<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 8, 1998
REGISTRATION NO. 333-40335
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
<TABLE>
<S> <C>
GLACIER WATER SERVICES, INC. GLACIER WATER TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS (EXACT NAME OF CO-REGISTRANT AS SPECIFIED IN ITS CHARTER)
CHARTER)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
33-0493559 33-0779340
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
5962 6719
(PRIMARY STANDARD INDUSTRIAL (PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
2261 COSMOS COURT 2261 COSMOS COURT
CARLSBAD, CA 92009 CARLSBAD, CA 92009
TELEPHONE: (760) 930-2420 TELEPHONE: (760) 930-2420
(ADDRESS INCLUDING ZIP CODE, AND (ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE) OF CO-REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
</TABLE>
JERRY A. GORDON
PRESIDENT AND CHIEF OPERATING OFFICER
GLACIER WATER SERVICES, INC.
2261 COSMOS COURT
CARLSBAD, CALIFORNIA 92009
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------
COPIES TO:
<TABLE>
<S> <C>
KENNETH J. BARONSKY, ESQ. WILLIAM T. QUICKSILVER, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY MANATT, PHELPS & PHILLIPS, LLP
601 SOUTH FIGUEROA STREET, 30TH FLOOR 11355 WEST OLYMPIC BOULEVARD
LOS ANGELES, CALIFORNIA 90017 LOS ANGELES, CA 90064-1614
TELEPHONE: (213) 892-4000 TELEPHONE: (310) 312-4210
</TABLE>
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
--------------
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, check the following box. [_]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this form, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED(1) REGISTERED(1) PER UNIT(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
% Cumulative Trust Preferred
Securities of Glacier Water
Trust I........................ 2,600,000 $25 $65,000,000 $19,697(5)
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% Junior Subordinated
Deferrable Interest Debentures
of Glacier Water Services,
Inc.(2)........................
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Glacier Water Services, Inc.
Guarantee with respect to %
Cumulative Trust Preferred
Securities(3)..................
- ----------------------------------------------------------------------------------------------
Total(4)........................ $19,697(5)
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2) The Junior Subordinated Deferrable Interest Debentures will be purchased
by Glacier Water Trust I with the proceeds from the sale of the %
Cumulative Trust Preferred Securities. Such securities may later be
distributed for no additional consideration to the holders of the %
Cumulative Trust Preferred Securities of Glacier Water Trust I upon its
dissolution and the distribution of its assets.
(3) No separate consideration will be received for the Glacier Water Services,
Inc. Guarantee.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of Glacier Water Services, Inc., the rights
of holders of Junior Subordinated Deferrable Interest Debentures of
Glacier Water Services, Inc. under the Indenture, the rights of holders of
Trust Preferred Securities of Glacier Water Trust I under the Trust
Agreement, the rights of holders of the % Cumulative Trust Preferred
Securities under the Guarantee Agreement and the Expense Agreement entered
into by Glacier Water Services, Inc., which taken together, fully,
irrevocably and unconditionally guarantee all of the obligations of
Glacier Water Trust I under the % Cumulative Trust Preferred Securities.
(5) Previously paid.
<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, DATED JANUARY 8, 1998
PROSPECTUS
2,600,000 TRUST PREFERRED SECURITIES
GLACIER WATER TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES (LIQUIDATION AMOUNT $25 PER TRUST
PREFERRED SECURITY) FULLY AND UNCONDITIONALLY GUARANTEED BY
[LOGO OF GLACIER WATER SERVICES, INC.]
GLACIER WATER SERVICES, INC.
The % Cumulative Trust Preferred Securities (the "Trust Preferred
Securities") offered hereby represent preferred undivided beneficial interests
in the assets of Glacier Water Trust I, a statutory business trust created
under the laws of the State of Delaware ("Water Trust I"). Glacier Water
Services, Inc., a Delaware corporation (referred to as the "Company" when such
reference includes Glacier Water Services, Inc. and its subsidiaries,
(Continued on page 3)
SEE "RISK FACTORS" COMMENCING ON PAGE 16 HEREIN FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) WATER TRUST I(2)
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<S> <C> <C> <C>
Per Trust Preferred Security............. $25 (2) $25
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Total.................................... $65,000,000 (2) $65,000,000
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</TABLE>
(1) Glacier and Water Trust I have each agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended (the "Securities Act"). See "Underwriting."
