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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
SEPTEMBER 16, 1996
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LA QUINTA INNS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
TEXAS 74-1724417
(State or other jurisdiction 1-7790 (I.R.S. Employer
of incorporation or organization) (Commission File Number) Identification Number)
</TABLE>
WESTON CENTRE
112 E. PECAN STREET
P.O. BOX 2636
SAN ANTONIO, TEXAS 78299-2636
(Address of principal executive offices)
(210) 302-6000
(Registrant's telephone number)
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ITEM 7. FINANCIAL STATEMENTS, FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
1. Distribution Agreement, dated as of September 16, 1996, by and between
Registrant, Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and
NationsBanc Capital Markets, Inc.
4.1 Officer's Certificate pursuant to the Indenture, dated as of September 15,
1995 by and between Registrant and U.S. Trust Company of Texas, N.A., as
Trustee (without exhibits).
4.2 Form of Fixed Rate Note described in Exhibit 4.1
4.3 Form of Floating Rate Note described in Exhibit 4.1.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LA QUINTA INNS, INC.
By: /s/ William C. Hammett, Jr.
-----------------------------------
William C. Hammett, Jr.
Senior Vice President and
Chief Financial Officer
Date: September 16, 1996
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE
-- ----------- ----
1. Distribution Agreement, dated as of September 16, 1996, by
and between Registrant, Morgan Stanley & Co. Incorporated,
Goldman, Sachs & Co. and NationsBanc Capital Markets, Inc.
4.1 Officer's Certificate pursuant to the Indenture, dated as of
September 15, 1995 by and between Registrant and U.S. Trust
Company of Texas, N.A., as Trustee (without exhibits).
4.2 Form of Fixed Rate Note described in Exhibit 4.1
4.3 Form of Floating Rate Note described in Exhibit 4.1.
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LA QUINTA INNS, INC.
$150,000,000
Medium-Term Notes
Due More Than 9 Months From Date of Issue
DISTRIBUTION AGREEMENT
September 16, 1996
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
NationsBanc Capital Markets, Inc.
100 North Tryon Street
Charlotte, North Carolina
Dear Sirs and Mesdames:
La Quinta Inns, Inc., a Texas corporation (the "Company"), confirms
its agreement with each of you with respect to the issue and sale from time to
time by the Company of up to $150,000,000 aggregate initial offering price of
its medium-term notes due more than 9 months from date of issue (the "Notes").
The Notes will be issued under an Indenture dated as of September 15, 1995 (the
"Indenture") between the Company and U.S. Trust Company of Texas, N.A., as
Trustee (the "Trustee"), and will have the maturities, interest rates,
redemption provisions, if any,
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and other terms as set forth in supplements to the Basic Prospectus referred
to below.
Subject to (i) reservation by the Company of the right to sell and to
accept offers to purchase the Notes directly to or from investors on its own
behalf and (ii) Section 14, the Company hereby appoints Morgan Stanley & Co.
Incorporated ("Morgan Stanley"), Goldman. Sachs & Co. ("Goldman") and
NationsBanc Capital Markets, Inc. ("NationsBanc") (each individually, an "Agent"
and collectively, the "Agents") as its agents for the purpose of soliciting and
receiving offers to purchase Notes from the Company by others and, on the basis
of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, each Agent agrees to use reasonable efforts to
solicit and receive offers to purchase Notes upon terms acceptable to the
Company at such times and in such amounts as the Company shall from time to time
specify. In addition, any Agent may also purchase Notes as principal pursuant
to a Terms Agreement relating to such sale (a "Terms Agreement") in accordance
with the provisions of Section 2(b) hereof.
1. REGISTRATION AND PROSPECTUS. The Company has filed with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-3 under the Act (File No. 333-00309), including
a prospectus relating to the offer and sale of $250,000,000 aggregate principal
amount of the Company's debt securities (including the Notes), which
registration statement has been declared effective and copies of which have been
heretofore delivered to you. Such registration statement in the form in which
it was declared effective (including all financial schedules and exhibits and
including all documents incorporated or deemed to be incorporated by reference
therein through the date hereof), is hereinafter referred to as the
"Registration Statement." The Company proposes to file with the Commission from
time to time, pursuant to Rule 424(b) of the Act, supplements to the prospectus
relating to the Registration Statement that will describe certain terms of the
Notes. The term "Basic Prospectus" as used in this Agreement means the
prospectus dated January 25, 1996 relating to the Registration Statement. The
term "Prospectus" means the Basic Prospectus together with the prospectus
supplement or supplements (each a "Prospectus Supplement") specifically relating
to the Notes, as filed with, or transmitted for filing to, the Commission
pursuant to Rule 424. Any reference in this Agreement to the Registration
Statement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act as of the date of the
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Registration Statement or the Prospectus, as the case may be, and any
reference to any amendment or supplement to the Registration Statement or the
Prospectus shall be deemed to refer to and include any documents filed after
such date under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Exchange Act"), that, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means, at any time, the documents that at such time
are incorporated by reference in the Registration Statement, the Prospectus,
or any amendment or supplement thereto.
2. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL.
(a) SOLICITATIONS AS AGENT. In connection with an Agent's actions as
agent hereunder, such Agent agrees to use its reasonable best efforts to solicit
offers to purchase Notes upon the terms and conditions set forth in the
Prospectus as then amended or supplemented.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase Notes. Upon receipt of at least one business
day's prior notice from the Company, the Agents will forthwith suspend
solicitations of offers to purchase Notes from the Company until such time as
the Company has advised the Agents that such solicitation may be resumed. While
such solicitation is suspended, the Company shall not be required to deliver any
certificates, opinions or letters in accordance with Sections 7(a), 7(b) and
7(c); PROVIDED, HOWEVER, that if the Registration Statement or Prospectus is
amended or supplemented during the period of suspension (other than by an
amendment or supplement providing solely for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on the Notes
or for a change the Agents deem to be immaterial), no Agent shall be required to
resume soliciting offers to purchase Notes until the Company has delivered such
certificates, opinions and letters as such Agent may request.
The Company agrees to pay to each Agent, as consideration for the sale
of each Note resulting from a solicitation made or an offer to purchase received
by such Agent, a commission in the form of a discount from the purchase price of
such Note equal to the percentage set forth below of the purchase price of such
Note:
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TERM COMMISSION RATE
---- ---------------
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years to less than 30 years .750%
From 30 years and beyond To be negotiated
Each Agent is authorized to solicit offers to purchase the Notes only
in the principal amounts of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000. Each Agent shall communicate to the Company,
orally or in writing, each offer to purchase Notes received by such Agent as
agent that in its judgment should be considered by the Company. The Company
shall have the sole right to accept offers to purchase Notes and may reject any
offer in whole or in part. Each Agent shall have the right to reject, in its
discretion reasonably exercised, any offer to purchase Notes, and any such
rejection shall not be deemed a breach of its agreements contained herein. The
procedural details relating to the issue and delivery of Notes sold by the
Agents as agents and the payment therefor shall be as set forth in the
Administrative Procedures (as hereinafter defined).
(b) PURCHASES AS PRINCIPAL. Each sale of Notes to an Agent as
principal shall be made in accordance with the terms of this Agreement. In
connection with such sale, the Company will enter into a Terms Agreement that
will provide for the sale of such Notes to and the purchase thereof by such
Agent. Each Terms Agreement will be substantially in the form of Exhibit A
hereto but may take the form of an exchange of any form of written
telecommunication between such Agent and the Company.
An Agent's commitment to purchase Notes as principal, pursuant to a
Terms Agreement, shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement
shall specify the principal amount of Notes to be purchased by such Agent
pursuant thereto, the maturity date of such Notes, the price to be paid to
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the Company for such Notes, the interest rate and interest rate formula, if
any, applicable to such Notes and any other terms of such Notes. Each such
Terms Agreement shall also specify any requirements for officers'
certificates, opinions of counsel and letters from the independent public
accountants of the Company pursuant to Section 6 hereof. A Terms Agreement
may also specify certain provisions relating to the reoffering of such Notes
by such Agent.
Each Terms Agreement shall specify the time and place of delivery of
and payment for such Notes. Unless otherwise specified in a Terms Agreement,
the procedural details relating to the issue and delivery of Notes purchased by
an Agent as principal and the payment therefor shall be as set forth in the
Administrative Procedures. Each date of delivery of and payment for Notes to be
purchased by an Agent as principal, whether pursuant to a Terms Agreement or
otherwise, is referred to herein as a "Settlement Date."
(c) ADMINISTRATIVE PROCEDURES. The Agents and the Company agree to
perform the respective duties and obligations specifically provided to be
performed in the Medium-Term Notes Administrative Procedures (attached hereto as
Exhibit B) (the "Administrative Procedures"), as amended from time to time. The
Administrative Procedures may be amended only by written agreement of the
Company and the Agents.
(d) DELIVERY. The documents required to be delivered by Section 6 of
this Agreement as a condition precedent to the Agents' obligations to begin
soliciting offers to purchase Notes as agents of the Company shall be delivered
at the office of Davis Polk & Wardwell, counsel for the Agents, not later than
5:00 p.m., New York time, on the date hereof, or at such other time and/or place
as the Agents and the Company may agree upon in writing, but in no event later
than the day prior to the earlier of (i) the date on which the Agents begin
soliciting offers to purchase Notes and (ii) the first date on which the Company
accepts any offer by an Agent pursuant to a Terms Agreement. The date of
delivery of such documents is referred to herein as the "Commencement Date."
(e) OBLIGATIONS SEVERAL. The Company acknowledges that the
obligations of the Agents under this Agreement are several and not joint.
3. AGREEMENTS OF THE COMPANY. The Company agrees with each Agent
that:
(a) The Company shall advise the Agents promptly (i) if and when any
amendment or supplement to the Basic Prospectus
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(except that notice of the filing of an amendment or supplement to the Basic
Prospectus that merely sets forth the terms or a description of particular
Notes shall only be given to the Agent or Agents offering such Notes) is
filed and when any post-effective amendment to the Registration Statement
becomes effective, (ii) of the receipt of any comments from the Commission
that relate to the Registration Statement or any request by the Commission
for an amendment of or a supplement to the Registration Statement or the
Basic Prospectus or for additional information and (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement, or of receipt by the Company of notice of the
suspension of qualification of the Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by the
Commission or any state securities commission or other regulatory authority.
If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption of the Notes under any state securities or Blue
Sky laws, the Company shall use every reasonable effort to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) Prior to the termination of the offering of the Notes pursuant to
this Agreement or any Terms Agreement, the Company shall not file any amendment
or supplement to the Registration Statement or make any amendment or supplement
to the Basic Prospectus, of which the Agents shall not previously have been
advised and provided a copy prior to the filing thereof and to which the Agents
shall reasonably object in writing, PROVIDED that (i) the foregoing requirement
shall not apply to any of the Company's periodic filings with the Commission
required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, copies of which filings the Company will cause to be delivered to
the Agents promptly after being transmitted for filing with the Commission and
(ii) any Prospectus Supplement that merely sets forth the terms or a description
of particular Notes shall only be reviewed and approved by the Agent or Agents
offering such Notes. If the Basic Prospectus is amended or supplemented as a
result of the filing under the Exchange Act of any document incorporated by
reference in the Prospectus, no Agent shall be obligated to solicit offers to
purchase Notes so long as it is not reasonably satisfied with such document.
(c) The Company shall expeditiously furnish to each Agent, without
charge, a signed copy of the Registration Statement, including exhibits and
amendments and as many copies of the Prospectus (and of any amendment or
supplement to the
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Prospectus and documents incorporated by reference) as each Agent may
reasonably request.
(d) At any time when a prospectus relating to the Notes is required
to be delivered under the Securities Act, if any event occurs as a result of
which it becomes necessary, in the judgment of the Company or in the reasonable
opinion of counsel for the Agents, to amend or supplement the Prospectus (as
then amended or supplemented) in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary to amend or supplement the Prospectus to comply with the Act or any
other law, the Company shall promptly notify the Agents by telephone (with
confirmation in writing) to suspend solicitation of offers to purchase Notes
and, if so notified by the Company, the Agents shall forthwith suspend such
solicitation and cease using the Prospectus, as then amended or supplemented.
If the Company shall decide to amend or supplement the Registration Statement or
Prospectus, as then amended or supplemented, it shall so advise the Agents
promptly by telephone (with confirmation in writing) and, at its expense, shall
prepare and, subject to the provisions of subsection (b) above, file with the
Commission an appropriate amendment or supplement to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will not, in the
light of the circumstances under which they were made, be misleading, and the
Prospectus, as so amended or supplemented, will comply with the Act or such
other law, and shall expeditiously furnish to the Agents without charge such
number of copies thereof as the Agents may reasonably request. If any
documents, certificates, opinions and letters furnished to the Agents pursuant
to paragraph (g) below and Sections 7(a), 7(b) and 7(c) in connection with the
preparation and filing of such amendment or supplement are reasonably
satisfactory in all respects to the Agents, upon the filing with the Commission
of such amendment or supplement to the Prospectus or upon the effectiveness of
an amendment to the Registration Statement, the Agents will resume the
solicitation of offers to purchase Notes hereunder. Notwithstanding any other
provision of this Section 3(d), until the distribution of any Notes an Agent may
own as principal has been completed, if any event described above in this
paragraph (d) occurs, the Company will, at its own expense, forthwith prepare
and cause to be filed promptly with the Commission an appropriate amendment or
supplement to the Registration Statement or Prospectus, as then amended or
supplemented, reasonably satisfactory in all respects to such Agent, will supply
such amended or supplemented Prospectus to such Agent in such quantities as it
may reasonably request and shall furnish to such Agent pursuant to paragraph (g)
below and Sections 7(a), 7(b) and 7(c) such documents, certificates,
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opinions and letters as it may request in connection with the preparation and
filing of such amendment or supplement.
(e) The Company will endeavor to qualify the Notes for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the Agents
shall reasonably request and to maintain such qualifications for so long as the
Agents shall reasonably request; provided, however, that the Company shall not
be required to register or qualify as a foreign corporation or to take any
action which would subject it to general service of process in suits, other than
those arising out of the offering or sale of the Notes, in any jurisdiction
where it is not now so subject.
(f) The Company shall make generally available to its security
holders as soon as reasonably practicable a combined earnings statement covering
a period of at least 12 months beginning after the "effective date" (as defined
in Rule 158 under the Act) of the Registration Statement with respect to each
sale of Notes (but in no event later than 90 days after such date) that shall
satisfy the provisions of Section 11(a) of the Act.
(g) The Company shall furnish without charge to each Agent such
relevant documents and certificates of officers of the Company relating to the
business, operations and affairs of the Company, the Registration Statement, the
Basic Prospectus, any amendments or supplements thereto, the Indenture, the
Notes, this Agreement, the Administrative Procedures, any Terms Agreement and
the performance by the Company of its obligations hereunder or thereunder as
such Agent may from time to time reasonably request.
(h) Between the date of any Terms Agreement by an Agent and the
Settlement Date with respect to such Terms Agreement, the Company shall not,
without the prior written consent of such Agent, which shall not be unreasonably
withheld, offer, sell, contract to sell or otherwise dispose of any debt
securities of the Company or warrants to purchase debt securities of the Company
substantially similar to the Notes (other than (i) the Notes to be sold pursuant
to such Terms Agreement, (ii) Notes previously agreed to be sold by the Company
and (iii) commercial paper and short-term bank loans issued in the ordinary
course of business), except as may otherwise be provided in such Terms
Agreement.
(i) The Company shall notify the Agents promptly in writing of any
downgrading, or of its receipt of any notice of any intended or potential
downgrading or of any review for
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possible change that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Act.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each Agent as of the Commencement
Date, as of each date on which the Company accepts an offer to purchase Notes
(including any purchase by an Agent as principal, pursuant to a Terms
Agreement), as of each date the Company issues and delivers Notes and as of each
date the Registration Statement or the Basic Prospectus is amended or
supplemented, as follows (it being understood that such representations,
warranties and agreements shall be deemed to relate to the Registration
Statement, the Basic Prospectus and the Prospectus, each as amended or
supplemented to each such date):
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for such purpose are pending before or, to the knowledge of the
Company, threatened by the Commission.
(b) The Company and the transactions contemplated by this Agreement
meet the requirements for using Form S-3 under the Act. (i) Each part of the
Registration Statement, when such part became or becomes effective, and the
Prospectus and any supplement or amendment thereto when filed with the
Commission under Rule 424(b) under the Act, complied or will comply in all
material respects with the provisions of the Act; (ii) each part of the
Registration Statement, when such part became effective, did not contain, and
each such part, as amended or supplemented, will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
(iii) the Prospectus and any supplement or amendment thereto do not and will not
at any such time contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; except that (1) this representation and warranty does not
apply (A) to statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
any Agent furnished to the Company in writing by or on behalf of any Agent
through any Agent expressly for use therein or (B) to that part of the
Registration Statement that constitutes the Statement of Eligibility (Form T-1)
under the Trust Indenture Act of 1939, as
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amended (the "Trust Indenture Act"), of the Trustee (the "Form T-1") and (2)
the representations and warranties set forth in clauses (i) and (iii) above,
when made as of the Commencement Date or as of any date on which an Agent
solicits offers to purchase Notes or on which the Company accepts an offer to
purchase Notes, shall be deemed not to cover information concerning an
offering of particular Notes to the extent such information will be set forth
in a supplement to the Basic Prospectus.
