately after giving effect thereto the aggregate amount of all
such Indebtedness of the Company and its Restricted Subsidiaries (not includ-
ing Indebtedness described in (i) through (vii) below) does not exceed 15% of
Consolidated Net Tangible Assets (as defined below).
11
<PAGE>
The foregoing restrictions shall not apply to Indebtedness secured by (i)
Liens on property of the Company or any Restricted Subsidiary existing on the
date of the Senior Indenture; (ii) certain Liens on property existing at the
time of acquisition thereof; (iii) Liens in favor of the Company or a Re-
stricted Subsidiary securing Indebtedness of the Company or a Restricted Sub-
sidiary; (iv) Liens created in connection with tax assessments or legal pro-
ceedings and mechanics' and materialmens' liens and other similar liens cre-
ated in the ordinary course of business; (v) Liens on property of the Company
or any Restricted Subsidiary (except Liens on the capital stock or Indebted-
ness of the Company or any Restricted Subsidiary) in favor of the United
States of America or any state thereof, or any agency or political subdivision
of either, or in favor of any other country or agency or political subdivision
thereof, in each case to secure payments pursuant to contract or statute or to
secure Indebtedness created, incurred or guaranteed for the purpose of financ-
ing all or any part of the purchase price or the cost of construction or im-
provement of the property subject to such Liens, including Liens incurred in
connection with pollution control, industrial revenue bond or other similar
financings; (vi) certain purchase money Liens on property of the Company or
any Restricted Subsidiary that constitutes a fixed asset or a surface or air
transportation vehicle used in the freight business securing or providing for
the payment of all or any part of the purchase price thereof, or any Indebted-
ness incurred to finance the purchase or the cost of construction or improve-
ment thereof for which a written commitment was executed within 180 days after
acquisition or the completion of construction or improvement, as the case may
be; or (vii) certain permitted extensions, renewals or replacements (or suc-
cessive extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses (i) through (vi), inclusive.
Covenant in Both Indentures--Consolidation, Merger and Sale of Assets. The
following covenant will be applicable to both Senior Debt Securities and Sub-
ordinated Debt Securities. Each Indenture provides that the Company shall not
consolidate with or merge into any Person or convey, transfer or lease its
properties and assets substantially as an entirety to any Person unless (a)
such Person (if other than the Company) is organized and existing under the
laws of the United States of America, any state thereof or the District of Co-
lumbia and shall expressly assume the due and punctual payment of the princi-
pal of, premium, if any, and interest, if any, on all the Debt Securities out-
standing under such Indenture and the performance of the Company's other obli-
gations under such Indenture and the Debt Securities outstanding thereunder;
(b) immediately after giving effect to such transaction, no Event of Default
under such Indenture, and no event which, after notice or lapse of time or
both would become an Event of Default under such Indenture, shall have hap-
pened and be continuing; and (c) certain other conditions are met.
Definition of Certain Terms. The term "Consolidated Net Tangible Assets" as
used in the Senior Indenture means, as of any particular time, the aggregate
amount of the Consolidated Assets (less depreciation, amortization and other
applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities, and (ii) all goodwill, tradenames,
trademarks, patents, debt discount and expense and other intangibles, in each
case net of applicable amortization, all as shown on the Company's most recent
consolidated financial statements prepared in accordance with generally ac-
cepted accounting principles. The term "Consolidated Assets" as used in the
Senior Indenture means all amounts that would be shown as assets on a consoli-
dated balance sheet of the Company and its consolidated Subsidiaries (as de-
fined) prepared in accordance with generally accepted accounting principles.
The term "Restricted Subsidiary" as used in the Senior Indenture means any
Subsidiary of the Company (i) that is majority owned or controlled by the Com-
pany or any of its Subsidiaries; (ii) substantially all of the operating as-
sets of which are located or the principal business of which is carried on
within the United States, Puerto Rico, the U.S. Virgin Islands or Canada;
(iii) which was in existence on the date of the Senior Indenture or thereafter
becomes a Subsidiary of the Company, unless any such Subsidiary is determined
by the Board of Directors not to be a Restricted Subsidiary because in the
opinion of the Board of Directors it is not of material importance to the to-
tal business conducted by the Company and its Subsidiaries taken as a whole;
and (iv) the assets of which have a gross book value (without deducting any
depreciation, amortization or other applicable reserves) which exceeds 1% of
Consolidated Assets. The term "Indebtedness" as used in the
12
<PAGE>
Indentures means, with respect to any Person, (a) any liability of such Person
(1) for borrowed money, or under any reimbursement obligation relating to a
letter of credit, or (2) evidenced by a bond, note, debenture or similar in-
strument, or (3) for payment obligations arising under any conditional sale or
other title retention arrangement (including a purchase money obligation)
given in connection with the acquisition of any businesses, properties or as-
sets of any kind, or (4) for the payment of money relating to a capitalized
lease obligation; (b) any liability of others described in the preceding
clause (a) that such Person has guaranteed or that is otherwise its legal lia-
bility; and (c) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses
(a) and (b) above.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, an Event
of Default with respect to the Debt Securities of any series is defined in the
relevant Indenture as being: (i) default for 30 days in payment of any inter-
est with respect to any Debt Security of such series; (ii) default in payment
of principal or any premium with respect to any Debt Security of such series
when due upon maturity, redemption or otherwise; (iii) default in making any
sinking fund payment or payment under any analogous provision when due with
respect to any Debt Security of such series; (iv) default by the Company in
the performance, or breach, of any other covenant or warranty in the relevant
Indenture (other than a covenant or warranty included therein solely for the
benefit of series of Debt Securities other than that series) or any Debt Secu-
rity of such series which shall not have been remedied for a period of 90 days
after notice to the Company by the relevant Trustee or the holders of not less
than 25% in aggregate principal amount of the Debt Securities of such series
then outstanding; (v) acceleration of the maturity of any single outstanding
issue of Indebtedness of the Company with an outstanding aggregate principal
amount in excess of $35,000,000 (including an acceleration under the relevant
Indenture with respect to Debt Securities of any other series), as a result of
an event of default thereunder, which acceleration is not annulled or which
Indebtedness is not discharged within 30 days thereafter or such longer period
during which the Company is contesting in good faith such acceleration; (vi)
certain events of bankruptcy, insolvency or reorganization of the Company; or
(vii) any other Event of Default established for the Debt Securities of such
series. No Event of Default with respect to any particular series of Debt Se-
curities necessarily constitutes an Event of Default with respect to any other
series of Debt Securities. Each Indenture provides that the Trustee thereunder
may withhold notice to the holders of the Debt Securities of any series of the
occurrence of a default with respect to the Debt Securities of such series
(except a default in payment of principal, premium, if any, interest, if any,
or sinking fund payments, if any) if the Trustee considers it in the interest
of the holders to do so.
Each Indenture provides that if an Event of Default with respect to any series
of Debt Securities issued thereunder shall have occurred and be continuing,
either the relevant Trustee or the holders of at least 25% in principal amount
of the Debt Securities of such series then outstanding may declare the princi-
pal amount (or if any Debt Securities of such series are Original Issue Dis-
count Securities, such lesser amount as may be specified in the terms thereof)
of all the Debt Securities of such series to be due and payable immediately,
but upon certain conditions such declaration and its consequences may be re-
scinded and annulled by the holders of a majority in principal amount of the
Debt Securities of such series then outstanding.
Subject to the provisions of Trust Indenture Act requiring each Trustee, dur-
ing an Event of Default under the relevant Indenture, to act with the requi-
site standard of care, a Trustee is under no obligation to exercise any of its
rights or powers under the relevant Indenture at the request or direction of
any of the holders of Debt Securities of any series unless such holders have
offered such Trustee reasonable indemnity. Subject to the foregoing, holders
of a majority in principal amount of the then outstanding Debt Securities of
any series issued under an Indenture shall have the right, subject to certain
limitations, to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee under such Indenture with respect to
such series. Each Indenture requires the annual filing by the Company with the
relevant Trustee of a certificate as to whether or not the Company is in de-
fault under the terms of such Indenture.
13
<PAGE>
Notwithstanding any other provision of the Indentures, the holder of any Debt
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and premium, if any, and interest, if any, on such
Debt Security on the respective due dates therefor (as the same may be ex-
tended in accordance with the terms of such Debt Security) and to institute
suit for enforcement of any such payment, and such right shall not be impaired
without the consent of such holder. In addition, in the case of a Subordinated
Debt Security issued to the Trust, if an Event of Default has occurred and is
continuing and such Event of Default is attributable to the failure by the
Company to pay the principal of or premium, if any, or interest, if any, on
such Subordinated Debt Security, then a holder of Trust Preferred Securities
may directly institute a proceeding against the Company for payment.
MODIFICATION, WAIVERS AND MEETINGS
Each Indenture contains provisions permitting the Company and the Trustee
thereunder, with the consent of the holders of a majority in principal amount
of the outstanding Debt Securities of each series issued under such Indenture
and affected by a modification or amendment, to modify or amend any of the
provisions of such Indenture or of the Debt Securities of such series or the
rights of the holders of the Debt Securities of such series under such Inden-
ture, provided that no such modification or amendment shall, among other
things, (i) change the stated maturity of the principal of, or premium, if
any, or any installment of interest, if any, on any Debt Securities issued un-
der such Indenture or reduce the principal amount thereof or any redemption
premium thereon, or reduce the rate of interest thereon, or reduce the amount
of principal of any Original Issue Discount Securities that would be due and
payable upon an acceleration of the maturity thereof, or adversely affect any
right of repayment at the option of any holder, or change any place where, or
the Currency in which, any Debt Securities issued under such Indenture are
payable, or impair the holder's right to institute suit to enforce the payment
of any such Debt Securities on or after the stated maturity thereof, or make
any change that materially adversely affects the right, if any, to convert or
exchange such Debt Securities for other securities in accordance with their
terms, or (ii) reduce the aforesaid percentage of Debt Securities of any se-
ries issued under such Indenture, the consent of the holders of which is re-
quired for any such modification or amendment or the consent of whose holders
is required for any waiver (of compliance with certain provisions of such In-
denture or certain defaults thereunder and their consequences) or reduce the
requirements for a quorum or voting at a meeting of holders of such Debt Secu-
rities or (iii) solely in the case of the Subordinated Indenture, modify any
of the provisions of Article Sixteen thereof (relating to subordination of the
Subordinated Debt Securities) or the definition of Senior Indebtedness in a
manner adverse to the holders of the Subordinated Debt Securities, without in
each such case obtaining the consent of the holder of each outstanding Debt
Security issued under such Indenture so affected.
If the Trust or the Property Trustee holds a series of Subordinated Debt Secu-
rities, no such amendment, modification or waiver which requires approval of
holders of a certain percentage in principal amount of the outstanding Subor-
dinated Debt Securities of such series shall be effective as to such series of
Subordinated Debt Securities, without the approval of the holders of at least
the same percentage of aggregate liquidation amount of outstanding Trust Secu-
rities.
Each Indenture also contains provisions permitting the Company and the rele-
vant Trustee, without the consent of the holders of any Debt Securities issued
thereunder, to modify or amend such Indenture in order to, among other things,
(a) add to the Events of Default or the covenants of the Company for the bene-
fit of the holders of all or any series of Debt Securities issued under such
Indenture; (b) to add or change any provisions of such Indenture to facilitate
the issuance of Bearer Securities; (c) to establish the form or terms of Debt
Securities of any series and any related coupons; (d) to cure any ambiguity or
correct or supplement any provision therein which may be inconsistent with
other provisions therein, or to make any other provisions with respect to mat-
ters or questions arising under such Indenture which shall not adversely af-
fect the interests of the holders of any series of Debt Securities issued
thereunder in any material respect; or (e) to amend or supplement any provi-
sion contained in such Indenture, provided that such amendment or supplement
does not apply to any outstanding Debt Securities issued prior to the date of
such amendment or supplement and entitled to the benefits of such provision.
14
<PAGE>
The holders of a majority in aggregate principal amount of the outstanding Debt
Securities of any series may waive compliance by the Company with certain re-
strictive provisions of the relevant Indenture, including the covenant de-
scribed above under "Certain Covenants of the Company--Covenant in
theSenior Indenture-- Limitation on Liens" (which covenant is included only in
the Senior Indenture). The Holders of a majority in aggregate principal amount
of the outstanding Debt Securities of any series may, on behalf of all holders
of Debt Securities of that series, waive any past default under the applicable
Indenture with respect to Debt Securities of that series and its consequences,
except a default in the payment of the principal of, or premium, if any, or in-
terest, if any, on any Debt Securities of such series or in respect of a cove-
nant or provision which cannot be modified or amended without the consent of
the holder of each outstanding Debt Securities of such series affected.
Each Indenture contains provisions for convening meetings of the holders of
Debt Securities of a series issued thereunder. A meeting may be called at any
time by the relevant Trustee, and also, upon request, by the Company or the
holders of at least 10% in principal amount of the outstanding Debt Securities
of such series, in any such case upon notice given in accordance with the pro-
visions of such Indenture. Except for any consent which must be given by the
holder of each outstanding Debt Security affected thereby, as described above,
any resolution presented at a meeting or adjourned meeting duly reconvened at
which a quorum (as described below) is present may be adopted by the affirma-
tive vote of the holders of a majority in principal amount of the outstanding
Debt Securities of that series; provided, however, that any resolution with re-
spect to any request, demand, authorization, direction, notice, consent, waiver
or other action which may be made, given or taken by the holders of a specified
percentage, which is less than a majority, in principal amount of the outstand-
ing Debt Securities of a series may be adopted at a meeting or adjourned meet-
ing duly reconvened at which a quorum is present by the affirmative vote of the
holders of such specified percentage in principal amount of the outstanding
Debt Securities of that series. Any resolution passed or decision taken at any
meeting of holders of Debt Securities of any series duly held in accordance
with the relevant Indenture will be binding on all holders of Debt Securities
of that series and the related coupons. The quorum at any meeting called to
adopt a resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series, subject to certain exceptions.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Upon the direction of the Company, either Indenture shall cease to be of fur-
ther effect with respect to any series of Debt Securities issued thereunder
specified by the Company (subject to the survival of certain provisions there-
of, including the obligation to pay Additional Amounts to the extent described
below) when (i) either (A) all outstanding Debt Securities of such series and,
in the case of Bearer Securities, all coupons appertaining thereto, have been
delivered to the relevant Trustee for cancellation (subject to certain excep-
tions) or (B) all Debt Securities of such series and, if applicable, any cou-
pons appertaining thereto, have become due and payable or will become due and
payable at their stated maturity within one year or are to be called for re-
demption within one year and the Company has deposited with the Trustee, in
trust, funds in U.S. dollars or in such Foreign Currency in which such Debt Se-
curities are payable in an amount sufficient to pay the entire indebtedness on
such Debt Securities in respect of principal (and premium, if any) and inter-
est, if any, (and, to the extent that (x) the Debt Securities of such series
provide for the payment of Additional Amounts upon the occurrence of certain
events of taxation, assessment or governmental charge with respect to payments
on such Debt Securities and (y) the amount of any such Additional Amounts is at
the time of deposit reasonably determinable by the Company (in the exercise of
its sole discretion), any such Additional Amounts) to the date of such deposit
(if such Debt Securities have become due and payable) or to the Maturity there-
of, as the case may be, (ii) the Company has paid all other sums payable under
the Indenture with respect to the Debt Securities of such series, and (iii)
certain other conditions are met. If the Debt Securities of any such series
provide for the payment of Additional Amounts, the Company will remain obligat-
ed, following such deposit, to pay Additional Amounts on such Debt Securities
to the extent that the amount thereof exceeds the amount deposited in respect
of such Additional Amounts as aforesaid.
15
<PAGE>
Unless otherwise provided in the applicable Prospectus Supplement, the Company
may elect with respect to any series of Debt Securities either (a) to defease
and be discharged from any and all obligations with respect to such Debt Secu-
rities (except for, among other things, the obligation to pay Additional
Amounts, if any, upon the occurrence of certain events of taxation, assessment
or governmental charge with respect to payments on such Debt Securities to the
extent that the amount thereof exceeds the amount deposited in respect of such
Additional Amounts as provided below, and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilat-
ed, destroyed, lost or stolen Debt Securities, to maintain an office or agency
in respect of such Debt Securities, to hold moneys for payment in trust, and,
if applicable, to exchange or convert such Debt Securities into other securi-
ties in accordance with their terms) ("defeasance"), or (b) to be released from
its obligations with respect to such Debt Securities described above under "--
Certain Covenants of the Company-- Covenants in the Senior Indenture--Limita-
tion on Liens" (which covenant appears only in the Senior Indenture) and cer-
tain other restrictive covenants, if any, in the relevant Indenture and, if in-
dicated in the applicable Prospectus Supplement, its obligations with respect
to any other covenant applicable to the Debt Securities of such series, and any
omission to comply with such obligations shall not constitute a default or an
Event of Default with respect to the Debt Securities of such series ("covenant
defeasance"), in either case upon the irrevocable deposit with the relevant
Trustee (or other qualifying trustee), in trust for such purpose, of an amount,
in U.S. dollars or in such Foreign Currency in which such Debt Securities are
payable at Stated Maturity, and/or Government Obligations (as defined in the
relevant Indenture) which through the payment of principal and interest in ac-
cordance with their terms will provide money, in an amount sufficient to pay
the principal of and any premium and any interest on (and, to the extent that
(x) the Debt Securities of such series provide for the payment of Additional
Amounts and (y) the amount of any such Additional Amounts is at the time of de-
posit reasonably determinable by the Company (in the exercise of its sole dis-
cretion), any such Additional Amounts with respect to) such Debt Securities,
and any mandatory sinking fund or analogous payments thereon, on the scheduled
due dates therefor or the applicable redemption date, as the case may be.
Such defeasance or covenant defeasance shall only be effective if, among other
things, (i) it shall not result in a breach or violation of, or constitute a
default under, the relevant Indenture or any other material agreement relating
to indebtedness for borrowed money to which the Company is a party or is bound,
(ii) the Company has delivered to the relevant Trustee an opinion of counsel
(as specified in the relevant Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or covenant defeasance, as the case may
be, and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance or
covenant defeasance had not occurred and (iii) if the cash and Government Obli-
gations deposited are sufficient to pay the outstanding Debt Securities of such
series provided such Debt Securities are redeemed on a particular redemption
date, the Company shall have given the applicable Trustee irrevocable instruc-
tions to redeem such Debt Securities on such date. It shall also be a condition
to the effectiveness of such defeasance (but not covenant defeasance) that no
Event of Default or event which with notice or lapse of time or both would be-
come an Event of Default with respect to Debt Securities of such series shall
have occurred and been continuing on the date of, or, solely in the case of
Events of Default described in clause (vi) of the first paragraph under "--
Events of Default" above, during the period ending on the 91st day after the
date of, such deposit into trust.
Unless otherwise provided in the applicable Prospectus Supplement, if after the
Company has deposited funds and/or Government Obligations to effect defeasance
or covenant defeasance with respect to Debt Securities of any series, (a) the
holder of a Debt Security of such series is entitled to, and does, elect pursu-
ant to the applicable Indenture or the terms of such Debt Security to receive
payment in a Currency other than that in which such deposit has been made in
respect of such Debt Security, or (b) a Conversion Event (as defined below) oc-
curs in respect of the Foreign Currency in which such deposit has been made,
the indebtedness represented by such Debt Security shall be deemed to have
been, and
16
<PAGE>
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest, if any, on such Debt Security as such Debt
Security becomes due out of the proceeds yielded by converting the amount so
deposited in respect of such Debt Security into the Currency in which such Debt
Security becomes payable as a result of such election or such Conversion Event
based on (x) in the case of payments made pursuant to clause (a) above, the ap-
plicable market exchange rate for such Foreign Currency in effect on the second
business day prior to such payment date, or (y) with respect to a Conversion
Event, the applicable market exchange rate for such Foreign Currency in effect
(as nearly as feasible) at the time of the Conversion Event.
"Conversion Event" means the cessation of use of (i) a Foreign Currency both by
the government of the country or the confederation which issued such Foreign
Currency and for the settlement of transactions by a central bank or other pub-
lic institutions of or within the international banking community, (ii) the ECU
both within the European Monetary System and for the settlement of transactions
by public institutions of or within the European Union or (iii) any currency
unit or composite currency other than the ECU for the purposes for which it was
established.
In the event the Company effects covenant defeasance with respect to any Debt
Securities and such Debt Securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to the covenant described above under "--Certain Covenants of the Company--Cov-
enant in the Senior Indenture--Limitation on Liens" (which covenant appears
only in the Senior Indenture and which would no longer be applicable to such
Debt Securities after such covenant defeasance) or with respect to any other
covenant as to which there has been covenant defeasance, the amount of monies
and/or Government Obligations deposited with the applicable Trustee to effect
such covenant defeasance may not be sufficient to pay amounts due on such Debt
Securities at the time of any acceleration resulting from such Event of De-
fault. However, the Company would remain liable to make payment of such amounts
due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting or restricting such defeasance or covenant defeasance with re-
spect to the Debt Securities of a particular series.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEES
The Trust Indenture Act of 1939 contains limitations on the rights of a trust-
ee, should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. Each Trustee is permitted to engage
in other transactions with the Company and its subsidiaries from time to time,
provided that if such Trustee acquires any conflicting interest it must elimi-
nate such conflict upon the occurrence of an Event of Default under the rele-
vant Indenture, or else resign.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The payment of the principal of, premium, if any, and interest, if any, on the
Subordinated Debt Securities will be subordinated, to the extent and in the
manner set forth in the Subordinated Indenture, in right of payment to the
prior payment in full of all Senior Indebtedness which may at any time and from
time to time be outstanding. Unless otherwise provided in the applicable Pro-
spectus Supplement with respect to an issue of Subordinated Debt Securities, in
the event of any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, (i) all Senior In-
debtedness shall first be paid in full, or such payment shall be provided for,
before any payment on
17
<PAGE>
account of the principal of, or premium, if any, or interest, if any, on the
Subordinated Debt Securities is made, (ii) any payment or distribution of as-
sets of the Company to which the holders of the Subordinated Debt Securities
would be entitled except for the subordination provisions of the Subordinated
Indenture shall be paid by the liquidating trustee or other person making such
distribution or directly to the holders of Senior Indebtedness or on their be-
half, to the extent necessary to make payment in full of all Senior Indebted-
ness remaining unpaid, after giving effect to any concurrent payment or distri-
bution to the holders of such Senior Indebtedness, and (iii) in the event that,
notwithstanding the foregoing, any payment or distribution of assets of the
Company is received by the Subordinated Trustee or the holders of any of the
Subordinated Debt Securities before all Senior Indebtedness is paid in full,
such payment or distribution will be paid over to the holders of such Senior
Indebtedness or on their behalf for application to the payment of all such Se-
nior Indebtedness remaining unpaid until all such Senior Indebtedness has been
paid in full or such payment provided for, after giving effect to any concur-
rent payment or distribution to the holders of such Senior Indebtedness. Sub-
ject to the payment in full of all Senior Indebtedness upon any such distribu-
tion of assets of the Company, the holders of the Subordinated Debt Securities
will be subrogated to the rights of the holders of the Senior Indebtedness to
receive payments or distributions of cash, property or securities of the Com-
pany applicable to Senior Indebtedness until the principal of (and premium, if
any) and interest, if any, on the Subordinated Debt Securities shall be paid in
full.
By reason of such subordination, in the event of any distribution of assets of
the Company upon dissolution, winding up, liquidation, reorganization or other
similar proceedings of the Company, (i) holders of Senior Indebtedness will be
entitled to be paid in full before payments may be made on the Subordinated
Debt Securities and the holders of Subordinated Debt Securities will be re-
quired to pay over their share of such distribution, to the extent made in re-
spect of such Subordinated Debt Securities, to the holders of Senior Indebted-
ness until such Senior Indebtedness is paid in full and (ii) creditors of the
Company who are neither holders of Subordinated Debt Securities nor holders of
Senior Indebtedness may recover less, ratably, than holders of Senior Indebted-
ness and may recover more, ratably, than the holders of the Subordinated Debt
Securities. Furthermore, such subordination may result in a reduction or elimi-
nation of payments to the holders of Subordinated Debt Securities. The Subordi-
nated Indenture provides that the subordination provisions thereof will not ap-
ply to any money and securities held in trust pursuant to the discharge, defea-
sance and covenant defeasance provisions of the Subordinated Indenture (see "--
Discharge, Defeasance and Covenant Defeasance" above).
The Subordinated Indenture also provides that no payment on account of the
principal of, or premium, if any, sinking funds, if any, or interest, if any,
on the Subordinated Debt Securities shall be made unless full payment of
amounts then due for the principal of, premium, if any, sinking funds, if any,
and interest, if any, on Senior Indebtedness has been made or duly provided
for.
The Subordinated Indenture defines "Senior Indebtedness" as (a) any liability
of the Company (1) for borrowed money or under any reimbursement obligation re-
lating to a letter of credit, surety bond or similar instrument, or (2) evi-
denced by a bond, note, debenture or similar instrument, or (3) for obligations
to pay the deferred purchase price of property or services, except trade ac-
counts payable arising in the ordinary course of business, or (4) for the pay-
ment of money relating to a capitalized lease obligation, or (5) for the pay-
ment of money under any Swap Agreement; (b) any liability of others described
in the preceding clause (a) that the Company has guaranteed or that is other-
wise its legal liability; and (c) any deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (a) and (b) above, unless,
in the instrument creating or evidencing any such liability referred to in
clause (a) or (b) above or any such deferral, renewal, extension or refunding
referred to in clause (c) above or pursuant to which the same is outstanding,
it is expressly provided that such liability, deferral, renewal, extension or
refunding is subordinate in right of payment to all other Indebtedness of the
Company or is not senior or prior in right of payment to the Subordinated Debt
Securities or ranks pari passu with or subordinate to the Subordinated Debt Se-
curities in right of payment; and provided that the Subordinated Debt Securi-
ties shall not constitute Senior Indebtedness. The Subordinated Indenture de-
fines
18
<PAGE>
"Swap Agreement" as any financial agreement designed to manage the Company's
exposure to fluctuations in interest rates, currency exchange rates or commod-
ity prices, including without limitation swap agreements, option agreements,
cap agreements, floor agreements, collar agreements and forward purchase agree-
ments.
If this Prospectus is being delivered in connection with the offering of a se-
ries of Subordinated Debt Securities, the accompanying Prospectus Supplement or
the information incorporated by reference herein will set forth the approximate
amount of Senior Indebtedness outstanding as of a recent date. There are no
limitations in the Subordinated Indenture on the issuance or incurrence of Se-
nior Indebtedness of the Company.
19
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The Company may issue shares of its Preferred Stock, in one or more series, ei-
ther separately, or together with, or upon the conversion of or in exchange
for, other Securities. The summary of certain provisions of the Preferred Stock
set forth below and the summary of certain terms of a particular series of Pre-
ferred Stock set forth in the applicable Prospectus Supplement do not purport
to be complete and are subject to and qualified in their entirety by reference
to all of the provisions of the Company's certificate of incorporation, as
amended (the "Amended Certificate of Incorporation"), and the Company's By-
laws, which have been filed or incorporated by reference as exhibits to the
Registration Statement, and the form of certificate of designations relating to
such series of Preferred Stock which will be filed as an exhibit to or incorpo-
rated by reference in the Registration Statement, all of which are incorporated
herein by reference.
The following description of Preferred Stock sets forth certain general terms
and provisions of the series of Preferred Stock to which any Prospectus Supple-
ment may relate. Certain other terms of any particular series of Preferred
Stock, including Preferred Stock to be represented by Depositary Shares, will
be described in the applicable Prospectus Supplement. To the extent that any
particular terms of any Preferred Stock described in a Prospectus Supplement
differ from any of the terms described herein, then such terms described herein
shall be deemed to have been superseded by such Prospectus Supplement.
GENERAL
Under the Amended Certificate of Incorporation, the Company is authorized to
issue up to 5,000,000 shares of Preferred Stock, without par value, which may
be issued from time to time in one or more series. Subject to limitations pre-
scribed by Delaware law and the Amended Certificate of Incorporation, the Board
of Directors is authorized to fix the number of shares constituting each series
of Preferred Stock and the designations, preferences and relative, participat-
ing, optional or other special rights, and the qualifications, limitations or
restrictions thereof, including the dividend rights, dividend rates, conversion
rights, exchange rights, voting rights, rights and terms of redemption (includ-
ing sinking fund and purchase fund provisions), redemption prices and dissolu-
tion preferences.
The Company has issued and outstanding shares of its Series B Cumulative Con-
vertible Preferred Stock, no par value (the "Series B Preferred Stock"). Unless
otherwise provided in the applicable Prospectus Supplement, any Offered Pre-
ferred Stock will rank, as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up of the Company, junior to the
Series B Preferred Stock. See "--Ranking" and "--Dividend, Repurchase and Re-
demption Restrictions" below and "Description of Capital Stock."
Reference is made to the applicable Prospectus Supplement relating to the se-
ries of Preferred Stock offered thereby (the "Offered Preferred Stock") for
specific terms, including (where applicable): (1) the title of such Offered
Preferred Stock; (2) the number of shares of such Offered Preferred Stock of-
fered, the liquidation preference per share and the initial public offering
price of such Offered Preferred Stock; (3) the dividend rate or method of cal-
culation thereof and the dividend payment dates or periods; (4) the date from
which dividends on such Offered Preferred Stock shall accrue and whether divi-
dends on such Offered Preferred Stock will be cumulative; (5) the procedures
for any auction or remarketing, if any, of such Offered Preferred Stock; (6)
the provisions for a sinking fund, if any, for such Offered Preferred Stock;
(7) the provisions for redemption or repurchase, if applicable, of such Offered
Preferred Stock; (8) any listing of such Offered Preferred Stock on any securi-
ties exchange; (9) the terms and conditions, if any, upon which such Offered
Preferred Stock will be convertible into or exchangeable for other Securities;
(10) whether interests in such Offered Preferred Stock will be represented by
Depositary Shares; (11) the preferences of such Offered Preferred Stock as to
dividends and upon liquidation, dissolution or winding up of the Company; and
(12) any other specific terms of such Offered Preferred Stock.
20
<PAGE>
RANKING
Unless otherwise specified in the applicable Prospectus Supplement, any series
of Offered Preferred Stock offered thereby will rank, with respect to both the
payment of dividends and the distribution of assets upon liquidation, dissolu-
tion or winding up of the Company, (i) junior to the Series B Preferred Stock,
(ii) senior to the Common Stock, and (iii) on a parity with shares of any other
outstanding series of Offered Preferred Stock.