(2) In view of the fact that all of the proceeds of the sale of the Trust
Preferred Securities will be used to purchase the Junior Subordinated
Debentures, Glacier has agreed to pay the Underwriters as compensation for
arranging the investment therein of such proceeds, $ per Trust
Preferred Security or $ in the aggregate. See "Underwriting."
Glacier has also agreed to pay the expenses of the offering estimated to be
$410,000.
-----------
The Trust Preferred Securities are being offered by the Underwriters named
herein subject to prior sale and when, as and if delivered to and accepted by
the Underwriters. It is expected that the Trust Preferred Securities will be
ready for delivery in book-entry form only through the facilities of The
Depository Trust Company in New York, New York, on or about , 1998,
against payment therefor in immediately available funds.
SUTRO & CO. INCORPORATED
EVEREN SECURITIES, INC.
CROWELL, WEEDON & CO.
, 1998
<PAGE>
[PHOTOS HERE]
[Photos of in-store and outdoor water vending machines of the Company.]
[Map of United States with highlighted regions where the Company operates
water vending machines.]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE TRUST PREFERRED
SECURITIES OFFERED HEREBY, INCLUDING BIDDING FOR AND PURCHASING SUCH TRUST
PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
(Continued from cover page)
collectively, or "Glacier" when referring only to the parent company), will be
the owner of all of the beneficial interests represented by common securities
of Water Trust I (the "Common Securities" and, collectively with the Trust
Preferred Securities, the "Trust Securities"). Water Trust I exists for the
sole purpose of issuing the Trust Securities and investing the proceeds
thereof in an equivalent amount of % Junior Subordinated Deferrable
Interest Debentures (the "Junior Subordinated Debentures") to be issued by
Glacier. The Junior Subordinated Debentures will mature on , 2028,
which date may be shortened (such date, as it may be shortened, the "Stated
Maturity") to a date not earlier than , 2003. The Trust Preferred
Securities will have a preference under certain circumstances with respect to
cash distributions and amounts payable on liquidation, redemption or otherwise
over the Common Securities, which will be held by Glacier. See "Description of
the Trust Preferred Securities--Subordination of Common Securities of Water
Trust I Held by Glacier."
Holders of the Trust Preferred Securities will be entitled to receive
preferential cumulative cash distributions accruing from the date of original
issuance and payable monthly in arrears on the 15th day of each calendar month
of each year (subject to possible deferral as described below), commencing
, 1998, at the annual rate of % of the Liquidation Amount (as
defined herein) of $25 per Trust Preferred Security ("Distributions"). The
amount of each Distribution due with respect to the Trust Preferred Securities
will include amounts accrued through the date the Distribution payment is due.
Glacier will have the right, so long as no Debenture Event of Default (as
defined herein) has occurred and is continuing, to defer payments of interest
on the Junior Subordinated Debentures at any time or from time to time for a
period not exceeding 60 consecutive months with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all amounts
then due, Glacier may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Junior Subordinated
Debentures are so deferred, Distributions on the Trust Preferred Securities
will also be deferred and Glacier will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash distributions with
respect to its capital stock or to make any payment with respect to its debt
securities that rank pari passu with or junior to the Junior Subordinated
Debentures. During an Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Trust Preferred Securities are entitled will accumulate) at the
rate of % per annum, compounded quarterly, and holders of the Trust
Preferred Securities will be required to accrue income and will be required to
pay United States federal income tax on that income. See "Description of
Junior Subordinated Debentures--Option to Defer Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
Glacier has, through the Guarantee, the Guarantee Agreement, the Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreement (each as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of Water Trust I's obligations under the Trust
Preferred Securities. See "Relationship Among the Trust Preferred Securities,
the Junior Subordinated Debentures and the Guarantee--Full and Unconditional
Guarantee." Under the Guarantee, Glacier guarantees the payment of
Distributions by Water Trust I and payments on liquidation of or redemption of
the Trust Preferred Securities (subordinate to the right to payment of Senior
Debt and Subordinated Debt of Glacier, as defined herein) to the extent of
funds held by Water Trust I. See "Description of Guarantee." If Glacier does
not make required payments on the Junior Subordinated Debentures held by Water
Trust I, Water Trust I will have insufficient funds to pay Distributions on
the Trust Preferred Securities. The Guarantee does not cover payment of
Distributions when Water Trust I does not have sufficient funds to pay such
Distributions. In such event, a holder of the Trust Preferred Securities may
institute a legal proceeding directly against Glacier pursuant to the terms of
the Indenture to enforce payment of such Distributions to such holder. See
"Description of Junior Subordinated Debentures--Enforcement of Certain Rights
by Holders of Trust Preferred Securities." The obligations of Glacier under
the Guarantee and the Junior Subordinated Debentures are subordinate and
junior in right of payment to all Senior Debt and Subordinated Debt (as
defined in "Description of Junior Subordinated Debentures--Subordination") of
Glacier.