(c) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act, and any further Incorporated Documents so filed will, when
they are filed, conform in all material respects with the requirements of the
Exchange Act; no such document when it was filed (or, if an amendment with
respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and no such further document, when it is filed, will contain an
untrue statement of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(d) All of the Company's subsidiaries (collectively, the
"Subsidiaries") as of the most recent year-end are listed in an exhibit to the
Company's most recent Annual Report on Form 10-K (the "Form 10-K"), which is
incorporated by reference into the Registration Statement. The Company and each
of the Subsidiaries that is a "significant subsidiary" (as defined in Regulation
S-X under the Act) (collectively, the "Significant Subsidiaries") has been duly
organized, is validly existing (if applicable, as a corporation in good
standing) under the laws of its jurisdiction of organization and has full
corporate (or partnership) power and authority to carry on its business as it is
currently being conducted (and, in the case of the Company, to execute, deliver
and perform this Agreement) and to own, lease and operate its properties, and
each is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect, singly or in the aggregate, on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries, taken as a whole (a "Material Adverse
Effect").
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(e) All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each Significant Subsidiary have been duly
authorized and validly issued, and certain shares of capital stock of each
Significant Subsidiary are owned, directly or through Subsidiaries, by the
Company as set forth in the Incorporated Documents. All such shares or other
ownership interests in each Significant Subsidiary are fully paid and
nonassessable, and are free and clear of any security interest, mortgage,
pledge, claim, lien or encumbrance (each, a "Lien"), except for Liens that are
in the aggregate immaterial to the business of the Company and the Subsidiaries,
taken as a whole.
(f) Neither the Company nor any of the Significant Subsidiaries is in
violation of or in default in the performance of any of their respective
charters or bylaws (or partnership agreements, as the case may be) or any bond,
debenture, note or any other evidence of indebtedness or any indenture,
mortgage, deed of trust or other contract, lease or other instrument to which
the Company or any of the Significant Subsidiaries is a party or by which it or
any of them is bound, or to which any of the property or assets of the Company
or any of the Significant Subsidiaries is subject, except as could not, singly
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(g)(x) As of the Commencement Date, this Agreement has been duly
authorized by all necessary corporate action of the Company and has been duly
and validly executed and delivered, and (y) as of the date of any Terms
Agreement and Settlement Date, each of this Agreement and any applicable Terms
Agreement, has been duly authorized by all necessary corporate action of the
Company and has been duly and validly executed and delivered by the Company.
(h) The Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by all necessary corporate action of the
Company and has been duly executed and delivered by the Company in accordance
with its terms. The Indenture conforms in all material respects to the
descriptions thereof in the Prospectus. Assuming the due execution and delivery
thereof by the Trustee, the Indenture is a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that a waiver of rights under any usury laws may be
unenforceable and subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter in
effect, relating to or affecting creditors' rights and remedies generally and to
general principles of equity
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(regardless of whether enforcement is sought at law or in equity).
(i)(x) With respect to the representation made as of any date other
than a date on which the Company accepts an offer to purchase Notes (including
any purchase by an Agent as principal pursuant to a Terms Agreement) or a date
on which the Company issues and delivers Notes, the forms of Notes have been
duly authorized by the Company and, when the terms of a particular Note and its
issuance and sale have been duly established in conformity with the Indenture,
and when such Note has been duly executed and authenticated in accordance with
the Indenture and delivered to and duly paid for by the purchasers thereof in
accordance with this Agreement or any applicable Terms Agreement, such Note will
conform in all material respects to the descriptions thereof in the Prospectus
and will be legal, valid and binding obligations of the Company enforceable
against the Company in accordance with its terms and entitled to the benefits of
the Indenture, except to the extent that a waiver of rights under any usury laws
may be unenforceable and subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws, now or
hereafter in effect, relating to or affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether enforcement
is sought at law or in equity) and (y) with respect to the representations made
as of a date on which the Company accepts an offer to purchase Notes (including
any purchase by an Agent as principal pursuant to a Terms Agreement) and as of a
date on which the Company issues and deliver Notes, the Notes have been duly
authorized by the Company and when such Notes have been duly executed and
authenticated in accordance with the Indenture and delivered to and duly paid
for by the purchasers thereof in accordance with the applicable Terms Agreement,
such Notes will conform in all material respects to the descriptions thereof in
the Prospectus and will be legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture, except to the extent that a waiver of rights
under any usury laws may be unenforceable and subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws,
now or hereafter in effect, relating to or affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought at law or in equity).
(j) The execution and delivery of this Agreement, any applicable
Terms Agreement, the Indenture and the Notes by the Company and the performance
of this Agreement, the Indenture and the Notes (i) does not require any consent,
approval, authorization or order of or registration or filing with any
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court, regulatory body, administrative agency or other governmental body,
agency or official (except such as may be required for the registration of
the Notes under the Act and the Trust Indenture Act and compliance with the
state securities or Blue Sky laws of various jurisdictions, all of which have
been or will be effected in accordance with this Agreement) and (ii) will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default or cause an acceleration of any obligation under, any of
the respective charters or bylaws (or partnership agreements, as the case may
be) of the Company or any of the Significant Subsidiaries or any material
bond, note, debenture or other evidence of indebtedness or any material
indenture, mortgage, deed of trust or other material contract, lease or other
instrument to which the Company or any of the Significant Subsidiaries is a
party or by which any of them is bound, or to which any of the property or
assets of the Company or any of the Significant Subsidiaries is subject, or
any order of any court or governmental agency or authority entered in any
proceeding to which the Company or any of the Significant Subsidiaries was or
is a party or by which any of them is bound or (solely with respect to
actions by the Company or the Significant Subsidiaries) violate any
applicable federal, state or local law, rule, administrative regulation or
ordinance or administrative or court decree, any of the foregoing of which
could, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(k) Except as disclosed in the Registration Statement and the
Prospectus, there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, pending against the Company or
any of the Significant Subsidiaries that is required to be disclosed in the
Registration Statement or the Prospectus, or that could, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect or
materially and adversely to affect the performance of the Company's obligations
pursuant to this Agreement, any applicable Terms Agreement, the Indenture or the
Notes and, to the best of the Company's knowledge, no such proceedings are
contemplated or threatened. No action has been taken with respect to the
Company or any of the Significant Subsidiaries, and no statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency that suspends the effectiveness of the Registration Statement or suspends
the sale of the Notes in any jurisdiction referred to in Section 3(e) hereof; no
injunction, restraining order or order of any nature by a federal or state court
of competent jurisdiction has been issued with respect to the Company or any of
the Significant Subsidiaries that suspends the effectiveness of the Registration
Statement or suspends the sale of the Notes in any jurisdiction referred to in
Section 3(e) hereof; other than the litigation
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matters or proceedings described in the Form 10-K under the caption "Item 3.
Legal Proceedings" and in Part II of the Company's Form 10-Q, if any, filed
since the Form 10-K, under the caption "Item 1. Legal Proceedings", no
action, suit or proceeding before any court or arbitrator or any governmental
body, agency or official (domestic or foreign), is pending against or, to the
best of the Company's knowledge, threatened against, the Company or any of
the Significant Subsidiaries that, if adversely determined, could, singly or
in the aggregate, reasonably be expected in any manner to invalidate this
Agreement, any applicable Terms Agreement, the Indenture or the Notes; and
every request of the Commission, or any securities authority or agency of any
jurisdiction, for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) has been complied with in all
material respects. No contract or document of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to or incorporated by reference in the Registration Statement is
not so described or filed or incorporated by reference as required.
(l) The firm of accountants that has certified or shall certify the
applicable combined financial statements and supporting schedules of the Company
included or incorporated by reference in the Registration Statement and the
Prospectus are independent public accountants with respect to the Company and
the Subsidiaries, as required by the Act and the Exchange Act. The combined
financial statements, together with related notes, included or incorporated by
reference in the Prospectus and the Registration Statement comply as to form in
all material respects with the requirements of the Act and the Exchange Act and
fairly present, in all material respects, the financial position of the Company
and the Subsidiaries at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated, in
accordance with generally accepted accounting principles in the United States of
America consistently applied throughout such periods, except as disclosed in the
notes to such financial statements; and the other financial and statistical
information and the supporting schedules included or incorporated by reference
in the Prospectus and in the Registration Statement present fairly, in all
material respects, the information required to be stated therein.
(m) Except as disclosed in the Registration Statement and the
Prospectus, (i) neither the Company nor any of the Significant Subsidiaries has
incurred any liabilities or obligations, direct or contingent, that are material
to the Company and the Subsidiaries, taken as a whole, nor entered into any
transaction not in the ordinary course of business that is material to the
Company and the Subsidiaries, taken as a whole,
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(ii) there has been no decision or judgment in the nature of litigation
adverse to the Company or any of the Significant Subsidiaries that is
material to the Company and the Subsidiaries taken as a whole, and (iii)
there has been no material adverse change in the condition (financial or
other), business, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole (any of the above, a "Material Adverse
Change").
(n) The Company and each of the Significant Subsidiaries possess such
licenses, certificates, authorizations, approvals, franchises, trademarks,
service marks, trade names, permits and other rights issued by local, state,
federal or foreign regulatory agencies or bodies as are necessary to conduct the
businesses now conducted by them and the lack of which could reasonably be
expected to have a Material Adverse Effect on the Company and the Subsidiaries,
taken as a whole, and neither the Company nor any of the Significant
Subsidiaries has, to be the best of the Company's knowledge, received any notice
of proceedings relating to the revocation or modification of any such
certificate, authorization, approval, franchise, trademark, service mark, trade
name, permit or right that, if the subject of any unfavorable decision, ruling
or finding, could reasonably be expected to have a Material Adverse Effect.
(o) Except as disclosed in the Prospectus or except as could not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect, (a) to the best of the Company's knowledge, neither the Company nor the
Subsidiaries is in violation of any federal, state or local law or regulation
relating to pollution or protection of public heath or welfare or the
environment, including, without limitation, the storage, handling,
transportation, emissions, discharges, releases or threatened releases of
pollutants, contaminates, hazardous or toxic materials, substances or wastes, or
petroleum or petroleum products ("Environmental Laws"), (b) the Company and each
of the Subsidiaries have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses, and the Company and each of the Subsidiaries are in compliance with
all terms and conditions of any such permit, license or approval and (c) neither
the Company nor, to the best of the Company's knowledge, any of the
Subsidiaries, has received any notice or communication from any governmental
agency or any written notice from any other person regarding violation of or
liability under Environmental Laws and (d) there is no pending action or
proceeding, or to the best of the Company's knowledge, pending or threatened
claim or investigation against the Company or any of the Subsidiaries regarding
violation of or liability under Environmental Laws.
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(p) To the best of the Company's knowledge, (i) each of the Company
and the Subsidiaries has good and marketable title to all property (real and
personal) described in the Prospectus as being owned by it, in fee simple in the
case of real property (other than in the case of certain buildings the land
under which is leased to the Company pursuant to long-term leases that are
valid, subsisting and enforceable against the Company), free and clear of all
liens, claims, security interests or other encumbrances except such as are
described in the Registration Statement and the Prospectus or in a document
filed as an exhibit to the Registration Statement and (ii) all the property
described in the Registration Statement and the Prospectus as being held under
lease by each of the Company and the Significant Subsidiaries is held by it
under valid, subsisting and enforceable leases, except (with respect to any
matter specified in clause (i) or (ii) above) such as would not, singly or in
the aggregate, have a Material Adverse Effect.
(q) The Company has complied with all provisions of Florida Statutes,
Section 517.075, relating to issuers doing business with Cuba.
Notwithstanding the foregoing, the representations and warranties set
forth in Section 4(b)(i) and (iii), (i) (except as to the authorization of the
Notes) and (j), when made as of the Commencement Date, with respect to any Notes
the payments of principal or interest on which will be determined by reference
to one or more currency exchange rates, commodity prices, equity indices or
other factors, shall be deemed not to address the application of the Commodity
Exchange Act, as amended, or the rules, regulations or interpretations of the
Commodity Futures Trading Commission.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Agent and
each person, if any, who controls any Agent within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which they
were made) not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged
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<PAGE>
untrue statement or omission that has been made therein or omitted therefrom
in reliance upon and in conformity with the information relating to such
Agent furnished in writing to the Company by such Agent expressly for use
therein, provided, however, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this paragraph shall not
inure to the benefit of any Agent from whom the person asserting any such
losses, claims, damages or liabilities purchased the Notes concerned, if (a)
a prospectus relating to such Notes was required to be delivered by such
Agent under the Act in connection with such purchase, (b) any such loss,
claim, damage or liability of such Agent results from the fact that there was
not sent or given to such person, at or prior to the written confirmation of
the sale of such Notes to such person, a copy of the Prospectus and (c) the
Company had previously furnished copies of the Prospectus to such Agent and
delivery of such Prospectus would have cured the defect giving rise to such
losses, claims, damages or liabilities. The foregoing indemnity agreement
shall be in addition to any liability that the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Agent or any person controlling any Agent in respect of which indemnity may be
sought against the Company, such Agent or such controlling person shall promptly
notify the parties against whom indemnification is being sought (the
"indemnifying parties"), and such indemnifying parties shall assume the defense
thereof, including the employment of counsel and payment of all fees and
expenses. Such Agent or any such controlling person shall have the right to
employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Agent or such controlling person unless (i) the
indemnifying parties have agreed in writing to pay such fees and expenses, (ii)
the indemnifying parties have failed to assume the defense and employ counsel,
or (iii) the named parties to any such action, suit or proceeding (including any
impleaded parties) include both such Agent or such controlling person and the
indemnifying parties and such Agent or such controlling person shall have been
advised by its counsel that representation of such indemnified party and any
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential conflicting interests
between them (in which case the indemnifying party shall not have the right to
assume the defense of such action, suit or proceeding on behalf of such Agent or
such controlling person). It is understood, however, that the indemnifying
parties shall, in connection with any one such
17
<PAGE>
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Agents and controlling persons, which firm
shall be designated in writing by Morgan Stanley or, if Morgan Stanley is not
an indemnified party, by the Agents that are indemnified parties, and that
all such fees and expenses shall be reimbursed as they are incurred. The
indemnifying parties shall not be liable for any settlement of any such
action, suit or proceeding effected without their written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying parties
agree to indemnify and hold harmless any Agent, to the extent provided in the
preceding paragraph, and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Agent agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and any person who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to such Agent, but only with respect
to information relating to such Agent furnished in writing by such Agent
expressly for use in the Registration Statement, the Prospectus or any amendment
or supplement thereto. If any action, suit or proceeding shall be brought
against the Company, any of its directors, any such officer or any such
controlling person based on the Registration Statement, the Prospectus or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Agent pursuant to this subsection (c), such Agent shall have the
rights and duties given to the indemnifying parties by subsection (b) above
(except that if the Company shall have assumed the defense thereof such Agent
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Agent's expense), and the Company, its directors, any such
officer and any such controlling person shall have the rights and duties given
to the Agents by subsection (b) above. The foregoing indemnity agreement shall
be in addition to any liability that any Agent may otherwise have.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under subsection (a) or (c) above in respect
of any losses, claims, damages, liabilities or expenses referred to therein, in
connection with any offering of Notes, then each indemnifying party, in lieu of
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<PAGE>
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other hand from the offering of such Notes, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and such Agent
on the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and each Agent on the other hand in connection with the
offering of such Notes shall be deemed to be in the same proportion as the total
net proceeds from the offering of such Notes (before deducting expenses)
received by the Company bear to the total commissions received by each Agent in
connection with the offering of such Notes. The relative fault of the Company
on the one hand and the Agents on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the Agents
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Each Agent's obligation to contribute pursuant to this Section 5 shall be
several (in the proportion that the principal amount of the Notes the sale of
which by or through such Agent gave rise to such losses, claims, damages or
liabilities bears to the aggregate principal amount of the Notes the sale of
which by or through any Agent gave rise to such losses, claims, damages or
liabilities) and not joint.
(e) The Company and the Agents agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by a pro
rata allocation (even if the Agents were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable
considerations referred to in subsection (d) above. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in subsection (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 5, no Agent shall be required to contribute any
amount in excess of the amount by which the total price at which the Notes
referred to in
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<PAGE>
subsection (d) above that were offered and sold to the public through such
Agent exceeds the amount of any damages that such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Agent or any person controlling any
Agent, the Company, its directors or officers or any person controlling the
Company, (ii) acceptance of any Notes and payment therefor hereunder, and (iii)
any termination of this Agreement. A successor to any Agent or any person
controlling any Agent, or to the Company, its directors or officers, or any
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 5.
6. CONDITIONS OF THE OBLIGATIONS OF THE AGENTS. Each Agent's
obligation to solicit offers to purchase Notes as agent of the Company, each
Agent's obligation to purchase Notes as principal pursuant to any Terms
Agreement and the obligation of any other purchaser to purchase Notes will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of the Company's officers made
in each certificate furnished pursuant to the provisions hereof and to the
performance and observance by the Company of all covenants and agreements herein
contained on its part to be performed and observed (in the case of an Agent's
obligation to solicit offers to purchase Notes, at the time of
20
<PAGE>
such solicitation, and, in the case of an Agent's or any other purchaser's
obligation to purchase Notes, at the time the Company accepts the offer to
purchase such Notes and at the time of purchase) and (in each case) to the
following additional conditions precedent when and as specified:
(a) Prior to such solicitation or purchase, as the case may be:
(i) (A) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the knowledge of the Company or
any Agent, threatened by the Commission, and (B) any request of the
Commission for additional information (to be included in the registration
statement or the Prospectus or otherwise) shall have been complied with to
the relevant Agent's satisfaction.