DIVIDEND, REPURCHASE AND REDEMPTION RESTRICTIONS
As described under "Description of Capital Stock--Authorized and Outstanding
Preferred Stock--Series B Preferred Stock," and unless otherwise described in
the applicable Prospectus Supplement, the Company will be prohibited (subject
to certain limited exceptions) from paying dividends on, and from redeeming or
otherwise purchasing, any shares of Offered Preferred Stock if the Company has
not paid full cumulative dividends on the Series B Preferred Stock. In addi-
tion, certain agreements to which the Company is a party contain covenants
which have the effect of restricting the payment of dividends and the redemp-
tion or repurchase of capital stock by the Company. In the event of a deterio-
ration in the financial condition or results of operations of the Company, such
covenants could limit or prohibit the payment of dividends on, or the repur-
chase or redemption of, Offered Preferred Stock. In addition, the Company is a
holding company substantially all of whose consolidated assets are held by its
subsidiaries, and the cash flow of the Company and the consequent ability to
pay dividends on and to redeem or repurchase its securities, including, Offered
Preferred Stock, are largely dependent upon the results of operations of such
subsidiaries. See "Description of Debt Securities--Ranking of Debt Securities;
Holding Company Structure."
DIVIDENDS
Subject to the preferential rights of holders of the Series B Preferred Stock
and any other capital stock of the Company ranking prior to any series of the
Offered Preferred Stock as to dividends, holders of shares of such Offered Pre-
ferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors of the Company, out of assets of the Company legally avail-
able therefor, dividends at such rates and on such dates as will be set forth
in, or as are determined by the method described in, the applicable Prospectus
Supplement. Such rates may be fixed or variable or both. If variable, the for-
mula used for determining the dividend rate for each dividend period will be
specified in the applicable Prospectus Supplement. Each such dividend shall be
payable to holders of record as they appear on the stock transfer books of the
Company on such record dates as shall be fixed by the Board of Directors of the
Company. Dividends may be paid in the form of cash, Preferred Stock (of the
same or a different series), or other securities or property, in each case as
specified in the applicable Prospectus Supplement.
Dividends on any series of the Offered Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the ap-
plicable Prospectus Supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Offered Preferred Stock for which dividends are non-cumulative, then the hold-
ers of such series of the Offered Preferred Stock will have no right to receive
a dividend in respect of the dividend period ending on such dividend payment
date, and the Company will have no obligation to pay the dividend accrued for
such period, whether or not dividends on such series are declared payable on
any future dividend payment date.
No full dividends will be declared or paid or set aside for payment on any Pre-
ferred Stock of the Company ranking, as to dividends, on a parity with or ju-
nior to any outstanding series of Offered Preferred Stock for any period unless
full dividends on such series of Offered Preferred Stock (including accumulated
dividends on any such series of Offered Preferred Stock on which dividends are
cumulative) have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment
21
<PAGE>
thereof set aside for payment. When dividends are not paid in full on any se-
ries of Offered Preferred Stock and any other Preferred Stock ranking on a par-
ity as to dividends with such series of Offered Preferred Stock, all dividends
declared or paid upon shares of Offered Preferred Stock of such series and any
other Preferred Stock ranking on a parity as to dividends with the Offered Pre-
ferred Stock of such series shall be declared and paid pro rata so that the
amount of dividends declared and paid per share on the Offered Preferred Stock
of such series and such other Preferred Stock shall in all cases bear to each
other the same ratio that accrued dividends per share (which in the case of
non-cumulative Preferred Stock shall not include any accumulation in respect of
unpaid dividends for prior dividend periods) on shares of such series of Of-
fered Preferred stock and such other Preferred Stock bear to each other. Except
as provided in the preceding sentence, unless full dividends on all outstanding
shares of any series of Offered Preferred Stock (including accumulated divi-
dends on any such series on which dividends are cumulative) have been or con-
temporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set aside for payment, no dividends (other than dividends or
distributions paid in shares of, or options, warrants or rights to subscribe
for or purchase shares of, Common Stock or any other stock of the Company rank-
ing junior to the Offered Preferred Stock of such series as to dividends and as
to distribution of assets upon liquidation, dissolution or winding up of the
Company) shall be declared or paid or set aside for payment or any other dis-
tribution declared or made upon the Common Stock or any other stock of the Com-
pany ranking junior to or on a parity with the Offered Preferred Stock of such
series as to dividends or distribution of assets upon liquidation, dissolution
or winding up of the Company, nor may any Common Stock or any other stock of
the Company ranking junior to or on a parity with the Preferred Stock of such
series as to dividends or distribution of assets upon liquidation, dissolution
or winding up of the Company be redeemed, purchased or otherwise acquired for
any consideration (and no moneys shall be paid to or made available for a sink-
ing fund for the redemption of any shares of any such junior of parity stock)
by the Company (except by conversion into or exchange for stock of the Company
ranking junior to the Offered Preferred Stock of such series as to dividends
and as to distribution of assets upon liquidation, dissolution or winding up of
the Company).
Holders of shares of any series of Offered Preferred Stock shall not be enti-
tled to any dividends, whether payable in cash, securities or other property,
in excess of full cumulative (if applicable) dividends on such series. No in-
terest, or sum of money in lieu of interest, shall be payable in respect of any
dividend or payments which may be in arrears.
The Company will be prohibited from paying dividends on Offered Preferred Stock
of any series in the event of a dividend arrearage on the Series B Preferred
Stock and may be prohibited from paying dividends on Offered Preferred Stock of
any series as a result of certain other dividend restrictions. See "--Dividend,
Repurchase and Redemption Restrictions" above and "Description of Capital
Stock-- Authorized and Outstanding Preferred Stock--Series B Preferred Stock"
below.
REDEMPTION AND REPURCHASE
The shares of Offered Preferred Stock of any series may be redeemable at the
option of the Company, may be subject to mandatory redemption pursuant to a
sinking fund or otherwise, or may be subject to repurchase by the Company at
the option of the holders, in each case upon the terms, at the times and at the
prices set forth in the applicable Prospectus Supplement. Offered Preferred
Stock redeemed by the Company will be restored to the status of authorized but
unissued shares of Preferred Stock.
The Prospectus Supplement relating to a series of Offered Preferred Stock which
is subject to mandatory redemption will specify the number of shares of such
series which shall be redeemed by the Company in each year commencing after a
date to be specified, at a redemption price per share to be specified, together
with an amount equal to all accrued and unpaid dividends thereon (including ac-
cumulated dividends on any such series on which dividends are cumulative) to
the date fixed for redemption. The redemption price may be payable in cash, se-
curities or other property, as specified in the Prospectus Supplement relating
to such series of Offered Preferred Stock.
22
<PAGE>
If fewer than all of the outstanding shares of any series of Offered Preferred
Stock are to be redeemed, the shares to be redeemed will be determined pro ra-
ta, by lot or by any other method deemed equitable by the Company.
In the event that full cumulative dividends on any series of Offered Preferred
Stock (including accumulated dividends on any such series on which dividends
are cumulative) have not been declared and paid or declared and a sum suffi-
cient for the payment thereof set apart for payment, the Company shall not re-
deem, repurchase or otherwise acquire any shares of such series of Offered Pre-
ferred Stock except by conversion into or exchange for capital stock of the
Company ranking junior to the Offered Preferred Stock of such series as to div-
idends and as to distributions upon liquidation, dissolution or winding up of
the Company, or except pursuant to a purchase or exchange offer made on the
same terms to all holders of such series of Offered Preferred Stock.
Notice of redemption shall be given by mailing the same to each record holder
of the shares to be redeemed, not less than 30 nor more than 60 days prior to
the date fixed for redemption thereof, to the respective addresses of such
holders as the same shall appear in the stock registry of the Company. Each
such notice shall state: (i) the redemption date; (ii) the number of shares and
series of Offered Preferred Stock to be redeemed; (iii) the redemption price;
(iv) the place or places where certificates for such Offered Preferred Stock
are to be surrendered for payment of the redemption price; (v) that dividends
on the shares to be redeemed will cease to accrue on such redemption date; and
(vi) the date upon which the holder's conversion rights as to such shares, if
any, shall terminate. If fewer than all shares of any series of the Preferred
Stock held by any holder are to be redeemed, the notice mailed to such holder
shall also specify the number of shares to be redeemed from such holder.
If a notice of redemption has been given, from and after the redemption date
for the shares of Offered Preferred Stock called for redemption (unless the
Company shall default in providing money for the payment of the redemption
price of the shares so called for redemption plus, if applicable, accrued and
unpaid dividends), dividends on the shares of Offered Preferred Stock so called
for redemption shall cease to accrue and such shares shall no longer be deemed
to be outstanding, and all rights of the holders thereof as shareholders of the
Company shall cease, except the right to receive the redemption price plus, if
applicable, accrued and unpaid dividends upon surrender of the certificates
representing the shares to be so redeemed (properly endorsed or assigned for
transfer, if the Company shall so require) in accordance with such notice. If
fewer than all of the shares represented by any such certificates are redeemed,
a new certificate shall be issued representing the unredeemed shares.
The Company will be prohibited from redeeming or repurchasing Offered Preferred
Stock of any series in the event of a dividend arrearage on the Series B Pre-
ferred Stock and may be prohibited from redeeming or repurchasing Offered Pre-
ferred Stock of any series as the result of certain other dividend restric-
tions. See "--Dividend, Repurchase and Redemption Restrictions" above and "De-
scription of Capital Stock" below.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, and after payment of all amounts due upon liquidation, dissolution or
winding up to holders of the Series B Preferred Stock and any other capital
stock of the Company ranking prior to the Offered Preferred Stock of any series
as to the distribution of assets upon liquidation, dissolution or winding up,
and subject to the rights of holders of any capital stock of the Company rank-
ing on a parity with the shares of Offered Preferred Stock of such series as to
distribution of assets upon liquidation, dissolution or winding up of the Com-
pany, the holders of shares of Offered Preferred Stock of such series shall be
entitled to receive, out of assets of the Company legally available therefor
and before any distribution or payment shall be made to the holders of any Com-
mon Stock or any other class or series of capital stock of the Company ranking
junior to the Offered Preferred Stock of such series as to distribution of as-
sets upon liquidation,
23
<PAGE>
dissolution or winding up of the Company, liquidating distributions in the
amount of the liquidation preference per share set forth in the applicable
Prospectus Supplement, plus accrued and unpaid dividends (including accumu-
lated dividends if dividends on such series of Offered Preferred Stock are cu-
mulative). After payment of the full amount of the liquidating distributions
to which they are entitled, the holders of Offered Preferred Stock of such se-
ries will have no right or claim to any of the remaining assets of the Compa-
ny. In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the legally available assets of the Company are in-
sufficient to pay the amount of the liquidating distributions on all outstand-
ing shares of Offered Preferred Stock of any series and the corresponding
amounts payable on all shares of other capital stock of the Company ranking on
a parity with the Offered Preferred Stock of such series in the distribution
of assets upon liquidation, dissolution or winding up, the holders of the Of-
fered Preferred Stock of such series and of such other capital stock shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively enti-
tled.
For such purposes, the consolidation or merger of the Company with or into any
other person, or the sale, lease, transfer or conveyance of all or substan-
tially all or any portion of the property or business of the Company, shall
not be deemed to constitute a liquidation, dissolution or winding up of the
Company.
VOTING RIGHTS
Holders of Offered Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as indi-
cated in the applicable Prospectus Supplement. In the event that the Company
issues a series of Offered Preferred Stock with voting rights or the Offered
Preferred Stock of any series is entitled pursuant to applicable law to vote
on any matter, then, unless otherwise specified in the Prospectus Supplement
relating to such series, each share of such series will be entitled to one
vote on matters on which holders of such shares are entitled to vote. However,
as more fully described under "Description of Depositary Shares," if the Com-
pany elects to provide for the issuance of Depositary Shares representing
fractional interests in shares of any such series of Offered Preferred Stock,
the holder of any such Depositary Share will, in effect and subject to certain
limitations and conditions, be entitled to such fraction of a vote, rather
than a full vote. In the case of any series of Offered Preferred Stock having
one vote per share on matters on which holders of such series are entitled to
vote, the voting power of such series on matters on which holders of such se-
ries and holders of any other series of Preferred Stock or other capital stock
of the Company are entitled to vote as a single class will depend on the num-
ber of shares in such series, not the aggregate stated value, liquidation
preference or initial offering price of the shares of such series.
So long as any shares of Offered Preferred Stock remain outstanding, and ex-
cept as otherwise set forth in the applicable Prospectus Supplement or except
as otherwise required by applicable law, the Company will not, without the af-
firmative vote or consent of the holders of at least a majority of the shares
of any affected series of Offered Preferred Stock outstanding at the time
(voting separately as a single class with all other affected series of Pre-
ferred Stock ranking on a parity with the Offered Preferred Stock of such se-
ries either as to dividends or as to distribution of assets upon liquidation,
dissolution or winding up of the Company and upon which like voting rights
have been conferred and are then exercisable), given in person or by proxy,
either in writing or at a meeting, (i) authorize, create or issue, or increase
the authorized or issued amount of, any class or series of capital stock rank-
ing prior to such affected series of Offered Preferred Stock with respect to
payment of dividends or the distribution of assets upon liquidation, dissolu-
tion or winding up or reclassify any authorized capital stock of the Company
into any such shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares; or (ii)
amend, alter or repeal the provisions of the Amended Certificate of Incorpora-
tion (including the certificate of designations for such affected series of
Offered Preferred Stock), whether by merger, consolidation or otherwise, so as
to materially and adversely affect any right, preference or privilege of such
affected series of Offered Preferred Stock; provided, however, that any in-
crease in the amount of the authorized Preferred Stock or the creation or is-
suance of any other class or series of capital stock or any other
24
<PAGE>
series of Preferred Stock, or any increase in the number of authorized shares
of any series of Preferred Stock, in each case, ranking on a parity with or ju-
nior to the Preferred Stock of such affected series with respect to payment of
dividends and the distribution of assets upon liquidation, dissolution or wind-
ing up, shall not be deemed to materially and adversely affect such rights,
preferences or privileges.
None of the foregoing voting provisions will apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected or occur, all outstanding shares of the relevant series of Offered
Preferred Stock shall have been redeemed or called for redemption upon proper
notice and sufficient funds shall have been deposited in trust to effect such
redemption.
Under Delaware law, notwithstanding anything to the contrary set forth above,
holders of all outstanding shares of Preferred Stock will be entitled to vote
as a class upon a proposed amendment to the Amended Certificate of Incorpora-
tion if the amendment would increase or decrease the aggregate number of autho-
rized shares of such class, increase or decrease the par value of the shares of
such class, or alter or change the powers, preferences or rights of the shares
of such class so as to affect them adversely. However, if any such proposed
amendment would change the powers, preferences or rights of one or more series
of Preferred Stock so as to affect them adversely, but shall not affect all se-
ries of Preferred Stock, then only the shares of the series so affected shall
be considered a separate class for such purposes. Any such amendment requires
the vote of a majority of the shares entitled to vote thereon, voting as a
class.
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, upon which shares of any series of Preferred Stock are con-
vertible into or exchangeable for the Common Stock, another series of Preferred
Stock or other Securities will be set forth in the applicable Prospectus Sup-
plement relating thereto. Such terms may include provisions for conversion or
exchange, either mandatory, at the option of the holders or at the option of
the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the shares of Preferred Stock will be
named in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
The Company may offer Depositary Shares (either separately or together with
other Securities) representing fractional interests in shares of Preferred
Stock of any series. In connection with the issuance of any Depositary Shares,
the Company will enter into a deposit agreement (a "Deposit Agreement") with a
bank or trust company, as depositary (the "Preferred Stock Depositary"), which
will be named in the applicable Prospectus Supplement. Depositary Shares will
be evidenced by depositary receipts (the "Depositary Receipts") issued pursuant
to the related Deposit Agreement. The summary of certain provisions of the De-
positary Shares and the Deposit Agreement set forth below and the summary of
certain terms of a particular issue of Depositary Shares and the related De-
posit Agreement set forth in the applicable Prospectus Supplement do not pur-
port to be complete and are subject to and qualified in their entirety by ref-
erence to all the provisions of the form of Deposit Agreement,
together with the form of related Depositary Receipt which will be filed as an
exhibit to or incorporated by reference in the Registration Statement, all of
which are incorporated herein by reference.
The following description of Depositary Shares sets forth certain general terms
and provisions of the Depositary Shares and the related Deposit Agreement to
which any Prospectus Supplement may relate. Certain other terms of any such De-
positary Shares and the related Deposit Agreement will be described in the ap-
plicable Prospectus Supplement. To the extent that any particular terms of the
Depositary Shares or the related Deposit Agreement described in a Prospectus
Supplement differ from any of the terms described herein, then such terms de-
scribed herein shall be deemed to have been superseded by such Prospectus Sup-
plement.
25
<PAGE>
GENERAL
The Company may provide for the issuance by the Preferred Stock Depositary of
Depositary Receipts evidencing the related Depositary Shares, each of which
Depositary Shares in turn will represent a fractional interest (which will be
specified in the applicable Prospectus Supplement) in one share of a series of
Preferred Stock. Shares of Preferred Stock of any series represented by Depos-
itary Shares will be deposited under a separate Deposit Agreement. Subject to
the terms of the Deposit Agreement, each owner of a Depositary Receipt will be
entitled, in proportion to the fraction of a share of Preferred Stock repre-
sented by the related Depositary Share, to all the rights, preferences and
privileges of, and will be subject to all of the limitations and restrictions
on, the Preferred Stock represented thereby (including, if applicable and sub-
ject to certain matters discussed below, dividend, voting, conversion, ex-
change, redemption and liquidation rights).
Depositary Shares may be issued in respect of shares of the Preferred Stock of
any series. Immediately following the issuance of any such shares of Preferred
Stock by the Company, the Company will deposit such shares of Preferred Stock
with the relevant Preferred Stock Depositary and will cause the Preferred
Stock Depositary to issue, on behalf of the Company, the related Depositary
Receipts.
Reference is made to the applicable Prospectus Supplement relating to the De-
positary Shares offered thereby for specific terms, including (where applica-
ble): (1) the terms of the series of Preferred Stock deposited by the Company
under the related Deposit Agreement; (2) the number of such Depositary Shares
and the fraction of one share of such Preferred Stock represented by one such
Depositary Share; (3) whether such Depositary Shares will be listed on any se-
curities exchange; (4) whether such Depositary Shares will be sold with any
other Securities and, if so, the amount and terms thereof; and (5) any other
specific terms of such Depositary Shares and the related Deposit Agreement.
Depositary Receipts may be surrendered for transfer or exchange for new Depos-
itary Receipts of different authorized denominations at any office or agency
of the relevant Preferred Stock Depositary maintained for such purpose, sub-
ject to the terms of the related Deposit Agreement. Unless otherwise specified
in the applicable Prospectus Supplement, Depositary Receipts will be issued in
denominations evidencing any whole number of Depositary Shares. No service
charge will be made for any permitted transfer or exchange of Depositary Re-
ceipts, but the Company or the Preferred Stock Depositary may require payment
of any tax or other governmental charge payable in connection therewith.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the related Preferred Stock to the
record holders of Depositary Receipts in proportion, insofar as possible, to
the number of Depositary Receipts owned by such holders on the relevant record
date. The Preferred Stock Depositary will distribute only such amount, howev-
er, as can be distributed without attributing to any holder of Depositary Re-
ceipts a fraction of one cent, and any balance not so distributed will be
added to and treated as part of the next sum, if any, received by the Pre-
ferred Stock Depositary for distribution to the record holders of Depositary
Receipts.
In the event of a distribution other than in cash, the Preferred Stock Deposi-
tary will distribute property received by it to the record holders of Deposi-
tary Receipts entitled thereto in proportion, insofar as possible, to the num-
ber of Depositary Receipts owned by such holders on the relevant record date,
unless the Preferred Stock Depositary determines that it is not feasible to
make such distribution, in which case the Preferred Stock Depositary may, with
the approval of the Company, adopt such method as it deems equitable and prac-
ticable for the purpose of effecting such distribution, including sale (public
or private) of such property and distribution of the net proceeds from such
sale to such holders.
26
<PAGE>
The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
the related series of Preferred Stock will be made available to holders of De-
positary Receipts.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Preferred Stock Deposi-
tary on the account of taxes.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of the Depositary Receipts at an office or agency of the Pre-
ferred Stock Depositary maintained for such purpose (unless the related shares
of Preferred Stock have previously been called for redemption), the holder
thereof will be entitled to delivery, at such office or agency, to or upon
such holder's order, of the number of whole shares of the related series of
Preferred Stock and any money or other property represented by such Depositary
Receipts. Shares of Preferred Stock so withdrawn, however, may not be redepos-
ited. If the Depositary Receipts delivered by the holder evidence a number of
Depositary Shares in excess of the number of whole shares of Preferred Stock
to be withdrawn, the Preferred Stock Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of Depos-
itary Shares.
REDEMPTION AND REPURCHASE OF PREFERRED STOCK
If a series of Preferred Stock represented by Depositary Shares is subject to
redemption at the option of the Company, then, whenever the Company redeems
shares of Preferred Stock of such series held by the Preferred Stock Deposita-
ry, the Preferred Stock Depositary will redeem as of the same redemption date
the number of Depositary Shares representing the shares of the Preferred Stock
so redeemed, provided the Company shall have paid in full to the Preferred
Stock Depositary the redemption price of the Preferred Stock to be redeemed
plus any other amounts or property payable with respect to the Preferred Stock
to be redeemed. The redemption price per Depositary Share will be equal to the
redemption price and any other amounts or property per share payable with re-
spect to the Preferred Stock multiplied by the fraction of a share of Pre-
ferred Stock represented by one such Depositary Share. If less than all of the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed
will be selected by the Preferred Stock Depositary by lot or pro rata or other
equitable method, in each case as may be determined by the Company. If the De-
positary Shares evidenced by a Depositary Receipt are to be redeemed in part
only, one or more new Depositary Receipts will be issued for any Depositary
Shares not so redeemed.
After the date fixed for redemption, the Depositary Shares so called for re-
demption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any monies payable upon
such redemption and any money or other property to which the holders of such
Depositary Receipts were entitled upon such redemption upon surrender of such
Depositary Receipts to the Preferred Stock Depositary.
Depositary Shares, as such, are not subject to repurchase by the Company at
the option of the holders. Nevertheless, if the Preferred Stock represented by
Depositary Shares is subject to repurchase of the option of the holders, the
related Depositary Receipts may be surrendered by the holders thereof to the
Preferred Stock Depositary with written instructions to the Preferred Stock
Depositary to instruct the Company to repurchase the Preferred Stock repre-
sented by the Depositary Shares evidenced by such Depositary Receipts at the
applicable repurchase price specified in the related Prospectus Supplement.
The Company, upon receipt of such instructions and subject to the Company hav-
ing funds legally available therefor, will repurchase the requisite whole num-
ber of shares of such Preferred Stock from the Preferred Stock Depositary, who
in turn will repurchase such Depositary Receipts. Notwithstanding the forego-
ing, holders shall only be entitled to request the repurchase of Depositary
Shares representing one or more whole shares of the related Preferred Stock.
The repurchase price per Depositary Share will be
27
<PAGE>
equal to the repurchase price and any other amounts per share payable with re-
spect to the Preferred Stock multiplied by the fraction of a share of Pre-
ferred Stock represented by one Depositary Share. If the Depositary Shares ev-
idenced by a Depositary Receipt are to be repurchased in part only, one or
more new Depositary Receipts will be issued for any Depositary Shares not to
be repurchased.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock of any series represented by Depositary Shares are entitled to vote, the
relevant Preferred Stock Depositary will mail the information contained in
such notice of meeting to the record holders of the related Depositary Re-
ceipts. Each record holder of Depositary Receipts evidencing Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Preferred Stock Depositary
as to the exercise of the voting rights pertaining to the amount of Preferred
Stock represented by such holder's Depositary Shares. The Preferred Stock De-
positary will endeavor, insofar as practicable, to vote the number of shares
of Preferred Stock represented by such Depositary Shares in accordance with
such instructions, and the Company will agree to take all reasonable action
which may be deemed necessary by the Preferred Stock Depositary in order to
enable the Preferred Stock Depositary to do so. The Preferred Stock Depositary
will abstain from voting shares of Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Receipts evidenc-
ing the Depositary Shares representing such Preferred Stock.
CONVERSION AND EXCHANGE OF PREFERRED STOCK
If the Preferred Stock represented by Depositary Shares is exchangeable at the
option of the Company for other Securities, then, whenever the Company exer-
cises its option to exchange all or a portion of such shares of Preferred
Stock held by the Preferred Stock Depositary, the Preferred Stock Depositary
will exchange as of the same exchange date a number of such Depositary Shares
representing the shares of the Preferred Stock so exchanged, provided the Com-
pany shall have issued and deposited with the Preferred Stock Depositary the
Securities for which such shares of Preferred Stock are to be exchanged. The
exchange rate per Depositary Share shall be equal to the exchange rate per
share of Preferred Stock multiplied by the fraction of a share of Preferred
Stock represented by one Depositary Share. If less than all of the Depositary
Shares are to be exchanged, the Depositary Shares to be exchanged will be se-
lected by the Preferred Stock Depositary by lot or pro rata or other equitable
method, in each case as may be determined by the Company. If the Depositary
Shares evidenced by a Depositary Receipt are to be exchanged in part only, a
new Depositary Receipt or Receipts will be issued for any Depositary Shares
not to be exchanged.
Depositary Shares, as such, are not convertible or exchangeable at the option
of the holders into other Securities or property. Nevertheless, if the Pre-
ferred Stock represented by Depositary Shares is convertible into or exchange-
able for other Securities at the option of the holders, the related Depositary
Receipts may be surrendered by holders thereof to the Preferred Stock Deposi-
tary with written instructions to the Preferred Stock Depositary to instruct
the Company to cause conversion or exchange, as the case may be, of the Pre-
ferred Stock represented by the Depositary Shares evidenced by such Depositary
Receipts into a whole number of shares of Common Stock or Preferred Stock, a
whole number of Common Stock Warrants, or Debt Securities in authorized denom-
inations, as specified in the related Prospectus Supplement. The Company, upon
receipt of such instructions and any amounts payable in respect thereof, will
cause the conversion or exchange, as the case may be, and will deliver to the
holders such number of whole shares of Common Stock or Preferred Stock, a
whole number of Common Stock Warrants, or a principal amount of Debt Securi-
ties in authorized denominations (and cash in lieu of any fractional Securi-
ty). The exchange or conversion rate per Depositary Share shall be equal to
the exchange or conversion rate per share of Preferred Stock multiplied by the
fraction of a share of Preferred Stock represented by one Depositary Share. If
the Depositary Shares evidenced by a Depositary Receipt are to be converted or
exchanged in part only, a new Depositary Receipt or Receipts will be issued
for any Depositary Shares not to be converted or exchanged.
28
<PAGE>
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The Depositary Receipts evidencing Depositary Shares and any provision of the
related Deposit Agreement may at any time be amended by agreement between the
Company and the Preferred Stock Depositary. However, any amendment that mate-
rially and adversely alters the rights of the holders of Depositary Receipts
issued under any Deposit Agreement will not be effective unless such amendment
has been approved by the holders of at least a majority of such Depositary Re-
ceipts then outstanding (or such greater proportion as may be required by the
rules of any securities exchange on which the related Depositary Shares may be
listed). In no event may any such amendment impair the right of any holder of
Depositary Receipts, subject to the conditions specified in the Deposit Agree-
ment, to receive the related Preferred Stock upon surrender of such Depositary
Receipts as described above under "--Withdrawal of Preferred Stock."
The Deposit Agreement may be terminated by the Company upon not less than 60
days' notice to the Preferred Stock Depositary. In any such case, the Pre-
ferred Stock Depositary shall deliver or make available to each holder of the
related Depositary Receipts, upon surrender of such Depositary Receipts, such
number of whole shares of the related series of Preferred Stock represented by
the Depositary Shares evidenced by such Depositary Receipts, together with
cash in lieu of any fractional shares (to the extent the Company has deposited
such cash with the Preferred Stock Depositary). The Deposit Agreement will au-
tomatically terminate if all of the shares of Preferred Stock deposited there-
under shall have been withdrawn, redeemed, converted or exchanged or if there
shall have been a final distribution in respect of such Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay the fees and expenses of the Preferred Stock Depositary
in connection with the performance of its duties under the Deposit Agreement,
and will pay all transfer and other taxes and governmental charges arising
solely from the existence of the Deposit Agreement. Holders of Depositary Re-
ceipts will be required to pay all other transfer and other taxes and govern-
mental charges (including taxes and other governmental charges in connection
with the transfer, exchange, surrender or conversion of Depositary Receipts)
and such other charges as are expressly provided in the Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time re-
move the Preferred Stock Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Stock Depositary.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary Receipts
any reports and communications from the Company which are received by the Pre-
ferred Stock Depositary with respect to the related Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if ei-
ther is prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performing their duties thereunder without gross negligence or
willful misconduct, and the Company and the Preferred Stock Depositary will
not be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or any related shares of Preferred Stock or Depositary Re-
ceipts unless satisfactory indemnity is furnished. The Company and the Pre-
ferred Stock Depositary may rely on advice of counsel, accountants or other
advisors, and information provided by persons presenting shares of Preferred
Stock for deposit, holders of Depositary Receipts or other persons believed to
be authorized or competent and on documents believed to be genuine.
29
<PAGE>
In the event that the Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on
the one hand, and the Company, on the other hand, the Preferred Stock Deposi-
tary shall be entitled to act on such claims, requests or instructions received
from the Company.
DESCRIPTION OF COMMON STOCK
The Company may issue (either separately or together with other Securities)
shares of its Common Stock. Under its Amended Certificate of Incorporation, the
Company is authorized to issue up to 100,000,000 shares of Common Stock. Refer-
ence is made to the applicable Prospectus Supplement relating to Common Stock
offered thereby for the terms relevant thereto, including the number of shares
offered and the initial public offering price. For a summary of certain terms
of the Common Stock, see "Description of Capital Stock" below.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue (either separately or together with other Securities)
warrants for the purchase of Common Stock ("Common Stock Warrants"). The Common
Stock Warrants are to be issued under warrant agreements (each a "Common Stock
Warrant Agreement") to be entered into between the Company and a bank or trust
company, as warrant agent ("Common Stock Warrant Agent"), all as set forth in
the Prospectus Supplement relating to the particular issue of Common Stock War-
rants. The form of Common Stock Warrant Agreement, including the form of cer-
tificates representing the Common Stock Warrants ("Common Stock Warrant Certif-
icates"), that will be entered into with respect to a particular offering of
Common Stock Warrants will be filed as an exhibit to or incorporated by refer-
ence in the Registration Statement. The following summary of certain provisions
of the Common Stock Warrant Agreement and the Common Stock Warrants and the
summary of certain terms of the particular Common Stock Warrant Agreement and
Common Stock Warrants set forth in the applicable Prospectus Supplement do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the particular Common Stock Warrant
Agreement and the related Common Stock Warrant Certificates, all of which are
incorporated herein by reference.