The Trust Preferred Securities are subject to mandatory redemption, in whole
or in part, upon repayment of the Junior Subordinated Debentures at the Stated
Maturity or their earlier redemption, in each case at a
(Continued on next page)
3
<PAGE>
(Continued from previous page)
redemption price equal to the aggregate liquidation preference of the Trust
Preferred Securities plus any accumulated and unpaid Distributions thereon to
the date of redemption. The Junior Subordinated Debentures are redeemable
prior to maturity at the option of Glacier (i) on or after , 2003, in
whole at any time or in part from time to time, or (ii) at any time, in whole
(but not in part), within 90 days following the occurrence of a Tax Event or
an Investment Company Event (each as defined herein), in each case at a
redemption price equal to the accrued and unpaid interest on the Junior
Subordinated Debentures to the date fixed for redemption, plus 100% of the
principal amount thereof. See "Description of the Trust Preferred Securities--
Redemption."
Glacier will have the right at any time to dissolve Water Trust I and, after
satisfaction of liabilities to creditors of Water Trust I as provided by
applicable law, cause a Like Amount (as defined herein) of the Junior
Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of Water Trust I. See "Description of the Trust
Preferred Securities--Liquidation Distribution Upon Dissolution."
In the event of the dissolution of Water Trust I, after satisfaction of
liabilities to creditors of Water Trust I as required by applicable law, the
holders of Trust Preferred Securities will be entitled to receive a
liquidation amount of $25 per Trust Preferred Security ("Liquidation Amount"),
plus accumulated and unpaid Distributions thereon to the date of payment,
which may be in the form of a Distribution of such Like Amount of Junior
Subordinated Debentures, subject to certain exceptions. See "Description of
the Trust Preferred Securities--Liquidation Distribution Upon Dissolution."
The Junior Subordinated Debentures and the Guarantee are unsecured and
subordinated to all Senior Debt and Subordinated Debt. The terms of the Junior
Subordinated Debentures and the Guarantee place no limitation on the amount of
Senior Debt and Subordinated Debt that Glacier can issue. Currently, the
Company has a bank credit agreement (the "Credit Facility") that provides for
borrowings of up to $35.0 million. The Company will apply a portion of the net
proceeds of this offering to pay off the outstanding balance under the Credit
Facility which was approximately $29.0 million as of the date hereof. The
Credit Facility will then be terminated. The Company has entered into
negotiations regarding a new credit facility, which will be for an amount
anticipated to be less than the Company's current Credit Facility. Because
Glacier is a holding company, substantially all of Glacier's assets consist of
the capital stock of its subsidiaries. All obligations of Glacier relating to
the securities described herein will be effectively subordinated to all
existing and future liabilities of Glacier's subsidiaries. Glacier may cause
additional Trust Preferred Securities to be issued by trusts similar to Water
Trust I in the future, and there is no limit on the amount of such securities
that may be issued. In this event, Glacier's obligations under the Junior
Subordinated Debentures to be issued to such other trusts and Glacier's
guarantees of the payments by such trusts will be pari passu with Glacier's
obligations under the Junior Subordinated Debentures and the Guarantee,
respectively.