(ii) There shall not have occurred (A) any downgrading or any notice
of any intended or potential downgrading or of any review for a possible
change that does not indicate the direction of the possible change, in the
rating accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Act, (B) any change in or affecting
the condition (financial or other), business, properties, net worth, or
results of operations of the Company and the Subsidiaries, taken as a
whole, not contemplated by the Prospectus, as amended or supplemented at
the time of such solicitation or at the time such offer to purchase was
made, that, in the relevant Agent's reasonable opinion, is material and
adverse and that makes it, in the reasonable judgment of such Agent,
impracticable to market the Notes on the terms and in the manner
contemplated by the Prospectus, as amended or supplemented.
(iii) (A) Trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall
not have been suspended or materially limited, (B) trading in any
securities of the Company on any exchange or in any over-the-counter market
shall not have been suspended, (C) a general moratorium on commercial
banking activities in New York or Texas shall not have been declared by
either federal or state authorities, or (D) there shall not have occurred
any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, that in the reasonable judgment of the relevant Agent, is
material and adverse and in the case of any of the events in (A), (B), (C)
or (D), such event,
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singly or together with any other such event, makes it, in the reasonable
judgment of the relevant Agent, impracticable to market the Notes on the
terms and in the manner contemplated by the Prospectus, as amended or
supplemented at the time of such solicitation or at the time such offer to
purchase was made.
(I) except, in each case described in paragraph (ii) or (iii) above, as
disclosed to the relevant Agent in writing by the Company prior to such
solicitation or, in the case of a purchase of Notes, as disclosed to the
relevant Agent in writing before the offer to purchase such Notes was made or
(II) unless in each case described in (iii) above, the relevant event shall have
occurred and been known to the relevant Agent before such solicitation or, in
the case of a purchase of Notes, before the offer to purchase such Notes was
made.
(b) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the relevant Agents shall have
received:
(i) The opinion, dated as of such date, of Latham & Watkins, counsel
for the Company to the effect that:
(A)(x) with respect to the opinion dated as of the Commencement
Date, assuming that the forms of Notes have been duly authorized by
the Company, when the terms of a particular Note and its issuance and
sale have been duly established in conformity with the Indenture, and
when such Note has been duly executed by the Company and the Trustee
and completed and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the purchasers thereof in
accordance with this Agreement or any applicable Terms Agreement, such
Note will be entitled to the benefit of the Indenture and will
constitute a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws then or thereafter in
effect relating to or affecting rights and remedies of creditors
generally, and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and to the
discretion of the court before which any proceeding therefor may be
brought and (y) with respect to the opinion dated as of the Settlement
Date, assuming that the Notes have been duly authorized by the
Company, when such Notes have been duly executed and authenticated in
accordance
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with the terms of the Indenture and delivered to and paid for by
the purchasers thereof in accordance with the applicable Terms
Agreement, such Note will constitute valid and binding obligations of
the Company enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws then or
thereafter in effect relating to or affecting rights and remedies of
creditors, and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and to the
discretion of the court before which any proceeding therefor may be
brought;
(B) the Indenture, assuming due authorization, execution and
delivery thereof by the Trustee, is a valid and binding agreement of
the Company, enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws then or
thereafter in effect relating to or affecting rights and remedies of
creditors, and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and to the
discretion of the court before which any proceeding therefor may be
brought;
(C) the forms of Notes (in the case of the opinion dated as of
the Commencement Date) or the Notes (in the case of the opinion dated
as of the Settlement Date) and the Indenture conform in all material
respects to the descriptions thereof contained in the Registration
Statement and the Prospectus under the headings "Description of Debt
Securities" and "Description of Notes";
(D) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the
best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Act and no proceedings therefor have been initiated by the Commission;
and any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) or Rule 434 under the Act has been
made in the manner and within the time period required by Rule 424(b)
under the Act; the Indenture has been duly qualified under the Trust
Indenture Act;
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(E) To the best of such counsel's knowledge no consent,
approval, authorization or order of, or filing with, any federal or
New York court or governmental agency or body is required to be
obtained or made by the Company for (x) the execution and delivery of
this Agreement (in the case of the opinion dated as of the
Commencement Date) or (y) the consummation of the sale of the Notes by
the Company pursuant to the applicable Terms Agreement (in the case of
the opinion dated as of the Settlement Date), except (A) such as have
been obtained under the Act and the Trust Indenture Act and (B) such
as may be required under the state securities laws, Blue Sky laws or
real estate syndication laws in connection with the purchase and sale
of the Notes;
(F) The Registration Statement and the Prospectus, as then
supplemented or amended, comply as to form in all material respects
with the requirements for registration statements on Form S-3 under
the Act and the rules and regulations of the Commission thereunder; it
being understood, however, that such counsel need express no opinion
with respect to (1) the financial statements, schedules and other
financial and statistical data included in the Registration Statement
or the Prospectus or incorporated therein or (2) the Form T-1. In
passing upon the compliance as to form of the Registration Statement
and the Prospectus, such counsel may assume that the statements made
and incorporated by reference therein are correct and complete;
(G) (x) The execution and the delivery of this Agreement (in the
case of the opinion dated as of the Commencement Date) or (y) the
purchase of the Notes by the Agents and the sale of the Notes by the
Company pursuant to the terms of the applicable Terms Agreement (in
the case of the opinion dated as of the Settlement Date) will not
result in the breach of or a default under those agreements identified
to such counsel by an officer of the Company as material to the
Company;
(H) The statements set forth in the Prospectus Supplement under
the headings "Plan of Distribution" (but only with respect to the
first paragraph (excluding the last sentence therein), the third
paragraph and the fourth paragraph) and "Certain U.S. Federal Income
Tax Considerations" and in the Basic Prospectus under the heading
"Plan of Distribution" (but only with respect to the third and fourth
paragraphs), insofar as such statements constitute a
24
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summary of legal matters, are accurate in all material respects.
Such opinion may be limited to the internal laws of the State of New
York and the federal laws of the United States. Such counsel may rely as
to factual matters on certificates of officers of the Company and of state
officials, in which case their opinion shall state that they are so doing.
Such opinion also shall take further exceptions that shall be reasonably
acceptable to the relevant Agents.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the
Company, representatives of the Agents and their counsel, at which the
contents of the Registration Statement and Prospectus and any amendments or
supplements thereto, if any, and related matters were discussed and,
although such counsel need not pass upon and need not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus or
any amendments or supplements thereto, if any, and such counsel may state
that they have made no independent check or verification thereof, during
the course of such participation, (relying as to materiality to a large
extent upon the statements of officers and other representatives of the
Company), no facts came to such counsel's attention that caused such
counsel to believe that the Registration Statement (as amended or
supplemented, if applicable, and including the Incorporated Documents), at
the time such Registration Statement or any post-effective amendment became
effective and on the date such opinion is delivered, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus (including the Incorporated Documents)
as amended or supplemented, as of its date and as of the date such opinion
is delivered, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; it being understood that such counsel need express no belief
with respect to (i) the financial statements, schedules and other financial
and statistical data included in the Registration Statement or the
Prospectus or incorporated therein or (ii) the Form T-1.
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(ii) The opinion, dated as of such date, of John F. Schmutz, Esq.,
Vice President and General Counsel of the Company, to the effect that:
(A) To the best of such counsel's knowledge, no authorization,
approval, consent or order of, or registration or filing with, any
court or governmental authority or agency is required to be obtained
or made by the Company for (x) execution and delivery of this
Agreement (in the case of the opinion dated as of the Commencement
Date) or (y) the consummation of the sale of the Notes by the Company
pursuant to the applicable Terms Agreement (in the case of the opinion
dated as of the Settlement Date), except (1) such as have been
obtained under the Act and the Trust Indenture Act and (2) such as may
be required under the state securities, Blue Sky laws or real estate
syndication laws or regulations of any jurisdiction in the United
States in connection with the sale of the Notes;
(B) (1) The Company has corporate power and authority to enter
into this Agreement, any applicable Terms Agreement, the Indenture and
the Notes and (2) each of this Agreement, any applicable Terms
Agreement, the Indenture and the forms of Notes (in the case of the
opinion dated as of the Commencement Date) or the Notes (in the case
of the opinion dated as of the Settlement Date) has been duly
authorized by all necessary corporate action by the Company, and each
of this Agreement and the Indenture has been duly executed and
delivered by the Company;
(C) (x) The execution and the delivery of this Agreement (in the
case of the opinion dated as of the Commencement Date) or (y) the
purchase of the Notes by the Agents and the sale of the Notes by the
Company pursuant to the terms of the applicable Terms Agreement (in
the case of the opinion dated as of the Settlement Date) will not
conflict with or constitute a breach of or a default under the
certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Significant
Subsidiaries or the terms of any material agreement or instrument to
which the Company or any of the Significant Subsidiaries is a party or
by which any of them is bound, or to which any of the properties of
the Company or any of the Significant Subsidiaries is subject, or will
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Significant
26
<PAGE>
Subsidiaries, or result in any violation of any statute, rule or
regulation applicable to the Company or, to the best of such
counsel's knowledge, any judgment, injunction, order or decree of
any court or governmental agency or body having jurisdiction over
the Company or any of the Significant Subsidiaries or any of their
respective properties;
(D) Each of the Company and, to the best of such counsel's
knowledge, the Significant Subsidiaries that is a corporation has been
duly incorporated and is validly existing and is a corporation in good
standing under the laws of its jurisdiction of its incorporation, and
each of the Company and, to the best of such counsel's knowledge, the
Significant Subsidiaries has the corporate (or partnership) power and
authority and all necessary governmental authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental regulatory officials and bodies to own and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction in which such qualification is required
wherein it owns or leases material property or conducts business,
except where the failure so to qualify could not reasonably be
expected to have a Material Adverse Effect;
(E) To the best of such counsel's knowledge (1) there are no
franchises, contracts, indentures, mortgages, leases, loan agreements,
notes or other agreements or instruments to which the Company or any
Significant Subsidiary is a party or by which any of them may be bound
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to or incorporated by reference
in the Registration Statement other than those described therein or
filed or incorporated by reference as exhibits thereto and (2) the
statements in the Form 10-K under the caption "Item 3. Legal
Proceedings" and in Part II of the Company's Form 10-Q, if any, filed
since the Form 10-K, under the caption "Item 1. Legal Proceedings", in
each case insofar as they relate to statements of law or legal
conclusions, are accurate in all material respects;
(F) The Company and the Significant Subsidiaries own all
patents, trademarks, trademark registrations,
27
<PAGE>
service marks, service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets and rights described in the
Prospectus as being owned by them or any of them or necessary for
the conduct of their respective businesses, and such counsel is not
aware of any claim to the contrary or any challenge by any other
person to the rights of the Company and the Significant
Subsidiaries with respect to the foregoing;
(G) To the best of such counsel's knowledge, there is no
current, pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of the Significant Subsidiaries or any of
their respective properties of a character required to be disclosed in
the Registration Statement and the Prospectus that is not adequately
so disclosed;
(H) At the time it became effective and on the date such opinion
is delivered, the Registration Statement (except for (1) financial
statements, the notes thereto and related schedules and other
financial, numerical, statistical or accounting data included or
incorporated therein or omitted therefrom and (2) the Form T-1, as to
which no opinion need be expressed) and the Prospectus complied and
complies as to form in all material respects with the applicable
requirements of the Act; and each of the Incorporated Documents
(except for financial statements, the notes thereto and related
schedules and other financial, numerical, statistical or accounting
data included therein or omitted therefrom, as to which no opinion
need be expressed) complies as to form in all material respects with
the Exchange Act;
(I) The statements in the Registration Statement and the
Prospectus, insofar as they are descriptions of contracts, agreements
or other legal documents, or refer to statements of law or legal
conclusions, are accurate and present fairly the information required
to be shown; and
(J) Neither the Company nor any of the Subsidiaries is an
"investment company" required to be registered under Section 8 of the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), or an entity "controlled by an investment company" required to
be registered under Section 8 of the Investment Company Act.
28
<PAGE>
Such opinion may be limited to the internal laws of the State of Texas
and the federal laws of the United States. Such opinion shall take further
exceptions that shall be reasonably acceptable to the relevant Agents.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the
Company, representatives of the Agents and their counsel, at which the
contents of the Registration Statement and Prospectus and any amendments or
supplements thereto (including the Incorporated Documents) and related
matters were discussed and, although such counsel is not passing upon and
does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus or any amendments or supplements thereto, on the basis of the
foregoing, relying as to the factual matters underlying the determination
of materiality to a large extent upon the statements of officers and other
representatives of the Company, no facts came to such counsel's attention
that caused such counsel to believe that the Registration Statement (as
amended or supplemented, if applicable, and including the Incorporated
Documents), at the time such Registration Statement or any post-effective
amendment became effective and on the date such opinion is delivered,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or the Prospectus, as amended or
supplemented, as of its date and as of the date such opinion is delivered,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; it
being understood that such counsel need express no belief with respect to
(i) the financial statements, schedules and other financial and statistical
data included in the Registration Statement or the Prospectus or
incorporated therein or (ii) the Form T-1.
(iii) The opinion, dated as of such date, of Davis Polk & Wardwell,
counsel for the Agents, with respect to the matters referred to in clauses
(i)(A), (i)(B), (i)(C), (i)(F) and (i)(H) (but only with respect to the
statements set forth in the Prospectus under the heading "Plan of
Distribution") and in the last paragraph of (i) above and such other
related matters as the relevant Agents may request.
29
<PAGE>
Notwithstanding the foregoing, the opinions described in clauses
(i)(A), (i)(C), (i)(E), (i)(F), (i)(G), (ii)(A), (ii)(C), (ii)(H), (ii)(I) and
the last paragraphs in (i) and (ii) above, when contained in an opinion
delivered on the Commencement Date or pursuant to Section 7(b), shall be deemed
not to address the application of the Commodity Exchange Act, as amended, or the
rules, regulations or interpretations of the Commodity Futures Trading
Commission to Notes the payments of principal or interest on which will be
determined by reference to one or more currency exchange rates, commodity
prices, equity indices or other factors.
(c) On the Commencement Date and, if called for by any agreement by
an Agent to purchase Notes as principal, on the corresponding Settlement Date,
KPMG Peat Marwick LLP, independent certified public accountants, or any other
independent certified public accountants shall have furnished to the relevant
Agents a letter or letters, dated as of the Commencement Date or such Settlement
Date, as the case may be, substantially in the forms approved by such Agents.
(d) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the relevant Agents shall have
received a certificate, dated such Commencement Date or Settlement Date, as the
case may be, signed by an executive officer of the Company reasonably acceptable
to the relevant Agents to the effect set forth in subparagraph (a)(ii)(A) above
and to the effect that (i) the representations and warranties of the Company
contained herein are true and correct as of such date and (ii) the Company has
not failed on or prior to such date to have performed or complied in all
material respects with any of its agreements herein contained and required to be
performed or complied with by it hereunder on or prior to such date.
(e) On the Commencement Date and on each Settlement Date, the Company
shall have furnished to the relevant Agents such appropriate further
information, certificates and documents as they may reasonably request.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the relevant Agents and their counsel.
Any certificate or document signed by any officer of the Company and
delivered to the relevant Agents, or to counsel for the relevant Agents, shall
be deemed a representation and warranty by the Company to each relevant Agent as
to the statements made therein.
30
<PAGE>
7. ADDITIONAL AGREEMENTS OF THE COMPANY.
(a)(i) Each time the Registration Statement or Prospectus is amended
or supplemented (other than by (x) an amendment or supplement providing solely
for a change in the interest rates, redemption provisions, amortization
schedules or maturities offered on the Notes or for a change the Agents deem to
be immaterial or (y) an amendment or supplement through the filing of a Form
8-K), the Company will deliver or cause to be delivered forthwith to each Agent
a certificate signed by an executive officer of the Company, dated the date of
such amendment or supplement, as the case may be, in form reasonably
satisfactory to the Agents, of the same tenor as the certificate referred to in
Section 6(d) relating to the Registration Statement or the Prospectus as amended
or supplemented to the time of delivery of such certificate and (ii) each time
the Registration Statement or Prospectus is amended or supplemented by an
amendment or supplement through the filing of a Form 8-K relating to a change
the Agents deem to be material, upon request of any Agent in writing, the
Company will deliver or cause to be delivered forthwith to such Agent a
certificate signed by an executive officer of the Company, dated the date of
such amendment or supplement, as the case may be, in form reasonably
satisfactory to such Agent, of the same tenor as the certificate referred to in
Section 6(d) relating to the Registration Statement or the Prospectus as amended
or supplemented to the time of delivery of such certificate.
(b) Each time the Company furnishes a certificate pursuant to Section
7(a), the Company will furnish or cause to be furnished forthwith to each Agent
written opinions of (i) general counsel of the Company and (ii) upon request of
any Agent in writing, Latham & Watkins, or any other counsel reasonably
satisfactory to the Agents. Any such opinions shall be dated the date of such
amendment or supplement, as the case may be, shall be in a form satisfactory to
the Agents and shall be of the same tenor as the opinions referred to in Section
6(b)(i) and 6(b)(ii), as the case may be, but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion. In lieu of such opinion, counsel last
furnishing such an opinion to an Agent may furnish to each Agent a letter to the
effect that such Agent may rely on such last opinion to the same extent as
though it were dated the date of such letter (except that statements in such
last opinion will be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented to the time of delivery of such letter.)
