<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 13, 1995
REGISTRATION NO. 33-56255
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
INTERNATIONAL LEASE FINANCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 22-3059110
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
1999 AVENUE OF THE STARS, 39TH FLOOR
LOS ANGELES, CALIFORNIA 90067 (310) 788-1999
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
JULIE I. SACKMAN, ESQ.
GENERAL COUNSEL AND SECRETARY
1999 AVENUE OF THE STARS, 39TH FLOOR
LOS ANGELES, CALIFORNIA 90067 (310) 788-1999
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
RICHARD A. BOEHMER, ESQ. PETER P. WALLACE, ESQ.
D. STEPHEN ANTION, ESQ. MILBANK, TWEED, HADLEY & MCCLOY
O'MELVENY & MYERS 601 SOUTH FIGUEROA STREET
400 S. HOPE STREET LOS ANGELES, CALIFORNIA 90017
LOS ANGELES, CALIFORNIA 90071
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
(SUBJECT TO COMPLETION, ISSUED JANUARY 13, 1995)
PROSPECTUS
[LOGO OF INTERNATIONAL LEASE FINANCE CORPORATION]
500 SHARES OF MARKET AUCTION PREFERRED STOCK, SERIES E
500 SHARES OF MARKET AUCTION PREFERRED STOCK, SERIES F
Liquidation Preference $100,000 Per Share
-----------
Dividends on the Market Auction Preferred Stock, Series E and Series F
(collectively, the "MAPS") are cumulative from the Date of Original Issue and
are payable when, as and if declared by the Board of Directors of International
Lease Finance Corporation. The Initial Dividend Payment Date and Initial
Dividend Rate will be , 1995 and % per annum for the Series E MAPS and
, 1995 and % per annum for the Series F MAPS. Thereafter, dividends will
be payable at the Applicable Rate in effect from time to time when, as and if
declared on each subsequent Dividend Payment Date which is, subject to certain
exceptions, every seventh for the Standard Dividend Period of 49 days,
subject to certain exceptions, commencing on the prior Dividend Payment Date.
Under certain circumstances, the Company may specify that a Dividend Period be
a Short Dividend Period (50 to 364 days) or a Long Dividend Period (one year or
longer).
After the Initial Dividend Period, the Applicable Rate for each Dividend
Period will be determined on the basis of Orders placed in an Auction conducted
on the Business Day preceding the commencement of a Dividend Period, subject to
certain exceptions. In each Auction each Existing Holder will indicate its
desire (i) to continue to hold shares of a Series without regard to the
Applicable Rate that results from such Auction, (ii) to continue to hold shares
of a Series if the Applicable Rate that results from such Auction is equal to
or greater than the rate bid by such Existing Holder and/or (iii) to sell
shares of a Series without regard to the Applicable Rate that results from such
Auction. Potential Holders may submit bids in which they will offer to purchase
shares of a Series if the Applicable Rate that results from such Auction is
equal to or greater than the rate bid by such Potential Holder. The Applicable
Rate that results from an Auction for any Dividend Period will not be greater
than a rate per annum (the "Maximum Applicable Rate"), determined by reference
to the credit ratings of the MAPS, that is a percentage of the Applicable "AA"
Composite Commercial Paper Rate, in the case of a Standard Dividend Period or a
Short Dividend Period of 183 days or less, or a percentage of the Applicable
Treasury Bill Rate, in the case of a Short Dividend Period of 184 days to 364
days or the Applicable Treasury Note Rate in the case of a Long Dividend
Period. The Maximum Applicable Rate may range from 150% to 275% of such rates,
and on the date of delivery of the MAPS is anticipated to be 200% thereof. If
the Company fails to make timely payments to the Auction Agent of the full
amount of any dividend on the MAPS or the redemption price of MAPS called for
redemption, the Applicable Rate will not be based on the results of an Auction
but instead will be the Default Rate, unless such failure to pay is cured
within three Business Days.
Shares of MAPS may be transferred only in whole shares and pursuant to a Bid
or a Sell Order placed in an Auction, to or through a Broker-Dealer or to a
person that has delivered a signed Master Purchaser's Letter to a Broker-
Dealer. Prospective purchasers should carefully review the Auction Procedures
described in this Prospectus (including its Appendices) and should note that
(i) a Bid or Sell Order constitutes a commitment to purchase or sell shares of
MAPS based upon the results of an Auction, (ii) Auction participation will be
through telephonic communications, (iii) settlement for purchases and sales
will be on the Business Day following an Auction and (iv) ownership of MAPS
will be maintained in book-entry form by or through the Securities Depositary.
Each Series of MAPS is redeemable on any Dividend Payment Date for such
Series, in whole or in part, at the option of the Company, at $100,000 per
share, plus accrued and unpaid dividends.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------
PRICE $100,000 PER SHARE
-----------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY (3)
--------- -------------- -----------
<S> <C> <C> <C>
Per Share.............. $ $ $
Total.................. $ $ $
</TABLE>
- -----
(1) Plus accrued dividends, if any, from the Date of Original Issue.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of estimated expenses for the account of the Company of
$270,000, of which $125,000 will be paid by the Underwriters.
-----------
Each share of MAPS is offered, subject to prior sale, when, as and if
accepted by the Underwriters named herein, and subject to approval of certain
legal matters by Milbank, Tweed, Hadley & McCloy, counsel for the Underwriters.
It is expected that delivery of the MAPS will be made on or about , 1995,
through the facilities of The Depository Trust Company, against payment
therefor in immediately available funds.
-----------
MORGAN STANLEY & CO. LEHMAN BROTHERS
Incorporated
, 1995
<PAGE>
AVAILABLE INFORMATION
International Lease Finance Corporation (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Such reports and other information filed by the Company can be inspected and
copied at the Public Reference Room of the Commission, Room 1024, at 450 Fifth
Street, N.W., Washington, D.C., 20549 and at the Commission's regional offices
at Seven World Trade Center, Room 1300, New York, New York 10048 and Suite
1400 Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such materials can be obtained at prescribed rates from the
Public Reference Room of the Commission, Room 1024, at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is made to the Registration Statement, which may be examined without
charge at the public reference facilities maintained by the Commission at the
Public Reference Room of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies thereof may be obtained from the Commission
upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(1) Annual Report on Form 10-K for the year ended December 31, 1993;
(2) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994,
June 30, 1994 and September 30, 1994; and
(3) Current Reports on Form 8-K, event dates January 4, 1994, January 11,
1994, February 23, 1994, March 24, 1994, May 17, 1994, May 20, 1994, May
26, 1994, July 26, 1994, October 12, 1994 and December 6, 1994.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the MAPS hereunder
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of the filing of such reports and documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which is incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated herein by reference (not including exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such documents). Requests should be directed to: Julie I. Sackman, Secretary,
International Lease Finance Corporation, 1999 Avenue of the Stars, 39th Floor,
Los Angeles, California 90067 (telephone: (310) 788-1999).
----------------
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................ 2
Incorporation of Certain Documents by Reference...................... 2
Prospectus Summary................................................... 4
International Lease Finance Corporation.............................. 9
Use of Proceeds...................................................... 9
Capitalization of the Company........................................ 9
Selected Financial Data.............................................. 10
American International Group, Inc.................................... 11
Description of MAPS.................................................. 11
Certain Income Tax Consequences...................................... 29
Underwriters......................................................... 31
Experts.............................................................. 32
Legal Matters........................................................ 32
Index of Terms....................................................... 33
Appendix A: Settlement Procedures.................................... A-1
Appendix B: Auction Procedures....................................... B-1
Appendix C: Master Purchaser's Letter................................ C-1
</TABLE>
----------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by reference to the detailed information appearing elsewhere in this
Prospectus. Terms not defined in this Summary are defined elsewhere herein or
in the Appendices hereto.
INTERNATIONAL LEASE FINANCE CORPORATION
The Company is primarily engaged in the acquisition of new and used
commercial jet aircraft and the leasing and sale of such aircraft to domestic
and foreign airlines. The Company, in terms of the number and value of
transactions concluded, is a major owner-lessor of commercial jet aircraft.
Since its formation in 1973, the Company has engaged in over 650 transactions
involving the lease or sale of commercial aircraft to more than 120 airlines.
In addition, the Company is engaged in the remarketing of commercial jets for
airlines and financial institutions. At September 30, 1994, the Company owned
253 aircraft including aircraft owned in joint ventures. At September 30, 1994,
the Company had committed to purchase 220 aircraft deliverable through 1999 at
an estimated aggregate purchase price of $13.0 billion. It also had options to
purchase an additional 43 aircraft deliverable through 1999 at an estimated
aggregate purchase price of $2.6 billion.
USE OF PROCEEDS
The net proceeds from the sale of the MAPS offered hereby will be
approximately $98,480,000. The Company intends to use the net proceeds to repay
maturing commercial paper. At January 12,1995, the Company had approximately
$1,953,661,000 of commercial paper outstanding with a weighted interest rate of
approximately 5.83%.
AMERICAN INTERNATIONAL GROUP, INC.
The Company is a wholly-owned subsidiary of American International Group,
Inc. ("AIG"). AIG is a holding company which through its subsidiaries is
primarily engaged in a broad range of insurance and insurance-related
activities in the United States and abroad. AIG's primary activities include
both general and life insurance operations. The principal insurance company
subsidiaries of AIG are American Home Assurance Company, National Union Fire
Insurance Company of Pittsburgh, Pa., New Hampshire Insurance Company,
Lexington Insurance Company, American International Underwriters Overseas,
Ltd., American Life Insurance Company, American International Assurance
Company, Limited, The Philippine American Life Insurance Company, American
International Reinsurance Company, Ltd. and United Guaranty Residential
Insurance Company. Other significant activities of AIG include financial
services and insurance agency and service fee operations. The common stock of
AIG is listed on, among others, the New York Stock Exchange.
THE MAPS ARE NOT OBLIGATIONS OF AIG.
THE OFFERING
The Company is offering two Series of MAPS ("Series E" and "Series F," each a
"Series"), each consisting of 500 shares. Each Series of MAPS is being offered
at an offering price of $100,000 per share.
DIVIDENDS
The MAPS of each Series will entitle the holder thereof to receive cumulative
preferred dividends, when, as and if declared by the Board of Directors of the
Company, out of funds available therefor under applicable law and the Articles
of Incorporation. See "Description of MAPS--General." Dividend rates and
Dividend Payment Dates for the Initial Dividend Period for each Series of MAPS
shall be as indicated on the cover page of this Prospectus. After the Initial
Dividend Period, except as provided below, the dividend rate on the
4
<PAGE>
MAPS of each Series will be the Applicable Rate for such Series that the
Auction Agent advises the Company has resulted from an Auction relating to such
Series. Separate Auctions will be conducted for each Series. See "Description
of MAPS--Dividends--Determination of Dividend Rate." The dividend rate on each
Series of MAPS shall not exceed the Maximum Applicable Rate for any Dividend
Period (except following a Failure to Deposit, in which case the dividend rate
shall be the Default Rate).
After the Initial Dividend Period for each Series of MAPS, the term of each
subsequent Dividend Period for each Series of MAPS will be a Standard Dividend
Period (currently a period of 49 days) or, if established by the Company, a
Short Dividend Period (50 to 364 days) or a Long Dividend Period (one year or
longer). See "Description of MAPS--Dividends--Dividend Periods." Dividends will
be payable (a) for any Series with respect to a Standard Dividend Period, on
each seventh following the commencement of such Dividend Period; (b) for
any Series with respect to a Short Dividend Period, on the day following the
last day of such Short Dividend Period and on such other dates as are
established at the time such Short Dividend Period is determined; and (c) for
any Series with respect to a Long Dividend Period, on the day following the
last day of such Long Dividend Period and on the first day of the fourth
calendar month after the commencement of such Long Dividend Period and
quarterly thereafter on the first day of each applicable month, in each case
subject to certain adjustments. See "Description of MAPS--Dividends--Dividend
Payment Dates."
The Maximum Applicable Rate on any Auction Date shall be the rate obtained by
multiplying the Applicable Determining Rate on such date by the percentage
determined as set forth below based on the lower of the credit ratings assigned
to the MAPS by Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Corporation ("S&P").
<TABLE>
<CAPTION>
CREDIT RATINGS APPLICABLE PERCENTAGE
-------------- OF APPLICABLE
MOODY'S S&P DETERMINING RATE
------- --- ---------------------
<S> <C> <C>
"aa3" or Above AA- or Above 150%
"a3" to "a1" A- to A+ 200%
"baa3" to "baa1" BBB- to BBB+ 225%
Below "baa3" Below BBB- 275%
</TABLE>
The Applicable Determining Rate with respect to MAPS with a Standard Dividend
Period or a Short Dividend Period of 183 days or less is the Applicable "AA"
Composite Commercial Paper Rate; with respect to MAPS with a Short Dividend
Period of 184 to 364 days, it is the Applicable Treasury Bill Rate; and with
respect to MAPS with a Long Dividend Period, it is the Applicable Treasury Note
Rate. See "Description of MAPS--Auction Procedures--Determination of Sufficient
Clearing Bids, Winning Bid Rate and Applicable Rate."
The Company may give a Notice of Short Dividend Period or a Notice of Long
Dividend Period, not less than ten and not more than 30 days prior to an
Auction Date for any Series of MAPS, to the Auction Agent and the Securities
Depositary. Each such Notice will specify (i) the next succeeding Dividend
Period as a Short Dividend Period or a Long Dividend Period, (ii) the term
thereof, (iii) in the case of any Long Dividend Period, additional redemption
provisions or restrictions on redemption, if any, and (iv) the Dividend Payment
Dates; provided that, for any Auction occurring after the initial Auction, the
Company may not give a Notice of a Short Dividend Period or a Notice of a Long
Dividend Period (and any such Notice shall be null and void) unless Sufficient
Clearing Bids were made in the last occurring Auction of any series of Market
Auction Preferred Stock of the Company now or hereafter authorized (the
"Authorized MAPS") (or all shares of such series of Authorized MAPS were
subject to Submitted Hold Orders) and full cumulative dividends, if any, for
all Authorized MAPS payable prior to such date have been paid in full. A Notice
may be revoked by the Company on or prior to the Business Day prior to the
related Auction Date by giving a Notice of Revocation to the Auction Agent and
the Securities Depositary. If the Company does not give a Notice with respect
to the succeeding Dividend Period for any Series of MAPS or gives a Notice of
Revocation with respect thereto, such next succeeding Dividend Period will be a
Standard Dividend Period.
In addition, if the Company has given a Notice with respect to the next
succeeding Dividend Period for a Series and has not given a Notice of
Revocation with respect thereto, but Sufficient Clearing Bids are not
5
<PAGE>
made in the related Auction (other than because all shares of such Series were
subject to Submitted Hold Orders) or such Auction is not held for any reason,
(i) such next succeeding Dividend Period will, notwithstanding such Notice, be
a Standard Dividend Period and (ii) the Company may not again give a Notice
(and any such Notice shall be null and void) until Sufficient Clearing Bids
have been made in an Auction of a series of Authorized MAPS or an Auction has
been held in which all shares of a series of Authorized MAPS were subject to
Submitted Hold Orders.
Each Broker-Dealer will be required to notify promptly each person that has
purchased MAPS of either Series from or through such Broker-Dealer and, to the
knowledge of such Broker-Dealer, remains an Existing Holder of MAPS of such
Series, as to any Notice or Notice of Revocation given by the Company relating
to such Series. Holders of MAPS for which a Notice has been delivered should
contact their respective Broker-Dealers for further information. See
"Description of MAPS--Dividends--Extension of Dividend Period."
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned
or declared) to be paid on such Dividend Payment Date for any Series of MAPS or
(ii) on the Business Day next preceding any redemption date, the full
redemption price (including accumulated and unpaid dividends) to be paid on
such redemption date for any share of any Series of MAPS (in each case referred
to as a "Failure to Deposit"), then, until the full amount due shall have been
paid to the Auction Agent, Auctions will be suspended and the Applicable Rate
for such Series will be equal to the Applicable Determining Rate multiplied by
the percentage shown opposite the lowest Credit Ratings category on the
preceding page determined as of the Business Day preceding such Failure to
Deposit (the "Default Rate"). If such Failure to Deposit is cured within three
Business Days, the Applicable Rate during the period from the Dividend Payment
Date in respect of which such Failure to Deposit occurred through the day
preceding the Business Day next succeeding the Auction held following such cure
will be the Default Rate and the Applicable Rate for the Dividend Period
commencing on the second Business Day following such cure will be based on the
results of an Auction to be held on the Business Day following such cure.
Unless such a cure is effected, the Default Rate shall continue in effect until
there shall occur a Dividend Payment Date at least two Business Days prior to
which the full amount of any dividends (whether or not earned or declared)
payable on each Dividend Payment Date prior to and including such Dividend
Payment Date, and the full amount of any redemption price (including
accumulated and unpaid dividends) then due, shall have been paid to the Auction
Agent, and thereupon Auctions shall resume on the terms stated herein for
Dividend Periods commencing with such Dividend Payment Date. If an Auction is
not held on an Auction Date for any reason (other than because of suspension of
Auctions due to a Failure to Deposit), the dividend rate therefor shall be the
Maximum Applicable Rate determined as of such Auction Date. See "Description of
MAPS--Dividends--Determination of Dividend Rate."
REDEMPTION
At the option of the Company, the shares of any Series of MAPS may be
redeemed, in whole or from time to time in part, out of funds legally available
therefor, on any Dividend Payment Date for such Series, upon at least 15 but
not more than 45 days' notice, at a redemption price per share equal to the sum
of $100,000 plus an amount equal to accumulated and unpaid dividends thereon
(whether or not earned or declared) to the date that the Company pays the full
amount payable upon redemption of such shares. Pursuant to such right of
optional redemption, the Company may elect to redeem some or all of the shares
of a series of Authorized MAPS without redeeming shares of any other series of
Authorized MAPS. See "Description of MAPS--Redemption."
LIQUIDATION PREFERENCE
The liquidation preference for MAPS will be $100,000 per share, plus an
amount equal to accumulated and unpaid dividends (whether or not declared) to
and including the date of distribution. See "Description of MAPS--Liquidation
Preference."
6
<PAGE>
VOTING RIGHTS
Except in certain limited circumstances described in this Prospectus or as
expressly required by law, holders of MAPS will have no voting rights. See
"Description of MAPS--Voting Rights."
AUCTION PROCEDURES
Separate Auctions will be conducted for each Series of MAPS on the Business
Day prior to the beginning of each Dividend Period after the Initial Dividend
Period. As used herein, "Existing Holder" means a person who has signed a
Master Purchaser's Letter and is listed as the beneficial owner of any MAPS in
the records of the Auction Agent, and "Potential Holder" means a person who has
signed a Master Purchaser's Letter.
Prior to the Submission Deadline on each Auction Date for the applicable
Series of MAPS, each Existing Holder may submit to a Broker-Dealer its:
. Hold Order--indicating its desire to hold shares of MAPS without regard
to the Applicable Rate for the next Dividend Period.
. Bid--indicating its desire to sell shares of MAPS, provided that the
Applicable Rate for the next Dividend Period is less than the rate per
annum specified in such Bid.
. Sell Order--indicating its desire to sell shares of MAPS without regard
to the Applicable Rate for the next Dividend Period.
An Existing Holder may submit different types of Orders in an Auction with
respect to different shares of MAPS then held by such Existing Holder. An
Existing Holder that offers to purchase additional shares of MAPS is, for
purposes of such offer, treated as a Potential Holder. Any Bid specifying a
rate higher than the Maximum Applicable Rate on the Auction Date will (a) be
treated as a Sell Order if submitted by an Existing Holder and (b) not be
considered if submitted by a Potential Holder. A Hold Order will be deemed to
have been submitted on behalf of an Existing Holder if an Order is not timely
submitted on behalf of such Existing Holder for any reason, including the
failure of a Broker-Dealer to submit such Existing Holder's Order to the
Auction Agent in a timely manner. See "Description of MAPS--Auction
Procedures--Orders by Existing Holders and Potential Holders."
If Sufficient Clearing Bids have been made, the Auction Agent will determine
the lowest rate specified in the Submitted Bids (the "Winning Bid Rate") which
would result in Existing Holders continuing to hold (pursuant to Submitted
Bids) an aggregate number of shares of MAPS which, when added to the number of
shares of MAPS to be purchased by Potential Holders, based on the rates in
their Submitted Bids, would equal not less than the number of Available Shares
of MAPS. In such event, the Winning Bid Rate will be the Applicable Rate for
the next Dividend Period for all MAPS of such Series.
If Sufficient Clearing Bids have not been made (other than because all of the
Outstanding shares of MAPS are subject to Submitted Hold Orders), the next
succeeding Dividend Period will be a Standard Dividend Period and the
Applicable Rate for the next Dividend Period for all shares of MAPS of such
Series will be equal to the Maximum Applicable Rate for a Standard Dividend
Period determined as of the Business Day immediately preceding such Auction. If
Sufficient Clearing Bids have not been made, Existing Holders that have
submitted Sell Orders will not be able to sell in the Auction all, and may not
be able to sell any, shares of MAPS subject to such Submitted Sell Orders.
If all of the Outstanding shares of MAPS of any Series are subject to
Submitted Hold Orders, the Applicable Rate for the next Dividend Period will be
59% of the Applicable "AA" Composite Commercial Paper Rate, if the next
Dividend Period for such Series of MAPS is a Standard Dividend Period or a
Short Dividend Period of 183 days or less; or 59% of the Applicable Treasury
Bill Rate, if the next Dividend Period for such Series of MAPS is a Short
Dividend Period of 184 days to 364 days; or 59% of the Applicable
7
<PAGE>
Treasury Note Rate, if the next Dividend Period for such Series of MAPS is a
Long Dividend Period, in each case as in effect on the related Auction Date.
See "Description of MAPS--Auction Procedures--Determination of Sufficient
Clearing Bids, Winning Bid Rate and Applicable Rate."
The Auction Procedures provide for a pro rata allocation of shares of MAPS
for purchase and sale, which may result in an Existing Holder continuing to
hold or selling, or a Potential Holder purchasing, a number of shares of MAPS
that is fewer than the number of shares of MAPS specified in its Order. If, as
a result of the Auction Procedures, (1) any Existing Holder would be entitled
or required to sell, or any Potential Holder would be entitled or required to
purchase, a fraction of a share, the Auction Agent will, in such manner as in
its sole discretion it will determine, round up or down the number of shares
being sold and purchased on such Auction Date so that the number of shares sold
or purchased by each Existing Holder or Potential Holder will be whole shares
or (2) any Potential Holder would be entitled or required to purchase less than
a whole share, the Auction Agent will, in such manner as in its sole discretion
it will determine, allocate shares of MAPS for purchase among Potential Holders
so that only whole shares are purchased by any such Potential Holder, even if
such allocation results in one or more of such Potential Holders not purchasing
shares of MAPS. Existing Holders that submitted or were deemed to have
submitted Hold Orders will continue to hold the shares of MAPS subject to such
Hold Orders. See "Description of MAPS--Auction Procedures--Acceptance and
Rejection of Submitted Bids and Submitted Sell Orders and Allocation of MAPS."
MASTER PURCHASER'S LETTER
Each prospective purchaser of MAPS of any Series will be required to sign and
deliver a Master Purchaser's Letter to a Broker-Dealer, in which such
prospective purchaser will agree, among other things, that (i) MAPS may be
transferred only pursuant to a Bid or Sell Order placed in an Auction, or to or
through a Broker-Dealer or to a person that has delivered a signed Master
Purchaser's Letter to a Broker-Dealer, provided that in the case of all
transfers other than those pursuant to an Auction, such prospective purchaser,
its Broker-Dealer or its Agent Member promptly advises the Auction Agent of
such transfer, and (ii) such prospective purchaser's ownership of shares of
MAPS of any Series will be maintained in book-entry form by the Securities
Depositary, in the account of such prospective purchaser's Agent Member, which
in turn will maintain records of such prospective purchaser's beneficial
ownership.
EXECUTION OF A MASTER PURCHASER'S LETTER IS NOT A COMMITMENT TO PURCHASE MAPS
OF ANY SERIES IN THE OFFERING MADE BY THIS PROSPECTUS OR IN ANY AUCTION, BUT IS
A CONDITION PRECEDENT TO PURCHASING MAPS OF ANY SERIES.
CERTAIN INCOME TAX CONSEQUENCES
The Company has received an opinion of O'Melveny & Myers, special counsel to
the Company, that the MAPS will constitute equity of the Company and
distributions thereon (other than distributions in redemption of the MAPS
subject to Section 302(b) of the Code) will constitute dividends for federal
income tax purposes to the extent made out of the current or accumulated
earnings and profits of the Company as determined under federal income tax
principles. In the opinion of such counsel, a corporate holder of MAPS, who is
otherwise entitled to the 70% Dividends-Received Deduction permitted by Section
243 of the Code, will be entitled to that deduction with respect to dividends
received on the MAPS. It should be noted that opinions of counsel are not
binding on the IRS or the courts. Thus, it is possible that the IRS might take
a position contrary to the opinion of counsel expressed above and seek to deny
the Dividends-Received Deduction with respect to dividends paid on the MAPS.
Counsel is of the opinion that if the IRS asserted such a position, the IRS
would not prevail in a judicial proceeding in which the issues were properly
presented.
See "Certain Income Tax Consequences" for a more complete description of
counsel's opinion and the income tax consequences of an investment in MAPS.
8
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION
The Company is primarily engaged in the acquisition of new and used
commercial jet aircraft and the leasing and sale of such aircraft to domestic
and foreign airlines. The Company, in terms of the number and value of
transactions concluded, is a major owner-lessor of commercial jet aircraft.
Since its formation in 1973, the Company has engaged in over 650 transactions
involving the lease or sale of commercial aircraft to more than 120 airlines.
In addition, the Company is engaged in the remarketing of commercial jets for
airlines and financial institutions. At September 30, 1994, the Company owned
253 aircraft including aircraft owned in joint ventures. At September 30, 1994,
the Company had committed to purchase 220 aircraft deliverable through 1999 at
an estimated aggregate purchase price of $13.0 billion. It also had options to
purchase an additional 43 aircraft deliverable through 1999 at an estimated
aggregate purchase price of $2.6 billion.
The Company is a wholly owned subsidiary of AIG.
The Company is incorporated in the State of California and its principal
executive offices are located at 1999 Avenue of the Stars, 39th Floor, Los
Angeles, California 90067, with telephone and telecopier numbers of (310) 788-
1999 and (310) 788-1990, respectively.
USE OF PROCEEDS
The net proceeds from the sale of the MAPS offered hereby will be
approximately $98,480,000. The Company intends to use the net proceeds to repay
maturing commercial paper. Commercial paper borrowings were used for general
corporate purposes, including working capital and the acquisition of aircraft.
At January 12, 1995, the Company had approximately $1,953,661,000 of commercial
paper outstanding with a weighted interest rate of approximately 5.83%.
CAPITALIZATION OF THE COMPANY
The following table sets forth the total capitalization of the Company at
September 30, 1994, and as adjusted to give effect to (i) the issuance of the
MAPS and (ii) the application of net proceeds from the issuance of the MAPS as
described above. See "Use of Proceeds." This table should be read in
conjunction with the consolidated financial statements of the Company contained
in the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1994 incorporated herein by reference. See "Incorporation of Certain
Documents by Reference."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
----------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt financing...................................... $7,156,089 $7,057,609
Shareholders' equity:
Preferred stock, without par value; authorized:
20,000,000 shares of preferred stock; issued: 500
shares of Series A MAPS, 500 shares of Series B
MAPS, 500 shares of Series C MAPS, and 500 shares
of Series D MAPS, liquidation preference $100,000
per share; (as adjusted: issued 500 Series A
MAPS, 500 Series B MAPS, 500 Series C MAPS, 500
Series D MAPS, 500 Series E MAPS and 500 Series F
MAPS, liquidation preference $100,000 per share). 200,000 300,000
Common stock, without par value; authorized:
100,000,000 shares; issued and outstanding:
35,818,122 shares................................ 3,582 3,582
Additional paid-in capital........................ 532,941 531,421
Retained earnings................................. 810,353 810,353
---------- ----------
Total shareholders' equity...................... 1,546,876 1,645,356
---------- ----------
Total capitalization (including short-term
debt).......................................... $8,702,965 $8,702,965
========== ==========
</TABLE>
9
<PAGE>
SELECTED FINANCIAL DATA
The following table summarizes selected consolidated financial data and
operating information of the Company. The selected consolidated financial data
should be read in conjunction with the Consolidated Financial Statements and
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in the Company's Annual Report on Form 10-
K for the year ended December 31, 1993 which is incorporated herein by
reference.
<TABLE>
<CAPTION>
13 MONTHS YEAR ENDED NINE MONTHS ENDED
YEAR ENDED ENDED DECEMBER 31, SEPTEMBER 30,
NOVEMBER DECEMBER 31, ---------------------------------- ----------------------
30, 1989 1990 1991 1992 1993 1993 1994
---------- ------------ ---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Rentals of flight equip-
ment................... $ 249,530 $ 367,649 $ 433,505 $ 628,600 $ 795,437 $ 581,086 $ 723,759
Flight equipment market-
ing.................... 52,962 45,408 38,238 46,845 53,680 12,184 59,531
Interest and other in-
come................... 31,589 53,023 54,968 55,072 62,515 50,029 30,553
Total revenues.......... 334,081 466,080 526,711 730,517 911,632 643,299 813,843
Expenses................ 239,211 343,080 387,011 484,277 633,992 461,683 570,866
Income before income
taxes.................. 94,870 123,000 139,700 246,240 277,640 181,616 242,977
Net income(1)........... 61,164 69,901 89,530 157,749 168,565 107,681 153,418
RATIO OF EARNINGS TO
FIXED CHARGES AND PRE-
FERRED STOCK DIVI-
DENDS(2)............... 1.35x 1.33x 1.44x 1.75x 1.68x 1.59x 1.66x
BALANCE SHEET DATA:
Flight equipment under
operating leases (net
of
accumulated deprecia-
tion).................. $1,909,465 $2,633,627 $3,453,149 $4,759,899 $6,515,837 $6,371,663 $8,351,732
Net investment in fi-
nance and sales-type
leases................. 278,347 260,396 247,936 242,445 290,269 293,217 59,115
Total assets............ 2,580,481 3,523,626 4,563,622 6,079,765 8,139,821 7,616,792 9,774,604
Total debt.............. 1,800,244 2,497,074 3,242,010 4,242,288 5,819,481 5,578,642 7,156,089
Shareholders' equity.... 500,165 632,323 815,208 1,156,195 1,409,181 1,253,428 1,546,876
OTHER DATA:
Aircraft owned at period
end.................... 78 106 132 176 230 224 253
Aircraft sold or
remarketed during the
period................. 9 13 8 7 9 8 28
</TABLE>
- --------
(1) Includes an extraordinary loss of $7,035,000 in 1990.
(2) For the purpose of computing such ratios, "earnings" represents the sum of
net income, provision for income taxes and fixed charges, less capitalized
interest. "Fixed charges" represents interest expense, capitalized interest
and the interest factor of rents under operating leases. "Preferred stock
dividends" represents preferred dividend requirements multiplied by the
ratio which pre-tax income bears to net income.
10
<PAGE>
AMERICAN INTERNATIONAL GROUP, INC.
AIG is a holding company which through its subsidiaries is primarily engaged
in a broad range of insurance and insurance-related activities in the United
States and abroad. AIG's primary activities include both general and life
insurance operations. The principal insurance company subsidiaries of AIG are
American Home Assurance Company, National Union Fire Insurance Company of
Pittsburgh, Pa., New Hampshire Insurance Company, Lexington Insurance Company,
American International Underwriters Overseas, Ltd., American Life Insurance
Company, American International Assurance Company, Limited, The Philippine
American Life Insurance Company, American International Reinsurance Company,
Ltd. and United Guaranty Residential Insurance Company. Other significant
activities of AIG include financial services and insurance agency and service
fee operations. The common stock of AIG is listed on, among others, the New
York Stock Exchange.
THE MAPS ARE NOT OBLIGATIONS OF AIG.
DESCRIPTION OF MAPS
The following description of the terms of the MAPS does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Restated Articles of Incorporation of the Company (the "Articles of
Incorporation"), as the same will be amended prior to the issuance of the MAPS
by the filing of certificates of determination designating and establishing the
voting rights, preferences, limitations and special rights of the MAPS (the
"Designation"), the Auction Agent Agreement and the Broker-Dealer Agreements,
the forms of which will be made available to prospective investors upon
request, and to the Appendices to this Prospectus.
GENERAL
The MAPS of each Series will be preferred shares of the Company entitling the
holders thereof to receive cumulative preferred dividends when, as and if
declared by the Board of Directors of the Company out of funds available
therefor under applicable law and the Articles of Incorporation. No fractional
MAPS will be issued. When issued in the manner described herein, the MAPS will
be fully paid and nonassessable. The MAPS will not be convertible into Common
Stock or other shares of the Company and holders thereof will have no
preemptive rights.
The Company is authorized by the Articles of Incorporation to issue, without
stockholder approval, up to 20,000,000 shares of Preferred Stock, no par value,
in one or more series, with such designations, preferences and other rights and
limitations or restrictions and qualifications as may be fixed by the Board of
Directors in resolutions providing for the issuance of such series. As of the
date of this Prospectus, 500 shares of Market Auction Preferred Stock, Series A
(the "Series A MAPS"), 500 shares of Market Auction Preferred Stock, Series B
(the "Series B MAPS"), 500 shares of Market Auction Preferred Stock, Series C
(the "Series C MAPS") and 500 shares of Market Auction Preferred Stock, Series
D (the "Series D MAPS") are outstanding. The Designation will authorize MAPS
comprised of 500 shares of Series E MAPS and 500 shares of Series F MAPS. The
terms of each Series of MAPS will be set forth in and established by the
Designation.
Each Series of MAPS will be represented by a single certificate issued to The
Depository Trust Company, as Securities Depositary, and registered in the name
of its nominee and, so long as there is a Securities Depositary, no person
acquiring MAPS will be entitled to receive a certificate evidencing such MAPS,
unless otherwise required by law. See "Securities Depositary."
As described in more detail herein, each Series of MAPS may have different
Dividend Payment Dates and Dividend Periods. Separate Auctions will be
conducted for each Series of MAPS, which may occur on different Auction Dates.
These separate Auctions may result in a different Applicable Rate for each
Series of MAPS.
11
<PAGE>
The MAPS will not be subject to any sinking fund but will be subject to
redemption at the option of the Company. MAPS of any Series are redeemable by
the Company at its sole option, in whole or from time to time in part, upon
not less than 15 nor more than 45 days notice on any Dividend Payment Date at
a redemption price of $100,000 per share plus the accumulated but unpaid
dividends (whether or not earned or declared) to the date that the Company
pays the full amount payable upon redemption of such shares. The Company may
elect to redeem all or any portion of any Series of MAPS. In connection with
the selection of a Long Dividend Period, the Company may restrict its ability
to redeem the MAPS of such Series by providing for the payment of a redemption
premium or fixing a period of time during which the MAPS may not be redeemed.
See "Redemption--Optional Redemption."
The Designation permits the Company to establish a Short Dividend Period and
a Long Dividend Period. See "Auction Procedures--Determination of Sufficient
Clearing Bids, Winning Bid Rate and Applicable Rate."
Pursuant to an agreement (the "Auction Agent Agreement") between the Company
and the Auction Agent (initially, Chemical Bank), the Auction Agent will also
be the transfer agent, paying agent, registrar and redemption agent for each
Series of MAPS. See "The Auction Agent."
DIVIDENDS
General. Holders of MAPS shall be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds available
therefor under applicable law and the Articles of Incorporation, cumulative
cash dividends at the Applicable Rate, determined as set forth below, payable
on the respective dates set forth below that may be applicable with respect to
such MAPS. For the Initial Dividend Period, dividends will accumulate at a
rate per annum of % in the case of Series E MAPS and % in the case of
Series F MAPS (each, an "Initial Dividend Rate"). For each subsequent Dividend
Period, the dividend rate for each Series of MAPS will be the Applicable Rate,
determined as set forth herein, and will be payable on the respective dates
set forth below.
Dividend Payment Dates. Dividends on the MAPS will accumulate (whether or
not declared) from the date on which the Company originally issues the MAPS
(the "Date of Original Issue"). Dividends on any Series of MAPS with a
Standard Dividend Period will be payable on the Dividend Payment Date for such
Series specified on the cover page of this Prospectus during the Initial
Dividend Period (the "Initial Dividend Payment Date" for such Series) and
thereafter, except as provided below, on each seventh following the
preceding Dividend Payment Date for such Series. Dividends on any Series of
MAPS with a Short Dividend Period will be payable, except as provided below,
on the day following the last day of such Short Dividend Period and will also
be payable on such other dates as are established at the time such Short
Dividend Period is determined. Dividends on any Series of MAPS with a Long
Dividend Period will be payable, except as provided below, on the day
following the last day of such Long Dividend Period and on the first day of
the fourth calendar month after the commencement of such Long Dividend Period
and quarterly thereafter on the first day of each applicable month. Each day
on which dividends on MAPS of each Series would be payable as determined as
set forth in this paragraph but for the adjustments set forth below is
referred to herein as a "Normal Dividend Payment Date."
In the case of dividends payable with respect to a Series of MAPS with a
Standard Dividend Period or a Short Dividend Period, if:
(a)(i) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the MAPS of such Series in
next-day funds on the dates on which such dividends are payable and (ii) a
Normal Dividend Payment Date is not a Business Day, or the day next
succeeding such Normal Dividend Payment Date is not a Business Day, then
dividends shall be payable on the first Business Day preceding such Normal
Dividend Payment Date that is next succeeded by a Business Day; or
12
<PAGE>
(b)(i) the Securities Depositary shall make available to Agent Members
the amounts due as dividends on MAPS of such Series in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (ii) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
In the case of dividends payable with respect to a Series of MAPS with a Long
Dividend Period, if:
(a)(i) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the MAPS of such Series in
next-day funds on the dates on which such dividends are payable and (ii) a
Normal Dividend Payment Date is not a Business Day, or the day next
succeeding such Normal Dividend Payment Date is not a Business Day, then
dividends shall be payable on the first Business Day following such Normal
Dividend Payment Date that is next succeeded by a Business Day; or
(b)(i) the Securities Depositary shall make available to Agent Members
the amounts due as dividends on the MAPS of such Series in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (ii) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
Notwithstanding the foregoing, in case of payment in next-day funds, if the
date on which dividends on shares of any Series of MAPS would be payable as
determined as set forth in the preceding paragraphs is a day that would result
in the number of days between successive Auction Dates for such Series
(determined by excluding the first Auction Date and including the second
Auction Date) not being at least equal to the then-current minimum holding
period (currently set forth in Section 246(c) of the Code) (the "Minimum
Holding Period") required for corporate taxpayers to be entitled to the
dividends-received deduction on preferred stock held by nonaffiliated
corporations (currently set forth in Section 243(a) of the Code) (the
"Dividends-Received Deduction"), then dividends on such shares shall be payable
on the first Business Day following such date on which dividends would be so
payable that is next succeeded by a Business Day that results in the number of
days between such successive Auction Dates (determined as set forth above)
being at least equal to the then-current Minimum Holding Period.
Each date on which dividends for each Series of MAPS shall be payable as
determined as set forth above is referred to herein as a "Dividend Payment
Date". If applicable, the period from the preceding Dividend Payment Date to
the next Dividend Payment Date for any Series of MAPS with a Long Dividend
Period is hereby referred to as a "Dividend Quarter." Although any particular
Dividend Payment Date may not occur on the originally scheduled Normal Dividend
Payment Date because of the adjustments set forth above, each succeeding
Dividend Payment Date will be, subject to such adjustments, the date determined
as set forth above as if each preceding Dividend Payment Date had occurred on
the respective originally scheduled Normal Dividend Payment Date.
In addition, notwithstanding the foregoing, in the event of a change in law
altering the Minimum Holding Period, the period of time between Dividend
Payment Dates shall automatically be adjusted so that there shall be a uniform
number of days in subsequent Dividend Periods (such number of days without
giving effect to the adjustment referred to above being referred to herein as
the "Subsequent Dividend Period Days") commencing after the date of such change
in law equal to or to the extent necessary, in excess of the then-current
Minimum Holding Period, provided that the number of Subsequent Dividend Period
Days shall not exceed by more than nine days the length of such then-current
Minimum Holding Period and shall be evenly divisible by seven, and the maximum
number of Subsequent Dividend Period Days, as adjusted pursuant to this
provision, in no event shall exceed 119 days.
In addition, following such change in law, under the Broker-Dealer Agreement
each Broker-Dealer is required to notify each Existing Holder who acquired
shares of any Series of MAPS through such Broker-Dealer and, to the knowledge
of such Broker-Dealer, has not disposed of such shares, at least ten days prior
13
<PAGE>
to both (i) the first day of the first Dividend Period preceding the Dividend
Period for which such change is to be effective and (ii) the first day of the
first Dividend Period for which such change is to be effective, if possible.
Dividend Periods. After the Initial Dividend Period for each Series of MAPS,
each subsequent Dividend Period for such Series will (except for the
adjustments for non-Business Days described above) be 49 days (each such 49-day
period, subject to any adjustment as a result of a change in law altering the
Minimum Holding Period as described above, being herein referred to as a
"Standard Dividend Period"), unless, as described under "Extension of Dividend
Period" below, the Company specifies that any such subsequent Dividend Period
for a particular Series of MAPS will be a Dividend Period of 50 to 364 days and
consisting of a whole number of weeks (a "Short Dividend Period") or a Dividend
Period of one year or longer (a "Long Dividend Period"). Each such Standard
Dividend Period, Short Dividend Period and Long Dividend Period (together with
the periods commencing on the Date of Original Issue and ending on the
respective Initial Dividend Payment Date for each Series (each, an "Initial
Dividend Period")) being referred to herein as a "Dividend Period." After the
Initial Dividend Period for each Series of MAPS, each successive Dividend
Period will commence on the Dividend Payment Date for the preceding Dividend
Period for such Series and will end (i) in the case of a Standard Dividend
Period, on the day preceding the next Dividend Payment Date and (ii) in the
case of a Short Dividend Period or a Long Dividend Period, on the last day of
the Short Dividend Period or the Long Dividend Period specified by the Company
in the related Notice.