The following description of the Common Stock Warrants sets forth certain gen-
eral terms and provisions of the Common Stock Warrants and the related Common
Stock Warrant Agreement to which any Prospectus Supplement may relate. Certain
other terms of any Common Stock Warrants and the related Common Stock Warrant
Agreement will be described in the applicable Prospectus Supplement. To the ex-
tent that any particular terms of the Common Stock Warrants or the related Com-
mon Stock Warrant Agreement described in a Prospectus Supplement differ from
any of the terms described herein, then such terms described herein shall be
deemed to have been superseded by such Prospectus Supplement.
GENERAL
Reference is made to the applicable Prospectus Supplement for the terms of the
Common Stock Warrants offered thereby, including (where applicable): (1) the
title and aggregate number of such Common Stock Warrants; (2) the number of
shares of Common Stock that may be purchased upon exercise of each such Common
Stock Warrant; the price, or the manner of determining the price, at which such
shares may be purchased upon such exercise; if other than cash, the property
and manner in which the exercise price may be paid; and any minimum number of
such Common Stock Warrants that are exercisable at any one time; (3) the time
or times at which, or period or periods during which, such Common Stock War-
rants may be exercised and the expiration date of such Common Stock Warrants;
(4) the terms of any right of the Company to redeem such Common Stock Warrants;
(5) the terms of any right
30
<PAGE>
of the Company to accelerate the exercise of such Common Stock Warrants upon
the occurrence of certain events; (6) whether such Common Stock Warrants will
be sold with any other Securities, and the date, if any, on and after which
such Common Stock Warrants and any such other Securities will be separately
transferable; and (7) any other terms of such Common Stock Warrants.
Common Stock Warrant Certificates may be surrendered for transfer or exchange
for new Common Stock Warrant Certificates of authorized denominations at any
office or agency of the relevant Common Stock Warrant Agent maintained for
such purpose, subject to the terms of the related Common Stock Warrant Agree-
ment. Unless otherwise specified in the applicable Prospectus Supplement, Com-
mon Stock Warrant Certificates will be issued in denominations evidencing any
whole number of Warrants. No service charge will be made for any permitted
transfer or exchange of Common Stock Warrant Certificates, but the Company or
the Common Stock Warrant Agent may require payment of any tax or other govern-
mental charge payable in connection therewith.
EXERCISE OF WARRANTS
Each Common Stock Warrant will entitle the holder to purchase such number of
shares of Common Stock at such exercise price as shall in each case be set
forth in, or be determinable from, the Prospectus Supplement relating to such
Common Stock Warrants, by payment of such exercise price in the Currency and
in the manner specified in the Prospectus Supplement. Common Stock Warrants
may be exercised at any time up to the date and time specified in the applica-
ble Prospectus Supplement for the expiration thereof. After the specified ex-
piration time on the specified date of expiration, unexercised Common Stock
Warrants will become void.
Upon receipt at an office or agency indicated in the applicable Prospectus
Supplement of (i) payment of the exercise price and (ii) the Common Stock War-
rant Certificate properly completed and duly executed, the Company will, as
soon as practicable, forward a certificate or certificates representing the
whole number of shares of Common Stock purchasable upon such exercise. Unless
otherwise indicated in the applicable Prospectus Supplement, fractional shares
of Common Stock will not be issued upon the exercise of Warrants and, in lieu
thereof, the Company will make a cash payment in an amount determined as pro-
vided in the applicable Prospectus Supplement. If less than all of the Common
Stock Warrants represented by such Common Stock Warrant Certificate are exer-
cised, a new Common Stock Warrant Certificate will be issued for the remaining
number of Common Stock Warrants. The holder of a Common Stock Warrant will be
required to pay any tax or other governmental charge that may be imposed in
connection with any transfer involved in the issuance of the Common Stock pur-
chased upon such exercise.
MODIFICATIONS
Any Common Stock Warrant Agreement and the terms of the related Common Stock
Warrants may be modified or amended by the Company and the applicable Common
Stock Warrant Agent, without the consent of any holder of the related Common
Stock Warrants, for the purpose of curing any ambiguity, or of curing, cor-
recting or supplementing any defective or inconsistent provision contained
therein, or in any other manner that the Company deems necessary or desirable
and that will not materially and adversely affect the interests of the holders
of the related Common Stock Warrants.
The Company and the applicable Common Stock Warrant Agent may also modify or
amend the applicable Common Stock Warrant Agreement and the terms of the re-
lated Common Stock Warrants with the consent of the holders of not less than a
majority in number of the then outstanding unexercised Common Stock Warrants
affected thereby; provided that no such modification or amendment that accel-
erates the expiration date, increases the exercise price, or reduces the num-
ber of outstanding Common Stock Warrants the consent of whose holders is re-
quired for any such amendment or modification, may be made without the consent
of each holder affected thereby.
31
<PAGE>
NO RIGHTS AS STOCKHOLDERS
Holders of Common Stock Warrants are not entitled, by virtue of being such
holders, to vote, consent or receive notice as stockholders of the Company in
respect of any meeting of stockholders for the election of directors of the
Company or any other matter, or to exercise any other rights whatsoever as
stockholders of the Company, or to receive any dividends or distributions, if
any, on the Common Stock.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 100,000,000 shares
of Common Stock, par value $.625 per share, and (ii) 5,000,000 shares of Pre-
ferred Stock, no par value.
As of December 31, 1996, (i) 51,595,827 shares of Common Stock were issued and
outstanding and an additional 7,029,917 shares of Common Stock were issued and
held in the Company's treasury and (ii) 1,100,000 shares of the Company's Se-
ries B Cumulative Convertible Preferred Stock (the "Series B Preferred Stock")
had been authorized and 875,191 such shares were outstanding.
The following summary of certain provisions of the Common Stock, Preferred
Stock, Series B Preferred Stock, and the Company's Amended Certificate of In-
corporation and By-laws does not purport to be complete and is qualified in
its entirety by reference to the Amended Certificate of Incorporation (includ-
ing the certificate of designations establishing the terms of the Series B
Preferred Stock) and By-laws, copies of which have been incorporated by refer-
ence or filed as exhibits to the Registration Statement.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all matters
voted on by stockholders, including elections of directors, and, except as
otherwise required by law or provided by the express provisions of any series
of Preferred Stock of the Company, the holders of such shares will exclusively
possess all voting power of the Company. In that regard, the holders of Series
B Preferred Stock are entitled to vote with the Common Stock as a single class
on all matters upon which the Common Stock is entitled to vote. See "--Pre-
ferred Stock" below. There is no cumulative voting in the election of direc-
tors, and no holder of Common Stock is entitled as such, as a matter of right,
to subscribe for or purchase any shares of Common Stock or Preferred Stock.
Subject to the preferential rights of any outstanding series of Preferred
Stock, the holders of Common Stock are entitled to receive ratably such divi-
dends as may be declared from time to time by the Board of Directors from
funds legally available therefor. In the event of a liquidation, dissolution
or winding up of the Company, holders of Common Stock are entitled to share
ratably in all assets remaining after payment or provision for liabilities and
amounts owing in respect of any outstanding Preferred Stock.
Certain agreements to which the Company is a party contain covenants which
have the effect of restricting the payment of dividends on capital stock by
the Company. In the event of a deterioration in the financial condition or re-
sults of operations of the Company, such covenants could limit or prohibit the
payment of dividends on Common Stock. In addition, the Company is a holding
company substantially all of whose consolidated assets are held by its subsid-
iaries, and the cash flow of the Company and the consequent ability to pay
dividends on Common Stock are largely dependent upon the results of operations
of such subsidiaries. See "Description of Debt Securities--Ranking of Debt Se-
curities; Holding Company Structure."
The transfer agent for the Common Stock is First Chicago Trust Company of New
York.
32
<PAGE>
PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series. Subject
to limitations prescribed by Delaware law and the Amended Certificate of Incor-
poration, the Board of Directors is authorized to fix the number of shares con-
stituting each series of Preferred Stock and the designations, preferences and
relative participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, including, without limitation, the divi-
dend rights, dividend rates, conversion rights, exchange rights, voting rights,
rights and terms of redemption (including sinking and purchase fund provi-
sions), the redemption prices and the dissolution preferences. The issuance of
Preferred Stock, while providing flexibility in connection with possible acqui-
sitions and other corporate purposes, could, among other things, adversely, af-
fect the voting power of the holders of Common Stock and, under certain circum-
stances, make it more difficult for a third party to gain control of the Com-
pany and could have the effect of delaying or preventing a merger, tender offer
or other attempted takeover of the Company. No Holder of Preferred Stock shall
be entitled, as a matter of right, to subscribe for or purchase any shares of
Preferred Stock or Common Stock.
Series B Preferred Stock. In 1989, the Board of Directors amended the Company's
TASP. As part of this amendment, the Board designated a series of 1,100,000
preferred shares as Series B Preferred Stock. As of December 31, 1996, 875,191
shares of Series B Preferred Stock were issued and outstanding. The Series B
Preferred Stock is convertible into Common Stock at the option of the holder.
At December 31, 1996, the Series B Preferred Stock was convertible into Common
Stock at the rate of 4.71 shares of Common Stock for each share of Series B
Preferred Stock, subject to antidilution adjustments in certain circumstances
(which include, but are not limited to, issuances of Common Stock at less than
fair market value), subject to the matters described in the following para-
graph.
As of December 31, 1996, all of the outstanding shares of Series B Preferred
Stock were held for the benefit of the TASP participants by a trustee (the
"TASP Trustee"). In the event of any transfer of Series B Preferred Stock to a
person other than a trustee for an employee stock ownership or other employee
benefit plan of the Company, the shares of Series B Preferred Stock so trans-
ferred shall be automatically converted into shares of Common Stock on the
terms then in effect for such conversion. However, in the event that shares of
Series B Preferred Stock are automatically converted upon transfer to a partic-
ipant in an employee stock ownership plan of the Company in connection with the
termination of the transferee's participation in the plan, each such share
shall be converted into a number of shares of Common Stock which is the greater
of (i) 4.71 shares of Common Stock (the conversion rate at December 31, 1996),
subject to antidilution adjustments in certain circumstances, and (ii) the num-
ber of shares of Common Stock obtained by dividing $152.10 by the then fair
market value (as defined) of a share of Common Stock.
Holders of the Series B Preferred Stock are entitled to vote with the Common
Stock as a single class on all matters upon which the Common Stock is entitled
to vote and each share of Series B Preferred Stock is entitled to a number of
votes in such circumstances equal to the product of 1.3 times the number of
shares of Common Stock into which each share of the Series B Preferred Stock is
then convertible on the record date for such vote. The approval of the holders
of at least two-thirds of the outstanding shares of Series B Preferred Stock,
voting separately as a class, is required for certain actions, including, with-
out limitation, the authorization of any additional class of capital stock, or
any increase in the authorized amount of any class of capital stock, ranking
prior to or on parity with the Series B Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up of the Com-
pany, except an increase in the authorized amount of any class of stock ranking
on a parity with the Series B Preferred Stock to be used for the purpose of
transferring such stock to an employee stock ownership plan or other employee
benefit plan of the Company or any subsidiary; any amendment to the Amended
Certificate of Incorporation or any other certificate filed pursuant to law
which would adversely affect any of the rights, powers or preferences of the
Series B Preferred Stock; or any consolidation, merger, sale or other transfer
of more than 50% of the "assets" or "earning power" (as defined) of the Company
which, in the determination of
33
<PAGE>
a majority of the Company's independent directors (as defined), can reasonably
be expected to jeopardize the Company's financial ability to meet its divi-
dend, redemption or liquidation payment obligations to the holders of the Se-
ries B Preferred Stock. The TASP Trustee is required to vote the allocated
shares of Series B Preferred Stock based upon instructions from the TASP par-
ticipants; unallocated shares are voted in proportion to the voting instruc-
tions received from the participants with allocated shares.
Each share of Series B Preferred Stock is entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available therefor,
cumulative cash dividends in the amount of $12.93 per annum, payable semi-an-
nually. In the event that full cumulative dividends on the Series B Preferred
Stock have not been declared and paid or set apart for payment when due, the
Company shall not declare or pay or set apart for payment any dividends, or
make any other distributions on, or make any payment on account of the pur-
chase, redemption or other retirement of, any other class or series of stock
of the Company ranking, as to dividends or as to distributions in the event of
a liquidation, dissolution or winding up of the Company, junior to the Series
B Preferred Stock (including, without limitation, the Common Stock and the
Preferred Stock offered hereby), until full cumulative dividends on the Series
B Preferred Stock shall have been paid or declared and set apart for payment;
provided that the foregoing shall not apply to (i) any dividend payable solely
in shares of stock ranking, as to dividends and as to distributions in the
event of a liquidation, dissolution or winding up of the Company, junior to
the Series B Preferred Stock, or (ii) the acquisition of shares of any stock
ranking, as to dividends or as to distributions in the event of a liquidation,
dissolution or winding up of the Company, junior to the Series B Preferred
Stock either (A) pursuant to any existing or future employee or director bene-
fit plan of the Company or any subsidiary, or (B) in exchange solely for
shares of any other stock ranking as to dividends and as to distributions in
the event of a liquidation, dissolution or winding up of the Company, junior
to the Series B Preferred Stock. No dividend may be declared or paid on any
shares of capital stock ranking on a parity with the Series B Preferred Stock
as to dividends unless there are also declared and paid or set apart for pay-
ment on the Series B Preferred Stock dividends for all dividend payment peri-
ods ending on or before the dividend payment date for such parity stock, rata-
bly in proportion to the respective amounts of dividends accrued and unpaid on
the Series B Preferred Stock and such parity stock.
Upon liquidation, dissolution or winding up of the Company, the holders of the
Series B Preferred Stock are entitled to receive out of assets legally avail-
able therefor and subject to the rights of any stock ranking senior to or on a
parity with the Series B Preferred Stock in respect of distributions upon liq-
uidation, dissolution or winding up, an amount equal to $152.10 per share plus
accrued and unpaid dividends, before any amount shall be paid or distributed
to the holders of shares of capital stock ranking junior to the Series B Pre-
ferred Stock with respect to distributions upon liquidation, dissolution and
winding up, including the Preferred Stock offered hereby and the Common Stock.
If, upon any such liquidation, dissolution or winding up, amounts payable in
respect of the Series B Preferred Stock and any other capital stock ranking as
to such distribution on a parity with the Series B Preferred Stock are not
paid in full, the holders of Series B Preferred Stock and such parity stock
shall share ratably in any distribution of assets in proportion to the full
respective preferential amounts to which they are entitled. Neither the merger
or consolidation of the Company with or into any other corporation, nor the
sale, transfer, exchange or lease of all or any portion of the assets of the
Company, shall be deemed to be a dissolution, liquidation or winding up for
the foregoing purposes.
The Series B Preferred Stock is redeemable, in whole or in part, at the
Company's option at a redemption price of $155.98 per share if redeemed during
the twelve months ending July 1, 1997, declining annually to $152.10 per share
if redeemed after July 1, 1999, and the Company may also redeem the Series B
Preferred Stock at any time at $152.10 under certain limited circumstances re-
lating to federal income tax matters, plus in each case accrued and unpaid
dividends to the date fixed for redemption. The Company, at its option, may
make payment of the redemption price in cash or shares of Common Stock or a
combination thereof. The Series B Preferred Stock is also subject to mandatory
redemption for cash or, at the Company's option, for shares of Common Stock or
a combination thereof, at a price
34
<PAGE>
of $152.10 per share, plus accrued and unpaid dividends to the date fixed for
redemption, upon notice from the holder of the Series B Preferred Stock to the
Company, if and to the extent necessary (i) for the holder of Series B Pre-
ferred Stock to make required distributions to, or to satisfy an investment
election provided to, participants in an employee stock ownership plan of the
Company for which it is holding the Series B Preferred Stock, or (ii) for such
employee stock ownership plan to pay principal, interest or premium on its in-
debtedness.
Upon consummation of any consolidation, merger, reclassification or similar
transaction involving the Company in which the outstanding Common Stock is by
operation of law exchanged solely for or changed solely into stock of any suc-
cessor or resulting company (including the Company) which stock constitutes
"qualifying employer securities" (within the meaning of certain provisions of
the Internal Revenue Code of 1986 and the Employee Retirement Income Security
Act of 1974) with respect to a holder of Series B Preferred Stock, the Series
B Preferred Stock shall become preferred stock of such successor or resulting
company having, insofar as possible, the same terms as the Series B Preferred
Stock and shall be convertible into the number and kind of "qualifying em-
ployer securities" receivable by a holder of the number of shares of Common
Stock into which such shares of Series B Preferred Stock could have been con-
verted immediately prior to such transaction. Upon consummation or any consol-
idation, merger, reclassification or similar transaction involving the Company
pursuant to which the outstanding Common Stock is by operation of law ex-
changed for or changed into other securities, cash or other property other
than "qualifying employer securities," holders of shares of Series B Preferred
Stock are entitled to receive the same securities, cash or other property re-
ceivable by a holder of the number of shares of Common Stock into which such
shares of Series B Preferred Stock could have been converted immediately prior
to such transaction or, at the election of each holder of the Series B Pre-
ferred Stock, cash in an amount equal to the amount that would then be payable
to such holder in respect of such Series B Preferred Stock upon liquidation of
the Company.
The certificate of designations establishing the Series B Preferred Stock pro-
vides that it shall rank senior to the Common Stock as to the payment of divi-
dends and the distribution of assets on liquidation, dissolution and winding
up of the Company and, unless otherwise approved by holders of at least two-
thirds of the outstanding shares of Series B Preferred Stock, senior to all
other series of Preferred Stock (including the Preferred Stock offered hereby)
as to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up.
SECTION 203 OF THE DELAWARE LAW
The Company is subject to Section 203 of the Delaware General Corporation Law
(the "DGCL"). Generally, Section 203 prohibits a publicly held Delaware corpo-
ration from engaging in a "business combination" with an "interested stock-
holder" for a period of three years following the time that such stockholder
became an interested stockholder, unless (i) prior to such time either the
business combination or the transaction which resulted in the stockholder be-
coming an interested stockholder is approved by the board of directors of the
corporation, (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owns at least 85 percent of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned by (A) persons who are both
directors and officers and (B) employee stock plans in which employee partici-
pants do not have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer, or (iii)
on or after such time the business combination is approved by the board of di-
rectors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3 percent of
the outstanding voting stock which is not owned by the interested stockholder.
A "business combination" includes certain mergers or consolidations with an
interested stockholder, certain asset sales and transfers to an interested
stockholder, certain issuances of capital stock to an interested stockholder
and certain other transactions resulting in financial benefit to an interested
stockholder. An
35
<PAGE>
"interested stockholder" is, in general, a person who, together with "affili-
ates" and "associates" (as defined), owns 15% or more of the corporation's
outstanding voting stock or is an affiliate or associate of the corporation
and was the owner of 15% or more of the corporation's outstanding voting stock
at any time during the prior three years, subject to certain exceptions. Al-
though a corporation's certificate of incorporation may exclude such corpora-
tion from the restrictions imposed by Section 203, the Amended Certificate of
Incorporation does not exclude the Company from those restrictions. According-
ly, Section 203 could make it more difficult for a third party to gain control
of the Company and could have the effect of delaying or preventing a merger,
tender offer, or other attempted takeover of the Company, and therefore may
discourage attempts to acquire the Company.
CERTAIN PROVISIONS OF THE AMENDED CERTIFICATE OF INCORPORATION AND BY-LAWS
Several provisions of the Company's Amended Certificate of Incorporation and
By-laws may have the effect of deterring a takeover of the Company. These pro-
visions include: (i) certain advance notice and content requirements for busi-
ness to be brought before the annual stockholders' meeting by a stockholder or
for nomination by any stockholder of persons for election to the Board of Di-
rectors; (ii) a requirement that stockholder action taken without a meeting be
by the affirmative vote of at least 80% of the voting power of the stockhold-
ers entitled to vote thereon; (iii) a requirement for the written request of
stockholders holding at least a majority of the voting power of all stockhold-
ers to call a special meeting of the stockholders; and (iv) the classification
of Company's Board of Directors into three classes serving staggered three-
year terms and the prohibition of any amendment, change or repeal of this
structure without the favorable vote, at a stockholders meeting, of at least
80% of the then outstanding shares of the Company's capital stock entitled to
vote. In addition, the approval of the holders of at least two-thirds of the
outstanding shares of Series B Preferred Stock is required, under certain cir-
cumstances, for a consolidation or merger of the Company or the sale or other
transfer of certain assets by the Company. See "--Preferred Stock--Series B
Preferred Stock" above.
The foregoing provisions could make it more difficult for a third party to
gain control of the Company, and could have the effect of delaying or prevent-
ing a merger, tender offer or other attempted takeover of the Company.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The Trust may issue only one series of Trust Preferred Securities which shall
have terms described in the Prospectus Supplement relating thereto. The Decla-
ration of the Trust will authorize the Regular Trustees to issue on behalf of
the Trust one series of Trust Preferred Securities. The Declaration will be
qualified as an indenture under the Trust Indenture Act. The form of Declara-
tion has been or will be filed or incorporated by reference as an exhibit to
the Registration Statement. The terms of the Declaration will be those set
forth in the Declaration and those made part of the Declaration by the Trust
Indenture Act. The summary of certain provisions of the Trust Preferred Secu-
rities and the Declaration set forth below and in any Prospectus Supplement do
not purport to be complete and are subject to and are qualified in their en-
tirety by reference to all of the provisions of the Declaration and the Trust
Securities, which provisions (including defined terms) are incorporated herein
by reference.
The following description of the Trust Preferred Securities and the Declara-
tion sets forth certain general terms and provisions of the Trust Preferred
Securities and the Declaration to which any Prospectus Supplement may relate.
Certain other specific terms of the Trust Preferred Securities and the Decla-
ration will be described in the applicable Prospectus Supplement. To the ex-
tent that any particular terms of any Trust Preferred Securities or the Decla-
ration described in a Prospectus Supplement differ from any of the terms de-
scribed herein, then such terms described herein shall be deemed to have been
superseded by such Prospectus Supplement.
36
<PAGE>
The Trust Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation, conversion rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the Declaration or made part of the Declaration by the Trust Indenture Act,
and which will generally mirror the terms of the Subordinated Debt Securities
held by the Trust and described in the Prospectus Supplement related thereto.
Reference is made to the Prospectus Supplement relating to the Trust Preferred
Securities for specific terms, including (i) the designation of such Trust
Preferred Securities; (ii) the number of Trust Preferred Securities; (iii) the
annual distribution rate (or method of determining such rate) for the Trust
Preferred Securities and the date or dates upon which such distributions shall
be payable; (iv) whether distributions on the Trust Preferred Securities shall
be cumulative, and, in the case of Trust Preferred Securities having such cu-
mulative distribution rights, the date or dates or method of determining the
date or dates from which distributions on the Trust Preferred Securities shall
be cumulative; (v) the amount or amounts which shall be paid out of the assets
of the Trust to the holders of the Trust Preferred Securities upon voluntary
or involuntary dissolution, winding-up or termination of the Trust; (vi) the
right or obligation, if any, of the Trust to purchase or redeem the Trust Pre-
ferred Securities and the price or prices at which, the period or periods
within which, and the terms and conditions upon which, the Trust Preferred Se-
curities shall or may be purchased or redeemed, in whole or in part, pursuant
to such obligation; (vii) the voting rights, if any, of the Trust Preferred
Securities in addition to those required by law, including the number of votes
per Trust Preferred Security and any requirement for the approval by the hold-
ers of the Trust Preferred Securities, as a condition to specified action or
amendments to the Declaration; (viii) the terms and conditions, if any, upon
which the Trust Preferred Securities may be converted into or exchanged for
shares of Common Stock or other Securities, including the conversion price per
share or conversion rate and the circumstances, if any, under which any such
conversion right shall expire; (ix) the terms and conditions, if any, upon
which the Subordinated Debt Securities may be distributed to holders of the
Trust Preferred Securities; (x) if applicable, any securities exchange upon
which the Trust Preferred Securities shall be listed; and (xi) any other rele-
vant rights, preferences, privileges, limitations or restrictions of the Trust
Preferred Securities. All Trust Preferred Securities offered hereby will be
guaranteed by the Company to the extent set forth below under "Description of
Trust Preferred Securities Guarantee." Certain United States federal income
tax considerations applicable to any offering of Trust Preferred Securities
will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, the Trust will
issue one series of Trust Common Securities. The Declaration will authorize
the Regular Trustees to issue on behalf of the Trust one series of Trust Com-
mon Securities having such terms including distributions, redemption, voting
and liquidation rights or such restrictions as shall be set forth therein. The
terms of the Trust Common Securities will be substantially identical to the
terms of the Trust Preferred Securities, and the Trust Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the Trust
Preferred Securities except that, upon an event of default under the Declara-
tion, the rights of the holders of the Trust Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and other-
wise will be subordinated to the rights of the holders of the Trust Preferred
Securities. Except in certain limited circumstances, the Trust Common Securi-
ties will also carry the right to vote to appoint, remove or replace any of
the Trustees. All of the Trust Common Securities will be directly or indi-
rectly owned by the Company.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an event of default under the Declaration occurs and is continuing, then
the holders of the Trust Preferred Securities would rely on the enforcement by
the Property Trustee of its rights as a holder of the Subordinated Debt Secu-
rities against the Company. In addition, the holders of a majority in liquida-
tion amount of the Trust Preferred Securities will have the right to direct
the time, method and place of conducting any proceeding for any remedy avail-
able to the Property Trustee or to direct the exercise of any trust or power
conferred upon the Property Trustee under the Declaration, including the right
to
37
<PAGE>
direct the Property Trustee to exercise the remedies available to it as a
holder of the Subordinated Debt Securities. If the Property Trustee fails to
enforce its rights under such Subordinated Debt Securities, a holder of the
Trust Preferred Securities, to the fullest extent permitted by law, may insti-
tute a legal proceeding directly against the Company to enforce the Property
Trustee's rights under such Subordinated Debt Securities without first insti-
tuting any legal proceeding against the Property Trustee or any other person
or entity. Notwithstanding the foregoing, if an event of default under the
Declaration has occurred and is continuing and such event is attributable to
the failure of the Company to pay the principal of or premium or interest, if
any, on such Subordinated Debt Securities on the date such principal, premium
or interest, as the case may be, is otherwise payable (or in the case of re-
demption, on the redemption date), then a holder of the Trust Preferred Secu-
rities may directly institute a proceeding for enforcement of payment to such
holder of the principal, premium or interest, as the case may be, on such Sub-
ordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities of such holder (a "Direct
Action") on or after the respective due date specified in the Subordinated
Debt Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of the Trust Preferred Securities un-
der the Declaration to the extent of any payment made by the Company to such
holder of Trust Preferred Securities in such Direct Action.
DESCRIPTION OF TRUST PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Trust Preferred Se-
curities Guarantee which will be executed and delivered by the Company for the
benefit of the holders from time to time of Trust Preferred Securities. The
Trust Preferred Securities Guarantee will be qualified as an indenture under
the Trust Indenture Act. A trustee whose name will be set forth in the appli-
cable Prospectus Supplement will act as the trustee under the Trust Preferred
Securities Guarantee (the "Preferred Guarantee Trustee") for purposes of the
Trust Indenture Act. The form of Trust Preferred Securities Guarantee has been
or will be filed or incorporated by reference as an exhibit to the Registra-
tion Statement. The terms of the Trust Preferred Securities Guarantee will be
those set forth in the Trust Preferred Securities Guarantee and those made
part of the Trust Preferred Securities Guarantee by the Trust Indenture Act.
The summary of certain provisions of the Trust Preferred Securities Guarantee
set forth below and in any Prospectus Supplement does not purport to be com-
plete and is subject to and qualified in its entirety by reference to all of
the provisions of the Trust Preferred Securities Guarantee, which provisions
of the Trust Preferred Securities Guarantee (including defined terms) are in-
corporated herein by reference. The Trust Preferred Securities Guarantee will
be held by the Preferred Guarantee Trustee for the benefit of the holders of
the Trust Preferred Securities.
The following description of the Trust Preferred Securities Guarantee sets
forth certain general terms and provisions of the Trust Preferred Securities
Guarantee to which any Prospectus Supplement may relate. Certain other spe-
cific terms of the Trust Preferred Securities Guarantee will be described in
the applicable Prospectus Supplement. To the extent that any particular terms
of the Trust Preferred Securities Guarantee described in a Prospectus Supple-
ment differ from any of the terms described herein, then such terms described
herein shall be deemed to have been superseded by such Prospectus Supplement.
GENERAL
Pursuant to the Trust Preferred Securities Guarantee, the Company will agree,
to the extent set forth therein, to pay in full, to the holders of the Trust
Preferred Securities, the Guarantee Payments (as defined herein) (except to
the extent paid by the Trust), as and when due, regardless of any defense,
right of setoff or counterclaim which the Trust may have or assert. The fol-
lowing payments with respect to the Trust Preferred Securities to the extent
not paid by the Trust (the "Guarantee Payments"), will be subject to the Trust
Preferred Securities Guarantee thereof (without duplication): (i) any accrued
and
38
<PAGE>
unpaid distributions which are required to be paid on such Trust Preferred Se-
curities, to the extent the Trust shall have funds available therefor; (ii)
the redemption price (if any) set forth in the applicable Prospectus Supple-
ment (the "Redemption Price"), which will not be lower than the liquidation
amount, and all accrued and unpaid distributions, to the extent the Trust has
funds available therefor, with respect to any Trust Preferred Securities
called for redemption by the Trust and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Subordinated Debt Securities to the holders of Trust
Preferred Securities or the conversion or redemption of all of the Trust Pre-
ferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Trust Preferred Securities to
the date of payment, to the extent the Trust has funds available therefor, and
(b) the amount of assets of the Trust remaining available for distribution to
holders of the Trust Preferred Securities in liquidation of the Trust. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of Trust Pre-
ferred Securities or by causing the Trust to pay such amounts to such holders.
The Trust Preferred Securities Guarantee will not apply to any payment of dis-
tributions on the Trust Preferred Securities except to the extent the Trust
shall have funds available therefor. If the Company does not make interest
payments on the Subordinated Debt Securities purchased by the Trust, the Trust
will not pay distributions on the Trust Preferred Securities issued by the
Trust and will not have funds available therefor. The Trust Preferred Securi-
ties Guarantee, when taken together with the Company's obligations under the
Subordinated Debt Securities, the Subordinated Indenture and the Declaration,
including its obligations to pay certain costs, expenses, debts and liabili-
ties of the Trust (other than with respect to the Trust Securities), will pro-
vide a full and unconditional guarantee on a subordinated basis by the Company
of payments due on the Trust Preferred Securities.
The Company has also agreed separately to guarantee the obligations of the
Trust with respect to the Trust Common Securities (the "Trust Common Securi-
ties Guarantee") to the same extent as the Trust Preferred Securities Guaran-
tee, except that upon an event of default under the Subordinated Indenture,
holders of Trust Preferred Securities shall have priority over holders of
Trust Common Securities with respect to distributions and payments on liquida-
tion, redemption or otherwise.
Certain covenants of the Company to be set forth in the Trust Preferred Secu-
rities Guarantee will be described in the applicable Prospectus Supplement.