(c) Each time the Registration Statement or the Prospectus is amended
or supplemented to set forth amended or
31
<PAGE>
supplemental financial information or such amended or supplemental information
is incorporated by reference in the Prospectus, the Company shall cause its
independent public accountants forthwith to furnish each Agent with a letter,
dated the date of such amendment or supplement, as the case may be, in form
satisfactory to the Agents, of the same tenor as the letter referred to in
Section 6(c), with regard to the amended or supplemental financial
information included or incorporated by reference in the Registration
Statement or the Prospectus as amended or supplemented to the date of such
letter.
8. POSITION OF THE AGENTS. In acting under this Agreement and in
connection with the sale of any Notes by the Company (other than Notes sold to
an Agent pursuant to a Terms Agreement), each Agent is acting solely as agent of
the Company and does not assume any obligation towards or relationship of agency
or trust with any purchaser of Notes. An Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Notes has been solicited by such Agent and accepted by the Company, but
such Agent shall not have any liability to the Company in the event any such
purchase is not consummated for any reason. If the Company shall default in its
obligations to deliver Notes to a purchaser whose offer it has accepted, the
Company shall hold the relevant Agent harmless against any loss, claim, damage
or liability arising from or as a result of such default and shall, in
particular, pay to such Agent the commission it would have received had such
sale been consummated.
9. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by the
Company of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), the Prospectus and each
amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as may
be reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery of
the Notes, including any stamp taxes in connection with the original issuance
and sale of the Notes; (iv) the printing (or reproduction) and delivery of this
Agreement, the Indenture, the preliminary and supplemental Blue Sky Memoranda
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Notes; (v) the registration or qualification
of the Notes for offer and sale under the state securities or Blue Sky laws of
the
32
<PAGE>
several states as provided herein (including the reasonable fees, expenses
and disbursements of counsel for the Company relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification); (vi) the filing fees and
the fees and expenses of counsel for the Agents in connection with any filings
required to be made with the National Association of Securities Dealers, Inc.;
(vii) the transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Notes; (viii) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company and the Trustee and its counsel; (ix) any fees charged by rating
agencies for the rating of the Notes; (x) the reasonable fees and disbursements
of counsel for the Agents incurred in connection with the offering and sale of
the Notes, including any opinions to be rendered by such counsel hereunder; and
(xi) any reasonable out-of-pocket expenses incurred by the Agent; PROVIDED that
any advertising expenses (including tombstones) incurred by the Agents shall
have been approved by the Company and that the Agents are solely responsible for
their road show expenses.
10. TERMINATION. This Agreement may be terminated at any time by
the Company or, as to any Agent, by the Company or such Agent upon the giving of
written notice of such termination to the other parties hereto, but without
prejudice to any rights, obligations or liabilities of any party hereto accrued
or incurred prior to such termination. The termination of this Agreement shall
not require termination of any Terms Agreement, and the termination of any such
Terms Agreement shall not require termination of this Agreement. If this
Agreement is terminated, the provisions of the third paragraph of Section 2(a),
Section 2(e), the last sentence of Section 3(d) and Sections 3(f), 5, 8, 9,
11(b), 12(a) and 13 shall survive; PROVIDED that if at the time of termination
an offer to purchase Notes has been accepted by the Company but the time of
delivery to the purchaser or its agent of such Notes has not occurred, the
provisions of Sections 2(b), 2(c), 3(b), 3(e), 3(g), 3(h), 3(i), 6 and 7 shall
also survive until such delivery has been made.
11. NOTICES; SUCCESSORS.
(a) Except as otherwise provided in this Agreement, notice given
pursuant to any provision of this Agreement shall be in writing and shall be
delivered (i) if to the Company, at the office of the Company at Weston
Centre, 112 E. Pecan Street, P.O. Box 2636, San Antonio, Texas 78299-2636,
Attention: John F. Schmutz, Esq., Vice President and General Counsel (Fax
no.: (210) 302-6016); (ii) if to Morgan Stanley, at 1585 Broadway, 2nd
33
<PAGE>
Floor, New York, New York 10036, Attention: Manager-Continuously Offered
Products (Fax no.: (212) 761-0780), with a copy to Morgan Stanley, at 1585
Broadway, 34th Floor, New York, New York 10036, Attention: Peter Cooper,
Investment Banking Information Center (Fax no.: (212) 761-0260); (iii) if to
Goldman, at 85 Broad Street, New York, New York 10004, Attention: Money
Market Originations Department (Fax no.: (212) 902-0683); or (iv) if to
NationsBanc, at NC1-007-07-01, 100 N. Tryon Street, Charlotte, NC 28255,
Attention: Medium-Term Notes, Lynn McConnell, Tel. no.: (704) 386-6616, Fax
no.: (704) 388-9939.
(b) Each of this Agreement and any applicable Terms Agreement has
been and is made solely for the benefit of the Agents, the Company, its
directors and officers and the other controlling persons referred to in Section
5 hereof and their respective successors and assigns, to the extent provided
herein, and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any Agent of
any of the Notes in his status as such purchaser.
12. APPLICABLE LAW; COUNTERPARTS. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
(b) This Agreement may be signed in various counterparts that
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
indemnity and contribution agreements, representations, warranties and other
statements of the Company, its officers and the Agents set forth in or made
pursuant to this Agreement or any Terms Agreement will remain in full force and
effect, regardless of any termination of this Agreement or any such Terms
Agreement, any investigation made by or on behalf of an Agent or the Company or
any of the officers, directors or controlling persons referred to in Section 5
and delivery of and payment for the Notes.
14. AMENDMENTS. (a) This Agreement may be amended or supplemented
if, but only if, such amendment or supplement is in writing and is signed by the
Company and each Agent; PROVIDED that the Company may, from time to time, upon
prior notice (which may be oral if promptly confirmed in writing) to the Agents
but without the consent of any Agent, amend this Agreement to add as
34
<PAGE>
a party hereto one or more additional firms registered under the Exchange
Act, whereupon each such firm shall become an Agent hereunder on the same
terms and conditions as the other Agents that are parties hereto. The Agents
shall sign any amendment or supplement giving effect to the addition of any
such firm as an Agent under this Agreement.
(b) The Company may, from time to time, upon prior notice (which
notice may be oral if promptly confirmed in writing) to the Agents but without
the consent of any Agent, enter into one or more additional agreements for
distribution of the Notes with one or more firms registered under the Exchange
Act; provided, however that any such agreement entered into pursuant to this
subparagraph (b) shall include (i) terms and conditions substantially similar to
those contained in this Agreement and (ii) commission rates identical to those
contained in section 2(a) of this Agreement.
15. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
35
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
LA QUINTA INNS, INC.
By: /s/ WILLIAM C. HAMMETT, JR.
--------------------------------------
Name: William C. Hammett, Jr.
Title: Senior Vice President and
Chief Financial Officer
36
<PAGE>
The foregoing Agreement
is hereby confirmed
and accepted as of the
date first above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ JENNIFER A. HARRIS
-------------------------------------
Name: Jennifer A. Harris
Title: Vice President
GOLDMAN, SACHS & CO.
By: /s/ GOLDMAN, SACHS & CO.
-------------------------------------
(Goldman, Sachs & Co.)
NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ LYNN T. MCCONNELL
-------------------------------------
Name: Lynn T. McConnell
Title: Director
37
<PAGE>
EXHIBIT A
LA QUINTA INNS, INC.
MEDIUM-TERM NOTES
TERMS AGREEMENT
[Date]
La Quinta Inns, Inc.
Weston Centre
112 East Pecan Street
Post Office Box 2636
San Antonio, Texas 78299-2636
Attention: John F. Schmutz, Esq.
Vice President and General Counsel
Re: Distribution Agreement dated September __, 1996
(THE "DISTRIBUTION AGREEMENT")
[We agree to purchase your Medium-Term Notes having the following
terms:](1)
[We agree to purchase, severally and not jointly, the principal amount
of Notes set forth below opposite our names:
PRINCIPAL AMOUNT
NAME OF NOTES
---- ----------------
Morgan Stanley & Co.
Incorporated
Goldman, Sachs & Co.
NationsBanc Capital Markets, Inc.
Total . . . . . . $
-----------
-----------
- --------------------
(1) Use this if the transaction is syndicated.
<PAGE>
The Notes shall have the following terms:](2)
ALL NOTES: FIXED RATE NOTES: FLOATING RATE NOTES:
Principal amount: Interest Rate: Base rate:
Purchase price: Applicability Index maturity:
of modified
Price to public: payment upon Spread:
acceleration:
Settlement date Spread multiplier:
and time: If yes, state
issue price: Alternate rate
Place of event spread:
delivery: Amortization
schedule: Initial interest
Specified rate:
currency:
Initial interest
Maturity date: reset date:
Initial accrual Interest reset
period OID: dates:
Total amount Interest reset
of OID: period:
Original yield Maximum interest
to maturity: rate:
Optional repayment Minimum interest
date(s): rate:
Optional redemption Interest payment
date(s): period:
Initial redemption Interest payment
date: dates:
Initial redemption Calculation agent:
percentage:
Annual redemption
percentage
decrease:
Other terms:
- --------------------
(2) Use this if the transaction is syndicated.
2
<PAGE>
The provisions of Sections 2(b), 2(c), 3, 4, 5, 6, 7, 11,
12(a) and 13 of the Distribution Agreement and the related
definitions are incorporated by reference herein and shall be
deemed to have the same force and effect as if set forth in full
herein.
[If on the Settlement Date any one or more of the Agents
shall fail or refuse to purchase Notes that it has or they have
agreed to purchase on such date, and the aggregate amount of
Notes which such defaulting Agent or Agents agreed but failed or
refused to purchase is not more than one-tenth of the aggregate
amount of the Notes to be purchased on such date, the other
Agents shall be obligated severally in the proportions that the
amount of Notes set forth opposite their respective names above
bears to the aggregate amount of Notes set forth opposite the
names of all such non-defaulting Agents, or in such other
proportions as _______________may specify, to purchase the Notes
which such defaulting Agent or Agents agreed but failed or
refused to purchase on such date; PROVIDED that in no event shall
the amount of Notes that any Agent has agreed to purchase
pursuant to this Agreement be increased pursuant to this
paragraph by an amount in excess of one-ninth of such amount of
Notes without the written consent of such Agent. If on the
Settlement Date any Agent or Agents shall fail or refuse to
purchase Notes and the aggregate amount of Notes with respect to
which such default occurs is more than one-tenth of the aggregate
amount of Notes to be purchased on such date, and arrangements
satisfactory to _____________ and the Company for the purchase of
such Notes are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any
non-defaulting Agent or the Company. In any such case either
_____________ or the Company shall have the right to postpone the
Settlement Date but in no event for longer than seven days, in
order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this
paragraph shall not relieve any
3
<PAGE>
defaulting Agent from liability in respect of any default of such
Agent under this Agreement.](3)
This Agreement is subject to termination on the terms
incorporated by reference herein. If this Agreement is so
terminated, the provisions of Sections 5, 9, 11(b), 12(a) and 13
of the Distribution Agreement shall survive for the purposes of
this Agreement.
The following information, opinions, certificates, letters
and documents referred to in Section 6 of the Distribution
Agreement will be required: ________________
Very truly yours,
[MORGAN STANLEY & CO. INCORPORATED]
By:
-----------------------------------
Name:
Title:
[GOLDMAN, SACHS & CO.]
By:
-----------------------------------
Name:
Title:
[NATIONSBANC CAPITAL MARKETS, INC.]
By:
-----------------------------------
Name:
Title:
- --------------------
(3) Delete if the transaction is not syndicated.
4
<PAGE>
Accepted:
LA QUINTA INNS, INC.
By:
------------------------
Name:
Title:
5
<PAGE>
EXHIBIT B
LA QUINTA INNS, INC.
MEDIUM-TERM NOTES
ADMINISTRATIVE PROCEDURES
_________________________________
Explained below are the administrative procedures and specific terms of
the offering of Medium-Term Notes (the "Notes"), on a continuous basis by La
Quinta Inns, Inc. (the "Company") pursuant to the Distribution Agreement,
dated as of September 16, 1996 (the "Distribution Agreement") among the
Company and Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and
NationsBanc Capital Markets, Inc. (the "Agents"). The Notes will be issued
under an Indenture dated as of September 15, 1995 (the "Indenture") between
the Company and U.S. Trust Company of Texas, N.A., as trustee (the
"Trustee"). In the Distribution Agreement, the Agents have agreed to use
reasonable efforts to solicit purchases of the Notes, and the administrative
procedures explained below will govern the issuance and settlement of any
Notes sold through an Agent, as agent of the Company. An Agent, as
principal, may also purchase Notes for its own account, pursuant to a terms
agreement (a"Terms Agreement"), as contemplated by the Distribution
Agreement. The administrative procedures explained below will govern the
issuance and settlement of any Notes purchased by an Agent, as principal,
unless otherwise specified in the applicable Terms Agreement.
The Trustee will be the Registrar, Calculation Agent, Authenticating
Agent and Paying Agent for the Notes and will perform the duties specified
herein. Each Note will be represented by either a Global Security (as
defined below) delivered to the Trustee, as agent for The Depository Trust
Company ("DTC"), and recorded in the book-entry system maintained by DTC (a
"Book-Entry Note") or a certificate delivered to the holder thereof or a
person designated by such holder (a "Certificated Note"). Except as set
forth in the Indenture, an
B-1
<PAGE>
owner of a Book-Entry Note will not be entitled to receive a Certificated
Note.
Book-Entry Notes, which will be payable only in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC'S
operating procedures. Certificated Notes will be issued in accordance with
the administrative procedures set forth in Part II hereof. Unless otherwise
defined herein, terms defined in the Indenture, the Notes or any prospectus
supplement relating to the Notes shall be used herein as therein defined.
The Company will advise the Agents in writing of the employees of the
Company with whom the Agents are to communicate regarding offers to purchase
Notes and the related settlement details.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will
perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter
of Representation from the Company and the Trustee to DTC, dated as of
September 16, 1996, and a Medium-Term Note Certificate Agreement between the
Trustee and DTC, dated as of February 2, 1993 (the "MTN Certificate
Agreement"), and its obligations as a participant in DTC, including DTC's
Same-Day Funds Settlement System ("SDFS").
Issuance: On any date of settlement (as defined under "Settlement"
below) for one or more Book-Entry Notes, the Company will
issue a single global security in fully registered form
without coupons (a "Global Security") representing up to U.S.
$150,000,000 principal amount of all such Notes that have the
same Original Issue Date, Maturity Date and other terms. Each
Global Security will be dated and issued as of the date of
its authentication by the Trustee. Each Global Security will
bear an "Interest Accrual Date," which will be (i) with
respect to an original
B-2
<PAGE>
Global Security (or any portion thereof), its original
issuance date and (ii) with respect to any Global Security
(or any portion thereof) issued subsequently upon exchange of
a Global Security, or in lieu of a destroyed, lost or stolen
Global Security, the most recent Interest Payment Date to
which interest has been paid or duly provided for on the
predecessor Global Security (or if no such payment or
provision has been made, the original issuance date of the
predecessor Global Security), regardless of the date of
authentication of such subsequently issued Global Security.
Book-Entry Notes will be payable only in U.S. dollars. No
Global Security will represent any Certificated Note.
Denominations: Book-Entry Notes will be issued in principal amounts of U.S.
$1,000 or any amount in excess thereof that is an integral
multiple of U.S. $1,000. Global Securities will be
denominated in principal amounts not in excess of U.S.
$150,000,000.
Preparation If any offer to purchase a Book-Entry Note is accepted by or
of Pricing on behalf of the Company, the Company will prepare a pricing
Supplement: supplement (a "Pricing Supplement") reflecting the terms of
such Note. The Company (i) will arrange to file a copy of
such Pricing Supplement with the Commission in accordance
with the applicable paragraph of Rule 424(b) under the Act
and (ii) will, as soon as possible and in any event not later
than 11:00 A.M., New York City time, on the Business Day
immediately following the applicable trade date, deliver the
number of copies of such Pricing Supplement to the relevant
B-3
<PAGE>
Agent as such Agent shall request, at the following address:
If to Morgan Stanley:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Medium-Term Note Trading Desk,
Carlos Cabrera
Tel: (212) 761-2000
Fax: (212) 761-8846
If to Goldman:
Goldman, Sachs & Co.
85 Broad Street, 26th Floor
New York, NY 10004
Attention: Medium-Term Note Trading,
Karen Robertson
Fax: (212) 902-0658
If to NationsBanc:
NationsBanc Capital Markets, Inc.
NC-1-007-07-01
100 N. Tryon Street
Charlotte, NC 28255
Attention: Medium-Term Notes,
Lynn McConnell
Tel: (704) 386-6616
Fax: (704) 388-9939
In each instance that a Pricing Supplement is prepared, the
relevant Agent will affix the Pricing Supplement to
Prospectuses prior to their use. Outdated Pricing
Supplements, and the Prospectuses to which they are attached
(other than those retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately available funds in
payment for a Book-Entry Note and the authentication and
issuance of the Global Security representing
B-4
<PAGE>
such Note shall constitute "settlement" with respect to such
Note. All offers accepted by the Company will be settled on
the third Business Day next succeeding the date of acceptance
pursuant to the timetable for settlement set forth below,
unless the Company and the purchaser agree to settlement on
another day, which shall be no earlier than the next Business
Day.