Extension of Dividend Period. The Company may give telephonic and written
notice, not less than ten and not more than 30 days prior to an Auction Date,
to the Auction Agent and the Securities Depositary that the next succeeding
Dividend Period will be a Short Dividend Period (a "Notice of Short Dividend
Period") or a Long Dividend Period (a "Notice of Long Dividend Period" and,
together with a Notice of Short Dividend Period, a "Notice"). Each such Notice
will specify (i) the next succeeding Dividend Period as a Short Dividend Period
or a Long Dividend Period, (ii) the term thereof, (iii) in the case of any Long
Dividend Period, additional redemption provisions or restrictions on
redemption, if any, and (iv) the Dividend Payment Dates; provided that, for any
Auction occurring after the initial Auction, the Company may not give a Notice
of a Short Dividend Period or a Notice of a Long Dividend Period (and any such
Notice shall be null and void) unless Sufficient Clearing Bids were made in the
last occurring Auction of any series of Authorized MAPS (or all shares of such
series were subject to Submitted Hold Orders) and full cumulative dividends, if
any, for all series of Authorized MAPS payable prior to such date have been
paid in full. The Board of Directors of the Company may establish a Short
Dividend Period or a Long Dividend Period for any Series of MAPS. Notice may be
revoked by the Company on or prior to the Business Day prior to the related
Auction Date by telephonic and written notice (a "Notice of Revocation") to the
Auction Agent and the Securities Depositary.
If the Company does not give a Notice with respect to the next succeeding
Dividend Period for any Series of MAPS or gives a Notice of Revocation with
respect thereto, such next succeeding Dividend Period will be a Standard
Dividend Period with respect to such Series. In addition, if the Company has
given Notice with respect to the next succeeding Dividend Period for a Series
of MAPS and has not given Notice of Revocation with respect thereto, but
Sufficient Clearing Bids are not made in the related Auction (other than
because all shares of such Series were subject to Submitted Hold Orders) or
such Auction is not held for any reason, such next succeeding Dividend Period
for such Series will, notwithstanding such Notice, be a Standard Dividend
Period and the Company may not again give a Notice (and such Notice shall be
null and void) until Sufficient Clearing Bids have been made in an Auction for
a series of Authorized MAPS or an Auction has been held in which all shares of
a series of Authorized MAPS were subject to Submitted Hold Orders.
The Auction Agent will be required to notify promptly each Broker-Dealer, and
each Broker-Dealer will be required to notify promptly each person that has
purchased MAPS of such Series from or through
14
<PAGE>
such Broker-Dealer and, to the knowledge of such Broker-Dealer, remains an
Existing Holder of MAPS of such Series, as to any Notice or any Notice of
Revocation given by the Company. Holders of MAPS for which a Notice has been
delivered should contact their respective Broker-Dealers for further
information.
Dividend Payments. Prior to each Dividend Payment Date for each Series of
MAPS, the Company is required to deposit with the Auction Agent sufficient
funds for the payment of declared dividends.
Each dividend will be payable to the holder or holders of record of MAPS as
they appear on the stock books of the Company on the Business Day next
preceding the applicable Dividend Payment Date. Dividends in arrears for any
past Dividend Period (and for any past Dividend Quarter during a Long Dividend
Period) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the holder or holders of record of MAPS. Any dividend
payment made on any Series shall first be credited against the dividends
accumulated with respect to the earliest Dividend Period (or, if applicable,
the earliest Dividend Quarter) for which dividends have not been paid with
respect to such Series. So long as the MAPS are held of record by the nominee
of the Securities Depositary, dividends will be paid to the nominee of the
Securities Depositary on each Dividend Payment Date. The Securities Depositary
will credit the accounts of the Agent Members of Existing Holders in accordance
with the Securities Depositary's normal procedures, which now provide for
payments in next-day funds settled through the New York Clearing House. The
Agent Member of an Existing Holder will be responsible for holding or
disbursing such payments to Existing Holders in accordance with the
instructions of such Existing Holders. See "Master Purchaser's Letter."
Holders of shares of each Series of MAPS shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends. No dividends will be declared or paid or set apart for
payment on the shares of any series of Authorized MAPS for any period unless
full cumulative dividends have been or contemporaneously are declared and paid
on all other series of Authorized MAPS through the most recent applicable
Dividend Payment Date for such other series of Authorized MAPS. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the MAPS which may be in arrears.
So long as any Authorized MAPS are Outstanding, the Company shall not
declare, pay or set aside for payment any dividend or other distribution in
respect of Junior Capital Stock or call for redemption, redeem, purchase or
otherwise acquire for consideration any shares of Junior Capital Stock unless
(a) full cumulative dividends for all past Dividend Periods (and, if
applicable, for all past Dividend Quarters) and all Dividend Payment Dates
occurring on or prior to the date of the transaction shall have been declared
and paid (or declared and a sum sufficient for payment of the dividends set
apart for payment) on all such Authorized MAPS Outstanding and (b) the Company
has redeemed (or set apart for payment a sum sufficient for redemption) the
full number of Authorized MAPS required to be redeemed after giving any notice
of an optional redemption.
The amount of dividends per share of any Series of MAPS payable for each
Dividend Period (or for each Dividend Quarter) shall be computed by multiplying
the Applicable Rate for each Dividend Period (or Dividend Quarter) by a
fraction, the numerator of which shall be the number of days in the Dividend
Period (or Dividend Quarter) (calculated by counting both the last day and the
first day thereof) such share was Outstanding, and the denominator of which
shall be 360 and multiplying the amount so obtained by $100,000.
"Business Day" means a day on which the New York Stock Exchange is open for
trading and which is not a Saturday, Sunday or other day on which banks in New
York City are authorized or obligated by law to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock, whether outstanding on the Date of Original Issue or
thereafter.
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"Junior Capital Stock" means, with respect to the Company, any and all
Capital Stock of the Company ranking junior to the MAPS with respect to the
payment of dividends or the distribution of assets upon liquidation.
"Parity Capital Stock" means any and all shares of Capital Stock of the
Company ranking on a parity with or equal to the MAPS as to the payment of
dividends and distribution of assets.
Determination of Dividend Rate. The Initial Dividend Rate for each Series of
MAPS during the period from and after the Date of Original Issue to the Initial
Dividend Payment Date will be the respective rates per annum set forth on the
cover page of this Prospectus, and the dividend rate for each subsequent
Dividend Period for each Series of MAPS will be, except as provided below, a
rate per annum (the "Applicable Rate") that results from the next preceding
Auction. See "Auction Procedures--Determination of Sufficient Clearing Bids,
Winning Bid Rate and Applicable Rate."
Notwithstanding the results of any Auction or the application of any of the
provisions of the Designation, the dividend rate on each Series of MAPS shall
not exceed the Maximum Applicable Rate for any Dividend Period. See "Auction
Procedures--Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate." The provisions of the immediately preceding sentence
notwithstanding, at any time that the application of the provisions of the next
paragraph would result in a dividend rate on the MAPS being in excess of the
Maximum Applicable Rate, the maximum dividend rate applicable to such Series of
MAPS shall be such higher dividend rate as provided below.
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned
or declared) to be paid on such Dividend Payment Date on any Series of MAPS or
(ii) on the Business Day next preceding any redemption date, the full
redemption price (including accumulated and unpaid dividends) to be paid on
such redemption date for any share of any Series of MAPS (in each case referred
to as a "Failure to Deposit"), then, until the full amount due shall have been
paid to the Auction Agent, Auctions will be suspended and the Applicable Rate
for such Series shall be the Default Rate as determined as of the Business Day
preceding the Failure to Deposit. If such Failure to Deposit is cured within
three Business Days as provided below, the Applicable Rate for the Dividend
Period commencing on the second Business Day following such cure will be based
upon the results of an Auction to be held on the Business Day next succeeding
such cure for such Series. Unless such a cure is effected, the Default Rate
shall continue in effect until there shall occur a Dividend Payment Date at
least two Business Days prior to which the full amount of any dividends
(whether or not earned or declared) payable on each Dividend Payment Date prior
to and including such Dividend Payment Date, and the full amount of any
redemption price (including accumulated and unpaid dividends) then due, shall
have been paid to the Auction Agent, and thereupon Auctions shall resume on the
terms stated herein for Dividend Periods commencing with such Dividend Payment
Date. If an Auction is not held on an Auction Date for any reason (other than
because of a suspension of Auctions due to a Failure to Deposit), the dividend
rate for the applicable Dividend Period shall be the Maximum Applicable Rate
determined as of such Auction Date.
Any Failure to Deposit with respect to any Series of MAPS shall be deemed to
be cured if, within three Business Days of such Failure to Deposit, with
respect to a Failure to Deposit relating to (a) the payment of dividends on
such Series of MAPS, the Company deposits with the Auction Agent by 12:00 noon,
New York City time, all accumulated and unpaid dividends on such Series of
MAPS, including the full amount of any dividends to be paid with respect to the
Dividend Period with respect to which the Failure to Deposit occurred, plus an
amount computed by multiplying the Default Rate by a fraction, the numerator of
which shall be the number of days during the period from the Dividend Payment
Date in respect of which such Failure to Deposit occurred through the day
preceding the Business Day next succeeding the Auction held following such cure
and the denominator of which shall be 360, and applying the rate obtained
against the
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aggregate liquidation preference of such Series of MAPS and (b) the redemption
of shares of MAPS of any Series, the deposit by the Company with the Auction
Agent, by 12:00 noon, New York City time, of funds sufficient for the
redemption of such shares (including accumulated and unpaid dividends), plus an
amount computed by multiplying the Default Rate by a fraction, the numerator of
which shall be the number of days for which such Failure to Deposit is not
cured in accordance with this paragraph (including the day such Failure to
Deposit occurs and excluding the day such Failure to Deposit is cured) and the
denominator of which shall be 360, and applying the rate obtained against the
aggregate liquidation preference of the shares of MAPS in such Series to be
redeemed, and the giving of irrevocable instructions by the Company to apply
such funds and, if applicable, the income and proceeds therefrom, to the
payment of the redemption price (including accumulated and unpaid dividends)
for such shares of the MAPS. If the Company shall have cured such Failure to
Deposit by making timely payment to the Auction Agent, the Auction Agent will
give telephonic and written notice of such cure to each Existing Holder of MAPS
at the telephone number and address specified in such Existing Holder's Master
Purchaser's Letter and to each Broker-Dealer as promptly as practicable after
such cure is effected and schedule an Auction for such Series for the next
Business Day.
Certain Restrictions on Dividends. Pursuant to certain covenants contained in
certain of the Company's bank loan agreements and indentures, the Company is
restricted to paying dividends in an amount which does not exceed 50% of its
cumulative net income from various dates. In addition, in certain agreements,
the Company is prohibited from paying dividends during the pendancy of an
"event of default."
REDEMPTION
Optional Redemption. At the option of the Company, the shares of any Series
of MAPS may be redeemed, in whole or from time to time in part, out of funds
legally available therefor, on any Dividend Payment Date for such Series of
MAPS, upon at least 15 but not more than 45 days' notice, at a redemption price
per share equal to the sum of $100,000 plus an amount equal to accumulated and
unpaid dividends thereon (whether or not earned or declared) to the date that
the Company pays the full amount payable upon redemption of such shares. The
Company may only redeem MAPS of each Series in whole shares. Pursuant to such
right of optional redemption, the Company may elect to redeem some or all of
the shares of a series of Authorized MAPS without redeeming shares of any other
series of Authorized MAPS.
In connection with the selection of a Long Dividend Period, the Company may
restrict its ability to redeem the MAPS of such Series by providing for the
payment of a redemption premium or fixing a period of time during which the
MAPS may not be redeemed.
Redemption Procedures. If MAPS are to be redeemed, the Auction Agent will, at
the direction of the Company, cause to be sent, by first-class or air mail
(postage prepaid) or facsimile, a notice of redemption to each holder of record
(initially Cede & Co., as nominee of the Securities Depositary) and Existing
Holder of MAPS to be redeemed. Such notice of redemption shall be sent not
fewer than 15 nor more than 45 days prior to the redemption date. Each notice
of redemption will state (a) the redemption date, (b) the redemption price, (c)
the number of shares of MAPS and the Series thereof to be redeemed and (d) the
CUSIP number of such shares to be redeemed. The notice of redemption will also
be published once in The Wall Street Journal.
No defect in the notice of redemption or in the mailing thereof will affect
the validity of the redemption proceedings, except as required by applicable
law. A notice of redemption will be deemed given on the day that it is mailed
and published in accordance with the foregoing description.
The Company may elect to redeem some or all of the shares of each Series of
MAPS. So long as the Securities Depositary or its nominee is the record holder
of all of the shares of MAPS to be redeemed, the Auction Agent will give notice
to the Securities Depositary, and the Securities Depositary will determine the
number of shares of each such Series to be redeemed from the account of the
Agent Member of each Existing Holder. An Agent Member may determine to redeem
shares of MAPS from some Existing Holders (which may include an Agent Member
holding shares of a Series for its own account) without redeeming shares of
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MAPS from the accounts of other Existing Holders. Any such redemption will be
made in accordance with applicable laws and rules. If the Securities
Depositary's nominee is not the record holder of all the shares of MAPS to be
redeemed, the particular shares of MAPS to be redeemed shall be selected by the
Company or, at the Company's request, the Auction Agent by lot or by such other
method as such Person shall deem fair and equitable.
Upon any date fixed for redemption (unless a Failure to Deposit occurs), all
rights of the holders of shares of MAPS of the Series called for redemption
will cease and terminate, except the right of such holders to receive the
amounts payable in respect of such redemption therefor, but without interest,
and such shares of MAPS will be deemed no longer Outstanding.
So long as all of the shares of MAPS of any Series to be redeemed are held of
record by a nominee of the Securities Depositary, the redemption price
(including accumulated and unpaid dividends) for such shares of MAPS will be
paid to the Securities Depositary on the redemption date for distribution to
Agent Members in accordance with its normal procedures. Such Agent Members
will, in turn, distribute such funds to the persons for whom they are acting as
agents.
LIQUIDATION PREFERENCE
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of the MAPS will be entitled
to receive, out of the assets of the Company available for distribution to
shareholders after satisfying claims of creditors but before any payment or
distribution of assets is made to holders of Junior Capital Stock, a
preferential liquidation distribution in the amount of the issue price of such
share (i.e., $100,000 per share of MAPS) plus an amount equal to accumulated
and unpaid dividends on each such share (whether or not declared) to and
including the date of such distribution. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the assets of the
Company are insufficient to pay the holders of the MAPS the full amount of the
preferential liquidation distributions to which they are entitled, holders of
MAPS will share ratably in any such distribution of such assets with holders of
Parity Capital Stock. Unless and until payment in full has been made to holders
of MAPS of the liquidation distributions to which they are entitled as
described in this paragraph, no dividends or distributions will be made to
holders of the Company's Junior Capital Stock, and no purchase, redemption or
other acquisition for any consideration by the Company will be made in respect
of the Company's Junior Capital Stock. After the payment to the holders of the
MAPS of the full amount of the preferential liquidation distributions to which
they are entitled pursuant to this paragraph, such holders (in their capacity
as such holders) will have no right or claim to any of the remaining assets of
the Company. A consolidation or merger of the Company with or into any other
corporation or corporations, or a sale or transfer of all or substantially all
of the assets of the Company, will not be deemed to be a liquidation,
dissolution or winding up of the Company.
VOTING RIGHTS
Holders of MAPS will have no voting rights except as hereinafter described or
as expressly required by law.
During any period when dividends on the MAPS or any other Parity Capital
Stock of the Company which have voting rights comparable to the MAPS which are
then exercisable (the MAPS and all such other securities being referred to as
the "Parity Securities") shall be in arrears for at least 180 consecutive days
and shall not have been paid in full (a "Default Period"), the holders of
record of the Parity Securities voting as described below will be entitled to
elect two directors to the Board of Directors (the "Additional Directors")
whether or not the Board of Directors of the Company has taken appropriate
action to increase the established number of directors of the Company by two,
and the holders of the Common Stock as a class, shall be entitled to elect the
remaining number of directors. If the Board of Directors has not taken
appropriate action to authorize an increase in the number of directors by two
and there are not two vacancies
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then existing on the Board of Directors, then, upon the election of the two
Additional Directors as provided below, the term of all previously sitting
directors shall cease (a "Termination of Directors").
As soon as practicable after the beginning of a Default Period (or a
reinstatement of the voting rights of holders of Parity Securities as provided
herein), the Board of Directors of the Company will call or cause to be called
a special meeting of the holders of Parity Securities and, in the case of a
Termination of Directors, all holders of Capital Stock of the Company entitled
to vote for the election of directors generally ("Other Voting Securities"), by
mailing or causing to be mailed to such holders a notice of such special
meeting to be held not less than ten and not more than 45 days after the date
such notice is given. If the Board of Directors of the Company does not call or
cause to be called such a special meeting, it may be called by any of such
holders on like notice. The record date for determining the holders of the
Parity Securities and, if applicable, Other Voting Securities entitled to
notice of and to vote at such special meeting will be the close of business on
the Business Day preceding the day on which such notice is mailed. At any such
special meeting, the holders of Parity Securities, by plurality vote, voting
together as a single class without regard to series (to the exclusion of the
holders of Junior Capital Stock) will be entitled to elect the two Additional
Directors on the basis of one vote per $100,000 liquidation preference
(excluding amounts in respect of accumulated and unpaid dividends) and, in the
case of a Termination of Directors, the holders of Other Voting Securities
shall be entitled to elect the remaining members of the Board of Directors in
the same manner as if such election had occurred at an annual meeting of the
Company. The holder or holders of one-third of the Parity Securities then
outstanding, present in person or by proxy, will constitute a quorum for the
election of the Additional Directors except as otherwise provided by law.
Notice of all meetings at which holders of MAPS shall be entitled to vote will
be given to such holders at their addresses as they appear on the register of
the Company. If a Default Period shall terminate after the notice of a special
meeting has been given but before such special meeting has been held, the
Company shall, as soon as practicable after such termination, mail or cause to
be mailed notice of such termination to holders of the Parity Securities and,
if applicable, Other Voting Securities that would have been entitled to vote at
such special meeting.
So long as a Default Period continues, (i) any vacancy in the office of an
Additional Director may be filled (except as provided in the following clause
(ii)) by the person appointed in an instrument in writing signed by the
remaining Additional Director and filed with the Secretary of the Company or,
in the event there is no remaining Additional Director, by vote of the holders
of the outstanding Parity Securities, voting together as a single class without
regard to series, in a meeting of shareholders or at a meeting of holders of
Parity Securities called for such purpose, and (ii) in the case of the removal
of any Additional Director, the vacancy may be filled by appointment by the
person elected by the vote of the holders of the outstanding Parity Securities,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted upon or any subsequent meeting. Each
director who shall be elected or appointed by the remaining Additional Director
as aforesaid shall be an Additional Director.
At such time as a Default Period shall terminate, (i) the term of office of
the Additional Directors shall terminate and (ii) the voting rights of the
holders of the Parity Securities to elect directors shall cease (subject to the
occurrence of a subsequent Default Period).
PRIORITY
Except as provided in the following paragraph, so long as any MAPS remain
Outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of all of the Authorized MAPS then Outstanding, given in
person or by proxy, either in writing or at a meeting (voting separately as a
single class), (i) authorize, create or issue, or increase the authorized
amount of, any Capital Stock of the Company of any class ranking, as to
dividends or upon the liquidation, dissolution or winding up of the Company,
prior to the MAPS, or reclassify any authorized Capital Stock of the Company
into any such Capital Stock, or authorize, create or issue any obligation or
security convertible into or evidencing the right to purchase any such Capital
Stock, or (ii) amend, alter or repeal the provisions of the Company's Articles
of
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Incorporation, whether by merger, consolidation, share exchange, division or
otherwise, so as to adversely affect any preference, limitation or special
right of the MAPS.
Except as provided by law, the consent of the holders of MAPS is not required
and such holders are not entitled to vote upon (i) the authorization, creation,
issuance or increase in the authorized amount of the Common Stock, additional
series of Authorized MAPS or any Capital Stock of the Company of any class
ranking, as to dividends and upon the liquidation, dissolution or winding up of
the Company, on a parity with or junior to the MAPS, or (ii) any merger,
consolidation, share exchange or division of the Company (or any successor
corporation) with or into another corporation, the result of which is that the
MAPS that may be Outstanding from time to time may be junior to any preferred
shares of such corporation as to dividends and upon the liquidation,
dissolution or winding up of the surviving corporation, if on or prior to the
date of effectiveness of such merger or consolidation, the Company shall have
given Moody's and S&P written notice of such merger or consolidation and
Moody's and S&P shall have confirmed in writing that the transaction will not
adversely affect the then existing rating for the MAPS. If either Moody's or
S&P shall change its rating categories for preferred stock, then the
determination of whether the transaction will not adversely affect the then
existing rating for the MAPS shall be made based upon the substantially
equivalent new rating categories for preferred stock of such rating agency. If
either Moody's or S&P, or both, shall not make a rating available for the MAPS
necessary to make such a determination or will not confirm whether the
transaction will adversely affect its then existing rating for the MAPS, such
confirmation will be sought from two substitute rating agencies if they have
made ratings available for the MAPS necessary to make the determination and are
willing to make such confirmation or, in the event that only one such rating
agency shall make such ratings available and is willing to make such
confirmation, based upon such rating agency's confirmation.
THE AUCTION
The Applicable Rate for each Series of MAPS for each Dividend Period after
the Initial Dividend Period will be equal to the rate per annum that the
Auction Agent advises the Company has resulted on the Auction Date from the
implementation with respect to such Series, of the auction procedures described
below and in Appendix B to this Prospectus (the "Auction Procedures"), pursuant
to which Persons determine to hold or offer to purchase or sell shares of MAPS
of such Series. Each periodic implementation of the Auction Procedures is
referred to as an "Auction." The Securities Depositary (or its nominee) will be
the holder of record of all MAPS. See "Securities Depositary."
AUCTION PROCEDURES
The following is a brief summary of the procedures to be used in conducting
Auctions as described in the Auction Procedures set forth in Appendix B hereto.
This summary is qualified by reference to the Auction Procedures. The
settlement procedures to be used with respect to Auctions are set forth in
Appendix A hereto.
Auction Dates. An Auction with respect to MAPS of each Series will be held on
the first Business Day preceding the first day of each Dividend Period (except
for the Initial Dividend Period) to determine the Applicable Rate for such
Series for such Dividend Period (the date of each Auction being referred to
herein as an "Auction Date").
So long as the Company does not exercise its right to select a Short Dividend
Period or a Long Dividend Period, each Auction for MAPS of a Series will
normally be held on the same day of the week, and each Dividend Period for such
Series will normally commence on the same day of the week (which also will be a
Dividend Payment Date). The Auction Date and the first day of the related
Dividend Period (both of which must be Business Days) need not be consecutive
calendar days. For example, in most cases, if a Friday that otherwise would be
an Auction Date is not a Business Day, then such Auction Date will be the
preceding Thursday and the first day of the related Dividend Period will
continue to be the following Monday. See "Dividends" for information concerning
the circumstances in which (i) the Auction Date or the first day of a
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Dividend Period, or both, may be moved to a different date and (ii) the Company
may increase or decrease the length of a Dividend Period prior to the
commencement thereof.
Orders by Existing Holders and Potential Holders. Prior to the Submission
Deadline on each Auction Date for the applicable Series of MAPS:
(a) each Existing Holder may submit to a Broker-Dealer its:
(i) Hold Order--indicating the number of Outstanding shares of MAPS,
if any, that such Existing Holder desires to continue to hold without
regard to the Applicable Rate for the next succeeding Dividend Period;
(ii) Bid--indicating the number of Outstanding shares of MAPS, if
any, that such Existing Holder desires to sell, provided that the
Applicable Rate for the next succeeding Dividend Period is less than
the rate per annum specified by such Existing Holder; and/or
(iii) Sell Order--indicating the number of Outstanding shares of
MAPS, if any, that such Existing Holder desires to sell without regard
to the Applicable Rate for the next succeeding Dividend Period; and
(b) Broker-Dealers will contact Existing Holders and Potential Holders
(the term Potential Holder includes an Existing Holder with respect to an
offer by such Existing Holder to purchase additional shares of MAPS) by
telephone or otherwise to notify such Existing Holders and Potential
Holders as to the length of the next Dividend Period and, (i) with respect
to any Short Dividend Period or Long Dividend Period, the Dividend Payment
Date(s), and (ii) with respect to any Long Dividend Period, any dates
before which shares of MAPS may not be redeemed and any redemption premium
applicable in an optional redemption, and to determine the number of
Outstanding shares of MAPS, if any, with respect to which each such
Existing Holder desires to submit an Order and each such Potential Holder
desires to submit a Bid.
The communication to a Broker-Dealer by an Existing Holder or by a Potential
Holder of the information referred to in paragraphs (a) and (b) above is
hereafter referred to an "Order." An Existing Holder or a Potential Holder
placing an Order is herein referred to as a "Bidder."
The Master Purchaser's Letter to be signed by each Existing Holder and each
Potential Holder provides that (a) a Sell Order placed by an Existing Holder
will constitute an irrevocable offer to sell the shares of MAPS subject
thereto, (b) a Bid placed by an Existing Holder will constitute an irrevocable
offer to sell the shares of MAPS subject thereto if the rate specified in such
Bid is greater than the Applicable Rate determined in the Auction and (c) a Bid
placed by a Potential Holder will constitute an irrevocable offer to purchase
the shares of MAPS subject thereto if the rate specified in such Bid is less
than or equal to the Applicable Rate determined in the Auction. An Existing
Holder may submit different types of Orders in an Auction with respect to
different shares of MAPS then held by such Existing Holder. An Existing Holder
that offers to purchase additional shares of MAPS is, for purposes of such
offer, treated as a Potential Holder. Any Bid specifying a rate higher than the
Maximum Applicable Rate on the Auction Date will (a) be treated as a Sell Order
if submitted by an Existing Holder and (b) not be considered if submitted by a
Potential Holder. The number of shares of MAPS purchased or sold may be subject
to proration procedures.
Each purchase or sale of MAPS will be settled on the first Business Day
following the Auction Date at a price per share equal to $100,000. See
"Notification of Results and Settlement."
If one or more Orders covering all of the shares held by any Existing Holder
are not submitted to the Auction Agent prior to the Submission Deadline for any
reason, including the failure of a Broker-Dealer to submit such Existing
Holder's Order to the Auction Agent in a timely manner, the Auction Agent will
deem a Hold Order to have been submitted on behalf of such Existing Holder
covering the number of shares of MAPS held by such Existing Holder and not
subject to Orders submitted to the Auction Agent.
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Submission of Orders by Broker-Dealers to Auction Agent. Prior to 1:00 P.M.,
New York City time, on each Auction Date, or such other time on the Auction
Date specified by the Auction Agent (the "Submission Deadline"), each Broker-
Dealer will submit to the Auction Agent in writing all Orders obtained by it
for the Auction to be conducted on such Auction Date (each such Hold Order, Bid
or Sell Order as submitted or deemed submitted by a Broker-Dealer being herein
referred to as a "Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell
Order," as the case may be, or as a "Submitted Order"). If any rate specified
in any Submitted Bid contains more than three figures to the right of the
decimal point, the Auction Agent will round such rate up to the next highest
one-thousandth (.001) of 1%.
If any Existing Holder submits through a Broker-Dealer to the Auction Agent
one or more Orders covering in the aggregate more than the number of
Outstanding shares of the applicable Series of MAPS held by such Existing
Holder, such Orders will be considered valid in the following order of
priority:
(a) any Submitted Hold Order of such Existing Holder will be considered
valid up to and including the number of Outstanding shares of MAPS held by
such Existing Holder, provided that, if there is more than one such
Submitted Hold Order and the aggregate number of shares of MAPS subject to
such Submitted Hold Orders exceeds the number of Outstanding shares of MAPS
held by such Existing Holder, the number of shares of MAPS subject to each
such Submitted Hold Order will be reduced pro rata so that such Submitted
Hold Orders in the aggregate will cover exactly the number of Outstanding
shares of MAPS held by such Existing Holder;
(b) any Submitted Bid of such Existing Holder will be considered valid
(in the ascending order of their respective rates per annum if there is
more than one Submitted Bid of such Existing Holder) for the number of
Outstanding shares of MAPS held by such Existing Holder equal to the
difference between (i) the number of Outstanding shares of MAPS held by
such Existing Holder and (ii) the number of Outstanding shares of MAPS
subject to any Submitted Hold Order of such Existing Holder referred to in
clause (a) above (and, if more than one Submitted Bid of such Existing
Holder specifies the same rate per annum and together they cover more than
the remaining number of shares of MAPS that can be the subject of valid
Submitted Bids of such Existing Holder after application of clause (a)
above and of the foregoing portion of this clause (b) to any Submitted Bid
or Submitted Bids of such Existing Holder specifying a lower rate or rates
per annum, the number of shares of MAPS subject to each of such Submitted
Bids specifying the same rate per annum will be reduced pro rata so that
such Submitted Bids, in the aggregate, cover exactly such remaining number
of Outstanding shares of MAPS of such Existing Holder); and
(c) any Submitted Sell Order of such Existing Holder will be considered
valid up to and including the excess of the number of Outstanding shares of
MAPS held by such Existing Holder over the sum of the number of shares of
MAPS subject to valid Submitted Hold Orders by such Existing Holder
referred to in clause (a) and the number of shares of MAPS subject to valid
Submitted Bids by such Existing Holder referred to in clause (b) above;
provided that, if there is more than one Submitted Sell Order of such
Existing Holder and the number of shares of MAPS subject to such Submitted
Sell Orders is greater than such excess, the number of shares of MAPS
subject to each of such Submitted Sell Orders will be reduced pro rata so
that such Submitted Sell Orders, in the aggregate, will cover exactly the
number of shares of MAPS equal to such excess.
If more than one Bid is submitted on behalf of any Potential Holder, each Bid
submitted will be a separate Bid with respect to the rate per annum and number
of shares of MAPS therein specified.
Determination of Sufficient Clearing Bids, Winning Bid Rate and Applicable
Rate. Not earlier than the Submission Deadline, the Auction Agent will assemble
all Submitted Orders and will determine the excess of the total number of
Outstanding shares of MAPS over the number of shares of MAPS subject to
Submitted Hold Orders (such excess being herein referred to as the "Available
Shares of MAPS") and whether Sufficient Clearing Bids have been made in the
Auction. "Sufficient Clearing Bids" will have been made if the number of
Outstanding shares of MAPS that are the subject of Submitted Bids by Potential
Holders specifying rates
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not higher than the Maximum Applicable Rate equals or exceeds the number of
Outstanding shares of MAPS that are the subject of Submitted Sell Orders
(including the number of Outstanding shares of MAPS subject to Submitted Bids
by Existing Holders specifying rates higher than the Maximum Applicable Rate).
If Sufficient Clearing Bids have been made, the Auction Agent will determine
the lowest rate specified in the Submitted Bids (the "Winning Bid Rate") which
would result in Existing Holders continuing to hold (pursuant to Submitted
Bids) an aggregate number of shares of MAPS which, when added to the number of
Outstanding shares of MAPS to be purchased by Potential Holders, based on the
rates in their Submitted Bids, would equal not less than the number of
Available Shares of MAPS. In such event, the Winning Bid Rate will be the
Applicable Rate for the next Dividend Period for all MAPS of such Series.
Subject to the matters described above under "Dividends--Determination of
Dividend Rate," if Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of MAPS are subject to Submitted Hold
Orders), the next succeeding Dividend Period will be a Standard Dividend Period
and the Applicable Rate for the next Dividend Period for all shares of MAPS of
such Series will be equal to the Maximum Applicable Rate for a Standard
Dividend Period determined as of the Business Day immediately preceding such
Auction. If Sufficient Clearing Bids have not been made, Existing Holders that
have submitted Sell Orders will not be able to sell in the Auction all, and may
not be able to sell any, shares of MAPS subject to such Submitted Sell Orders.
See "Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and
Allocation of MAPS" below.
The Maximum Applicable Rate on any Auction Date shall be the rate obtained by
multiplying the Applicable Determining Rate on such date by the percentage
determined as set forth below based on the lower of the credit ratings assigned
to the MAPS by Moody's and S&P.
<TABLE>
<CAPTION>
APPLICABLE
PERCENTAGE
CREDIT RATINGS OF APPLICABLE
----------------------------------------- DETERMINING
MOODY'S S&P RATE
---------------- ------------ -------------
<S> <C> <C>
"aa3" or Above AA- or Above 150%
"a3" to "a1" A- to A+ 200%
"baa3" to "baa1" BBB- to BBB+ 225%
Below "baa3" Below BBB- 275%
</TABLE>
The Company will take all reasonable action necessary to enable S&P and
Moody's to provide ratings for the MAPS. If either S&P or Moody's does not make
such a rating available, or neither S&P nor Moody's make such a rating
available, the Company will designate a rating agency or rating agencies as a
substitute rating agency or substitute rating agencies, as the case may be,
subject to the approval by Morgan Stanley & Co. Incorporated ("Morgan Stanley")
and Lehman Brothers Inc. ("Lehman Brothers"), such approval not to be
unreasonably withheld, and the Company will take all reasonable action to
enable such rating agency or rating agencies to provide a rating or ratings for
the MAPS.
The Applicable Determining Rate with respect to MAPS with a Standard Dividend
Period or a Short Dividend Period of 183 days or less is the Applicable "AA"
Composite Commercial Paper Rate; with respect to MAPS with a Short Dividend
Period of 184 to 364 days, it is the Applicable Treasury Bill Rate; and with
respect to MAPS with a Long Dividend Period, it is the Applicable Treasury Note
Rate.
"Applicable 'AA' Composite Commercial Paper Rate," on any date, shall mean in
the case of any Standard Dividend Period or Short Dividend Period of (1) 49
days or more but less than 70 days, the interest equivalent of the 60-day rate,
(2) 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 days or more but
less than 120 days, the interest equivalent of the 90-day rate, (4) 120 days or
more but less than 148 days, the arithmetic average of the interest
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<PAGE>
equivalent of the 90-day and 180-day rates, and (5) 148 days or more but less
than 184 days, the interest equivalent of the 180-day rate, in each case, on
commercial paper placed on behalf of issuers whose corporate bonds are rated
"AA" by S&P or "Aa" by Moody's, or the equivalent of such rating by another
rating agency, as made available on a discount basis or otherwise by the
Federal Reserve Bank of New York for the Business Day immediately preceding
such date. In the event that the Federal Reserve Bank of New York does not make
available any of the foregoing rates, then such rates shall be the 60-day rate
or arithmetic average of such rates, as the case may be, as quoted on a
discount basis or otherwise, by Morgan Stanley and Lehman Brothers, or, in lieu
thereof, their respective affiliates or successors (collectively, the
"Commercial Paper Dealers") to the Auction Agent as of the close of business on
the Business Day next preceding such date. If any Commercial Paper Dealer does
not quote a rate required to determine the Applicable "AA" Composite Commercial
Paper Rate, the Applicable "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer (if any) and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the Company to
provide such rate or rates or, if the Company does not select any Substitute
Commercial Paper Dealer or Substitute Commercial Paper Dealers, by the
remaining Commercial Paper Dealer (if any). "Substitute Commercial Paper
Dealer" means Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated or Salomon Brothers Inc or their respective affiliates or
successors or, if no such dealer furnishes such quotations, a leading dealer in
the commercial paper market selected by the Company in good faith. For purposes
of this definition, the "interest equivalent" means the equivalent yield on a
360-day basis of a discount-basis security to an interest-bearing security.
"Applicable Treasury Bill Rate" for any Short Dividend Period in excess of
183 days and "Applicable Treasury Note Rate" for any Long Dividend Period, on
any date, shall mean the interest equivalent of the rate for direct obligations
of the United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Short Dividend Period or Long Dividend
Period, as the case may be, as published weekly by the Board of Governors of
the Federal Reserve System (the "Board") in "Federal Reserve Statistical
Release H.15(519)-Selected Interest Rates," or any successor publication by the
Board, within five Business Days preceding such date. In the event that the
Board does not publish such rate, or if such release is not available, the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate will be the
arithmetic mean of the secondary market bid rate as of approximately 3:30 P.M.,
New York City time, on the Business Day next preceding such date of Morgan
Stanley and Lehman Brothers, or, in lieu thereof, their respective affiliates
or successors (collectively, the "U.S. Government Securities Dealers")
furnished to the Auction Agent for the issue of direct obligations of the
United States Treasury, in an aggregate principal amount of at least $1,000,000
with a remaining maturity equal to, or next lower than, the length of such
Short Dividend Period or Long Dividend Period, as the case may be. If any U.S.
Government Securities Dealer does not quote a rate required to determine the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate shall be determined on the
basis of the quotation or quotations furnished by the remaining U.S. Government
Securities Dealer (if any) or any Substitute U.S. Government Securities Dealer
or Dealers selected by the Company to provide such rate or rates or, if the
Company does not select any such Substitute U.S. Government Securities Dealer
or Dealers, by the remaining U.S. Government Securities Dealer (if any).
"Substitute U.S. Government Securities Dealers" means Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers Inc or
their respective affiliates or successors or, if no such dealer provides such
quotes, a leading dealer in the government securities market selected by the
Company in good faith. For purposes of this definition, the "interest
equivalent" of a rate stated on a discount basis shall be equal to the quotient
of (A) the discount rate divided by (B) the difference between 1.00 and the
discount rate.
If all of the Outstanding shares of MAPS of any Series are subject to
Submitted Hold Orders, the Applicable Rate for the next Dividend Period will be
59% of the Applicable "AA" Composite Commercial Paper Rate, if the next
Dividend Period for such Series of MAPS is a Standard Dividend Period or a
Short Dividend Period of 183 days or less; or 59% of the Applicable Treasury
Bill Rate, if the next Dividend Period
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<PAGE>
for such Series of MAPS is a Short Dividend Period of 184 days to 364 days; or
59% of the Applicable Treasury Note Rate, if the next Dividend Period for such
Series of MAPS is a Long Dividend Period, in each case as in effect on the
related Auction Date.
Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and
Allocation of MAPS. Based on the determinations made as described under
"Determination of Sufficient Clearing Bids, Winning Bid Rate and Applicable
Rate" above and subject to the discretion of the Auction Agent to round as
described below, Submitted Bids and Submitted Sell Orders will be accepted or
rejected in the order of priority set forth in the Auction Procedures, with the
result that Existing Holders and Potential Holders of shares of MAPS will sell,
continue to hold or purchase shares of MAPS as set forth below. Existing
Holders that submitted or were deemed to have submitted Hold Orders will
continue to hold the shares of MAPS subject to such Hold Orders.
If Sufficient Clearing Bids have been made:
(a) Each Existing Holder that placed a Submitted Sell Order or a
Submitted Bid specifying any rate higher than the Winning Bid Rate will
sell the Outstanding shares of MAPS subject to such Submitted Sell Order or
Submitted Bid;
(b) Each Existing Holder that placed a Submitted Bid specifying a rate
lower than the Winning Bid Rate will continue to hold the Outstanding
shares of MAPS subject to such Submitted Bid;
(c) Each Potential Holder that placed a Submitted Bid specifying a rate
lower than the Winning Bid Rate will purchase the number of Outstanding
shares of MAPS subject to such Submitted Bid;
(d) Each Existing Holder that placed a Submitted Bid specifying a rate
equal to the Winning Bid Rate will continue to hold the shares of MAPS
subject to such Submitted Bid, unless the number of Outstanding shares of
MAPS subject to all such Submitted Bids of Existing Holders is greater than
the excess of the Available Shares of MAPS over the number of shares of
MAPS accounted for in clauses (b) and (c) above, in which event each
Existing Holder with such a Submitted Bid will sell a number of Outstanding
shares of MAPS subject to such Submitted Bid determined on a pro rata basis
based on the number of Outstanding shares of MAPS subject to all such
Submitted Bids by Existing Holders; and
(e) Each Potential Holder that placed a Submitted Bid specifying a rate
equal to the Winning Bid Rate will purchase any Available Shares of MAPS
not accounted for in clause (b), (c) or (d) above on a pro rata basis based
on the Outstanding shares of MAPS subject to all such Submitted Bids of
Potential Holders.
If Sufficient Clearing Bids have not been made (unless as a result of all of
the Outstanding shares of MAPS being subject to Submitted Hold Orders in an
Auction):
(a) Each Existing Holder that placed a Submitted Bid specifying a rate
equal to or lower than the Maximum Applicable Rate will continue to hold
the Outstanding shares of MAPS subject to such Submitted Bid;
(b) Each Potential Holder that placed a Submitted Bid specifying a rate
equal to or lower than the Maximum Applicable Rate will purchase the number
of Outstanding shares of MAPS subject to such Submitted Bid; and
(c) Each Existing Holder that placed a Submitted Bid specifying a rate
higher than the Maximum Applicable Rate or a Submitted Sell Order will sell
only such number of shares of MAPS, determined on a pro rata basis based on
the number of Outstanding shares of MAPS subject to all such Submitted Bids
and Submitted Sell Orders, as are needed to be purchased pursuant to (b)
above.
If, as a result of the Auction Procedures, (1) any Existing Holder would be
entitled or required to sell, or any Potential Holder would be entitled or
required to purchase, a fraction of a share, the Auction Agent will, in such
manner as in its sole discretion it will determine, round up or down the number
of shares being sold and purchased on such Auction Date so that the number of
shares sold or purchased by each Existing Holder or Potential Holder will be
whole shares or (2) any Potential Holder would be entitled or required to
purchase less than a whole share, the Auction Agent will, in such manner as in
its sole discretion it will
25
<PAGE>
determine, allocate shares of MAPS for purchase among Potential Holders so that
only whole shares are purchased by any such Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing
shares of MAPS.
Notification of Results and Settlement. The Auction Agent will advise each
Broker-Dealer that submitted an Order of the duration of and Applicable Rate
for the next Dividend Period and, if such Order was a Bid or Sell Order,
whether such Bid or Sell Order was accepted or rejected, in whole or in part,
by telephone by 3:00 P.M., New York City time, on each Auction Date. Each such
Broker-Dealer will then (i) advise each Bidder represented by it of the
Applicable Rate for the next Dividend Period and, if such Bidder's Order was a
Bid or a Sell Order, whether such Bid or Sell Order was accepted or rejected in
whole or in part; (ii) confirm purchases and sales with each such Bidder
purchasing or selling shares of MAPS as a result of the Auction; and (iii)
advise each such Bidder purchasing or selling shares of MAPS as a result of the
Auction to give instructions to its Agent Member of the Securities Depositary
to pay the purchase price against delivery of such MAPS or to deliver such MAPS
against payment therefor, as appropriate. If an Existing Holder selling shares
of MAPS as a result of an Auction shall fail to instruct its Agent Member to
deliver such shares of MAPS, the Broker-Dealer that submitted such Existing
Holder's Bid or Sell Order will instruct such Agent Member to deliver such
shares of MAPS against payment therefor. Each Broker-Dealer that submitted a
Hold Order in an Auction on behalf of an Existing Holder will also advise such
Existing Holder of the Applicable Rate for the next Dividend Period. The
Auction Agent will record each transfer of shares of MAPS on the registry of
Existing Holders to be maintained by the Auction Agent.