The Trust Preferred Securities have been approved for listing on the
American Stock Exchange, subject to notice of issuance. In order to meet the
listing requirements of the American Stock Exchange, the Underwriters have
undertaken to distribute the Trust Preferred Securities to a minimum of 400
public shareholders. Although the Underwriters have indicated an intention to
make a market in the Trust Preferred Securities, the Underwriters are not
obligated to do so, and any market making may be discontinued at any time at
the sole discretion of any of the Underwriters. There can be no assurance that
a market will develop for the Trust Preferred Securities. See "Risk Factors--
Absence of Existing Public Market; Market Prices" and "Underwriting."
The Trust Preferred Securities will be represented by one or more global
certificates registered in the name of The Depository Trust Company (the
"Depositary") or its nominee. Beneficial interests in the Trust Preferred
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by participants in the Depositary. Except as
described herein, the Trust Preferred Securities in certificated form will not
be issued in exchange for global certificates. See "Book-Entry Issuance."
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture
dated as of , 1998, as amended and supplemented from time to
time, between Glacier and Wilmington
4
<PAGE>
(Continued from previous page)
Trust Company, as Trustee (the "Indenture Trustee"), under which the Junior
Subordinated Debentures will be issued, (ii) the "Trust Agreement" means the
Trust Agreement relating to Water Trust I among Glacier, as depositor,
Wilmington Trust Company, as Property Trustee (the "Property Trustee"),
Wilmington Trust Company, as Delaware Trustee (the "Delaware Trustee"), the
Administrative Trustees named therein (collectively, with the Property Trustee
and Delaware Trustee, the "Issuer Trustees") and the holders, from time to
time, of the trust securities, (iii) the "Guarantee Agreement" means the
Guarantee Agreement relating to the guarantee between Glacier and Wilmington
Trust Company, as Guarantee Trustee, and (iv) the "Expense Agreement" means
the Expense Agreement between Glacier and Water Trust I.
5
<PAGE>
AVAILABLE INFORMATION
Glacier and Water Trust I have jointly filed with the Commission a
Registration Statement on Form S-2 (together with all amendments and exhibits
thereto the "Registration Statement") under the Securities Act, with respect
to the offering of the securities offered hereby. 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 with respect to the
Company, Water Trust I and the securities offered hereby, reference is made to
the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein, which may be inspected at the public reference facilities of the
Commission, at the addresses set forth below. Statements made in this
Prospectus concerning the contents of any documents referred to herein are not
necessarily complete, and in each instance are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement.
Glacier is subject to the informational requirements of the Exchange Act,
and in accordance therewith files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other
information filed by Glacier can be inspected and copies of such material can
be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. The Commission also maintains a Web site
(http://www.sec.gov) at which reports, proxy and information statements and
other information regarding Glacier may be accessed. In addition, such
reports, proxy statements and other information can also be inspected at the
offices of the American Stock Exchange, 86 Trinity Place, New York, New York
10006-1881.
No separate financial statements of Water Trust I have been included herein.
Glacier and Water Trust I do not consider that such financial statements would
be material to holders of the Trust Preferred Securities because Water Trust I
is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Junior Subordinated
Debentures of Glacier and issuing the Trust Securities. Water Trust I is a
wholly-owned subsidiary of Glacier, and Glacier will irrevocably and
unconditionally guarantee all of Water Trust I's obligations under the Trust
Preferred Securities. See "Prospectus Summary--Water Trust I," "Description of
the Trust Preferred Securities," "Description of Junior Subordinated
Debentures" and "Description of Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1996.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended October
5, 1997.
3. The Company's Quarterly Report on Form 10-Q for the quarter ended July 4,
1997.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended April
4, 1997.
5. The Company's Proxy Statement dated April 23, 1997.
6. The Company's Report on Form 8-K as filed on April 10, 1997.
7. The Company's Report on Form 8-K as filed on May 19, 1997.
8. The Company's Report on Form 8-K/A as filed on June 11, 1997.
9. The Company's Report on Form 8-K as filed on November 6, 1997.
6
<PAGE>
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" means this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of
any contract or other document referred to herein do not purport to be
complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN
(OTHER THAN EXHIBITS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED
TO: GLACIER WATER SERVICES, INC., 2261 COSMOS COURT, CARLSBAD, CALIFORNIA
92009, ATTN: INVESTOR RELATIONS (TELEPHONE (760) 930-2420).