Settlement Settlement Procedures with regard to each Book-Entry Note
Procedures: sold by the Company to or through an Agent (unless otherwise
specified pursuant to a Terms Agreement) shall be as follows:
A. The relevant Agent will advise the Company by
telephone that such Note is a Book-Entry Note and of
the following settlement information:
1. Principal amount.
2. Maturity Date.
3. In the case of a Fixed Book-Entry Note, the
Interest Rate, whether such Note will pay interest
annually or semiannually and whether such Note is an
Amortizing Note, and, if so, the amortization
schedule, or, in the case of a Floating Rate
Book-Entry Note, the Initial Interest Rate (if known
at such time), Interest Payment Date(s), Interest
Payment Period, Calculation Agent, Base Rate, Index
Maturity, Interest Reset Period, Initial Interest
Reset
B-5
<PAGE>
Date, Interest Reset Dates, Spread or Spread
Multiplier (if any), Minimum Interest Rate (if any),
Maximum Interest Rate (if any) and the Alternate Rate
Event Spread (if any).
4. Redemption or repayment provisions (if any).
5. Settlement date and time (Original Issue Date).
6. Interest Accrual Date.
7. Price.
8. Agent's commission (if any) determined as
provided in the Distribution Agreement.
9. Whether the Note is an Original Issue Discount
Note (an "OID Note"), and if it is an OID Note, the
total amount of OID, the yield to maturity, the
initial accrual period OID and the applicability of
Modified Payment upon Acceleration (and, if so, the
Issue Price).
10. Whether the Note is an Indexed Note, and if it is
an Indexed Note, the Indexed Currency or Currencies,
the Payment Currency, the Exchange Rate Agent, the
Reference Dealers, the Face Amount, the Fixed Amount
of each
B-6
<PAGE>
Indexed Currency and the Aggregate Fixed Amount of
each Indexed Currency.
11. Whether the Note is a Renewable Note, and if it
is a Renewable Note, the Initial Maturity Date and
the Final Maturity Date.
12. Whether the Company has the option to extend the
Original Maturity Date of the Note, and, if so, the
Final Maturity Date of such Note.
13. Whether the Company has the option to reset the
Interest Rate, the Spread or the Spread Multiplier of
the Note.
14. Any other applicable terms.
B. The Company will advise the Trustee by telephone or
electronic transmission (confirmed in writing at any time on
the same date) of the information set forth in Settlement
Procedure "A" above. The Trustee will then assign a CUSIP
number to the Global Security representing such Note and will
notify the Company and the relevant Agent of such CUSIP
number by telephone as soon as practicable.
C. The Trustee will enter a pending deposit message through
DTC's Participant Terminal System, providing the following
settlement information to DTC, the relevant Agent and
Standard &
B-7
<PAGE>
Poor's Corporation:
1. The information set forth in Settlement
Procedure "A".
2. The Initial Interest Payment Date for such Note,
the number of days by which such date succeeds the
related DTC Record Date (which in the case of
Floating Rate Notes which reset daily or weekly,
shall be the date five calendar days immediately
preceding the applicable Interest Payment Date and,
in the case of all other Notes, shall be the Record
Date as defined in the Note) and, if known, the
amount of interest payable on such Initial Interest
Payment Date.
3. The CUSIP number of the Global Security
representing such Note.
4. Whether such Global Security will represent any
other Book-Entry Note (to the extent known at such
time).
5. Whether such Note is an Amortizing Note (by an
appropriate notation in the comments field of DTC's
Participant Terminal System).
6. The number of participant accounts to be
maintained by DTC on behalf of the relevant Agent
and the Trustee.
B-8
<PAGE>
D. The Trustee will complete and authenticate the Global
Security representing such Note.
E. DTC will credit such Note to the Trustee's participant
account at DTC.
F. The Trustee will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC to (i)
debit such Note to the Trustee's participant account and
credit such Note to the relevant Agent's participant account
and (ii) debit such Agent's settlement account and credit the
Trustee's settlement account for an amount equal to the price
of such Note less such Agent's commission (if any). The entry
of such a deliver order shall constitute a representation and
warranty by the Trustee to DTC that (a) the Global Security
representing such Book-Entry Note has been issued and
authenticated and (b) the Trustee is holding such Global
Security pursuant to the MTN Certificate Agreement.
G. Unless the relevant Agent is the end purchaser of such
Note, such Agent will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC (i) to
debit such Note to such Agent's participant account and
credit such Note to the participant accounts of the
Participants with respect to such Note and (ii) to debit the
settlement accounts of such Participants and credit
B-9
<PAGE>
the settlement account of such Agent for an amount equal to
the price of such Note.
H. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "F" and "G" will be
settled in accordance with SDFS operating procedures in
effect on the settlement date.
I. The Trustee will credit to the account of the Company
maintained at NationsBanc of Texas, N.A., or such other
account as the Company shall have specified to such Agent and
the Trustee in immediately available funds the amount
transferred to the Trustee in accordance with Settlement
Procedure "F".
J. Unless the relevant Agent is the end purchaser of such
Note, such Agent will confirm the purchase of such Note to
the purchaser either by transmitting to the Participants with
respect to such Note a confirmation order or orders through
DTC's institutional delivery system or by mailing a written
confirmation to such purchaser.
K. Monthly, the Trustee will send to the Company a statement
setting forth the principal amount of Notes outstanding as of
that date under the Indenture and setting forth a brief
description of any sales of which the Company has advised the
Trustee that have not yet been settled.
B-10
<PAGE>
Settlement For sales by the Company of Book-Entry Notes to or through an
Procedures Agent (unless otherwise specified pursuant to a Terms
Timetable: Agreement) for settlement on the first Business Day after the
sale date, Settlement Procedures "A" through "J" set forth
above shall be completed as soon as possible but not later
than the respective times in New York City set forth below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 A.M. on sale date
B 12:00 Noon on sale date
C 2:00 P.M. on sale date
D 9:00 A.M. on settlement date
E 10:00 A.M. on settlement date
F-G 2:00 P.M. on settlement date
H 4:45 P.M. on settlement date
I-J 5:00 P.M. on settlement date
If a sale is to be settled more than one Business Day after
the sale date, Settlement Procedures "A", "B" and "C" shall
be completed as soon as practicable but no later than 11:00
A.M., 12:00 Noon and 2:00 P.M., respectively, on the first
Business Day after the sale date. If the Initial Interest
Rate for a Floating Rate Book-Entry Note has not been
determined at the time that Settlement Procedure "A" is
completed, Settlement Procedures "B" and "C" shall be
completed as soon as such rate has been determined but no
later than 12:00 Noon and 2:00 P.M., respectively, on the
first Business Day before the settlement date. Settlement
Procedure "H" is subject to extension in accordance with any
extension of Fedwire closing deadlines and in the other
events specified in the SDFS operating procedures in effect
on the settlement date.
B-11
<PAGE>
If settlement of a Book-Entry Note is rescheduled or
cancelled, the Trustee, after receiving notice from the
Company or the relevant Agent, will deliver to DTC, through
DTC's Participant Terminal System, a cancellation message to
such effect by no later than 2:00 P.M. on the Business Day
immediately preceding the scheduled settlement date.
Failure If the Trustee fails to enter an SDFS deliver order with
to Settle: respect to a Book-Entry Note pursuant to Settlement Procedure
"F", the Trustee may deliver to DTC, through DTC's
Participant Terminal System, as soon as practicable a
withdrawal message instructing DTC to debit such Note to the
Trustee's participant account, provided that the Trustee's
participant account contains a principal amount of the Global
Security representing such Note that is at least equal to the
principal amount to be debited. If a withdrawal message is
processed with respect to all the Book-Entry Notes
represented by a Global Security, the Trustee will mark such
Global Security "cancelled," make appropriate entries in the
Trustee's records and send such cancelled Global Security to
the Company. The CUSIP number assigned to such Global
Security shall, in accordance with the procedures of the
CUSIP Service Bureau of Standard & Poor's Corporation, be
cancelled and not immediately reassigned. If a withdrawal
message is processed with respect to one or more, but not
all, of the Book-Entry Notes represented by a Global
Security, the Trustee will exchange such Global Security for
two Global Securities, one of which shall represent such
Book-Entry Note or Notes and shall be
B-12
<PAGE>
cancelled immediately after issuance and the other of which
shall represent the remaining Book-Entry Notes previously
represented by the surrendered Global Security and shall bear
the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Note is not timely
paid to the Participants with respect to such Note by the
beneficial purchaser thereof (or a person, including an
indirect participant in DTC, acting on behalf of such
purchaser), such Participants and, in turn, the relevant
Agent may enter SDFS deliver orders through DTC's Participant
Terminal System reversing the orders entered pursuant to
Settlement Procedures "F" and "G", respectively. Thereafter,
the Trustee will deliver the withdrawal message and take the
related actions described in the preceding paragraph.
Notwithstanding the foregoing, upon any failure to settle
with respect to a Book-Entry Note, DTC may take any actions
in accordance with its SDFS operating procedures then in
effect.
In the event of a failure to settle with respect to one or
more, but not all, of the Book-Entry Notes to have been
represented by a Global Security, the Trustee will provide,
in accordance with Settlement Procedures "D" and "F", for the
authentication and issuance of a Global Security representing
the Book-Entry Notes to be represented by such Global
Security and will make appropriate entries in its records.
B-13
<PAGE>
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as Registrar in connection with the Certificated
Notes.
Issuance: Each Certificated Note will be dated and issued as of the
date of its authentication by the Trustee. Each Certificated
Note will bear an Original Issue Date, which will be (i) with
respect to an original Certificated Note (or any portion
thereof), its original issuance date (which will be the
settlement date) and (ii) with respect to any Certificated
Note (or portion thereof) issued subsequently upon transfer
or exchange of a Certificated Note or in lieu of a destroyed,
lost or stolen Certificated Note, the original issuance date
of the predecessor Certificated Note, regardless of the date
of authentication of such subsequently issued Certificated
Note.
Preparation If any offer to purchase a Certificated Note is accepted by
of Pricing or on behalf of the Company, the Company will prepare a
Supplement: Pricing Supplement reflecting the terms of such Note. The
Company (i) will arrange to file a copy of such Pricing
Supplement with the Commission in accordance with the
applicable paragraph of Rule 424(b) under the Act and (ii)
will, as soon as possible and in any event not later than
11:00 A.M., New York City time, on the Business Day
immediately following the applicable trade date, deliver the
number of copies of such Pricing Supplement to the relevant
Agent as such Agent shall request at the following address:
B-14
<PAGE>
If to Morgan Stanley:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Medium-Term Note Trading Desk,
Carlos Cabrera
Tel: (212) 761-2000
Fax: (212) 761-8846
If to Goldman:
Goldman, Sachs & Co.
85 Broad Street, 26th Floor
New York, NY 10004
Attention: Medium-Term Note Trading,
Karen Robertson
Fax: (212) 902-0658
If to NationsBanc:
NationsBanc Capital Markets, Inc.
NC-1-007-07-01
100 N. Tryon Street
Charlotte, NC 28255
Attention: Medium-Term Notes,
Lynn McConnell
Tel: (704) 386-6616
Fax: (704) 388-9939
In each instance that a Pricing Supplement is prepared, the
relevant Agent will affix the Pricing Supplement to
Prospectuses prior to their use. Outdated Pricing
Supplements, and the Prospectuses to which they are attached
(other than those retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately available funds in
exchange for an authenticated Certificated Note delivered to
the relevant Agent and such Agent's delivery of such Note
against receipt of immediately available funds shall
constitute "settlement"
B-15
<PAGE>
with respect to such Note. All offers accepted by the Company
will be settled on the third Business Day next succeeding the
date of acceptance pursuant to the timetable for settlement
set forth below, unless the Company and the purchaser agree
to settlement on another date, which date shall be no earlier
than the next Business Day.
Settlement Settlement Procedures with regard to each Certificated Note
Procedures: sold by the Company to or through an Agent (unless otherwise
specified pursuant to a Terms Agreement) shall be as follows:
A. The relevant Agent will advise the Company by telephone
that such Note is a Certificated Note and of the following
settlement information:
1. Name in which such Note is to be registered
("Registered Owner").
2. Address of the Registered Owner and address for
payment of principal and interest.
3. Taxpayer identification number of the Registered
Owner (if available).
4. Principal amount.
5. Maturity Date.
6. In the case of a Fixed Rate Certificated Note, the
Interest Rate, whether such Note will pay interest
annually or semiannually and whether such Note is an
Amortizing Note and, if so, the amortization schedule,
or, in the case of a Floating Rate
B-16
<PAGE>
Certificated Note, the Initial Interest Rate (if known at
such time), Interest Payment Date(s), Interest Payment
Period, Calculation Agent, Base Rate, Index Maturity,
Interest Reset Period, Initial Interest Reset Date,
Interest Reset Dates, Spread or Spread Multiplier (if
any), Minimum Interest Rate (if any), Maximum Interest
Rate (if any) and the Alternate Rate Event Spread (if
any).
7. Redemption or repayment provisions (if any).
8. Settlement date and time (Original Issue Date).
9. Interest Accrual Date.
10. Price.
11. Agent's commission (if any) determined as provided in
the Distribution Agreement.
12. Denominations.
13. Whether the Note is an OID Note, and if it is an OID
Note, the total amount of OID, the yield to maturity, the
initial accrual period OID and the applicability of
Modified Payment upon Acceleration (and if so, the Issue
Price).
14. Whether the Note is an Indexed Note, and if it is an
Indexed Note, the Indexed Currency or Currencies, the
Payment Currency, the Exchange Rate Agent, the Reference
Dealers, the Face Amount, the Fixed Amount of each
Indexed Currency and the Aggregate Fixed Amount of each
Indexed
B-17
<PAGE>
Currency.
15. Whether the Note is a Renewable Note, and if it is a
Renewable Note, the Initial Maturity Date and the Final
Maturity Date.
16. Whether the Company has the option to extend the
Original Maturity Date of the Note, and, if so, the Final
Maturity Date of such Note.
17. Whether the Company has the option to reset the
Interest Rate, the Spread or the Spread Multiplier of the
Note.
18. Any other applicable terms.
B. The Company will advise the Trustee by telephone or
electronic transmission (confirmed in writing at any time on
the same date) of the information set forth in Settlement
Procedure "A" above.
C. The Company will have delivered to the Trustee a
pre-printed four-ply packet for such Note, which packet will
contain the following documents in forms that have been
approved by the Company, the relevant Agent and the Trustee:
1. Note with customer confirmation.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant Agent.
4. Stub Three - For the Company.
B-18
<PAGE>
D. The Trustee will complete such Note and authenticate such
Note and deliver it (with the confirmation) and Stubs One and
Two to the relevant Agent at the following address:
If to Morgan Stanley:
Bank of New York
Dealer Clearance Department
1 Wall Street
3rd Floor, Window 3B
New York NY 10005
Attention: For the account of
Morgan Stanley & Co. Incorporated
If to Goldman:
Goldman, Sachs & Co.
85 Broad Street, 6th Floor
New York, NY 10004
Attention: Corporate Bond Operations
Tel: (212) 902-5836
If to NationsBanc:
NationsBanc Capital Markets, Inc.
NC-1-007-07-01
100 N. Tryon Street
Charlotte, NC 28255
Attention: Medium-Term Notes,
Lynn McConnell
Tel: (704) 386-6616
Fax: (704) 388-9939
Such Agent will acknowledge receipt of the Note by stamping
or otherwise marking Stub One and returning it to the
Trustee. Such delivery will be made only against such
acknowledgment of receipt and evidence that instructions have
been given by such Agent for payment to the account of the
Company at NationsBanc of Texas, N.A., or to such other
account as the Company shall have specified to such Agent and
the Trustee, in immediately available funds, of an amount
equal to the price of such Note less such Agent's commission
(if any).
B-19
<PAGE>
In the event that the instructions given by such Agent for
payment to the account of the Company are revoked, the
Company will as promptly as possible wire transfer to the
account of such Agent an amount of immediately available
funds equal to the amount of such payment made.
E. Unless the relevant Agent is the end purchaser of such
Note, such Agent will deliver such Note (with confirmation)
to the customer against payment in immediately available
funds. Such Agent will obtain the acknowledgment of receipt
of such Note by retaining Stub Two.
F. The Trustee will send Stub Three to the Company by first-
class mail. Monthly, the Trustee will also send to the
Company a statement setting forth the principal amount of the
Notes outstanding as of that date under the Indenture and
setting forth a brief description of any sales of which the
Company has advised the Trustee that have not yet been
settled.
Settlement For sales by the Company of Certificated Notes to or through
Procedures an Agent (unless otherwise specified pursuant to a Terms
Timetable: Agreement), Settlement Procedures "A" through "F" set forth
above shall be completed on or before the respective times
in New York City set forth below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 2:00 P.M. on day before settlement date
B 3:00 P.M. on day before settlement date
C-D 2:15 P.M. on settlement date
E 3:00 P.M. on settlement date
B-20
<PAGE>
F 5:00 P.M. on settlement date
Failure If a purchaser fails to accept delivery of and make payment
to Settle: for any Certificated Note, the relevant Agent will notify
the Company and the Trustee by telephone and return such Note
to the Trustee. Upon receipt of such notice, the Company
will immediately wire transfer to the account of such Agent
an amount equal to the price of such Note less such Agent's
commission in respect of such Note (if any). Such wire
transfer will be made on the settlement date, if possible,
and in any event not later than the Business Day following
the settlement date. If the failure shall have occurred for
any reason other than a default by such Agent in the
performance of its obligations hereunder and under the
Distribution Agreement, then the Company will reimburse such
Agent or the Trustee, as appropriate, on an equitable basis
for its loss of the use of the funds during the period when
they were credited to the account of the Company. Immediately
upon receipt of the Certificated Note in respect of which
such failure occurred, the Trustee will mark such Note
"cancelled," make appropriate entries in the Trustee's
records and send such Note to the Company.
B-21
<PAGE>
LA QUINTA INNS, INC.