In accordance with the Securities Depositary's normal procedures, on the
Business Day after the Auction Date, the transactions described above will be
executed through the Securities Depositary and the accounts of the respective
Agent Members at the Securities Depositary will be debited and credited and
shares of MAPS delivered as necessary to effect the purchases and sale of MAPS
as determined in the Auction. Purchasers will make payment through their Agent
Members in same-day funds to the Securities Depositary against delivery to
their Agent Members, and the Securities Depositary will make payment in
accordance with its normal procedures. If any Existing Holder selling shares of
MAPS in an Auction fails to deliver such shares (by authorized book-entry), the
Broker-Dealer of any person that was to have purchased such shares in such
Auction may deliver to such person a number of whole shares that is less than
the number of shares that otherwise was to be purchased by such person. In such
event, the number of shares of MAPS to be so delivered will be determined by
such Broker-Dealer in its sole discretion. Delivery of such lesser number of
shares of MAPS will constitute good delivery. Notwithstanding the foregoing,
any delivery or non-delivery of shares of MAPS that shall represent any
departure from the results of an Auction, as determined by the Auction Agent,
shall be of no effect unless and until the Auction Agent shall be notified of
such delivery or non-delivery in accordance with the provisions of the Auction
Agent Agreement and the Broker-Dealer Agreements. Any payment by a Broker-
Dealer for shares of MAPS purchased on behalf of a purchaser will not relieve
the purchaser of any liability to such Broker-Dealer for payment for such
shares of MAPS. Each Broker-Dealer Agreement will provide that neither the
Auction Agent nor the Broker-Dealer party thereto (in its capacity as Broker-
Dealer) will have any responsibility or liability with respect to the failure
of a Potential Holder, Existing Holder or an Agent Member to pay for shares of
MAPS or to deliver shares of MAPS purchased or sold in an Auction or otherwise,
nor shall the Company have any such responsibility or liability, or any other
responsibility or liability under such agreement to the Auction Agent or any
Existing Holder, Potential Holder or Broker-Dealer.
Participation by the Company. Neither the Company nor any of its affiliates
may submit any Order in any Auction except as set forth in the next sentence.
Any Broker-Dealer that is an affiliate of the Company may submit Orders in
Auctions but only if such Orders are not for its own account, except that if
such affiliate Broker-Dealer holds shares of MAPS for its own account, it must
submit a Sell Order in the next Auction with respect to such shares of MAPS.
THE AUCTION AGENT
The Auction Agent, initially Chemical Bank (the "Auction Agent"), has agreed
to act as agent for the Company in connection with Auctions and as transfer
agent, paying agent, registrar and redemption agent.
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<PAGE>
In the absence of bad faith or negligence on its part, the Auction Agent will
not be liable for any action taken, suffered or omitted or for any error of
judgment made by it in the performance of its duties under the
Auction Agent Agreement and will not be liable for any error of judgment made
reasonably and in good faith unless the Auction Agent has been negligent in
ascertaining (or failing to ascertain) the pertinent facts. The Company has
agreed to indemnify the Auction Agent with respect to certain liabilities
incurred by the Auction Agent without negligence or bad faith on its part in
connection with its provision of services under the Auction Agent Agreement.
The Auction Agent Agreement provides that the Company may remove the Auction
Agent at any time. The Auction Agent may resign as Auction Agent upon prior
notice to the Company on any date that is no earlier than the earlier of the
first Business Day after the last to occur of the second Dividend Payment Date
after such notice with respect to each Series of MAPS Outstanding or six months
after delivery of such notice. Upon receipt of a notice of resignation from the
Auction Agent, the Company will use its best efforts to enter into an agreement
with a successor Auction Agent containing substantially the same terms and
conditions as the Auction Agent Agreement. No resignation by the Auction Agent
or termination by the Company will be effective until the Company has entered
into such an agreement with a successor Auction Agent and such successor
Auction Agent has entered into agreements with the Broker-Dealers.
BROKER-DEALERS
Each Auction requires the participation of one or more broker-dealers. The
Auction Agent will initially enter into agreements with Morgan Stanley and
Lehman Special Securities Inc. providing for such broker-dealer's participation
in Auctions. After Morgan Stanley and Lehman Special Securities Inc. determine
that Auctions for each Series of MAPS have been stabilized (which stabilization
is expected to occur after three Auctions of MAPS), the Auction Agent may enter
into similar agreements with one or more additional broker-dealers selected by
the Company which provide for the participation of such broker-dealers in
Auctions. Morgan Stanley, Lehman Government Securities Inc., and any such
additional broker-dealers are herein referred to collectively as "Broker-
Dealers," and the agreements pursuant to which Broker-Dealers participate in
Auctions are herein referred to collectively as "Broker-Dealer Agreements."
After each Auction with respect to a Standard Dividend Period and a Short
Dividend Period, the Auction Agent will pay a service charge to each Broker-
Dealer at the annual rate of .25% of the purchase price of shares of MAPS
placed by such Broker-Dealer at such Auction. After each Auction with respect
to a Long Dividend Period, the Auction Agent will pay a service charge to each
Broker-Dealer at the annual rate of such percentage of the purchase price of
shares of MAPS placed by such Broker-Dealer at such Auction as the Company and
such Broker-Dealers may agree at the time the Company establishes such Long
Dividend Period. For the purposes of the two preceding sentences, shares of
MAPS will have been "placed" by a Broker-Dealer if such shares of MAPS were (i)
the subject of Hold Orders deemed to have been made by Existing Holders and
were acquired by such Existing Holders through such Broker-Dealer (unless such
Existing Holder has transferred such shares of MAPS to another Person other
than pursuant to an Auction and such transfer was to or effected by a Broker-
Dealer other than such Broker-Dealer) or (ii) the subject of the following
Orders submitted by such Broker-Dealer: (A) a Submitted Bid of an Existing
Holder that resulted in such Existing Holder continuing to hold such shares of
MAPS as a result of the Auction, (B) a Submitted Bid of a Potential Holder that
resulted in such Potential Holder purchasing such shares of MAPS as a result of
the Auction, (C) a Submitted Hold Order or (D) a Submitted Sell Order of an
Existing Holder that was rejected.
The Broker-Dealer Agreements provide that a Broker-Dealer that signs a Master
Purchaser's Letter may submit Orders in Auctions for its own account, unless
the Company notifies all Broker-Dealers that they may no longer do so, in which
case Broker-Dealers may continue to submit Hold Orders and Sell Orders for
their own accounts. Investors should consider the fact that if a Broker-Dealer
submits an Order for its own account in any Auction, it might have an advantage
over other Bidders because it would have knowledge of Orders placed through it
in that Auction, but that such Broker-Dealer, however, would not have knowledge
of Orders submitted by other Broker-Dealers in that Auction. The Broker-Dealer
Agreements provide for
27
<PAGE>
each Broker-Dealer to handle customer orders in accordance with applicable
securities statutes and rules. The Auction Agent may request the Broker-Dealer
to provide a list of its customers that are Existing Holders, which information
(as well as any other information received as to the identity of Bidders in any
Auction) the Auction Agent will keep confidential, except that it may provide
such information to the Company upon request for the Company's confidential
use.
MASTER PURCHASER'S LETTER
As a condition to purchasing shares of any series of Authorized MAPS and as a
condition to participating in any Auction, each prospective purchaser of
Authorized MAPS will be required to sign and deliver to a Broker-Dealer a
Master Purchaser's Letter in substantially the form attached to this Prospectus
as Appendix C. In the Master Purchaser's Letter each such prospective purchaser
will agree, among other things:
(i) to sell, transfer or otherwise dispose of shares of Authorized MAPS
only pursuant to a Bid or a Sell Order in an Auction, or to or through a
Broker-Dealer or to a person that has delivered a signed Master Purchaser's
Letter to a Broker-Dealer, provided that, in the case of all transfers
other than those pursuant to an Auction, such prospective purchaser, its
Broker-Dealer or its Agent Member promptly advises the Auction Agent of
such transfer;
(ii) that any Bid or Sell Order placed by such purchaser will constitute
an irrevocable offer to purchase or sell the shares of the series of
Authorized MAPS subject to such Bid or Sell Order, or such lesser number of
shares of the series of Authorized MAPS as such purchaser will be required
to purchase or sell, respectively, as a result of such Auction; and that a
failure by such purchaser or its Broker-Dealer to place a Bid or Sell Order
with respect to any shares of any series of Authorized MAPS owned by such
purchaser will be deemed to constitute a Hold Order with respect to such
shares; and
(iii) that it understands and agrees that (A) the ownership of the shares
of any series of Authorized MAPS as to which such purchaser is the Existing
Holder will be maintained in book-entry form by the Securities Depositary,
in the account of such purchaser's Agent Member, which in turn will
maintain records of such purchaser's ownership, (B) such Agent Member is
authorized to disclose to the Auction Agent such information with respect
to such purchaser's beneficial ownership as the Auction Agent shall request
and (C) so long as there is a Securities Depositary or unless otherwise
required by law, such purchaser will not be entitled to receive
certificates evidencing shares of any series of Authorized MAPS.
An execution copy of the Master Purchaser's Letter is included inside the
back cover of this Prospectus. EXECUTION OF A MASTER PURCHASER'S LETTER IS NOT
A COMMITMENT TO PURCHASE SHARES OF ANY SERIES OF AUTHORIZED MAPS IN THE
OFFERING BEING MADE BY THIS PROSPECTUS OR IN ANY AUCTION, BUT IS A CONDITION
PRECEDENT TO PURCHASING SHARES OF ANY SERIES OF AUTHORIZED MAPS.
The Auction Agent may rely upon, as evidence of the identities of the
Existing Holders, a list of the initial owners of shares of any series of
Authorized MAPS provided by the Company, the results of Auctions and notices
from the Broker-Dealers with respect to an Existing Holder's transfer of shares
of any series of Authorized MAPS to another person. The Auction Agent will be
required to register a transfer of shares of any series of Authorized MAPS from
an Existing Holder to another person only if such transfer is made to a person
that has delivered a signed Master Purchaser's Letter to a Broker-Dealer and if
(a) such transfer is pursuant to an Auction or (b) the Auction Agent has been
notified in writing (i) by the Broker-Dealer of such Existing Holder of such
transfer or (ii) by the Broker-Dealer of any person that purchased or sold such
shares in an Auction of the failure of such shares to be transferred as a
result of the Auction. The Auction Agent is not required to accept any such
notice of transfer prior to an Auction with respect to such shares unless it is
received by the Auction Agent by 3:00 P.M., New York City time, on the Business
Day immediately preceding the related Auction Date.
SECURITIES DEPOSITARY
Each Series of MAPS will be represented by a single certificate issued to the
Securities Depositary and registered in the name of its nominee. So long as
there is a Securities Depositary, each Series of MAPS will
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<PAGE>
be represented by a single certificate registered in the name of the Securities
Depositary or its nominee, and no Existing Holder or other person acquiring
MAPS will be entitled to receive a certificate evidencing such MAPS unless
otherwise required by law. Payment and communications made by the Company to
holders of the MAPS will be duly made by making payments to, and communicating
with, the Securities Depositary. Accordingly, each purchaser of MAPS must rely
on (i) the procedures of the Securities Depositary and, if such purchaser is
not a member of the Securities Depositary, such purchaser's Agent Member to
receive dividends, distributions and notices, and to direct the exercise of any
limited voting or nominating rights, with respect to such MAPS, and (ii) the
records of the Securities Depositary and, if such purchaser is not a member of
the Securities Depositary, of such purchaser's Agent Member to evidence its
ownership of such MAPS.
So long as the Securities Depositary (or its nominee) is the sole holder of
record of the MAPS, no Existing Holder will, as a matter of California law, be
deemed to be a shareholder of the Company.
The Depository Trust Company, the initial Securities Depositary, is a New
York-chartered limited purpose trust company that performs services for its
participants (including Agent Members), some of whom (and/or their
representatives) own The Depository Trust Company. The Depository Trust Company
maintains lists of its participants and will maintain the positions (ownership
interests) held by each Agent Member in MAPS, whether as an Existing Holder for
its own account or as a nominee for another Existing Holder.
CERTAIN INCOME TAX CONSEQUENCES
FEDERAL INCOME TAXES
This discussion of the material federal income tax consequences of an
investment in MAPS and the opinions of counsel referred to herein are based
upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations promulgated thereunder, and judicial or
administrative interpretations thereof, all as in effect on the date of this
Prospectus. Future legislative, regulatory, judicial or administrative changes
could significantly modify the conclusions expressed below and could affect the
tax consequences to holders of MAPS, possibly with retroactive effect. The
Company will not request any rulings from the Internal Revenue Service (the
"IRS") concerning the federal income tax consequences of an investment in the
MAPS.
In the opinion of O'Melveny & Myers, special counsel to the Company, the MAPS
will constitute equity of the Company and distributions thereon (other than
distributions in redemption of the MAPS subject to Section 302(b) of the Code)
will constitute dividends for federal income tax purposes to the extent made
out of the current or accumulated earnings and profits of the Company as
determined under federal income tax principles. In the opinion of such counsel,
a corporate holder of MAPS, who is otherwise entitled to the 70% Dividends-
Received Deduction permitted by Section 243 of the Code, will be entitled to
that deduction with respect to dividends received on the MAPS.
It should be noted that opinions of counsel are not binding on the IRS or the
courts and it is possible that the IRS might take a position contrary to the
opinions of counsel expressed above and seek to deny the Dividends-Received
Deduction with respect to dividends paid on the MAPS. Counsel is of the opinion
that if the IRS asserted such a position, the IRS would not prevail in a
judicial proceeding in which the issues were properly presented. In particular,
prospective purchasers of MAPS should be aware that, in Revenue Ruling 90-27,
the IRS ruled that preferred stock with terms similar in many respects to those
of the MAPS was equity for federal income tax purposes. In that ruling,
however, the IRS suggested that it may seek to disallow the Dividends-Received
Deduction with respect to dividends paid on preferred stock that provides
holders with rights that result in a diminution of risk and that are of a type
usually associated with debt.
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In determining their entitlement to the Dividends-Received Deduction,
corporate holders should consider the holding period and other requirements of
Section 246(c) of the Code, the "debt-financed portfolio stock" rules of
Section 246A of the Code (under which the Dividends-Received Deduction could be
reduced to the extent that a holder incurs indebtedness directly attributable
to its investment in MAPS), and Section 1059 of the Code (which, under certain
circumstances, reduces the tax basis of stock by the portion of any
"extraordinary dividend" that is eligible for the Dividends-Received
Deduction), as well as any judicial or administrative interpretations of such
Code provisions. In particular, Section 246(c) of the Code disallows the
Dividends-Received Deduction in its entirety if the stock with respect to which
the dividend is paid is not held for a minimum holding period (generally 46
days), or the holder of such stock is obligated to make related payments with
respect to a position in substantially similar or related property. Section
246(c)(4) of the Code provides that a holder may not count towards the minimum
holding period any period during which the holder (1) has an option to sell, is
under a contractual obligation to sell or has made (and not closed) a short
sale of, substantially identical stock or securities, (2) is the grantor of an
option (other than a qualified covered call) to buy substantially identical
stock or securities or (3) has diminished its risk of loss by holding one or
more other positions with respect to substantially similar or related property.
In addition, corporate holders should be aware that dividend income that is not
subject to regular corporate taxation as a consequence of the Dividends-
Received Deduction may give rise to alternative minimum tax liability.
To the extent that distributions on MAPS exceed the earnings and profits of
the Company, such distributions will not qualify for the Dividends-Received
Deduction. Instead they will be treated as a return of capital and reduce the
holder's adjusted basis in its MAPS. Such reduction in basis will increase any
gain, or reduce any loss, realized by the holder on any subsequent sale,
redemption or other disposition of its MAPS. Any such distribution in excess of
a holder's adjusted basis in its MAPS will be treated as taxable gain, which
generally will be capital gain if the MAPS are held as a capital asset.
Although no assurance can be given, the Company expects to have earnings and
profits sufficient for the payment of dividends.
The Company may, at its option, redeem the MAPS. Gain or loss resulting from
a sale or redemption of MAPS generally will be taxed as capital gain or loss,
provided that the shares of MAPS are held as capital assets. Any portion of the
redemption price that is attributable to accumulated but unpaid dividends will
only be eligible for the Dividends-Received Deduction to the extent such
portion is designated as declared but unpaid dividends. If such portion is not
so designated, it will be treated as additional redemption proceeds, which may
result in an investor recognizing additional gain or a smaller loss on the
redemption.
STATE AND LOCAL INCOME TAXES
Holders of MAPS may be liable for state and local income taxes with respect
to dividends paid on the MAPS. Because many states and localities may not allow
a dividend-received deduction, each prospective purchaser of MAPS is advised to
consult its own tax advisor concerning state and local taxes.
EACH PROSPECTIVE PURCHASER OF MAPS IS ADVISED TO CONSULT ITS OWN TAX ADVISOR
REGARDING THE CONSEQUENCES OF ACQUIRING, HOLDING OR DISPOSING OF MAPS IN LIGHT
OF CURRENT TAX LAWS, THE PROSPECTIVE HOLDER'S PARTICULAR INVESTMENT
CIRCUMSTANCES, AND THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS.
30
<PAGE>
UNDERWRITERS
Under the terms of and subject to the conditions contained in an Underwriting
Agreement dated , 1995, the Underwriters named below have severally agreed
to purchase, and the Company has agreed to sell to each Underwriter, severally,
the respective number of shares of MAPS set forth opposite their respective
names below:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES OF SHARES OF
NAME SERIES E SERIES F
---- --------- ---------
<S> <C> <C>
Morgan Stanley & Co. Incorporated.....................
Lehman Brothers Inc. .................................
--- ---
Total............................................. 500 500
=== ===
</TABLE>
The Underwriting Agreement provides that the several obligations of the
Underwriters are subject to the approval of certain legal matters by counsel
and to certain other conditions including the condition that no stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for such purpose are pending before or threatened by the
Commission. The nature of the Underwriters' obligation is such that they are
committed to take and pay for all of the MAPS if any are taken.
In the Underwriting Agreement, the Company has agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended, and to afford the Underwriters certain
rights of contribution.
The several Underwriters propose to offer part of the MAPS directly to the
public at the public offering price set forth on the cover page hereof and part
to certain dealers at a price that represents a concession not in excess of $
per share.
The Company does not intend to apply for listing of the MAPS on a national
securities exchange, but has been advised by the Underwriters that they
currently intend to make a market in the MAPS, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the MAPS and any such market making as to any Series may be discontinued at
any time at the sole discretion of the Underwriters. Accordingly, no assurance
can be given as to the liquidity of, or trading markets for, the MAPS.
Each Underwriter has agreed with the Company that it will sell MAPS only to a
person who agrees to execute and deliver a Master Purchaser's Letter in
accordance with the terms of this Prospectus or to a selected dealer who has
agreed with the Underwriters that it will (i) execute and deliver a Master
Purchaser's Letter in accordance with the terms of this Prospectus and (ii)
sell MAPS only to such a person or to another such selected dealer. Each
Underwriter will also agree with the Company that it will execute and deliver a
Master Purchaser's Letter in accordance with the terms of the Prospectus.
Morgan Stanley and Lehman Government Securities Inc., an affiliate of Lehman
Brothers Inc., will act in Auctions as Broker-Dealers as set forth under
"Description of MAPS--Broker-Dealers." Morgan Stanley and Lehman Brothers may
provide information to be used in ascertaining the Applicable "AA" Composite
Commercial Paper Rate, the Applicable Treasury Bill Rate and the Applicable
Treasury Note Rate as set forth under "Description of MAPS--The Auction--
Determination of Sufficient Clearing Bids, Winning Bid Rate and Applicable
Rate." Each of Morgan Stanley and Lehman Brothers has performed various other
investment banking and other financial services for the Company and its
affiliates.
31
<PAGE>
EXPERTS
The consolidated financial statements of International Lease Finance
Corporation and subsidiaries appearing in International Lease Finance
Corporation's Annual Report (Form 10-K) for the year ended December 31, 1993,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the MAPS offered hereby is being passed upon
for the Company by O'Melveny & Myers. Milbank, Tweed, Hadley & McCloy, Los
Angeles, California will pass upon certain legal matters for the Underwriters.
Certain tax matters will be passed upon for the Company by O'Melveny & Myers.
32
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
TERMS PAGE
- ----- -----
<S> <C>
Additional Directors...................................................... 18
AIG....................................................................... 4
Applicable "AA" Composite Commercial Paper Rate........................... 23
Applicable Determining Rate............................................... B-1
Applicable Rate........................................................... 16
Applicable Treasury Bill Rate............................................. 24
Applicable Treasury Note Rate............................................. 24
Articles of Incorporation................................................. 11
Auction................................................................... 20
Auction Agent............................................................. 26
Auction Agent Agreement................................................... 12
Auction Date.............................................................. 20
Auction Procedures........................................................ 20
Authorized MAPS........................................................... 5
Available Shares of MAPS.................................................. 22
Bidder.................................................................... 21
Board..................................................................... 24
Broker-Dealers............................................................ 27
Broker-Dealer Agreements.................................................. 27
Business Day.............................................................. 15
Capital Stock............................................................. 15
Code...................................................................... 29
Commercial Paper Dealers.................................................. 24
Commission................................................................ 2
Company................................................................... 2
Date of Original Issue.................................................... 12
Default Period............................................................ 18
Default Rate.............................................................. 6
Designation............................................................... 11
Dividend Payment Date..................................................... 13
Dividend Period........................................................... 14
Dividend Quarter.......................................................... 13
Dividends-Received Deduction.............................................. 13
Exchange Act.............................................................. 2
Existing Holder........................................................... 7
Failure to Deposit........................................................ 6, 16
Initial Dividend Payment Date............................................. 12
Initial Dividend Period................................................... 14
Initial Dividend Rate..................................................... 12
IRS....................................................................... 29
Junior Capital Stock...................................................... 16
Lehman Brothers........................................................... 23
Long Dividend Period...................................................... 14
MAPS...................................................................... 1
Master Purchaser's Letter................................................. 28
Maximum Applicable Rate................................................... 1
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
TERMS PAGE
- ----- -----
<S> <C>
Minimum Holding Period............................................................... 13
Moody's.............................................................................. 5
Morgan Stanley....................................................................... 23
Normal Dividend Payment Date......................................................... 12
Notice............................................................................... 14
Notice of Long Dividend Period....................................................... 14
Notice of Revocation................................................................. 14
Notice of Short Dividend Period...................................................... 14
Order................................................................................ 21
Outstanding.......................................................................... B-2
Parity Capital Stock................................................................. 16
Parity Securities.................................................................... 18
Potential Holder..................................................................... 7
Registration Statement............................................................... 2
S&P.................................................................................. 5
Securities Act....................................................................... 2
Securities Depositary................................................................ 28
Series............................................................................... 4
Series A MAPS........................................................................ 11
Series B MAPS........................................................................ 11
Series C MAPS........................................................................ 11
Series D MAPS........................................................................ 11
Series E............................................................................. 4
Series F............................................................................. 4
Short Dividend Period................................................................ 14
Standard Dividend Period............................................................. 14
Submission Deadline.................................................................. 22
Submitted Bid........................................................................ 22
Submitted Hold Order................................................................. 22
Submitted Sell Order................................................................. 22
Submitted Order...................................................................... 22
Subsequent Dividend Period Days...................................................... 13
Substitute Commercial Paper Dealer................................................... 24
Substitute U.S. Government Securities Dealers........................................ 24
Sufficient Clearing Bids............................................................. 22
U.S. Government Securities Dealers................................................... 24
Winning Bid Rate..................................................................... 7, 23
</TABLE>
34
<PAGE>
APPENDIX A
SETTLEMENT PROCEDURES
The following summary of Settlement Procedures sets forth the procedures
expected to be followed in connection with the settlement of each Auction and
will be incorporated by reference in the Auction Agent Agreement and each
Broker-Dealer Agreement. Nothing contained in this Appendix A constitutes a
representation by the Company that in each Auction each party referred to
herein will actually perform the procedures described herein to be performed by
such party. Capitalized terms used herein shall have the respective meanings
specified in the forepart of this Prospectus or Appendix B hereto, as the case
may be.
(a) On each Auction Date with respect to each Series of MAPS, the Auction
Agent shall notify by telephone or telecopy the Broker-Dealers that
participated in the Auction on such Auction Date and submitted an Order on
behalf of any Existing Holder or Potential Holder of:
(i) the Applicable Rate fixed for the next succeeding Dividend Period
and, with respect to any Short Dividend Period or Long Dividend Period,
the Dividend Payment Dates therefor;
(ii) whether Sufficient Clearing Bids existed for the determination
of the Applicable Rate;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer") submitted a
Bid or a Sell Order on behalf of an Existing Holder, the number of
shares of MAPS, if any, to be sold by such Existing Holder;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted a
Bid on behalf of a Potential Holder, the number of shares of MAPS, if
any, to be purchased by such Potential Holder;
(v) if the aggregate number of shares of MAPS to be sold by all
Existing Holders on whose behalf such Broker-Dealer submitted a Bid or
a Sell Order exceeds the aggregate number of shares of MAPS to be
purchased by all Potential Holders on whose behalf such Broker-Dealer
submitted a Bid, the name or names of one or more Buyer's Broker-
Dealers (and the name of the Agent Member, if any, of each such Buyer's
Broker-Dealer) acting for one or more purchasers of such excess number
of shares of MAPS and the number of such shares to be purchased from
one or more Existing Holders on whose behalf such Broker-Dealer acted
by one or more Potential Holders on whose behalf each of such Buyer's
Broker-Dealers acted;
(vi) if the aggregate number of shares of MAPS to be purchased by all
Potential Holders on whose behalf such Broker-Dealer submitted a Bid
exceeds the aggregate number of shares of MAPS to be sold by all
Existing Holders on whose behalf such Broker-Dealer submitted a Bid or
a Sell Order, the name or names of one or more Seller's Broker-Dealers
(and the name of the Agent Member, if any, of each such Seller's
Broker-Dealer) acting for one or more sellers of such excess number of
shares of MAPS and the number of such shares to be sold to one or more
Potential Holders on whose behalf such Broker-Dealer acted by one or
more Existing Holders on whose behalf each of such Seller's Broker-
Dealers acted; and
(vii) the Auction Date of the next succeeding Auction with respect to
the MAPS.
(b) On each Auction Date with respect to each Series of MAPS, each
Broker-Dealer that submitted an Order on behalf of any Existing Holder or
Potential Holder shall:
(i) in the case of a Broker-Dealer that is a Buyer's Broker-Dealer,
instruct each Potential Holder on whose behalf such Broker-Dealer
submitted a Bid that was accepted, in whole or in part, to instruct
such Potential Holder's Agent Member to pay in same-day funds to such
Broker Dealer (or its Agent Member) through the Securities Depositary
the amount necessary to purchase the number of shares of MAPS to be
purchased pursuant to such Bid against receipt of such shares and
advise such Potential Holder of the Applicable Rate for the next
succeeding Dividend Period;
(ii) in the case of a Broker-Dealer that is a Seller's Broker-Dealer,
instruct each Existing Holder on whose behalf such Broker-Dealer
submitted a Sell Order that was accepted, in whole or in part,
A-1
<PAGE>
or a Bid that was rejected, in whole or in part, to instruct such
Existing Holder's Agent Member to deliver to such Broker-Dealer (or its
Agent Member) through the Securities Depositary the number of shares of
MAPS to be sold pursuant to such Order against payment therefor and
advise any such Existing Holder that will continue to hold shares of
MAPS of the Applicable Rate for the next succeeding Dividend Period;
(iii) advise each Existing Holder on whose behalf such Broker-Dealer
submitted a Hold Order of the Applicable Rate for the next succeeding
Dividend Period;
(iv) advise each Existing Holder on whose behalf such Broker-Dealer
submitted an Order of the Auction Date for the next succeeding Auction;
and
(v) advise each Potential Holder on whose behalf such Broker-Dealer
submitted a Bid that was accepted, in whole or in part, of the Auction
Date for the next succeeding Auction.
(c) On the basis of the information provided to it pursuant to (a) above,
each Broker-Dealer that submitted a Bid or a Sell Order on behalf of a
Potential Holder or an Existing Holder shall, in such manner and at such
time or times as in its sole discretion it may determine, allocate any
funds received by it pursuant to (b)(i) above and any shares of MAPS
received by it pursuant to (b)(ii) above among the Potential Holders, if
any, on whose behalf such Broker-Dealer submitted Bids, the Existing
Holders, if any, on whose behalf such Broker-Dealer submitted Bids that
were accepted or Sell Orders, and any Broker-Dealer or Broker-Dealers
identified to it by the Auction Agent pursuant to (a)(v) or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Holder and Existing Holder shall instruct its
Agent Member as provided in (b)(i) or (b)(ii) above, as the case may
be;
(ii) each Seller's Broker-Dealer that is not an Agent Member of the
Securities Depositary shall instruct its Agent Member to (A) pay
through the Securities Depositary to the Agent Member of the Existing
Holder delivering shares of MAPS to such Broker-Dealer pursuant to
(b)(ii) above the amount necessary to purchase such shares against
receipt of such shares, and (B) deliver such shares through the
Securities Depositary to a Buyer's Broker-Dealer (or its Agent Member)
identified to such Seller's Broker-Dealer pursuant to (a)(v) above
against payment therefor; and
(iii) each Buyer's Broker-Dealer that is not an Agent Member of the
Securities Depositary shall instruct its Agent Member to (A) pay
through the Securities Depositary to a Seller's Broker-Dealer (or its
Agent Member) identified pursuant to (a)(vi) above the amount necessary
to purchase the shares of MAPS to be purchased pursuant to (b)(i) above
against receipt of such shares, and (B) deliver such shares of MAPS
through the Securities Depositary to the Agent Member of the purchaser
thereof against payment therefor.
(e) On the Business Day next succeeding the Auction Date:
(i) each Agent Member referred to in (d)(i) above shall instruct the
Securities Depositary to execute the transactions described under
(b)(i) or (b)(ii) above, and the Securities Depositary shall execute
such transactions;
(ii) each Seller's Broker-Dealer or its Agent Member shall instruct
the Securities Depositary to execute the transactions described in
(d)(ii) above, and the Securities Depositary shall execute such
transactions; and
(iii) each Buyer's Broker-Dealer or its Agent Member shall instruct
the Securities Depositary to execute the transactions described in
(d)(iii) above, and the Securities Depositary shall execute such
transactions.
(f) If an Existing Holder selling shares of MAPS in an Auction fails to
deliver such shares (by authorized book-entry), a Broker-Dealer may deliver
to the Potential Holder on behalf of which it submitted a Bid that was
accepted a number of whole shares that is less than the number of shares
that otherwise was to be purchased by such Potential Holder. In such event,
the number of shares of MAPS
A-2
<PAGE>
to be so delivered shall be determined by such Broker-Dealer in its sole
discretion. Delivery of such lesser number of shares shall constitute good
delivery. Notwithstanding the foregoing terms of this subsection (f), any
delivery or non-delivery of shares of MAPS that shall represent any
departure from the results of an Auction, as determined by the Auction
Agent, shall be of no effect unless and until the Auction Agent shall have
been notified of such delivery or non-delivery in accordance with the
provisions of the Auction Agent Agreement and the Broker-Dealer Agreements.
A-3
<PAGE>
APPENDIX B
AUCTION PROCEDURES
The following procedures will be set forth in or incorporated by reference in
the Designation and will be incorporated by reference in the Auction Agent
Agreement and each Broker-Dealer Agreement. Nothing contained in this Appendix
B constitutes a representation by the Company that in each Auction each party
referred to herein will actually perform the procedures described herein to be
performed by such party.
SECTION (A). CERTAIN DEFINITIONS
Capitalized terms not defined in this Section shall have the respective
meanings specified in the Prospectus. As used in these Auction Procedures, the
following terms shall have the following meanings, unless the context otherwise
requires:
(i) "Affiliate" shall mean any Person controlled by, in control of, or
under common control with, the Company.
(ii) "Agent Member" shall mean the member of the Securities Depositary
that will act on behalf of an Existing Holder or a Potential Holder and
that is identified as such in such Existing Holder's or Potential Holder's
Master Purchaser's Letter.
(iii) "Applicable Determining Rate" means, (i) for any Standard Dividend
Period or Short Dividend Period of 183 days or less, the Applicable "AA"
Composite Commercial Paper Rate, (ii) for any Short Dividend Period of 184
to 364 days, the Applicable Treasury Bill Rate and (iii) for any Long
Dividend Period, the Applicable Treasury Note Rate.
(iv) "Auction Date" shall mean the first Business Day preceding the first
day of a Dividend Period other than the Initial Dividend Periods.
(v) "Available Shares of MAPS" shall have the meaning specified in
Subsection (d)(i) below.
(vi) "Bid" shall have the meaning specified in Subsection (b)(i) below.
(vii) "Bidder" shall have the meaning specified in Subsection (b)(i)
below.
(viii) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the functions required of a Broker-Dealer in
these Auction Procedures, that has been selected by the Company and has
entered into a Broker-Dealer Agreement with the Auction Agent that remains
effective.
(ix) "Broker-Dealer Agreement" shall mean an agreement between the
Auction Agent and a Broker-Dealer pursuant to which such Broker-Dealer
agrees to follow the procedures specified in these Auction Procedures.
(x) "Hold Order" shall have the meaning specified in Subsection (b)(i)
below.
(xi) "MAPS" shall mean the MAPS being auctioned pursuant to these Auction
Procedures.
(xii) "Maximum Applicable Rate," on any Auction Date, shall mean the rate
obtained by multiplying the Applicable Determining Rate on such Auction
Date by the percentage determined as set forth below based on the lower of
the credit ratings assigned to the MAPS by Moody's and S&P (or if Moody's
or S&P or both shall not make such rating available, the equivalent of
either or both of such ratings by a Substitute Rating Agency or two
Substitute Rating Agencies, as the case may be, or in the event that only
one such rating shall be available, the percentage shall be based on such
rating).
<TABLE>
<CAPTION>
CREDIT RATINGS APPLICABLE PERCENTAGE
------------------------------------- OF APPLICABLE
MOODY'S S&P DETERMINING RATE
---------------- ------------ ---------------------
<S> <C> <C>
"aa3" or Above AA- or Above 150%
"a3" to "a1" A- to A+ 200%
"baa3" to "baa1" BBB- to BBB+ 225%
Below "baa3" Below BBB- 275%
</TABLE>
B-1
<PAGE>
(xiii) "Outstanding" shall mean, as of any date, Authorized MAPS
theretofore issued except, without duplication, (i) any Authorized MAPS
theretofore cancelled, delivered to the Company for cancellation or
redeemed and (ii) as of any Auction Date, any shares of Authorized MAPS
subject to redemption on the next following Business Day.
(xiv) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or
other entity or a government or any agency or political subdivision
thereof.
(xv) "Potential Holder" shall mean any Person, including any Existing
Holder, (A) who shall have executed a Master Purchaser's Letter and (B) who
may be interested in acquiring shares of MAPS (or, in the case of an
Existing Holder, additional shares of MAPS).
(xvi) "Securities Depositary" shall mean The Depository Trust Company or
any other securities depository selected by the Company that agrees to
follow the procedures required to be followed by such securities depository
in connection with MAPS.
(xvii) "Sell Order" shall have the meaning specified in Subsection (b)(i)
below.
(xviii) "Submission Deadline" shall mean 1:00 p.m., New York City time,
on any Auction Date or such other time on any Auction Date as may be
specified from time to time by the Auction Agent as the time prior to which
each Broker-Dealer must submit to the Auction Agent in writing all Orders
obtained by it for the Auction to be conducted on such Auction Date.
(xix) "Submitted Bid" shall have the meaning specified in Subsection
(c)(i) below.
(xx) "Submitted Hold Order" shall have the meaning specified in
Subsection (c)(i) below.
(xxi) "Submitted Order" shall have the meaning specified in Subsection
(c)(i) below.
(xxii) "Submitted Sell Order" shall have the meaning specified in
Subsection (c)(i) below.
(xxiii) "Substitute Rating Agency" shall mean a nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Securities Exchange Act of 1934) selected by the
Company, subject to the approval by Morgan Stanley and Lehman Brothers,
such approval not to be unreasonably withheld.
(xxiv) "Sufficient Clearing Bids" shall have the meaning specified in
Subsection (d)(i) below.
(xxv) "Winning Bid Rate" shall have the meaning specified in Subsection
(d)(i) below.
SECTION (B). ORDERS BY EXISTING HOLDERS AND POTENTIAL HOLDERS
(i) Prior to the Submission Deadline on each Auction Date for any Series of
MAPS:
(A) each Existing Holder may submit to a Broker-Dealer information as to:
(1) the number of Outstanding shares of MAPS, if any, held by such
Existing Holder that such Existing Holder desires to continue to hold
without regard to the Applicable Rate for the next succeeding Dividend
Period;
(2) the number of Outstanding shares of MAPS, if any, held by such
Existing Holder that such Existing Holder desires to sell, provided
that the Applicable Rate for the next succeeding Dividend Period is
less than the rate per annum specified by such Existing Holder; and/or
(3) the number of Outstanding shares of MAPS, if any, held by such
Existing Holder that such Existing Holder desires to sell without
regard to the Applicable Rate for the next succeeding Dividend Period;
and
(B) each Broker-Dealer, using a list of Potential Holders that shall be
maintained in accordance with the provisions set forth in the Broker-Dealer
Agreement for the purpose of conducting a competitive Auction, shall
contact both Existing Holders and Potential Holders, including Existing
Holders with
B-2
<PAGE>
respect to an offer by any such Existing Holder to purchase additional
shares of MAPS, on such list to notify such Existing Holders and Potential
Holders by telephone or otherwise as to the length of the next Dividend
Period and (i) with respect to any Short Dividend Period or Long Dividend
Period, the Dividend Payment Date(s) and (ii) with respect to any Long
Dividend Period, any dates before which shares of MAPS may not be redeemed
and any redemption premium applicable in an optional redemption and to
determine the number of Outstanding shares of MAPS, if any, with respect to
which each such Existing Holder desires to submit an Order and each such
Potential Holder desires to submit a Bid.
For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (A) or (B) of this Subsection (b)(i) is hereinafter
referred to as an "Order" and each Existing Holder and each Potential Holder
placing an Order is hereinafter referred to as a "Bidder," an Order containing
the information referred to in clause (A)(1) of this Subsection (b)(i) is
hereinafter referred to as a "Hold Order," an Order containing the information
referred to in clause (A)(2) or (B) of this Subsection (b)(i) is hereinafter
referred to as a "Bid;" and an Order containing the information referred to in
clause (A)(3) of this Subsection (b)(i) is hereinafter referred to as a "Sell
Order."
(ii) (A) A Bid by an Existing Holder shall constitute an irrevocable offer to
sell:
(1) the number of Outstanding shares of MAPS specified in such Bid if the
Applicable Rate determined on such Auction Date shall be less than the rate
per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding shares of MAPS to be
determined as set forth in Subsections (e)(i)(D) and (e)(iii) if the
Applicable Rate determined on such Auction Date shall be equal to the rate
per annum specified therein; or
(3) a lesser number of Outstanding shares of MAPS to be determined as set
forth in Subsections (e)(ii)(C) and (e)(iii) if such specified rate per
annum shall be higher than the Maximum Applicable Rate and Sufficient
Clearing Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute an irrevocable offer
to sell:
(1) the number of Outstanding shares of MAPS specified in such Sell
Order; or
(2) such number or a lesser number of Outstanding shares of MAPS to be
determined as set forth in Subsections (e)(ii)(C) and (e)(iii) if
Sufficient Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an irrevocable offer to
purchase:
(1) the number of Outstanding shares of MAPS specified in such Bid if the
Applicable Rate determined on such Auction Date shall be higher than the
rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding shares of MAPS to be
determined as set forth in Subsections (e)(i)(E) and (e)(iv) if the
Applicable Rate determined on such Auction Date shall be equal to the rate
per annum specified therein.
SECTION (C). SUBMISSION OF ORDERS BY BROKER-DEALERS TO AUCTION AGENT
(i) Each Broker-Dealer shall submit in writing to the Auction Agent prior to
the Submission Deadline on each Auction Date for any Series of MAPS all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate number of Outstanding shares of MAPS that are the
subject of such Order;
(C) to the extent that such Bidder is an Existing Holder;
(1) the number of Outstanding shares of MAPS, if any, subject to any
Hold Order placed by such Existing Holder;
B-3
<PAGE>
(2) the number of Outstanding shares of MAPS, if any, subject to any
Bid placed by such Existing Holder and the rate per annum specified in
such Bid; and
(3) the number of Outstanding shares of MAPS, if any, subject to any
Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the rate per annum
specified in such Potential Holder's Bid.
(Each "Hold Order," "Bid" or "Sell Order" as submitted or deemed
submitted by a Broker-Dealer being hereinafter referred to individually as
a "Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as
the case may be, or as a "Submitted Order.")
(ii) If any rate per annum specified in any Submitted Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(iii) If one or more Orders covering in the aggregate all of the Outstanding
shares of MAPS held by an Existing Holder are not submitted to the Auction
Agent prior to the Submission Deadline for any reason (including the failure of
a Broker-Dealer to contact such Existing Holder or to submit such Existing
Holder's Order or Orders), such Existing Holder shall be deemed to have
submitted a Hold Order covering the number of Outstanding shares of MAPS held
by such Existing Holder that are not subject to Orders submitted to the Auction
Agent.