MODIFICATION OF THE TRUST PREFERRED SECURITIES GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of Trust Preferred Securities (in which case no vote
will be required), the Trust Preferred Securities Guarantee may be amended
only with the prior approval of the holders of not less than a majority in
liquidation amount of the outstanding Trust Preferred Securities. The manner
of obtaining any such approval of holders of such Trust Preferred Securities
will be as set forth in an accompanying Prospectus Supplement. All guarantees
and agreements contained in the Trust Preferred Securities Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Trust Preferred
Securities then outstanding.
TERMINATION
The Trust Preferred Securities Guarantee will terminate (a) upon full payment
of the Redemption Price of all Trust Preferred Securities, (b) upon distribu-
tion of the Subordinated Debt Securities held by the Trust to the holders of
the Trust Preferred Securities or the conversion or redemption, if applicable,
of all of the Trust Preferred Securities or (c) upon full payment of the
amounts payable in accordance with the Declaration upon liquidation of the
Trust. The Trust Preferred Securities Guarantee will continue to
39
<PAGE>
be effective or will be reinstated, as the case may be, if at any time any
holder of Trust Preferred Securities must restore payment of any sums paid un-
der the Trust Preferred Securities or the Trust Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under the Trust Preferred Securities Guarantee will occur
upon (a) the failure of the Company to perform any of its payment or other ob-
ligations thereunder or (b) if applicable, the failure by the Company to de-
liver Common Stock or other applicable securities upon an appropriate election
by the holder or holders of Trust Preferred Securities to convert the Trust
Preferred Securities into shares of Common Stock or other applicable securi-
ties, as the case may be.
The holders of a majority in liquidation amount of the Trust Preferred Securi-
ties have the right to direct the time, method and place of conducting any pro-
ceeding for any remedy available to the Preferred Guarantee Trustee in respect
of the Trust Preferred Securities Guarantee or to direct the exercise of any
trust or power conferred upon the Preferred Guarantee Trustee under such Trust
Preferred Securities. If the Preferred Guarantee Trustee fails to enforce such
Trust Preferred Securities Guarantee, any holder of Trust Preferred Securities
may institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under such Trust Preferred Securities
Guarantee, without first instituting a legal proceeding against the Trust, the
Preferred Guarantee Trustee or any other person or entity. The Company will
waive any right or remedy to require that any action be brought first against
the Trust or any other person or entity before proceeding directly against the
Company.
STATUS OF THE TRUST PREFERRED SECURITIES GUARANTEE
The Trust Preferred Securities Guarantee will constitute an unsecured obliga-
tion of the Company and will rank (i) subordinate and junior in right of pay-
ment to all other liabilities of the Company, (ii) pari passu in right of pay-
ment with the most senior preferred or preference stock now or hereafter issued
by the Company, if any, and with any guarantee now or hereafter entered into by
the Company in respect of any preferred or preference stock of any affiliate of
the Company and (iii) senior to Common Stock. The terms of the Trust Preferred
Securities provide that each holder of Trust Preferred Securities by acceptance
thereof agrees to the subordination provisions and other terms of the Trust
Preferred Securities Guarantee relating thereto.
The Trust Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal pro-
ceeding directly against the guarantor to enforce its rights under the guaran-
tee without instituting a legal proceeding against any other person or entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with re-
spect to the Trust Preferred Securities Guarantee, undertakes to perform only
such duties as are specifically set forth in such Trust Preferred Securities
Guarantee and, after default, shall exercise the same degree of care as a pru-
dent individual would exercise in the conduct of his or her own affairs. Sub-
ject to such provisions, the Preferred Guarantee Trustee is under no obligation
to exercise any of the powers vested in it by a Trust Preferred Securities
Guarantee at the request of any holder of the Trust Preferred Securities, un-
less offered reasonable indemnity against the costs, expenses and liabilities
which might be incurred thereby.
40
<PAGE>
PLAN OF DISTRIBUTION
The Company, or the Trust, as the case may be, may sell Securities to one or
more underwriters for public offering and sale by them or may sell Securities
through agents which solicit or receive offers on behalf of the Company or the
Trust, as the case may be, or through dealers or through a combination of any
such methods of sale, and the Company may also sell Securities directly to in-
vestors. Any such underwriter or agent involved in the offer and sale of Secu-
rities will be named in the applicable Prospectus Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at negoti-
ated prices. The Company or the Trust, as the case may be, may, from time to
time, authorize agents acting on a best or reasonable efforts basis to solicit
or receive offers to purchase the Securities upon the terms and conditions as
are set forth in the applicable Prospectus Supplement. In connection with the
sale of Securities, underwriters or agents may be deemed to have received com-
pensation from the Company or the Trust, as the case may be, in the form of
underwriting discounts or commissions or other underwriting compensation and
may also receive commissions from purchasers of Securities for whom they may
act as agents. Underwriters may sell Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any compensation paid by the Company or the Trust to underwriters or agents in
connection with the offering of Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers, will be set
forth in the applicable Prospectus Supplement. Underwriters, dealers and
agents participating in a distribution of the Securities (including agents
only soliciting or receiving offers to purchase Securities on behalf of the
Company or the Trust) may be deemed to be underwriters, and any discounts,
commissions or other underwriting compensation received by them and any profit
realized by them on resale of Securities may be deemed to be underwriting dis-
counts and commissions.
Under agreements which may be entered into by the Company or the Trust, as the
case may be, underwriters, dealers and agents who participate in the distribu-
tion of Securities may be entitled to indemnification against certain liabili-
ties, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company may au-
thorize underwriters or other persons acting as the Company's agents to so-
licit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date. In-
stitutions with which such contracts may be made include commercial and sav-
ings banks, insurance companies, pension funds, investment companies, educa-
tional and charitable institutions and others, but in all cases such institu-
tions must be approved by the Company. The obligations of any institutional
purchaser under any such contract will not be subject to any conditions except
(i) the purchase by such institution of the Securities covered by such con-
tract shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such institution is subject, and (ii) if such Securities
are being sold to underwriters, the Company shall have sold to such underwrit-
ers the total principal amount of such Securities less the principal amount
thereof covered by delayed delivery contracts.
Certain of the underwriters, dealers or agents and their affiliates may engage
in transactions with and perform services for the Company in the ordinary
course of business.
41
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the offering made hereby will be
passed upon for the Company by Eberhard G.H. Schmoller, Senior Vice President,
General Counsel and Secretary of the Company, and by Brown & Wood llp, San
Francisco, California. As of March 31, 1997, Mr. Schmoller owned approximately
4,391 shares of Common Stock, held options to acquire approximately 185,033 ad-
ditional shares of Common Stock, and beneficially owned approximately 99.84
shares of Series B Preferred Stock, which, on such date, were convertible into
approximately 470 shares of Common Stock. The validity of the Trust Preferred
Securities will be passed upon for the Company and the Trust by Richards, Lay-
ton & Finger, Wilmington, Delaware.
EXPERTS
The audited consolidated financial statements and schedule incorporated by ref-
erence in this Prospectus and elsewhere in the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are incorporated herein and therein by
reference in reliance upon the authority of said firm as experts in giving said
reports.
42
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses (all of which will be paid by the
Company) to be incurred in connection with the registration and sale of the
Securities:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................... $ 45,207
Blue Sky fees and expenses...................................... 5,000
Rating agency fees.............................................. 90,000
Legal fees and expenses......................................... 250,000
Accounting fees and expenses.................................... 50,000
Trustees' fees and expenses..................................... 10,000
Printing and engraving.......................................... 40,000
Miscellaneous................................................... 9,793
--------
Total......................................................... $500,000
========
</TABLE>
All of the above amounts, other than the Securities and Exchange Commission
filing fee, are estimates. Such filing fee was previously paid in connection
with certain prior registration statements to which this Registration State-
ment constitutes a post-effective amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL"), the Company's Certificate of Incorporation eliminates to the
fullest extent permitted by Delaware law the personal liability of its direc-
tors to the Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director.
The Company's Bylaws provide that each person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding by reason of the fact that he or she is
or was a director, officer, employee or agent of the Company or of another en-
terprise, serving as such at the request of the Company, shall be indemnified
and held harmless by the Company to the fullest extent permitted by the DGCL;
provided, however, that except as to actions to enforce indemnification
rights, the Company shall indemnify any such person seeking indemnification in
connection with an action, suit or proceeding (or part thereof) initiated by
such person only if the action, suit or proceeding (or part thereof) was au-
thorized by the Board of Directors of the Company. When indemnification is au-
thorized by the Company's Bylaws, the director, officer, employee or agent
shall be indemnified for expenses, liabilities and losses (including attor-
neys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid
or to be paid in settlement) reasonably incurred by him or her in connection
therewith. The Company's Bylaws also provide that expenses incurred by an of-
ficer or director (acting in his or her capacity as such) in defending a pro-
ceeding shall be paid by the Company in advance of final disposition of the
proceeding; provided, however, that if required by the DGCL, the officer or
director shall deliver to the Company an undertaking by the officer or direc-
tor to repay such expenses if it is ultimately determined that he or she is
not entitled to be indemnified by the Company. The Company's Bylaws also pro-
vide that in other circumstances, expenses may be advanced upon such terms and
conditions as the Board of Directors deems appropriate.
The Company's Bylaws further provide that the right to indemnification granted
thereunder shall be a contract right for the benefit of the Company's direc-
tors, officers, employees and agents. The Company's Bylaws also authorize ac-
tions against the Company to enforce the indemnification rights provided by
the
II-1
<PAGE>
Bylaws, subject to the Company's right to assert a defense in any such action
that the claimant has not met the standards of conduct that make it permissi-
ble under the DGCL for the Company to indemnify the claimant for the amount
claimed, and the Company shall bear the burden of proving any such defense.
Under Section 145 of the DGCL, a corporation may provide indemnification to
directors, officers, employees and agents against judgments, penalties, fines,
settlements and reasonable expenses (including attorneys' fees) incurred in
the defense or settlement of a third party action, or against reasonable ex-
penses (including attorneys' fees) in the defense or settlement of a deriva-
tive action, provided there is a determination by a majority vote of a quorum
of disinterested directors, a committee of directors, independent legal coun-
sel, or a majority vote of stockholders that a person seeking indemnification
acted in good faith and in a manner reasonably believed to be in or not op-
posed to the best interests of the corporation, and, in the case of a criminal
proceeding, with no reasonable cause to believe his or her conduct was unlaw-
ful. However, Section 145 also states that no indemnification may be made in
derivative actions where such person is adjudged liable to the corporation,
unless, and only to the extent, that a court determines upon application that
such person is fairly and reasonably entitled to indemnity for such expenses
which the court deems proper. Section 145 of the DGCL also permits indemnifi-
cation of expenses which the court deems proper and provides that indemnifica-
tion of expenses actually and reasonably incurred shall be provided when the
individual being indemnified has successfully defended the action on the
merits or otherwise in any action, suit or proceeding. The indemnification
rights provided by statute in Delaware are not deemed to be exclusive of any
other rights which those seeking indemnification may be entitled under any by-
law, agreement or otherwise.
The Company's Bylaws also authorize the Company to purchase and maintain in-
surance to protect itself and any person who is or was a director, officer,
employee or agent of the Company against any liability, expense or loss in-
curred by or asserted against such persons, whether or not the Company would
have the power to indemnify any such person against such liability, expense or
loss under applicable law or the Company's Bylaws. The Company presently main-
tains a directors' and officers' liability insurance policy which insures di-
rectors and officers of the Company and those of certain of its subsidiaries.
Reference is made to the form of Underwriting Agreement included or incorpo-
rated by reference or to be included or incorporated by reference herein as an
exhibit to the Registration Statement for provisions regarding indemnification
of the Company's officers, directors and controlling persons against certain
liabilities.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1(a) Form of Underwriting Agreement Basic Provisions for Debt Securities(d)
Form of Underwriting Agreement for the other Securities registered
1(b) hereby(a)
4(a) Certificate of Incorporation of the Company(b)
4(b) By-Laws of the Company, as amended(f)
4(c) Amendment to Certificate of Incorporation(f)
4(d) Form of Senior Indenture(d)
4(e) Form of Subordinated Indenture(d)
4(f) Form of Common Stock Warrant Agreement(a)
4(g) Form of Certificate of Designations for Preferred Stock(a)
4(h) Form of Senior Debt Security(d)
4(i) Form of Subordinated Debt Security(d)
4(j) Form of Deposit Agreement including form of Depositary Receipt(a)
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
4(k) Declaration of Trust of the Trust(e)
4(l) Form of Amended and Restated Declaration of Trust of the Trust,
including form of Trust Preferred Security(e)
Form of Guarantee Agreement with respect to Trust Preferred
4(m) Securities(a)
5(a) Opinion of Brown & Wood LLP as to the validity of the Securities other
than the Trust Preferred Securities(e)
Opinion of Richards, Layton & Finger as to the validity of the Trust
5(b) Preferred Securities(e)
12(a) Computation of Ratio of Earnings to Fixed Charges(f)
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
12(b) Stock Dividends(f)
23(a) Consent of Independent Public Accountants(e)
23(b) Consent of Brown & Wood LLP (included in Exhibit 5(a))
23(c) Consent of Richards, Layton & Finger (included in Exhibit 5(b))
24 Power of Attorney of certain officers and directors (included as part of
the signature pages hereof)
25(a) Form T-1 Statement of Eligibility of the Senior Trustee (to be filed or
incorporated by reference in connection with a particular offering of
securities)
25(b) Form T-1 Statement of Eligibility of the Subordinated Trustee (to be
filed or incorporated by reference in connection with a particular
offering of securities)
25(c) Form T-1 Statement of Eligibility of trustee with respect to the Amended
and Restated Declaration of Trust of the Trust (to be filed or
incorporated by reference in connection with a particular offering of
securities)
25(d) Form T-1 Statement of Eligibility of trustee with respect to the
Preferred Securities Guarantee (to be filed or incorporated by reference
in connection with a particular offering of securities)
</TABLE>
- --------
(a) To be filed by amendment or as an exhibit to a document to be incorporated
or deemed to be incorporated by reference in the Registration Statement.
(b) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1987.
(c) Incorporated herein by reference from the Company's Report on Form 8-A
dated October 27, 1986.
(d) Incorporated by reference from the Company's Registration Statement on Form
S-3 (no. 33-60619).
(e) Filed herewith.
(f) Filed previously.
ITEM 17. UNDERTAKINGS
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 prospec-
tus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect
in the prospectus any acts or events arising after the effective date of this
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in this registration statement; (iii) to include any ma-
terial information with respect to the plan of distribution not previously dis-
closed in this registration statement or any material change to such informa-
tion in this registration statement; provided, however, that subparagraphs
(i) and (ii) do not apply if the information required to be included in a post-
effective amendment by those subparagraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the Securi-
ties Exchange Act of 1934 that are incorporated by reference in this registra-
tion statement. Notwithstanding the foregoing, any increase or
II-3
<PAGE>
decrease in volume of securities offered (if the total dollar value of securi-
ties offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act of 1933 if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby further undertakes that for the purpose 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 therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, pursuant to the provisions described under Item 15 or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, 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.
(2) For the purpose of determining any liability under the Securities Act
of 1933, 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.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and regula-
tions prescribed by the Commission under Section 305(b)(2) of the Trust Inden-
ture Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant cer-
tifies that it has reasonable grounds to believe that it meets all of the re-
quirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Palo Alto, State of California, on May 9, 1997.
CNF Transportation Inc.
/s/ Eberhard G.H. Schmoller
By: _________________________________
Eberhard G.H. Schmoller
Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed by the following persons in the ca-
pacities indicated on May 9, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ Donald E. Moffitt* Chairman of the Board, President and
____________________________________ Chief Executive Officer (Principal
Donald E. Moffitt Executive Officer)
/s/ Gregory L. Quesnel* Executive Vice President and Chief
____________________________________ Financial Officer (Principal Financial
Gregory L. Quesnel and Principal Accounting Officer)
/s/ Robert Alpert* Director
____________________________________
Robert Alpert
/s/ Earl F. Cheit* Director
____________________________________
Earl F. Cheit
/s/ Richard A. Clarke* Director
____________________________________
Richard A. Clarke
/s/ Margaret G. Gill* Director
____________________________________
Margaret G. Gill
/s/ Robert Jaunich II* Director
____________________________________
Robert Jaunich II
/s/ W. Keith Kennedy, Jr.* Director
____________________________________
W. Keith Kennedy, Jr.
Director
____________________________________
Richard B. Madden
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ Michael J. Murray* Director
____________________________________
Michael J. Murray
/s/ Robert D. Rogers* Director
____________________________________
Robert D. Rogers
/s/ William J. Schroeder* Director
____________________________________
William J. Schroeder
/s/ Robert P. Wayman* Director
____________________________________
Robert P. Wayman
</TABLE>
/s/ Eberhard G.H. Schmoller
*By_____________________________
Eberhard G.H. Schmoller Attorney-
in-Fact
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, CNF Trust I certi-
fies that it has reasonable grounds to believe that it meets all the require-
ments for filing on Form S-3 and has duly caused this amendment to the Regis-
tration Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Palo Alto, State of California on May 9, 1997.
CNF Trust I
By:CNF Transportation Inc.,
as Sponsor
/s/ Eberhard G.H. Schmoller
By: _________________________________
Eberhard G.H. Schmoller
Senior Vice President,
General Counsel and Secretary
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
Form of Underwriting Agreement Basic Provisions for Debt
1(a) Securities(d)
1(b) Form of Underwriting Agreement for the other Securities
registered hereby(a)
4(a) Certificate of Incorporation of the Company(b)
4(b) By-Laws of the Company, as amended(f)
4(c) Amendment to Certificate of Incorporation(f)
4(d) Form of Senior Indenture(d)
4(e) Form of Subordinated Indenture(d)
4(f) Form of Common Stock Warrant Agreement(a)
4(g) Form of Certificate of Designations for Preferred Stock(a)
4(h) Form of Senior Debt Security(d)
4(i) Form of Subordinated Debt Security(d)
4(j) Form of Deposit Agreement including form of Depositary
Receipt(a)
4(k) Declaration of Trust of the Trust(e)
4(l) Form of Amended and Restated Declaration of Trust of the Trust,
including form of Trust Preferred Security(e)
4(m) Form of Guarantee Agreement with respect to Trust Preferred
Securities(a)
5(a) Opinion of Brown & Wood LLP as to the validity of the Securities
other than the Trust Preferred Securities(e)
5(b) Opinion of Richards, Layton & Finger as to the validity of the
Trust Preferred Securities(e)
12(a) Computation of Ratio of Earnings to Fixed Charges(f)
12(b) Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends(f)
23(a) Consent of Independent Public Accountants(e)
23(b) Consent of Brown & Wood LLP (included in Exhibit 5(a))
23(c) Consent of Richards, Layton & Finger (included in Exhibit 5(b))
24 Power of Attorney of certain officers and directors (included as
part of the signature pages hereof)
25(a) Form T-1 Statement of Eligibility of the Senior Trustee (to be
filed or incorporated by reference in connection with a
particular offering of securities)
25(b) Form T-1 Statement of Eligibility of the Subordinated Trustee
(to be filed or incorporated by reference in connection with a
particular offering of securities)
25(c) Form T-1 Statement of Eligibility of trustee with respect to the
Amended and Restated Declaration of Trust of the Trust (to be
filed or incorporated by reference in connection with a
particular offering of securities)
25(d) Form T-1 Statement of Eligibility of trustee with respect to the
Preferred Securities Guarantee (to be filed or incorporated by
reference in connection with a particular offering of
securities)
</TABLE>
- --------
(a) To be filed by amendment or as an exhibit to a document to be incorporated
or deemed to be incorporated by reference in the Registration Statement.
(b) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1987.
(c) Incorporated herein by reference from the Company's Report on Form 8-A
dated October 27, 1986.
(d) Incorporated by reference from the Company's Registration Statement on Form
S-3 (no. 33-60619).
(e) Filed herewith.
(f) Filed previously.
<PAGE>
EXHIBIT 4(k)
TRUST AGREEMENT
OF
CNF TRUST I
THIS TRUST AGREEMENT is made as of May 6, 1997 (this "Trust Agreement"),
by and among CNF Transportation Inc., a Delaware corporation, as Sponsor (the
"Sponsor"), First Chicago Delaware Inc., a Delaware corporation, as trustee
("Delaware Trustee"), and R. Guy Kraines, as trustee (the Delaware Trustee and
R. Guy Kraines being hereinafter jointly referred to as the "Trustees"). The
Sponsor and the Trustees hereby agree as follows :
1. The trust created hereby shall be known as "CNF Trust I" (the
"Trust"), in which name the Trustees or the Sponsor, to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trustees the sum of $10. The Trustees hereby acknowledge receipt of such
amount in trust from the Sponsor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Sponsor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S) 3801, et seq. (the "Business Trust Act"), and
------- -- ---
that this document constitute the governing instrument of the Trust. The
Trustees are hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in such form as the Trustees may
approve.
3. The Sponsor and the Trustees will enter into an amended and restated
Trust Agreement or Declaration satisfactory to each such party and substantially
in the form to be included as an exhibit to the Registration Statement on Form
S-3 (the "1933 Act Registration Statement") referred to below, or in such other
form as the Trustees and the Sponsor may approve, to provide for the
contemplated operation of the Trust created hereby and the issuance of the
Preferred Securities and Common Securities referred to therein. Prior to the
execution and delivery of such amended and restated Trust Agreement or
Declaration, the Trustees shall not have any duty or obligation hereunder or
with respect of the trust estate, except as otherwise required by applicable law
or as may be necessary to obtain prior to such execution and delivery any
licenses, consents or approvals required by applicable law or otherwise.
Notwithstanding the foregoing, the Trustees may take all actions deemed proper
as are necessary to effect the transactions contemplated herein.
4. The Sponsor and the Trustees hereby authorize and direct the Sponsor,
as the sponsor of the Trust, (i) to file with the Securities and Exchange
Commission (the "Commission") and to execute, in the case of the 1933 Act
Registration Statement and 1934 Act Registration Statement (as herein defined),
on behalf of the Trust, (a) the 1933 Act Registration Statement including
pre-effective or post-effective amendments to such Registration Statement,
relating to the registration under the Securities Act of 1933, as amended (the
"1933 Act"), of the
<PAGE>
Preferred Securities of the Trust, (b) any preliminary prospectus or
prospectus or supplement thereto relating to the Preferred Securities required
to be filed pursuant to Rule 424 under the 1933 Act, and (c) a Registration
Statement on Form 8-A or other appropriate form (the "1934 Act Registration
Statement") (including all pre-effective and post-effective amendments thereto
relating to the registration of the Preferred Securities of the Trust under
Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to file
with the New York Stock Exchange and execute on behalf of the Trust a listing
application and all other applications, statements, certificates, agreements and
other instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the New York Stock Exchange; (iii) to file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorney for service of process and other
papers and documents as shall be necessary or desirable to register the
Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable; and (iv) to execute, deliver and perform on behalf of the Trust, an
underwriting agreement with the Sponsor and the underwriter or undewriters of
the Preferred Securities of the Trust. In the event that any filing referred to
in clauses (i)-(iii) above is required by the rules and regulations of the
Commission, the New York Stock Exchange or state securities or Blue Sky laws to
be executed on behalf of the Trust by the Trustees, the Trustees, in their
capacities as trustees of the Trust, are hereby authorized and directed to join
in any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that Delaware Trustee, in its capacity as trustee
of the Trust, shall not be required to join in any such filing or execute on
behalf of the Trust any such document unless required by the rules and
regulations of the Commission, the New York Stock Exchange or state securities
or Blue Sky laws. In connection with all of the foregoing, each of the Trustees,
solely in their capacities as trustees of the Trust, and the Sponsor hereby
constitutes and appoints Eberhard G.H. Schmoller, R. Guy Kraines, Gregory L.
Quesnel as his or its, as the case may be, true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution for the Sponsor or
such Trustee or in the Sponsor's or such Trustee's name, place and stead, in any
and all capacities, to sign any and all amendments (including all pre-effective
and post-effective amendments) to the 1933 Act Registration Statement and the
1934 Act Registration Statement and the 1934 Act Registration Statement and to
file the same, with all exhibits thereto, and any other documents in connection
therewith, with the Commission, granting unto said attorney-in-fact and agent
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as the Sponsor or such Trustee might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent or his
respective substitute or substitutes, shall do or cause to be done by virtue
hereof.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be two and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Sponsor which may
increase or decrease the number of trustees of the Trust; provided, however,
that to the extent required by the Business Trust Act, one trustee of the Trust
shall either be a natural person who is a resident of the State of Delaware
-2-
<PAGE>
or, if not a natural person, an enity which has its principal place of
business in the State of Delaware. Subject to the foregoing, the Sponsor is
entitled to appoint or remove without cause any trustee of the Trust at any
time. Any trustee of the Trust may resign upon thirty days prior notice to the
Sponsor.
7. First Chicago Delaware Inc. in its capacity as Delaware Trustee,
shall not have the powers or duties of the Trustees set forth herein (except as
may be required under the Business Trust Act) and shall be a trustee hereunder
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Business Trust Act.
8. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (with regard to conflict of
laws principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
CNF TRANSPORTATION,INC.,
as Sponsor
By: /s/ R. GUY KRAINES
------------------
Name: R. Guy Kraines
Title: VP and Treasurer
FIRST CHICAGO DELAWARE INC., not in its
individual capacity but solely as Trustee
By:
------------------
Name:
Title:
/s/ R. Guy Kraines
------------------
R. GUY KRAINES, not in his individual
capacity but solely as Trustee.
-3-
<PAGE>
or, if not a natural person, an entity which has its principal place of
business in the State of Delaware. Subject to the foregoing, the Sponsor is
entitled to appoint or remove without cause any trustee of the Trust at any
time. Any trustee of the Trust may resign upon thirty days' prior notice to the
Sponsor.
7. First Chicago Delaware, Inc., in its capacity as Delaware Trustee,
shall not have the powers or duties of the Trustees set forth herein (expect as
may be required under the Business Trust Act) and shall be a trustee hereunder
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Business Trust Act.
8. This Trust Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware (with regard to conflict of laws
principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed as of the day and year first above written.
CNF TRANSPORTATION, INC.,
as Sponsor
By: --------------------------------
Name:
Title:
FIRST CHICAGO DELAWARE INC., not in its
individual capacity but solely as Trustee
By: /s/ Steven M. Wagner
---------------------------------
Name: Steven M. Wagner
Title: Vice President
--------------------------------------
R. GUY KRAINES, not in his individual
capacity but solely as Trustee
-3-
<PAGE>
EXHIBIT 4(L)
=================================================
AMENDED AND RESTATED DECLARATION OF TRUST
OF
CNF TRUST I
_______________________________________
DATED AS OF __________, __ 1997
_______________________________________
=================================================
<PAGE>
TABLE OF CONTENTS/1/
-----------------
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS
Section 1.01 Definitions 2
ARTICLE 2 TRUST INDENTURE ACT
Section 2.01. Trust Indenture Act; Application........................................ 8
Section 2.02. Lists of Holders of Preferred Securities................................ 9
Section 2.03. Reports by the Property Trustee......................................... 9
Section 2.04. Periodic Reports to Property Trustee.................................... 9
Section 2.05. Evidence of Compliance with Conditions Precedent........................ 9
Section 2.06. Events of Default; Waiver............................................... 9
Section 2.07. Disclosure of Information............................................... 11
ARTICLE 3 ORGANIZATION
Section 3.01. Name.................................................................... 12
Section 3.02. Office.................................................................. 12
Section 3.03. Issuance of the Trust Securities........................................ 12
Section 3.04. Purchase of Debentures.................................................. 13
Section 3.05. Purpose................................................................. 13
Section 3.06. Authority............................................................... 14
Section 3.07. Title to Property of the Trust.......................................... 14
Section 3.08. Powers and Duties of the Regular Trustees............................... 14
Section 3.09. Prohibition of Actions by Trust and Trustees............................ 17
Section 3.10. Powers and Duties of the Property Trustee............................... 18
Section 3.11. Delaware Trustee........................................................ 21
Section 3.12. Certain Rights and Duties of the Property Trustee....................... 21
Section 3.13. Registration Statement and Related Matters.............................. 24
Section 3.14. Filing of Amendments to Certificate of Trust............................ 25
Section 3.15. Execution of Documents by Regular Trustees.............................. 25
Section 3.16. Trustees Not Responsible for Recitals or Issuance of Securities......... 25
Section 3.17. Duration of Trust....................................................... 26
ARTICLE 4 SPONSOR
Section 4.01. Purchase of Common Securities by Sponsor................................ 26
Section 4.02. Expenses................................................................ 26
</TABLE>
- ------------------------------
/1/ This Table of Contents does not constitute part of the Amended and Restated
Declaration of Trust and should not have any bearing upon the interpretation of
any of its terms or provisions.
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 5 TRUSTEES
Section 5.01. Number of Trustees; Qualifications...................................... 27
Section 5.02. Appointment, Removal and Resignation of Trustees........................ 29
Section 5.03. Vacancies among Trustees................................................ 31
Section 5.04. Effect of Vacancies..................................................... 31
Section 5.05. Meetings................................................................ 31
Section 5.06. Delegation of Power..................................................... 32
ARTICLE 6 DISTRIBUTIONS
Section 6.01. Distributions........................................................... 32
ARTICLE 7 ISSUANCE OF SECURITIES
Section 7.01. General Provisions Regarding Securities................................. 32
Section 7.02. Conversion Agent........................................................ 34
ARTICLE 8 TERMINATION OF TRUST
Section 8.01. Termination of Trust.................................................... 35
ARTICLE 9 TRANSFER OF INTERESTS
Section 9.01. Transfer of Securities.................................................. 35
Section 9.02. Transfer of Certificates................................................ 36
Section 9.03. Deemed Security Holders................................................. 36
Section 9.04. Book Entry Interests.................................................... 37
Section 9.05. Notices to Holders of Certificates...................................... 38
Section 9.06. Appointment of Successor Clearing Agency................................ 38
Section 9.07. Definitive Preferred Securities Certificates............................ 38
Section 9.08. Mutilated, Destroyed, Lost or Stolen Certificates....................... 38
ARTICLE 10 LIMITATION OF LIABILITY; INDEMNIFICATION
Section 10.01. Exculpation............................................................. 39
Section 10.02. Indemnification......................................................... 39
Section 10.03. Outside Business........................................................ 40
ARTICLE 11 ACCOUNTING
Section 11.01. Fiscal Year............................................................. 41
Section 11.02. Certain Accounting Matters.............................................. 41
Section 11.03. Banking................................................................. 42
Section 11.04. Withholding............................................................. 42
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 12 AMENDMENTS AND MEETINGS
Section 12.01. Amendments.............................................................. 42
Section 12.02. Meetings of the Holders of Securities; Action by Written Consent........ 43
ARTICLE 13 REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
Section 13.01. Representations and Warranties of Property Trustee...................... 45
ARTICLE 14 MISCELLANEOUS
Section 14.01. Notices................................................................. 46
Section 14.02. Undertaking for Costs................................................... 47
Section 14.03. Governing Law........................................................... 48
Section 14.04. Headings................................................................ 48
Section 14.05. Partial Enforceability.................................................. 48
Section 14.06. Counterparts............................................................ 48
Section 14.07. Intention of the Parties................................................ 48
Section 14.08. Successors and Assigns.................................................. 48
</TABLE>
SIGNATURES AND SEALS
EXHIBIT A: CERTIFICATE OF TRUST
EXHIBIT B: TERMS OF THE PREFERRED SECURITIES
EXHIBIT C: TERMS OF THE COMMON SECURITIES
iv
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CNF TRUST I
__________, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of __________, 1997 by the undersigned trustees (together with all
other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), CNF
Transportation Inc., a Delaware corporation, as trust sponsor ("CNF" or the
"Sponsor"), and by the holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to this Declaration.