OFFICERS' CERTIFICATE
Pursuant to Sections 2.2 and 10.4 of the Indenture dated as of
September 15, 1995 (the "Indenture"), between La Quinta Inns, Inc. (the
"Issuer") and U.S. Trust Company of Texas, N.A., as Trustee (the "Trustee"),
the undersigned officers of the Issuer do hereby certify as follows in
connection with the issuance from time to time under the Indenture of the
Issuer's Medium-Term Notes due more than nine months from date of issue (the
"Notes"), with an aggregate initial public offering price not to exceed
$150,000,000:
1. In our opinion, when all of the terms of the Notes have been
established in conformity with the Indenture, all conditions precedent under the
Indenture to the issuance and authentication of the Notes and the delivery of
the Notes by the Issuer shall have been complied with.
2. The undersigned have read the conditions referred to in paragraph
1 above and the definitions in the Indenture relating thereto.
3. The statements of the undersigned contained herein are based upon
our participation in the preparation of the forms of the Notes and a review of
the Indenture.
4. Each of the undersigned has made such examination or
investigation as is necessary in our opinion to enable the undersigned to
express an informed opinion as to whether the conditions referred to in
paragraph 1 above have been complied with.
5. The forms of the Notes are attached hereto as Exhibits A-1 and
A-2.
6. The form and the terms of the Notes have been established in
compliance with the Indenture.
<PAGE>
Dated: September 16, 1996
Very truly yours,
LA QUINTA INNS, INC.
By: /s/ Gary L. Mead
-----------------------------------
Name: Gary L. Mead
Title: President and Chief Executive
Officer
By: /s/ William C. Hammett, Jr.
-----------------------------------
Name: William C. Hammett, Jr.
Title: Senior Vice President and
Chief Financial Officer
2
<PAGE>
[FORM OF FACE OF SECURITY]
LA QUINTA INNS, INC.
MEDIUM-TERM NOTE
Fixed Rate Note
REGISTERED REGISTERED
No. FXR [PRINCIPAL AMOUNT]
CUSIP:
[Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate 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 is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE
METHOD) SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF
APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
* Delete if this is not a Registered Global Security
<PAGE>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
ORIGINAL ISSUE DATE: INITIAL REDEMPTION INTEREST ORIGINAL
DATE: RATE: MATURITY
DATE:
- ----------------------------------------------------------------------------
INTEREST ACCRUAL INITIAL REDEMPTION APPLICABILITY OPTIONAL
DATE: PERCENTAGE: OF MODIFIED REPAYMENT
PAYMENT DATES(S):
UPON ACCEL-
ERATION:
- ----------------------------------------------------------------------------
TOTAL AMOUNT OF OID: ANNUAL REDEMPTION If yes, state
PERCENTAGE Issue Price:
REDUCTION:
- ----------------------------------------------------------------------------
ORIGINAL YIELD TO
MATURITY:
- ----------------------------------------------------------------------------
INITIAL ACCRUAL
PERIOD:
- ----------------------------------------------------------------------------
APPLICABILITY OF APPLICABILITY OF
ISSUER'S OPTION TO ANNUAL INTEREST
EXTEND ORIGINAL PAYMENTS:
MATURITY DATE:
- ----------------------------------------------------------------------------
If yes, state Final
Maturity Date:
- ----------------------------------------------------------------------------
OTHER PROVISIONS:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
La Quinta Inns, Inc., a Texas corporation (together with its
successors and assigns, the "Issuer"), for value received, hereby promises to
pay to:______
________________________________________________________________________, or
registered assignees, the principal sum of ____________________________ dollars,
on the Original Maturity Date specified above or, if the maturity hereof is
extended in accordance with the procedures set forth below to an Extended
Maturity Date, as defined below, on such Extended Maturity Date (except to the
extent previously redeemed or repaid) and to pay interest thereon at the
Interest Rate per annum specified above or, if the interest rate herein is reset
or re-established in connection with an extension of maturity in accordance with
the procedures specified on the reverse hereof, at the interest rate per annum
determined pursuant to such procedures, from the Interest Accrual Date specified
above until the principal hereof is paid or duly made available for payment
2
<PAGE>
(except as provided below), semiannually (unless otherwise specified on the face
hereof) in arrears on the 15th day of January and July in each year (unless
otherwise specified on the face hereof) (each such date an "Interest Payment
Date") commencing on the Interest Payment Date next succeeding the Interest
Accrual Date specified above, and at maturity (or on any redemption or repayment
date); PROVIDED, HOWEVER, that if the Interest Accrual Date occurs between a
Record Date, as defined below, and the next succeeding Interest Payment Date,
interest payments will commence on the second Interest Payment Date succeeding
the Interest Accrual Date to the registered holder of this Note on the Record
Date with respect to such second Interest Payment Date; and PROVIDED, FURTHER,
that if this Note is subject to "Annual Interest Payments," interest payments
shall be made annually in arrears and the term "Interest Payment Date" shall be
deemed to mean the 15th day of July in each year.
Interest on this Note will accrue from the most recent Interest
Payment Date to which interest has been paid or duly provided for, or, if no
interest has been paid or duly provided for, from the Interest Accrual Date,
until the principal hereof has been paid or duly made available for payment
(except as provided below). The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, subject to certain
exceptions described herein, be paid to the person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on the
date 15 calendar days prior to such Interest Payment Date (whether or not a
Business Day) (each such date a "Record Date"); PROVIDED, HOWEVER, that interest
payable at maturity (or on any redemption or repayment date) will be payable to
the person to whom the principal hereof shall be payable. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which banking institutions are authorized or required
by law, regulation or executive order to close in The City of New York.
Payment of the principal of this Note, any premium and the interest
due at maturity (or on any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payment of the principal of and
premium, if any, and interest on this Note will be made by U.S. dollar check
mailed to the address of the person entitled thereto as such address shall
appear in the Note register. Notwithstanding the foregoing, (a) the Depository,
as holder of Global Notes, shall be entitled to receive payments of interest by
wire transfer of immediately available funds and (b) a holder of $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date will be entitled to receive payments of interest, other than interest due
at maturity or on any date of redemption or repayment, by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received by the Paying Agent in writing not less than 15 calendar days prior to
the applicable Interest Payment Date.
3
<PAGE>
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: LA QUINTA INNS, INC.
(SEAL)
By
-------------------------------------
Name:
Title:
ATTEST:
By
- -------------------------- -------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Indenture.
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
By
------------------------
Authorized Officer
5
<PAGE>
[FORM OF REVERSE OF SECURITY]
This Note is one of a duly authorized issue of Medium-Term Notes,
having maturities more than nine months from the date of issue (the "Notes") of
the Issuer. The Notes are issuable under an Indenture, dated as of September
15, 1995 (the "Indenture"), between the Issuer and U.S. Trust Company of Texas,
N.A., as Trustee (the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed U.S. Trust Company of Texas, N.A. at its
corporate trust office in The City of New York as the paying agent (the "Paying
Agent," which term includes any additional or successor Paying Agent appointed
by the Issuer) with respect to the Notes. The terms of individual Notes may
vary with respect to interest rates, interest rate formulas, issue dates,
maturity dates, or otherwise, all as provided in the Indenture. To the extent
not inconsistent herewith, the terms of the Indenture are hereby incorporated by
reference herein.
Unless otherwise provided on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof in
accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption
(except as provided below). If this Note is subject to "Annual Redemption
Percentage Reduction," the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption (except as
provided below). Notice of redemption shall be mailed to the registered holders
of the Notes designated for redemption at their addresses as the same shall
appear on the Note register not less than 30 nor more than 60 days prior to the
date fixed for redemption, subject to all the conditions and provisions of the
Indenture. In the event of redemption of this Note in part only, a new Note or
Notes for the amount of the unredeemed portion hereof shall be issued in the
name of the holder hereof upon the cancellation hereof; but in any event, the
principal amount of the Note remaining outstanding after redemption must be an
Authorized Denomination (as defined below).
Notwithstanding the foregoing, this Note may be redeemed in accordance
with the terms of any Extension Notice, as defined below, sent to the holder
hereof as described below.
6
<PAGE>
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment (except as
provided below). For this Note to be repaid at the option of the holder hereof,
the Paying Agent must receive at its corporate trust office in the Borough of
Manhattan, The City of New York, at least 30 but not more than 60 days prior to
the date of repayment, (i) this Note with the form entitled "Option to Elect
Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; PROVIDED, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the
event of repayment of this Note in part only, a new Note or Notes for the amount
of the unpaid portion hereof shall be issued in the name of the holder hereof
upon the cancellation hereof; PROVIDED, HOWEVER, that the principal amount of
such Note or Notes must be an Authorized Denomination.
If so indicated on the face of this Note, the Issuer has the option to
extend the Original Maturity Date hereof for one or more periods of one or more
whole years (each an "Extension Period") up to but not beyond the Final Maturity
Date specified on the face hereof and in connection therewith to establish a new
interest rate and new redemption provisions for the Extension Period.
The Issuer may exercise such option by notifying the Paying Agent of
such exercise at least 45 but not more than 60 days prior to the Original
Maturity Date or, if the maturity hereof has already been extended, prior to the
maturity date then in effect (an "Extended Maturity Date"), such notice to be
accompanied by the form of the Extension Notice referred to below. No later
than 38 days prior to the Original Maturity Date or an Extended Maturity Date,
as the case may be (each, a "Maturity Date"), the Paying Agent will mail to the
holder hereof a notice (the "Extension Notice") relating to such Extension
Period, first class mail, postage prepaid, setting forth (a) the election of the
Issuer to extend the maturity of this Note; (b) the new Extended Maturity Date;
(c) the interest rate applicable to the Extension Period; and (d) the
provisions, if any, for redemption during the Extension Period, including the
date or dates on which, the period or periods during which and the price or
prices at which such redemption may occur during the Extension Period. Upon the
mailing by the Paying Agent of an Extension Notice to the holder of this Note,
the maturity hereof shall be extended automatically,
7
<PAGE>
and, except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms it had prior to the mailing of
such Extension Notice.
Notwithstanding the foregoing, not later than 10:00 A.M., New York
City time, on the twentieth calendar day prior to the Maturity Date in effect
immediately preceding the mailing of the applicable Extension Notice (or if such
day is not a Business Day, not later than 10:00 A.M., New York City time, on the
immediately succeeding Business Day), the Issuer may, at its option, revoke the
interest rate provided for in such Extension Notice and establish a higher
interest rate for the Extension Period by causing the Paying Agent to send
notice of such higher interest rate to the holder of this Note by first class
mail, postage prepaid, or by such other means as shall be agreed between the
Issuer and the Paying Agent. Such notice shall be irrevocable. All Notes with
respect to which the Maturity Date is extended in accordance with an Extension
Notice will bear such higher interest rate for the Extension Period, whether or
not tendered for repayment.
If the Issuer elects to extend the maturity hereof, the holder of this
Note will have the option to require the Issuer to repay this Note on the
Maturity Date in effect immediately preceding the mailing of the applicable
Extension Notice at a price equal to the principal amount hereof plus any
accrued and unpaid interest to such date. In order for this Note to be so
repaid on such Maturity Date, the holder hereof must follow the procedures set
forth above for optional repayment, except that the period for delivery of this
Note or notification to the Paying Agent shall be at least 25 but not more than
35 days prior to the Maturity Date in effect immediately preceding the mailing
of the applicable Extension Notice and except that if the holder hereof has
tendered this Note for repayment pursuant to this paragraph he may, by written
notice to the Paying Agent, revoke any such tender for repayment until 3:00
P.M., New York City time, on the twentieth calendar day prior to the Maturity
Date then in effect (or, if such day is not a Business Day, until 3:00 P.M., New
York City time, on the immediately succeeding Business Day).
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note will be computed and paid on
the basis of a 360-day year of twelve 30-day months.
In the case where the Interest Payment Date or the Maturity Date (or
any redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.
8
<PAGE>
This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and PARI PASSU with all other existing and future unsecured and
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, unless otherwise provided on the face hereof, is issuable only in fully
registered form, without coupons, and is issuable only in denominations of
$1,000 and any integral multiple of $1,000 in excess thereof ("Authorized
Denominations").
The Trustee has been appointed registrar for the Notes, and the
Trustee will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and duly executed by the registered holder hereof in person or by the
holder's attorney duly authorized in writing, and thereupon the Trustee shall
issue in the name of the transferee or transferees, in exchange herefor, a new
Note or Notes having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein; PROVIDED, HOWEVER, that the Trustee will not be
required (i) to register the transfer of or exchange any Note that has been
called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Indenture
with respect to the redemption of Notes. Notes are exchangeable at said office
for other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and transfers
of Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange or
transfer of Notes shall be such that no gain or loss of interest results from
such exchange or transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon
9
<PAGE>
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.
In case an Event of Default with respect to the Notes, as defined in
the Indenture, shall have occurred and be continuing, the principal hereof and
the interest accrued hereon, if any, may be declared, and upon such declaration
shall become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
It is also provided in the Indenture that, subject to certain
conditions, the Holders of at least a majority in principal amount of the
outstanding Notes of all series affected (voting as a single class), by notice
to the Trustee, may waive an existing Default or Event of Default with respect
to the Notes of such series and its consequences, except a Default in the
payment of principal of or interest on any Note or in respect of a covenant or
provision of the Indenture which cannot be modified or amended without the
consent of the Holder of each outstanding Note affected. Upon any such waiver,
such Default shall cease to exist, and no Event of Default with respect to the
Notes of such series arising therefrom shall be deemed to have been cured, for
every purpose of the Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration," then (i) if the principal hereof is declared to be
due and payable as described in the preceding paragraph, the amount of principal
due and payable with respect to this Note shall be limited to the aggregate
principal amount hereof multiplied by the sum of the Issue Price specified on
the face hereof (expressed as a percentage of the aggregate principal amount)
plus the original issue discount amortized from the Interest Accrual Date to the
date of declaration, which amortization shall be calculated using the "interest
method" (computed in accordance with generally accepted accounting principles in
effect on the date of declaration), (ii) for the purpose of any vote of
securityholders taken pursuant to the Indenture prior to the acceleration of
payment of this Note, the principal amount hereof shall equal the amount that
would be due and payable hereon, calculated as set forth in clause (i) above, if
this Note were declared to be due and payable on the date of any such vote and
(iii) for the purpose of any vote of securityholders taken pursuant to the
Indenture following the acceleration of payment of this Note, the principal
amount hereof shall equal the amount of principal due and payable with respect
to this Note, calculated as set forth in clause (i) above.
The Indenture contains provisions which provide that, without prior
notice to any Holders, the Company and the Trustee may amend the Indenture and
the Notes of any series with the written consent of the Holders of a majority in
principal amount of the outstanding Notes of all series affected by such
supplemental indenture (all such series voting as one class), and the Holders of
a majority in principal amount of the outstanding Notes of all series affected
thereby (all such series voting as one class) by
10
<PAGE>
written notice to the Trustee may waive future compliance by the Company with
any provision of the Indenture or the Notes of such series; PROVIDED that,
without the consent of each Holder of the Notes of each series affected
thereby, an amendment or waiver, including a waiver of past defaults, may
not: (i) extend the stated maturity of the principal of, or any sinking fund
obligation or any installment of interest on, such Holder's Note, or reduce
the principal amount thereof or the rate of interest thereon (including any
amount in respect of original issue discount), or any premium payable with
respect thereto, or adversely affect the rights of such Holder under any
mandatory redemption or repurchase provision or any right of redemption or
repurchase at the option of such Holder, or reduce the amount of the
principal of an Original Issue Discount Note that would be due and payable
upon an acceleration of the maturity or the amount thereof provable in
bankruptcy, or change any place of payment where, or the currency in which,
any Note or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after
the due date therefor; (ii) reduce the percentage in principal amount of
outstanding Notes of the relevant series the consent of whose Holders is
required for any such supplemental indenture, for any waiver of compliance
with certain provisions of the Indenture or certain Defaults and their
consequences provided for in the Indenture; (iii) waive a Default in the
payment of principal of or interest on any Note of such Holder; or (iv)
modify any of the provisions of the Indenture governing supplemental
indentures with the consent of Securityholders except to increase any such
percentage or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the Holder of each
outstanding Security affected thereby.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the Notes.
The Issuer may designate other agencies for the payment of said principal,
premium and interest at such place or places (subject to applicable laws and
regulations) as the Issuer may decide. So long as there shall be such an
agency, the Issuer shall keep the Trustee advised of the names and locations of
such agencies, if any are so designated.
The Indenture provides that a series of Notes may include one or more
tranches (each a "tranche") of Notes, including Notes issued in a periodic
offering. The Securities of different tranches may have one or more different
terms, including authentication dates and public offering prices, but all the
Notes within each such tranche shall have identical terms, including
authentication date and public offering price. Notwithstanding any other
provision of the Indenture, subject to certain exceptions, with respect to
sections of the Indenture concerning the execution, authentication and terms of
the Notess, redemption of the Notes, Events of Default of the Notes, defeasance
of the Notes and amendment of the Indenture, if any series of Notes includes
more than one tranche, all provisions of such sections applicable to any series
of Notes shall be deemed equally applicable to each tranche of any series of
Notes in the same manner as though originally designated a series unless
otherwise provided with respect to such series or
11
<PAGE>
tranche pursuant to a board resolution or a supplemental indenture
establishing such series or tranche.
No provision of this Note or of the Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place, and
rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
12
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM- as tenants in common
TEN ENT- as tenants by the entireties
JT TEN- as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT-____________________ Custodian __________________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act-________________________
(State)
Additional abbreviations may also be used though not in the above
list.