(iv) A Submitted Order or Submitted Orders of an Existing Holder that cover
in the aggregate more than the number of Outstanding shares of MAPS held by
such Existing Holder will be considered valid in the following order of
priority:
(A) any Submitted Hold Order of such Existing Holder will be considered
valid up to and including the number of Outstanding shares of MAPS held by
such Existing Holder, provided that, if there is more than one such
Submitted Hold Order and the aggregate number of shares of MAPS subject to
such Submitted Hold Orders exceeds the number of Outstanding shares of MAPS
held by such Existing Holder, the number of shares of MAPS subject to each
such Submitted Hold Order will be reduced pro rata so that such Submitted
Hold Orders in the aggregate will cover exactly the number of Outstanding
shares of MAPS held by such Existing Holder;
(B) any Submitted Bids of such Existing Holder will be considered valid
(in the ascending order of their respective rates per annum if there is
more than one Submitted Bid of such Existing Holder) for the number of
Outstanding shares of MAPS held by such Existing Holder equal to the
difference between (i) the number of Outstanding shares of MAPS held by
such Existing Holder and (ii) the number of Outstanding shares of MAPS
subject to any Submitted Hold Order of such Existing Holder referred to in
clause (iv)(A) above (and, if more than one Submitted Bid of such Existing
Holder specifies the same rate per annum and together they cover more than
the remaining number of shares of MAPS that can be the subject of valid
Submitted Bids of such Existing Holder after application of clause (iv)(A)
above and of the foregoing portion of this clause (iv)(B) to any Submitted
Bid or Submitted Bids of such Existing Holder specifying a lower rate or
rates per annum, the number of shares of MAPS subject to each of such
Submitted Bids specifying the same rate per annum will be reduced pro rata
so that such Submitted Bids, in the aggregate, cover exactly such remaining
number of Outstanding shares of MAPS of such Existing Holder);
(C) any Submitted Sell Order of such Existing Holder will be considered
valid up to and including the excess of the number of Outstanding shares of
MAPS held by such Existing Holder over the sum of (a) the number of shares
of MAPS subject to Submitted Hold Orders by such Existing Holder referred
to in clause (iv)(A) above and (b) the number of shares of MAPS subject to
valid Submitted Bids by such Existing Holder referred to in clause (iv)(B)
above; provided that, if there is more than one Submitted Sell Order of
such Existing Holder and the number of shares of MAPS subject to such
B-4
<PAGE>
Submitted Sell Orders is greater than such excess, the number of shares of
MAPS subject to each of such Submitted Sell Orders will be reduced pro rata
so that such Submitted Sell Orders, in the aggregate, will cover exactly
the number of shares of MAPS equal to such excess.
The number of Outstanding shares of MAPS, if any, subject to Submitted Bids of
such Existing Holder not valid under clause (iv)(B) above shall be treated as
the subject of a Submitted Bid by a Potential Holder at the rate per annum
specified in such Submitted Bids.
(v) If there is more than one Submitted Bid by any Potential Holder in any
Auction, each such Submitted Bid shall be considered a separate Submitted Bid
with respect to the rate per annum and number of shares of MAPS specified
therein.
SECTION (D). DETERMINATION OF SUFFICIENT CLEARING BIDS, WINNING BID RATE AND
APPLICABLE RATE
(i) Not earlier than the Submission Deadline on each Auction Date, for any
Series of MAPS, the Auction Agent shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers and shall determine:
(A) the excess of the total number of Outstanding shares of MAPS over the
number of shares of MAPS that are the subject of Submitted Hold Orders
(such excess being hereinafter referred to as the "Available Shares of
MAPS");
(B) from the Submitted Orders, whether the number of Outstanding shares
of MAPS that are the subject of Submitted Bids by Potential Holders
specifying one or more rates per annum equal to or lower than the Maximum
Applicable Rate exceeds or is equal to the sum of:
(1) the number of Outstanding shares of MAPS that are the subject of
Submitted Bids by Existing Holders specifying one or more rates per
annum higher than the Maximum Applicable Rate, and
(2) the number of Outstanding shares of MAPS that are subject to
Submitted Sell Orders.
(if such excess or such equality exists (other than because the number of
Outstanding shares of MAPS in clauses (1) and (2) above are each zero
because all of the Outstanding shares of MAPS are the subject of Submitted
Hold Orders), there shall exist "Sufficient Clearing Bids" and such
Submitted Bids by Potential Holders shall be hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(C) if Sufficient Clearing Bids exist, the winning bid rate (the "Winning
Bid Rate"), which shall be the lowest rate per annum specified in the
Submitted Bids that if:
(1) each Submitted Bid from Existing Holders specifying the Winning
Bid Rate and all other Submitted Bids from Existing Holders specifying
lower rates per annum were accepted, thus entitling such Existing
Holders to continue to hold the shares of MAPS that are the subject of
such Submitted Bids, and
(2) each Submitted Bid from Potential Holders specifying the Winning
Bid Rate and all other Submitted Bids from Potential Holders specifying
lower rates per annum were accepted, thus entitling such Potential
Holders to purchase the shares of MAPS that are the subject of such
Submitted Bids,
would result in such Existing Holders described in subclause (C)(1) continuing
to hold an aggregate number of Outstanding shares of MAPS that, when added to
the number of Outstanding shares of MAPS to be purchased by such Potential
Holders described in subclause (C)(2), would equal or exceed the number of
Available Shares of MAPS.
(ii) In connection with any Auction and promptly after the Auction Agent has
made the determinations pursuant to Subsection (d)(i), the Auction Agent shall
advise the Company of the Maximum Applicable Rate and, based on such
determinations, the Applicable Rate for the next succeeding Dividend Period as
follows:
(A) if Sufficient Clearing Bids exist, that the Applicable Rate for the
next succeeding Dividend Period shall be equal to the Winning Bid Rate;
B-5
<PAGE>
(B) if Sufficient Clearing Bids do not exist (other than because all of
the Outstanding shares of MAPS are the subject of Submitted Hold Orders),
that the next succeeding Dividend Period will be a Standard Dividend Period
and the Applicable Rate for the next succeeding Dividend Period shall be
equal to the Maximum Applicable Rate for a Standard Dividend Period
determined as of the Business Day immediately preceding such Auction; or
(C) if all of the Outstanding shares of MAPS are the subject of Submitted
Hold Orders, that the Applicable Rate for the next succeeding Dividend
Period shall be equal to 59% of the Applicable "AA" Composite Commercial
Paper Rate, in the case of MAPS with a Standard Dividend Period or a Short
Dividend Period of 183 days or less, 59% of the Applicable Treasury Bill
Rate in the case of MAPS with a Short Dividend Period of 184 to 364 days,
or 59% of the Applicable Treasury Note Rate in the case of MAPS with a Long
Dividend Period, in effect on the Auction Date.
SECTION (E). ACCEPTANCE AND REJECTION OF SUBMITTED BIDS AND SUBMITTED SELL
ORDERS AND ALLOCATION OF SHARES OF MAPS
Based on the determinations made pursuant to Subsection (d)(i), the Submitted
Bids and Submitted Sell Orders shall be accepted or rejected and the Auction
Agent shall take such other action as set forth below:
(i) If Sufficient Clearing Bids have been made, subject to the provisions
of Subsections (e)(iii) and (e)(iv), Submitted Bids and Submitted Sell
Orders shall be accepted or rejected in the following order of priority and
all other Submitted Bids shall be rejected:
(A) the Submitted Sell Orders of Existing Holders shall be accepted
and the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is higher than the Winning Bid Rate shall be
rejected, thus requiring each such Existing Holder to sell the
Outstanding shares of MAPS that are the subject of such Submitted Sell
Order or Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be
accepted, thus entitling each such Existing Holder to continue to hold
the Outstanding shares of MAPS that are the subject of such Submitted
Bid;
(C) the Submitted Bid of each of the Potential Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be
accepted;
(D) the Submitted Bid of each of the Existing Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the
Outstanding shares of MAPS that are the subject of such Submitted Bid,
unless the number of Outstanding shares of MAPS subject to all such
Submitted Bids shall be greater than the number of Outstanding shares
of MAPS ("Remaining Shares of MAPS") equal to the excess of the
Available Shares of MAPS over the number of Outstanding shares of MAPS
subject to Submitted Bids described in Subsections (e)(i)(B) and
(e)(i)(C), in which event the Submitted Bids of each such Existing
Holder shall be rejected, and each such Existing Holder shall be
required to sell Outstanding shares of MAPS, but only in an amount
equal to the difference between (1) the number of Outstanding shares of
MAPS then held by such Existing Holder subject to such Submitted Bid
and (2) the number of shares of MAPS obtained by multiplying (x) the
number of Remaining Shares of MAPS by (y) a fraction, the numerator of
which shall be the number of Outstanding shares of MAPS held by such
Existing Holder subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of MAPS
subject to such Submitted Bids made by all such Existing Holders that
specified a rate per annum equal to the Winning Bid Rate; and
(E) the Submitted Bid of each of the Potential Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted,
but only in an amount equal to the number of Outstanding shares of MAPS
obtained by multiplying (x) the difference between the Available Shares
of MAPS and the number of Outstanding shares of MAPS subject to
Submitted Bids
B-6
<PAGE>
described in Subsections (e)(i)(B), (e)(i)(C) and (e)(i)(D) by (y) a
fraction, the numerator of which shall be the number of Outstanding
shares of MAPS subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of MAPS
subject to such Submitted Bids made by all such Potential Holders that
specified rates per annum equal to the Winning Bid Rate.
(ii) If Sufficient Clearing Bids have not been made (other than because
all of the Outstanding shares of MAPS are subject to Submitted Hold
Orders), subject to the provisions of Subsection (e)(iii), Submitted Orders
shall be accepted or rejected as follows in the following order of priority
and all other Submitted Bids of Potential Holders shall be rejected:
(A) the Submitted Bid of each Existing Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall
be accepted, thus entitling such Existing Holder to continue to hold
the Outstanding shares of MAPS that are the subject of such Submitted
Bid;
(B) the Submitted Bid of each Potential Holder specifying any rate
per annum that is equal to or lower than the Maximum Applicable Rate
shall be accepted, thus requiring such Potential Holder to purchase the
Outstanding shares of MAPS that are the subject of such Submitted Bid;
and
(C) the Submitted Bids of each Existing Holder specifying any rate
per annum that is higher than the Maximum Applicable Rate shall be
rejected, thus requiring each such Existing Holder to sell the
Outstanding shares of MAPS that are the subject of such Submitted Bid,
and the Submitted Sell Orders of each Existing Holder shall be
accepted, in both cases only in an amount equal to the difference
between (1) the number of Outstanding shares of MAPS then held by such
Existing Holder subject to such Submitted Bid or Submitted Sell Order
and (2) the number of shares of MAPS obtained by multiplying (x) the
difference between the Available Shares of MAPS and the aggregate
number of Outstanding shares of MAPS subject to Submitted Bids
described in Subsections (e)(ii)(A) and (e)(ii)(B) by (y) a fraction,
the numerator of which shall be the number of Outstanding shares of
MAPS held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and the denominator of which shall be the
aggregate number of Outstanding shares of MAPS subject to all such
Submitted Bids and Submitted Sell Orders.
(iii) If, as a result of the procedures described in Subsections (e)(i)
or (e)(ii), any Existing Holder would be entitled or required to sell or
any Potential Holder would be entitled or required to purchase, a fraction
of a share of MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, round up or down the
number of shares of MAPS to be purchased or sold by any Existing Holder or
Potential Holder on such Auction Date so that only whole shares of MAPS
will be entitled or required to be sold or purchased.
(iv) If, as a result of the procedures described in Subsection (e)(i),
any Potential Holder would be entitled or required to purchase less than a
whole share of MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of
MAPS for purchase among Potential Holders so that only whole shares of MAPS
are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing
any shares of MAPS on such Auction Date.
(v) Based on the results of each Auction, the Auction Agent shall
determine, with respect to each Broker-Dealer that submitted Bids or Sell
Orders on behalf of Existing Holders or Potential Holders, the aggregate
number of Outstanding shares of MAPS to be purchased and the aggregate
number of Outstanding shares of MAPS to be sold by such Potential Holders
and Existing Holders and, to the extent that such aggregate number of
Outstanding shares of MAPS to be purchased and such aggregate number of
Outstanding shares of MAPS to be sold differ, the Auction Agent shall
determine to which other Broker-Dealer or Broker-Dealers acting for one or
more purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such Broker-
Dealer shall receive, as the case may be, Outstanding shares of MAPS.
B-7
<PAGE>
SECTION (F). MISCELLANEOUS
An Existing Holder (A) may sell, transfer or otherwise dispose of shares of
MAPS only pursuant to a Bid or Sell Order in accordance with the procedures
described in these Auction Procedures or to or through a Broker-Dealer or to a
Person that has delivered a signed copy of a Master Purchaser's Letter to a
Broker-Dealer, provided that in the case of all transfers other than pursuant
to Auctions such Existing Holder, its Broker-Dealer or its Agent Member advises
the Auction Agent of such transfer and (B) unless otherwise required by law,
shall have the beneficial ownership of the shares of MAPS held by it maintained
in book-entry form by the Securities Depositary in the account of its Agent
Member, which in turn will maintain records of such Existing Holder's
beneficial ownership. The Company and its Affiliate shall not submit any Order
in any Auction except as set forth in the next sentence. Any Broker-Dealer that
is an Affiliate of the Company may submit Orders in Auctions but only if such
Orders are not for its own account, except that if such affiliated Broker-
Dealer holds shares of MAPS for its own account, it must submit a Sell Order in
the next Auction with respect to such shares of MAPS. All of the Outstanding
shares of MAPS of each Series shall be represented by a single certificate for
each Series registered in the name of the nominee of the Securities Depositary
unless otherwise required by law or unless there is no Securities Depositary.
If there is no Securities Depositary, shares of MAPS shall be registered in the
register of the Company in the name of the Existing Holder thereof and such
Existing Holder thereupon will be entitled to receive a certificate therefor
and be required to deliver a certificate therefor upon transfer or exchange
thereof.
B-8
<PAGE>
APPENDIX C
TO BE SUBMITTED TO YOUR BROKER-DEALER
MASTER PURCHASER'S LETTER
RELATING TO
SECURITIES INVOLVING RATE SETTINGS
THROUGH AUCTIONS
To: The Company
A Broker-Dealer
An Agent Member
Other Persons
1. This letter is designed to apply to auctions for publicly or privately
offered debt or equity securities ("Securities") of any issuer ("Company") that
are described in any final prospectus or other offering materials relating to
such Securities as the same may be amended or supplemented (collectively, with
respect to the particular Securities concerned, the "Prospectus") and that
involve periodic rate settings through auctions ("Auctions"). This letter shall
be for the benefit of any Company and of any auction agent, broker-dealer,
agent member, securities depository or other interested person in connection
with any Securities and related Auctions (it being understood that such persons
may be required to execute specified agreements and nothing herein shall alter
such requirements). The terminology used herein is intended to be general in
its application and not to exclude any Securities in respect of which (in the
Prospectus or otherwise) alternative terminology is used.
2. We may from time to time offer to purchase, purchase, offer to sell and/or
sell Securities of any Company as described in the Prospectus relating thereto.
We agree that this letter shall apply to all such purchases, sales and offers
and to Securities owned by us. We understand that the dividend/interest rate on
Securities may be based from time to time on the results of Auctions as set
forth in the Prospectus.
3. We agree that any bid or sell order placed by us shall constitute an
irrevocable offer by us to purchase or sell Securities subject to such bid or
sell order, or such lesser amount of Securities as we shall be required to sell
or purchase as a result of such Auction, at the applicable price, all as set
forth in the Prospectus, and that if we fail to place a bid or sell order with
respect to Securities owned by us with a broker-dealer on any auction date, or
a broker-dealer to which we communicate a bid or sell order fails to submit
such bid or sell order to the auction agent concerned, we shall be deemed to
have placed a hold order with respect to such Securities as described in the
Prospectus. We authorize any broker-dealer that submits a bid or sell order as
our agent in Auctions to execute contracts for the sale of Securities covered
by such bid or sell order. We recognize that the payment by such broker-dealer
for Securities purchased on our behalf shall not relieve us of any liability to
such broker-dealer for payment for such Securities.
4. We agree that, during the applicable period as described in the
Prospectus, dispositions of Securities can be made only in the denominations
set forth in the Prospectus and we will sell, transfer or otherwise dispose of
any Securities held by us from time to time only pursuant to a bid or sell
order placed in an Auction, to or through a broker-dealer or, when permitted in
the Prospectus, to a person that has signed and delivered, or caused to be
delivered on its behalf, to a broker-dealer a letter substantially in the form
of this letter (or other applicable purchaser's letter), provided that in the
case of all transfers other than pursuant to Auctions we or our broker-dealer
or our agent member shall advise such auction agent of such transfer. We
understand that a restrictive legend will be placed on certificates
representing the Securities and stop-transfer instructions will be issued to
the transfer agent and/or registrar, all as set forth in the Prospectus. We
agree to comply with any other transfer restrictions or other related
procedures as described in the Prospectus.
5. We agree that, during the applicable period as described in the
Prospectus, ownership of Securities shall be represented by a global
certificate registered in the name of the applicable securities depository or
its nominees, that we will not be entitled to receive any certificate
representing the Securities and that our ownership of any Securities will be
maintained in book entry form by the securities depository for the account
C-1
<PAGE>
of our agent member, which in turn will maintain records of our beneficial
ownership. We authorize and instruct our agent member to disclose to the
applicable auction agent such information concerning our beneficial ownership
of Securities as such auction agent shall request.
6. The Broker-Dealers or their successors (including any successor appointed
by the Company to replace the Broker-Dealers or their successors) or any
assignee thereof to whom the Company consents, shall have an option,
exercisable on not less than three Business Days' notice and only with the
Company's consent, to purchase, on any Final Dividend Date with respect to the
Securities to be so purchased, all or a portion of the Securities owned by it
at a purchase price, after payment by the Company on such Final Dividend Date
of any accumulated but unpaid dividends on the Securities and any redemption
premium (that may have been established by the Company in respect of a Long
Dividend Period) that may be payable by the Company with respect thereto, of
$ per Security, and it, by its ownership of such Securities and its
execution of the Master Purchaser's Letter, will be deemed to have consented
irrevocably to such purchase.
7. We acknowledge that partial deliveries of Securities purchased in Auctions
may be made to us and such deliveries shall constitute good delivery as set
forth in the Prospectus.
8. This letter is not a commitment by us to purchase any Securities.
9. This letter supersedes any prior-dated version of this master purchaser's
letter, and supplements any prior or post-dated purchaser's letter specific to
particular Securities; any recipient of this letter may rely upon it until such
recipient has received a signed writing amending or revoking this letter.
10. The descriptions of Auction procedures set forth in each applicable
Prospectus are incorporated by reference herein and, in case of any conflict
between this letter and any such description, such description shall control.
11. Any xerographic or other copy of this letter shall be deemed of equal
effect as a signed original.
12. Our agent member of the securities depository currently is
.
13. Our personnel authorized to place orders with broker-dealers for the
purposes set forth in the Prospectus in Auctions currently is
, telephone number ( ) .
14. Our taxpayer identification number is .
15. In the case of each offer to purchase, offer to sell or sale by us of
Securities not registered under the Securities Act of 1933, as amended (the
"Act"), we represent and agree as follows:
A. We understand and expressly acknowledge that the Securities have not
been and will not be registered under the Act and, accordingly, that the
Securities may not be reoffered, resold or otherwise pledged, hypothecated
or transferred unless an applicable exemption from the registration
requirements of the Act is available.
B. We hereby confirm that any purchase of Securities made by us will be
for our own account, or for the account of one or more parties for which we
are acting as trustee or agent with complete investment discretion and with
authority to bind such parties, and not with a view to any public resale or
distribution thereof. We and each other party for which we are acting which
will acquire Securities will be "accredited investors" within the meaning
of Regulation D under the Act with respect to the Securities to be
purchased by us or such party, as the case may be, will have previously
invested in similar types of instruments and will be able and prepared to
bear the economic risk of investing in and holding such Securities.
C. We acknowledge that prior to purchasing any Securities we shall have
received a Prospectus (private placement memorandum) with respect thereto
and acknowledge that we will have had access to such financial and other
information and have been afforded the opportunity to ask such questions of
representatives of the Company and receive answers thereto, as we deem
necessary in connection with our decision to purchase Securities.
C-2
<PAGE>
D. We recognize that the Company and broker-dealers will rely upon the
truth and accuracy of the foregoing investment representations and
agreements, and we agree that each of our purchases of Securities now or in
the future shall be deemed to constitute our concurrence in all of the
foregoing that shall be binding on us and each party for which we are
acting as set forth in Subparagraph B above.
Dated: ______________________________ _____________________________________
Mailing Address of Purchaser:
_____________________________________ By: _________________________________
_____________________________________ Printed Name: _______________________
_____________________________________ Title: ______________________________
C-3
<PAGE>
[LOGO OF ILFC]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a statement of estimated expenses in connection with the
issuance and distribution of the securities being registered, other than
underwriting discounts and commissions.
<TABLE>
<S> <C>
1. Registration Fee............................................. $ 34,483
2. Cost of Printing, Engraving and Freight...................... 60,000
3. Legal Fees and Expenses...................................... 60,000
4. Accounting Fees.............................................. 20,000
5. Auction Agent Fees........................................... 25,000
6. Blue Sky Fees and Expenses................................... 10,000
7. Rating Agency Fees........................................... 50,000
8. Miscellaneous................................................ 10,517
--------
Total....................................................... $270,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the California Corporations Code and Section 7.5 of the Company's
Bylaws, directors, officers, employees and agents of the Company may be
indemnified by the Company in certain circumstances against liabilities they
incur while acting in such capacities.
Section 7 of the form of proposed Underwriting Agreement (Exhibit 1.1 hereto)
provides for indemnification of directors and officers by the Underwriters in
certain circumstances.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1* Underwriting Agreement.
4.1 Form of Certificate of Determination of Series E MAPS.
4.2 Form of Certificate of Determination of Series F MAPS.
5 Opinion of O'Melveny & Myers as to the legality of the Series E
and F MAPS.
8* Opinion of O'Melveny & Myers as to certain Federal income tax
consequences to the holders of Series E and F MAPS.
12 Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends.
23.1* Consent of Ernst & Young LLP.
23.2 Consent of O'Melveny & Myers (included in Exhibits 5 and 8).
24* Power of Attorney (included on page II-3).
99.1 Form of Agreement between the Company and Chemical Bank, as Auc-
tion Agent.
99.2 Form of Broker-Dealer Agreement.
99.3* Form of Agreement with the Securities Depositary.
</TABLE>
- --------
* Previously filed.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The Company hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described in Item 15 above, or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer, or controlling person of
the Company in the successful defense of any action, suit or proceeding) is
asserted against the Company by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT DULY
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF LOS ANGELES, STATE OF CALIFORNIA, ON
THE 13TH DAY OF JANUARY, 1995.
International Lease Finance
Corporation
By /s/ Alan H. Lund
----------------------------------
Senior Vice President, Co-Chief
Operating Officer, Chief Financial
Officer and Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*/s/ Leslie L. Gonda Director
- ------------------------------------
Leslie L. Gonda
*/s/ Steven F. Udvar-Hazy Chief Executive Officer
- ------------------------------------ and Director
Steven F. Udvar-Hazy
*/s/ Louis L. Gonda Director
- ------------------------------------
Louis L. Gonda
*/s/ M. R. Greenberg Director
- ------------------------------------
M. R. Greenberg
*/s/ Edward E. Matthews Director
- ------------------------------------
Edward E. Matthews
*/s/ Petros Sabatacakis Director
- ------------------------------------
Petros Sabatacakis
*/s/ Howard I. Smith Director
- ------------------------------------
Howard I. Smith
/s/ Alan H. Lund Chief Financial Officer and
- ------------------------------------ Chief Accounting Officer
Alan H. Lund
</TABLE>
*By /s/ Alan H. Lund January 13, 1995
_______________________
Alan H. Lund
Attorney-in-fact
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1* Underwriting Agreement.
4.1 Form of Certificate of Determination of Series E MAPS.
4.2 Form of Certificate of Determination of Series F MAPS.
5 Opinion of O'Melveny & Myers as to the legality of the Series E
and F MAPS.
8* Opinion of O'Melveny & Myers as to certain Federal income tax
consequences to the holders of Series E and F MAPS.
12 Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends.
23.1* Consent of Ernst & Young LLP.
23.2 Consent of O'Melveny & Myers (included in Exhibits 5 and 8).
24* Power of Attorney (included on page II-3).
99.1 Form of Agreement between the Company and Chemical Bank, as Auc-
tion Agent.
99.2 Form of Broker-Dealer Agreement.
99.3* Form of Agreement with the Securities Depositary.
</TABLE>
- --------
* Previously filed.
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF DETERMINATION OF
PREFERENCES OF PREFERRED STOCK OF
INTERNATIONAL LEASE FINANCE CORPORATION,
A CALIFORNIA CORPORATION
The undersigned, Steven F. Udvar-Hazy and Julie I. Sackman hereby certify
that:
1. They are the duly elected and acting President and Secretary,
respectively, of International Lease Finance Corporation (the "Company").
2. Pursuant to authority given by the Company's Restated Articles of
Incorporation, a duly appointed committee (the "Special Committee") of the Board
of Directors of the Company (such committee having been previously authorized to
exercise the powers of the Board of Directors as to the subject matter), has
duly adopted the following recitals and resolutions:
WHEREAS, the Restated Articles of Incorporation of the Company provide for a
class of shares known as Preferred Stock, issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of the Company is authorized to determine or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, to fix the number of
shares constituting any such series, and to determine the designation thereof,
or any of them; and
WHEREAS, the Company desires, pursuant to its authority as aforesaid, to
determine and fix the rights, preferences, privileges, and restrictions relating
to a series of said Preferred Stock and the number of shares constituting and
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and
determines the designation of, the number of shares constituting, and the
rights, preferences, privileges, and restrictions relating to, said series of
Preferred Stock as follows:
ARTICLE ONE
DESIGNATION
Section 1. Designation.
A series of Preferred Stock shall be designated "Market Auction Preferred
Stock, Series E" (the "Series E MAPS").
Section 2. Amount.
The number of shares constituting Series E MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES E MAPS--GENERAL PROVISIONS.
Section 1. Definitions.
As used herein, the following terms have the following meanings:
(a) "Additional Directors" has the meaning specified in Section 6(a) of
this ARTICLE TWO.
(b) "Agent Member" means the member of the Securities Depositary that will
act on behalf of an Existing Holder or a Potential Holder and that is identified
as such in such Existing Holder's or Potential Holder's Master Purchaser's
Letter.
(c) "Applicable 'AA' Composite Commercial Paper Rate," on any date, shall
mean in the case of any Standard Dividend Period or Short Dividend Period of (1)
49 days or more but less than 70 days, the interest equivalent of the 60-day
rate, (2) 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 days or more but less
than 120 days, the interest equivalent of the 90-day rate, (4) 120 days or more
but less than 148 days, the arithmetic average of the interest equivalent of the
90-day and 180-day rates, and (5) 148 days or more but less than 184 days, the
interest equivalent of the 180-day rate, in each case, on commercial paper
placed on behalf of issuers whose corporate bonds are rated "AA" by S&P or "Aa"
by Moody's, or the equivalent of such rating by another rating agency, as made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date. In the event that the
Federal Reserve Bank of New York does not make available any of the foregoing
rates, then such rates shall be the 60-day rate or arithmetic average of such
rates, as the case may be, as quoted on a discount basis or otherwise, by
Commercial Paper Dealers to the Auction Agent as of the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the Applicable "AA" Composite Commercial
Paper Rate, the Applicable "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer (if any) and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the Company to provide
such rate or rates or, if the Company does not select any Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
Paper Dealer (if any). "Substitute Commercial Paper Dealer" means Goldman, Sachs
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers
Inc or their respective affiliates or successors or, if no such dealer furnishes
such quotations, a leading dealer in the commercial paper market selected by the
Company in good faith. For purposes of this definition, the "interest
equivalent" means the equivalent yield on a 360-day basis of a discount-basis
security to an interest-bearing security.
(d) "Applicable Rate" means the rate per annum, resulting from the next
preceding Auction, at which dividends are payable on the shares of Series E MAPS
for any Dividend Period.
(e) "Applicable Treasury Bill Rate" for any Short Dividend Period in excess
of 183 days and "Applicable Treasury Note Rate" for any Long Dividend Period, on
any date, shall mean the interest equivalent of the rate for direct obligations
of the United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Short Dividend Period or Long Dividend
Period, as the case may be, as published weekly by the Board of Governors of the
Federal Reserve System (the "Board") in "Federal Reserve Statistical Release
H.15(519)-Selected Interest Rates," or any successor publication by the Board,
within five Business Days preceding such date. In the event that the Board does
not publish such rate, or if such release is not available, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate will be the arithmetic mean
of the secondary market bid rate as of approximately 3:30 P.M., New York City
time, on the Business Day next preceding such date of the U.S. Government
Securities Dealers furnished to
2
<PAGE>
the Auction Agent for the issue of direct obligations of the United States
Treasury, in an aggregate principal amount of at least $1,000,000 with a
remaining maturity equal to, or next lower than, the length of such Short
Dividend Period or Long Dividend Period, as the case may be. If any U.S.
Government Securities Dealer does not quote a rate required to determine the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate shall be determined on the
basis of the quotation or quotations furnished by any Substitute U.S. Government
Securities Dealer or Dealers selected by the Company to provide such rate or
rates or, if the Company does not select any such Substitute U.S. Government
Securities Dealer or Dealers, by the remaining U.S. Government Securities
Dealer (if any). "Substitute U.S. Government Securities Dealers" means Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon
Brothers Inc or their respective affiliates or successors or, if no such dealer
provides such quotes, a leading dealer in the government securities market
selected by the Company in good faith. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis shall be equal to the
quotient of (A) the discount rate divided by (B) the difference between 1.00 and
the discount rate.
(f) "Auction Agent" means Chemical Bank, or its successors, or any other
bank or trust company appointed by a resolution of the Board of Directors of the
Company, or its Special Committee, which enters into an agreement with the
Company to follow the Auction Procedures set forth in ARTICLE THREE hereof.
(g) "Auction Date" means the first Business Day preceding the first day of a
Dividend Period other than the Initial Dividend Period.
(h) "Broker-Dealer" means any broker-dealer, or other entity permitted by
law to perform the functions required of a Broker-Dealer in ARTICLE THREE, that
has been selected by the Company and has entered into a Broker-Dealer Agreement
with the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in ARTICLE THREE.
(j) "Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
New York City are authorized or obligated by law to close.
(k) "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock, whether outstanding on the Date of Original Issue or
thereafter.
(l) "Code" means the Internal Revenue Code of 1986, as amended.
(m) "Commercial Paper Dealers" means Morgan Stanley & Co. Incorporated and
Lehman Brothers Inc. or, in lieu of either thereof, their respective affiliates
or successors.
(n) "Common Stock" means all shares now or hereafter authorized of the class
of Common Stock of the Company presently authorized and any other shares into
which such shares may hereafter be changed from time to time.
(o) "Date of Original Issue" means the date on which the Company initially
issues shares of Series E MAPS.
(p) "Default Period" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
3
<PAGE>
(q) "Default Rate" means the Applicable Determining Rate multiplied by the
percentage shown opposite the lowest Credit Ratings category in the definition
of Maximum Applicable Rate, determined as of the Business Day preceding a
Failure to Deposit.
(r) "Dividend Payment Date" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(s) "Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(t) "Dividend Quarter" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(u) "Dividends-Received Deduction" has the meaning specified in Section 2(b)
of this ARTICLE TWO.
(v) "Existing Holder," means a Person who has signed a Master Purchaser's
Letter and is listed as the beneficial owner of shares of Series E MAPS in the
records of the Auction Agent.
(w) "Failure to Deposit" has the meaning specified in Section 2(e) of this
ARTICLE TWO.
(x) "Initial Dividend Payment Date" means _________ __, 1995.
(y) "Initial Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(z) "Initial Dividend Rate" has the meaning specified in Section 2(a) of
this ARTICLE TWO.
(aa) "Junior Capital Stock" means, with respect to the Company, any and all
Capital Stock of the Company ranking junior to the Series E MAPS with respect to
the payment of dividends or the distribution of assets upon liquidation.
(ab) "Long Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(ac) "MAPS" means all shares of each series of the Company's Market Auction
Preferred Stock now or hereafter authorized.
(ad) "Maximum Applicable Rate," on any Auction Date, shall mean the rate per
annum obtained by multiplying the Applicable Determining Rate on such Auction
Date by a percentage determined as set forth below based on the lower of the
credit ratings assigned to the Series E MAPS by Moody's and S&P (or if Moody's
or S&P or both shall not make such rating available, the equivalent of either or
both of such ratings by a Substitute Rating Agency or two Substitute Rating
Agencies, as the case may be, or in the event that only one such rating shall be
available, the percentage shall be based on such rating).
<TABLE>
<CAPTION>
Credit Ratings
------------------
Applicable Percentage
of Applicable
Moody's S&P Determining Rate
------------ ------------- ----------------------
<S> <C> <C>
"aa3" or Above AA-- or Above 150%
"a3" to "a1" A-- to A+ 200%
"baa3" to "baa BBB-- to BBB+ 225%
Below "baa3" Below BBB-- 275%
</TABLE>
4
<PAGE>
(ae) "Master Purchaser's Letter" means a letter addressed to the Company,
the Auction Agent and a Broker-Dealer in which a Person agrees, among other
things, to offer to purchase, purchase, offer to sell or sell shares of Series E
MAPS as set forth in ARTICLE THREE.
(af) "Minimum Holding Period" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(ag) "Moody's" means Moody's Investors Service, Inc.
(ah) "Normal Dividend Payment Date" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ai) "Notice" has the meaning specified in Section 2(c) of this ARTICLE TWO.
(aj) "Notice of Long Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(ak) "Notice of Revocation" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(al) "Notice of Short Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(am) "Outstanding" means, as of any date, shares of MAPS theretofore issued
by the Company except, without duplication, (i) any shares of MAPS theretofore
cancelled, delivered to the Company for cancellation or redeemed and (ii) as of
any Auction Date, any shares of MAPS subject to redemption on the next following
Business Day.
(an) "Parity Capital Stock" means any and all shares of Capital Stock of the
Company ranking on a parity with or equal to the Series E MAPS as to the payment
of dividends and distribution of assets.
(ao) "Parity Securities" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(ap) "Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(aq) "Potential Holder" means any Person, including any Existing Holder, (i)
who has executed a Master Purchaser's Letter and (ii) who may be interested in
acquiring shares of Series E MAPS (or, in the case of an Existing Holder,
additional shares of Series E MAPS).
(ar) "Preferred Stock" means all shares now or hereafter authorized of the
class of Preferred Stock, without par value, of the Company, including the
shares of MAPS of any series.
(as) "S&P" means Standard & Poor's Corporation.
(at) "Securities Depositary" means The Depository Trust Company and its
successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
Securities Depositary in connection with shares of Series E MAPS.
(au) "Short Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(av) "Standard Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(aw) "Subsequent Dividend Period" has the meaning specified in Section 2(c)
of this ARTICLE TWO.
5
<PAGE>
(ax) "Subsequent Dividend Period Days" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ay) "Substitute Rating Agency" shall mean a nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Securities Exchange Act of 1934, as amended) selected by the
Company, subject to the approval by Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc., such approval not to be unreasonably withheld.
(az) "Sufficient Clearing Bids" has the meaning specified in Section 4(a) of
ARTICLE THREE.
(ba) "U.S. Government Securities Dealers" shall mean Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. or, in lieu of either thereof, their
respective affiliates or successors.
Section 2. Dividends.
(a) Holders of Series E MAPS shall be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds available
therefor under applicable law and the Restated Articles of Incorporation of the
Company, cumulative cash dividends at the Applicable Rate, determined as set
forth below, payable on the respective dates set forth below that may be
applicable with respect to such Series E MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of _____% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series E
MAPS will be the Applicable Rate, determined as set forth herein, and will be
payable on the respective dates set forth below.
(b) Dividends on the Series E MAPS will accumulate (whether or not declared)
from the Date of Original Issue. Except for the Initial Dividend Payment Date,
dividends on the Series E MAPS with a Standard Dividend Period will be payable,
except as provided below, on each seventh ______ following the preceding
Dividend Payment Date. Dividends on the Series E MAPS with a Short Dividend
Period will be payable, except as provided below, on the day following the last
day of such Short Dividend Period and will also be payable on such other dates
as are established at the time such Short Dividend Period is determined.
Dividends on the Series E MAPS with a Long Dividend Period will be payable,
except as provided below, on the day following the last day of such Long
Dividend Period and on the first day of the fourth calendar month after the
commencement of such Long Dividend Period and quarterly thereafter on the first
day of each applicable month. Each day on which dividends on Series E MAPS
would be payable as determined as set forth in this paragraph but for the
adjustments set forth below is referred to herein as a "Normal Dividend Payment
Date."
(i) In the case of dividends payable on Series E MAPS with a Standard
Dividend Period or a Short Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the Series E MAPS in next-day
funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day preceding such Normal Dividend Payment Date
that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on Series E MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal
6
<PAGE>
Dividend Payment Date is not a Business Day, then dividends shall be payable
on the first Business Day following such Normal Dividend Payment Date.
(ii) In the case of dividends payable on Series E MAPS with a Long
Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the Series E MAPS in next-day
funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment Date
that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on the Series E MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
Notwithstanding the foregoing, in case of payment in next-day funds, if the
date on which dividends on Series E MAPS would be payable as determined as set
forth in the preceding paragraphs is a day that would result in the number of
days between successive Auction Dates (determined by excluding the first Auction
Date and including the second Auction Date) not being at least equal to the
then-current minimum holding period (currently set forth in Section 246(c) of
the Code) (the "Minimum Holding Period") required for corporate taxpayers to be
entitled to the dividends-received deduction on preferred stock held by
nonaffiliated corporations (currently set forth in Section 243(a) of the Code)
(the "Dividends-Received Deduction"), then dividends on the Series E MAPS shall
be payable on the first Business Day following such date on which dividends
would be so payable that is next succeeded by a Business Day that results in the
number of days between such successive Auction Dates (determined as set forth
above) being at least equal to the then-current Minimum Holding Period.
Each date on which dividends on Series E MAPS shall be payable as determined
as set forth above is referred to herein as a "Dividend Payment Date". If
applicable, the period from the preceding Dividend Payment Date to the next
Dividend Payment Date for Series E MAPS with a Long Dividend Period is hereby
referred to as a "Dividend Quarter." Although any particular Dividend Payment
Date may not occur on the originally scheduled Normal Dividend Payment Date
because of the adjustments set forth above, each succeeding Dividend Payment
Date will be, subject to such adjustments, the date determined as set forth
above as if each preceding Dividend Payment Date had occurred on the respective
originally scheduled Normal Dividend Payment Date.
In addition, notwithstanding the foregoing, in the event of a change in law
altering the Minimum Holding Period, the period of time between Dividend Payment
Dates shall automatically be adjusted so that there shall be a uniform number of
days in subsequent Dividend Periods (such number of days without giving effect
to the adjustment referred to above being referred to herein as the "Subsequent
Dividend Period Days") commencing after the date of such change in law equal to
or to the extent necessary, in excess of the then-current Minimum Holding
Period, provided that the number of Subsequent Dividend Period Days shall not
exceed by more than nine days the length of such then-current Minimum Holding
Period and shall be evenly divisible by seven, and the maximum number of
Subsequent Dividend Period Days, as adjusted pursuant to this provision, in no
event shall exceed 119 days.
(c) After the Initial Dividend Period for the Series E MAPS, each subsequent
Dividend Period will (except for the adjustments for non-Business Days described
above) be 49 days (each such 49-day period, subject to any adjustment as a
result of a change in law altering the Minimum Holding Period as described
7
<PAGE>
above, being herein referred to as a "Standard Dividend Period"), unless the
Company specifies that any such subsequent Dividend Period will be a Dividend
Period of 50 to 364 days and consisting of a whole number of weeks (a "Short
Dividend Period") or a Dividend Period of one year or longer (a "Long Dividend
Period"). Each such Standard Dividend Period, Short Dividend Period and Long
Dividend Period (together with the period commencing on the Date of Original
Issue and ending on the Initial Dividend Payment Date for the Series E MAPS (the
"Initial Dividend Period")) being referred to herein as a "Dividend Period."
After the Initial Dividend Period for the Series E MAPS, each successive
Dividend Period will commence on the Dividend Payment Date for the preceding
Dividend Period and will end (i) in the case of a Standard Dividend Period, on
the day preceding the next Dividend Payment Date and (ii) in the case of a Short
Dividend Period or a Long Dividend Period, on the last day of the Short Dividend
Period or the Long Dividend Period specified by the Company in the related
Notice.
The Company may give telephonic and written notice, not less than ten and not
more than 30 days prior to an Auction Date, to the Auction Agent and the
Securities Depositary that the next succeeding Dividend Period will be a Short
Dividend Period (a "Notice of Short Dividend Period") or a Long Dividend Period
(a "Notice of Long Dividend Period" and, together with a Notice of Short
Dividend Period, a "Notice"). Each such Notice will specify (i) the next
succeeding Dividend Period as a Short Dividend Period or a Long Dividend Period,
(ii) the term thereof, (iii) in the case of any Long Dividend Period, additional
redemption provisions or restrictions on redemption, if any, and (iv) the
Dividend Payment Dates; provided that, for any Auction occurring after the
initial Auction, the Company may not give a Notice of a Short Dividend Period or
a Notice of a Long Dividend Period (and any such Notice shall be null and void)
unless Sufficient Clearing Bids were made in the last occurring Auction of any
series of MAPS (or all shares of such series were subject to Submitted Hold
Orders) and full cumulative dividends, if any, for all series of MAPS payable
prior to such date have been paid in full. The Board of Directors of the
Company may establish a Short Dividend Period or a Long Dividend Period for the
Series E MAPS. Notice may be revoked by the Company on or prior to the Business
Day prior to the related Auction Date by telephonic and written notice (a
"Notice of Revocation") to the Auction Agent and the Securities Depositary.
If the Company does not give a Notice with respect to the next succeeding
Dividend Period or gives a Notice of Revocation with respect thereto, such next
succeeding Dividend Period will be a Standard Dividend Period. In addition, if
the Company has given Notice with respect to the next succeeding Dividend Period
and has not given Notice of Revocation with respect thereto, but Sufficient
Clearing Bids are not made in the Auction for the Series E MAPS (other than
because all shares of Series E MAPS were subject to Submitted Hold Orders) or
such Auction is not held for any reason, such next succeeding Dividend Period
will, notwithstanding such Notice, be a Standard Dividend Period and the Company
may not again give a Notice (and such Notice shall be null and void) until
Sufficient Clearing Bids have been made in an Auction of a series of MAPS or an
Auction has been held in which all shares of a series of MAPS were subject to
Submitted Hold Orders.
(d) Prior to each Dividend Payment Date for the Series E MAPS, the Company
shall deposit with the Auction Agent sufficient funds for the payment of
declared dividends.
Each dividend will be payable to the holder or holders of record of Series E
MAPS as they appear on the stock books of the Company on the Business Day next
preceding the applicable Dividend Payment Date. Dividends in arrears for any
past Dividend Period (and for any past Dividend Quarter during a Long Dividend
Period) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the holder or holders of record of the Series E MAPS.