WHEREAS, the Sponsor and the Trustees entered into a Declaration of Trust
dated as of __________, 1996 (the "Original Declaration") in order to establish
a statutory business trust (the "Trust") under the Business Trust Act (as
hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust") of the Trust
was filed with the office of the Secretary of State of the State of Delaware on
__________, 1996 and was restated on __________, 1997;
WHEREAS, the Trustees and the Sponsor desire to continue the Trust pursuant
to the Business Trust Act for the purpose of, as described more fully in
Sections 3.03 and 3.04 hereof, (i) issuing and selling Preferred Securities (as
defined herein) representing preferred undivided beneficial interests in the
assets of the Trust for cash and investing the proceeds thereof in Debentures
(as hereinafter defined) of CNF issued under the Indenture (as hereinafter
defined) to be held as assets of the Trust and (ii) issuing and selling Common
Securities (as defined herein) representing common undivided beneficial
interests in the assets of the Trust to CNF in exchange for cash and investing
the proceeds thereof in additional Debentures issued under the Indenture to be
held as assets of the Trust; and
NOW, THEREFORE, it being the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Act, that the Original
Declaration be amended and restated in its entirety as provided herein and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets referred to in clauses (i) and (ii) of the
previous Whereas clause purchased by the Trust will be held in trust for the
benefit of the Holders (as defined herein) from time to time, of the
Certificates (as defined herein) representing undivided beneficial interests in
the assets of the Trust issued hereunder, subject to the provisions of this
Declaration.
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.01;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Amended and Restated Declaration of Trust (including Exhibits A, B and C
hereto (the "Exhibits")) as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this Declaration unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa."Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Book Entry Interest" means a beneficial interest in a Global Certificate
registered in the name of a Clearing Agency or a nominee thereof, ownership and
transfers of which shall be maintained and made through book entries by such
Clearing Agency as described in Section 9.04.
"Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions in the City of New York, in the State of New York
are authorized or required by applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code (S) 3801 et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred Security
Certificate.
"Certificate of Trust" has the meaning set forth in the second Whereas
clause above.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depository for the
Preferred Securities and in whose name or in the name of a nominee of that
organization, shall be
2
<PAGE>
registered a Global Certificate and which shall undertake to effect book entry
transfers and pledges of the Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the Closing Date as specified in the Underwriting
Agreement, which date is also the date of execution and delivery of this
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section ((Sec.))
of the Code refers not only to such specific section but also to any
corresponding provision of any federal tax statute enacted after the date of
this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.01(b).
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Annex I to Exhibit C.
"Common Stock" means the common stock of CNF, par value $.01 per share.
"Conversion Agent" has the meaning specified in Section 7.02.
"Covered Person" means (i) any officer, director, shareholder, partner,
member, representative, employee or agent of the Trust or its Affiliates, (ii)
any officer, director, shareholder, employees, representatives or agents of CNF
or its Affiliates and (iii) the Holders from time to time of the Securities.
"Debenture Trustee" means __________________, as trustee under the
Indenture until a successor is appointed thereunder and thereafter means such
successor trustee.
"Debentures" means the series of Convertible Subordinated Debentures issued
by CNF under the Indenture to the Property Trustee and entitled the "_____%
Convertible Subordinated Debentures due _____".
"Definitive Preferred Security Certificates" has the meaning set forth in
Section 9.04.
"Delaware Trustee" has the meaning set forth in Section 5.01(a)(3).
"Depositary Agreement" means the agreement among the Trust, the Property
Trustee and DTC dated as of the Closing Date, as the same may be amended or
supplemented from time to time.
3
<PAGE>
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.01.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Indenture Event of
Default has occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time or any successor legislation.
"Fiscal Year" has the meaning specified in Section 11.01.
"Global Certificate" has the meaning set forth in Section 9.04.
"Holder" means a Person in whose name a Certificate representing a Security
is registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means any Trustee, any Affiliate of any Trustee, any
Conversion Agent, any Paying Agent, any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Trustee,
Conversion Agent or Paying Agent, or any employee or agent of the Trust or its
Affiliates.
"Indenture" means the Convertible Subordinated Indenture dated as of
__________, 1997 between CNF and the Debenture Trustee as supplemented by the
First Supplemental Indenture thereto dated as of __________, 1997, pursuant to
which the Debentures are to be issued.
"Indenture Event of Default" means an event or condition defined as an
"Event of Default" with respect to the Debentures under Section _____ of the
Indenture has occurred and is continuing.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time or any successor legislation.
"Legal Action" has the meaning specified in Section 3.08(g).
"Liquidation Distribution" has the meaning set forth in Exhibits B and C
hereto establishing the terms of the Securities.
"Majority in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or
4
<PAGE>
Common Securities voting separately as a class, who are the record owners of a
relevant class of Securities whose liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) represents more than 50% of the liquidation amount of all
outstanding Securities of such class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"Option Closing Date" means the Option Closing Date as specified in the
Underwriting Agreement.
"Original Declaration" has the meaning set forth in the first WHEREAS
clause above.
"Paying Agent" has the meaning specified in Section 3.10(i).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee" means the Guarantee Agreement dated as of __________,
1997 of CNF in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.01(b).
"Preferred Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive certificate in fully
registered form representing a Preferred Security substantially in the form of
Annex I to Exhibit B.
"Property Trustee" means the Trustee meeting the eligibility requirements
set forth in Section 5.01 and having the duties set forth for the Property
Trustee herein.
"Property Account" has the meaning specified in Section 3.10(c)(i).
"Quorum" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both such Regular Trustees.
"Regular Trustee" means any Trustee other than the Property Trustee and the
Delaware Trustee.
5
<PAGE>
"Related Party" means any direct or indirect wholly owned subsidiary of CNF
or any other Person which owns, directly or indirectly, 100% of the outstanding
voting securities of CNF.
"Resignation Request" has the meaning specified in Section 5.02(d).
"Responsible Officer" means, with respect to the Property Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Property Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time or any successor legislation.
"Special Event" has the meaning set forth in the terms of the Securities as
set forth in Exhibits B and C hereto.
"Sponsor" or "CNF" means CNF Transportation Inc., a Delaware corporation,
or any successor entity in a merger, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.02(b)(ii).
"Successor Property Trustee" means a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.01(c).
"10% in liquidation amount of the Securities" means, except as otherwise
required by the Trust Indenture Act and except as provided in the penultimate
paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of outstanding
Securities voting together as a single class or, as the context may require,
Holder(s) of outstanding Preferred Securities or Common Securities, voting
separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
represents 10% or more of the liquidation amount of all outstanding Securities
of such class.
"Treasury Regulations" means the income tax regulations including temporary
and proposed regulations, promulgated under the Code by the United States
Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
6
<PAGE>
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Underwriting Agreement" means the Underwriting Agreement dated as of
__________, 1997 among the Trust, the Sponsor, J.P. Morgan Securities Inc.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Goldman, Sachs & Co.
ARTICLE II
TRUST INDENTURE Act
Section 2.1 Trust Indenture Act; Application
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S)310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control;
(c) the Property Trustee, to the extent permitted by applicable law
and/or the rules and regulations of the Commission, shall be the only Trustee
which is a trustee for the purposes of the Trust Indenture Act; and
(d) the application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 2.2 Lists of Holders of Preferred Securities
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee with such information as is required
under (S) 312(a) of the Trust Indenture Act at the times and in the manner
provided in (S) 312(a); and
(b) the Property Trustee shall comply with its obligations under
(S)(S) 310(b), 311 and 312(b) of the Trust Indenture Act.
Section 2.3 Reports by the Property Trustee within 60 days after
_________ of each year, commencing __________ 1998, the Property Trustee shall
provide to the Holders of the Securities such reports as are required by (S) 313
of the Trust Indenture Act, if any, in the form, in the manner and at the times
provided by (S) 313 of the Trust Indenture
7
<PAGE>
Act. The Property Trustee shall also comply with the requirements of (S) 313(d)
of the Trust Indenture Act.
Section 2.4 Periodic Reports to Property Trustee
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee, the Commission and the Holders of the
Securities, as applicable, such documents, reports and information as required
by (S) 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by (S) 314(a)(4) and (c) of the Trust Indenture Act, any
such certificates to be provided in the form, in the manner and at the times
required by (S) 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to (S) 314(a)(4) of the Trust Indenture Act
shall be provided within 120 days of the end of each Fiscal Year).
Section 2.5 Evidence of Compliance with Conditions Precedent
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration which relate to
any of the matters set forth in (S) 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given pursuant to (S) 314(c) shall comply
with (S) 314(e) of the Trust Indenture Act.
Section 2.6 Events of Default; Waiver
(a) Subject to Section 2.06(c), Holders of Preferred Securities may,
by vote of at least a Majority in liquidation amount of the Preferred Securities
(A) in accordance with the terms of the Preferred Securities, direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the Property
Trustee, or (B) on behalf of the Holders of all Preferred Securities, waive any
past Event of Default in respect of the Preferred Securities and its
consequences; provided that if the Event of Default arises out of an Indenture
Event of Default:
(i) which is not waivable under the Indenture, the Event of
Default under this Declaration shall also be not waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures, or (2) each holder of Debentures, the
Event of Default under this Declaration may only be waived by, in the case
of clause (1) above, the vote of Holders of Preferred Securities
representing such specified percentage of the aggregate liquidation amount
of the Preferred Securities or, in the case of clause (2) above, each
Holder of Preferred Securities.
Upon such waiver, any such default shall cease to exist, and any Event
of Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any
8
<PAGE>
subsequent or other default or Event of Default with respect to the Preferred
Securities or impair any right consequent thereon.
(b) Subject to Section 2.06(c), Holders of Common Securities may by
vote of at least a Majority in liquidation amount of the Common Securities, (A)
in accordance with the terms of the Common Securities, direct the time, method
and place of conducting any proceeding for any remedy available to the Property
Trustee or exercising any trust or power conferred upon the Property Trustee or
(B) on behalf of the Holders of all of the Common Securities, waive any past
Event of Default with respect to the Common Securities and its consequences,
provided that, if the Event of Default arises out of an Indenture Event of
Default:
(i) which is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below, the Event of Default under
this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, except
where the holders of the Common Securities are deemed to have waived such
Event of Default under this Declaration as provided below, the Event of
Default under this Declaration may only be waived by, in the case of clause
(1) above, the vote of Holders of Common Securities representing such
specified percentage of the aggregate liquidation amount of the Common
Securities or, in the case of clause (2) above, each holder of Common
Securities; and
provided, further, that each Holder of Common Securities will be deemed to
have waived any Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the Preferred
Securities have been cured, waived by the Holders of Preferred Securities as
provided in this Declaration or otherwise eliminated and until all Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of this Declaration or the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in this Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under this Declaration without any further act, vote or consent of the Holders
of the Common Securities. Subject to the foregoing provisions of this Section
2.06(b), upon such waiver, any such default shall cease to exist and any Event
of Default with respect to the Common Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
9
<PAGE>
(c) The right of any Holder of Securities to receive payment of
Distributions on the Securities in accordance with this Declaration and the
terms of the Securities set forth in Exhibits B and C on or after the respective
payment dates therefor, or to institute suit for the enforcement of any such
payment on or after such payment dates, shall not be impaired without the
consent of such Holder.
(d) As provided in the terms of the Securities set forth in Exhibits
B and C hereto, a waiver of an Indenture Event of Default by the Property
Trustee at the written direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration in respect of the Securities.
Section 2.7 Disclosure of Information
The disclosure of information as to the names and addresses of the
Holders of the Securities in accordance with (S) 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, shall not be
deemed to be a violation of any existing law, or any law hereafter enacted which
does not specifically refer to (S) 312 of the Trust Indenture Act, nor shall the
Property Trustee be held accountable by reason of mailing any material pursuant
to a request made under (S) 312(b) of the Trust Indenture Act.
ARTICLE III
ORGANIZATION
Section 3.1 Name
The Trust continued by this Declaration is named "CNF Trust I" as such
name may be modified from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
Section 3.2 Office
The address of the principal office of the Trust is c/o CNF
Transportation Inc., 3240 Hillview Avenue, Palo Alto, California 94304. Upon
ten days' written notice to the Holders, the Regular Trustees may change the
location of the Trust's principal office. The name of the registered agent and
office of the Trust in the State of Delaware is __________. At any time, the
Regular Trustees may designate another registered agent and/or registered
office.
Section 3.3 Issuance of the Trust Securities
On March 31, 1997 the Sponsor, on behalf of the Trust and pursuant to
the Original Declaration, executed and delivered the Underwriting Agreement. On
the Closing Date and contemporaneously with the execution and delivery of this
Declaration, the Regular Trustees, on behalf of the Trust, shall execute and
deliver to (i) the underwriters named in the Underwriting Agreement, a Global
Certificate, registered in the name of the nominee of the initial Clearing
Agency as specified in Section 9.04, in an aggregate amount
10
<PAGE>
of ___________ Preferred Securities having an aggregate liquidation amount of
$___________, against receipt of the aggregate purchase price of such Preferred
Securities of $__________, and (ii) the Sponsor, Common Securities Certificates,
registered in the name of the Sponsor, in an aggregate amount of _________
Common Securities having an aggregate liquidation amount of $_________, against
receipt of the aggregate purchase price of such Common Securities of
$__________. In the event and to the extent the overallotment option granted by
the Trust pursuant to the Underwriting Agreement is exercised by such
underwriters, on the Option Closing Date the Regular Trustees, on behalf of the
Trust, shall execute and deliver to (i) such underwriters a Global Certificate,
registered in the name of the nominee of the initial Clearing Agency as
specified in Section 9.04, in an aggregate amount of up to __________ Preferred
Securities having an aggregate liquidation amount of up to $__________ against
receipt of the aggregate purchase price of such Preferred Securities of up to
$__________, and (ii) the Sponsor, Common Security Certificates, registered in
the name of the Sponsor, in an aggregate amount of ______ Common Security having
an aggregate liquidation of $_________, against receipt of the aggregate
purchase price of such Common Securities of up to $___________.
Section 3.4 Purchase of Debentures
On the Closing Date and contemporaneously with the execution and
delivery of this Declaration, the Regular Trustees, on behalf of the Trust,
shall purchase from the Sponsor with the proceeds received by the Trust from the
sale of the Securities on such date pursuant to Section 3.03, at a purchase
price of 100% of the principal amount thereof, Debentures, registered in the
name of the Property Trustee and having an aggregate principal amount equal to
$__________, and, in satisfaction of the purchase price for such Debentures, the
Regular Trustee, on behalf of the Trust, shall deliver or cause to be delivered
to the Sponsor the sum of $__________. In the event the overallotment option
granted by the Trust with respect to the Preferred Securities pursuant to the
Underwriting Agreement is exercised by the underwriters named therein, on the
Option Closing Date the Regular Trustees, on behalf of the Trust, shall purchase
from the Sponsor with the proceeds received by the Trust from the sale of the
Preferred Securities on such date pursuant to Section 3.03, at a purchase price
of 100% of the principal amount thereof, additional Debentures, registered in
the name of the Property Trustee and having an aggregate principal amount of up
to $___________, and, in satisfaction of the purchase price for such Debentures,
the Regular Trustees, on behalf of the Trust, shall deliver or cause to be
delivered to the Sponsor an amount equal to the aggregate principal amount of
the Debentures being purchased.
Section 3.5 Purpose
The exclusive purposes and functions of the Trust are: (a)(i) to
issue and sell Preferred Securities for cash and use the proceeds of such sales
to acquire from CNF Debentures issued under the Indenture having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities so issued and sold; (ii) to enter into such agreements and
arrangements as may be necessary in connection with the sale of Preferred
Securities to the initial purchasers thereof (including the Underwriting
Agreement) and to take all action, and exercise such discretion, as may be
necessary or desirable in connection therewith and to file such registration
statements or make such other filings
11
<PAGE>
under the Securities Act, the Exchange Act or state securities or "Blue Sky"
laws as may be necessary or desirable in connection therewith and the issuance
of the Preferred Securities; and (iii) to issue and sell Common Securities to
CNF for cash and use the proceeds of such sale to purchase as trust assets an
equal aggregate principal amount of Debentures issued under the Indenture; and
(b) except as otherwise limited herein, to engage in only those other activities
necessary, convenient or incidental thereto. The Trust shall not borrow money,
issue debt or reinvest proceeds derived from investments, pledge any of its
assets or at any time while the Securities are outstanding, otherwise undertake
(or permit to be undertaken) any activity that would result in or cause the
Trust to be treated as anything other than a grantor trust for United States
federal income tax purposes.
Section 3.6 Authority
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with the Trustees acting on behalf of the
Trust, no Person shall be required to inquire into the authority of the Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
Section 3.7 Title to Property of the Trust
Except as provided in Section 3.10 with respect to the Debentures and
the Property Account or unless otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an individual undivided beneficial interest in the assets of the Trust.
Section 3.8 Powers and Duties of the Regular Trustees
The Regular Trustees shall have the exclusive power, authority and
duty to cause the Trust, and shall cause the Trust, to engage in the following
activities:
(a) to issue Preferred Securities and Common Securities, in each case
in accordance with this Declaration; provided, however, that the Trust may issue
no more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities and the issuance of Securities shall be
limited to (x) a one-time, simultaneous issuance of both Preferred Securities
and Common Securities on the Closing Date and (y) any subsequent issuance of
Preferred Securities on the Option Closing Date pursuant to an exercise of the
over-allotment option granted to underwriters in the Underwriting Agreement;
(b) in connection with the issuance of the Preferred Securities, at
the direction of the Sponsor, to effect or cause to be effected the filings, and
to execute or
12
<PAGE>
cause to be executed, the documents, set forth in Section 3.13 and to execute,
deliver and perform on behalf of the Trust the Depositary Agreement;
(c) to acquire as trust assets Debentures with the proceeds of the
sale of the Preferred Securities and Common Securities; provided, however, that
the Regular Trustees shall cause legal title to all of the Debentures to be
vested in, and the Debentures to be held of record in the name of, the Property
Trustee for the benefit of the Holders of the Preferred Securities and the
Common Securities;
(d) to cause the Trust to enter into the Underwriting Agreement and
such other agreements and arrangements as may be necessary or desirable in
connection with the sale of Preferred Securities to the initial purchasers
thereof and the consummation thereof, and to take all action, and exercise all
discretion, as may be necessary or desirable in connection with the consummation
thereof;
(e) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided, that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining to take any Ministerial Action in relation to a Special Event;
(f) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including for the
purposes of Section 316(c) of the Trust Indenture Act and with respect to
Distributions, voting rights, redemptions, and exchanges, and to issue relevant
notices to Holders of the Preferred Securities and Common Securities as to such
actions and applicable record dates;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.10(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate to the Property Trustee required by (S)
314(a)(4) of the Trust Indenture Act, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses which are necessary or incidental to carrying
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities, the Regular Trustees hereby initially
appointing the Property Trustee for such purposes;
13
<PAGE>
(m) to take all actions and perform such duties as may be required of
the Regular Trustee pursuant to the terms of the Securities set forth in
Exhibits B and C hereto;
(n) to execute all documents or instruments, perform all duties and
powers and do all things for and on behalf of the Trust in all matters necessary
or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust has been created;
(p) to take all action, not inconsistent with this Declaration or
with applicable law, which the Regular Trustees determine in their discretion to
be reasonable and necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.08, in order that:
(i) the Trust will not be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) the Trust will not be classified for United States federal
income tax purposes as an association taxable as a corporation or a
partnership and will be treated as a grantor trust for United States
federal income tax purposes; and
(iii) the Trust will comply with any requirements imposed by any
taxing authority on holders of instruments treated as indebtedness for
United States federal income tax purposes;
provided that such action does not adversely affect the interests of
Holders;
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(r) subject to the requirements of Rule 3a-7 and (S) 317(b) of the
Trust Indenture Act, to appoint one or more Paying Agents in addition to the
Property Trustee.
The Regular Trustees must exercise the powers set forth in this Section
3.08 in a manner which is consistent with the purposes and functions of the
Trust set out in Section
14
<PAGE>
3.05 and the Regular Trustees shall not take any action which is inconsistent
with the purposes and functions of the Trust set forth in Section 3.05.
Subject to this Section 3.08, the Regular Trustees shall have none of the
powers nor any of the authority of the Property Trustee set forth in Section
3.10.
Section 3.9 Prohibition of Actions by Trust and Trustees
The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the
Debentures but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans, other than loans represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial ownership
of, or beneficial interests in, the Trust other than the Securities;
(g) incur any indebtedness for borrowed money; or
(h) (i) direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to the Debentures, (ii)
waive any past default that is waivable under Section ____ of the Indenture,
(iii) exercise any right to rescind or annul any declaration that the principal
of all of the Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Debentures, where
such consent shall be required, unless in the case of this clause (h) the
Property Trustee shall have received an unqualified opinion of nationally
recognized independent tax counsel recognized as expert in such matters to the
effect that such action will not cause the Trust to be classified for United
States federal income tax purposes as an association taxable as a corporation or
partnership and that the Trust will continue to be classified as a grantor trust
for United States federal income tax purposes.
Section 3.10 Powers and Duties of the Property Trustee
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest
15
<PAGE>
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Article 5. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or, if the Property Trustee
does not also act as the Delaware Trustee, the Delaware Trustee.
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
bank account (the "Property Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of the
Securities and on the receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds into the
Property Account and, without any further acts of the Property Trustee or
the Regular Trustees, promptly make payments to the Holders of the
Preferred Securities and Common Securities from the Property Account in
accordance with Section 6.01. Funds in the Property Account shall be held
uninvested, and without liability for interest thereon, until disbursed in
accordance with this Declaration. The Property Account shall be an account
which is maintained with a banking institution whose long term unsecured
indebtedness is rated by a "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act, at least equal to (but in no event less than "A" or the
equivalent) the rating assigned to the Preferred Securities by a nationally
recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect promptly the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature;
(iii) upon notice of distribution issued by the Regular Trustees
in accordance with the terms of the Preferred Securities and the Common
Securities, engage in such ministerial activities as shall be necessary or
appropriate to effect promptly the distribution pursuant to terms of the
Securities of Debentures to Holders of Securities upon the occurrence of a
Special Event; and
(iv) have the legal power to exercise all of the rights, powers
and privileges of a holder of the Debentures under the Indenture and, if an
Event of Default occurs and is continuing, the Property Trustee, subject to
Section 2.06, shall for the benefit of the Holders of the Securities,
enforce its rights as holder of the Debentures under the Indenture, subject
to the rights of the Holders of the Preferred Securities pursuant to the
terms of this Declaration, the Business Trust Act and the Trust Indenture
Act.
16
<PAGE>
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities set forth in Exhibits B and C hereto.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default or the Property Trustee's duties
and obligations under this Declaration, the Business Trust Act or the Trust
Indenture Act; provided however, that the holders of a Majority in liquidation
amount of the Preferred Securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee or to direct the exercise of any trust or power conferred upon
the Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Property Trustee fails to enforce its rights under the
Debentures, a Holder of Preferred Securities, to the extent permitted by law,
may institute a legal proceeding directly against CNF to enforce the Property
Trustee's rights under the Debentures without first instituting any legal
proceeding against the Property Trustee or any other Person; provided further,
that, if an Event of Default has occurred and is continuing and such event is
attributed to the failure of the Sponsor to pay interest or principal on the
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date), then a Holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such Holder (a "Holder Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Holder Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of Preferred Securities to the extent of any payment made by the
Sponsor to such Holders of Preferred Securities in such Holder Direct Action.
Except as provided in the preceding sentences, the Holders of Preferred
Securities will not be able to exercise directly any remedy available to the
Holders of the Debentures.
(f) All moneys deposited in the Property Account, and all Debentures
held by the Property Trustee for the benefit of the Holders of the Securities
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of, or for the benefit of the Property Trustee or its agents
or their creditors.
(g) The Property Trustee shall, within 90 days after the occurrence
of a default with respect to the Securities known to the Property Trustee,
transmit by mail, first class postage prepaid, to the holders of the Securities,
as their names and addresses appear upon the register, notice of all such
defaults with respect to the Securities, unless such defaults shall have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 3.10(g) being hereby defined to be an Indenture Event of Default,
not including any periods of grace provided for in the Indenture and
irrespective of the giving of any notice provided therein); provided, that,
except in the case of default in the payment of the principal of (or premium, if
any) or interest on any of the Debentures, the Property Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers, of the Property Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities. The
Property Trustee
17
<PAGE>
shall not be deemed to have knowledge of any default, except (i) a default in
the payment of principal, premium or interest on the Debentures or (ii) any
default as to which the Property Trustee shall have received written notice or a
Responsible Officer charged with the administration of this Declaration shall
have obtained written notice.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the terms of
the Securities; or
(ii) a Successor Property Trustee has been appointed and
accepted that appointment in accordance with Article 5.
(i) The Property Trustee shall act as paying agent in respect of the
Common Securities and the Preferred Securities and, subject to Section 3.08(f),
may authorize one or more Persons (each, a "Paying Agent") to pay Distributions,
redemption payments or liquidation payments on behalf of the Trust with respect
to the Preferred Securities. Any such Paying Agent shall comply with (S) 317(b)
of the Trust Indenture Act. Any Paying Agent may be removed by the Property
Trustee, after consultation with the Regular Trustees, at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee, subject to Section 3.08(r).
(j) The Property Trustee shall give prompt written notice to the
Holders of the Securities of any notice received by it from CNF of its election
to defer payments of interest on the Debentures by extending the interest
payment period with respect thereto.
(k) Subject to this Section 3.10, the Property Trustee shall have
none of the powers or the authority of the Regular Trustees set forth in Section
3.08.
(l) The Property Trustee shall exercise the powers, duties and rights
set forth in this Section 3.10 and Section 3.12 in a manner which is consistent
with the purposes and functions of the Trust set out in Section 3.05, and the
Property Trustee shall not take any action which is inconsistent with the
purposes and functions of the Trust set forth in Section 3.05.
Section 3.11 Delaware Trustee
Notwithstanding any other provision of this Declaration other than
Section 5.01(a)(3), the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees and the Property Trustee (except as
required under the Business Trust Act) described in this Declaration. Except as
set forth in Section 5.01(a)(3), the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of (S) 3807 of the
Business Trust Act. No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
18
<PAGE>
Section 3.12 Certain Rights and Duties of the Property Trustee
(a) The Property Trustee, before the occurrence of an Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration, and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.06), the Property Trustee
shall exercise such of the rights and powers vested in it by this Declaration,
and use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration, and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of
this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders as provided herein relating to
19
<PAGE>
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee hereunder or under the Indenture, or
exercising any trust or power conferred upon the Property Trustee under
this Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable ground
for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or adequate
indemnity against such risk or liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.12(a) and (b):
(i) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part and, if the Trust
is excluded from the definition of Investment Company solely by means of
Rule 3a-7, subject to the requirements of Rule 3a-7, request and rely upon
a certificate, which shall comply with the provisions of (S) 314(e) of the
Trust Indenture Act, signed by any two of the Regular Trustees or by an
authorized officer of the Sponsor, as the case may be;
(ii) The Property Trustee (A) may consult with counsel (which
may be counsel to the Sponsor or any of its Affiliates and may include any
of its employees) selected by it in good faith and with due care and the
written advice or opinion of such counsel with respect to legal matters
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 and in accordance with such advice and opinion and (B)
shall have the right at any time to seek instructions concerning the
administration of this Declaration from any court of competent
jurisdiction;
(iii) The Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it in good faith and with due care;
(iv) The Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holders, unless such Holders shall have
offered to the Property Trustee reasonable security and indemnity against
the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction; provided that
20
<PAGE>
nothing contained in this clause (iv) shall relieve the Property Trustee of
the obligation, upon the occurrence of an Event of Default (which has not
been cured or waived) to exercise such of the rights and powers vested in
it by this Declaration, and to use the same degree of care and skill in
this exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; and
(v) Any action taken by the Property Trustee or its agents
hereunder shall bind the Holders of the Securities and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action; and no third party shall be required to inquire as
to the authority of the Property Trustee to so act, or as to its compliance
with any of the terms and provisions of this Declaration, both of which
shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action.
Section 3.13 Registration Statement and Related Matters
In accordance with the Original Declaration, CNF and the Trustees have
authorized and directed, and hereby confirm the authorization of, CNF, as the
sponsor of the Trust, (i) to file with the Commission and execute, in each case
on behalf of the Trust, (a) the Registration Statement on Form S-3 (File No.
333-_____) (the "1933 Act Registration Statement") including any amendments
thereto and any further pre-effective or post-effective amendments to such
Registration Statement, relating to the registration under the Securities Act of
the Preferred Securities of the Trust and (b) a Registration Statement on Form
8-A or other appropriate form (the "1934 Act Registration Statement") (including
all pre-effective and post-effective amendments thereto) relating to the
registration of the Preferred Securities of the Trust under Section 12(b) of the
Exchange Act; (ii) to file with the New York Stock Exchange and execute on
behalf of the Trust a listing application and all other applications,
statements, certificates, agreements and other instruments as shall be necessary
or desirable to cause the Preferred Securities to be listed on the New York
Stock Exchange; (iii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents as shall be
necessary or desirable to register the Preferred Securities under the securities
or "Blue Sky" laws of such jurisdictions as CNF on behalf of the Trust, may deem
necessary or desirable and (iv) to execute on behalf of the Trust the
Underwriting Agreement. In the event that any filing referred to in clauses
(i)-(iii) above is required by the rules and regulations of the Commission, the
New York Stock Exchange or state securities or blue sky laws, to be executed on
behalf of the Trust by the Trustees, the Regular Trustees, in their capacities
as Trustees of the Trust, are hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing, it
being understood that the Property Trustee and the Delaware Trustee, in their
capacities as Trustees of the Trust, shall not be required to join in any such
filing or execute on behalf of the Trust any such document unless required by
the rules and regulations of the Commission, the New York Stock Exchange or
state securities or blue sky laws. In connection with all of the foregoing, CNF
and each Trustee, solely in its capacity as Trustee of the Trust, have
constituted and appointed, and hereby confirm the
21
<PAGE>
appointment of, _________________ and ________________ and each of them, as his,
her or its, as the case may be, true and lawful attorneys-in-fact, and agents,
with full power of substitution and resubstitution, for CNF or such Trustee or
in CNF's or such Trustee's name, place and stead, in any and all capacities, to
sign any and all amendments (including post-effective amendments) to the 1933
Act Registration Statement and the 1934 Act Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as CNF or such Trustee might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his or her substitute or substitutes, shall do or cause to be
done by virtue hereof.