The Company will provide to the holders of the Trust Preferred Securities
quarterly reports containing unaudited financial statements and annual reports
containing financial statements audited by the Company's independent auditors.
The Company will also furnish annual reports on Form 10-K and quarterly
reports on Form 10-Q free of charge to holders of the Trust Preferred
Securities who so request in writing to the Company.
7
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial information appearing elsewhere or
incorporated by reference in this Prospectus. Unless the context clearly
suggests otherwise, references to the "Company" include Glacier Water Services,
Inc. and its subsidiaries, collectively, and references to "Glacier" include
the parent company only. Except for historical information contained in this
Prospectus, the matters discussed herein contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act") and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") such as plans for future growth, capital
spending and financing sources. Such forward-looking statements are inherently
uncertain, and investors must recognize that actual results may differ from
management's expectations. Factors that might cause such a difference include,
but are not limited to, those discussed under the caption "Risk Factors" as
well as those discussed elsewhere or incorporated by reference in this
Prospectus.
THE COMPANY
Glacier Water Services, Inc. is the leading provider of high quality, low
priced drinking water dispensed to consumers through self-service vending
machines. Since its inception in 1983, the Company has created a network of
over 12,000 water vending machines in Arizona, California, Florida, Georgia,
Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Nevada, New Mexico,
Ohio and Texas. The Company's water vending machines are placed at supermarkets
and other retail locations in order to take advantage of the regular customer
traffic at such locations. The Company's retail accounts include Albertson's,
Fiesta Markets, Fry's, HEB, Hughes, KashN'Karry, Kroger, Longs, Lucky,
Osco/Savon, Pantry, Publix, Ralphs, Randall's, Safeway, Smith's, Stater Bros.,
Thrifty/Payless, Vons, Wal-Mart, Winn Dixie and others. Based on information
contained in Bottled Water in the U.S.--1997 Edition, management believes that
sales by the Company account for over 75% of the volume of water sold through
water vending machines.
The Company's internally developed and manufactured water vending machines
are connected to the municipal water source at each of its retail locations.
The vending machines reduce impurities in the water through a combination of
micron filtration, reverse osmosis, carbon absorption and ultraviolet
sterilization. The Company generally charges $.25 to $.35 per gallon, which is
significantly lower than the price of water sold off-the-shelf in retail
locations or sold through delivery services. The Company's water vending
machines are clustered in close proximity to one another within the geographic
areas served in order to assure cost-effective, quality service. Each water
vending machine is serviced and tested weekly.
The Company has experienced significant growth. The number of water vending
machines in operation has increased from 3,666 machines as of December 31, 1992
to 9,164 machines as of December 31, 1996, representing a compounded annual
growth rate of 25.7%. For the year ended December 31, 1996, the Company's
revenues, EBITDA (as defined herein) and net income were $46.1 million, $12.3
million and $3.3 million, respectively, representing compounded annual growth
rates over the prior four years of 14.1%, 24.4% and 19.2%, respectively. During
the nine months ended October 5, 1997, the Company added 3,006 machines,
primarily as a result of the acquisition in March 1997 of the Company's largest
competitor, Aqua-Vend, a division of McKesson Water Products Company. For such
nine-month period, the Company had revenues and EBITDA of $44.4 million and
$11.4 million, respectively. Net income was $319,000 for the same period after
recording non-recurring charges of approximately $3.1 million, representing
costs incurred to integrate Aqua-Vend's operations with the Company's.
Historically, the Company has operated water vending machines designed
primarily for outside use in fair-weather climates. Of the Company's 12,170
machines in operation as of October 5, 1997, 11,961 were located in nine
sunbelt states. Because it is impractical to use vending machines outside in
cold-weather climates, the Company has developed a new water vending machine
specifically designed to be installed inside retail locations.
8
<PAGE>
The "in-store" machine is smaller and has a sleeker exterior, thereby making it
more compatible with an interior retail layout. The Company believes that the
in-store machine affords the Company significant opportunities to expand within
its existing locations, as well as into new market areas in cold-weather
states. The Company currently operates machines at less than 10% of the
estimated 72,000 grocery stores (excluding convenience stores) in the United
States.