Any dividend payment made shall first be credited against the dividends
accumulated with respect to the earliest Dividend Period (or, if applicable, the
earliest Dividend Quarter) for which dividends have not been paid. So long as
the Series E MAPS are held of record by the nominee of the Securities
Depositary, dividends will be paid to the nominee of the Securities Depositary
on each Dividend Payment Date. The Securities Depositary will credit the
accounts of the Agent Members of Existing Holders in accordance with the
Securities Depositary's normal procedures, which now
8
<PAGE>
provide for payments in next-day funds settled through the New York Clearing
House. The Agent Member of an Existing Holder will be responsible for holding
or disbursing such payments to Existing Holders in accordance with the
instructions of such Existing Holders.
Holders of shares of the Series E MAPS shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends. No dividends will be declared or paid or set apart for
payment on the Series E MAPS for any period unless full cumulative dividends
have been or contemporaneously are declared and paid on all series of MAPS
through the most recent applicable Dividend Payment Date for such series of
MAPS. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series E MAPS which may be in
arrears.
So long as any MAPS are Outstanding, the Company shall not declare, pay or
set aside for payment any dividend or other distribution in respect of Junior
Capital Stock or call for redemption, redeem, purchase or otherwise acquire for
consideration any shares of Junior Capital Stock unless (i) full cumulative
dividends for all past Dividend Periods (and, if applicable, for all past
Dividend Quarters) and all Dividend Payment Dates occurring on or prior to the
date of the transaction shall have been declared and paid (or declared and a sum
sufficient for payment of the dividends set apart for payment) on all such MAPS
Outstanding and (ii) the Company has redeemed (or set apart for payment a sum
sufficient for redemption) the full number of MAPS required to be redeemed after
giving any notice of an optional redemption.
The amount of dividends per share on Series E MAPS payable for each Dividend
Period (or for each Dividend Quarter) shall be computed by multiplying the
Applicable Rate for each Dividend Period (or Dividend Quarter) by a fraction,
the numerator of which shall be the number of days in the Dividend Period (or
Dividend Quarter) (calculated by counting both the last day and the first day
thereof) such share was Outstanding, and the denominator of which shall be 360
and multiplying the amount so obtained by $100,000.
(e) The dividend rate for each Dividend Period subsequent to the Initial
Dividend Period for the Series E MAPS will be, except as provided below, the
Applicable Rate.
Notwithstanding the results of any Auction or any other provision herein,
the dividend rate on the Series E MAPS shall not exceed the Maximum Applicable
Rate for any Dividend Period. The provisions of the previous sentence of this
paragraph notwithstanding, at any time that the application of the provisions of
the next paragraph would result in a dividend rate on the Series E MAPS being in
excess of the Maximum Applicable Rate, the maximum dividend rate applicable to
such Series E MAPS shall be such higher dividend rate as provided below.
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on the Series E MAPS or (ii)
on the Business Day next preceding any redemption date, the full redemption
price (including accumulated and unpaid dividends) to be paid on such redemption
date for any share of the Series E MAPS (in each case referred to as a "Failure
to Deposit"), then, until the full amount due shall have been paid to the
Auction Agent, Auctions will be suspended and the Applicable Rate for such
Series shall be the Default
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Rate as determined as of the Business Day preceding the Failure to Deposit. If
such Failure to Deposit is cured within three Business Days as provided below,
the Applicable Rate for the Dividend Period commencing on the second Business
Day following such cure will be based upon the results of an Auction to be held
on the Business Day next succeeding such cure. Unless such a cure is effected,
the Default Rate shall continue in effect until there shall occur a Dividend
Payment Date at least two Business Days prior to which the full amount of any
dividends (whether or not earned or declared) payable on each Dividend Payment
Date prior to and including such Dividend Payment Date, and the full amount of
any redemption price (including accumulated and unpaid dividends) then due,
shall have been paid to the Auction Agent, and thereupon Auctions shall resume
on the terms stated herein for Dividend Periods commencing with such Dividend
Payment Date. If an Auction is not held on an Auction Date for any reason
(other than the suspension of Auctions due to a Failure to Deposit), the
dividend rate for the applicable Dividend Period shall be the Maximum Applicable
Rate determined as of such Auction Date.
Any Failure to Deposit with respect to the Series E MAPS shall be deemed to
be cured if, within three Business Days of such Failure to Deposit, with respect
to a Failure to Deposit relating to (a) the payment of dividends, the Company
deposits with the Auction Agent by 12:00 noon, New York City time, all
accumulated and unpaid dividends on the Series E MAPS, including the full amount
of any dividends to be paid with respect to the Dividend Period with respect to
which the Failure to Deposit occurred, plus an amount computed by multiplying
the Default Rate by a fraction, the numerator of which shall be the number of
days during the period from the Dividend Payment Date in respect of which such
Failure to Deposit occurred through the day preceding the Business Day next
succeeding the Auction held following such cure and the denominator of which
shall be 360, and applying the rate obtained against the aggregate liquidation
preference of the Series E MAPS and (b) the redemption of shares of Series E
MAPS, the deposit by the Company with the Auction Agent, by 12:00 noon, New York
City time, of funds sufficient for the redemption of such shares (including
accumulated and unpaid dividends), plus an amount computed by multiplying the
Default Rate by a fraction, the numerator of which shall be the number of days
for which such Failure to Deposit is not cured in accordance with this paragraph
(including the day such Failure to Deposit occurs and excluding the day such
Failure to Deposit is cured) and the denominator of which shall be 360, and
applying the rate obtained against the aggregate liquidation preference of the
shares of Series E MAPS to be redeemed, and the giving of irrevocable
instructions by the Company to apply such funds and, if applicable, the income
and proceeds therefrom, to the payment of the redemption price (including
accumulated and unpaid dividends) for such shares of the Series E MAPS. If the
Company shall have cured such Failure to Deposit by making timely payment to the
Auction Agent, the Auction Agent shall give telephonic and written notice of
such cure to each Existing Holder of MAPS at the telephone number and address
specified in such Existing Holder's Master Purchaser's Letter and to each
Broker-Dealer as promptly as practicable after such cure is effected and
schedule an Auction for such Series for the next Business Day.
Section 3. Redemption.
The Series E MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series E MAPS may be redeemed, in
whole or from time to time in part, out of funds legally available therefor, on
any Dividend Payment Date for the Series E MAPS,
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upon at least fifteen but not more than 45 days' notice, at a redemption price
per share equal to the sum of $100,000 plus an amount equal to accumulated and
unpaid dividends thereon (whether or not earned or declared) to the date that
the Company pays the full amount payable upon redemption of the shares of Series
E MAPS. The Company may only redeem Series E MAPS in whole shares. Pursuant to
such right of optional redemption, the Company may elect to redeem some or all
of the shares of Series E MAPS without redeeming shares of any other series of
MAPS or redeem some or all of the shares of any other series of MAPS without
redeeming shares of Series E MAPS. In the event of a partial redemption, the
shares to be redeemed shall be selected by the Company or, at the Company's
request, the Auction Agent by lot or by such other method as such Person shall
deem fair and equitable.
Upon any date fixed for redemption (unless a Failure to Deposit occurs), all
rights of the holders of shares of Series E MAPS called for redemption will
cease and terminate, except the right of such holders to receive the amounts
payable in respect of such redemption therefor, but without interest, and such
shares of the Series E MAPS will be deemed no longer Outstanding.
So long as all of the Series E MAPS to be redeemed are held of record by a
nominee of the Securities Depositary, the redemption price (including
accumulated and unpaid dividends) for such shares of the Series E MAPS will be
paid by the Company to the Securities Depositary on the redemption date for
distribution to Agent Members in accordance with its normal procedures.
(b) Any shares of Series E MAPS which shall at any time have been redeemed
or purchased by the Company shall, after such redemption or purchase, be
restored to the status of authorized but unissued shares, undesignated as to
series, in the manner provided by the laws of the State of California.
Section 4. Conversion or Exchange.
The holders of shares of Series E MAPS shall not have any rights to convert
such shares into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of the Capital Stock of
the Company or into any other securities of the Company.
Section 5. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of the Series E MAPS will be
entitled to receive, out of the assets of the Company available for distribution
to shareholders after satisfying claims of creditors but before any payment or
distribution of assets is made to holders of Junior Capital Stock, a
preferential liquidation distribution in the amount of $100,000 per share plus
an amount equal to accumulated and unpaid dividends on each such share (whether
or not declared) to and including the date of such distribution. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the assets of the Company are insufficient to pay the holders of the Series E
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series E MAPS will share ratably in any such
distribution of such assets with holders of Parity Capital Stock. Unless and
until payment in full has been made to holders of the Series E MAPS of the
liquidation distributions to which they are entitled as described in this
paragraph, no dividends or distributions will be made to holders of the
Company's Junior Capital Stock, and no purchase, redemption or other acquisition
for any consideration by the Company will be made in respect of the Company's
Junior Capital Stock. After the payment to the holders of the Series E MAPS of
the full amount of the preferential liquidation distributions to which they are
entitled pursuant to this paragraph, such holders (in their capacity as such
holders) will have no right or claim to any of the remaining assets of the
Company. Neither the consolidation nor the merger of the Company with or into
any other corporation or corporations, nor the sale or transfer by the Company
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Company for purposes of this Section 5.
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Section 6. Voting Rights.
(a) Holders of the Series E MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series E MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series E
MAPS which are then exercisable (the Series E MAPS and all such other securities
being referred to as the "Parity Securities") shall be in arrears for at least
180 consecutive days and shall not have been paid in full (a "Default Period"),
the holders of record of the Parity Securities voting as described below will be
entitled to elect two directors to the Board of Directors (the "Additional
Directors") whether or not the Board of Directors of the Company has taken
appropriate action to increase the established number of directors of the
Company by two, and the holders of the Common Stock as a class, shall be
entitled to elect the remaining number of directors. If the Board of Directors
has not taken appropriate action to authorize an increase in the number of
directors by two and there are not two vacancies then existing on the Board of
Directors, then, upon the election of the two Additional Directors as provided
below, the term of all previously sitting directors shall cease (a "Termination
of Directors").
As soon as practicable after the beginning of a Default Period (or a
reinstatement of the voting rights of holders of Parity Securities as provided
herein), the Board of Directors of the Company will call or cause to be called a
special meeting of the holders of Parity Securities and, in the case of a
Termination of Directors, all holders of Capital Stock of the Company entitled
to vote for the election of directors generally ("Other Voting Securities"), by
mailing or causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date such
notice is given. If the Board of Directors of the Company does not call or cause
to be called such a special meeting, it may be called by any of such holders on
like notice. The record date for determining the holders of the Parity
Securities and, if applicable, Other Voting Securities entitled to notice of and
to vote at such special meeting will be the close of business on the Business
Day preceding the day on which such notice is mailed. At any such special
meeting, the holders of Parity Securities, by plurality vote, voting together as
a single class without regard to series (to the exclusion of the holders of
Junior Capital Stock) will be entitled to elect the two Additional Directors on
the basis of one vote per $100,000 liquidation preference (excluding amounts in
respect of accumulated and unpaid dividends) and, in the case of a Termination
of Directors, the holders of Other Voting Securities shall be entitled to elect
the remaining members of the Board of Directors in the same manner as if such
election had occurred at an annual meeting of the Company. The holder or holders
of one-third of the Parity Securities then outstanding, present in person or by
proxy, will constitute a quorum for the election of the Additional Directors
except as otherwise provided by law. Notice of all meetings at which holders of
the Series E MAPS shall be entitled to vote will be given to such holders at
their addresses as they appear on the register of the Company. If a Default
Period shall terminate after the notice of a special meeting has been given but
before such special meeting has been held, the Company shall, as soon as
practicable after such termination, mail or cause to be mailed notice of such
termination to holders of the Parity Securities and, if applicable, Other Voting
Securities that would have been entitled to vote at such special meeting.
So long as a Default Period continues, (i) any vacancy in the office of an
Additional Director may be filled (except as provided in the following clause
(ii)) by the person appointed in an instrument in writing signed by the
remaining Additional Director and filed with the Secretary of the Company or, in
the event there is no remaining Additional Director, by vote of the holders of
the outstanding Parity Securities, voting together as a single class without
regard to series, in a meeting of shareholders or at a meeting of holders of
Parity Securities called for such purpose, and (ii) in the case of the removal
of any Additional Director, the vacancy may be filled by appointment by the
person elected by the vote of the holders of the outstanding Parity Securities,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted upon or any subsequent meeting. Each
director who shall be elected or appointed by the remaining Additional Director
as aforesaid shall be an Additional Director.
At such time as a Default Period shall terminate, (i) the term of office of
the Additional Directors shall terminate and (ii) the voting rights of the
holders of the Parity Securities to elect directors shall cease (subject to the
occurrence of a subsequent Default Period).
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(b) Except as provided below, so long as any Series E MAPS remain
Outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of all of the MAPS then outstanding (taken together as a single
class), given in person or by proxy, either in writing or at a meeting (voting
separately as a single class), (i) authorize, create or issue, or increase the
authorized amount of, any Capital Stock of the Company of any class ranking, as
to dividends or upon the liquidation, dissolution or winding up of the Company,
prior to the Series E MAPS, or reclassify any authorized Capital Stock of the
Company into any such Capital Stock, or authorize, create or issue any
obligation or security convertible into or evidencing the right to purchase any
such Capital Stock, or (ii) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation, share
exchange, division or otherwise, so as to adversely affect any preference,
limitation or special right of the Series E MAPS.
Except as provided by law, the consent of the holders of the Series E MAPS
is not required and such holders are not entitled to vote upon (i) the
authorization, creation, issuance or increase in the authorized amount of the
Common Stock, additional series of MAPS or any Capital Stock of the Company of
any class ranking, as to dividends and upon the liquidation, dissolution or
winding up of the Company, on a parity with or junior to the Series E MAPS or
(ii) any merger, consolidation, share exchange or division of the Company (or
any successor corporation) with or into another corporation the result of which
is that the Series E MAPS that may be Outstanding from time to time may be
junior to any preferred shares of such corporation as to dividends and upon the
liquidation, dissolution or winding up of the surviving corporation if on or
prior to the date of effectiveness of such merger or consolidation, the Company
shall have given Moody's and S&P written notice of such merger or consolidation
and Moody's and S&P shall have confirmed in writing that the transaction will
not adversely affect the then existing rating for the MAPS. If either Moody's or
S&P shall change its rating categories for preferred stock, then the
determination of whether the transaction will not adversely affect the then
existing rating for the MAPS shall be made based upon the substantially
equivalent new rating categories for preferred stock of such rating agency. If
either Moody's or S&P, or both, shall not make a rating available for the Series
E MAPS necessary to make such a determination or will not confirm whether the
transaction will adversely affect its then existing rating for the Series E
MAPS, such confirmation will be sought from two Substitute Rating Agencies if
they have made ratings available for the Series E MAPS necessary to make the
determination and are willing to make such confirmation or, in the event that
only one such rating agency shall make such ratings available and is willing to
make such confirmation, based upon such rating agency's confirmation.
Section 7. Sinking Fund.
Shares of Series E MAPS are not subject or entitled to the benefit of a
sinking fund.
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ARTICLE THREE
AUCTION PROCEDURES
Section 1. Definitions.
Capitalized terms not defined in this Section 1 shall have the respective
meanings specified in Section 1 of ARTICLE TWO. As used in this ARTICLE THREE,
the following terms have the following meanings:
(a) "Affiliate" means any Person controlled by, in control of or under
common control with the Company.
(b) "Applicable Determining Rate" means, (i) for any Standard Dividend
Period or Short Dividend Period of 183 days or less, the Applicable "AA"
Composite Commercial Paper Rate, (ii) for any Short Dividend Period of 184 to
364 days, the Applicable Treasury Bill Rate and (iii) for any Long Dividend
Period, the Applicable Treasury Note Rate.
(c) "Available Shares of Series E MAPS" has the meaning specified in Section
4(a) of this ARTICLE THREE.
(d) "Bid" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(e) "Bidder" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(f) "Hold Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(g) "Order" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(h) "Sell Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(i) "Submission Deadline" means 1:00 P.M., New York City time, on any
Auction Date or such other time on any Auction Date as may be specified from
time to time by the Auction Agent as the time prior to which each Broker-Dealer
must submit to the Auction Agent in writing all Orders obtained by it for the
Auction to be conducted on such Auction Date.
(j) "Submitted Bid" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(k) "Submitted Hold Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(l) "Submitted Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(m) "Submitted Sell Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(n) "Winning Bid Rate" has the meaning specified in Section 4(a) of this
ARTICLE THREE.
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Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series E
MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information as
to:
(A) the number of Outstanding shares of Series E MAPS, if any, held
by such Existing Holder that such Existing Holder desires to continue to hold
without regard to the Applicable Rate for the next succeeding Dividend
Period;
(B) the number of Outstanding shares of Series E MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell, provided
that the Applicable Rate for the next succeeding Dividend Period is less than
the rate per annum specified by such Existing Holder; and/or
(C) the number of Outstanding shares of Series E MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell without
regard to the Applicable Rate for the next succeeding Dividend Period; and
(ii) each Broker-Dealer, using a list of Potential Holders that shall
be maintained in accordance with the provisions set forth in the Broker-
Dealer Agreement for the purpose of conducting a competitive Auction, shall
contact both Existing Holders and Potential Holders, including Existing
Holders with respect to an offer by any such Existing Holder to purchase
additional shares of Series E MAPS, on such list to notify such Existing
Holders and Potential Holders as to the length of the next Dividend Period
and (A) with respect to any Short Dividend Period or Long Dividend Period,
the Dividend Payment Date(s) and (B) with respect to any Long Dividend
Period, any dates before which shares of Series E MAPS may not be redeemed
and any redemption premium applicable in an optional redemption and to
determine the number of Outstanding shares of Series E MAPS, if any, with
respect to which each such Existing Holder desires to submit an Order and
each such Potential Holder desires to submit a Bid.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i) or (ii) of this Subsection (a) is
hereinafter referred to as an "Order" and each Existing Holder and each
Potential Holder placing an Order is hereinafter referred to as a "Bidder,"
an Order containing the information referred to in clause (i)(A) of this
Subsection (a) is hereinafter referred to as a "Hold Order," an Order
containing the information referred to in clause (i)(B) or (ii) of this
Subsection (a) is hereinafter referred to as a "Bid;" and an Order containing
the information referred to in clause (i)(C) of this Subsection (a) is
hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of Series E MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be less
than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
E MAPS to be determined as set forth in Subsections (a)(iv) and (c) of
Section 5 of this ARTICLE THREE if the Applicable Rate determined on such
Auction Date shall be equal to the rate per annum specified therein; or
(C) a lesser number of Outstanding shares of Series E MAPS to be
determined as set forth in Subsections (b)(iii) and (c) of Section 5 of this
ARTICLE THREE if such specified rate per annum shall be higher than the
Maximum Applicable Rate and Sufficient Clearing Bids do not exist.
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(ii) A Sell Order by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of Series E MAPS specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series
E MAPS to be determined as set forth in Subsections (b)(iii) and (c) of
Section 5 of this ARTICLE THREE if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an irrevocable offer
to purchase:
(A) the number of Outstanding shares of Series E MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
E MAPS to be determined as set forth in Subsections (a)(v) and (d) of Section
5 of this ARTICLE THREE if the Applicable Rate determined on such Auction
Date shall be equal to the rate per annum specified therein.
(c) Orders may be submitted for whole shares of MAPS only. Orders submitted
for fractional shares of MAPS shall not be valid.
Section 3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior to
the Submission Deadline on each Auction Date for the Series E MAPS all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of Outstanding shares of Series E MAPS that
are the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder;
(A) the number of Outstanding shares of Series E MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series E MAPS, if any,
subject to any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(C) the number of Outstanding shares of Series E MAPS, if any,
subject to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(Each "Hold Order," "Bid" or "Sell Order" as submitted or deemed
submitted by a Broker-Dealer is hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the
case may be, or as a "Submitted Order.")
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(b) If any rate per annum specified in any Submitted Bid contains more
than three figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next highest one-thousandth (.001) of 1%.
(c) If one or more Orders covering in the aggregate all of the
Outstanding shares of Series E MAPS held by an Existing Holder are not submitted
to the Auction Agent prior to the Submission Deadline for any reason (including
the failure of a Broker-Dealer to contact such Existing Holder or to submit such
Existing Holder's Order or Orders), such Existing Holder shall be deemed to have
submitted a Hold Order covering the number of Outstanding shares of Series E
MAPS held by such Existing Holder that are not subject to Orders submitted to
the Auction Agent.
(d) A Submitted Order or Submitted Orders of an Existing Holder that cover in
the aggregate more than the number of Outstanding shares of Series E MAPS held
by such Existing Holder will be considered valid in the following order of
priority:
(i) any Submitted Hold Order of such Existing Holder will be considered
valid up to and including the number of Outstanding shares of Series E MAPS
held by such Existing Holder, provided that, if there is more than one such
Submitted Hold Order and the aggregate number of shares of Series E MAPS
subject to such Submitted Hold Orders exceeds the number of Outstanding
shares of Series E MAPS held by such Existing Holder, the number of shares of
Series E MAPS subject to each such Submitted Hold Order will be reduced pro
rata so that such Submitted Hold Orders in the aggregate will cover exactly
the number of Outstanding shares of Series E MAPS held by such Existing
Holder;
(ii) any Submitted Bids of such Existing Holder will be considered
valid (in the ascending order of their respective rates per annum if there is
more than one Submitted Bid of such Existing Holder) for the number of
Outstanding shares of Series E MAPS held by such Existing Holder equal to the
difference between (A) the number of Outstanding shares of Series E MAPS held
by such Existing Holder and (B) the number of Outstanding shares of Series E
MAPS subject to any Submitted Hold Order of such Existing Holder referred to
in clause (d)(i) above (and, if more than one Submitted Bid of such Existing
Holder specifies the same rate per annum and together they cover more than
the remaining number of shares of Series E MAPS that can be the subject of
valid Submitted Bids of such Existing Holder after application of clause
(d)(i) above and of the foregoing portion of this clause (d)(ii) to any
Submitted Bid or Submitted Bids of such Existing Holder specifying a lower
rate or rates per annum, the number of shares of Series E MAPS subject to
each of such Submitted Bids specifying the same rate per annum will be
reduced pro rata so that such Submitted Bids, in the aggregate, cover exactly
such remaining number of Outstanding shares of Series E MAPS of such Existing
Holder);
(iii) any Submitted Sell Order of such Existing Holder will be
considered valid up to and including the excess of the number of Outstanding
shares of Series E MAPS held by such Existing Holder over the sum of (A) the
number of shares of Series E MAPS subject to Submitted Hold Orders by such
Existing Holder referred to in clause (d)(i) above and (B) the number of
shares of Series E MAPS subject to valid Submitted Bids by such Existing
Holder referred to in clause (d)(ii) above; provided that, if there is more
than one Submitted Sell Order of such Existing Holder and the number of
shares of Series E MAPS subject to such Submitted Sell Orders is greater than
such excess, the number of shares of Series E MAPS subject to each of such
Submitted Sell Orders will be reduced pro rata so that such Submitted Sell
Orders, in the aggregate, will cover exactly the number of shares of Series E
MAPS equal to such excess.
The number of Outstanding shares of Series E MAPS, if any, subject to Submitted
Bids of such Existing Holder not valid under clause (d)(ii) above shall be
treated as the subject of a Submitted Bid by a Potential Holder at the rate per
annum specified in such Submitted Bids.
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(e) If there is more than one Submitted Bid by any Potential Holder in any
Auction, each such Submitted Bid shall be considered a separate Submitted Bid
with respect to the rate per annum and number of shares of Series E MAPS
specified therein.
Section 4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date for the
Series E MAPS, the Auction Agent shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers and shall determine:
(i) the excess of the total number of Outstanding shares of Series E
MAPS over the number of shares of Series E MAPS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Shares of Series E MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding
shares of Series E MAPS that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than the
Maximum Applicable Rate exceeds or is equal to the sum of:
(A) the number of Outstanding shares of Series E MAPS that are the
subject of Submitted Bids by Existing Holders specifying one or more rates
per annum higher than the Maximum Applicable Rate, and
(B) the number of Outstanding shares of Series E MAPS that are
subject to Submitted Sell Orders.
(if such excess or such equality exists (other than because the number of
Outstanding shares of Series E MAPS in clauses (A) and (B) above are each
zero because all of the Outstanding shares of Series E MAPS are the subject
of Submitted Hold Orders), there shall exist "Sufficient Clearing Bids" and
such Submitted Bids by Potential Holders shall be hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the winning bid rate (the
"Winning Bid Rate"), which shall be the lowest rate per annum specified in
the Submitted Bids that if:
(A) each Submitted Bid from Existing Holders specifying the Winning Bid
Rate and all other Submitted Bids from Existing Holders specifying lower
rates per annum were accepted, thus entitling such Existing Holders to
continue to hold the shares of Series E MAPS that are the subject of such
Submitted Bids, and
(B) each Submitted Bid from Potential Holders specifying the Winning
Bid Rate and all other Submitted Bids from Potential Holders specifying lower
rates per annum were accepted, thus entitling such Potential Holders to
purchase the shares of Series E MAPS that are the subject of such Submitted
Bids,
would result in such Existing Holders described in subclause (iii)(A) continuing
to hold an aggregate number of Outstanding shares of Series E MAPS that, when
added to the number of Outstanding shares of Series E MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series E MAPS.
(b) In connection with any Auction and promptly after the Auction Agent has
made the determinations pursuant to Subsection (a), the Auction Agent shall
advise the Company of the Maximum
18
<PAGE>
Applicable Rate and, based on such determinations, the Applicable Rate for the
next succeeding Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for the
next succeeding Dividend Period shall be equal to the Winning Bid Rate;
(ii) if Sufficient Clearing Bids do not exist (other than because all of
the Outstanding shares of Series E MAPS are the subject of Submitted Hold
Orders), that the next succeeding Dividend Period will be a Standard Dividend
Period and the Applicable Rate for the next succeeding Dividend Period shall
be equal to the Maximum Applicable Rate for a Standard Dividend Period
determined as of the Business Day immediately preceding such Auction; or
(iii) if all of the Outstanding shares of Series E MAPS are the subject
of Submitted Hold Orders, that the Applicable Rate for the next succeeding
Dividend Period shall be equal to 59% of the Applicable "AA" Composite
Commercial Paper Rate, in the case of Series E MAPS with a Standard Dividend
Period or a Short Dividend Period of 183 days or less, 59% of the Applicable
Treasury Bill Rate in the case of Series E MAPS with a Short Dividend Period
of 184 to 364 days, or 59% of the Applicable Treasury Note Rate in the case
of Series E MAPS with a Long Dividend Period, in effect on the Auction Date.
Section 5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares of Series E MAPS.
Based on the determinations made pursuant to Subsection (a) of Section 4,
the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and
the Auction Agent shall take such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, subject to the provisions of
Subsections (c) and (d), Submitted Bids and Submitted Sell Orders shall be
accepted or rejected in the following order of priority and all other Submitted
Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted and
the Submitted Bid of each of the Existing Holders specifying any rate per
annum that is higher than the Winning Bid Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of Series
E MAPS that are the subject of such Submitted Sell Order or Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the Outstanding
shares of Series E MAPS that are the subject of such Submitted Bid;
(iii) the Submitted Bid of each of the Potential Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted;
(iv) the Submitted Bid of each of the Existing Holders specifying a rate
per annum that is equal to the Winning Bid Rate shall be accepted, thus
entitling each such Existing Holder to continue to hold the Outstanding
shares of Series E MAPS that are the subject of such Submitted Bid, unless
the number of Outstanding shares of Series E MAPS subject to all such
Submitted Bids shall be greater than the number of Outstanding shares of
Series E MAPS ("Remaining Shares of Series E MAPS") equal to the excess of
the Available Shares of Series E MAPS over the number of Outstanding shares
of Series E MAPS subject to Submitted Bids described in Subsections (a)(ii)
and (a)(iii), in which event the Submitted Bids of each such Existing Holder
shall be rejected, and each such Existing Holder
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<PAGE>
shall be required to sell Outstanding shares of Series E MAPS, but only in an
amount equal to the difference between (A) the number of Outstanding shares
of Series E MAPS then held by such Existing Holder subject to such Submitted
Bid and (B) the number of shares of Series E MAPS obtained by multiplying (x)
the number of Remaining Shares of Series E MAPS by (y) a fraction, the
numerator of which shall be the number of Outstanding shares of Series E MAPS
held by such Existing Holder subject to such Submitted Bid and the
denominator of which shall be the aggregate number of Outstanding shares of
Series E MAPS subject to such Submitted Bids made by all such Existing
Holders that specified a rate per annum equal to the Winning Bid Rate; and
(v) the Submitted Bid of each of the Potential Holders specifying a rate
per annum that is equal to the Winning Bid Rate shall be accepted, but only
in an amount equal to the number of Outstanding shares of Series E MAPS
obtained by multiplying (x) the difference between the Available Shares of
Series E MAPS and the number of Outstanding shares of Series E MAPS subject
to Submitted Bids described in Subsections (a)(ii), (a)(iii) and (a)(iv) by
(y) a fraction, the numerator of which shall be the number of Outstanding
shares of Series E MAPS subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of Series E MAPS
subject to such Submitted Bids made by all such Potential Holders that
specified rates per annum equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than because all of
the Outstanding shares of Series E MAPS are subject to Submitted Hold Orders),
subject to the provisions of Subsection (c), Submitted Orders shall be accepted
or rejected as follows in the following order of priority and all other
Submitted Bids of Potential Holders shall be rejected:
(i) the Submitted Bid of each Existing Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus entitling such Existing Holder to continue to hold the
Outstanding shares of Series E MAPS that are the subject of such Submitted
Bid;
(ii) the Submitted Bid of each Potential Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus requiring such Potential Holder to purchase the Outstanding
shares of Series E MAPS that are the subject of such Submitted Bid; and
(iii) the Submitted Bids of each Existing Holder specifying any rate per
annum that is higher than the Maximum Applicable Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of Series
E MAPS that are the subject of such Submitted Bid, and the Submitted Sell
Orders of each Existing Holder shall be accepted, in both cases only in an
amount equal to the difference between (A) the number of Outstanding shares
of Series E MAPS then held by such Existing Holder subject to such Submitted
Bid or Submitted Sell Order and (B) the number of shares of Series E MAPS
obtained by multiplying (x) the difference between the Available Shares of
Series D MAPS and the aggregate number of Outstanding shares of Series E MAPS
subject to Submitted Bids described in Subsections (b)(i) and (b)(ii) by (y)
a fraction, the numerator of which shall be the number of Outstanding shares
of Series E MAPS held by such Existing Holder subject to such Submitted Bid
or Submitted Sell Order and the denominator of which shall be the aggregate
number of Outstanding shares of Series E MAPS subject to all such Submitted
Bids and Submitted Sell Orders.
(c) If, as a result of the procedures described in Subsections (a) or (b),
any Existing Holder would be entitled or required to sell or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
Series E MAPS on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, round up or down the number of shares of
Series E MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series E MAPS will be entitled
or required to be sold or purchased.
20
<PAGE>
(d) If, as a result of the procedures described in Subsection (a), any
Potential Holder would be entitled or required to purchase less than a whole
share of Series E MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series E
MAPS for purchase among Potential Holders so that only whole shares of Series E
MAPS are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing any
shares of Series E MAPS on such Auction Date.
(e) Based on the results of each Auction, the Auction Agent shall determine,
with respect to each Broker-Dealer that submitted Bids or Sell Orders on behalf
of Existing Holders or Potential Holders, the aggregate number of Outstanding
shares of Series E MAPS to be purchased and the aggregate number of Outstanding
shares of Series E MAPS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares of
Series E MAPS to be purchased and such aggregate number of Outstanding shares of
Series E MAPS to be sold differ, the Auction Agent shall determine to which
other Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or Broker-Dealers
acting for one or more sellers such Broker-Dealer shall receive, as the case may
be, Outstanding shares of Series E MAPS.
Section 6. Participation in Auctions.
The Company and its Affiliates shall not submit any Order in any Auction
except as set forth in the next sentence. Any Broker-Dealer that is an
Affiliate of the Company may submit Orders in Auctions but only if such Orders
are not for its own account, except that if such affiliated Broker-Dealer holds
shares of Series E MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series E MAPS.
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series E MAPS only pursuant to a Bid or Sell Order in accordance with the
procedures described in these Auction Procedures or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Master Purchaser's
Letter to a Broker-Dealer, provided that in the case of all transfers other than
pursuant to Auctions such Existing Holder, its Broker-Dealer or its Agent Member
advises the Auction Agent of such transfer and (b) unless otherwise required by
law, shall have the beneficial ownership of the shares of Series E MAPS held by
it maintained in book-entry form by the Securities Depositary in the account of
its Agent Member, which in turn will maintain records of such Existing Holder's
beneficial ownership. All of the Outstanding shares of Series E MAPS of each
Series shall be represented by a single certificate for each Series registered
in the name of the nominee of the Securities Depositary unless otherwise
required by law or unless there is no Securities Depositary. If there is no
Securities Depositary, shares of Series E MAPS shall be registered in the
register of the Company in the name of the Existing Holder thereof and such
Existing Holder thereupon will be entitled to receive a certificate therefor and
be required to deliver a certificate therefor upon transfer or exchange thereof.
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<PAGE>
RESOLVED FURTHER, that the Chairman of the Board, the President or any Vice
President, and the Secretary, the Chief Financial Officer, the Treasurer, or any
Assistant Secretary or Assistant Treasurer of this Company are each authorized
to execute, verify, and file a certificate of determination of preferences in
accordance with California law.
3. The authorized number of shares of Preferred Stock of the Company is
20,000,000, and the number of shares constituting Series E MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on ______
___, 1995.
_____________________________________________
STEVEN F. UDVAR-HAZY, President
_____________________________________________
JULIE I. SACKMAN, Secretary
The undersigned, STEVEN F. UDVAR-HAZY and JULIE I. SACKMAN, the President
and Secretary, respectively, of INTERNATIONAL LEASE FINANCE CORPORATION, each
declares under penalty of perjury that the matters set forth in the foregoing
Certificate are true of his or her own knowledge.
Executed at Los Angeles, California on ________ ___, 1995.
_____________________________________________
STEVEN F. UDVAR-HAZY
_____________________________________________
JULIE I. SACKMAN
22
<PAGE>
EXHIBIT 4.2
CERTIFICATE OF DETERMINATION OF
PREFERENCES OF PREFERRED STOCK OF
INTERNATIONAL LEASE FINANCE CORPORATION,
A CALIFORNIA CORPORATION
The undersigned, Steven F. Udvar-Hazy and Julie I. Sackman hereby certify
that:
1. They are the duly elected and acting President and Secretary,
respectively, of International Lease Finance Corporation (the "Company").
2. Pursuant to authority given by the Company's Restated Articles of
Incorporation, a duly appointed committee (the "Special Committee") of the Board
of Directors of the Company (such committee having been previously authorized to
exercise the powers of the Board of Directors as to the subject matter), has
duly adopted the following recitals and resolutions:
WHEREAS, the Restated Articles of Incorporation of the Company provide for
a class of shares known as Preferred Stock, issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of the Company is authorized to determine
or alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, to fix the number of
shares constituting any such series, and to determine the designation thereof,
or any of them; and
WHEREAS, the Company desires, pursuant to its authority as aforesaid, to
determine and fix the rights, preferences, privileges, and restrictions relating
to a series of said Preferred Stock and the number of shares constituting and
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes
and determines the designation of, the number of shares constituting, and the
rights, preferences, privileges, and restrictions relating to, said series of
Preferred Stock as follows:
ARTICLE ONE
DESIGNATION
Section 1. Designation.
A series of Preferred Stock shall be designated "Market Auction Preferred
Stock, Series F" (the "Series F MAPS").
Section 2. Amount.
The number of shares constituting Series F MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES F MAPS--GENERAL PROVISIONS.
Section 1. Definitions.
As used herein, the following terms have the following meanings:
(a) "Additional Directors" has the meaning specified in Section 6(a) of
this ARTICLE TWO.
(b) "Agent Member" means the member of the Securities Depositary that will
act on behalf of an Existing Holder or a Potential Holder and that is identified
as such in such Existing Holder's or Potential Holder's Master Purchaser's
Letter.
(c) "Applicable 'AA' Composite Commercial Paper Rate," on any date, shall
mean in the case of any Standard Dividend Period or Short Dividend Period of (1)
49 days or more but less than 70 days, the interest equivalent of the 60-day
rate, (2) 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 days or more but less
than 120 days, the interest equivalent of the 90-day rate, (4) 120 days or more
but less than 148 days, the arithmetic average of the interest equivalent of the
90-day and 180-day rates, and (5) 148 days or more but less than 184 days, the
interest equivalent of the 180-day rate, in each case, on commercial paper
placed on behalf of issuers whose corporate bonds are rated "AA" by S&P or "Aa"
by Moody's, or the equivalent of such rating by another rating agency, as made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date. In the event that the
Federal Reserve Bank of New York does not make available any of the foregoing
rates, then such rates shall be the 60-day rate or arithmetic average of such
rates, as the case may be, as quoted on a discount basis or otherwise, by
Commercial Paper Dealers to the Auction Agent as of the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the Applicable "AA" Composite Commercial
Paper Rate, the Applicable "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer (if any) and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the Company to provide
such rate or rates or, if the Company does not select any Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
Paper Dealer (if any). "Substitute Commercial Paper Dealer" means Goldman, Sachs
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers
Inc or their respective affiliates or successors or, if no such dealer furnishes
such quotations, a leading dealer in the commercial paper market selected by the
Company in good faith. For purposes of this definition, the "interest
equivalent" means the equivalent yield on a 360-day basis of a discount-basis
security to an interest-bearing security.
(d) "Applicable Rate" means the rate per annum, resulting from the next
preceding Auction, at which dividends are payable on the shares of Series F MAPS
for any Dividend Period.
(e) "Applicable Treasury Bill Rate" for any Short Dividend Period in excess
of 183 days and "Applicable Treasury Note Rate" for any Long Dividend Period, on
any date, shall mean the interest equivalent of the rate for direct obligations
of the United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Short Dividend Period or Long Dividend
Period, as the case may be, as published weekly by the Board of Governors of the
Federal Reserve System (the "Board") in "Federal Reserve Statistical Release
H.15(519)-Selected Interest Rates," or any successor publication by the Board,
within five Business Days preceding such date. In the event that the Board does
not publish such rate, or if such release is not available, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate will be the arithmetic mean
of the secondary market bid rate as of approximately 3:30 P.M., New York City
time, on the Business Day next preceding such date of the U.S. Government
Securities Dealers furnished to
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<PAGE>
the Auction Agent for the issue of direct obligations of the United States
Treasury, in an aggregate principal amount of at least $1,000,000 with a
remaining maturity equal to, or next lower than, the length of such Short
Dividend Period or Long Dividend Period, as the case may be. If any U.S.
Government Securities Dealer does not quote a rate required to determine the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate shall be determined on the
basis of the quotation or quotations furnished by any Substitute U.S. Government
Securities Dealer or Dealers selected by the Company to provide such rate or
rates or, if the Company does not select any such Substitute U.S. Government
Securities Dealer or Dealers, by the remaining U.S. Government Securities
Dealer (if any). "Substitute U.S. Government Securities Dealers" means Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon
Brothers Inc or their respective affiliates or successors or, if no such dealer
provides such quotes, a leading dealer in the government securities market
selected by the Company in good faith. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis shall be equal to the
quotient of (A) the discount rate divided by (B) the difference between 1.00 and
the discount rate.
(f) "Auction Agent" means Chemical Bank, or its successors, or any other
bank or trust company appointed by a resolution of the Board of Directors of the
Company, or its Special Committee, which enters into an agreement with the
Company to follow the Auction Procedures set forth in ARTICLE THREE hereof.
(g) "Auction Date" means the first Business Day preceding the first day of
a Dividend Period other than the Initial Dividend Period.
(h) "Broker-Dealer" means any broker-dealer, or other entity permitted by
law to perform the functions required of a Broker-Dealer in ARTICLE THREE, that
has been selected by the Company and has entered into a Broker-Dealer Agreement
with the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in ARTICLE THREE.
(j) "Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
New York City are authorized or obligated by law to close.
(k) "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock, whether outstanding on the Date of Original Issue or
thereafter.
(l) "Code" means the Internal Revenue Code of 1986, as amended.
(m) "Commercial Paper Dealers" means Morgan Stanley & Co. Incorporated and
Lehman Brothers Inc. or, in lieu of either thereof, their respective affiliates
or successors.
(n) "Common Stock" means all shares now or hereafter authorized of the
class of Common Stock of the Company presently authorized and any other shares
into which such shares may hereafter be changed from time to time.
(o) "Date of Original Issue" means the date on which the Company initially
issues shares of Series F MAPS.
(p) "Default Period" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
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<PAGE>
(q) "Default Rate" means the Applicable Determining Rate multiplied by the
percentage, shown opposite the lowest Credit Ratings category in the definition
of Maximum Applicable Rate, determined as of the Business Day preceding a
Failure to Deposit.
(r) "Dividend Payment Date" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(s) "Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(t) "Dividend Quarter" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(u) "Dividends-Received Deduction" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(v) "Existing Holder," means a Person who has signed a Master Purchaser's
Letter and is listed as the beneficial owner of shares of Series F MAPS in the
records of the Auction Agent.
(w) "Failure to Deposit" has the meaning specified in Section 2(e) of this
ARTICLE TWO.
(x) "Initial Dividend Payment Date" means _________ __, 1995.
(y) "Initial Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(z) "Initial Dividend Rate" has the meaning specified in Section 2(a) of
this ARTICLE TWO.
(aa) "Junior Capital Stock" means, with respect to the Company, any and all
Capital Stock of the Company ranking junior to the Series F MAPS with respect to
the payment of dividends or the distribution of assets upon liquidation.
(ab) "Long Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(ac) "MAPS" means all shares of each series of the Company's Market Auction
Preferred Stock now or hereafter authorized.
(ad) "Maximum Applicable Rate," on any Auction Date, shall mean the rate
per annum obtained by multiplying the Applicable Determining Rate on such
Auction Date by a percentage determined as set forth below based on the lower of
the credit ratings assigned to the Series F MAPS by Moody's and S&P (or if
Moody's or S&P or both shall not make such rating available, the equivalent of
either or both of such ratings by a Substitute Rating Agency or two Substitute
Rating Agencies, as the case may be, or in the event that only one such rating
shall be available, the percentage shall be based on such rating).