----------
13
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
- ---------------------------------------
- ---------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS
INCLUDING ZIP CODE, OF ASSIGNEE]
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
the within Note and all rights thereunder, hereby irrevocably
constituting and appointing such person attorney to transfer
such note on the books of the Issuer, with full power of
substitution in the premises.
Dated:
------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever; signature(s) must
be guaranteed by an eligible guarantor institution (banks, stock
brokers, savings and loan associations and credit unions with
membership in an approved signature guaranteed medallion program)
pursuant to Securities and Exchange Commission Rule 17Ad-15.
14
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer
to repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
___________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid): ___________________________________.
Dated:
-------------- --------------------------------------
NOTICE: The signature on this Option to Elect Repayment must correspond with
the name as written upon the face of the within instrument in every
particular without alteration or enlargement; signature(s) must be
guaranteed by an eligible guarantor institution (banks, stock brokers,
savings and loan associations and credit unions with membership in an
approved signature guaranteed medallion program) pursuant to
Securities and Exchange Commission Rule 17Ad-15.
15
<PAGE>
[FORM OF FACE OF SECURITY]
LA QUINTA INNS, INC.
MEDIUM-TERM NOTE
Floating Rate Note
REGISTERED REGISTERED
No. FLR [PRINCIPAL AMOUNT]
CUSIP:
[Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate 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 is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE
METHOD) SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF
APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
* Delete if this is not a Registered Global Security
<PAGE>
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
BASE RATE: ORIGINAL ISSUE DATE: ORIGINAL MATURITY DATE:
- --------------------------------------------------------------------------
INDEX MATURITY: INTEREST ACCRUAL DATE: INTEREST PAYMENT DATE(S):
- --------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): INITIAL INTEREST RATE: INTEREST PAYMENT PERIOD:
- --------------------------------------------------------------------------
ALTERNATE RATE INITIAL INTEREST RESET INTEREST RESET PERIOD:
EVENT SPREAD: DATE:
- --------------------------------------------------------------------------
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATES:
- --------------------------------------------------------------------------
REPORTING SERVICE: MINIMUM INTEREST RATE: CALCULATION AGENT:
- --------------------------------------------------------------------------
INITIAL REDEMPTION
DATE:
- --------------------------------------------------------------------------
INITIAL REDEMPTION TOTAL AMOUNT OF OID:
PERCENTAGE:
- --------------------------------------------------------------------------
ANNUAL REDEMPTION ORIGINAL YIELD TO
PERCENTAGE REDUCTION: MATURITY:
- --------------------------------------------------------------------------
OTHER PROVISIONS: OPTIONAL REPAYMENT INITIAL ACCRUAL PERIOD
DATE(S): OID:
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
La Quinta Inns, Inc., a Texas corporation (together with its
successors and assigns, the "Issuer"), for value received, hereby promises to
pay to: ______________________________________________________________________
______________________________________________________________________________,
or registered assignees, the principal sum of ________________________________
________________________________ dollars on the Maturity Date specified above
(except to the extent redeemed or repaid prior to the Maturity Date) and to pay
interest thereon, from the Interest Accrual Date specified above at a rate per
annum equal to the Initial Interest Rate specified above until the Initial
Interest Reset Date specified above, and thereafter at a rate per annum
determined in accordance with the provisions specified on the reverse hereof
until the principal hereof is paid or duly made available for payment. The
Issuer will pay interest in arrears monthly, quarterly, semiannually or annually
as specified above as the Interest Payment Period on each Interest Payment Date
(as specified above), commencing with the first Interest Payment Date next
succeeding the Interest Accrual Date specified above, and on the Maturity Date
(or any redemption or repayment date); PROVIDED, HOWEVER, that if the Interest
Accrual Date occurs between a Record Date, as defined below, and the next
succeeding Interest Payment Date, interest payments will commence on the second
Interest Payment Date succeeding the Interest Accrual Date to the registered
holder of this Note on the Record Date with respect to such second Interest
Payment Date; and PROVIDED, FURTHER, that if an Interest Payment Date (other
than the Maturity Date or redemption or repayment date) would fall on a day that
is not a Business Day, as defined on the reverse hereof, such Interest Payment
Date shall be the following day that is a Business Day, except that if the Base
Rate specified above is LIBOR and such next Business Day falls in the next
calendar month, such Interest Payment Date shall be the immediately preceding
day that is a Business
2
<PAGE>
Day; and PROVIDED, FURTHER, that if the Maturity Date or redemption or
repayment date would fall on a day that is not a Business Day, such payment
shall be made on the following day that is a Business Day and no interest
shall accrue for the period from and after such Maturity Date or redemption
or repayment date.
Interest on this Note will accrue from the most recent date to which
interest has been paid or duly provided for, or, if no interest has been paid or
duly provided for, from the Interest Accrual Date, until the principal hereof
has been paid or duly made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); PROVIDED, HOWEVER, that
interest payable on the Maturity Date (or any redemption or repayment date) will
be payable to the person to whom the principal hereof shall be payable.
Payment of the principal of this Note, any premium and the interest
due at the Maturity Date (or any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payment of the principal of and
premium, if any, and interest on this Note will be made by U.S. dollar check
mailed to the address of the person entitled thereto as such address shall
appear in the Note register. Notwithstanding the foregoing, (a) the Depository,
as holder of the Global Notes, shall be entitled to receive payments by wire
transfer of immediately available funds and (b) a holder of $10,000,000 or more
in aggregate principal amount of Notes having the same Interest Payment Date
will be entitled to receive payments of interest, other than interest due at
maturity or any date of redemption or repayment, by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received by
the Paying Agent in writing not less than 15 calendar days prior to the
applicable Interest Payment Date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: LA QUINTA INNS, INC.
(SEAL) By
---------------------------------------
Name:
Title:
ATTEST:
By
- --------------------------- ----------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes
referred to in the within-
mentioned Indenture.
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
By
----------------------------------
Authorized Officer
4
<PAGE>
[FORM OF REVERSE OF SECURITY]
This Note is one of a duly authorized issue of Medium-Term Notes,
having maturities more than nine months from the date of issue (the "Notes") of
the Issuer. The Notes are issuable under an Indenture, dated as of September
15, 1995 (the "Indenture"), between the Issuer and U.S. Trust Company of Texas,
N.A., as Trustee (the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed U.S. Trust Company of Texas, N.A. at its
corporate trust office in The City of New York as the paying agent (the "Paying
Agent," which term includes any additional or successor Paying Agent appointed
by the Issuer) with respect to the Notes. The terms of individual Notes may
vary with respect to interest rates, interest rate formulas, issue dates,
maturity dates, or otherwise, all as provided in the Indenture. To the extent
not inconsistent herewith, the terms of the Indenture are hereby incorporated by
reference herein.
Unless otherwise provided on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof in
accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.
Unless otherwise indicated on the face of this Note, this Note may not
be redeemed prior to the Maturity Date. If so indicated on the face of this
Note, this Note may be redeemed in whole or in part at the option of the Issuer
on or after the Initial Redemption Date specified on the face hereof on the
terms set forth on the face hereof, together with interest accrued and unpaid
hereon to the date of redemption. If this Note is subject to "Annual Redemption
Percentage Reduction," the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption. Notice of
redemption shall be mailed to the registered holders of the Notes designated for
redemption at their addresses as the same shall appear on the Note register not
less than 30 nor more than 60 days prior to the date fixed for redemption,
subject to all the conditions and provisions of the Indenture. In the event of
redemption of this Note in part only, a new Note or Notes for the amount of the
unredeemed portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof but in any event, the principal amount of the Note
remaining outstanding after redemption must be an Authorized Denomination.
Notwithstanding the foregoing, this Note may be redeemed in accordance
with the terms of any Extension Notice, as defined below, sent to the holder
hereof as described below.
Unless otherwise indicated on the face of this Note, this Note shall
not be subject to repayment at the option of the holder prior to the Maturity
Date. If so indicated on the face of
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<PAGE>
this Note, this Note will be subject to repayment at the option of the holder
on the Optional Repayment Date or Dates specified on the face hereof on the
terms set forth herein. On any Optional Repayment Date, this Note will be
repayable in whole or in part in increments of $1,000 at a price equal to
100% of the principal amount to be repaid, together with interest accrued and
unpaid hereon to the date of repayment. For this Note to be repaid at the
option of the holder hereof, the Paying Agent must receive at its corporate
trust office in the Borough of Manhattan, The City of New York, at least 30
but not more than 60 days prior to the date of repayment, (i) this Note with
the form entitled "Option to Elect Repayment" below duly completed or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or a trust company in the United States
setting forth the name of the holder of this Note, the principal amount
hereof, the certificate number of this Note or a description of this Note's
tenor and terms, the principal amount hereof to be repaid, a statement that
the option to elect repayment is being exercised thereby and a guarantee that
this Note, together with the form entitled "Option to Elect Repayment" duly
completed, will be received by the Paying Agent not later than the fifth
Business Day after the date of such telegram, telex, facsimile transmission
or letter; PROVIDED, that such telegram, telex, facsimile transmission or
letter shall only be effective if this Note and form duly completed are
received by the Paying Agent by such fifth Business Day. Exercise of such
repayment option by the holder hereof shall be irrevocable. In the event of
repayment of this Note in part only, a new Note or Notes for the amount of
the unpaid portion hereof shall be issued in the name of the holder hereof
upon the cancellation hereof; PROVIDED, HOWEVER, that the principal amount of
such Note or Notes must be an Authorized Denomination.
If so indicated on the face of this Note, the Issuer has the option to
extend the Original Maturity Date hereof for one or more periods of one or more
whole years (each an "Extension Period") up to but not beyond the Final Maturity
Date specified on the face hereof and in connection therewith to establish a new
interest rate and new redemption provisions for the Extension Period.
The Issuer may exercise such option by notifying the Paying Agent of
such exercise at least 45 but not more than 60 days prior to the Original
Maturity Date or, if the maturity hereof has already been extended, prior to the
maturity date then in effect (an "Extended Maturity Date"), such notice to be
accompanied by the form of the Extension Notice referred to below. No later
than 38 days prior to the Original Maturity Date or an Extended Maturity Date,
as the case may be (each, a "Maturity Date"), the Paying Agent will mail to the
holder hereof a notice (the "Extension Notice") relating to such Extension
Period, first class mail, postage prepaid, setting forth (a) the election of the
Issuer to extend the maturity of this Note; (b) the new Extended Maturity Date;
(c) the interest rate applicable to the Extension Period; and (d) the
provisions, if any, for redemption during the Extension Period, including the
date or dates on which, the period or periods during which and the price or
prices at which such redemption may occur during the Extension Period. Upon the
mailing by the Paying Agent of an Extension Notice to the holder of this Note,
the maturity hereof shall be extended automatically, and, except as modified by
the Extension Notice and as described in the next paragraph, this Note will have
the same terms it had prior to the mailing of such Extension Notice.
6
<PAGE>
Notwithstanding the foregoing, not later than 10:00 A.M., New York
City time, on the twentieth calendar day prior to the Maturity Date in effect
immediately preceding the mailing of the applicable Extension Notice (or if such
day is not a Business Day, not later than 10:00 A.M., New York City time, on the
immediately succeeding Business Day), the Issuer may, at its option, revoke the
interest rate provided for in such Extension Notice and establish a higher
interest rate for the Extension Period by causing the Paying Agent to send
notice of such higher interest rate to the holder of this Note by first class
mail, postage prepaid, or by such other means as shall be agreed between the
Issuer and the Paying Agent. Such notice shall be irrevocable. All Notes with
respect to which the Maturity Date is extended in accordance with an Extension
Notice will bear such higher interest rate for the Extension Period, whether or
not tendered for repayment.
If the Issuer elects to extend the maturity hereof, the holder of this
Note will have the option to require the Issuer to repay this Note on the
Maturity Date in effect immediately preceding the mailing of the applicable
Extension Notice at a price equal to the principal amount hereof plus any
accrued and unpaid interest to such date. In order for this Note to be so
repaid on such Maturity Date, the holder hereof must follow the procedures set
forth above for optional repayment, except that the period for delivery of this
Note or notification to the Paying Agent shall be at least 25 but not more than
35 days prior to the Maturity Date in effect immediately preceding the mailing
of the applicable Extension Notice and except that if the holder hereof has
tendered this Note for repayment pursuant to this paragraph he may, by written
notice to the Paying Agent, revoke any such tender for repayment until 3:00
P.M., New York City time, on the twentieth calendar day prior to the Maturity
Date then in effect (or, if such day is not a Business Day, until 3:00 P.M., New
York City time, on the immediately succeeding Business Day).
This Note will bear interest at the rate determined in accordance with
the applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any, specified on the face hereof. Commencing with the Initial Interest Reset
Date specified on the face hereof, the rate at which interest on this Note is
payable shall be reset as of each Interest Reset Date (as used herein, the term
"Interest Reset Date" shall include the Initial Interest Reset Date). The
Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; PROVIDED, HOWEVER, that the interest rate in effect for the period from
the Interest Accrual Date to the Initial Interest Reset Date will be the Initial
Interest Rate. If any Interest Reset Date would otherwise be a day that is not
a Business Day, such Interest Reset Date shall be postponed to the next
succeeding day that is a Business Day, except that if the Base Rate specified on
the face hereof is LIBOR and such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the next preceding Business
Day. As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in
The City of New York, and if this Note bears interest calculated by reference to
LIBOR, that is also a London Banking Day.
The Interest Determination Date pertaining to an Interest Reset Date
for Notes bearing interest calculated by reference to the CD Rate, Commercial
Paper Rate, Federal Funds Rate,
7
<PAGE>
Prime Rate and CMT Rate will be the second Business Day next preceding such
Interest Reset Date. The Interest Determination Date pertaining to an
Interest Reset Date for Notes bearing interest calculated by reference to
LIBOR shall be the second London Banking Day preceding such Interest Reset
Date. As used herein, "London Banking Day" means any day on which dealings
in deposits in the Index Currency (as defined herein) are transacted in the
London interbank market. The Interest Determination Date pertaining to an
Interest Reset Date for Notes bearing interest calculated by reference to the
Treasury Rate shall be the day of the week in which such Interest Reset Date
falls on which Treasury bills normally would be auctioned; PROVIDED, HOWEVER,
that if as a result of a legal holiday an auction is held on the Friday of
the week preceding such Interest Reset Date, the related Interest
Determination Date shall be such preceding Friday; and PROVIDED, FURTHER,
that if an auction shall fall on any Interest Reset Date, then the Interest
Reset Date shall instead be the first Business Day following the date of such
auction.
Unless otherwise specified on the face hereof, the "Calculation Date"
pertaining to an Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date or, if such day is not
a Business Day, the next succeeding Business Day, or (ii) the Business Day
preceding the applicable Interest Payment Date or Maturity Date (or, with
respect to any principal amount to be redeemed or repaid, any redemption or
repayment date), as the case may be.
DETERMINATION OF CD RATE. If the Base Rate specified on the face
hereof is the CD Rate, the CD Rate with respect to this Note shall be determined
on each Interest Determination Date and shall be the rate on such date for
negotiable certificates of deposit having the Index Maturity specified on the
face hereof as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)"), under the heading "CDs (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 P.M. Quotations for
U.S. Government Securities" ("Composite Quotations") under the heading
"Certificates of Deposit." If neither of such rates is published by 3:00 P.M.,
New York City time, on such Calculation Date, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent referred to on
the face hereof and will be the arithmetic mean of the secondary market offered
rates as of 10:00 A.M., New York City time, on such Interest Determination Date
for certificates of deposit in an amount that is representative for a single
transaction at that time with a remaining maturity closest to the Index Maturity
specified on the face hereof of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major U.S. money
center banks with a remaining maturity closest to the Index Maturity specified
on the face hereof in an amount that is representative for a single transaction
in that market at that time; PROVIDED, HOWEVER, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate in effect for the applicable period will be the same as
the CD Rate for
8
<PAGE>
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
DETERMINATION OF COMMERCIAL PAPER RATE. If the Base Rate specified on
the face hereof is the Commercial Paper Rate, the Commercial Paper Rate with
respect to this Note shall be determined on each Interest Determination Date and
shall be the Money Market Yield (as defined herein) of the rate on such date for
commercial paper having the Index Maturity specified on the face hereof, as such
rate shall be published in H.15(519) under the heading "Commercial Paper," or if
not so published prior to 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Commercial Paper Rate shall
be the Money Market Yield of the rate on such Interest Determination Date for
commercial paper of the Index Maturity specified on the face hereof as published
in Composite Quotations under the heading "Commercial Paper." If neither of
such rates is published by 3:00 P.M., New York City time, on such Calculation
Date, then the Commercial Paper Rate shall be the Money Market Yield of the
arithmetic mean of the offered rates as of 11:00 A.M., New York City time, on
such Interest Determination Date of three leading dealers in commercial paper in
The City of New York selected by the Calculation Agent for commercial paper of
the Index Maturity specified on the face hereof, placed for an industrial issuer
whose bond rating is "AA," or the equivalent, from a nationally recognized
rating agency; PROVIDED, HOWEVER, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate in effect for the applicable period will be the same as
the Commercial Paper Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable
hereon shall be the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with
the following formula:
Money Market Yield = D x 360
---------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the Index Maturity specified on the face hereof.