In addition to its growth strategy, the Company intends to maintain its
leading position in the water vending industry by: (i) providing high quality,
low priced water to consumers; (ii) developing and maintaining good
relationships with retail accounts; (iii) increasing brand and product
awareness; and (iv) maximizing operating efficiencies and asset productivity.
THE BOTTLED WATER INDUSTRY
According to a report entitled Bottled Water in the U.S.--1997 Edition,
published by the Beverage Marketing Corporation (the data from which is
referred to herein below), the bottled water market has grown from
approximately 300 million gallons sold in 1976 to approximately 3.1 billion
gallons sold in 1996, representing a compounded annual growth rate of 12.4%.
The bottled water market in the United States, which in 1996 totaled
approximately $3.6 billion, comprises four segments: nonsparkling, sparkling,
club soda/seltzer and imported water. Nonsparkling water is the segment in
which the Company competes and is consumed as an alternative to tap water.
Nonsparkling water is the largest of the four segments and represented
approximately 85% of the total market in terms of gallons sold and
approximately 65% of the total market in terms of dollars sold for 1996.
Nonsparkling water is distributed through three principal channels: packaged
water sold off-the-shelf in retail locations, packaged water delivered to homes
and offices and water sold through vending machines. Like water sold off-the-
shelf or through delivery services, vended water is processed using the reverse
osmosis or deionization methods. Although equivalent in quality, vended water
is sold at a substantially lower price than off-the-shelf and delivered water.
Vended water eliminates two principal cost components: packaging (because
consumers provide their own containers) and transportation. By competing on
price, management believes Glacier Water has become the leading brand sold in
the nonsparkling water market segment, with approximately a 6.8% share at the
end of 1996 based on gallons sold.
GROWTH STRATEGY
Supermarkets will continue to be the primary targets for the Company's
growth. To capitalize on the low penetration of water vending machines at
supermarkets and other retail locations, the Company will pursue the following
growth strategy:
. Increase Penetration of Existing Domestic Markets. The Company primarily
operates in nine sunbelt states through the use of its outdoor water
vending machine. Management believes it can place additional outdoor
machines with both existing and new retail accounts in those states.
Management also believes there are significant opportunities to add in-
store water vending machines at its current retail account locations,
without adversely affecting revenues generated by its outdoor machines
at such locations.
. Expand Into New Domestic Markets. The Company intends to place its in-
store water vending machines inside retail locations in cold weather
regions throughout the United States. In addition, the Company intends
to expand into new warm weather climate markets using both in-store and
outdoor machines.
. Expand Into Select International Markets. The Company intends to
capitalize on the demand for bottled water outside of the United States
by expanding into select international markets. The Company currently is
in the process of establishing operations in Mexico as its initial entry
into the international market.
9
<PAGE>
. Pursue Select Acquisition Opportunities. The Company intends to evaluate
and pursue select strategic acquisition opportunities, but has no firm
commitments with respect to acquisitions at this time.
RECENT ACQUISITION
On March 28, 1997, the Company purchased substantially all of the assets of
the Aqua-Vend division of McKesson Water Products Company, a wholly-owned
subsidiary of McKesson Corporation, for a purchase price of approximately $9
million, subject to certain post-closing adjustments. Prior to the acquisition,
Aqua-Vend was the Company's largest competitor, with approximately 3,000 water
vending machines. In connection with the acquisition, the Company developed a
detailed integration plan which included the removal of approximately 600 Aqua-
Vend machines and the rationalization and relocation of Aqua-Vend machines
within Glacier's network of machines. The revenues and operating costs
associated with these machines from March 29, 1997 are included in the
Company's results of operations for the nine-month period ended October 5,
1997.
GLACIER AND WATER TRUST I
Glacier was incorporated in Delaware on November 19, 1991. Substantially all
of its operations are conducted through a wholly-owned operating subsidiary, GW
Services, Inc. ("GW Services"), a California corporation. The Company maintains
its executive offices at 2261 Cosmos Court, Carlsbad, California 92009 and its
telephone number is (760) 930-2420.