<TABLE>
<CAPTION>
Credit Ratings
-------------- Applicable Percentage
of Applicable
Moody's S&P Determining Rate
--------------------- -------------- ---------------------
<S> <C> <C>
"aa3" or Above AA-- or Above 150%
"a3" to "a1" A-- to A+ 200%
"baa3" to "baa1" BBB-- to BBB+ 225%
Below "baa3" Below BBB-- 275%
</TABLE>
4
<PAGE>
(ae) "Master Purchaser's Letter" means a letter addressed to the Company,
the Auction Agent and a Broker-Dealer in which a Person agrees, among other
things, to offer to purchase, purchase, offer to sell or sell shares of Series F
MAPS as set forth in ARTICLE THREE.
(af) "Minimum Holding Period" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(ag) "Moody's" means Moody's Investors Service, Inc.
(ah) "Normal Dividend Payment Date" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ai) "Notice" has the meaning specified in Section 2(c) of this ARTICLE
TWO.
(aj) "Notice of Long Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(ak) "Notice of Revocation" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(al) "Notice of Short Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(am) "Outstanding" means, as of any date, shares of MAPS theretofore issued
by the Company except, without duplication, (i) any shares of MAPS theretofore
cancelled, delivered to the Company for cancellation or redeemed and (ii) as of
any Auction Date, any shares of MAPS subject to redemption on the next following
Business Day.
(an) "Parity Capital Stock" means any and all shares of Capital Stock of
the Company ranking on a parity with or equal to the Series F MAPS as to the
payment of dividends and distribution of assets.
(ao) "Parity Securities" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(ap) "Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(aq) "Potential Holder" means any Person, including any Existing Holder,
(i) who has executed a Master Purchaser's Letter and (ii) who may be interested
in acquiring shares of Series F MAPS (or, in the case of an Existing Holder,
additional shares of Series F MAPS).
(ar) "Preferred Stock" means all shares now or hereafter authorized of the
class of Preferred Stock, without par value, of the Company, including the
shares of MAPS of any series.
(as) "S&P" means Standard & Poor's Corporation.
(at) "Securities Depositary" means The Depository Trust Company and its
successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
Securities Depositary in connection with shares of Series F MAPS.
(au) "Short Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(av) "Standard Dividend Period" has the meaning specified in Section 2(c)
of this ARTICLE TWO.
(aw) "Subsequent Dividend Period" has the meaning specified in Section 2(c)
of this ARTICLE TWO.
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<PAGE>
(ax) "Subsequent Dividend Period Days" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ay) "Substitute Rating Agency" shall mean a nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Securities Exchange Act of 1934, as amended) selected by the
Company, subject to the approval by Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc., such approval not to be unreasonably withheld.
(az) "Sufficient Clearing Bids" has the meaning specified in Section 4(a)
of ARTICLE THREE.
(ba) "U.S. Government Securities Dealers" shall mean Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. or, in lieu of either thereof, their
respective affiliates or successors.
Section 2. Dividends.
(a) Holders of Series F MAPS shall be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds available
therefor under applicable law and the Restated Articles of Incorporation of the
Company, cumulative cash dividends at the Applicable Rate, determined as set
forth below, payable on the respective dates set forth below that may be
applicable with respect to such Series F MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of _____% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series F
MAPS will be the Applicable Rate, determined as set forth herein, and will be
payable on the respective dates set forth below.
(b) Dividends on the Series F MAPS will accumulate (whether or not
declared) from the Date of Original Issue. Except for the Initial Dividend
Payment Date, dividends on the Series F MAPS with a Standard Dividend Period
will be payable, except as provided below, on each seventh ______ following the
preceding Dividend Payment Date. Dividends on the Series F MAPS with a Short
Dividend Period will be payable, except as provided below, on the day following
the last day of such Short Dividend Period and will also be payable on such
other dates as are established at the time such Short Dividend Period is
determined. Dividends on the Series F MAPS with a Long Dividend Period will be
payable, except as provided below, on the day following the last day of such
Long Dividend Period and on the first day of the fourth calendar month after the
commencement of such Long Dividend Period and quarterly thereafter on the first
day of each applicable month. Each day on which dividends on Series F MAPS would
be payable as determined as set forth in this paragraph but for the adjustments
set forth below is referred to herein as a "Normal Dividend Payment Date."
(i) In the case of dividends payable on Series F MAPS with a Standard
Dividend Period or a Short Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available
to Agent Members the amounts due as dividends on the Series F MAPS in next-
day funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding
such Normal Dividend Payment Date is not a Business Day, then dividends
shall be payable on the first Business Day preceding such Normal Dividend
Payment Date that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on Series F MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal
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Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
(ii) In the case of dividends payable on Series F MAPS with a Long
Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available
to Agent Members the amounts due as dividends on the Series F MAPS in next-
day funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding
such Normal Dividend Payment Date is not a Business Day, then dividends
shall be payable on the first Business Day following such Normal Dividend
Payment Date that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on the Series F MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
Notwithstanding the foregoing, in case of payment in next-day funds, if the
date on which dividends on Series F MAPS would be payable as determined as set
forth in the preceding paragraphs is a day that would result in the number of
days between successive Auction Dates (determined by excluding the first Auction
Date and including the second Auction Date) not being at least equal to the
then-current minimum holding period (currently set forth in Section 246(c) of
the Code) (the "Minimum Holding Period") required for corporate taxpayers to be
entitled to the dividends-received deduction on preferred stock held by
nonaffiliated corporations (currently set forth in Section 243(a) of the Code)
(the "Dividends-Received Deduction"), then dividends on the Series F MAPS shall
be payable on the first Business Day following such date on which dividends
would be so payable that is next succeeded by a Business Day that results in the
number of days between such successive Auction Dates (determined as set forth
above) being at least equal to the then-current Minimum Holding Period.
Each date on which dividends on Series F MAPS shall be payable as
determined as set forth above is referred to herein as a "Dividend Payment
Date". If applicable, the period from the preceding Dividend Payment Date to the
next Dividend Payment Date for Series F MAPS with a Long Dividend Period is
hereby referred to as a "Dividend Quarter." Although any particular Dividend
Payment Date may not occur on the originally scheduled Normal Dividend Payment
Date because of the adjustments set forth above, each succeeding Dividend
Payment Date will be, subject to such adjustments, the date determined as set
forth above as if each preceding Dividend Payment Date had occurred on the
respective originally scheduled Normal Dividend Payment Date.
In addition, notwithstanding the foregoing, in the event of a change in law
altering the Minimum Holding Period, the period of time between Dividend Payment
Dates shall automatically be adjusted so that there shall be a uniform number of
days in subsequent Dividend Periods (such number of days without giving effect
to the adjustment referred to above being referred to herein as the "Subsequent
Dividend Period Days") commencing after the date of such change in law equal to
or to the extent necessary, in excess of the then-current Minimum Holding
Period, provided that the number of Subsequent Dividend Period Days shall not
exceed by more than nine days the length of such then-current Minimum Holding
Period and shall be evenly divisible by seven, and the maximum number of
Subsequent Dividend Period Days, as adjusted pursuant to this provision, in no
event shall exceed 119 days.
(c) After the Initial Dividend Period for the Series F MAPS, each
subsequent Dividend Period will (except for the adjustments for non-Business
Days described above) be 49 days (each such 49-day period, subject to any
adjustment as a result of a change in law altering the Minimum Holding Period as
described
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above, being herein referred to as a "Standard Dividend Period"), unless the
Company specifies that any such subsequent Dividend Period will be a Dividend
Period of 50 to 364 days and consisting of a whole number of weeks (a "Short
Dividend Period") or a Dividend Period of one year or longer (a "Long Dividend
Period"). Each such Standard Dividend Period, Short Dividend Period and Long
Dividend Period (together with the period commencing on the Date of Original
Issue and ending on the Initial Dividend Payment Date for the Series F MAPS (the
"Initial Dividend Period")) being referred to herein as a "Dividend Period."
After the Initial Dividend Period for the Series F MAPS, each successive
Dividend Period will commence on the Dividend Payment Date for the preceding
Dividend Period and will end (i) in the case of a Standard Dividend Period, on
the day preceding the next Dividend Payment Date and (ii) in the case of a Short
Dividend Period or a Long Dividend Period, on the last day of the Short Dividend
Period or the Long Dividend Period specified by the Company in the related
Notice.
The Company may give telephonic and written notice, not less than ten and
not more than 30 days prior to an Auction Date, to the Auction Agent and the
Securities Depositary that the next succeeding Dividend Period will be a Short
Dividend Period (a "Notice of Short Dividend Period") or a Long Dividend Period
(a "Notice of Long Dividend Period" and, together with a Notice of Short
Dividend Period, a "Notice"). Each such Notice will specify (i) the next
succeeding Dividend Period as a Short Dividend Period or a Long Dividend Period,
(ii) the term thereof, (iii) in the case of any Long Dividend Period, additional
redemption provisions or restrictions on redemption, if any, and (iv) the
Dividend Payment Dates; provided that, for any Auction occurring after the
initial Auction, the Company may not give a Notice of a Short Dividend Period or
a Notice of a Long Dividend Period (and any such Notice shall be null and void)
unless Sufficient Clearing Bids were made in the last occurring Auction of any
series of MAPS (or all shares of such series were subject to Submitted Hold
Orders) and full cumulative dividends, if any, for all series of MAPS payable
prior to such date have been paid in full. The Board of Directors of the Company
may establish a Short Dividend Period or a Long Dividend Period for the Series F
MAPS. Notice may be revoked by the Company on or prior to the Business Day prior
to the related Auction Date by telephonic and written notice (a "Notice of
Revocation") to the Auction Agent and the Securities Depositary.
If the Company does not give a Notice with respect to the next succeeding
Dividend Period or gives a Notice of Revocation with respect thereto, such next
succeeding Dividend Period will be a Standard Dividend Period. In addition, if
the Company has given Notice with respect to the next succeeding Dividend Period
and has not given Notice of Revocation with respect thereto, but Sufficient
Clearing Bids are not made in the Auction for the Series F MAPS (other than
because all shares of Series F MAPS were subject to Submitted Hold Orders) or
such Auction is not held for any reason, such next succeeding Dividend Period
will, notwithstanding such Notice, be a Standard Dividend Period and the Company
may not again give a Notice (and such Notice shall be null and void) until
Sufficient Clearing Bids have been made in an Auction of a series of MAPS or an
Auction has been held in which all shares of a series of MAPS were subject to
Submitted Hold Orders.
(d) Prior to each Dividend Payment Date for the Series F MAPS, the Company
shall deposit with the Auction Agent sufficient funds for the payment of
declared dividends.
Each dividend will be payable to the holder or holders of record of Series
F MAPS as they appear on the stock books of the Company on the Business Day next
preceding the applicable Dividend Payment Date. Dividends in arrears for any
past Dividend Period (and for any past Dividend Quarter during a Long Dividend
Period) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the holder or holders of record of the Series F MAPS.
Any dividend payment made shall first be credited against the dividends
accumulated with respect to the earliest Dividend Period (or, if applicable, the
earliest Dividend Quarter) for which dividends have not been paid. So long as
the Series F MAPS are held of record by the nominee of the Securities
Depositary, dividends will be paid to the nominee of the Securities Depositary
on each Dividend Payment Date. The Securities Depositary will credit the
accounts of the Agent Members of Existing Holders in accordance with the
Securities Depositary's normal procedures, which now
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provide for payments in next-day funds settled through the New York Clearing
House. The Agent Member of an Existing Holder will be responsible for holding
or disbursing such payments to Existing Holders in accordance with the
instructions of such Existing Holders.
Holders of shares of the Series F MAPS shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends. No dividends will be declared or paid or set apart for
payment on the Series F MAPS for any period unless full cumulative dividends
have been or contemporaneously are declared and paid on all series of MAPS
through the most recent applicable Dividend Payment Date for such series of
MAPS. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series F MAPS which may be in
arrears.
So long as any MAPS are Outstanding, the Company shall not declare, pay or
set aside for payment any dividend or other distribution in respect of Junior
Capital Stock or call for redemption, redeem, purchase or otherwise acquire for
consideration any shares of Junior Capital Stock unless (i) full cumulative
dividends for all past Dividend Periods (and, if applicable, for all past
Dividend Quarters) and all Dividend Payment Dates occurring on or prior to the
date of the transaction shall have been declared and paid (or declared and a sum
sufficient for payment of the dividends set apart for payment) on all such MAPS
Outstanding and (ii) the Company has redeemed (or set apart for payment a sum
sufficient for redemption) the full number of MAPS required to be redeemed after
giving any notice of an optional redemption.
The amount of dividends per share on Series F MAPS payable for each
Dividend Period (or for each Dividend Quarter) shall be computed by multiplying
the Applicable Rate for each Dividend Period (or Dividend Quarter) by a
fraction, the numerator of which shall be the number of days in the Dividend
Period (or Dividend Quarter) (calculated by counting both the last day and the
first day thereof) such share was Outstanding, and the denominator of which
shall be 360 and multiplying the amount so obtained by $100,000.
(e) The dividend rate for each Dividend Period subsequent to the Initial
Dividend Period for the Series F MAPS will be, except as provided below, the
Applicable Rate.
Notwithstanding the results of any Auction or any other provision herein,
the dividend rate on the Series F MAPS shall not exceed the Maximum Applicable
Rate for any Dividend Period. The provisions of the previous sentence of this
paragraph notwithstanding, at any time that the application of the provisions of
the next paragraph would result in a dividend rate on the Series F MAPS being in
excess of the Maximum Applicable Rate, the maximum dividend rate applicable to
such Series F MAPS shall be such higher dividend rate as provided below.
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on the Series F MAPS or (ii)
on the Business Day next preceding any redemption date, the full redemption
price (including accumulated and unpaid dividends) to be paid on such redemption
date for any share of the Series F MAPS (in each case referred to as a "Failure
to Deposit"), then, until the full amount due shall have been paid to the
Auction Agent, Auctions will be suspended and the Applicable Rate for such
Series shall be the Default
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Rate as determined as of the Business Day preceding the Failure to Deposit. If
such Failure to Deposit is cured within three Business Days as provided below,
the Applicable Rate for the Dividend Period commencing on the second Business
Day following such cure will be based upon the results of an Auction to be held
on the Business Day next succeeding such cure. Unless such a cure is effected,
the Default Rate shall continue in effect until there shall occur a Dividend
Payment Date at least two Business Days prior to which the full amount of any
dividends (whether or not earned or declared) payable on each Dividend Payment
Date prior to and including such Dividend Payment Date, and the full amount of
any redemption price (including accumulated and unpaid dividends) then due,
shall have been paid to the Auction Agent, and thereupon Auctions shall resume
on the terms stated herein for Dividend Periods commencing with such Dividend
Payment Date. If an Auction is not held on an Auction Date for any reason
(other than the suspension of Auctions due to a Failure to Deposit), the
dividend rate for the applicable Dividend Period shall be the Maximum Applicable
Rate determined as of such Auction Date.
Any Failure to Deposit with respect to the Series F MAPS shall be deemed to
be cured if, within three Business Days of such Failure to Deposit, with respect
to a Failure to Deposit relating to (a) the payment of dividends, the Company
deposits with the Auction Agent by 12:00 noon, New York City time, all
accumulated and unpaid dividends on the Series F MAPS, including the full amount
of any dividends to be paid with respect to the Dividend Period with respect to
which the Failure to Deposit occurred, plus an amount computed by multiplying
the Default Rate by a fraction, the numerator of which shall be the number of
days during the period from the Dividend Payment Date in respect of which such
Failure to Deposit occurred through the day preceding the Business Day next
succeeding the Auction held following such cure and the denominator of which
shall be 360, and applying the rate obtained against the aggregate liquidation
preference of the Series F MAPS and (b) the redemption of shares of Series F
MAPS, the deposit by the Company with the Auction Agent, by 12:00 noon, New York
City time, of funds sufficient for the redemption of such shares (including
accumulated and unpaid dividends), plus an amount computed by multiplying the
Default Rate by a fraction, the numerator of which shall be the number of days
for which such Failure to Deposit is not cured in accordance with this paragraph
(including the day such Failure to Deposit occurs and excluding the day such
Failure to Deposit is cured) and the denominator of which shall be 360, and
applying the rate obtained against the aggregate liquidation preference of the
shares of Series F MAPS to be redeemed, and the giving of irrevocable
instructions by the Company to apply such funds and, if applicable, the income
and proceeds therefrom, to the payment of the redemption price (including
accumulated and unpaid dividends) for such shares of the Series F MAPS. If the
Company shall have cured such Failure to Deposit by making timely payment to the
Auction Agent, the Auction Agent shall give telephonic and written notice of
such cure to each Existing Holder of MAPS at the telephone number and address
specified in such Existing Holder's Master Purchaser's Letter and to each
Broker-Dealer as promptly as practicable after such cure is effected and
schedule an Auction for such Series for the next Business Day.
Section 3. Redemption.
The Series F MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series F MAPS may be redeemed, in
whole or from time to time in part, out of funds legally available therefor, on
any Dividend Payment Date for the Series F MAPS,
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upon at least fifteen but not more than 45 days' notice, at a redemption price
per share equal to the sum of $100,000 plus an amount equal to accumulated and
unpaid dividends thereon (whether or not earned or declared) to the date that
the Company pays the full amount payable upon redemption of the shares of Series
F MAPS. The Company may only redeem Series F MAPS in whole shares. Pursuant to
such right of optional redemption, the Company may elect to redeem some or all
of the shares of Series F MAPS without redeeming shares of any other series of
MAPS or redeem some or all of the shares of any other series of MAPS without
redeeming shares of Series F MAPS. In the event of a partial redemption, the
shares to be redeemed shall be selected by the Company or, at the Company's
request, the Auction Agent by lot or by such other method as such Person shall
deem fair and equitable.
Upon any date fixed for redemption (unless a Failure to Deposit occurs),
all rights of the holders of shares of Series F MAPS called for redemption will
cease and terminate, except the right of such holders to receive the amounts
payable in respect of such redemption therefor, but without interest, and such
shares of the Series F MAPS will be deemed no longer Outstanding.
So long as all of the Series F MAPS to be redeemed are held of record by a
nominee of the Securities Depositary, the redemption price (including
accumulated and unpaid dividends) for such shares of the Series F MAPS will be
paid by the Company to the Securities Depositary on the redemption date for
distribution to Agent Members in accordance with its normal procedures.
(b) Any shares of Series F MAPS which shall at any time have been redeemed
or purchased by the Company shall, after such redemption or purchase, be
restored to the status of authorized but unissued shares, undesignated as to
series, in the manner provided by the laws of the State of California.
Section 4. Conversion or Exchange.
The holders of shares of Series F MAPS shall not have any rights to convert
such shares into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of the Capital Stock of
the Company or into any other securities of the Company.
Section 5. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of the Series F MAPS will be
entitled to receive, out of the assets of the Company available for distribution
to shareholders after satisfying claims of creditors but before any payment or
distribution of assets is made to holders of Junior Capital Stock, a
preferential liquidation distribution in the amount of $100,000 per share plus
an amount equal to accumulated and unpaid dividends on each such share (whether
or not declared) to and including the date of such distribution. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the assets of the Company are insufficient to pay the holders of the Series F
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series F MAPS will share ratably in any such
distribution of such assets with holders of Parity Capital Stock. Unless and
until payment in full has been made to holders of the Series F MAPS of the
liquidation distributions to which they are entitled as described in this
paragraph, no dividends or distributions will be made to holders of the
Company's Junior Capital Stock, and no purchase, redemption or other acquisition
for any consideration by the Company will be made in respect of the Company's
Junior Capital Stock. After the payment to the holders of the Series F MAPS of
the full amount of the preferential liquidation distributions to which they are
entitled pursuant to this paragraph, such holders (in their capacity as such
holders) will have no right or claim to any of the remaining assets of the
Company. Neither the consolidation nor the merger of the Company with or into
any other corporation or corporations, nor the sale or transfer by the Company
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Company for purposes of this Section 5.
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Section 6. Voting Rights.
(a) Holders of the Series F MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series F MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series F
MAPS which are then exercisable (the Series F MAPS and all such other securities
being referred to as the "Parity Securities") shall be in arrears for at least
180 consecutive days and shall not have been paid in full (a "Default Period"),
the holders of record of the Parity Securities voting as described below will be
entitled to elect two directors to the Board of Directors (the "Additional
Directors") whether or not the Board of Directors of the Company has taken
appropriate action to increase the established number of directors of the
Company by two, and the holders of the Common Stock as a class, shall be
entitled to elect the remaining number of directors. If the Board of Directors
has not taken appropriate action to authorize an increase in the number of
directors by two and there are not two vacancies then existing on the Board of
Directors, then, upon the election of the two Additional Directors as provided
below, the term of all previously sitting directors shall cease (a "Termination
of Directors").
As soon as practicable after the beginning of a Default Period (or a
reinstatement of the voting rights of holders of Parity Securities as provided
herein), the Board of Directors of the Company will call or cause to be called a
special meeting of the holders of Parity Securities and, in the case
of a Termination of Directors, all holders of Capital Stock of the Company
entitled to vote for the election of directors generally ("Other Voting
Securities"), by mailing or causing to be mailed to such holders a notice of
such special meeting to be held not less than ten and not more than 45 days
after the date such notice is given. If the Board of Directors of the Company
does not call or cause to be called such a special meeting, it may be called by
any of such holders on like notice. The record date for determining the holders
of the Parity Securities and, if applicable, Other Voting Securities entitled to
notice of and to vote at such special meeting will be the close of business on
the Business Day preceding the day on which such notice is mailed. At any such
special meeting, the holders of Parity Securities, by plurality vote, voting
together as a single class without regard to series (to the exclusion of the
holders of Junior Capital Stock) will be entitled to elect the two Additional
Directors on the basis of one vote per $100,000 liquidation preference
(excluding amounts in respect of accumulated and unpaid dividends) and, in the
case of a Termination of Directors, the holders of Other Voting Securities shall
be entitled to elect the remaining members of the Board of Directors in the same
manner as if such election had occured at an annual meeting of the Company. The
holder or holders of one-third of the Parity Securities then outstanding,
present in person or by proxy, will constitute a quorum for the election of the
Additional Directors except as otherwise provided by law. Notice of all meetings
at which holders of the Series F MAPS shall be entitled to vote will be given to
such holders at their addresses as they appear on the register of the Company.
If a Default Period shall terminate after the notice of a special meeting has
been given but before such special meeting has been held, the Company shall, as
soon as practicable after such termination, mail or cause to be mailed notice of
such termination to holders of the Parity Securities and, if applicable, Other
Voting Securities that would have been entitled to vote at such special meeting.
So long as a Default Period continues, (i) any vacancy in the office of an
Additional Director may be filled (except as provided in the following clause
(ii)) by the person appointed in an instrument in writing signed by the
remaining Additional Director and filed with the Secretary of the Company or, in
the event there is no remaining Additional Director, by vote of the holders of
the outstanding Parity Securities, voting together as a single class without
regard to series, in a meeting of shareholders or at a meeting of holders of
Parity Securities called for such purpose, and (ii) in the case of the removal
of any Additional Director, the vacancy may be filled by appointment by the
person elected by the vote of the holders of the outstanding Parity Securities,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted upon or any subsequent meeting. Each
director who shall be elected or appointed by the remaining Additional Director
as aforesaid shall be an Additional Director.
At such time as a Default Period shall terminate, (i) the term of office of
the Additional Directors shall terminate and (ii) the voting rights of the
holders of the Parity Securities to elect directors shall cease (subject to the
occurrence of a subsequent Default Period).
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(b) Except as provided below, so long as any Series F MAPS remain
Outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of all of the MAPS then outstanding (taken together as a single
class), given in person or by proxy, either in writing or at a meeting (voting
separately as a single class), (i) authorize, create or issue, or increase the
authorized amount of, any Capital Stock of the Company of any class ranking, as
to dividends or upon the liquidation, dissolution or winding up of the Company,
prior to the Series F MAPS, or reclassify any authorized Capital Stock of the
Company into any such Capital Stock, or authorize, create or issue any
obligation or security convertible into or evidencing the right to purchase any
such Capital Stock, or (ii) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation, share
exchange, division or otherwise, so as to adversely affect any preference,
limitation or special right of the Series F MAPS.
Except as provided by law, the consent of the holders of the Series F MAPS
is not required and such holders are not entitled to vote upon (i) the
authorization, creation, issuance or increase in the authorized amount of the
Common Stock, additional series of MAPS or any Capital Stock of the Company of
any class ranking, as to dividends and upon the liquidation, dissolution or
winding up of the Company, on a parity with or junior to the Series F MAPS or
(ii) any merger, consolidation, share exchange or division of the Company (or
any successor corporation) with or into another corporation the result of which
is that the Series F MAPS that may be Outstanding from time to time may be
junior to any preferred shares of such corporation as to dividends and upon the
liquidation, dissolution or winding up of the surviving corporation if on or
prior to the date of effectiveness of such merger or consolidation, the Company
shall have given Moody's and S&P written notice of such merger or consolidation
and Moody's and S&P shall have confirmed in writing that the transaction will
not adversely affect the then existing rating for the MAPS. If either Moody's or
S&P shall change its rating categories for preferred stock, then the
determination of whether the transaction will not adversely affect the then
existing rating for the MAPS shall be made based upon the substantially
equivalent new rating categories for preferred stock of such rating agency. If
either Moody's or S&P, or both, shall not make a rating available for the Series
F MAPS necessary to make such a determination or will not confirm whether the
transaction will adversely affect its then existing rating for the Series F
MAPS, such confirmation will be sought from two Substitute Rating Agencies if
they have made ratings available for the Series F MAPS necessary to make the
determination and are willing to make such confirmation or, in the event that
only one such rating agency shall make such ratings available and is willing to
make such confirmation, based upon such rating agency's confirmation.
Section 7. Sinking Fund.
Shares of Series F MAPS are not subject or entitled to the benefit of a
sinking fund.
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ARTICLE THREE
AUCTION PROCEDURES
Section 1. Definitions.
Capitalized terms not defined in this Section 1 shall have the respective
meanings specified in Section 1 of ARTICLE TWO. As used in this ARTICLE THREE,
the following terms have the following meanings:
(a) "Affiliate" means any Person controlled by, in control of or under
common control with the Company.
(b) "Applicable Determining Rate" means, (i) for any Standard Dividend
Period or Short Dividend Period of 183 days or less, the Applicable "AA"
Composite Commercial Paper Rate, (ii) for any Short Dividend Period of 184 to
364 days, the Applicable Treasury Bill Rate and (iii) for any Long Dividend
Period, the Applicable Treasury Note Rate.
(c) "Available Shares of Series F MAPS" has the meaning specified in
Section 4(a) of this ARTICLE THREE.
(d) "Bid" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(e) "Bidder" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(f) "Hold Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(g) "Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(h) "Sell Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(i) "Submission Deadline" means 1:00 P.M., New York City time, on any
Auction Date or such other time on any Auction Date as may be specified from
time to time by the Auction Agent as the time prior to which each Broker-Dealer
must submit to the Auction Agent in writing all Orders obtained by it for the
Auction to be conducted on such Auction Date.
(j) "Submitted Bid" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(k) "Submitted Hold Order" has the meaning specified in Section 3(a) of
this ARTICLE THREE.
(l) "Submitted Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(m) "Submitted Sell Order" has the meaning specified in Section 3(a) of
this ARTICLE THREE.
(n) "Winning Bid Rate" has the meaning specified in Section 4(a) of this
ARTICLE THREE.
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Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series F
MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information a s
to:
(A) the number of Outstanding shares of Series F MAPS, if any, held
by such Existing Holder that such Existing Holder desires to continue to
hold without regard to the Applicable Rate for the next succeeding Dividend
Period;
(B) the number of Outstanding shares of Series F MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell, provided
that the Applicable Rate for the next succeeding Dividend Period is less
than the rate per annum specified by such Existing Holder; and/or
(C) the number of Outstanding shares of Series F MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell without
regard to the Applicable Rate for the next succeeding Dividend Period; and
(ii) each Broker-Dealer, using a list of Potential Holders that shall
be maintained in accordance with the provisions set forth in the Broker-
Dealer Agreement for the purpose of conducting a competitive Auction, shall
contact both Existing Holders and Potential Holders, including Existing
Holders with respect to an offer by any such Existing Holder to purchase
additional shares of Series F MAPS, on such list to notify such Existing
Holders and Potential Holders as to the length of the next Dividend Period
and (A) with respect to any Short Dividend Period or Long Dividend Period,
the Dividend Payment Date(s) and (B) with respect to any Long Dividend
Period, any dates before which shares of Series F MAPS may not be redeemed
and any redemption premium applicable in an optional redemption and to
determine the number of Outstanding shares of Series F MAPS, if any, with
respect to which each such Existing Holder desires to submit an Order and
each such Potential Holder desires to submit a Bid.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i) or (ii) of this Subsection (a) is
hereinafter referred to as an "Order" and each Existing Holder and each
Potential Holder placing an Order is hereinafter referred to as a "Bidder,"
an Order containing the information referred to in clause (i)(A) of this
Subsection (a) is hereinafter referred to as a "Hold Order," an Order
containing the information referred to in clause (i)(B) or (ii) of this
Subsection (a) is hereinafter referred to as a "Bid;" and an Order
containing the information referred to in clause (i)(C) of this Subsection
(a) is hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of Series F MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
less than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
F MAPS to be determined as set forth in Subsections (a)(iv) and (c) of
Section 5 of this ARTICLE THREE if the Applicable Rate determined on such
Auction Date shall be equal to the rate per annum specified therein; or
(C) a lesser number of Outstanding shares of Series F MAPS to be
determined as set forth in Subsections (b)(iii) and (c) of Section 5 of
this ARTICLE THREE if such specified rate per annum shall be higher than
the Maximum Applicable Rate and Sufficient Clearing Bids do not exist.
15
<PAGE>
(ii) A Sell Order by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of Series F MAPS specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series
F MAPS to be determined as set forth in Subsections (b)(iii) and (c) of
Section 5 of this ARTICLE THREE if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an irrevocable offer
to purchase:
(A) the number of Outstanding shares of Series F MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
F MAPS to be determined as set forth in Subsections (a)(v) and (d) of
Section 5 of this ARTICLE THREE if the Applicable Rate determined on such
Auction Date shall be equal to the rate per annum specified therein.
(c) Orders may be submitted for whole shares of MAPS only. Orders submitted
for fractional shares of MAPS shall not be valid.
Section 3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior
to the Submission Deadline on each Auction Date for the Series F MAPS all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of Outstanding shares of Series F MAPS that
are the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder;
(A) the number of Outstanding shares of Series F MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series F MAPS, if any,
subject to any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(C) the number of Outstanding shares of Series F MAPS, if any,
subject to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(Each "Hold Order," "Bid" or "Sell Order" as submitted or deemed
submitted by a Broker-Dealer is hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as
the case may be, or as a "Submitted Order.")
16
<PAGE>
(b) If any rate per annum specified in any Submitted Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(c) If one or more Orders covering in the aggregate all of the Outstanding
shares of Series F MAPS held by an Existing Holder are not submitted to the
Auction Agent prior to the Submission Deadline for any reason (including the
failure of a Broker-Dealer to contact such Existing Holder or to submit such
Existing Holder's Order or Orders), such Existing Holder shall be deemed to have
submitted a Hold Order covering the number of Outstanding shares of Series F
MAPS held by such Existing Holder that are not subject to Orders submitted to
the Auction Agent.
(d) A Submitted Order or Submitted Orders of an Existing Holder that cover
in the aggregate more than the number of Outstanding shares of Series F MAPS
held by such Existing Holder will be considered valid in the following order of
priority:
(i) any Submitted Hold Order of such Existing Holder will be considered
valid up to and including the number of Outstanding shares of Series F MAPS
held by such Existing Holder, provided that, if there is more than one such
Submitted Hold Order and the aggregate number of shares of Series F MAPS
subject to such Submitted Hold Orders exceeds the number of Outstanding
shares of Series F MAPS held by such Existing Holder, the number of shares
of Series F MAPS subject to each such Submitted Hold Order will be reduced
pro rata so that such Submitted Hold Orders in the aggregate will cover
exactly the number of Outstanding shares of Series F MAPS held by such
Existing Holder;
(ii) any Submitted Bids of such Existing Holder will be considered
valid (in the ascending order of their respective rates per annum if there
is more than one Submitted Bid of such Existing Holder) for the number of
Outstanding shares of Series F MAPS held by such Existing Holder equal to
the difference between (A) the number of Outstanding shares of Series F
MAPS held by such Existing Holder and (B) the number of Outstanding shares
of Series F MAPS subject to any Submitted Hold Order of such Existing
Holder referred to in clause (d)(i) above (and, if more than one Submitted
Bid of such Existing Holder specifies the same rate per annum and together
they cover more than the remaining number of shares of Series F MAPS that
can be the subject of valid Submitted Bids of such Existing Holder after
application of clause (d)(i) above and of the foregoing portion of this
clause (d)(ii) to any Submitted Bid or Submitted Bids of such Existing
Holder specifying a lower rate or rates per annum, the number of shares of
Series F MAPS subject to each of such Submitted Bids specifying the same
rate per annum will be reduced pro rata so that such Submitted Bids, in the
aggregate, cover exactly such remaining number of Outstanding shares of
Series F MAPS of such Existing Holder);
(iii) any Submitted Sell Order of such Existing Holder will be
considered valid up to and including the excess of the number of
Outstanding shares of Series F MAPS held by such Existing Holder over the
sum of (A) the number of shares of Series F MAPS subject to Submitted Hold
Orders by such Existing Holder referred to in clause (d)(i) above and (B)
the number of shares of Series F MAPS subject to valid Submitted Bids by
such Existing Holder referred to in clause (d)(ii) above; provided that, if
there is more than one Submitted Sell Order of such Existing Holder and the
number of shares of Series F MAPS subject to such Submitted Sell Orders is
greater than such excess, the number of shares of Series F MAPS subject to
each of such Submitted Sell Orders will be reduced pro rata so that such
Submitted Sell Orders, in the aggregate, will cover exactly the number of
shares of Series F MAPS equal to such excess.
The number of Outstanding shares of Series F MAPS, if any, subject to Submitted
Bids of such Existing Holder not valid under clause (d)(ii) above shall be
treated as the subject of a Submitted Bid by a Potential Holder at the rate per
annum specified in such Submitted Bids.
17
<PAGE>
(e) If there is more than one Submitted Bid by any Potential Holder in any
Auction, each such Submitted Bid shall be considered a separate Submitted Bid
with respect to the rate per annum and number of shares of Series F MAPS
specified therein.
Section 4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date for the
Series F MAPS, the Auction Agent shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers and shall determine:
(i) the excess of the total number of Outstanding shares of Series F
MAPS over the number of shares of Series F MAPS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Shares of Series F MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding
shares of Series F MAPS that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than the
Maximum Applicable Rate exceeds or is equal to the sum of:
(A) the number of Outstanding shares of Series F MAPS that are the
subject of Submitted Bids by Existing Holders specifying one or more rates
per annum higher than the Maximum Applicable Rate, and
(B) the number of Outstanding shares of Series F MAPS that are
subject to Submitted Sell Orders.
(if such excess or such equality exists (other than because the number of
Outstanding shares of Series F MAPS in clauses (A) and (B) above are each
zero because all of the Outstanding shares of Series F MAPS are the subject
of Submitted Hold Orders), there shall exist "Sufficient Clearing Bids" and
such Submitted Bids by Potential Holders shall be hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the winning bid rate (the
"Winning Bid Rate"), which shall be the lowest rate per annum specified in
the Submitted Bids that if:
(A) each Submitted Bid from Existing Holders specifying the
Winning Bid Rate and all other Submitted Bids from Existing Holders
specifying lower rates per annum were accepted, thus entitling such
Existing Holders to continue to hold the shares of Series F MAPS that are
the subject of such Submitted Bids, and
(B) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential Holders
specifying lower rates per annum were accepted, thus entitling such
Potential Holders to purchase the shares of Series F MAPS that are the
subject of such Submitted Bids,
would result in such Existing Holders described in subclause (iii)(A) continuing
to hold an aggregate number of Outstanding shares of Series F MAPS that, when
added to the number of Outstanding shares of Series F MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series F MAPS.
(b) In connection with any Auction and promptly after the Auction Agent has
made the determinations pursuant to Subsection (a), the Auction Agent shall
advise the Company of the Maximum
18
<PAGE>
Applicable Rate and, based on such determinations, the Applicable Rate for the
next succeeding Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for the
next succeeding Dividend Period shall be equal to the Winning Bid Rate;
(ii) if Sufficient Clearing Bids do not exist (other than because all
of the Outstanding shares of Series F MAPS are the subject of Submitted
Hold Orders), that the next succeeding Dividend Period will be a Standard
Dividend Period and the Applicable Rate for the next succeeding Dividend
Period shall be equal to the Maximum Applicable Rate for a Standard
Dividend Period determined as of the Business Day immediately preceding
such Auction; or
(iii) if all of the Outstanding shares of Series F MAPS are the subject
of Submitted Hold Orders, that the Applicable Rate for the next succeeding
Dividend Period shall be equal to 59% of the Applicable "AA" Composite
Commercial Paper Rate, in the case of Series F MAPS with a Standard
Dividend Period or a Short Dividend Period of 183 days or less, 59% of the
Applicable Treasury Bill Rate in the case of Series F MAPS with a Short
Dividend Period of 184 to 364 days, or 59% of the Applicable Treasury Note
Rate in the case of Series F MAPS with a Long Dividend Period, in effect on
the Auction Date.
Section 5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares of Series F MAPS.
Based on the determinations made pursuant to Subsection (a) of Section 4,
the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and
the Auction Agent shall take such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, subject to the provisions
of Subsections (c) and (d), Submitted Bids and Submitted Sell Orders shall be
accepted or rejected in the following order of priority and all other Submitted
Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted and
the Submitted Bid of each of the Existing Holders specifying any rate per
annum that is higher than the Winning Bid Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of
Series F MAPS that are the subject of such Submitted Sell Order or
Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the
Outstanding shares of Series F MAPS that are the subject of such Submitted
Bid;
(iii) the Submitted Bid of each of the Potential Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted;
(iv) the Submitted Bid of each of the Existing Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the
Outstanding shares of Series F MAPS that are the subject of such Submitted
Bid, unless the number of Outstanding shares of Series F MAPS subject to
all such Submitted Bids shall be greater than the number of Outstanding
shares of Series F MAPS ("Remaining Shares of Series F MAPS") equal to the
excess of the Available Shares of Series F MAPS over the number of
Outstanding shares of Series F MAPS subject to Submitted Bids described in
Subsections (a)(ii) and (a)(iii), in which event the Submitted Bids of each
such Existing Holder shall be rejected, and each such Existing Holder shall
19
<PAGE>
be required to sell Outstanding shares of Series F MAPS, but only in an
amount equal to the difference between (A) the number of Outstanding shares
of Series F MAPS then held by such Existing Holder subject to such
Submitted Bid and (B) the number of shares of Series F MAPS obtained by
multiplying (x) the number of Remaining Shares of Series F MAPS by (y) a
fraction, the numerator of which shall be the number of Outstanding shares
of Series F MAPS held by such Existing Holder subject to such Submitted Bid
and the denominator of which shall be the aggregate number of Outstanding
shares of Series F MAPS subject to such Submitted Bids made by all such
Existing Holders that specified a rate per annum equal to the Winning Bid
Rate; an d
(v) the Submitted Bid of each of the Potential Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted, but
only in an amount equal to the number of Outstanding shares of Series F
MAPS obtained by multiplying (x) the difference between the Available
Shares of Series F MAPS and the number of Outstanding shares of Series F
MAPS subject to Submitted Bids described in Subsections (a)(ii), (a)(iii)
and (a)(iv) by (y) a fraction, the numerator of which shall be the number
of Outstanding shares of Series F MAPS subject to such Submitted Bid and
the denominator of which shall be the aggregate number of Outstanding
shares of Series F MAPS subject to such Submitted Bids made by all such
Potential Holders that specified rates per annum equal to the Winning Bid
Rate.
(b) If Sufficient Clearing Bids have not been made (other than because all
of the Outstanding shares of Series F MAPS are subject to Submitted Hold
Orders), subject to the provisions of Subsection (c), Submitted Orders shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids of Potential Holders shall be rejected:
(i) the Submitted Bid of each Existing Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus entitling such Existing Holder to continue to hold the
Outstanding shares of Series F MAPS that are the subject of such Submitted
Bid;
(ii) the Submitted Bid of each Potential Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus requiring such Potential Holder to purchase the Outstanding
shares of Series F MAPS that are the subject of such Submitted Bid; and
(iii) the Submitted Bids of each Existing Holder specifying any rate
per annum that is higher than the Maximum Applicable Rate shall be
rejected, thus requiring each such Existing Holder to sell the Outstanding
shares of Series F MAPS that are the subject of such Submitted Bid, and the
Submitted Sell Orders of each Existing Holder shall be accepted, in both
cases only in an amount equal to the difference between (A) the number of
Outstanding shares of Series F MAPS then held by such Existing Holder
subject to such Submitted Bid or Submitted Sell Order and (B) the number of
shares of Series F MAPS obtained by multiplying (x) the difference between
the Available Shares of Series D MAPS and the aggregate number of
Outstanding shares of Series F MAPS subject to Submitted Bids described in
Subsections (b)(i) and (b)(ii) by (y) a fraction, the numerator of which
shall be the number of Outstanding shares of Series F MAPS held by such
Existing Holder subject to such Submitted Bid or Submitted Sell Order and
the denominator of which shall be the aggregate number of Outstanding
shares of Series F MAPS subject to all such Submitted Bids and Submitted
Sell Orders.
(c) If, as a result of the procedures described in Subsections (a) or (b),
any Existing Holder would be entitled or required to sell or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
Series F MAPS on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, round up or down the number of shares of
Series F MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series F MAPS will be entitled
or required to be sold or purchased.
20
<PAGE>
(d) If, as a result of the procedures described in Subsection (a), any
Potential Holder would be entitled or required to purchase less than a whole
share of Series F MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series F
MAPS for purchase among Potential Holders so that only whole shares of Series F
MAPS are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing any
shares of Series F MAPS on such Auction Date.
(e) Based on the results of each Auction, the Auction Agent shall
determine, with respect to each Broker-Dealer that submitted Bids or Sell Orders
on behalf of Existing Holders or Potential Holders, the aggregate number of
Outstanding shares of Series F MAPS to be purchased and the aggregate number of
Outstanding shares of Series F MAPS to be sold by such Potential Holders and
Existing Holders and, to the extent that such aggregate number of Outstanding
shares of Series F MAPS to be purchased and such aggregate number of Outstanding
shares of Series F MAPS to be sold differ, the Auction Agent shall determine to
which other Broker-Dealer or Broker-Dealers acting for one or more purchasers
such Broker-Dealer shall deliver, or from which other Broker-Dealer or Broker-
Dealers acting for one or more sellers such Broker-Dealer shall receive, as the
case may be, Outstanding shares of Series F MAPS.