DETERMINATION OF FEDERAL FUNDS RATE. If the Base Rate specified on
the face hereof is the Federal Funds Rate, the Federal Funds Rate with respect
to this Note shall be determined on each Interest Determination Date and shall
be the rate on such date for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)," or, if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on such Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If neither of such rates is published by 3:00
P.M., New York City time, on such Calculation Date, the Federal Funds Rate for
such Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds as of 9:00 A.M., New York City time, on such Interest
Determination
9
<PAGE>
Date arranged by three leading brokers in Federal funds transactions in The
City of New York selected by the Calculation Agent; PROVIDED, HOWEVER, that
if the brokers selected as aforesaid by the Calculation Agent are not quoting
as mentioned in this sentence, the Federal Funds Rate in effect for the
applicable period will be the same as the Federal Funds Rate for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
DETERMINATION OF LIBOR. If the Base Rate specified on the face hereof
is LIBOR, LIBOR with respect to this Note shall be determined on each Interest
Determination Date as follows:
(i) As of the Interest Determination Date, the Calculation Agent will
determine (a) if "LIBOR Reuters" is specified as the Reporting Service on
the face hereof, the arithmetic mean of the offered rates (unless the
specified Designated LIBOR Page (as defined below) by its terms provides
only for a single rate, in which case such single rate shall be used) for
deposits in the London interbank market in the Index Currency for the
period of the Index Maturity specified on the face hereof, commencing on
the second London Banking Day immediately following such Interest
Determination Date, which appear on the Designated LIBOR Page at
approximately 11:00 A.M., London time, on such Interest Determination Date,
if at least two such offered rates appear (unless, as aforesaid, only a
single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR
Telerate" is specified as the Reporting Service on the face hereof, the
rate for deposits in the Index Currency for the period of the Index
Maturity, commencing on such Interest Determination Date, that appears on
the Designated LIBOR Page at approximately 11:00 A.M., London time, on such
Interest Determination Date. If fewer than two offered rates appear (if
"LIBOR Reuters" is specified as the Reporting Service on the face hereof
and calculation of LIBOR is based on the arithmetic mean of the offered
rates) or if no rate appears (if (i) "LIBOR Telerate" is specified as the
Reporting Service on the face hereof or (ii) "LIBOR Reuters" is specified
as the Reporting Service on the face hereof and the Designated LIBOR Page
by its terms provides only for a single rate), LIBOR in respect of that
Interest Determination Date will be determined as if the parties had
specified the rate described in (ii) below.
(ii) With respect to an Interest Determination Date on which fewer
than two offered rates appear (if "LIBOR Reuters" is specified as the
Reporting Service on the face hereof and calculation of LIBOR is based on
the arithmetic mean of the offered rates) or no rate appears (if (i) "LIBOR
Telerate" is specified as the Reporting Service on the face hereof or
(ii) "LIBOR Reuters" is specified as the Reporting Service on the face
hereof and the Designated LIBOR Page by its terms provides only for a
single rate), the Calculation Agent will request the principal London
offices of each of four major reference banks in the London interbank
market, as selected by the Calculation Agent (after consultation with the
Issuer), to provide the Calculation Agent with its offered quotations for
deposits in the Index Currency for the period of the Index Maturity
specified on the face hereof, commencing on the second London Banking Day
immediately following such Interest Determination Date, to prime banks in
the London interbank market at approximately 11:00 A.M., London time, on
such Interest Determination Date and in a principal amount equal to an
amount of not less
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<PAGE>
than $1 million that is representative of a single transaction in such
Index Currency in such market at such time. If at least two such
quotations are provided, LIBOR will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR in
respect of that Interest Determination Date will be the arithmetic mean of
rates quoted at approximately 11:00 A.M. (or such other time specified on
the face hereof), in the City of New York on such Interest Determination
Date, by three major banks in the City of New York selected by the
Calculation Agent (after consultation with the Issuer) on such Interest
Determination Date for loans in the Index Currency to leading European
banks, for the period of the Index Maturity specified on the face hereof
commencing on the second London Banking Day immediately following such
Interest Determination Date and in a principal amount of not less than $1
million that is representative of a single transaction in such Index
Currency in such market at such time; PROVIDED, HOWEVER, that if the banks
selected as aforesaid by the Calculation Agent are not quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period will be
the same as LIBOR for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the rate of interest payable on
the LIBOR Notes for which LIBOR is being determined shall be the Initial
Interest Rate). "Index Currency" means U.S. dollars. "Designated LIBOR
Page" means either (a) if "LIBOR Reuters" is designated as the Reporting
Service on the face hereof, the display on the Reuters Monitor Money Rates
Service for the purpose of displaying the London interbank rates of major
banks for the Index Currency, or (b) if "LIBOR Telerate" is designated as
the Reporting Service on the face hereof, the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates
of major banks for the Index Currency. If neither LIBOR Reuters nor LIBOR
Telerate is specified as the Reporting Service on the face hereof, LIBOR
for the Index Currency will be determined as if LIBOR Telerate (Page 3750)
had been specified.
DETERMINATION OF PRIME RATE. If the Base Rate specified on the face
hereof is the Prime Rate, the Prime Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate set forth
in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate
is not yet published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the arithmetic mean of the rates of interest publicly
announced by each bank named on the Reuters Screen USPRIME1 (as defined below)
as such bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen USPRIME1 on such Interest
Determination Date, or, if fewer than four such rates appear on the Reuters
Screen USPRIME1 for such Interest Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as of the close of business on such Interest
Determination Date by at least two of the three major money center banks in The
City of New York selected by the Calculation Agent from which quotations are
requested. If fewer than two quotations are provided, the Prime Rate shall be
calculated by the Calculation Agent and shall be determined as the arithmetic
mean on the basis of the prime rates in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business under
the laws of the United States, or any State thereof, in each case having total
equity capital of at least $500 million and being subject to supervision or
examination by federal or state authority, selected by the Calculation Agent to
quote such rate or rates; provided, however, that if the
11
<PAGE>
banks or trust companies selected as aforesaid by the Calculation Agent are
not quoting as set forth above, the "Prime Rate" in effect for the applicable
period will be the same as the Prime Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
rate of interest payable on the Prime Rate Notes for which such Prime Rate is
being determined shall be the Initial Interest Rate). "Reuters Screen
USPRIME1" means the display designated as page "USPRIME1" on the Reuters
Monitor Money Rates Service (or such other page as may replace the USPRIME1
on that service for the purpose of displaying prime rates or base lending
rates of major United States banks).
DETERMINATION OF TREASURY RATE. If the Base Rate specified on the
face hereof is the Treasury Rate, the Treasury Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the rate
for the auction held on such date of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified on the face hereof, as
published in H.15(519) under the heading "Treasury Bills--auction average
(investment)," or if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the auction
average rate on such Interest Determination Date (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States Department
of the Treasury. In the event that the results of the auction of Treasury Bills
having the Index Maturity specified on the face hereof are not published or
reported as provided above by 3:00 P.M., New York City time, on such Calculation
Date or if no such auction is held on such Interest Determination Date, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) calculated using the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Interest Determination Date, of three leading
primary United States government securities dealers selected by the Calculation
Agent for the issue of Treasury Bills with a remaining maturity closest to the
Index Maturity specified on the face hereof; PROVIDED, HOWEVER, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate for such Interest Reset Date will
be the same as the Treasury Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
DETERMINATION OF CMT RATE. If the Base Rate is the CMT Rate as
specified on the face hereof, "CMT Rate" means with respect to any Interest
Determination Date, the rate displayed on the Designated CMT Telerate Page (as
defined below) under the caption "...Treasury Constant Maturities... Federal
Reserve Board Release H.15...Mondays Approximately 3:45 p.m.," under the column
for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7055, such Interest Determination Date and (ii)
if the Designated CMT Telerate Page is 7052, the week or the month, as
applicable, ended immediately preceding the week in which the related Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page, or if not displayed by 3:00 p.m., New York City time on the related
Calculation Date, then the CMT Rate for such Interest Determination Date will be
such Treasury Constant Maturity rate for the Designated CMT Maturity Index as
published in the relevant H.15(519). If such rate is no longer published, or,
if not published by 3:00 p.m., New York City time, on the related Calculation
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Date, then the CMT Rate for such Interest Determination Date, will be such
Treasury Constant Maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for the
Interest Determination Date with respect to such Interest Reset Date as may then
be published by either the Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519). If such information is
not provided by 3:00 p.m., New York City time, on the related Calculation Date,
then the CMT Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market closing offer side prices as of approximately 3:30 p.m.,
New York City time on the Interest Determination Date reported, according to
their written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York (which
may include the Agents or their affiliates selected by the Calculation Agent
(from five such Reference Dealers selected by the Calculation Agent, after
consultation with the Issuer, and eliminating the highest quotation (or, in the
event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury notes") with
an original maturity approximately the Designated CMT Maturity Index and
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury
notes quotation, the CMT Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on the
arithmetic mean of the secondary market offer side prices as of approximately
3:30 p.m., New York City time on the Interest Determination Date of three
Reference Dealers in The City of New York (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for Treasury notes with an original
maturity of the number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest to the Designated CMT
Maturity Index and in an amount of at least $100,000,000. If three or four (and
not five) of such Reference dealers are quoting as described above, then the CMT
Rate will be based on the arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of such quotes will be eliminated: provided
however, that if fewer than three Reference Dealers selected by the Calculation
Agent are quoting as described herein, the CMT Rate for such Interest Reset Date
will be the same as the CMT Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on this Note for which the CMT Rate is being determined shall be the
Initial Interest Rate). If two Treasury notes with an original maturity as
described in the third preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page designated in an applicable Pricing Supplement (or
any other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported
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in H.15(519). If no such page is specified in the applicable Pricing
Supplement, the Designated CMT Telerate Page shall be 7052, for the most
recent week.
"Designated CMT Maturity Index" shall be the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified in an applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent
shall calculate the interest rate hereon in accordance with the foregoing on or
before each Calculation Date. The interest rate on this Note will in no event
be higher than the maximum rate permitted by New York law, as the same may be
modified by United States Federal law of general application.
At the request of the holder hereof, the Calculation Agent will
provide to the holder hereof the interest rate hereon then in effect and, if
determined, the interest rate that will become effective as of the next Interest
Reset Date.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Accrued interest hereon
shall be an amount calculated by multiplying the face amount hereof by an
accrued interest factor. Such accrued interest factor shall be computed by
adding the interest factor calculated for each day in the period for which
interest is being paid. The interest factor for each such date shall be
computed by dividing the interest rate applicable to such day by 360 if the Base
Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate or LIBOR,
as specified on the face hereof, or by the actual number of days in the year if
the Base Rate is the Treasury Rate or the CMT Rate, as specified on the face
hereof. All percentages resulting from any calculation of the rate of interest
on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-millionths of
a percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on this Note will be rounded to the nearest cent (with
one-half cent rounded upward). The interest rate in effect on any Interest
Reset Date will be the applicable rate as reset on such date. The interest rate
applicable to any other day is the interest rate from the immediately preceding
Interest Reset Date (or, if none, the Initial Interest Rate).
This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and PARI PASSU with all other existing and future unsecured and
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, unless otherwise provided on the face hereof, is issuable only in fully
registered form, without coupons, and is issuable only in denominations of
$1,000 and any integral multiple of $1,000 in excess thereof ("Authorized
Denominations").
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The Trustee has been appointed registrar for the Notes, and the
Trustee will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and duly executed by the registered holder hereof in person or by the
holder's attorney duly authorized in writing, and thereupon the Trustee shall
issue in the name of the transferee or transferees, in exchange herefor, a new
Note or Notes having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein; PROVIDED, HOWEVER, that the Trustee will not be
required (i) to register the transfer of or exchange any Note that has been
called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Indenture
with respect to the redemption of Notes. Notes are exchangeable at said office
for other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and transfers
of Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange or
transfer of Notes shall be such that no gain or loss of interest results from
such exchange or transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
In case an Event of Default with respect to the Notes, as defined in
the Indenture, shall have occurred and be continuing, the principal hereof and
the interest accrued hereon, if any, may be declared, and upon such declaration
shall become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
It is also provided in the Indenture that, subject to certain
conditions, the Holders of at least a majority in principal amount of the
outstanding Notes of all series affected (voting as a single class), by notice
to the Trustee, may waive an existing Default or Event of Default with respect
to the Notes of such series and its consequences, except a Default in the
payment of
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principal of or interest on any Note or in respect of a covenant or provision
of the Indenture which cannot be modified or amended without the consent of
the Holder of each outstanding Note affected. Upon any such waiver, such
Default shall cease to exist, and nay Event of Default with respect to the
Notes of such series arising therefrom shall be deemed to have been cured,
for every purpose of the Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereto.
If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration," then (i) if the principal hereof is declared to be
due and payable as described in the preceding paragraph, the amount of principal
due and payable with respect to this Note shall be limited to the aggregate
principal amount hereof multiplied by the sum of the Issue Price specified on
the face hereof (expressed as a percentage of the aggregate principal amount)
plus the original issue discount amortized from the Interest Accrual Date to the
date of declaration, which amortization shall be calculated using the "interest
method" (computed in accordance with generally accepted accounting principles in
effect on the date of declaration), (ii) for the purpose of any vote of
securityholders taken pursuant to the Indenture prior to the acceleration of
payment of this Note, the principal amount hereof shall equal the amount that
would be due and payable hereon, calculated as set forth in clause (i) above, if
this Note were declared to be due and payable on the date of any such vote and
(iii) for the purpose of any vote of securityholders taken pursuant to the
Indenture following the acceleration of payment of this Note, the principal
amount hereof shall equal the amount of principal due and payable with respect
to this Note, calculated as set forth in clause (i) above.
The Indenture contains provisions which provide that, without prior
notice to any Holders, the Company and the Trustee may amend the Indenture and
the Notes of any series with the written consent of the Holders of a majority in
principal amount of the outstanding Notes of all series affected by such
supplemental indenture (all such series voting as one class), and the Holders of
a majority in principal amount of the outstanding Notes of all series affected
thereby (all such series voting as one class) by written notice to the Trustee
may waive future compliance by the Company with any provision of the Indenture
or the Notes of such series; PROVIDED that, without the consent of each Holder
of the Notes of each series affected thereby, an amendment or waiver, including
a waiver of past defaults, may not: (i) extend the stated maturity of the
principal of, or any sinking fund obligation or any installment of interest on,
such Holder's Note, or reduce the principal amount thereof or the rate of
interest thereon (including any amount in respect of original issue discount),
or any premium payable with respect thereto, or adversely affect the rights of
such Holder under any mandatory redemption or repurchase provision or any right
of redemption or repurchase at the option of such Holder, or reduce the amount
of the principal of an Original Issue Discount Note that would be due and
payable upon an acceleration of the maturity or the amount thereof provable in
bankruptcy, or change any place of payment where, or the currency in which, any
Note or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the due date
therefor; (ii) reduce the percentage in principal amount of outstanding Notes of
the relevant series the consent of whose Holders is required for any such
supplemental indenture, for any waiver of compliance with certain provisions of
the Indenture or certain Defaults and their consequences provided for in the
Indenture; (iii) waive a Default in the payment of principal of or interest on
any Note of such Holder; or (iv) modify any of the
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provisions of the Indenture governing supplemental indentures with the
consent of Noteholders except to increase any such percentage or to provide
that certain other provisions of the Indenture cannot be modified or waived
without the consent of the Holder of each outstanding Note affected thereby.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the Notes.
The Issuer may designate other agencies for the payment of said principal,
premium and interest at such place or places (subject to applicable laws and
regulations) as the Issuer may decide. So long as there shall be such an
agency, the Issuer shall keep the Trustee advised of the names and locations of
such agencies, if any are so designated.
The Indenture provides that a series of Securities may include one or
more tranches (each a "tranche") of Notes, including Notes issued in a periodic
offering. The Notes of different tranches may have one or more different terms,
including authentication dates and public offering prices, but all the Notes
within each such tranche shall have identical terms, including authentication
date and public offering price. Notwithstanding any other provision of the
Indenture, subject to certain exceptions, with respect to sections of the
Indenture concerning the execution, authentication and terms of the Notes,
redemption of the Notes, Events of Default of the Notes, defeasance of the Notes
and amendment of the Indenture, if any series of Securities includes more than
one tranche, all provisions of such sections applicable to any series of Notes
shall be deemed equally applicable to each tranche of any series of Notes in the
same manner as though originally designated a series unless otherwise provided
with respect to such series or tranche pursuant to a board resolution or a
supplemental indenture establishing such series or tranche.
No provision of this Note or of the Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place, and
rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
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This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM- as tenants in common
TEN ENT- as tenants by the entireties
JT TEN- as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT- _______________ Custodian _______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act __________________________
(State)
Additional abbreviations may also be used though not in the above
list.
--------------------
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FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS
INCLUDING ZIP CODE,OF ASSIGNEE]
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
the within Note and all rights thereunder,
hereby irrevocably constituting and appointing
such person attorney to transfer such note on
the books of the Issuer, with full power of
substitution in the premises.
Dated:
--------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever; signature(s) must
be guaranteed by an eligible guarantor institution (banks, stock
brokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program)
pursuant to Securities and Exchange Commission Rule 17Ad-15.
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OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer
to repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid: ___
___________________________ ; and specify the denomination or denominations
(which shall not be less than the minimum authorized denomination) of the Notes
to be issued to the holder for the portion of the within Note not being repaid
(in the absence of any such specification, one such Note will be issued for the
portion not being repaid):_________________________________
Dated:
----------------------- ---------------------------------------
NOTICE: The signature on this Option to Elect Repayment must correspond with
the name as written upon the face of the within instrument in every
particular without alteration or enlargement; signature(s) must be
guaranteed by an eligible guarantor institution (banks, stock brokers,
savings and loan associations and credit unions with membership in an
approved signature guarantee medallion program) pursuant to Securities
and Exchange Commission Rule 17Ad-15.
21