Water Trust I is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement and (ii) the filing of a Certificate of
Trust with the Delaware Secretary of State on November 13, 1997. Water
Trust I's business and affairs are conducted by the Property Trustee, the
Delaware Trustee and three individual Administrative Trustees who are officers
of the Company. Water Trust I exists for the exclusive purposes of (i) issuing
and selling the Trust Securities, (ii) using the proceeds from the sale of the
Trust Securities to acquire the Junior Subordinated Debentures issued by
Glacier, and (iii) engaging in only those other activities necessary, advisable
or incidental thereto. The Junior Subordinated Debentures will be the sole
assets of Water Trust I, and payments by Glacier under the Junior Subordinated
Debentures and the Expense Agreement will be the sole revenues of Water Trust
I. All of the Common Securities will be owned by Glacier. The Common Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Trust Preferred Securities, except that upon the occurrence and during the
continuance of an event of default under the Trust Agreement resulting from an
event of default under the Indenture, the rights of Glacier as holder of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Trust Preferred Securities. See "Description of the Trust
Preferred Securities--Subordination of Common Securities of Water Trust I Held
by Glacier." Glacier will acquire Common Securities in an aggregate liquidation
amount equal to 3% of the total capital of Water Trust I. Water Trust I has a
term of 31 years, but may dissolve earlier as provided in the Trust Agreement.
Water Trust I's principal offices are located at 2261 Cosmos Court, Carlsbad,
California 92009 and its telephone number is (760) 930-2420.
10
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER INFORMATION
The following summary consolidated statements of income data and consolidated
balance sheet data of the Company as of and for the years ended December 31,
1996, 1995, 1994, 1993 and 1992 has been derived from the Company's audited
consolidated financial statements. The following summary consolidated
statements of income data and consolidated balance sheet data of the Company as
of and for the nine months ended October 5, 1997 and September 30, 1996 have
been derived from the Company's unaudited consolidated quarterly financial
statements which, in the opinion of management, include all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation. The information contained herein should be read in conjunction
with the Company's consolidated financial statements and related notes included
elsewhere herein. The consolidated financial information for the nine months
ended October 5, 1997 is not necessarily indicative of the operating results to
be expected for the entire year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------- SEPTEMBER 30, OCTOBER 5,
1992 1993 1994 1995 1996 1996 1997(1)
--------- --------- --------- --------- --------- ------------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF INCOME DATA:(2)
Revenues................ $ 27,182 $ 30,636 $ 36,557 $ 42,409 $ 46,091 $ 35,760 $ 44,352
Costs and expenses:
Operating expenses..... 18,356 20,065 23,504 25,933 28,088 22,009 27,482
General and
administrative
expenses.............. 3,702 4,512 4,791 5,483 5,733 4,155 5,461
Depreciation and
amortization.......... 1,995 2,692 3,662 5,756 6,769 4,991 6,515
Non-recurring
charges(3)............ -- -- -- -- -- -- 3,062
--------- --------- --------- --------- --------- --------- ---------
Total costs and
expenses............ 24,053 27,269 31,957 37,172 40,590 31,155 42,520
--------- --------- --------- --------- --------- --------- ---------
Income from operations.. 3,129 3,367 4,600 5,237 5,501 4,605 1,832(9)
Interest expense, net... 476 38 317 723 783 553 1,370
--------- --------- --------- --------- --------- --------- ---------
Income before income
taxes.................. 2,653 3,329 4,283 4,514 4,718 4,052 462
Income tax provision.... 1,016 1,282 1,578 1,805 1,415 1,337 143
--------- --------- --------- --------- --------- --------- ---------
Net income.............. $ 1,637 $ 2,047 $ 2,705 $ 2,709 $ 3,303 $ 2,715 $ 319(9)
========= ========= ========= ========= ========= ========= =========