Section 6. Participation in Auctions.
The Company and its Affiliates shall not submit any Order in any Auction
except as set forth in the next sentence. Any Broker-Dealer that is an
Affiliate of the Company may submit Orders in Auctions but only if such Orders
are not for its own account, except that if such affiliated Broker-Dealer holds
shares of Series F MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series F MAPS.
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series F MAPS only pursuant to a Bid or Sell Order in accordance with the
procedures described in these Auction Procedures or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Master Purchaser's
Letter to a Broker-Dealer, provided that in the case of all transfers other than
pursuant to Auctions such Existing Holder, its Broker-Dealer or its Agent Member
advises the Auction Agent of such transfer and (b) unless otherwise required by
law, shall have the beneficial ownership of the shares of Series F MAPS held by
it maintained in book-entry form by the Securities Depositary in the account of
its Agent Member, which in turn will maintain records of such Existing Holder's
beneficial ownership. All of the Outstanding shares of Series F MAPS of each
Series shall be represented by a single certificate for each Series registered
in the name of the nominee of the Securities Depositary unless otherwise
required by law or unless there is no Securities Depositary. If there is no
Securities Depositary, shares of Series F MAPS shall be registered in the
register of the Company in the name of the Existing Holder thereof and such
Existing Holder thereupon will be entitled to receive a certificate therefor and
be required to deliver a certificate therefor upon transfer or exchange thereof.
21
<PAGE>
RESOLVED FURTHER, that the Chairman of the Board, the President or any Vice
President, and the Secretary, the Chief Financial Officer, the Treasurer, or any
Assistant Secretary or Assistant Treasurer of this Company are each authorized
to execute, verify, and file a certificate of determination of preferences in
accordance with California law.
3. The authorized number of shares of Preferred Stock of the Company is
20,000,000, and the number of shares constituting Series F MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
_______ ___, 1995.
_____________________________________________
STEVEN F. UDVAR-HAZY, President
_____________________________________________
JULIE I. SACKMAN, Secretary
The undersigned, STEVEN F. UDVAR-HAZY and JULIE I. SACKMAN, the President
and Secretary, respectively, of INTERNATIONAL LEASE FINANCE CORPORATION, each
declares under penalty of perjury that the matters set forth in the foregoing
Certificate are true of his or her own knowledge.
Executed at Los Angeles, California on ________ ___, 1995.
_____________________________________________
STEVEN F. UDVAR-HAZY
_____________________________________________
JULIE I. SACKMAN
22
<PAGE>
Exhibit 5
O'MELVENY & MYERS
400 S. Hope Street
Los Angeles, California 90071
January
13th
1 9 9 5
412,190-014
LA1-645139
International Finance Lease Corporation
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067
Re: Amendment No. 1 to Registration Statement on Form S-3
-----------------------------------------------------
Ladies and Gentlemen:
At your request, we have examined Amendment No. 1 to the Registration
Statement (No. 33-56255) on Form S-3 ("Amendment No. 1") filed by International
Lease Finance Corporation (the "Company") with the Securities and Exchange
Commission on January 13, 1995 in connection with the registration under the
Securities Act of 1933, as amended, of 1,000 shares of Market Auction Preferred
Stock, no par value, of the Company (the "MAPS") to be issued and sold in two
series. We are familiar with the proceedings heretofore taken and proposed to
be taken by the Company in connection with the authorization, registration,
issuance and sale of the MAPS.
Subject to the proposed additional proceedings being taken as now
contemplated by us as your counsel and as contemplated by Amendment No. 1, it is
our opinion that the shares of MAPS will, upon the issuance and sale thereof in
the manner referred to in Amendment No. 1, be validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to Amendment
No. 1.
Respectfully submitted,
O'MELVENY & MYERS
<PAGE>
EXHIBIT 12
COMPUTATION OF RATIOS
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1995
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Earnings:
Net income........................................... $153,418 $107,681
Add:
Provision for income taxes........................... 89,559 73,935
Fixed charges........................................ 300,118 250,049
Less:
Capitalized interest................................. 31,772 29,226
-------- --------
Earnings as adjusted(A).............................. $511,323 $402,439
======== ========
Preferred dividend requirement....................... $ 5,095 $ 1,973
Ratio of income before provision for income taxes
to net income....................................... 158% 169%
-------- --------
Preferred dividend factor on pretax basis............ 8,050 3,334
-------- --------
Fixed Charges:
Interest expense................................... 268,346 220,823
Capitalized interest............................... 31,772 29,226
-------- --------
Fixed charges as adjusted............................ 300,118 250,049
-------- --------
Fixed charges and preferred stock dividends(B)....... $308,168 $253,383
======== ========
Ratio of earnings to fixed charges and preferred
stock dividends (A) divided by (B).................. 1.66x 1.59x
======== ========
</TABLE>
<PAGE>
EXHIBIT 99.1
AUCTION AGENT AGREEMENT
Between
INTERNATIONAL LEASE FINANCE CORPORATION
and
CHEMICAL BANK
Dated as of __________, 1995
Relating to
INTERNATIONAL LEASE FINANCE CORPORATION
Market Auction Preferred Stock
("MAPS")
500 shares of Series E MAPS
500 shares of Series F MAPS
<PAGE>
AUCTION AGENT AGREEMENT, dated as of __________, 1995, between
International Lease Finance Corporation, a California corporation (the
"Company"), and Chemical Bank, a New York corporation (the "Auction
Agent").
WHEREAS, the Company has an authorized share capital which includes
preferred shares and proposes to issue and offer a portion of such preferred
shares as Market Auction Preferred Stock, comprised of 500 shares of Series E
MAPS and 500 shares of Series F MAPS (collectively, the "MAPS").
WHEREAS, the two series of MAPS may be issued on the same date or on
different dates and separate Auctions may be conducted on different Auction
Dates for each series of MAPS.
WHEREAS, the Securities Depositary will initially be the holder of
record of all of the MAPS on behalf of the representatives of investors that
have signed Master Purchaser's Letters and are listed as the beneficial owners
of MAPS in the records of the Auction Agent (the "Existing Holders").
WHEREAS, the Company desires that the Auction Agent perform certain
duties as agent in connection with the MAPS upon the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Company and the Auction Agent agree as follows:
1. Definitions and Rules of Construction.
-------------------------------------
1.1 Terms Defined by Reference to the Designation.
---------------------------------------------
Capitalized terms not defined herein shall have the respective
meanings specified in the Designation.
1.2 Terms Defined Herein.
--------------------
As used herein and in the Settlement Procedures, the following terms
shall have the following meanings, unless the context otherwise requires:
(a) "Affiliate" means any Person controlled by, in control of or
under common control with, the Company.
(b) "Auction" shall have the meaning specified in Section 2.1(a)
hereof.
(c) "Auction Procedures" means the procedures for conducting Auctions
set forth in Appendix B to the Prospectus.
1
<PAGE>
(d) "Authorized MAPS" means all shares of each series of the
Company's Market Auction Preferred Stock now or hereafter authorized.
(e) "Authorized Newspaper" means The Wall Street Journal, or, if The
--- ---- ------ ------- ---
Wall Street Journal shall cease to be published, or, if because of temporary
- ---- ------ -------
suspension of publication or general circulation of The Wall Street Journal, or
--- ---- ------ -------
for any other reason, it is impossible or, in the opinion of the Auction Agent,
impracticable to publish any notice required to be published pursuant to this
Agreement in The Wall Street Journal, such other newspaper, selected by the
--- ---- ------ -------
Auction Agent, of general circulation in The City of New York, the State of New
York, which carries financial news.
(f) "Authorized Officer" means any President, Senior Vice President,
Vice President, Assistant Vice President or Assistant Secretary of the Auction
Agent assigned to its Corporate Trust Group and every other officer or employee
of the Auction Agent designated as an "Authorized Officer" for purposes hereof
in a communication to the Company.
(g) "Board of Directors" shall mean the Board of Directors of the
Company, or any duly authorized committee of the Board of Directors acting on
behalf thereof.
(h) "Broker-Dealer Agreement" means each agreement between the
Auction Agent and a Broker-Dealer substantially in the form of Exhibit A hereto.
(i) "Company Officer" shall mean the Chairman of the Board,
President, any Executive Vice President, each other Vice President (whether or
not designated by a number or word or words added before or after the title
"Vice President"), the Secretary, the Treasurer, the Controller, any Assistant
Treasurer, any Assistant Secretary of the Company and every other officer or
employee of the company designated as a "Company Officer" for purposes hereof in
a notice to the Auction Agent.
(j) "Designation" means the Certificates of Determination of the
Company, designating and establishing the voting rights, preferences,
limitations and special rights of the Series E MAPS and the Series F MAPS,
respectively, as filed by the Company on __________, 1995 in the office of the
Secretary of State of the State of California, copies of which are attached
hereto as Exhibit B.
(k) "Master Purchaser's Letter" means a letter in the form attached
to the Prospectus as Appendix C, or such other form as may be specified by the
Company, in each case, which is
2
<PAGE>
required to be executed by each prospective purchaser of shares of MAPS.
(l) "Notice of Redemption" shall mean a notice in substantially the
form of Exhibit C hereto given by the Auction Agent pursuant to Section 3
hereof.
(m) "Prospectus" means the prospectus with respect to the MAPS first
used to confirm sales of MAPS by the Underwriters attached hereto as Exhibit G.
(n) "Record Date" for any Dividend Period means the Business Day
immediately preceding each Dividend Payment Date with respect to such Dividend
Period.
(o) "Settlement Procedures" means the Settlement Procedures attached
to the Prospectus as Appendix A.
(p) "Underwriters" means Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc.
1.3 Rules for Construction.
----------------------
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
2. The Auctions.
------------
2.1 Purposes; Incorporation by Reference of Auction Procedures and
--------------------------------------------------------------
Settlement Procedures.
---------------------
(a) Article II, Section 2(e) of the Designation provides that the
Applicable Rate for each series of MAPS for each Dividend Period subsequent to
the Initial Dividend Periods shall be, in general, the rate per annum that
results from implementation of the Auction Procedures for each series of MAPS.
3
<PAGE>
The Applicable Rate shall not exceed the Maximum Applicable Rate except in the
event of a Failure to Deposit. The Company hereby appoints Chemical Bank as
Auction Agent in accordance with the terms and conditions set forth herein for
the purpose of implementing the Auction Procedures. The Auction Agent hereby
accepts such appointment and agrees that, on each Auction Date, it shall follow
the procedures set forth in this Section 2 and the Auction Procedures for the
purpose of determining the Applicable Rate for each series of MAPS for the next
Dividend Period therefor. Each periodic operation of such procedures is
hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein. In the event of any inconsistency between the
provisions hereof and the provisions of the Designation, the provisions of the
Designation shall control.
2.2 Changes in Dividend Period.
--------------------------
(a) Article II, Section 2(c) of the Designation provides that the
Company may, except as set forth in the proviso below, at its option, not less
than ten and not more than 30 days prior to an Auction Date for any series of
MAPS, by telephonic and written notice (a "Notice of Change in Dividend Period")
to the Auction Agent and the Securities Depositary, substantially in the form of
Exhibit D hereto, specify the next succeeding Dividend Period for such series of
MAPS, provided that for any Auction occurring after the initial Auction for a
--------
series of MAPS, the Company may not give a Notice of Change in Dividend Period
for such series of MAPS (and any such Notice of Change in Dividend Period shall
be null and void) unless Sufficient Clearing Bids were made in the last
occurring Auction for any series of Authorized MAPS (or all shares of such
series were subject to Submitted Hold Orders) and full cumulative dividends for
all series of Authorized MAPS payable prior to such date have been paid in
full.
(b) Article II, Section 2(c) of the Designation provides that the
Dividend Period following each Auction for any series of MAPS shall be a
Standard Dividend Period (A) if the Company does not give a Notice of Change in
Dividend Period with respect to the next succeeding Dividend Period for such
series of MAPS in the manner provided therein, (B) if, in the event the Company
has given a Notice of Change in Dividend Period with respect to the next
succeeding Dividend Period for such series of MAPS, the Company gives a Notice
of Revocation (as defined below) with respect thereto, or (C) if Sufficient
Clearing Bids are not made in the related Auction for such series of MAPS (other
than
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<PAGE>
because all shares of such series were subject to Submitted Hold Orders) or such
Auction is not held for any reason.
(c) Article II, Section 2(c) and Article III, Section 4(b) of the
Designation provide that if Sufficient Clearing Bids are not made at any Auction
for a series of MAPS (other than because all shares of such series are subject
to Submitted Hold Orders) with respect to which the Company has given a Notice
of Change in Dividend Period (and such notice was not revoked), the Applicable
Rate for the Dividend Period following such Auction and for each subsequent
Dividend Period until the first Dividend Period following an Auction for such
series of MAPS at which Sufficient Clearing Bids are made (or in which all
shares of such series are subject to Submitted Hold Orders) shall be the Maximum
Applicable Rate for a Standard Dividend Period.
(d) Article II, Section 2(c) of the Designation provides that any
Notice of Change in Dividend Period may be revoked by the Company on or prior to
the Business Day prior to the related Auction Date by telephonic and written
notice. Such notice shall be substantially in the form of Exhibit E hereto (a
"Notice of Revocation") and delivered to the Auction Agent and the Securities
Depositary.
(e) In the event of a change in law altering the Minimum Holding
Period, the Company shall as promptly as practicable, give telephonic and
written notice of such change in law ("Notice of Change in Law") to the Auction
Agent.
(f) Promptly after receipt of a Notice of Change in Dividend Period,
a Notice of Revocation or a Notice of Change in Law, the Auction Agent shall
deliver a copy of such notice by hand delivery or telecopier to each Broker-
Dealer.
5
<PAGE>
2.3 Preparation for Each Auction; Maintenance of Registry of Existing
-----------------------------------------------------------------
Holders.
-------
(a) Prior to or at the time of closing of the initial issuance and
sale of the shares of MAPS (the "Closing"), the Company shall provide the
Auction Agent with a list of the Broker-Dealers designated by the Company and
previously approved by the Auction Agent and shall cause to be delivered to the
Auction Agent for execution by the Auction Agent a Broker-Dealer Agreement
substantially in the form of Exhibit A hereto signed by each such Broker-Dealer.
The Auction Agent shall keep such list current and accurate to reflect any
change of which it is notified by the Company, and, with respect to each such
Broker-Dealer shall indicate thereon, or on a separate list, the identity of
each Existing Holder, if any, and the number of shares of each series of MAPS
held by each such Existing Holder. Not later than seven days prior to any
Auction Date for which any change in such list of Broker-Dealers is to be
effective, the Company shall notify the Auction Agent in writing of such change
and, if any such change is the addition of a Broker-Dealer to such list, the
Company shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by such Broker-Dealer. The
Auction Agent shall have entered into a Broker-Dealer Agreement with each
Broker-Dealer prior to the participation of any such Broker-Dealer in any
Auction.
(b) i) In the event that the Auction Date shall be changed in a
manner consistent with the Designation after the Auction Agent shall have given
the notice of the next succeeding Auction for such series of MAPS referred to in
clause (vii) of Paragraph (a) of the Settlement Procedures, or after the Company
has delivered a Notice, the Auction Agent shall give notice of such change to
the Broker-Dealers not later than the earlier of 9:15 A.M. on the new Auction
Date or 9:15 A.M. on the old Auction Date.
ii) If, after the date of this Agreement, there is any change in the
prevailing rating of the MAPS by S&P or Moody's (or any Substitute Rating Agency
or Rating Agencies, as the case may be), thereby resulting in any change in the
applicable percentage of the Applicable Determining Rate for the MAPS, as set
forth in the definition of Maximum Applicable Rate in the Auction Procedures
(the "Percentage"), the Company shall notify the
6
<PAGE>
Auction Agent in writing of such change in the Percentage prior to 9:00 A.M. on
the Auction Date next succeeding such change for such series of MAPS. The
Percentage for the MAPS on the date of this Agreement is 200%. The Auction
Agent shall be entitled to rely on the last Percentage of which it has received
notice from the Company (or, in the absence of such notice, the Percentage set
forth in the preceding sentence) in determining the Maximum Applicable Rate as
set forth in Section 2.3(c) hereof.
(c) i) On each Auction Date, the Auction Agent shall determine the
Applicable Determining Rate and the Maximum Applicable Rate. If the Applicable
Determining Rate is not quoted on an interest basis but is quoted on a discount
basis, the Auction Agent shall convert the quoted rate to its interest
equivalent in accordance with the terms of the Designation. Not later than 9:30
A.M. on each Auction Date, the Auction Agent shall notify by telephone the
Company and the Broker-Dealers of the Applicable Determining Rate so determined
and the Maximum Applicable Rate for the relevant series.
ii) If (x) the Applicable Determining Rate is to be based on the
Applicable "AA" Composite Commercial Paper Rate, (y) the Federal Reserve Bank of
New York does not make available any such rate and (z) any Commercial Paper
Dealer shall not provide a quotation for the determination of the Applicable
"AA" Composite Commercial Paper Rate, then the Auction Agent shall immediately
notify the Company so that the Company can determine whether to select one or
more Substitute Commercial Paper Dealers to provide the quotation or quotations
not being supplied. The Company shall promptly advise the Auction Agent of any
such selection. If the Company does not select any such Substitute Commercial
Paper Dealers, then the Applicable "AA" Composite Commercial Paper Rate shall be
based on the rates supplied by the remaining Commercial Paper Dealer (if any).
iii) If (x) the Applicable Determining Rate is to be based on the
Applicable Treasury Bill Rate or the Applicable Treasury Note Rate and the
"Federal Reserve Statistical Release H.15 (519) - Selected Interest Rates," or
any successor publication by the Federal Reserve Board is not available or the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate is not published
therein, and (y) any U.S. Government Securities Dealer shall not provide a
quotation for the determination of the Applicable Treasury Bill Rate or the
Applicable Treasury Note Rate, as the case may be, then the Auction Agent shall
immediately notify the Company so that the Company can determine whether to
select one or more Substitute U.S. Government Securities Dealers to provide the
quotation or quotations not being supplied. The Company shall promptly advise
the Auction Agent of any such selection. If the Company does not select any
such Substitute U.S. Government Securities Dealers, then the
7
<PAGE>
Applicable Treasury Bill Rate or the Applicable Treasury Note Rate, as the case
may be, shall be based on the rates supplied by the remaining U.S. Government
Securities Dealer (if any); provided, that if the Company is unable to cause
such quotations to be furnished to the Auction Agent by such sources, the
Company may cause such rates to be furnished to the Auction Agent by such
alternative source as the Company in good faith deems to be reliable.
(d) In the event that the Company fails to pay, in immediately
available funds to the Auction Agent by 12:00 noon, New York City time (i) on
the Business Day next preceding any Dividend Payment Date, the full amount of
any dividend (whether or not earned or declared) to be paid on such Dividend
Payment Date on any series of MAPS or (ii) on the Business Day next preceding
any redemption date, the full redemption price to be paid on such redemption
date for any shares of each series of MAPS to be redeemed on such redemption
date (in each case, a "Failure to Deposit"), the Auction Agent shall determine
the Default Rate which shall be applicable to each Dividend Period which follows
any such Failure to Deposit and shall be utilized to calculate any amount due in
connection with any subsequent payment by the Company. However, if the Company
shall have cured such Failure to Deposit by making timely payment to the Auction
Agent pursuant to Section 5.3 hereof, the Auction Agent shall give telephonic
and written notice of such cure to each Existing Holder at the telephone number
and address of such Existing Holder as listed in its Registry and to each
Broker-Dealer as promptly as practicable after such cure is effected and
schedule an Auction for such series for the Business Day next succeeding the
date the Company cured such Failure to Deposit.
(e) i) The Auction Agent shall maintain by series a current list of
the Existing Holders of the shares of MAPS and the number of shares held by each
Existing Holder for purposes of an Auction. As evidence of the identities of
the Existing Holders, the Auction Agent shall be entitled to rely upon (x) a
list of initial Existing Holders provided by the Broker-Dealers, (y) notices
from any Existing Holder, any Agent Member of an Existing Holder, or any Broker-
Dealer of an Existing Holder with respect to such Existing Holder's transfer of
any of the shares to another person and (z) information provided by any Agent
Member in accordance with sub-clause (ii) below as to the identity of an
Existing Holder whose shares are to be redeemed and as to the number of shares
of each such Existing Holder to be redeemed.
ii) In the event of any partial redemption of any series of MAPS, the
Company shall mail a notice of such partial redemption to the Auction Agent as
set forth in Section 3 hereof and, upon such notice, the Auction Agent shall
promptly request
8
<PAGE>
the Securities Depositary to notify the Auction Agent of the identities of the
Agent Members from whose accounts such shares have been called for redemption
and the person or department at such Agent Member to contact regarding such
redemption. At least two Business Days prior to the date fixed for redemption
with respect to shares of the series being partially redeemed, the Auction Agent
shall request each Agent Member so identified to disclose to the Auction Agent
(upon selection by such Agent Member of the Existing Holders whose shares are to
be redeemed) the number of such shares of each such Existing Holder to be
redeemed; provided that the Auction Agent has been furnished with the name and
--------
telephone number of a person or department at such Agent Member from which it is
to request such information. If necessary to procure such information with
respect to any Existing Holder, the Auction Agent shall direct the Broker-Dealer
holding the Master Purchaser's Letter for such Existing Holder to deliver to
each Agent Member a facsimile copy of such Master Purchaser's Letter for each
Existing Holder represented by such Agent Member, which authorizes and instructs
such Agent Member to release such information to the Auction Agent. In the
event that the Auction Agent shall not receive any such information with respect
to any Existing Holder from such Existing Holder's Agent Member or otherwise,
the Auction Agent may continue to treat such Existing Holder as the beneficial
owner of the number of shares shown in the Auction Agent's list of Existing
Holders.
iii) The Auction Agent shall record a transfer of the beneficial
ownership of any of the shares of any series of MAPS from an Existing Holder to
another Person only if such transfer is made to a Person that has delivered a
signed Master Purchaser's Letter to a Broker-Dealer and the Auction Agent and
only if (A) such transfer is made pursuant to an Auction or (B) if such transfer
is made other than pursuant to an Auction, the Auction Agent has been notified
in writing of such transfer in a notice substantially in the form of Exhibit B
to the Broker-Dealer Agreement by such Existing Holder, the Agent Member of such
Existing Holder or the Broker-Dealer of such Existing Holder. The Auction Agent
is not required to accept any notice of transfer delivered prior to an Auction
unless it is received by the Auction Agent by 3:00 P.M. on the Business Day next
preceding the applicable Auction Date or if the Auction Agent has been notified
in writing in a notice substantially in the form of Exhibit C to the Broker-
Dealer Agreement by the Broker-Dealer of any Person that such Person (i)
purchased any shares and the seller failed to deliver such shares or (ii) sold
any shares and the purchaser failed to make payment to such Person upon delivery
to the purchaser of such shares.
(f) The Auction Agent may request that the Broker-Dealers, as set
forth in Section 2.3(c) of the Broker-Dealer Agreement, provide the Auction
Agent with a list of their
9
<PAGE>
respective customers that are Existing Holders of any of the MAPS. The Auction
Agent shall keep confidential all information contained in such list (as well as
any other information it receives as to the identity of Bidders in any Auction)
and, except as provided in Section 2.8 hereof, shall not disclose any such
information so provided to any Person other than the relevant Broker-Dealer and
the Company.
2.4 Auction Schedule.
----------------
The Auction Agent shall conduct Auctions for each series of MAPS in
accordance with the Auction Procedures and the schedule set forth below. Such
schedule may be changed by the Auction Agent with the consent of the Company,
which consent shall not be unreasonably withheld or delayed. The Auction Agent
shall give written notice of any such change to each Broker-Dealer pursuant to
Section 9 hereof. To be effective, such notice must be received prior to the
close of business on the Business Day next preceding the first Auction Date on
which any such change would be effective.
Time on Auction Date Event
-------------------- -----
By 9:30 A.M. Auction Agent advises the Company and the
Broker-Dealers of Applicable Determining
Rate and the Maximum Applicable Rate as set
forth in Section 2.3(c)(i) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information as to
Orders communicated to it by Broker-Dealers
as provided in Section (c) of the Auction
Procedures. Submission deadline is 1:00
P.M.
Not earlier than 1:00 P.M. Auction Agents makes determinations as to
Available Shares of MAPS, Sufficient
Clearing Bids, the Applicable Rate and
Winning Bid Rate pursuant to Section (d) of
the Auction Procedures.
At or before 3:00 P.M. Auction Agent advises the Company of results
of Auction as provided in Section (d) of the
Auction Procedures.
10
<PAGE>
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part
and shares of MAPS are allocated as provided
in Section (e) of the Auction Procedures.
Auction Agent gives notice of Auction
results as set forth in Section 2.5 hereof.
2.5 Notice of Auction Results.
-------------------------
On each Auction Date, the Auction Agent shall notify each Broker-
Dealer that submitted an Order of the duration of and Applicable Rate for the
next Dividend Period and, if such Order was a Bid or Sell Order, whether such
Bid or Sell Order was accepted or rejected, in whole or in part, by telephone by
3:00 P.M. By 11:30 A.M. on the Business Day next succeeding such Auction Date,
the Auction Agent shall notify each Broker-Dealer, if requested, in writing by
telecopies of the disposition of all Orders submitted by each such Broker-Dealer
in the Auction held on such Auction Date. Not later than two Business Days
after each Auction Date, the Auction Agent shall provide the Company with (i) a
list identifying by Broker-Dealer the amount and rate per annum of each Bid
submitted in the Auction held on such Auction Date and (ii) such other
information as the Company may from time to time reasonably request.
2.6 Broker-Dealers.
--------------
(a) i) On the Business Day next preceding the Dividend Payment Date
for each series of MAPS with a Standard Dividend Period or a Short Dividend
Period, the Company shall pay the Auction Agent the service charge due to the
Broker-Dealers in an amount in immediately available funds equal to the product
of (w) a fraction, the numerator of which is the number of actual days in the
Standard Dividend Period or Short Dividend Period for which the relevant Auction
is conducted (calculated by counting the first day of such Standard Dividend
Period or Short Dividend period and the last day thereof) and the denominator of
which is 360, (x) 0.25%, (y) $100,000 and (z) the aggregate number of
Outstanding Shares of the series for which the relevant Auction is conducted.
ii) On the Business Day next preceding the Dividend Payment Date for
each series of MAPS with a Long Dividend Period, the Company shall pay the
Auction Agent the service charge due to the Broker-Dealers in an amount in
immediately payable funds calculated in accordance with the formula set forth in
sub-
11
<PAGE>
paragraph (i) above, except that the percentage set forth in clause (x) of such
sub-paragraph shall be such percentage as the Company and the Broker-Dealers
shall agree at such time as the Company establishes the duration of such Long
Dividend Period.
iii) The Auction Agent shall apply such funds received from the
Company pursuant to sub-paragraphs (i) and (ii) above as set forth in Section
2.7 of the Broker-Dealer Agreements. To the extent that any such funds are not
payable to a Broker-Dealer because Sufficient Clearing Bids were not made in the
relevant Auction and shares of such series of MAPS continue to be held despite
being subject to a Submitted Sell Order, the Auction Agent shall repay such
funds to the Company.
(b) After completion of three Auctions, the Auction Agent shall from
time to time enter into such Broker-Dealer Agreements as the Company shall
request.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as
set forth therein if so directed by the Company.
(d) The Auction Agent shall not modify, amend or terminate any
Broker-Dealer Agreement without the prior written consent of the Company, which
consent shall not be unreasonably withheld.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.7 Ownership of Shares of MAPS and Submission of Bids by Company
--------------------------------------------------------------
and Affiliates.
--------------
Except as set forth in the Auction Procedures, neither the Company nor
any Affiliate of the Company may submit on its own behalf any Order in any
Auction. The Company shall notify the Auction Agent if the Company or, to the
best of the Company's knowledge, any Affiliate of the Company becomes an
Existing Holder of any shares of MAPS. The Company shall ensure that any such
shares redeemed, purchased or otherwise acquired by Affiliates of the Company
shall not subsequently be acquired by any person other than the Company. The
Auction Agent shall have no duty or liability with respect to enforcement of
this Section 2.7.
2.8 Access to and Maintenance of Auction Records.
--------------------------------------------
The Auction Agent shall afford to the Company, its agents, independent
public accountants and counsel, any governmental or regulatory body (including
any taxing authority) with jurisdiction over the Company access at all
reasonable times
12
<PAGE>
to review and make extracts or copies (at the Company's sole cost and expense)
of all books, records, documents and other information concerning the conduct
and results of Auctions, provided that any such agent, accountant, or counsel
--------
shall furnish the Auction Agent with a letter from the Company requesting that
the Auction Agent afford such person access. For purposes of the preceding
sentence, the parties hereto acknowledge that Broker-Dealers shall not be deemed
to be agents of the Company. The Auction Agent shall maintain records relating
to any Auction for a period of two years after such Auction (or for such longer
period not exceeding four years, as reasonably requested by the Company), and
such records shall, in reasonable detail accurately and fairly reflect the
actions taken by the Auction Agent hereunder. The Company agrees to keep
confidential any information regarding the customers or potential customers of
any Broker-Dealer received from the Auction Agent in connection with this
Agreement or any Auction and shall not disclose such information or permit the
disclosure of such information, without the prior written consent of the
applicable Broker-Dealer, to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this Section
2.8 or as may otherwise be required by law. Any such agent, accountant or
counsel, before having access to such information, shall agree on reasonable
terms and conditions to keep such information confidential and not to disclose
such information or permit disclosure of such information without the prior
written consent of the applicable Broker-Dealer, other than in connection with
any governmental investigation or inquiry, legal proceedings or otherwise as
required by law.
3. The Auction Agent as Redemption Agent
-------------------------------------
If shares of any series of MAPS are to be redeemed, the Auction Agent
will, at the direction and expense of the Company, cause to be sent, by first-
class or air mail, postage prepaid, or facsimile, a Notice of Redemption to each
holder of record (initially Cede & Co., as nominee of the Securities Depositary)
and to the address as it appears in the Auction Agent's registry of each
Existing Holder of the shares of such series of MAPS to be redeemed. Such
Notice of Redemption shall be sent not fewer than 15 nor more than 45 days prior
to the redemption date and shall state (a) the redemption date, (b) the
redemption price, (c) the number of shares of such series to be redeemed and (d)
the CUSIP number of such shares to be redeemed. The notice will also be
published once in The Wall Street Journal.
-----------------------
No defect in the Notice of Redemption or in the mailing thereof will
affect the validity of the redemption proceedings, except as required by
applicable law. A Notice of Redemption will be deemed given on the day that it
is mailed and published in accordance with the foregoing description.
13
<PAGE>
The Company may elect to redeem some or all of the shares of each
series of MAPS. So long as the Securities Depositary's nominee is the record
holder of such shares, the Auction Agent will give notice to the Securities
Depositary, and the Securities Depositary will determine the number of shares of
each such series to be redeemed from the account of the Agent Member of each
Existing Holder. An Agent Member may determine to redeem shares from some
Existing Holders (which may include an Agent Member holding shares for its own
account) without redeeming shares from the accounts of other Existing Holders.
Any such redemption shall be made in accordance with applicable securities laws
and rules. If the Securities Depositary's nominee is not the holder of record
of all the shares of the series of MAPS to be redeemed, the particular shares to
be redeemed shall be selected by the Company or the Auction Agent, as the case
may be, by lot or by such other method as such person shall deem fair and
equitable.
4. The Auction Agent as Transfer Agent and Registrar.
-------------------------------------------------
4.1 Original Issue of Share Certificates.
------------------------------------
Upon the Date of Original Issue with respect to each series of MAPS,
one certificate representing all of the shares of such series issued on such
date shall be issued by the Company and, at the request of the Securities
Depositary, registered in the name of Cede & Co., as nominee of the Securities
Depositary, and countersigned by the Auction Agent.
4.2 Registration of Transfer of Shares.
----------------------------------
Except as provided in this Section 4.2, shares of each series of Maps
shall be registered solely in the name of the Securities Depositary or its
nominee. If the Securities Depositary shall give notice of its intention to
resign as such and if the Company shall not have selected a substitute
Securities Depositary reasonably acceptable to the Auction Agent prior to such
resignation, then upon the effective date of such resignation, certificates for
such shares registered in the name of the Securities Depositary or its nominee
shall be surrendered and new certificates shall be issued in the name or names
of the designated transferee or transferee of the shares; provided that the
--------
certificates so surrendered are properly endorsed for transfer with all
necessary endorsers' signatures guaranteed in such manner and form as the
Auction Agent may require by a guarantor reasonably believed by the Auction
Agent to be responsible and accompanied by such assurances as the Auction Agent
shall deem necessary or appropriate to evidence the genuineness and
effectiveness of each necessary endorsement and satisfactory evidence of
compliance with all applicable laws
14
<PAGE>
relating to the collection of taxes or funds necessary for payment of such
taxes.
4.3 Lost Share Certificates.
-----------------------
The Auction Agent shall issue and register replacement certificates
for certificates represented to have been lost, stolen or destroyed upon the
fulfillment of such requirements as shall be deemed appropriate by the Company
and the Auction Agent, subject at all times to provisions of law, the
Designation and resolutions, if any, adopted by the Company with respect to lost
certificates. The Auction Agent may issue new certificates in exchange for and
upon the cancellation of mutilated certificates. Any request by the Company to
the Auction Agent to issue a replacement or new certificate pursuant to this
Section 4.3 shall be deemed to be a representation and warranty by the Company
to the Auction Agent that such issuance will comply with such provisions of law
and the Designation.
4.4 Disposition of Cancelled Certificates; Record Retention.
-------------------------------------------------------
The Auction Agent shall retain all share certificates which have been
cancelled and all accompanying documentation in accordance with applicable rules
and regulations of the Securities and Exchange Commission for two calendar years
from the date of such cancellation. Upon the expiration of this two-year
period, the Auction Agent shall deliver to the Company the cancelled
certificates and accompanying documentation. The Company shall at its expense
also undertake to furnish to the Securities and Exchange Commission and to the
Board of Governors of the Federal Reserve System, upon demand, at either the
principal office or at any regional office, complete, correct and current hard
copies of any and all such records.
4.5 Redeposit of Certificates.
-------------------------
In the event that the Securities Depositary has resigned and the
Company has subsequently selected a Securities Depositary reasonably acceptable
to the Auction Agent, the Auction Agent shall give notice to the holders of
record of shares of each series of MAPS that, to submit an Order in an Auction,
each holder of record must surrender its share certificate to the Securities
Depositary and must maintain its ownership of such shares in book-entry form
with the Securities Depositary for the account of such person's Agent Member.
4.6 Stock Books.
-----------
The Auction Agent shall maintain the stock books listing the holders
of the shares of MAPS, the number of shares
15
<PAGE>
held by each and the address of each. Ownership of shares of MAPS shall be
registered in whole shares only. The Auction Agent shall record in such stock
books any change of address of a holder upon notice by such holder. In case of
any request or demand for the inspection of the stock books of the Company or
any other books in the possession of the Auction Agent, the Auction Agent will
notify the Company and request instructions as to permitting or refusing such
inspection. The Auction Agent reserves the right, however, to exhibit the stock
books or other books to any person in case it is advised by its counsel that its
failure to do so would (i) be unlawful or (ii) expose it to liability unless the
Company shall have offered indemnification satisfactory to the Auction Agent.
4.7 Return of Funds.
---------------
Any funds paid to the Auction Agent hereunder by the Company
including, but not limited to, for the purpose of the payment of dividends,
compensation of Broker-Dealers or redemption of shares of MAPS of any series,
that remain unpaid to the Persons entitled thereto after 12 months, shall be
repaid to the Company upon written request of the Company together with
interest, if any, earned thereon.
5. The Auction Agent as Paying Agent.
---------------------------------
5.1 Company to Provide Funds for Dividends and Redemptions.
------------------------------------------------------
(a) In addition to the funds required to be deposited pursuant to
Section 2.6 hereof, the Company shall deposit with the Auction Agent not later
than 12:00 noon, New York City Time, on the Business Day next preceding each
Dividend Payment Date, sufficient same-day funds to be available on the Dividend
Payment Date in The City of New York equal to the dividends to be paid to
holders on such Dividend Payment Date, and hereby gives the Auction Agent
irrevocable written instructions to apply such funds or the proceeds of such
funds, if any, to the payment of such dividend on such Dividend Payment Date.
(b) If the Company shall give or cause to be given a Notice of
Redemption, then the Company shall deposit with the Auction Agent not later than
12:00 noon, New York City Time, on the Business Day next preceding the date
fixed for redemption, an aggregate amount of same-day funds to be available on
the date fixed for redemption in The City of New York sufficient to redeem such
shares of MAPS to be redeemed, and hereby gives the Auction Agent irrevocable
written instructions and authority to pay the redemption price to the holders of
the shares of MAPS called for redemption against delivery of such shares.
16
<PAGE>
(c) The Company may direct the Auction Agent to invest the funds so
deposited pursuant to (a) or (b) of this Section 5.1, and if so directed, such
directions shall be given prior to such deposit, in short-term money market
instruments specified in writing by the Company which mature on or before the
opening of business on such Dividend Payment Date or date fixed for redemption,
as the case may be, provided that the proceeds of such overnight investments
--------
will be available at the opening of business on the Dividend Payment Date or
date fixed for redemption, as the case may be. The investments made pursuant to
the foregoing sentence are solely for the account and at the risk of the
Company, and the Auction Agent shall not be liable or responsible for any loss,
in whole or in part, resulting from such investments. Upon the request of the
Company, the Auction Agent shall transmit any interest received on such
investments to the Company that is not applied on a Dividend Payment Date or a
date fixed for redemption.
5.2 Disbursing Dividends and Redemption Price.
-----------------------------------------
The Auction Agent will pay to the holders of shares (i) on each
Dividend Payment Date, dividends on the shares of MAPS and (ii) on any date
fixed for redemption, the redemption price of any shares of MAPS called for
redemption in either case after receipt of the necessary funds from the Company
with which to pay such dividends or redemption price and instructions to pay the
same. The amount of dividends for any Dividend Period to be paid by the Auction
Agent to the holders will be determined as set forth in Article II, Section 2(d)
of the Designation. The redemption price to be paid by the Auction Agent to the
holders will be determined as set forth in Article II, Section 3 of the
Designation. The Company shall notify the Auction Agent in writing of a
decision to redeem shares of MAPS at least five days prior to the date a Notice
of Redemption is required by the Designation to be mailed to the holders of the
shares to be redeemed. Such notice by the Company to the Auction Agent shall
contain the information required to be stated in the Notice of Redemption
required to be mailed by the Company to such holders. The Auction Agent shall
have no duty to determine the redemption price and may rely on the amount
thereof set forth in such notice.
5.3 Payment Failure.
---------------
If the Company has not cured any Failure to Deposit within three
Business Days after such Failure to Deposit has occurred, the Auction Agent will
promptly notify by telephone (which notification shall be confirmed in writing,
which may be facsimile, by the close of business on the same day) each Broker-
Dealer who acted on behalf of an Existing Holder (i) that a Failure to Deposit
has occurred, (ii) that the Applicable Rate
17
<PAGE>
for the Dividend Period commencing on the day after such Failure to Deposit, and
each subsequent Dividend Period until such Failure to Deposit has been cured (in
each case the Dividend Period shall be a Standard Dividend Period), shall be the
Default Rate, (iii) that the Dividend Period shall be a Standard Dividend Period
and (iv) that Auctions will not be held until such Failure to Deposit has been
cured in accordance with the provisions of Article II, Section 2(e) of the
Designation. If the Company remedies a Failure to Deposit within three Business
Days of such Failure to Deposit, the Applicable Rate for the Dividend Period
commencing on the second Business Day following the cure shall be as determined
in an Auction to be held for such Dividend Period as provided below. Until such
Failure to Deposit has been cured in accordance with the Designation, the
Auction Agent shall not conduct any Auction and the Dividend Period during which
such uncured Failure to Deposit occurred and each subsequent Dividend Period
until such Failure to Deposit has been cured shall be a Standard Dividend
Period. The Auction for the Dividend Period commencing after the date on which
the Company has cured any Failure to Deposit will occur on the Business Day next
succeeding the date on which the Company has cured such Failure to Deposit.
6. Representations and Warranties.
------------------------------
The Company represents and warrants to the Auction Agent that:
(a) The Company has been duly incorporated and is validly existing
under the laws of California, with corporate power and authority to own or lease
its properties and conduct its business as described in the Prospectus.
(b) The shares of MAPS have been duly and validly authorized, and the
MAPS, when issued and delivered against payment therefor as provided in the
Prospectus, will be duly and validly issued, fully paid and non-assessable and
will conform in all material respects to the description thereof contained in
the Prospectus.
(c) This Agreement has been duly authorized, executed and delivered
by the Company and, assuming due authorization, execution and delivery by the
Auction Agent, constitutes a valid and binding obligation of the Company,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditor's rights generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(d) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the
18
<PAGE>
Underwriting Agreement, the Letter of Representations from the Company and the
Auction Agent to The Depository Trust Company and this Agreement and the
consummation of the transactions herein and therein contemplated will not
contravene (i) any provision of applicable law, (ii) the Articles of
Incorporation or by-laws of the Company, (iii) any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material to the
Company and its subsidiaries, taken as a whole, or (iv) any judgment, order or
decree of any governmental body or agency having jurisdiction over the Company
or any subsidiary, with only such exceptions which, in the case of clauses (i),
(iii) and (iv) above, would not be material to the business of the Company and
its subsidiaries, taken as a whole and no consent, approval, authorization or
order of, or qualification with any governmental agency or body is required for
the performance by the Company of its obligations pursuant to this Agreement,
the DTC Agreement and the Underwriting Agreement, except (i) the filing of the
Designation with the Secretary of State of the State of California, (ii) the
registration of the MAPS under the Securities Act pursuant to a registration
statement which has been declared effective and (iii) such consents, approvals
authorizations, registrations or qualifications as have been obtained and are in
full force and effect or as may be required by the securities or Blue Sky laws
of the various states in connection with the sales of the MAPS.
(e) There is no legal or governmental proceeding pending or, to the
best knowledge of the Company, threatened or contemplated to which the Company
is a party that would, if determined adversely to the Company, have a material
adverse effect on the Company's performance of its duties under this Agreement.
7. The Auction Agent.
-----------------
7.1 Duties and Responsibilities.
---------------------------
(a) The Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth or incorporated by reference in this
Agreement, the DTC Agreement or the Broker-Dealer Agreements, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.