Section 3.14 Filing of Amendments to Certificate of Trust
The Restated Certificate of Trust as filed with the Secretary of State
of the State of Delaware on ___________, 1997 and restated on _____________,
1997 is attached hereto as Exhibit A. On or after the date of execution of this
Declaration, the Trustees shall cause the filing with the Secretary of State of
the State of Delaware of such amendments to the Certificate of Trust as the
Trustees shall deem necessary or desirable.
Section 3.15 Execution of Documents by Regular Trustees
Unless otherwise determined by the Regular Trustees and except as
otherwise required by the Business Trust Act with respect to the Certificate of
Trust or otherwise, a majority of, or if there are only two, both of, the
Regular Trustees are authorized to execute and deliver on behalf of the Trust
any documents which the Regular Trustees have the power and authority to execute
or deliver pursuant to this Declaration.
Section 3.16 Trustees Not Responsible for Recitals or Issuance of
Securities
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
Section 3.17 Duration of Trust
The Trust, absent termination pursuant to the provisions of Article 8
hereof, shall have existence until _____________.
ARTICLE IV
SPONSOR
Section 4.1 Purchase of Common Securities by Sponsor
22
<PAGE>
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust at the same time as the Preferred Securities to
be issued on such date are issued, such purchase to be in an amount equal to 3%
of the total capital of the Trust (including for this purpose the maximum amount
of Preferred Securities, if any, which may be issued on the Option Closing Date
pursuant to the exercise of the overallotment option set forth in the
Underwriting Agreement).
Section 4.2 Expenses
(a) In connection with the purchase of the Debentures by the Trust,
the Sponsor, in its capacity as Sponsor and not as a Holder, shall be
responsible for and shall pay for all debts and obligations (other than with
respect to the Securities) and all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the organization of the
Trust, the issuance of the Preferred Securities to initial purchasers thereof,
the fees and expenses (including reasonable counsel fees and expenses) of the
Trustees (including any amounts payable under Article 10), the costs and
expenses relating to the operation of the Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and expenses
incurred in connection with the disposition of Trust assets).
(b) In connection with the purchase of the Debentures by the Trust,
the Sponsor, in its capacity as Sponsor and not as a Holder, will pay any and
all taxes (other than United States withholding taxes attributable to the Trust
or its assets) and all liabilities, costs and expenses with respect to such
taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.02 shall be for
the benefit of, and shall be enforceable by, any Person to whom any such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 4.02 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements
as may be necessary or desirable in order to give full effect to the provisions
of this Section 4.02.
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees; Qualifications
(a) The number of Trustees initially shall be five (5). At any time
(i) before the issuance of the Securities, the Sponsor may, by written
instrument, increase or decrease the number of, and appoint, remove and replace
the, Trustees, and (ii) after the issuance of the Securities the number of
Trustees may be increased or decreased solely by, and Trustees may be appointed,
removed or replaced solely by, vote of Holders of Common
23
<PAGE>
Securities representing a Majority in liquidation amount of the Common
Securities voting as a class; provided that in any case:
(i) the number of Trustees shall be at least five (5) unless
the Trustee that acts as the Property Trustee also acts as the Delaware
Trustee, in which cases the number of Trustees shall be at least four (4);
(ii) at least a majority of the Trustees shall at all times be
officers, directors or employees of CNF;
(iii) if required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be either a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the laws of the State of
Delaware, except that if the Property Trustee has its principal place of
business in the State of Delaware and otherwise is permitted to act as a
Trustee hereunder under the laws of the State of Delaware, then the
Property Trustee shall also be the Delaware Trustee and Section 3.11 shall
have no application; and
(iv) there shall at all times be a Property Trustee hereunder
which shall satisfy the requirements of Section 5.01(c). Each Trustee shall
be either a natural person at least 21 years of age or a legal entity which
shall act through one or more duly appointed representatives.
(b) The initial Regular Trustees shall be:
_______________
_______________
_______________
c/o CNF Transportation Inc.
3240 Hillview Avenue
Palo Alto, California 94304
(c) There shall at all times be one Trustee which shall act as
Property Trustee. In order to act as Property Trustee hereunder, such Trustee
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation or national banking association organized
and doing business under the laws of the United States of America or any
State or Territory thereof or of the District of Columbia, or a
corporation, national banking association or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least $50,000,000, and subject to
24
<PAGE>
supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation or national banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.01(c)(ii), 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 condition so published;
and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7 and to the extent Rule 3a-
7 requires a trustee having certain qualifications to hold title to the
"eligible assets" (as defined in Rule 3a-7) of the Trust, the Property
Trustee shall possess those qualifications.If at any time the Property
Trustee shall cease to satisfy the requirements of clauses (i)-(iii) above,
the Property Trustee shall immediately resign in the manner and with the
effect set out in Section 5.02(d).
If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holders of the Common Securities (as if such Holders
were the obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of (S) 310(b) of the Trust Indenture
Act. The Preferred Guarantee shall be deemed to be specifically described in
this Declaration for the purposes of clause (i) of the first proviso contained
in (S) 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the Property Trustee is
_______________, a national banking association, whose address is as set forth
in Section 14.01(b).
(d) The initial Trustee which shall serve as the Delaware Trustee is
First Chicago Delaware Inc., a Delaware corporation, whose address is as set
forth in Section 14.01(b).
(e) Any action taken by Holders of Common Securities pursuant to this
Article 5 shall be taken at a meeting of Holders of Common Securities convened
for such purpose or by written consent as provided in Section 12.02.
(f) No amendment may be made to this Section 5.01 which would change
any rights with respect to the number, existence or appointment and removal of
Trustees, except with the consent of each Holder of Common Securities.
Section 5.2 Appointment, Removal and Resignation of Trustees
(a) Subject to Section 5.02(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of the Securities, by written instrument
executed by the Sponsor; and
25
<PAGE>
(ii) after the issuance of the Securities by vote of the Holders
of a Majority in liquidation amount of the Common Securities voting as a
class.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.02(a) until a Successor Property Trustee
possessing the qualifications to act as Property Trustee under Section 5.01(c)
has been appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the Regular
Trustees, the Sponsor and the Property Trustee being removed; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.02(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Section
5.1(a)(3) (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such Successor
Delaware Trustee and delivered to the Regular Trustees, the Sponsor and the
Delaware Trustee being removed.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
(d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective until:
(A) a Successor Property Trustee possessing the
qualifications to act as Property Trustee under Section 5.01(c) has
been appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to the
Trust, the Sponsor and the resigning Property Trustee; or
(B) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7, until the assets of
the Trust have been completely liquidated and the proceeds thereof
distributed to the Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor and
the resigning Delaware Trustee.
26
<PAGE>
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.02 within 60 days after delivery to the Sponsor and the Trust of a Resignation
Request, the resigning Property Trustee or Delaware Trustee may petition any
court of competent jurisdiction for appointment of a Successor Property Trustee
or Successor Delaware Trustee. Such court may thereupon after such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
Section 5.3 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.01 or if the number of Trustees is
increased pursuant to Section 5.01, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with the requirements of this
Article 5.
Section 5.4 Effect of Vacancies
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee, or
any one of them, shall not operate to annul the Trust. Whenever a vacancy in
the number of Regular Trustees shall occur until such vacancy is filled as
provided in this Article 5, the Regular Trustees in office, regardless of their
number, shall have all the powers granted to the Regular Trustees and shall
discharge all the duties imposed upon the Regular Trustees by this Declaration.
Section 5.5 Meetings
Meetings of the Regular Trustees shall be held from time to time upon
the call of any Trustee. Regular meetings of the Regular Trustees may be held
at a time and place fixed by resolution of the Regular Trustees. Notice of any
in-person meeting of the Regular Trustees shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 48 hours before such meeting. Notice of any telephonic
meeting of the Regular Trustees or any committee thereof shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before such meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration, any action
of the Regular Trustees may be taken at a meeting by vote of a majority of the
Regular Trustees present (whether in person or by telephone) and eligible to
vote with respect to such matter; provided that a Quorum is present, or without
a meeting by the unanimous written consent of the Regular Trustees.
27
<PAGE>
Section 5.6 Delegation of Power
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any registration statement or amendment
thereto or other document or schedule filed with the Commission or making any
other governmental filing (including, without limitation to filings referred to
in Section 3.13).
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
Section 6.1 Distributions
Holders shall receive periodic distributions, redemption payments and
liquidation distributions in accordance with the applicable terms of the
relevant Holder's Securities ("Distributions"). Distributions shall be made to
the Holders of Preferred Securities and Common Securities in accordance with the
terms of the Securities as set forth in Exhibits B and C hereto. If and to the
extent that CNF makes a payment of interest (including Compounded Interest (as
defined in the Indenture)), premium and principal on the Debentures held by the
Property Trustee (the amount of any such payment being a "Payment Amount"), the
Property Trustee shall and is directed to promptly make a Distribution of the
Payment Amount to Holders in accordance with the terms of the Securities as set
forth in Exhibits B and C hereto.
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.1 General Provisions Regarding Securities
(a) The Regular Trustees shall issue on behalf of the Trust
securities in fully registered form representing undivided beneficial interests
in the assets of the Trust in accordance with Section 7.01(b) and for the
consideration specified in Section 3.03.
(b) The Regular Trustees shall issue on behalf of the Trust one class
of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Exhibit B (the
"Preferred Securities") which terms are incorporated by reference in, and made a
part of, this Declaration as if specifically set forth herein, and one class of
common securities representing undivided beneficial interests in the assets of
the Trust having such terms as are set forth in Exhibit C (the "Common
28
<PAGE>
Securities") which terms are incorporated by reference in, and made a part of,
this Declaration as if specifically set forth herein. The Trust shall have no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular Trustees by any two of
the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and
other minor errors or defects in any such reproduction of any such signature
shall not affect the validity of any Certificate. In case any Regular Trustee
of the Trust who shall have signed any of the Certificates shall cease to be
such Regular Trustee before the Certificate so signed shall be delivered by the
Trust, such Certificate nevertheless may be delivered as though the person who
signed such Certificate had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons as, at the
actual date of the execution of such Certificate, shall be the Regular Trustees
of the Trust, although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee. Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which Securities may be listed, or to conform to usage.
Pending the preparation of definitive Certificates, the Regular Trustees on
behalf of the Trust may execute temporary Certificates (printed, lithographed or
typewritten), in substantially the form of the definitive Certificates in lieu
of which they are issued, but with such omissions, insertions and variations as
may be appropriate for temporary Certificates, all as may be determined by the
Regular Trustees. Each temporary Certificate shall be executed by the Regular
Trustees on behalf of the Trust upon the same conditions and in substantially
the same manner, and with like effect, as definitive Certificates. Without
unnecessary delay, the Regular Trustees on behalf of the Trust will execute and
furnish definitive Certificates and thereupon any or all temporary Certificates
may be surrendered to the transfer agent and registrar in exchange therefor
(without charge to the Holders). Each Certificate whether in temporary or
definitive form shall be countersigned by the manual or facsimile signature of
an authorized signatory of the Person acting as registrar and transfer agent for
the Securities, which shall initially be the Property Trustee.
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(f) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be
29
<PAGE>
deemed to have expressly assented and agreed to the terms of, and shall be bound
by this Declaration.
(g) Upon issuance of the Securities as provided in this Declaration,
the Regular Trustees on behalf of the Trust shall return to CNF the $_____
constituting initial trust assets as set forth in the Original Declaration.
Section 7.2 Conversion Agent
The Trust shall maintain an office or agency where Preferred
Securities may be presented for conversion ("Conversion Agent"). The Trust may
appoint the Conversion Agent and may appoint one or more additional Conversion
Agents in such other locations as it may determine. The term "Conversion Agent"
includes any additional Conversion Agent. The Trust may change any Conversion
Agent without prior notice to any Holders. If the Trust fails to appoint or
maintain another entity as Conversion Agent, the Property Trustee will act as
such. The Trust or any of its Affiliates may act as Conversion Agent. The
Trust shall act as Conversion Agent for the Common Securities. The Conversion
Agent shall be entitled to the rights and protections extended to the Property
Trustee when acting in such capacity.
The Property Trustee is hereby initially appointed as Conversion Agent
for the Preferred Securities.
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1 Termination of Trust
This Declaration and the Trust shall terminate and be of no further
force or effect when:
(a) all of the Securities shall have been called for redemption and
the amounts necessary for redemption thereof shall have been paid to the Holders
of Securities in accordance with the terms of the Securities; or
(b) all of the Debentures shall have been distributed to the Holders
of Securities in exchange for all of the Securities in accordance with the terms
of the Securities; or
(c) upon the expiration of the term of the Trust as set forth in
Section 3.17; or,
(d) upon the distribution of the Sponsor's common stock to all
Securities Holders upon conversion of all outstanding Preferred Securities.
30
<PAGE>
and a certificate of cancellation is filed by the Trustees with the Secretary of
State of the State of Delaware. The Trustees shall so file such a certificate as
soon as practicable after the occurrence of an event referred to in this Section
8.01.
The provisions of Sections 3.12 and 4.02 and Article 10 shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
Section 9.1 Transfer of Securities
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration. Any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article 9, Preferred Securities shall be freely
transferable.
(c) Subject to this Article 9, CNF and any Related Party may only
transfer Common Securities to CNF or a Related Party; provided that any such
transfer shall be subject to the condition that the transferor shall have
obtained (1) either a ruling from the Internal Revenue Service or an unqualified
written opinion addressed to the Trust and delivered to the Trustees of
nationally recognized independent tax counsel experienced in such matters to the
effect that such transfer will not (i) cause the Trust to be treated as issuing
a class of interests in the Trust differing from the class of interests
represented by the Common Securities originally issued to CNF, (ii) result in
the Trust acquiring or disposing of, or being deemed to have acquired or
disposed of, an asset, or (iii) result in or cause the Trust to be treated as
anything other than a grantor trust for United States federal income tax
purposes and (2) an unqualified written opinion addressed to the Trust and
delivered to the Trustees of a nationally recognized independent counsel
experienced in such matters that such transfer will not cause the Trust to be an
Investment Company or controlled by an Investment Company.
Section 9.2 Transfer of Certificates
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges which may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder
31
<PAGE>
hereunder upon the receipt by such transferee of a Certificate. By acceptance of
a Certificate, each transferee shall be deemed to have agreed to be bound by
this Declaration.
Section 9.3 Deemed Security Holders
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trustees shall have
actual or other notice thereof.
Section 9.4 Book Entry Interests
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance (including Preferred
Securities, if any, issued on the Option Closing Date pursuant to the exercise
of the overallotment option set forth in the Underwriting Agreement), will be
issued in the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.07. Unless and until definitive, fully registered
Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.07:
(a) the provisions of this Section 9.04 shall be in full force and
effect;
(b) (i) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificates and, except as set forth herein or in Rule 3a-
7 with respect to the Property Trustee, shall have no obligation to the
Preferred Security Beneficial Owners; provided, that solely for the purposes of
determining whether the Holders of the requisite amount of Preferred Securities
have voted on any matter provided for in this Declaration, so long as definitive
Preferred Security Certificates have not been issued (pursuant to Section 9.07
hereof), the Trustees may conclusively rely on, and shall be protected in
relying on, any written instrument (including a proxy) delivered to the Trustees
by the Clearing Agency setting forth the Preferred Security Beneficial Owners'
votes or assigning the right to vote on any matter to any other Persons either
in whole or in part;
(c) to the extent that the provisions of this Section 9.04 conflict
with any other provisions of this Declaration, the provisions of this Section
9.04 shall control; and
32
<PAGE>
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants. DTC
will make book entry transfers among the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants.
Section 9.5 Notices to Holders of Certificates
Whenever a notice or other communication to the Holders is required to
be given under this Declaration, unless and until Definitive Preferred Security
Certificates shall have been issued pursuant to Section 9.07, the relevant
Trustees shall give all such notices and communications, specified herein to be
given to Preferred Securities Holders, to the Clearing Agency and, with respect
to any Preferred Security Certificate registered in the name of a Clearing
Agency or the nominee of a Clearing Agency, the Trustees shall, except as set
forth herein or in Rule 3a-7 with respect to the Property Trustee, have no
notice obligations to the Preferred Security Beneficial Owners.
Section 9.6 Appointment of Successor Clearing Agency
If any Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to the Preferred Securities.
Section 9.7 Definitive Preferred Securities Certificates
If (i) a Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 9.06 or (ii) the Regular Trustees elect after consultation
with the Sponsor to terminate the book entry system through the Clearing Agency
with respect to the Preferred Securities, then (x) Definitive Preferred Security
Certificates shall be prepared by the Regular Trustees on behalf of the Trust
with respect to such Preferred Securities and (y) upon surrender of the Global
Certificates by the Clearing Agency, accompanied by registration instructions,
the Regular Trustees shall cause definitive Preferred Security Certificates to
be delivered to Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the Trust shall
be liable for any delay in delivery of such instructions and each of them may
conclusively rely on and shall be protected in relying on, such instructions.
Section 9.8 Mutilated, Destroyed, Lost or Stolen Certificates
If (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the
33
<PAGE>
destruction, loss or theft of any Certificate; and (b) there shall be delivered
to the Regular Trustees such security or indemnity as may be required by them to
keep each of them harmless, then in the absence of notice that such Certificate
shall have been acquired by a bona fide purchaser, any two Regular Trustees on
behalf of the Trust shall execute and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 9.08, the Regular Trustees may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this section shall
constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 10.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (but, in
the case of the Property Trustee, subject to the Trust Indenture Act) or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
Securities, in their capacities as Holders, shall be entitled to the same
limitation of liability that is extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of Delaware.
Section 10.2 Indemnification
(a) To the fullest extent permitted by applicable law, the Sponsor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission
34
<PAGE>
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by this Declaration,
except that no Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Indemnified Person by reason of
gross negligence (but, in the case of the Property Trustee, subject to the Trust
Indenture Act) or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Sponsor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
10.02.
(c) The provisions of this Section 10.02 shall survive the
termination of this Declaration or the resignation or removal of any Trustee.
Section 10.3 Outside Business
The Sponsor and any Trustee may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived therefrom, and
the pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. Neither the Sponsor nor any
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and the Sponsor or any
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor or may act
as depository for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
Section 11.1 Fiscal Year
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code
35
<PAGE>
Section 11.2 Certain Accounting Mattersa
At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books of account, records and supporting
documents, which shall reflect in reasonable detail, each transaction of the
Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books and records of the Trust,
together with a copy of this Declaration and a certified copy of the Certificate
of Trust, or any amendment thereto, shall at all times be maintained at the
principal office of the Trust and shall be open for inspection for any
examination by any Holder or its duly authorized representative for any purpose
reasonably related to its interest in the Trust during normal business hours.
(b) The Regular Trustees shall cause to be prepared and mailed to
each Holder of Securities, an annual United States federal income tax
information statement, on such form as is required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Regular Trustees shall cause to be prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on such form as is required by the Code, and any other annual income
tax returns required to be filed by the Regular Trustees on behalf of the Trust
with any state or local taxing authority, such returns to be filed as soon as
practicable after the end of each Fiscal Year of the Trust.
Section 11.3 Banking
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Account and no other funds from the Trust shall be deposited in the
Property Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided, however, that the Property Trustee shall
designate the sole signatories for the Property Account.
Section 11.4 Withholding
The Trust and the Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Trust shall file required forms with applicable
jurisdictions and, unless an exemption from withholding is properly established
by a Holder, shall remit amounts withheld with respect to the Holder to
applicable jurisdictions.
36
<PAGE>
To the extent that the Trust is required to withhold and pay over any amounts to
any authority with respect to distributions or allocations to any Holder, the
amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Holder. In the event of any claimed overwithholding, Holders
shall be limited to an action against the applicable jurisdiction. If the amount
to be withheld was not withheld from a Distribution, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be amended by, and only
by, a written instrument executed by a majority of the Regular Trustees;
provided, however, that (i) no amendment to this Declaration shall be made
unless the Regular Trustees shall have obtained (A) either a ruling from the
Internal Revenue Service or a written unqualified opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that such amendment will not cause the Trust to be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership and to the effect that the Trust will continue to be treated as a
grantor trust for purposes of United States federal income taxation and (B) a
written unqualified opinion of nationally recognized independent counsel
experienced in such matters to the effect that such amendment will not cause the
Trust to be an Investment Company which is required to be registered under the
Investment Company Act, (ii) at such time after the Trust has issued any
Securities which remain outstanding, any amendment which would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the terms
of such Securities, (iii) Section 4.02, Section 9.01(c) and this Section 12.01
shall not be amended without the consent of all of the Holders of the
Securities, (iv) no amendment which adversely affects the rights, powers and
privileges of the Property Trustee shall be made without the consent of the
Property Trustee, (v) Article 4 shall not be amended without the consent of the
Sponsor, and (vi) the rights of Holders of Common Securities under Article 5 to
increase or decrease the number of, and to appoint, replace or remove, Trustees
shall not be amended without the consent of each Holder of Common Securities.
(b) Notwithstanding Section 12.02(a)(ii), this Declaration may be
amended without the consent of the Holders of the Securities to (i) cure any
ambiguity, (ii) correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this Declaration, (iii)
to add to the covenants, restrictions or obligations of the Sponsor, and (iv) to
conform to any changes in Rule 3a-7 or any change in interpretation or
application of Rule 3a-7 by the Commission, which amendment does not adversely
affect the rights, preferences or privileges of the Holders.
Section 12.2 Meetings of the Holders of Securities; Action by Written
Consent
37
<PAGE>
(a) Meetings of the Holders of Preferred Securities and/or Common
Securities may be called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter on which Holders
of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading. The Regular
Trustees shall call a meeting of Holders of Preferred Securities or Common
Securities, if directed to do so by Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given by delivering
to the Regular Trustees one or more calls in a writing stating that the signing
Holders of Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of Securities exercising the right to call a meeting and only those
specified Certificates shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provision shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given by mail to all
the Holders of Securities having a right to vote thereat not less than 7
days nor more than 60 days prior to the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on which
the Preferred Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders of Securities.
Any action that may be taken at a meeting of the Holders of Securities may
be taken without a meeting if a consent in writing setting forth the action
so taken is signed by Holders of Securities owning not less than the
minimum aggregate liquidation amount of Securities that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Holders of Securities for the purpose of taking any action without a
meeting shall be returned to the Trust within the time specified by the
Regular Trustees.
(ii) Each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of a Security is
entitled to participate, including waiving notice of any meeting, or voting
or participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of the
Security executing it. Except as otherwise provided herein or in the terms
of the Securities, all matters relating to the giving, voting or validity
of proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as
if the Trust were
38
<PAGE>
a Delaware corporation and the Holders of the Securities were stockholders
of a Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate.
(iv) Unless otherwise provided in the Business Trust Act,
this Declaration or the rules of any stock exchange on which the Preferred
Securities are then listed or admitted for trading, the Regular Trustees,
in their sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any Holders
of Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any
such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
Section 13.1 Representations and Warranties of Property Trustee
(a) The Trustee which acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(i) The Property Trustee is a national banking association
or a banking corporation with trust powers, duly organized, validly
existing and in good standing under the laws of the United States or the
laws of the state of its incorporation, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, this Declaration.
(ii) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration has
been duly executed and delivered by the Property Trustee, and constitutes a
legal, valid and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
39
<PAGE>
(iii) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or constitute a
breach of the Charter or By-laws of the Property Trustee.
(iv) No consent, approval or authorization of, or
registration with or notice to, any banking authority which supervises or
regulates the Property Trustee is required for the execution, delivery or
performance by the Property Trustee, of this Declaration.
(v) The Property Trustee satisfies the qualifications set
forth in Section 5.01(c).
(b) The Trustee which acts as initial Delaware Trustee represents
and warrants to the Trust and the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee, that it satisfies the qualifications set forth
in Section 5.01(a)(3).
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Notices
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Regular
Trustees on behalf of the Trust may give notice of to the Holders of the
Securities):
40
<PAGE>
CNF Trust I
c/o CNF Transportation Inc.
3240 Hillview Avenue
Palo Alto, California 94304
Attention: General Counsel
Facsimile No:
(b) if given to the Property Trustee, at the mailing address of
the Property Trustee set forth below (or such other address as the Property
Trustee may give notice of to the Holders of the Securities):
__________________________
__________________________
__________________________
Attention: Corporate Trust Administrator
Telecopy: ______________
(c) if given to the Delaware Trustee, at the mailing address of
the Delaware Trustee set forth below (or such other address as the Delaware
Trustee may give notice of to the Holders of the Securities):
__________________________
__________________________
__________________________
Telecopy:
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
CNF Transportation Inc.
3240 Hillview Avenue
Palo Alto, California 94304
Attention: Corporate Secretary
Facsimile No:
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
A copy of any notice to the Property Trustee or the Delaware Trustee
shall also be sent to the Trust. All notices shall be deemed to have been
given, when received in person, telecopied with receipt confirmed, or mailed by
first class mail, postage prepaid except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
41
<PAGE>
Section 14.2 Undertaking for Costs
All parties to this Declaration agree, and each Holder of any
Securities by his or her acceptance thereof 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 Declaration, or in any suit against the Property
Trustee for any action taken or omitted by it as Property Trustee, 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 reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 14.02 shall not apply to any suit
instituted by the Property Trustee, to any suit instituted by any Holder of
Preferred Securities, or group of Holders of Preferred Securities, holding more
than 10% in aggregate liquidation amount of the outstanding Preferred
Securities, or to any suit instituted by any Holder of Preferred Securities for
the enforcement of the payment of the principal of (or premium, if any) or
interest on the Debentures, on or after the respective due dates expressed in
such Debentures.
Section 14.3 Governing Law
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
Section 14.4 Headings
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
Section 14.5 Partial Enforceability
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
Section 14.6 Counterparts
This Declaration may contain more than one counterpart of the
signature pages and this Declaration may be executed by the affixing of the
signature of the Sponsor and each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
Section 14.7 Intention of the Parties
42
<PAGE>
It is the intention of the parties hereto that the Trust not be
classified for United States federal income tax purposes as an association
taxable as a corporation or partnership but that the Trust be treated as a
grantor trust for United States federal income tax purposes. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
Section 14.8 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
43
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
CNF Transportation Inc.
as Sponsor
By:______________________________
Name:
Title:
_______________________________
________________
as Trustee
________________________________
________________
as Trustee
________________________________
____________
as Trustee
________________________________
as Property Trustee
By::______________________________
Name:
Title:
________________________________
as Delaware Trustee
By:______________________________
Name:
Title:
44
<PAGE>
EXHIBIT A
RESTATED CERTIFICATE OF TRUST
OF
CNF TRUST I
THIS Restated Certificate of Trust of CNF Trust I (the "Trust"), dated
__________, 1997, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. Code (S) 3801 et seq.).
WHEREAS, the Trustees entered into a Certificate of Trust dated as of
_______, 1997 (the "Original Certificate") in order to form a business trust
under the Delaware Business Trust Act (12 Del. Code (S) 3801 et seq.).
NOW, THERETOFORE, it is the intention of the parties hereto that the
Original Certificate of Trust be amended and restated in its entirety as
provided herein.
1. Name. The name of the business trust being formed hereby is CNF Trust I.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware is
______________________________.
3. Effective Date. This Certificate of Trust shall be effective as of its
filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
__________________________
as Delaware Trustee
__________________________
Name: ____________________
Title: _____________________
<PAGE>
__________________________
as Property Trustee
__________________________
Name: ____________________
Title: _____________________
__________________________
_______________
as Trustee
__________________________
__________________
as Trustee
__________________________
__________________
as Trustee
2
<PAGE>
EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of Trust
of CNF Trust I dated as of _________, 1997 (as amended from time to time, the
"Declaration"), the designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth below
(each capitalized term used but not defined herein having the meaning set forth
in the Declaration):
1. DESIGNATION AND NUMBER. Preferred Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of _______________
Dollars ($__________) (plus up to an additional ____________ Dollars
($__________) issuable upon exercise of the overallotment option set forth in
the Underwriting Agreement) and a liquidation amount in the assets of the Trust
of $___ per Preferred Security, are hereby designated as "$______ Term
Convertible Securities, Series A". The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form attached
hereto as Annex I, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Preferred Securities are listed.
In connection with the issuance and sale of the Preferred Securities and the
Common Securities, the Trust will purchase as trust assets Debentures of CNF
having an aggregate principal amount equal to the aggregate liquidation amount
of the Preferred Securities and Common Securities so issued and bearing interest
at an annual rate equal to the annual Distribution rate on the Preferred
Securities and Common Securities and having payment and redemption provisions
which correspond to the payment and redemption provisions of the Preferred
Securities and Common Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Preferred Security will
be fixed at a rate per annum of _____% (the "Coupon Rate") of the stated
liquidation amount of $__ per Preferred Security. Distributions in arrears for
more than one calendar quarter will bear interest at the rate per annum of
_____% thereof (to the extent permitted by law), compounded quarterly. The term
"Distributions" as used herein means such periodic cash distributions and any
such interest payable unless otherwise stated. A Distribution will be made by
the Property Trustee only to the extent that interest payments are made in
respect of the Debentures held by the Property Trustee. The amount of
Distributions payable for any period will be computed for any quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months.
(b) Distributions on the Preferred Securities will be cumulative, will
accrue from _________, 1997 and will be payable quarterly in arrears, on the
last day of each quarter commencing on __________, 1997, except as otherwise
described below, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as CNF shall
not be in default in the payment of interest on the Debentures, CNF has the
right under the Indenture for the Debentures to
<PAGE>
defer payments of interest by extending the interest payment period from time to
time on the Debentures for a period not exceeding 20 consecutive quarterly
interest periods (each, an "Extension Period") and, as a consequence, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the rate of _____% per annum, compounded
quarterly during any such Extension Period. Prior to the termination of any such
Extension Period, CNF may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly interest periods; and provided
that no Extension Period shall last beyond the date of maturity or any
redemption date of the Debentures.. Upon the termination of any Extension Period
and the payment of all amounts then due, CNF may commence a new Extension
Period, subject to the above requirements. Payments of accrued Distributions
will be payable to Holders of Preferred Securities as they appear on the books
and records of the Trust on the first record date after the end of the Extension
Period.