(b) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or omitted by
it in the performance of its duties under this Agreement. The Auction Agent
shall not be liable for any error of judgment made reasonably and in good faith
unless the Auction Agent shall have been negligent in ascertaining (or failing
to ascertain) the pertinent facts.
19
<PAGE>
(c) The Auction Agent is acting solely as the agent of the Company
hereunder and owes no fiduciary duty to any other person by reason of this
Agreement.
7.2 Rights of the Auction Agent.
---------------------------
(a) The Auction Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby and upon any
written instruction, notice request, direction, consent, report, certificate,
share certificate or other instrument, paper or document reasonably believed by
it to be genuine. The Auction Agent shall not be liable for acting upon any
telephone communication authorized hereby which the Auction Agent believes
reasonably and in good faith to have been by a validly authorized agent of the
Company or of a Broker-Dealer. The Auction Agent may record telephone
communications with the Company or with the Broker-Dealers or both.
(b) Before the Auction Agent acts or refrains from acting, the
Auction Agent may consult with counsel of its choice, and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder reasonably and in good
faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder except as may be required as a result
of its own negligence or bad faith.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.
(e) The Auction Agent, in its individual or other capacity, may
provide other services for the Company on the same basis as if it were not
acting as Auction Agent. Nothing herein shall be construed to prohibit the
Auction Agent from performing similar services for the Company in respect of
other series of the Company's market auction preferred shares.
7.3 Auction Agent's Disclaimer.
--------------------------
The Auction Agent makes no representation as to the validity, adequacy
or enforceability of this Agreement, the Broker-Dealer Agreements or the MAPS.
20
<PAGE>
7.4 Compensation, Expenses and Indemnification.
------------------------------------------
(a) The Company shall pay the Auction Agent from time to time such
compensation as shall be agreed upon in writing for all services rendered by it
under this Agreement and the Broker-Dealer Agreements.
(b) The Company shall reimburse the Auction Agent upon its request
for all reasonable out-of-pocket expenses, disbursements and advances incurred
or made by the Auction Agent in accordance with any provision of this Agreement
and the Broker-Dealer Agreements upon submission of reasonably itemized invoices
or statements therefore (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any expense, disbursement and
advances attributable to its negligence or bad faith.
(c) The Company shall indemnify the Auction Agent for, and hold it
harmless against, any and all loss, liability, claim, damage or expense, as
incurred, and to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, arising out of or in connection with its agency
or duties under this Agreement and the Broker-Dealer Agreements, including the
reasonable costs and expenses of defending itself against any claim or liability
in connection with its exercise or performance of any of its duties hereunder
and thereunder, except such as may result from unreasonable refusal or failure
to perform any of its duties or obligations hereunder or from its negligence or
bad faith, provided that promptly after the Auction Agent becomes aware of any
--------
fact or circumstance which might result in any such loss, liability, claim,
damage or expense the Auction Agent (i) shall have advised the Company thereof
with particularity in writing, provided that failure by the Auction Agent to
give such notice shall not jeopardize the indemnification herein, except to the
extent of actual prejudice arising therefrom; (ii) shall not have admitted
liability for or compromised or settled any such loss, liability, claim, damage
or expense without the prior written consent of the Company which shall not be
unreasonably withheld or delayed; and (iii) shall have permitted the Company, in
the Auction Agent's name but at the Company's expense, to defend any claim made
against the Auction Agent, employing counsel reasonably satisfactory to the
Auction Agent and the Auction Agent has been reasonably responsive to the
Company's reasonable requests for cooperation and assistance in connection
therewith. In connection with any matter in respect of which indemnification
may be claimed pursuant to this paragraph (c), the Auction Agent agrees to take
or refrain from taking, as the case may be, the actions described in clauses
(i), (ii) and (iii) of the proviso of the preceding sentence. If the Auction
Agent shall have
21
<PAGE>
admitted liability for, compromised or settled any loss, liability, claim,
damage or expense in respect of which indemnification may be claimed hereunder
with the prior written consent of the Company, the Company shall indemnify the
Auction Agent as provided herein. In any such proceeding, the Auction Agent
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of the Auction Agent unless (i) the Company
and the Auction Agent shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Company and the Auction Agent and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them.
8. Term of Agreement.
-----------------
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 8. The Company may terminate this
Agreement with respect to any series of MAPS at any time by so notifying the
Auction Agent. The Auction Agent may resign as Auction Agent under this
Agreement upon prior notice to the Company on the date specified in such notice,
which shall be no earlier than the earlier of (i) the first Business Day after
the last to occur of the second Dividend Payment Date with respect to each
series of MAPS following delivery of such notice or (ii) six months following
delivery of such notice. No such termination by the Company or resignation by
the Auction Agent shall be effective until (i) the Company has entered into an
agreement with a successor auction agent containing substantially the same terms
and conditions as this Agreement and (ii) such successor auction agent has
entered into agreements with the Broker-Dealers containing substantially the
same terms and conditions as the Broker-Dealer Agreements. Upon receiving a
resignation notice from the Auction Agent, the Company will use its best efforts
to enter into an agreement with a successor auction agent containing
substantially the same terms and conditions as this Agreement. This Agreement
will terminate immediately upon redemption by the Company of all shares of MAPS.
(b) Except as otherwise provided in this Section 8(b), the respective
rights and duties of the Company and the Auction Agent under this Agreement
shall cease upon termination of this Agreement. The Company's representations,
warranties, covenants and obligations to the Auction Agent under Sections 6(a)
and 7.4 hereof, or contained in certificates of Company Officers submitted
pursuant to this Agreement shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall (i) resign as Auction
Agent under the Broker-Dealer Agreements, (ii) promptly deliver to the Company
copies of all books and records maintained by it in connection with its
22
<PAGE>
duties hereunder and (iii) at the request of the Company, promptly transfer to
the Company or any successor auction agent any funds deposited by the Company
with the Auction Agent pursuant to this Agreement which have not previously been
distributed by the Auction Agent in accordance with this Agreement.
9. Communications.
--------------
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be deemed to have
been duly given if personally delivered, sent by overnight courier or mailed by
registered mail, postage prepaid and return receipt requested, or transmitted by
telecopy.
If to the Company, International Lease Finance Corporation
addressed: 1999 Avenue of the Stars, 39th Floor
Los Angeles, CA 90067
Attention: Chief Financial Officer
Telephone No.: (310) 788-1999
Telecopier No: (310) 788-1990
If to the Auction Chemical Bank
Agent, addressed: 55 Water Street, 18th Floor-
South Building
New York, New York 10041
Attention: Corporate Trust Group
Telephone No.: (212) 623-4947
Telecopier No: (212) 509-7476
or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Company by a Company Officer and
on behalf of the Auction Agent by an Authorized Officer.
10. Parties.
-------
This Agreement shall inure to the benefit of and be binding upon the
Auction Agent, the Company and their successors and assigns; provided, however,
--------
that the Auction Agent may not assign any of its duties, obligations or
liabilities hereunder without the prior written consent of the Company which
shall not be unreasonably withheld, provided that such assignee is a bank with
recognized experience in providing the services required of the Auction Agent
hereunder. Nothing expressed herein is
23
<PAGE>
intended or shall be construed to give any person, other than the parties hereto
and their respective successors and assigns, any legal or equitable right,
remedy or claim under or in respect of this Agreement. This Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns, and
for the benefit of no other person. No purchaser of MAPS shall be deemed to be
a successor to any party hereto by reason merely of such purchase.
Notwithstanding the foregoing, the Broker-Dealers are entitled to rely upon the
Company's and the Auction Agent's covenants in Section 2.8 of this Agreement and
the Company and Auction Agent hereby agree that such covenants shall also be for
the benefit of the Broker-Dealers.
11. Miscellaneous.
-------------
(a) Except for agreements relating to the Auction Agent's
compensation hereunder, this Agreement constitutes the entire agreement and
understanding of the parties hereto with respect to the matters and transactions
contemplated hereby and supersedes all prior agreements and understandings
whatsoever relating to such matters and transactions. Neither this Agreement nor
any term hereof may be changed, waived or discharged, except by an instrument in
writing signed by the parties hereto. The Company shall notify the Auction Agent
of any change in or amendment of the Designation or the passing by the Board of
Directors of the Company of any resolutions relating to the terms of any series
of MAPS prior to the effective date of any such change or any such resolutions.
(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
(c) This Agreement may be executed in counterparts, each of which
shall constitute an original, but both of which shall together constitute one
instrument.
(d) If any clause, provision or section hereof shall be ruled invalid
or unenforceable by any court of competent jurisdiction, the invalidity of such
clauses, provision or section shall not affect any of the remaining clause,
provisions or sections hereof.
(e) The Company shall not alter the Designation in such a way that
would adversely affect the Auction Agent's duties, rights or remedies hereunder
or under the Broker-Dealer Agreement without the prior written consent of the
Auction Agent, which shall not be unreasonably withheld or delayed.
24
<PAGE>
12. Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
INTERNATIONAL LEASE FINANCE CORPORATION
By: ____________________________
Name:
Title:
CHEMICAL BANK, as Auction Agent
By: ____________________________
Name:
Title:
26
<PAGE>
EXHIBIT A
---------
[FORM OF BROKER-DEALER AGREEMENT]
[Included as Exhibit 99.2 to this Registration Statement]
<PAGE>
EXHIBIT B
---------
[Designation of the Company]
[Included as Exhibits 4.1 and 4.2 to this Registration Statement]
<PAGE>
EXHIBIT C
---------
FORM OF NOTICE OF REDEMPTION
----------------------------
Re: INTERNATIONAL LEASE FINANCE CORPORATION
MARKET AUCTION PREFERRED STOCK
SERIES [E] [F] (THE "MAPS")
To: _______________________________________
_______________________________________
_______________________________________
NOTICE IS HEREBY GIVEN that, pursuant to the Certificates of
Determination of International Lease Finance Corporation (the "Company") with
respect to the Company's Market Auction Preferred Stock, Series [E] [F] (the
"MAPS"), on ____________, ____, the Company will redeem all of the outstanding
shares of MAPS [if not all shares are to be redeemed, shares to be redeemed must
be identified by CUSIP number, and by series, certificate number or otherwise]
for a price of $_______ per Share, plus $____________ in accrued and unpaid
dividends per Share. Shares of MAPS are to be surrendered for payment of the
redemption price at the following locations: [________________]. Please note
that dividends on the shares to be redeemed will cease to accumulate on the
above-mentioned redemption date and that the holders of shares of MAPS being
called for redemption will not be entitled to participate, with respect to such
shares, in any Auction held subsequent to the date of this notice of redemption.
____________________________
as Auction Agent
<PAGE>
EXHIBIT D
---------
[COMPANY TO AUCTION AGENT
AND SECURITIES DEPOSITARY]
NOTICE OF [SHORT] [LONG] DIVIDEND PERIOD
NOTICE IS HEREBY GIVEN that, pursuant to the Certificate of
Determination of International Lease Finance Corporation (the "Company") with
respect to the Company's Market Auction Preferred Stock ("MAPS"), Series ______
(a) the next succeeding Dividend Period for the Series ______ MAPS (CUSIP No.
_________) shall be a [Short] [Long] Dividend Period to consist of a term of
______ [weeks][years], (b) the Dividend Payment Dates(s) for such [Short][Long]
Dividend Period is [are] _______________, ________ [and _________] and (c) the
redemption dates and redemption prices if any, on which the Company may redeem
all or any shares of such series during such Long Dividend period are as
follows: []]/1/
INTERNATIONAL LEASE FINANCE CORPORATION
By: _________________________________
Name:
Title:
________________
/1/ Only for Long Dividend Period.
<PAGE>
EXHIBIT E
---------
[COMPANY TO AUCTION AGENT
AND SECURITIES DEPOSITARY]
INTERNATIONAL LEASE FINANCE CORPORATION
NOTICE OF REVOCATION OF [SHORT] [LONG] DIVIDEND PERIOD
NOTICE IS HEREBY GIVEN that, pursuant to the Certificate of
Determination of International Lease Finance Corporation (the "Company") with
respect to the Company's Market Auction Preferred Stock (the "MAPS"), Series
____________, the Company has determined to revoke their Notice (given on
_____________, 19__) of a [Short] [Long] Dividend Period with respect to the
next succeeding Dividend Period for the Series ______ MAPS (CUSIP No. _______)
and such next succeeding Dividend Period shall thus be a Standard Dividend
Period.
INTERNATIONAL LEASE FINANCE CORPORATION
By: _________________________________
Name:
Title:
<PAGE>
EXHIBIT 99.2
BROKER-DEALER AGREEMENT
between
CHEMICAL BANK
and
_______________________
Dated as of __________ __, 199_
Relating to
INTERNATIONAL LEASE FINANCE CORPORATION
Market Auction Preferred Stock
$100,000 liquidation preference per share
("MAPS")
500 shares of Series E
500 shares of Series F
<PAGE>
BROKER-DEALER AGREEMENT, dated as of ________ __, 199_, between Chemical
Bank, a New York corporation (the "Auction Agent") (not in its individual
capacity but solely as agent of International Lease Finance Corporation, a
California corporation (the "Company"), pursuant to authority granted to it in
the Auction Agent Agreement (the "Auction Agent Agreement"), dated as of
__________, 1995, between the Company and Chemical Bank) and
______________________ (together with its successors and assigns hereinafter
referred to as "BD").
The Company has duly authorized and issued shares of Market Auction
Preferred Stock, Series E and Series F (collectively, the "MAPS"), each with a
liquidation preference of $100,000. Such issue of MAPS shall be comprised of
500 shares of Series E MAPS and 500 shares of Series F MAPS. The Designation
(as defined below) provides that the shares of any series of MAPS may be
transferred only in whole shares.
The Company's Certificates of Determination (the "Designation") with
respect to each series of the MAPS provides that the dividend rate on such
series of MAPS for each Dividend Period (as defined below) shall be the
Applicable Rate (as defined below) therefor, which in each case, in general,
shall be the rate per annum that results from the implementation of the Auction
Procedures (as defined below) for each series of MAPS. The Board of Directors
of the Company has adopted a resolution providing for the appointment of
Chemical Bank as Auction Agent for purposes of the Auction Procedures and,
pursuant to Section 2.6(b) of the Auction Agent Agreement, the Company has
requested and directed the Auction Agent to execute and deliver this Agreement.
The Auction Procedures require the participation of one or more Broker-
Dealers.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Auction Agent and BD agree as follows:
1. Definitions and Rules of Construction.
-------------------------------------
1.1 Terms Defined by Reference to the Designation. Capitalized terms not
---------------------------------------------
defined herein shall have the respective meanings specified in the Designation.
1.2 Terms Defined Herein. As used herein and in the Settlement Procedures
--------------------
(as defined below), the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Affiliate" means any Person controlled by, in control of or under
common control with, the Company.
<PAGE>
(b) "Applicable Broker-Dealer Fee" shall have the meaning specified in
Section 2.7 hereof.
(c) "Auction" has the meaning specified in Section 2.1 hereof.
(d) "Auction Agent Agreement" has the meaning set forth in the recitals.
(e) "Auction Procedures" means the procedures for conducting Auctions set
forth in Appendix B to the Prospectus.
(f) "Authorized Officer" means any President, Senior Vice President, Vice
President, Assistant Vice President or Assistant Secretary of the Auction Agent
assigned to its Corporate Trust Group and every other officer or employee of the
Auction Agent designated as an "Authorized Officer" for purposes hereof in a
communication to the BD.
(g) "BD Officer" means any officer or employee of BD designated as a "BD
Officer" for purposes of this Agreement in a communication to the Auction Agent.
(h) "Broker-Dealer Agreement" means this Agreement and any substantially
similar agreement between the Auction Agent and a Broker-Dealer.
(i) "Designation" means the Certificates of Determination of the Company
designating and establishing the voting rights, preferences, limitations and
special rights of the MAPS, which will be comprised of the Series E and Series F
MAPS, as filed by the Company on __________, 1995 in the office of the Secretary
of State of the State of California, a copy of which is attached hereto as
Exhibit D.
(j) "Existing Holder" means a Person who has signed a Master Purchaser's
Letter and is listed as the beneficial owner of shares of MAPS of a series in
the records of the Auction Agent.
(k) "Master Purchaser's Letter" means a letter in the form attached to the
Prospectus as Appendix C, or such other form as may be specified by the Company,
in each case, which is required to be executed by each prospective purchaser of
shares of MAPS.
(l) "Percentage" means the applicable percentage of the Applicable
Determining Rate for the MAPS, as set forth in the definition of Maximum
Applicable Rate in the Auction Procedures.
2
<PAGE>
(m) "Person" means and includes an individual, a partnership, a
corporation, a trust, an incorporated association, a joint venture or other
entity or government or any agency or political subdivision thereof.
(n) "Prospectus" means the prospectus with respect to the MAPS first used
to confirm sales of MAPS by the Underwriters attached hereto as Exhibit E.
(o) "Settlement Procedures" means the Settlement Procedures attached to the
Prospectus as Appendix A.
1.3 Rules of Construction. Unless the context or use indicates another or
---------------------
different meaning or intent, the following rules shall apply to the construction
of this Agreement.
(a) Words importing the singular number shall include the plural number and
vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of similar
import refer to this Agreement as a whole.
(d) all references herein to a particular time of day shall be to New York
City time.
2. The Auctions.
------------
2.1 Purpose; Incorporation by Reference of Auction Procedures and
-------------------------------------------------------------
Settlement Procedures.
- ---------------------
(a) The Designation provides that the Applicable Rate on each series of
MAPS for each Dividend Period subsequent to the Initial Dividend Period shall
be, in general, the rate per annum that results from the implementation of the
Auction Procedures for each series of MAPS. The provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of determining
the Applicable Rate for each series of MAPS for the next subsequent Dividend
Period therefor. Each periodic operation of such procedures is hereinafter
referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions were fully set forth herein.
3
<PAGE>
(c) BD is delivering herewith a Master Purchaser's Letter executed by BD
and a list of the initial Existing Holders for whom BD is acting as Broker-
Dealer. BD represents and warrants that it has received from each initial
Existing Holder for whom BD is acting as Broker-Dealer an executed Master
Purchaser's Letter. BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in the Prospectus may execute a Broker-
Dealer Agreement and a Master Purchaser's Letter and participate as Broker-
Dealers in Auctions. BD agrees to handle customer orders in accordance with its
duties under applicable securities laws and regulations. The Auction Agent
hereby consents to BD acting as a broker-dealer in connection with Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for their own
accounts, provided that BD or such other Broker-Dealers, as the case may be,
have executed a Master Purchaser's Letter. However, the Company may by notice
to BD and all other Broker-Dealers prohibit all Broker-Dealers from submitting
Bids in Auctions for their own accounts, provided that Broker-Dealers may
continue to submit Hold Orders and Sell Orders for their own accounts. The
Auction Agent shall have no duty or liability with respect to enforcement of the
terms of the preceding two sentences.
2.2 Designation of Dividend Periods; Change in Calculation of Minimum
-----------------------------------------------------------------
Holding Period.
- --------------
(a) Unless the Company exercises its right to designate a Short Dividend
Period or a Long Dividend Period for a series of MAPS, subject to Article II,
Section 2(c) of the Designation, each Dividend Period after the Initial Dividend
Period will be a Standard Dividend Period. Following the receipt by the Auction
Agent of a notice from the Company in the form of Exhibit D to the Auction Agent
Agreement not more than 30 nor less than 10 days prior to an Auction Date
designating a Short or Long Dividend Period for a series of MAPS or a notice in
the form of Exhibit E to the Auction Agent Agreement from the Company on or
prior to the Business Day prior to the related Auction Date revoking such
designation as provided in Section 2.2 of the Auction Agent Agreement, the
Auction Agent shall promptly following receipt of any such notice, provide to BD
by telecopier or hand delivery, a copy of the Company's notice delivered
pursuant to Section 2.2 of the Auction Agent Agreement to the effect that the
next succeeding Dividend Period will have the duration designated by the Company
or of a Standard Dividend Period, as the case may be.
4
<PAGE>
(b) Following the receipt by BD from the Auction Agent of the Company's
notice designating a different Dividend Period with respect to a series of MAPS
or the Company's notice revoking such designation as provided in Section 2.2(a)
hereof, BD shall, in accordance with its customary procedures and practice of
communicating with its customers, promptly, and, prior to the Submission
Deadline for the related Auction, notify (i) each Person that has purchased one
or more shares of such series of MAPS from or through BD and, to BD's knowledge,
remains at the time an Existing Holder of any such shares of MAPS on such
Auction Date and (ii) each Person contacted by BD for purposes of the Auction on
such Auction Date, that the next succeeding Dividend Period will have the
duration as specified by the Company or of a Standard Dividend Period, as the
case may be.
(c) Following the receipt by BD from the Auction Agent of the Company's
notice of a change in law altering the Minimum Holding Period, BD shall notify
each Existing Holder who acquired shares of any series of MAPS through such BD
and, to the knowledge of such BD, has not disposed of such shares, at least ten
(10) days prior to both (i) the first day of the first Dividend Period preceding
the Dividend Period for which such
5
<PAGE>
change is to be effective and (ii) the first day of the first Dividend Period
for which such change is to be effective, if possible.
2.3 Preparation for Each Auction.
----------------------------
(a) Not later than 9:30 A.M. on each Auction Date, the Auction Agent
shall advise BD by telephone of the Applicable Determining Rate and the Maximum
Applicable Rate in effect on such Auction Date.
(b) In the event that the Auction Date for any Auction shall be
changed after the Auction Agent shall have given the notice of the next
succeeding Auction with respect to such series of MAPS referred to in clause
(vii) of paragraph (a) of the Settlement Procedures, the Auction Agent shall
give notice of such change to BD not later than the earlier of 9:15 A.M. on the
new Auction Date or 9:15 A.M. on the old Auction Date. Thereafter, BD shall
promptly notify customers of BD that are Existing Holders of such series of MAPS
of such change in the Auction Date.
(c) The Auction Agent from time to time may request BD to provide the
Auction Agent with a list of its customers that are Existing Holders of the
shares of MAPS. BD shall comply with any such request and the Auction Agent
shall keep confidential all information contained in such a list (as well as any
other information received as to the identity of Bidders in any Auction) and,
except as provided in Section 2.8 of the Auction Agent Agreement, shall not
disclose any such information so provided to any Person other than the relevant
Broker-Dealer and the Company.
(d) The Auction Agent is not required to accept the Master Purchaser's
Letter for any Potential Holder for an Auction or any amendment to any Master
Purchaser's Letter unless it is notified by the BD holding such letters by 3:00
P.M. on the Business Day next immediately preceding such Auction.
(e) The Auction Agent will provide copies of the notices received by
it pursuant to Section 2.2 of the Auction Agent Agreement to each Broker-Dealer
promptly after receiving such notices. BD will use its best efforts to give
similar notice to each Existing Holder that purchased MAPS through BD.
2.4 Solicitation of Potential Holders in Connection with Certain
------------------------------------------------------------
Auctions.
--------
BD shall designate an individual in its organization who will
coordinate its procedures in connection with Auctions
6
<PAGE>
and purchases and sales of shares of MAPS and shall inform the Auction Agent in
writing of the identity of such individual.
2.5 Auction Schedule; Method of Submission of Orders.
------------------------------------------------
(a) The Auction Agent shall conduct Auctions in accordance with the
Auction Procedures and the schedule set forth below. Such schedule may be
changed at any time by the Auction Agent with the consent of the Company, which
consent shall not be unreasonably withheld or delayed. The Auction Agent shall
give written notice of any such change to BD pursuant to Section 4.3 of this
Agreement. Such notice must be received prior to the close of business on the
Business Day next preceding the first Auction Date on which any such change
would be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Company and
Broker-Dealers of the Applicable Determining
Rate and the Maximum Applicable Rate as set
forth in Section 2.3(a) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information as to
Orders communicated to it by Broker-Dealers
as provided in Section (c) of the Auction
Procedures. Submission Deadline is 1:00
P.M.
Not earlier than 1:00 P.M. Auction Agent makes determinations as to the
Available Shares of MAPS, Sufficient
Clearing Bids, the Applicable Rate and
Winning Bid Rate pursuant to Section (d) of
the Auction Procedures.
At or before 3:00 P.M. Auction Agent advises the Company of results
of Auction as provided in Section (d) of the
Auction Procedures.
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part
and shares of MAPS are allocated as provided
in
7
<PAGE>
Section (e) of the Auction Procedures.
Auction Agent gives notice of Auction
results as set forth in Section 2.6(a)
hereof.
(b) BD agrees to maintain a list of Potential Holders, to contact the
Potential Holders on such list on or before each Auction Date for the purposes
set forth in Section (b)(i)(B) of the Auction Procedures.
(c) BD agrees not to sell, assign or dispose of shares of any series
of MAPS or place any Orders on behalf of any Person who has not delivered a
signed Master Purchaser's Letter to it.
(d) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Holder or Existing Holder on
whose behalf BD is submitting an Order and shall not net or aggregate the Orders
of different Potential Holders or Existing Holders on whose behalf BD is
submitting Orders.
(e) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of any
shares of any series of MAPS made through BD by an Existing Holder to another
Person other than pursuant to an Auction, together with the related Master
Purchaser's Letter and (ii) a written notice, substantially in the form attached
hereto as Exhibit C, of the failure of any shares of such series of MAPS to be
transferred to or by any Person that purchased or sold any shares of any series
of MAPS through BD pursuant to an Auction. The Auction Agent is not required to
accept any notice delivered pursuant to the terms of the foregoing sentence with
respect to an Auction unless it is received by the Auction Agent by 3:00 P.M. on
the Business Day next preceding the applicable Auction Date.
(f) Concurrently with the execution of this Agreement, BD shall
provide the Auction Agent with a list of the initial Existing Holders who have
agreed to purchase MAPS through BD and the aggregate number of shares so held,
if any. In order to verify the accuracy and authenticity of the list of
Existing Holders so provided, the Auction Agent may confirm such list by sending
confirmation notices containing a list of the Existing Holders to BD within ten
Business Days of the Auction Agent's receipt thereof.
8
<PAGE>
2.6 Notice of Auction Results.
-------------------------
(a) On each Auction Date, the Auction Agent shall notify each Broker-
Dealer that submitted an Order of the duration of and Applicable Rate for the
next Dividend Period and, if such Order was a Bid or Sell Order, whether such
Bid or Sell Order was accepted or rejected, in whole or in part, by telephone by
3:00 P.M. By 11:30 A.M. on the Business Day next succeeding such Auction Date,
the Auction Agent shall, if requested, notify BD in writing by telecopier of the
disposition of all Orders submitted by BD in the Auction held on such Auction
Date.
(b) BD shall notify each Existing Holder or Potential Holder on whose
behalf BD has submitted an Order as set forth in paragraph (b) of the Settlement
Procedures and take such other action as is required of BD pursuant to the
Settlement Procedures.
If any Existing Holder on whose behalf BD has submitted a Bid or Sell
Order that was accepted in whole or in part fails to instruct its Agent Member
to deliver shares of MAPS against payment therefor, BD shall instruct such Agent
Member to deliver to it such shares against payment therefor and BD may deliver
to the Potential Holder on behalf of which it submitted a Bid that has been
accepted a number of whole shares that is less than the number of shares that
otherwise was to be purchased by such Potential Holder. In such event, the
number of shares to be so delivered shall be determined by such BD in its sole
discretion. Delivery of such lesser number of shares of MAPS shall constitute
good delivery. Upon the occurrence of such failure to deliver such shares, BD
shall deliver to the Auction Agent the notice required by Section 2.5(e)(ii)
hereof. Notwithstanding the foregoing terms of this Section 2.6(b), any
delivery or non-delivery of shares which represents any departure from the
results of an Auction, as determined by the Auction Agent, shall be of no effect
unless and until the Auction Agent shall have been notified of such delivery or
non-delivery in accordance with the terms of Section 2.5(e)(ii) hereof. The
Auction Agent shall not have any duty or liability with respect to enforcement
of this Section 2.6(b) and neither the Auction Agent nor BD shall have any
responsibility or liability with respect to the failure of a Potential Holder or
Existing Holder, or its respective Agent Member, to deliver shares or to pay for
shares purchased or sold pursuant to an Auction or otherwise.
(c) If the number of days comprising a Standard Dividend Period is
changed as provided in Article II, Section 2(c) of the Designation, the Auction
Agent shall provide BD with a form of notice of such change not later than five
days after the receipt of such form of notice by the Auction Agent from the
Company. BD shall mail a copy of such notice (at the address
9
<PAGE>
specified on such Existing Holder's Master Purchaser's Letter) to each Existing
Holder of shares of MAPS which acquired through BD, and, to the knowledge of BD,
has not disposed of its shares, at least ten days prior to both (i) the first
day of the Dividend Period preceding the Dividend Period for which such change
is to be effective (ii) the first day of the first Dividend Period for which
such change is to be effective.
(d) If the Company has not cured any Failure to Deposit as provided in
Article II, Section 2(e) of the Designation by the third Business Day after such
Failure to Deposit has occurred, the Auction Agent will promptly notify by
telephone (which notification shall be confirmed in writing, which may be by
facsimile, by the close of business on the same day) BD, if BD acted on behalf
of an Existing Holder (i) that a Failure to Deposit has occurred, (ii) that the
Applicable Rate for the Dividend Period commencing on the Business Day following
such Failure to Deposit, and each subsequent Dividend Period until such Failure
to Deposit has been cured (in each case the Dividend Period shall be a Standard
Dividend Period), shall be the Default Rate, (iii) that the Dividend Period
shall be a Standard Dividend Period and (iv) that Auctions will not be held
until such Failure to Deposit has been cured in accordance with the Designation.
(e) Following the receipt by BD from the Auction Agent of telephonic
and written notice of the Company's cure of a Failure to Deposit and the
scheduling of a new Auction with respect to a series of MAPS, BD shall, in
accordance with its customary procedures and practice of communicating with its
customers, promptly, and, prior to the Submission Deadline for the new Auction,
notify (i) each Person that has purchased one or more shares of such series of
MAPS from or through BD and, to BD's knowledge, remains at the time an Existing
Holder of any such shares of MAPS on such Auction Date and (ii) each Person
contacted by BD for purposes of the Auction prior to the Failure to Deposit,
that there will be a new Auction and the date of such Auction.
(f) If the Company delivers to the Auction Agent a Notice of
Redemption in the form of Exhibit C to the Auction Agent Agreement, the Auction
Agent shall send, by first class or air mail, postage prepaid, or facsimile,
such Notice of Redemption to each Existing Holder as listed in its registry, the
Securities Depositary and each Broker-Dealer not fewer than 15 nor more than 45
days prior to the redemption date. Promptly after receipt of any such Notice of
Redemption, BD shall notify by telephone (at a telephone number specified in
such Existing Holder's Master Purchaser's Letter) each holder of MAPS who
acquired MAPS through BD and, to the knowledge of BD, who has not disposed of
its MAPS and each Potential Holder which BD contacted
10
<PAGE>
in connection with any Auction after receipt of such notice of the contents of
such notice.
2.7 Service Charge to Be Paid to BD.
-------------------------------
(a) On the Business Day next succeeding the Auction Date for MAPS with
a Standard Dividend Period or a Short Dividend Period, the Auction Agent will
pay a service charge by wire transfer in same-day funds, to BD equal to the
product of (i) a fraction the numerator of which is the number of actual days in
the Standard Dividend Period or a Short Dividend Period for which the Auction
occurring on the preceding Business Day is conducted (calculated by counting the
first day of such Standard Dividend Period or Short Dividend Period and the last
day thereof) and the denominator of which is 360, (ii) 0.25%, (iii) $100,000 and
(iv) the sum of (A) the aggregate number of shares placed by BD in the
applicable Auction that were (x) the subject of a Submitted Bid of an Existing
Holder submitted by BD and continued to be held as a result of such Auction or
(y) the subject of a Submitted Bid of a Potential Holder submitted by BD and
were purchased as a result of such Auction plus (B) the aggregate number of
shares subject to valid Hold Orders (determined in accordance with Section (c)
of the Auction Procedures without reference to subsection (iii) of such Section)
submitted to the Auction Agent by BD plus (C) the aggregate number of shares
deemed to be subject to Hold Orders by Existing Holders pursuant to Section
(c)(iii) of the Auction Procedures that were acquired by such Existing Holders
through BD.
On the Business Day next succeeding the Auction Date for MAPS with a
Long Dividend Period, the Auction Agent will pay a service charge by wire
transfer in same-day funds, to BD calculated in accordance with the formula set
forth in the next preceding paragraph, except that the percentage set forth in
clause (ii) of such paragraph shall be such percentage as the Company and the
Broker-Dealers shall agree at such time as the Company establishes the duration
of a Long Dividend Period.
The Auction Agent shall be responsible for determining the accuracy of
the calculation of the service charge due to BD.
(b) For purposes of Section 2.7(a)(iv)(C) hereof, if any Existing
Holder who acquired shares of MAPS through BD transfers those shares to another
Person other than pursuant to an Auction, then the Broker-Dealer for such shares
so transferred shall continue to be BD, provided, however, that if the transfer
was effected by, or if the transferee is, a Broker-Dealer other than BD, then
such other Broker-Dealer shall be the Broker-Dealer for such shares and such
other Broker-Dealer shall be entitled to the service charge with respect to such
MAPS as provided in the
11
<PAGE>
Broker-Dealer Agreement between the Auction Agent and such other Broker-Dealer.
3. The Auction Agent.
-----------------
3.1 Duties and Responsibilities.
---------------------------
(a) The Auction Agent is acting solely as agent for the Company
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth or incorporated by reference in this
Agreement and the Auction Agent Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Auction Agent.
(c) The Auction Agent shall not be liable for any action taken,
suffered, or omitted by it in the performance of its duties under this
Agreement, provided it acted without bad faith or negligence. The Auction Agent
shall not be liable for any error of judgment made reasonably and in good faith
unless the Auction Agent shall have been negligent in ascertaining (or failing
to ascertain) the pertinent facts.
3.2 Rights of the Auction Agent.
---------------------------
(a) The Auction Agent may rely upon and shall be protected in acting
or refraining from acting in accordance with any communication authorized by
this Agreement and in accordance with any written information, notice, request,
directions, consent, report, certificate, share certificate or any instrument,
paper or document believed by it to be genuine. The Auction Agent shall not be
liable for acting upon any telephone communication authorized by this Agreement
which the Auction Agent believes reasonably and in good faith to have been given
by a duly authorized agent of the Company or the Broker-Dealer. The Auction
Agent may record telephone communications with the Broker-Dealers.
(b) The Auction Agent may consult with counsel of its own choice, and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
reasonably and in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder, expect as may be required as a result of
its own negligence or bad faith.
12
<PAGE>
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.
3.3 Auction Agent's Disclaimer.
--------------------------
The Auction Agent makes no representation as to the validity,
adequacy or enforceability of this Agreement, the Auction Agent Agreement or the
MAPS.
4. Miscellaneous.
-------------
4.1 Term of Agreement.
-----------------
Either party may terminate this Agreement at any time upon five days'
prior notice to the other party; provided, however, that the Auction Agent may
-------- -------
not terminate this Agreement without first obtaining the prior written consent
of the Company to such termination, which consent shall not be unreasonably
withheld or delayed; and provided further, that this Agreement shall in any
-------- -------
event terminate upon the termination of the Auction Agent Agreement. The
Auction Agent shall promptly notify BD if the Auction Agent Agreement is
terminated.
4.2 Agent Member.
------------
BD hereby confirms that it is a participant of the Securities
Depositary at the date hereof.
4.3 Communications.
--------------
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given,
addressed to it, at its address reference the particular Auction to which such
notice relates:
If to BD,
addressed:
Attention:
Facsimile:
Telephone:
13
<PAGE>
If to the Auction
Agent, addressed:
Chemical Bank
55 Water Street, 18th Floor-
South Building
New York, New York 10041
Attention: Corporate Trust
Group
Facsimile: (212) 509-7476
Telephone: (212) 623-4947
If to the Company, International Lease Finance
addressed: Corporation
1999 Avenue of the Stars
Los Angeles, CA 90067
Attention: Chief Financial Officer
Facsimile: (310) 788-1999
Telephone: (310) 788-1990
or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
4.4 Parties.
-------
This Agreement shall inure to the benefit of and be binding upon the
Auction Agent, BD and their respective successors and assigns; provided,
--------
however, that this Agreement may not be assigned by either the Auction Agent or
- -------
BD without the prior written consent of the other, except that the Auction Agent
may, without the consent of BD, assign its rights hereunder to any successor
auction agent appointed in accordance within the Auction Agent Agreement.
Nothing expressed herein is intended or shall be construed to give any person,
other than the parties hereto and their respective permitted successors and
assigns, any legal or equitable right, remedy or claim under or in respect of
this Agreement. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
their respective permitted successors and assigns, and for the benefit of no
other person. No purchaser of shares of any series of MAPS shall be deemed to
be a successor to any party hereto by reason merely of such purchase.
14
<PAGE>
4.5 Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement and understanding
of the parties hereto with respect to the matters and transactions contemplated
hereby and supersedes all prior agreements and understandings whatsoever
relating to such matters and transactions. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated except by an instrument
in writing signed by the parties hereto.
(b) Failure of either party to this Agreement to exercise any right or
remedy hereunder in the event of a breach of this Agreement by the other party
shall not constitute a waiver of any such right or remedy with respect to any
subsequent breach.
(c) This Agreement may be executed in counterparts, each of which
shall constitute an original, but both of which shall together constitute one
instrument.
4.6 Severability.
------------
If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.
4.7 Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
CHEMICAL BANK,
as Auction Agent
By: _________________________
Name:
Title:
____________________________,
as Broker-Dealer
By: _________________________
Name:
Title:
16
<PAGE>
EXHIBIT A
---------
VTP Order Submission Form
Auction Date: _____________
TIME: ________________________________________ SERIES: ___________________
THE UNDERSIGNED BROKER-DEALER SUBMITS THE FOLLOWING ORDERS ON BEHALF OF THE
BIDDER(S) LISTED BELOW:
================================================================================
# OF SHARES # OF SHARES
EXISTING HOLDER HELD BID DATE SELL
- --------------- ---- --- ---- ----
1.________________________ ______ ______ ________________________ _____
2.________________________ ______ ______ ________________________ _____
3.________________________ ______ ______ ________________________ _____
4.________________________ ______ ______ ________________________ _____
5.________________________ ______ ______ ________________________ _____
6.________________________ ______ ______ ________________________ _____
7.________________________ ______ ______ ________________________ _____
8.________________________ ______ ______ ________________________ _____
9.________________________ ______ ______ ________________________ _____
NAME OF BROKER-DEALER: ____________________________________________
AUTHORIZED SIGNATURE: ____________________________________________
******************************* POTENTIAL BIDS *********************************
# OF SHARES
POTENTIAL HOLDER BID RATE
- ---------------- --- ----
1._______________________________________________ ___________ ___________
2._______________________________________________ ___________ ___________
3._______________________________________________ ___________ ___________
4._______________________________________________ ___________ ___________
5._______________________________________________ ___________ ___________
6._______________________________________________ ___________ ___________
7._______________________________________________ ___________ ___________
8._______________________________________________ ___________ ___________
9._______________________________________________ ___________ ___________
10._______________________________________________ ___________ ___________
11._______________________________________________ ___________ ___________
12._______________________________________________ ___________ ___________
13._______________________________________________ ___________ ___________
14._______________________________________________ ___________ ___________
15._______________________________________________ ___________ ___________
16._______________________________________________ ___________ ___________
17._______________________________________________ ___________ ___________
18._______________________________________________ ___________ ___________
19._______________________________________________ ___________ ___________
20._______________________________________________ ___________ ___________
================================================================================
TOTAL NUMBER OF ORDERS ON THIS BID FORM: ___________________________
Notes to VTP Order Submission Form:
1. If one or more Bids covering in the aggregate more than the number of
outstanding shares of the series of VTP held by any Existing Holder are
submitted, such Bids shall be considered valid in the order of priority set
forth in the Auction Procedures for VTP.
2. A Hold Order, Sell Order or Bid may be placed only by an Existing Holder
covering a number of shares of VTP not greater than the number of shares of
VTP currently held.
3. Potential Holders may make only Bids, each of which must specify a rate; if
more than one Bid is submitted on behalf of any Potential Holder, each Bid
submitted shall be a separate Bid with the rate specified.
4. Bids may contain no more than three figures to the right of the decimal
point (.001 of 1%). However, the Auction Agent shall, if necessary, round
any rate (expressed as a percentage) specified in any Bid which contains
more than three figures to the right of the decimal point up to the next
highest one-thousandth of one percent (.001%).
5. Terms used but not defined herein have the respective meanings set forth in
the Company's Statement of Resolution dated and attached as Exhibit D to the
Auction Agent Agreement.
17
<PAGE>
EXHIBIT B
---------
(To be used only for transfers made other than
pursuant to an Auction)
TRANSFER FORM
Re: International Lease Finance Corporation
Series [E][F] MAPS
------------------
We are (check one):
[ ] the Existing Holder named below;
[ ] the Broker-Dealer for such Existing Holder; or
[ ] the Agent Member for such Existing Holder.
We hereby notify you that such Existing Holder has transferred ___
shares of Series [E][F] MAPS to __________________, who has executed a Master
Purchaser's Letter in the required form, which has been delivered to BD.
____________________________
(Name of Existing Holder)
____________________________
(Name of Broker-Dealer)
____________________________
(Name of Agent Member)
By: _______________________
Printed Name:
Title:
18
<PAGE>
EXHIBIT C
---------
(To be used only for failures to deliver
shares of MAPS sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
- -----------------------
I. We are a Broker-Dealer for _________________ (the "Purchaser"),
which purchased ______ shares of Series [E][F] MAPS of International Lease
Finance Corporation in the Auction held on ________________ from the seller of
such shares of Series [E][F] MAPS.
II. We are a Broker-Dealer for ______________ (the "Seller"), which
sold ______ shares of Series [E] [F] MAPS in the Auction held on
_____________________ to the Purchaser of such shares of Series [E][F] MAPS.
We hereby notify you that (check one) --
________________ the Seller failed to deliver such shares of MAPS to the
Purchaser
________________ the Purchaser failed to make payment to the Seller upon
delivery of such shares of MAPS
Name: _______________________
(Name of Broker-Dealer)
By: _______________________
Printed Name:
Title:
19
<PAGE>
EXHIBIT D
---------
CERTIFICATE OF DETERMINATION
[Included as Exhibits 4.1 and 4.2 to this Registration Statement]
20
<PAGE>
EXHIBIT E
---------
PROSPECTUS
[Included as part of this Registration Statement]
21