(c) Distributions on the Preferred Securities will be payable promptly by
the Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and records
of the Trust on the relevant record dates. While the Preferred Securities remain
in book-entry only form, the relevant record dates shall be one business day
prior to the relevant Distribution date, and if the Preferred Securities are no
longer in book-entry only form, the Regular Trustees shall have the right to
select relevant record dates which shall be more than one business day prior to
the relevant payment dates. Distributions payable on any Preferred Securities
that are not punctually paid on any Distribution payment date as a result of CNF
having failed to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the person in whose name such Preferred
Security is registered on the relevant record date, and such defaulted
Distribution will instead be payable to the person in whose name such Preferred
Security is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that Distributions shall not be considered payable on any Distribution payment
date falling within an Extension Period unless CNF has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any applicable laws and regulations and the provisions
of the Declaration, each payment in respect of the Preferred Securities will be
made as described in paragraph 10 hereof. If any date on which Distributions are
payable on the Preferred Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) All Distributions paid with respect to the Preferred Securities and the
Common Securities will be paid Pro Rata to the Holders thereof entitled thereto.
If an Event of Default has occurred and is continuing, the Preferred Securities
shall have a priority over the Common Securities with respect to Distributions.
2
<PAGE>
(e) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as set forth in this Exhibit B to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that if a Security is surrendered for conversion after the close of business on
any regular record date for payment of a Distribution and before the opening of
business on the corresponding Distribution date, then, notwithstanding such
conversion, the Distribution payable on such Distribution date will be paid in
cash to the person in whose name the Security is registered at the close of
business on such record date, and (other than a Security or a portion of a
Security called for redemption on a redemption date occurring after such record
date and on or prior to such Distribution date) when so surrendered for
conversion, the Security must be accompanied by payment of an amount equal to
the Distribution payable on such Distribution date.
(f) In the event that there is any money or other property held by or for
the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and Common Securities at the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive Pro Rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common Securities after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $___ per Preferred Security and Common Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, and after satisfaction of liabilities to
creditors, Debentures in an aggregate principal amount equal to the aggregate
stated liquidation amount of such Preferred Securities and Common Securities and
bearing accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Preferred Securities and Common Securities, shall be
distributed Pro Rata to the Holders of the Preferred Securities and Common
Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and Common Securities shall be paid, subject
to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
3
<PAGE>
4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred Securities and
Common Securities may only be redeemed if Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether at
maturity, upon redemption at any time or from time to time on or after
__________, or at any time in certain circumstances upon the occurrence of a Tax
Event, the proceeds of such repayment will be promptly applied to redeem Pro
Rata Preferred Securities and Common Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures so repaid or
redeemed, upon not less than 30 nor more than 60 days' notice, at a redemption
price per Preferred and Common Security equal to the redemption price of the
Debentures, together with accrued and unpaid Distributions thereon through the
date of redemption, payable in cash (the "Redemption Price"). The date of any
such repayment or redemption of Preferred Securities and Common Securities shall
be established to coincide with the repayment or redemption date of the
Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed
will be redeemed as described in paragraph 4(f)(ii) below. If a partial
redemption would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, CNF pursuant to the Indenture will only redeem
Debentures in whole and, as a result, the Trust may only redeem the Preferred
Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each a "Special Event") shall occur and be continuing,
the Regular Trustees shall, unless the Debentures are redeemed in the limited
circumstances described below, dissolve the Trust and, after satisfaction of
creditors, cause Debentures held by the Property Trustee having an aggregate
principal amount equal to the aggregate stated liquidation amount of and accrued
and unpaid interest equal to accrued and unpaid Distributions on, and having the
same record date for payment as the Preferred Securities and Common Securities,
to be distributed to the Holders of the Preferred Securities and Common
Securities on a Pro Rata basis in liquidation of such Holders' interests in the
Trust, within 90 days following the occurrence of such Special Event (the "90
Day Period"), provided, however, that in the case of the occurrence of a Tax
Event, as a condition of such dissolution and distribution, the Regular Trustees
shall have received an opinion of a nationally recognized independent tax
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on any then applicable published revenue ruling of the Internal Revenue
Service, to the effect that the Holders of the Preferred Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and distribution of Debentures; and
provided, further, that, if and as long as at the time there is available to the
Trust the opportunity to eliminate, within the 90 Day Period, the Special Event
by taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure that has no adverse effect
4
<PAGE>
on the Trust, CNF or the Holders of the Preferred Securities ("Ministerial
Action"), the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular Trustees
have received an opinion (a "Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that CNF would be precluded from
deducting the interest on the Debentures for United States federal income tax
purposes even if the Debentures were distributed to the Holders of Preferred
Securities and Common Securities in liquidation of such Holder's interest in the
Trust as described in this paragraph 4(c) or (ii) the Regular Trustees shall
have been informed by such tax counsel that a No Recognition Opinion cannot be
delivered to the Trust, CNF shall have the right at any time, upon not less than
30 nor more than 60 days' notice, to redeem the Debentures in whole or in part
for cash at the Redemption Price within 90 days following the occurrence of such
Tax Event, and promptly following such redemption Preferred Securities and
Common Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so redeemed will be redeemed by the Trust at
the Redemption Price on a Pro Rata basis; provided, however, that, if at the
time there is available to CNF or the Regular Trustees on behalf of the Trust
the opportunity to eliminate, within such 90 day period, the Tax Event by taking
some Ministerial Action, CNF or the Regular Trustees on behalf of the Trust will
pursue such measure in lieu of redemption and; provided, further, that CNF shall
have no right to redeem the Debentures while the Regular Trustees on behalf of
the Trust are pursuing such Ministerial Action. The Common Securities will be
redeemed Pro Rata with the Preferred Securities, except that if an Event of
Default under the Indenture has occurred and is continuing, the Preferred
Securities will have a priority over the Common Securities with respect to
payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an opinion
of nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after _______, 1997 as a
result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or (d)
any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after ___________, 1997, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to income accrued or
received on the Debentures, (ii) the Trust is, or will be within 90 days of the
date thereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges or (iii) interest payable by CNF to the Trust on the
5
<PAGE>
Debentures is not, or within 90 days of the date thereof will not be, deductible
by CNF for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment Company
which is required to be registered under the Investment Company Act, which
Change in 1940 Act Law becomes effective on or after ________, 1997.
On the date fixed for any distribution of Debentures, upon dissolution of
the Trust, (i) the Preferred Securities will no longer be deemed to be
outstanding and (ii) certificates representing Preferred Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such Preferred
Securities until such certificates are presented to CNF or its agent for
transfer or reissuance.
(d) The Trust may not redeem any outstanding Preferred Securities unless
all accrued and unpaid Distributions have been paid on all Preferred Securities
for all quarterly Distribution periods terminating on or prior to the date of
redemption.
(e) If Debentures are distributed to Holders of the Preferred Securities,
CNF, pursuant to the terms of the Indenture, will use its best efforts to have
the Debentures listed on the New York Stock Exchange or on such other exchange
as the Preferred Securities were listed immediately prior to the distribution of
the Debentures.
(f) (i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (f)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by first-
class mail, postage prepaid, to Holders of Preferred Securities and Common
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Preferred Securities
are to be redeemed, the Preferred Securities to be redeemed will be redeemed Pro
Rata from each
6
<PAGE>
Holder of Preferred Securities, it being understood that, in respect of
Preferred Securities registered in the name of and held of record by DTC (or
successor Clearing Agency) or any other nominee, the Preferred Securities will
be redeemed from, and the distribution of the proceeds of such redemption will
be made to, each Clearing Agency Participant (or person on whose behalf such
nominee holds such securities) in accordance with the procedures applied by such
agency or nominee.
(iii) Subject to paragraph 10 hereof, if the Trust gives a Redemption/
Distribution Notice in respect of a redemption of Preferred Securities as
provided in this paragraph 4 (which notice will be irrevocable) then (A) while
the Preferred Securities are in book-entry only form, with respect to the
Preferred Securities, by 12:00 noon, New York City time, on the redemption date,
provided that CNF has paid the Property Trustee, in immediately available funds,
a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will deposit irrevocably with
DTC (or successor Clearing Agency) funds sufficient to pay the applicable
Redemption Price with respect to the Preferred Securities and will give DTC (or
successor Clearing Agency) irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities and (B) if the
Preferred Securities are issued in definitive form, with respect to the
Preferred Securities and provided that CNF has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such Preferred Securities by
check mailed to the address of the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the date of such deposit,
Distributions will cease to accrue on the Preferred Securities called for
redemption, such Preferred Securities will no longer be deemed to be outstanding
and all rights of Holders of such Preferred Securities so called for redemption
will cease, except the right of the Holders of such Preferred Securities to
receive the Redemption Price, but without interest on such Redemption Price.
Neither the Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Preferred Securities which have been so called
for redemption. If any date fixed for redemption of Preferred Securities is not
a Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If CNF fails to repay Debentures
on maturity or on the date fixed for this redemption or if payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by the Property Trustee or by CNF pursuant to the
Preferred Securities Guarantee, Distributions on such Preferred Securities will
continue to accrue, from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
7
<PAGE>
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees
on behalf of the Trust to DTC or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holders of the
Preferred Securities.
(v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Preferred Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Preferred Securities will no longer be deemed
outstanding and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so distributed.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), CNF or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. CONVERSION RIGHTS. The Holders of Securities shall have the right at any
time prior to the close of business on _________, 20__ (or, in the case of
Securities called for redemption, prior to the close of business on the Business
Day prior to the redemption date), at their option, to cause the Conversion
Agent to convert Securities, on behalf of the converting Holders, into shares of
Common Stock in the manner described herein on and subject to the following
terms and conditions:
The Securities will be convertible at the office of the Conversion Agent
into fully paid and nonassessable shares of Common Stock pursuant to the
Holder's direction to the Conversion Agent to exchange such Securities for a
portion of the Debentures theretofore held by the Trust on the basis of one
Security per $___ principal amount of Debentures, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Common Stock at
an initial rate of _______ shares of Common Stock per $__ principal amount of
Debentures (which is equivalent to a conversion price of $_____ per share of
Common Stock, subject to certain adjustments set forth in Sections 5.03 and 5.04
of the Supplemental Indenture (as so adjusted, the "Conversion Price")).
(a) In order to convert Securities into Common Stock the Holder shall
submit to the Conversion Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder (the "Conversion
Request"), together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Property Trustee of the Holder's election to
exchange Securities for a portion of the Debentures held by the Trust and the
Property Trustee shall, upon receipt
8
<PAGE>
of such notice, deliver to the Conversion Agent the appropriate principal amount
of Debentures for exchange in accordance with this Section. The Conversion Agent
shall thereupon notify the Property Trustee of the Holder's election to convert
such Debentures into shares of Common Stock. If a Security is surrendered for
conversion after the close of business on any regular record date for payment of
a Distribution and before the opening of business on the corresponding
Distribution payment date, then, notwithstanding such conversion, the
Distribution payable on such Distribution payment date will be paid in cash to
the person in whose name the Security is registered at the close of business on
such record date, and (other than a Security or a portion of a Security called
for redemption on a redemption date occurring after such record date and on or
prior to such Distribution payment date) when so surrendered for conversion, the
Security must be accompanied by payment of an amount equal to the Distribution
payable on such Distribution payment date. Except as provided above, neither the
Trust nor the Sponsor will make, or be required to make, any payment, allowance
or adjustment upon any conversion on account of any accumulated and unpaid
Distributions accumulated on the Securities surrendered for conversion, or on
account of any accumulated and unpaid dividends on the shares of Common Stock
issued upon such conversion. Securities shall be deemed to have been converted
immediately prior to the close of business on the day on which the Conversion
Request relating to such Securities is received by the Trust in accordance with
the foregoing provision (the "Conversion Date"). The Person or Persons entitled
to receive Common Stock issuable upon conversion of the Debentures shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the Conversion Date, the
Sponsor shall issue and deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same, unless otherwise directed by the Holder in the Conversion Request and the
Conversion Agent shall distribute such certificate or certificates, together
with the applicable cash payment, if any, to such Person or Persons.
(b) Each Holder of a Security by his acceptance thereof appoints The First
National Bank of Chicago "Conversion Agent" for the purpose of effecting the
conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Securities in accordance with this
section and (ii) to convert all or a portion of the Debentures into Common Stock
and thereupon to deliver such shares of Common Stock in accordance with the
provisions of this section and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Sponsor to the Conversion Agent, which in turn will make such payment to
the Holder or Holders of Securities so converted.
9
<PAGE>
(d) The Sponsor shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion of
the Debentures, free from any preemptive or other similar rights, such number of
shares of Common Stock as shall from time to time be issuable upon the
conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, the Sponsor shall be entitled to deliver upon conversion of
Debentures, shares of Common Stock reacquired and held in the treasury of the
Sponsor (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any shares of Common Stock issued
upon conversion of the Debentures shall be duly authorized, validly issued and
fully paid and nonassessable. The Trust shall deliver the shares of Common
Stock received upon conversion of the Debentures to the converting Holder free
and clear of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. Each of the Sponsor and the Trust shall prepare
and shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
Common Stock (and all requirements to list Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable the Sponsor
to lawfully issue Common Stock to the Trust upon conversion of the Debentures
and the Trust to lawfully deliver Common Stock to each Holder upon conversion of
the Securities.
(e) The Sponsor will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Debentures
and the delivery of the shares of Common Stock by the Trust upon conversion of
the Securities. The Sponsor shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Trust the
amount of any such tax, or has established to the satisfaction of the Trust that
such tax has been paid.
(f) Nothing in the preceding Paragraph (e) shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Securities as set forth
in this Exhibit B to the Declaration or to the Declaration itself or otherwise
require the Property Trustee or the Trust to pay any amounts on account of such
withholdings.
6. VOTING RIGHTS. (a) Except as provided under paragraph 6(b) below and
as otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Preferred
Securities as a consequence of a redemption of Debentures, then the Holders
10
<PAGE>
of outstanding Securities will be entitled to vote on such amendment or proposal
as a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing a Majority in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities and (B) amendments to the Declaration shall
be subject to such further requirements as are set forth in Sections 12.01 and
12.02 of the Declaration.
In the event the consent of the Property Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, the
Property Trustee may only vote with respect to that amendment, modification or
termination as directed by, in the case of clause (1) above, the vote of Holders
of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of Securities unless the Property Trustee shall have received, at the
expense of the Sponsor, an opinion of nationally recognized independent tax
counsel recognized as expert in such matters to the effect that the Trust will
not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States federal income tax
purposes following such action.
Subject to Section 2.06 of the Declaration, and the provisions of this and
the next succeeding paragraph, the Holders of a Majority in liquidation amount
of the Preferred Securities, voting separately as a class shall have the right
to (A) on behalf of all Holders of Preferred Securities, waive any past default
that is waivable under the Declaration (subject to, and in accordance with the
Declaration) and (B) direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as the holder of the
Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section ____ of
the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater
11
<PAGE>
than a majority in principal amount of the Debentures or (2) each holder of
Debentures, the Property Trustee may only take such action if directed by, in
the case of clause (1) above, the vote of Holders of Preferred Securities
representing such specified percentage of the aggregate liquidation amount of
the Preferred Securities, or, in the case of clause (2) above, each Holder of
Preferred Securities. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities. Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or
the Debenture Trustee as set forth above, the Property Trustee shall be under no
obligation to take any of the foregoing actions at the direction of the Holders
of Preferred Securities unless the Property Trustee shall have received, at the
expense of the Sponsor, an opinion of nationally recognized independent tax
counsel recognized as expert in such matters to the effect that the Trust will
not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States federal income tax
purposes following such action. If the Property Trustee fails to enforce its
rights under the Declaration (including, without limitation, its rights, powers
and privileges as a holder of the Debentures under the Indenture), any Holder of
Preferred Securities may, to the extent permitted by law, after a period of 30
days has elapsed from such Holder's written request to the Property Trustee to
enforce such rights, institute a legal proceeding directly against CNF to
enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Sponsor to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then the registered holder of the Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder (a "Holder Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Holder Direct Action, the Sponsor will be subrogated to the
rights of such Holder of Preferred Securities under the Declaration to the
extent of any payment made by the Sponsor to such Holder of Preferred Securities
in such Holder Direct Action. Except as provided in the preceding sentences, the
holders of Preferred Securities will not be able to exercise any other remedy
available to the holders of the Debentures.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of the Holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the
Securities.
Any required approval or direction of Holders of Preferred Securities may
be given at a separate meeting of Holders of Preferred Securities convened for
such purpose, at a meeting of all of the Holders of Securities of the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i)
12
<PAGE>
the date of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of Preferred Securities will be required
for the Trust to redeem and cancel Preferred Securities or distribute Debentures
in accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by CNF or by any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with CNF shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
Except as provided in this paragraph 6, Holders of the Preferred Securities
will have no rights to increase or decrease the number of Trustees or to
appoint, remove or replace a Trustee, which voting rights are vested solely in
the Holders of the Common Securities.
7. PRO RATA TREATMENT. A reference in these terms of the Preferred
Securities to any payment, distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. RANKING. The Preferred Securities rank pari passu and payment thereon
will be made Pro Rata with the Common Securities except that where an Event of
Default occurs and is continuing, the rights of Holders of Preferred Securities
to payment in respect of Distributions and payments upon liquidation, redemption
or otherwise rank in priority to the rights of Holders of the Common Securities.
9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets to, any corporation or other entity.
10. TRANSFER, EXCHANGE, METHOD OF PAYMENTS. Payment of Distributions and
payments on redemption of the Preferred Securities will be payable, the transfer
of the Preferred Securities will be registrable, and Preferred Securities will
be exchangeable for
13
<PAGE>
Preferred Securities of other denominations of a like aggregate liquidation
amount, at the principal corporate trust office of the Property Trustee in The
City of New York; provided that payment of Distributions may be made at the
option of the Regular Trustees on behalf of the Trust by check mailed to the
address of the persons entitled thereto and that the payment on redemption of
any Preferred Security will be made only upon surrender of such Preferred
Security to the Property Trustee.
11. ACCEPTANCE OF INDENTURE AND PREFERRED GUARANTEE. Each Holder of
Preferred Securities, by the acceptance thereof, agrees to the provisions of (i)
the Preferred Guarantee, including the subordination provisions therein and (ii)
the Indenture and the Debentures, including the subordination provisions of the
Indenture.
12. NO PREEMPTIVE RIGHTS. The Holders of Preferred Securities shall have no
preemptive rights to subscribe to any additional Preferred Securities or Common
Securities.
13. MISCELLANEOUS. These terms shall constitute a part of the Declaration.
The Trust will provide a copy of the Declaration and the Indenture to a Holder
without charge on written request to the Trust at its principal place of
business.
14
<PAGE>
Annex I
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company ("DTC") or a nominee of DTC. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than DTC or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to the Trust or its
agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]
Number ___________ Preferred Securities
___________
CUSIP NO. ____________
Certificate Evidencing Preferred Securities
of
CNF Trust I
$_______ Term Convertible Securities, Series A
(liquidation amount $__ per security)
CNF Trust I, a statutory business trust created under the laws of the State
of Delaware (the "Trust"), hereby certifies that _________ (the "Holder") is the
registered owner of ___________ (______) preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the $________ Term Convertible Securities, Series A (liquidation
amount $___ per security) (the "Preferred Securities"). The Preferred Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the
1
<PAGE>
terms and provisions of, the Amended and Restated Declaration of Trust of the
Trust dated as of _________, 1997, as the same may be amended from time to time
(the "Declaration") including the designation of the terms of Preferred
Securities as set forth in Exhibit B thereto. The Preferred Securities and the
Common Securities issued by the Trust pursuant to the Declaration represent
undivided beneficial interests in the assets of the Trust, including the
Debentures (as defined in the Declaration) issued by The CNF Corporation, a
Delaware corporation ("CNF"), to the Trust pursuant to the Indenture referred to
in the Declaration. The Holder is entitled to the benefits of the Guarantee
Agreement of CNF dated as of ___________, 1997 (the "Guarantee") to the extent
provided therein. The Trust will furnish a copy of the Declaration, the
Guarantee and the Indenture to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is deemed to
have (i) agreed to the terms of the Indenture and the Debentures, including that
the Debentures are subordinate and junior in right of payment to all Senior and
Subordinated Debt (as defined in the Indenture) as and to the extent provided in
the Indenture and (ii) agreed to the terms of the Guarantee, including that the
Guarantee is subordinate and junior in right of payment to all other liabilities
of CNF, including the Debentures, and ranks pari passu in right payment with the
most senior preferred stock issued, from time to time, by CNF.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
certificate this _________ day of _______ 1997.
CNF TRUST I
By:_________________________, as Trustee
Name:
Title: Trustee
By:_________________________, as Trustee
Name:
Title: Trustee
Dated:
Countersigned and Registered:
Transfer Agent and Registrar
By:___________________________
Authorized Signature
3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a rate
per annum of _____% of the stated liquidation amount of $__ per Preferred
Security, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon at the rate per annum of _____% thereof (to
the extent permitted by law) compounded quarterly. The term "Distributions" as
used herein means such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Debentures held by the Property Trustee. The amount
of Distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months.
Except as otherwise described below, distributions on the Preferred
Securities will be cumulative, will accrue from __________, 1997 and will be
payable quarterly in arrears, on the last day of each quarter, commencing on
__________, 1997, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as CNF shall
not be in default in the payment of interest on the Debentures, CNF has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of _____% per
annum, compounded quarterly during such Extension period; provided that no
Extension Period shall last beyond the date of maturity or any redemption date
of the Debentures. Prior to the termination of any such Extension Period, CNF
may commence a new Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarterly interest periods. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, CNF
may commence a new Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
The Preferred Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Preferred Securities for a portion of the Debentures
and (ii) the immediate conversion of such Debentures into Common Stock, in the
manner and according to the terms set forth in the Declaration.
4
<PAGE>
CONVERSION REQUEST
To: ___________________________ as Property Trustee of CNF Trust I
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into common stock of CNF Transportation Inc. (the "Common Stock") in
accordance with the terms of the Amended and Restated Declaration of Trust,
dated as of _________, 1997 (as amended from time to time, the "Declaration"),
by _______________ and ____________ as Regular Trustees, _____________, as
Delaware Trustee, ___________________, as Property Trustee, CNF Transportation
Inc., as Sponsor, and by the Holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to the Declaration.
Pursuant to the aforementioned exercise of the option to convert these Preferred
Securities, the undersigned hereby directs the Conversion Agent (as that term is
defined in the Declaration) to (i) exchange such Preferred Securities for a
portion of the Debentures (as that term is defined in the Declaration) held by
the Trust (at the rate of exchange specified in the terms of the Preferred
Securities set forth as Exhibit B to the Declaration) and (ii) immediately
convert such Debentures on behalf of the undersigned, into Common Stock (at the
conversion rate specified in the terms of the Trust Preferred Securities set
forth as Exhibit B to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
5
<PAGE>
Date: _______________, _____
in whole ___ in part ___
Number of Preferred Securities to be converted:
_______________________
If a name or names other than the undersigned,
please indicate in the spaces below the name or
names in which the shares of Common Stock are to be
issued, along with the address or addresses of such
person or persons
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including
Zip Code, and Social Security or Other Identifying
Number
__________________________________
__________________________________
__________________________________
Signature Guarantee:** _________
**(Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Conversion Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.)
6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Insert assignee's social security or tax identification number)
___________________________________________________________________________
___________________________________________________________________________
____________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
____________________________________________________________
____________________________________________________________
____________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: _________________________
Signature: ____________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
7
<PAGE>
EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of Trust
of CNF Trust I dated as of ___________, 1997 (as amended from time to time, the
"Declaration"), the designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities are set forth below
(each capitalized term used but not defined herein having the meaning set forth
in the Declaration):
1. DESIGNATION AND NUMBER. Common Securities of the Trust with an aggregate
liquidation amount in the assets of the Trust of __________________________
Dollars ($___________) and a liquidation amount in the assets of the Trust of
$__ per Common Security, are hereby designated as "______% Common Trust
Securities". The Common Security Certificates evidencing the Common Securities
shall be substantially in the form attached hereto as Annex I, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice. The Common Securities are to be issued and sold to
CNF Transportation Inc. ("CNF") in consideration of $__________ in cash. In
connection with the issuance and sale of the Preferred Securities and the Common
Securities, the Trust will purchase as trust assets Debentures of CNF having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities so issued, and bearing interest at an
annual rate equal to the annual Distribution rate on the Preferred Securities
and Common Securities and having payment and redemption provisions which
correspond to the payment and redemption provisions of the Preferred Securities
and Common Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Common Security will be
fixed at a rate per annum of _____% (the "Coupon Rate") of the stated
liquidation amount of $50 per Common Security. Distributions in arrears for more
than one calendar quarter will bear interest at the rate per annum of ______%
thereof (to the extent permitted by applicable law), compounded quarterly. The
term "Distributions" as used in these terms means such periodic cash
distributions and any such interest payable unless otherwise stated. A
Distribution will be made by the Property Trustee only to the extent that
interest payments are made in respect of the Debentures held by the Property
Trustee. The amount of Distributions payable for any period will be computed for
any monthly Distribution period on the basis of a 360-day year of twelve 30 day
months.
(b) Distributions on the Common Securities will be cumulative, will accrue
from _________, 1997 and will be payable quarterly in arrears, on the last day
of each month commencing on __________, 1997, except as otherwise described
below, but only if and to the extent that interest payments are made in respect
of the Debentures held by the Property Trustee. So long as CNF shall not be in
default in the payment of interest on the Debentures, CNF has the right under
the Indenture for the Debentures to defer payments of interest by extending the
interest payment period from time to time on the Debentures for a
<PAGE>
period not exceeding 20 consecutive quarterly interest periods (each, an
"Extension Period") and, as a consequence, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the rate of ______% per annum, compounded quarterly during any such Extension
Period; provided that no Extension Period shall last beyond the date of maturity
or any redemption date of the Debentures. Prior to the termination of any such
Extension Period, CNF may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly interest periods. Upon the
termination of any Extension Period and the payment of all amounts then due, CNF
may commence a new Extension Period, subject to the above requirements. Payments
of accrued Distributions will be payable to Holders of Common Securities as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period.
(c) Distributions on the Common Securities will be payable promptly by the
Property Trustee (or other Paying Agent) upon receipt of immediately available
funds to the Holders thereof as they appear on the books and records of the
Trust on the relevant record dates which will be one business day prior to the
relevant Distribution date unless the Preferred Securities are no longer in
book-entry only form in which event the Regular Trustees shall have the right to
select relevant record dates which shall be more than one business day prior to
the relevant payment dates. Distributions payable on any Common Securities that
are not punctually paid on any Distribution date as a result of CNF having
failed to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the person in whose name such Common Security
is registered on the relevant record date, and such defaulted Distribution will
instead be payable to the person in whose name such Common Security is
registered on the special record date established by the Regular Trustees, which
record date shall correspond to the special record date or other specified date
determined in accordance with the Indenture; provided, however, that
Distributions shall not be considered payable on any Distribution payment date
falling within an Extension Period unless CNF has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any applicable laws and regulations and the provisions
of the Declaration, each payment in respect of the Common Securities will be
made as described in paragraph 10 hereof. If any date on which Distributions
are payable on the Common Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) All Distributions paid with respect to the Common Securities and the
Preferred Securities will be paid Pro Rata to the Holders thereof entitled
thereto. If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with respect to
Distributions.
(e) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as set forth in this Exhibit C to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be
2
<PAGE>
made; provided, however, that if a Security is surrendered for conversion after
the close of business on any regular record date for payment of a Distribution
date will be paid in cash to the person in whose name the Security is registered
at the close of business on such record date, and (other than a Security or a
portion of a Security called for redemption on a redemption date occurring after
such record date and on or prior to such Distribution date) when so surrendered
for conversion, the Security must be accompanied by payment of an amount equal
to the Distribution payable on such Distribution date.
(f) In the event that there is any money or other property held by or for
the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any voluntary
or involuntary dissolution, winding-up or termination of the Trust, the Holders
of the Preferred Securities and Common Securities at the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive Pro Rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common Securities, after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $__ per Preferred Security and Common Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, and after satisfaction of liabilities to
creditors, Debentures in an aggregate principal amount equal to the aggregate
stated liquidation amount of such Preferred Securities and Common Securities
bearing accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Preferred Securities and Common Securities, shall be
distributed Pro Rata to the Holders of the Preferred Securities and Common
Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and Common Securities shall be paid, subject
to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred Securities and
Common Securities may only be redeemed if Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether at
maturity, upon redemption at any time or from time to time on or after
__________, ____, or at any time in certain circumstances upon the occurrence of
a Tax Event, the proceeds of such repayment will be promptly applied to redeem
Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal
3
<PAGE>
amount of the Debentures so repaid or redeemed, upon not less than 30 nor more
than 60 days' notice, at a redemption price per Preferred and Common Security
equal to the redemption price of the Debentures, together with accrued and
unpaid Distributions thereon through the date of redemption, payable in cash
(the "Redemption Price"). The date of any such repayment or redemption of
Preferred Securities and Common Securities shall be established to coincide with
the repayment or redemption date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Common Securities to be redeemed
will be redeemed as described in paragraph 4(e)(ii) below. If a partial
redemption would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, CNF pursuant to the Indenture will only redeem
Debentures in whole and, as a result, the Trust may only redeem the Common
Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each a "Special Event") shall occur and be continuing,
the Regular Trustees shall, unless the Debentures are redeemed in the limited
circumstances described below, dissolve the Trust and, after satisfaction of
creditors, cause Debentures held by the Property Trustee having an aggregate
principal amount equal to the aggregate stated liquidation amount of and accrued
and unpaid interest equal to accrued and unpaid Distributions on, and having the
same record date for payment as the Preferred Securities and Common Securities,
to be distributed to the Holders of the Preferred Securities and Common
Securities on a Pro Rata basis in liquidation of such Holders' interests in the
Trust, within 90 days following the occurrence of such Special Event (the "90
Day Period"); provided, however, that in the case of the occurrence of a Tax
Event, as a condition of such dissolution and distribution, the Regular Trustees
shall have received an opinion of a nationally recognized independent tax
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on any then applicable published revenue rulings of the Internal
Revenue Service, to the effect that the Holders of the Preferred Securities will
not recognize any gain or loss for United States federal income tax purposes as
a result of the dissolution of the Trust and distribution of Debentures; and
provided, further, that, if and as long as at the time there is available to the
Trust the opportunity to eliminate, within such 90 Day Period, the Special Event
by taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure that has no adverse effect on
the Trust, CNF or the Holders of the Preferred Securities ("Ministerial Action")
the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular Trustees
have received an opinion (a "Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that CNF would be precluded from
deducting the interest on the Debentures for United States federal income tax
purposes even if the Debentures were distributed to the Holders of Preferred
Securities and Common Securities in liquidation of such Holder's interest in the
Trust as described in this paragraph 4(c) or (ii) the Regular Trustees shall
have been informed by such tax counsel that a No Recognition Opinion cannot be
delivered to the Trust, CNF shall have the right at any time, upon not less than
30 nor more than 60 days'
4
<PAGE>
notice, to redeem the Debentures in whole or in part for cash at the Redemption
Price within 90 days following the occurrence of such Tax Event, and promptly
following such redemption Preferred Securities and Common Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed will be redeemed by the Trust at the Redemption Price on
a Pro Rata basis: provided, however, that, if at the time there is available to
CNF or the Regular Trustees on behalf of the Trust the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some Ministerial Action, CNF
or the Holders of the Preferred Securities, CNF or the Regular Trustees on
behalf of the Trust will pursue such measure in lieu of redemption; and
provided, further, that CNF shall have no right to redeem the Debentures while
the Regular Trustees on behalf of the Trust are pursuing such Ministerial
Action. The Common Securities will be redeemed Pro Rata with the Preferred
Securities, except that if an Event of Default under the Indenture has occurred
and is continuing, the Preferred Securities will have a priority over the Common
Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an opinion
of nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after __________, 1997 as a
result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or (d)
any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after ___________, 1997, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to income accrued or
received on the Debentures, (ii) the Trust is, or will be within 90 days of the
date thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by CNF to the Trust on the
Debentures is not, or within 90 days of the date thereof will not be, deductible
by CNF for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment Company
which is required to be registered under the Investment Company Act, which
Change in 1940 Act Law becomes effective on or after _________, 1997.
On the date fixed for any distribution of Debentures, upon dissolution of
the Trust, (i) the Common Securities will no longer be deemed to be outstanding
and (ii) any certificates representing Common Securities will be deemed to
represent beneficial interests in the
5
<PAGE>
Debentures having an aggregate principal amount equal to the stated liquidation
amount of, and bearing accrued and unpaid interest equal to accrued and unpaid
Distributions on, such Common Securities until such certificates are presented
to CNF or its agent for transfer or reissuance.
(d) The Trust may not redeem any outstanding Common Securities unless all
accrued and unpaid Distributions have been paid on all Common Securities for all
quarterly Distribution periods terminating on or prior to the date of
redemption.
(e)(i) Notice of any redemption of, or notice of distribution of Debentures
in exchange for, the Preferred Securities and Common Securities (a "Redemption/
Distribution Notice") will be given by the Regular Trustees on behalf of the
Trust by mail to each Holder of Preferred Securities and Common Securities to be
redeemed or exchanged not less than 30 nor more than 60 days prior to the date
fixed for redemption or exchange thereof. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given pursuant
to this paragraph (e)(i), a Redemption/Distribution Notice shall be deemed to be
given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Preferred Securities and Common Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of Preferred
Securities and Common Securities at the address of each such Holder appearing in
the books and records of the Trust. No defect in the Redemption/Distribution
Notice or in the mailing of either thereof with respect to any Holder shall
affect the validity of the redemption or exchange proceedings with respect to
any other Holder.
(ii) In the event that fewer than all the outstanding Common Securities are
to be redeemed, the Common Securities to be redeemed will be redeemed Pro Rata
from each Holder of Common Securities (subject to adjustment to eliminate
fractional Common Securities).
(iii) If the Trust gives a Redemption/Distribution Notice in respect of a
redemption of Common Securities as provided in this paragraph 4 (which notice
will be irrevocable) then immediately prior to the close of business on the
redemption date, provided that CNF has paid to the Property Trustee in
immediately available funds a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, Distributions will cease to
accrue on the Common Securities called for redemption, such Common Securities
will no longer be deemed to be outstanding and all rights of Holders of such
Common Securities so called for redemption will cease, except the right of the
Holders of such Common Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Common
Securities which have been so called for redemption. If any date fixed for
redemption of Common Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of Common Securities
is improperly withheld or refused and not paid by the Property Trustee,
Distributions on such Common Securities will continue to
6
<PAGE>
accrue, from the original redemption date to the date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees
on behalf of the Trust to the Holders of the Common Securities.
(v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Common Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Common Securities will no longer be deemed outstanding
and may be canceled by the Regular Trustees. The Debentures so distributed
shall have an aggregate principal amount equal to the aggregate liquidation
amount of the Common Securities so distributed.
5. CONVERSION RIGHTS. The Holders of Securities shall have the right at
any time prior to the close of business on ___________, 20__ (or, in the case
of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
The Securities will be convertible at the office of the Conversion Agent
into fully paid and nonassessable shares of Common Stock pursuant to the
Holder's direction to the Conversion Agent to exchange such Securities for a
portion of the Debentures theretofore held by the Trust on the basis of one
Security per $__ principal amount of Debentures, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Common Stock at
an initial rate of ________ shares of Common Stock per $__ principal amount of
Debentures (which is equivalent to a conversion price of $_____ per share of
Common Stock, subject to certain adjustments set forth in Sections 5.03 and 5.04
of the Supplemental Indenture (as so adjusted, "Conversion Price")).
(a) In order to convert Securities into Common Stock the Holder shall
submit to the Conversion Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder (the "Conversion
Request"), together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Property Trustee of the Holder's election to
exchange Securities for a portion of the Debentures held by the Trust and the
Property Trustee shall, upon receipt of such notice, deliver to the Conversion
Agent the appropriate principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon notify the Property
Trustee of the Holder's election to convert such Debentures into shares of
Common Stock. If a Security is surrendered for conversion after the close of
business on any regular record date for payment of a Distribution and before the
opening of business on the corresponding Distribution payment
7
<PAGE>
date, then, notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose name the
Security is registered at the close of business on such record date, and (other
than a Security or a portion of a Security called for redemption on a redemption
date occurring after such record date and on or prior to such Distribution
payment date) when so surrendered for conversion, the Security must be
accompanied by payment of an amount equal to the Distribution payable on such
Distribution payment date. Except as provided above, neither the Trust nor the
Sponsor will make, or be required to make, any payment, allowance or adjustment
upon any conversion on account of any accumulated and unpaid Distributions
accumulated on the Securities surrendered for conversion, or on account of any
accumulated and unpaid dividends on the shares of Common Stock issued upon such
conversion. Securities shall be deemed to have been converted immediately prior
to the close of business on the day on which a Conversion Request relating to
such Securities is received by the Trust in accordance with the foregoing
provision (the "Conversion Date"). The Person or Persons entitled to receive
Common Stock issuable upon conversion of the Debentures shall be treated for all
purposes as the record holder or holders of such Common Stock at such time. As
promptly as practicable on or after the Conversion Date, the Sponsor shall issue
and deliver at the office of the Conversion Agent a certificate or certificates
for the number of full shares of Common Stock issuable upon such conversion,
together with the cash payment, if any, in lieu of any fraction of any share to
the Person or Persons entitled to receive the same, unless otherwise directed by
the Holder in the Conversion Request and the Conversion Agent shall distribute
such certificate or certificates, together with the applicable cash payment, if
any, to such Person or Persons.
(b) Each Holder of a Security by his acceptance thereof appoints
_____________ "Conversion Agent" for the purpose of effecting the conversion of
Securities in accordance with this Section. In effecting the conversion and
transactions described in this Section, the Conversion Agent shall be acting as
agent of the Holders of Securities directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange
Securities from time to time for Debentures held by the Trust in connection with
the conversion of such Securities in accordance with this section and (ii) to
convert all or a portion of the Debentures into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions of this
section and to deliver to the Trust a new Debenture or Debentures for any
resulting unconverted principal amount.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Company to the Conversion Agent, which in turn will make such payment to
the Holder or Holders of Securities so converted.
(d) The Sponsor shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion of
the Debentures, free from any preemptive or other similar rights, such number of
shares of Common Stock as shall from time to time be issuable upon the
conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, shall be entitled to deliver upon conversion of Debentures, shares of
Common Stock reacquired and held in the treasury of the Sponsor (in lieu of the
issuance of authorized and unissued shares of Common Stock), so long as any such
treasury shares are free and clear of all liens, charges, security interests or
8
<PAGE>
encumbrances. Any shares of Common Stock issued upon conversion of the
Debentures shall be duly authorized, validly issued and fully paid and
nonassessable. The Trust shall deliver the shares of Common Stock received upon
conversion of the Debentures to the converting Holder free and clear of all
liens, charges, security interests and encumbrances, except for United States
withholding taxes. Each of the Sponsor and the Trust shall prepare and shall
use its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of Common Stock
(and all requirements to list Common Stock issuable upon conversion of
Debentures that are at the time applicable), in order to enable the company to
lawfully issue Common Stock to the Trust upon conversion of the Debentures and
the Trust to lawfully deliver Common Stock to each Holder upon conversion of the
Securities.
(e) The Sponsor will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Debentures
and the delivery of the shares of Common Stock by the Trust upon conversion of
the Securities. The Sponsor shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Trust the
amount of any such tax, or has established to the satisfaction of the Trust that
such tax has been paid.
(f) Nothing in the preceding Paragraph (e) shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Securities or set forth
in this Exhibit C to the Declaration or to the Declaration itself or otherwise
require the Property Trustee or the Trust to pay any amounts on account of such
withholdings.
6. VOTING RIGHTS. (a) Except as provided under paragraph 5(b) below and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under the Declaration
to increase or decrease the number of Trustees, and to appoint, remove or
replace a Trustee, any such increase, decrease, appointment, removal or
replacement to be approved by Holders of Common Securities representing a
Majority in liquidation amount of the Common Securities.
If any proposed amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Securities, whether by way of
amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up
or termination of the Trust, other than in connection with the distribution of
Debentures held by the Property Trustee, upon the occurrence of a Special Event
or in connection with the redemption of Common Securities as a consequence of a
redemption of Debentures, then the Holders of outstanding Securities will be
entitled to vote on such amendment or proposal as a class and such amendment or
proposal shall not be effective except with the approval of the Holders of
Securities representing a Majority in liquidation amount of such Securities;
provided, however, that (A) if any amendment or proposal referred to in clause
(i) above would
9
<PAGE>
adversely affect only the Preferred Securities or the Common Securities, then
only the affected class will be entitled to vote on such amendment or proposal
and such amendment or proposal shall not be effective except with the approval
of a Majority in liquidation amount of such class of Securities, (B) the rights
4.02 of the Declaration to increase or decrease the number of, and to appoint,
replace or remove, Trustees shall not be amended without the consent of each
Holder of Common Securities, and (C) amendments to the Declaration shall be
subject to such further 12.01 and 12.02 of the Declaration.
In the event the consent of the Property Trustee as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, the
Property Trustee may only vote with respect to that amendment, modification or
termination as directed by, in the case of clause (1) above, the vote of Holders
of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of the Securities unless the Property Trustee shall have received, at
the expense of the Sponsor, an opinion of nationally recognized independent tax
counsel recognized as an expert in such matters to the effect that the Trust
will not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States federal income tax
purposes following such action.
Subject to Section 2.06 of the Declaration, and the provisions of this and
the next succeeding paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class shall have the right to
(A) on behalf of all Holders of Common Securities, waive any past default that
is waivable under the Declaration (subject to, and in accordance with the
Declaration) and (B) direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as holder of the Debentures,
to (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable under Section ____ of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (e) each holder of Debentures,
the Property Trustee may only take such action if directed by, in the case of
clause (1) above, the vote of Holders of Common Securities representing such
specified percentage of the aggregate liquidation amount of the Common
10
<PAGE>
Securities, or, in the case of clause (2) above, each Holder of Common
Securities. Pursuant to this paragraph, the Property Trustee shall not revoke,
or take any action inconsistent with, any action previously authorized or
approved by a vote of the Holders of the Preferred Securities, and shall not
take any action in accordance with the direction of the Holders of the Common
Securities under this paragraph if the action is prejudicial to the Holders of
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee or the Debenture Trustee as set forth above, the Property Trustee shall
be under no obligation to take any of the foregoing actions at the direction of
the Holders of Common Securities unless the Properties Trustee shall have
received, at the expense of the Sponsor, an opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
the Trust will not be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership on account of such
action and will be treated as a grantor trust for United States income tax
purposes following such action.
Notwithstanding any other provision of these terms, each Holder of Common
Securities will be deemed to have waived any Event of Default with respect to
the Common Securities and its consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived by the Holders of
Preferred Securities as provided in the Declaration or otherwise eliminated, and
until all Events of Default with respect to the Preferred Securities have been
so cured, waived by the Holders of Preferred Securities or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Declaration or of the Securities. In the event that any Event of Default
with respect to the Preferred Securities is waived by the Holders of Preferred
Securities as provided in the Declaration, the Holders of Common Securities
agree that such waiver shall also constitute the waiver of such Event of Default
with respect to the Common Securities for all purposes under the Declaration
without any further act, vote or consent of the Holders of the Common
Securities.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of the Holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the
Securities.
Any required approval of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities of the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of Common Securities will be required for
the Trust to redeem and cancel Common Securities in accordance with the
Declaration.
11
<PAGE>
7. PRO RATA TREATMENT. A reference in these terms of the Common Securities
to any payment, distribution or treatment as being "Pro Rata" shall mean pro
rata to each Holder of Securities according to the aggregate liquidation amount
of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
8. RANKING. The Common Securities rank pari passu and payment thereon will
be made Pro Rata with the Preferred Securities except that where an Event of
Default occurs and is continuing, the rights of Holders of Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise are subordinate to the rights of Holders of the Preferred Securities.
9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets to, any corporation or other body.
10. TRANSFERS, EXCHANGES, METHOD OF PAYMENTS. Payment of Distributions and
payments on redemption of the Common Securities will be payable, the transfer of
the Common Securities will be registrable, and Common Securities will be
exchangeable for Common Securities of other denominations of a like aggregate
liquidation amount, at the principal corporate trust office of the Property
Trustee in The City of New York; provided that payment of Distributions may be
made at the option of the Regular Trustees on behalf of the Trust by check
mailed to the address of the persons entitled thereto and that the payment on
redemption of any Common Security will be made only upon surrender of such
Common Security to the Property Trustee. Notwithstanding the foregoing,
transfers of Common Securities are subject to conditions set forth in Section
9.01 of the Declaration.
11. ACCEPTANCE OF INDENTURE. Each Holder of Common Securities, by the
acceptance thereof, agrees to the provisions of the Indenture and the
Debentures, including the subordination provisions thereof.
12. NO PREEMPTIVE RIGHTS. The Holders of Common Securities shall have no
preemptive rights to subscribe to any additional Common Securities or Preferred
Securities.
13. MISCELLANEOUS. These terms shall constitute a part of the Declaration.
The Trust will provide a copy of the Declaration and the Indenture to a Holder
without charge on written request to the Trust at its principal place of
business.
12
<PAGE>
Annex I
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
______ ---------
Certificate Evidencing Common Securities
of
CNF Trust I
_____% Common Trust Securities
(liquidation amount $__ per Common Security)
CNF Trust I, a statutory business trust formed under the laws of the State
of Delaware (the "Trust"), hereby certifies that CNF Transportation Inc. (the
"Holder") is the registered owner of ____________________________ (_________)
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the "_____% Common Trust Securities"
(liquidation amount $__ per security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and satisfaction of the other conditions set
forth in the Declaration (as defined below) including, without limitation
Section 9.01 thereof. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Declaration of Trust of the Trust dated as of _________,
1997, as the same may be amended from time to time (the "Declaration") including
the designation of the terms of Common Securities as set forth in Exhibit C
thereto. The Common Securities and the Preferred Securities issued by the Trust
pursuant to the Declaration represent undivided beneficial interests in the
assets of the Trust, including the Debentures (as defined in the Declaration)
issued by CNF Transportation Inc., a Delaware corporation, to the Trust pursuant
to the Indenture referred to in the Declaration. The Trust will furnish a copy
of the Declaration and the Indenture to the Holder without charge upon written
request to the Trust at its principal place of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is deemed to
have agreed to the terms of the Indenture and the Debentures, including that the
Debentures are
1
<PAGE>
subordinate and junior in right of payment to all Senior Debt (as defined in the
Indenture) as and to the extent provided in the Indenture.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
certificate this ______ day of ______, 1997.
CNF TRUST I
By________________________, as Trustee
Name:
Title: Trustee
By_________________________, as Trustee
Name:
Title: Trustee
Dated:
Countersigned and Registered:
Transfer Agent and Registrar
By:___________________________
Authorized Signature
3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate per
annum of _____% (the "Coupon Rate") of the stated liquidation amount of $__ per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon at the rate per annum of ______% thereof (to
the extent permitted by law) compounded monthly. The term "Distributions" as
used herein means such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Property Trustee. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Except as otherwise described below, distributions on the Common Securities
will be cumulative, will accrue from __________, 1997 and will be payable
quarterly in arrears, on the last day of each quarter, commencing on ________,
1997, but only if and to the extent that interest payments are made in respect
of the Debentures held by the Property Trustee. So long as CNF shall not be in
default in the payment of interest on the Debentures, CNF has the right under
the Indenture for the Debentures to defer payments of interest by extending the
interest payment period from time to time on the Debentures for a period not
exceeding 20 consecutive quarters (each an "Extension Period") and, as a
consequence, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of _____% per
annum, compounded quarterly during such Extension period; provided that no
Extension Period shall last beyond the date of maturity or any redemption date
of the Debentures. Prior to the termination of any such Extension Period, CNF
may commence a new Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarterly interest periods. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, CNF
may commence a new Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the Declaration.
The Common Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Common Securities for a portion of the Debentures
and (ii) the immediate conversion of such Debentures into Common Stock, in the
manner and according to the terms set forth in the Declaration.
<PAGE>
CONVERSION REQUEST
To: ___________________________________
as Property Trustee of CNF Trust I
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Common Stock of CNF Transportation Inc. (the "Common Stock") in
accordance with the terms of the Amended and Restated Declaration of Trust dated
as of _________, 1997 (as amended from time to time, the "Declaration"), by
____________________ and ________________, as Regular Trustees,
__________________, as Delaware Trustee, __________________, as Property
Trustee, CNF Transportation Inc., as Sponsor, and by the Holders, from time to
time, of undivided beneficial interests in the assets of the Trust to be issued
pursuant to the Declaration. Pursuant to the aforementioned exercise of the
option to convert these Common Securities, the undersigned hereby directs the
Conversion Agent (as that term is defined in the Declaration) to (i) exchange
such Common Securities for a portion of the Debentures (as that term is defined
in the Declaration) held by the Trust (at the rate of exchange specified in the
terms of the Common Securities set forth as Exhibit C to the Declaration) and
(ii) immediately convert such Debentures on behalf of the undersigned, into
Common Stock (at the conversion rate specified in the terms of the Common
Securities set forth as Exhibit C to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
5
<PAGE>
Date: _____________, _____
in whole ___ in part ___
Number of Common Securities to be converted:
_______________
If a name or names other than the undersigned,
please indicate in the spaces below the name
or names in which the shares of Common Stock
are to be issued, along with the address or
addresses of such person or persons
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number
___________________________________
___________________________________
___________________________________
Signature Guarantee:/*/ ___________
__________________
/*/(Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Conversion Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.)
6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Insert assignee's social security or tax identification number)
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
____________________________________________________________
____________________________________________________________
_____________________________________________________ agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: ________________________
Signature: _________________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
7
<PAGE>
EXHIBIT 5(a)
May 9, 1997
CNF Transportation Inc.
3240 Hillview Avenue
Palo Alto, California 94304
Ladies and Gentlemen:
We have acted as special counsel to CNF Transportation Inc., a Delaware
corporation (the "Company"), in connection with the proposed issuance and sale
by the Company of up to $150,000,000 aggregate initial public offering price of
its (i) senior debt securities (the "Senior Debt Securities"), (ii) subordinated
debt securities (the "Subordinated Debt Securities", and together with the
Senior Debt Securities, the "Debt Securities"), (iii) shares of common stock,
par value $.625 per share (the "Common Stock"), (iv) shares of preferred stock,
no par value (the "Preferred Stock"), (v) depositary shares (the "Depositary
Shares") representing shares of Preferred Stock, which Depositary Shares will be
evidenced by depositary receipts (the "Depositary Receipts") and (vi) warrants
to purchase Common Stock (the "Warrants"), and in connection with the proposed
issuance by the Company of guarantees (the "Guarantees") of up to $150,000,000
aggregate initial public offering price of preferred securities (the "Preferred
Securities") of CNF Trust I, a Delaware business trust (the "Trust"). The Debt
Securities, the Common Stock, the Preferred Stock, the Depositary Shares, the
Warrants and the Guarantees are hereinafter collectively referred to as the
"Securities". The Senior Debt Securities will be issuable under an indenture
(the "Senior Indenture") to be entered into between the Company and a trustee to
be named therein (the "Senior Trustee"). The Subordinated Debt Securities will
be issuable under an Indenture (the "Subordinated Indenture") between the
Company and a trustee to be named therein (the "Subordinated Trustee").
As special counsel to the Company, we have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, certificates, corporate records and other instruments as we have
deemed necessary or advisable for the
<PAGE>
purpose of this opinion. In our examination, we have assumed the authenticity of
all documents submitted to us as originals, the genuineness of all signatures
thereon, the legal capacity of natural persons executing such documents and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies.
Based upon the foregoing, and subject to the assumptions and limitations
set forth herein, we are of the opinion that:
(i) When (a) appropriate corporate action has been taken by the Company to
authorize the form, terms, execution and delivery of the Senior Indenture, any
applicable supplemental indenture thereto and the Senior Notes, (b) the Senior
Indenture and any such supplemental indenture have been duly executed and
delivered by the Company and the Senior Trustee, (c) appropriate action has been
taken by the Company to authorize the issuance and establish, in accordance with
the Senior Indenture, the form and terms of the Senior Debt Securities and (d)
Senior Debt Securities with such terms are duly executed, attested, issued and
delivered by duly authorized officers of the Company against payment of the
consideration therefor and authenticated by the Trustee, all in the manner
provided for in the Senior Indenture, any such supplemental indenture and such
action, such Senior Debt Securities will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms.
(ii) When (a) appropriate corporate action has been taken by the Company to
authorize the form, terms, execution and delivery of the Subordinated Indenture,
any applicable supplemental indenture thereto and the Subordinated Notes, (b)
the Subordinated Indenture and any such supplemental indenture have been duly
executed and delivered by the Company and the Subordinated Trustee, (c)
appropriate action has been taken by the Company to authorize the issuance and
establish, in accordance with the Subordinated Indenture, the form and terms of
the Subordinated Debt Securities and (d) Subordinated Debt Securities with such
terms are duly executed, attested, issued and delivered by duly authorized
officers of the Company against payment of the consideration therefor and
authenticated by the Trustee, all in the manner provided for in the Subordinated
Indenture, any such supplemental indenture and such action, such Subordinated
Debt Securities will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
(iii) When appropriate corporate action has been taken by the Company to
authorize the issuance of shares of Common Stock, and when such shares of Common
Stock shall have been duly issued and delivered by the Company against payment
of the consideration therefor and in accordance with such corporate action, such
Common Stock will be validly issued, fully paid and non-assessable.
(iv) When (a) appropriate corporate action has been taken by the Company
to authorize the issuance of a series of Preferred Stock, to fix the terms
thereof and to authorize the execution and filing of a certificate of
designations relating thereto with the Secretary of State of the State of
Delaware, (b) such certificate of designations shall have been executed
2
<PAGE>
by duly authorized officers of the Company and so filed by the Company, all in
accordance with the laws of the State of Delaware, and (c) Preferred Stock with
terms so fixed shall have been duly issued and delivered by the Company against
payment of the consideration therefor or for Depositary Shares representing
interests therein in accordance with such corporate action, such Preferred Stock
will be validly issued, fully paid and nonassessable.
(v) When (a) appropriate corporate action has been taken by the Company
to authorize the form, terms, execution and delivery of a deposit agreement
(including a form of Depositary Receipt) (a "Deposit Agreement") with respect to
Depositary Shares to be entered into between the Company and a depositary (the
"Depositary") and to authorize the issuance of Depositary Shares thereunder, (b)
such Deposit Agreement has been duly executed and delivered by the Company and
the Depositary, (c) appropriate corporate action has been taken by the Company
to authorize the issuance of Preferred Stock and the deposit thereof with the
Depositary pursuant to the Deposit Agreement and the issuance of the Depositary
Shares representing interests therein, and (d) duly authorized and validly
issued, fully paid and non-assessable shares of such Preferred Stock shall have
been deposited with the Depositary in accordance with the Deposit Agreement and
such corporate action and the Depositary shall have duly executed, issued and
delivered Depositary Receipts with such terms evidencing such Depositary Shares
against payment of the consideration therefor, all in the manner provided for in
such Deposit Agreement and such corporate action, such Depositary Shares will
entitle the holders thereof to the benefits provided therein and in the
applicable Deposit Agreement.
(vi) When (a) appropriate corporate action has been taken by the
Company to authorize the form, terms, execution and delivery of a warrant
agreement (including a form of certificate evidencing the Warrants) (a "Warrant
Agreement") to be entered into between the Company and a warrant agent (the
"Warrant Agent") and to authorize the issuance of Warrants thereunder, (b) such
Warrant Agreement has been duly executed and delivered by the Company and the
Warrant Agent and (c) Warrants with such terms are duly executed, attested,
issued and delivered by duly authorized officers of the Company against payment
of the consideration therefor and authenticated by the Warrant Agent, all in the
manner provided for in the Warrant Agreement and such corporate action, such
Warrants will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
(vii) When (a) appropriate corporate action has been taken by the Company
to authorize the form, terms, execution and delivery of a guarantee agreement (a
"Guarantee Agreement") with respect to Preferred Securities to be entered into
between the Company and a guarantee trustee (the "Guarantee Trustee"), (b) such
Guarantee Agreement shall have been duly executed and delivered by the Company
and the Guarantee Trustee, and (c) such Preferred Securities shall have been
duly authorized for issuance by the Trust's declaration of trust, as the same
may be amended or restated from time to time (the "Declaration"), and duly
executed, issued and delivered by duly authorized trustees of the Trust against
payment of the consideration therefor and authenticated by the Guarantee
Trustee, all in the manner provided for in the Declaration, such Guarantee
Agreement will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
3
<PAGE>
With respect to enforcement, the above opinions are qualified to the extent
that such enforcement may be subject to or limited by bankruptcy, insolvency,
fraudulent transfer, fraudulent conveyance, reorganization, moratorium,
arrangement or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles, and further to the extent that the
enforcement of any Securities denominated or payable in a currency or currency
unit other than United States dollars may be limited by requirements that a
claim (or foreign currency judgment in respect of such claim) be converted into
United States dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law. We have further assumed with respect to enforcement
that, when fixed, the terms of the Securities will comply with all applicable
"bucket shop" or similar state laws, or have the availability of federal
preemption therefrom.
In rendering the opinions expressed above, we have assumed that (i)
certificates representing shares of Common Stock and Preferred Stock will be in
due and proper form, will comply with applicable law and will have been duly
executed by duly authorized officers of the Company in accordance with
applicable law; (ii) the Preferred Securities of the Trust will have been
validly issued and (except to the extent set forth in the Declaration) will be
fully paid and non-assessable; (iii) the Declaration has been duly authorized,
executed and delivered by, and constitutes a valid, binding and enforceable
obligation of, the parties thereto and that the Trust has been duly organized
and is validly existing in good standing as a business trust under Delaware law;
and (iv) the Securities and all other instruments and agreements referred to in
the foregoing opinions, and the execution, delivery and performance thereof by
the Company or the Trust, as the case may be, comply and will comply with
applicable law and do not and will not constitute a breach or violation of the
charter or by-laws of the Company, the Declaration or any other instrument or
agreement to which the Company or the Trust is or becomes a party or by which
either of them or any of their respective properties is or may be bound.
In addition, we express no opinion as to the enforceability of provisions
of any of the Securities or any other instrument or agreement which provide that
the assertion or employment of any right or remedy shall not prevent the
concurrent assertion or employment of any other right or remedy, or that every
right and remedy shall be cumulative and in addition to every other right and
remedy, or that any delay or omission to exercise any right or remedy shall not
impair any other right or remedy or constitute a waiver thereof.
We are members of the bar of the State of New York and the foregoing
opinion is limited to matters arising under the laws of the State of New York,
the General Corporation Law of the State of Delaware and the federal laws of the
United States of America and we express no opinion with respect to matters
arising under the laws of any other jurisdiction.
We consent to the filing of this opinion as an exhibit to the Company's
Registration Statement on Form S-3 (Registration No. 333-26595) and to the use
of our name wherever appearing in such Registration Statement and any amendment
thereto. In giving the foregoing consent, however, we do not admit that we come
within the category of person whose consent
4
<PAGE>
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
/s/ Brown & Wood LLP
5
<PAGE>
Exhibit 5(b)
May 9, 1997
CNF Trust I
c/o CNF Transportation Inc.
3240 Hillview Avenue
Palo Alto, California 94304
Re: CNF Trust I
-----------
Ladies and Gentlemen::
We have acted as special Delaware counsel for CNF Transportation
Inc., a Delaware corporation (the "Company"), and CNF Trust I, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of May 6, 1997
(the "Certificate of Trust"), as filed with the office of the Secretary of State
of the State of Delaware (the "Secretary of State") on May 6, 1997;
(b) The Declaration of Trust of the Trust, dated as of May 6, 1997
among the Company and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on
Form S-3, including a preliminary prospectus with respect to the Trust (the
"Prospectus"), relating to the
<PAGE>
CNF Trust I
May 9, 1997
Page 2
Preferred Securities of the Trust representing preferred undivided beneficial
interests in the assets of the Trust (each, a "Preferred Security" and
collectively, the "Preferred Securities"), filed by the Company and the Trust
with the Securities and Exchange Commission on May 6, 1997;
(d) A form of Amended and Restated Declaration of Trust for the
Trust, to be entered into between the Company, the trustees of the Trust named
therein, and the holders, from time to time, of the undivided beneficial
interests in the assets of such Trust (including Exhibit B and Annex I thereto)
(the "Declaration"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated May 6,
1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined
are used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (e) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Declaration constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Declaration and the
Certificate of Trust are in full force and effect and have not been amended,
(ii) except to the extent provided in paragraph 1 below, the due organization or
due formation, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its organization or formation, (iii) the legal capacity of natural
persons who are parties to the documents examined by us, (iv) that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (v) the due
authorization, execution and
<PAGE>
CNF Trust I
May 9, 1997
Page 3
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Preferred Security is to be issued by the Trust
(collectively, the "Preferred Security Holders") of a Preferred Security
Certificate for such Preferred Security and the payment for such Preferred
Security, in accordance with the Declaration and the Registration Statement, and
(vii) that the Preferred Securities are issued and sold to the Preferred
Security Holders in accordance with the Declaration and the Registration
Statement. We have not participated in the preparation of the Registration
Statement or the Prospectus and assume no responsibility for their contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulation and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. We hereby consent to the
use of our name under the heading "Legal Matters" in the Prospectus. In giving
the foregoing consents, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other person for any purpose.
<PAGE>
CNF Trust I
May 9, 1997
Page 4
Very truly yours,
EAM /s/ Richards Layton & Finger
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement, in Registration Statement No. 33-
29793 and in Registration Statement No. 33-60619 of our reports dated January
24, 1997 included and incorporated by reference in CNF Transportation Inc.'s
(formerly Consolidated Freightways, Inc.) Form 10-K for the year ended December
31, 1996 and to all references to our Firm included in such Registration State-
ments.
/s/ Arthur Andersen LLP
San Francisco, California,
May 5, 1997