Net income per share.... $ 0.54 $ 0.62 $ 0.80 $ 0.80 $ 0.98 $ 0.80 $ 0.10(9)
========= ========= ========= ========= ========= ========= =========
Weighted average common
and common equivalent
shares outstanding..... 3,058,029 3,299,130 3,367,151 3,405,104 3,374,482 3,389,893 3,324,525
========= ========= ========= ========= ========= ========= =========
OTHER DATA (UNAUDITED):
EBITDA(4)............... $ 5,124 $ 6,059 $ 8,262 $ 10,993 $ 12,270 $ 9,596 $ 11,409
Net cash provided by
operating activities... 3,275 4,277 3,490 7,385 7,193 7,531 6,801
Net cash used in
investing
opportunities.......... (5,040) (6,131) (10,597) (10,791) (8,540) (5,478) (17,454)
Net cash provided by
financing activities... 2,752 901 7,095 3,362 1,329 (1,216) 10,652
MACHINE DATA:
Number of machines at
beginning of period.... 2,990 3,666 4,780 6,725 8,518 8,518 9,164
Number of machines added
during period, net..... 676 1,114 1,945 1,793 646 376 3,006
Number of machines at
end of period.......... 3,666 4,780 6,725 8,518 9,164 8,894 12,170
GROWTH RATES:
Revenue growth.......... * 12.7% 19.3% 16.0% 8.7% * 24.0 %
EBITDA growth(4)........ * 18.2% 36.4% 33.1% 11.6% * 18.9 %
Income from operations
growth................. * 7.6% 36.6% 13.8% 5.0% * (60.2)%(10)
MARGINS:
EBITDA margin(4)(5)..... 18.9% 19.8% 22.6% 25.9% 26.6% 26.8% 25.7 %
Income from operations
margin(6).............. 11.5% 11.0% 12.6% 12.3% 11.9% 12.9% 4.1 %(10)
RATIOS:
EBITDA to interest
expense, net(4)........ 10.8x 159.4x 26.1x 15.2x 15.7x 17.4x 8.3x
Earnings to fixed
charges(7)............. 8.8x 22.5x 9.0x 5.2x 5.1x 6.0x 1.3x
Pro forma ratio of
earnings to fixed
charges(7)(8).......... -- -- -- -- 3.9x -- 1.2x
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
AS ADJUSTED
DECEMBER 31, OCTOBER 5, OCTOBER 5,
1996 1997(1) 1997(11)(12)
------------ ---------- ------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Total assets.............................. $46,067 $58,515 $94,483
Long-term debt............................ 15,820 26,022 --
Company obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely junior subordinated
debentures(11)........................... -- -- 65,000
Stockholders' equity...................... 23,986 24,502 24,502
</TABLE>
- --------
(1) The Company elected on May 8, 1997 to change its fiscal year end from
December 31 to the fifty-two or fifty-three week period ending on the
Friday closest to December 31. On October 23, 1997, the Company further
modified its fiscal year end to more closely align its fiscal reporting to
its business cycle to the fifty-two or fifty-three week period ending on
the Sunday closest to December 31.
(2) Certain amounts have been reclassified to conform to the current
presentation.
(3) Non-recurring charges in 1997 represent costs incurred to integrate Aqua-
Vend's operations with the Company's following the March 28, 1997 asset
purchase.
(4) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization and non-recurring charges. EBITDA is not
intended to represent cash flow from operations as defined by generally
accepted accounting principles and should not be considered as an
alternative to cash flow or as a measure of liquidity or as an alternative
to net earnings as indicative of operating performance. The Company's
reported EBITDA may not be comparable to similarly titled measures of
other companies that do not have non-recurring charges. EBITDA, EBITDA
margin, EBITDA growth and EBITDA to interest expense, net are included
herein because management believes they are useful for measuring the
Company's ability to service its debt.
(5) EBITDA margins represent EBITDA divided by revenues.
(6) Income from operations margins represents income from operations divided
by revenues.
(7) For purposes of calculating the ratio and pro forma ratio of earnings to
fixed charges, earnings consist of income before income taxes, plus fixed
charges. Fixed charges consist of the interest expense on all indebtedness
and the estimated representative interest factor of rental expense.
(8) The average outstanding debt balances for the year ending December 31,
1996 and the nine-month period ending October 5, 1997 were approximately
$13,454,000 and $22,621,000, respectively. The pro forma ratios assume the
replacement of this indebtedness with a corresponding amount of Junior
Subordinated Debentures. If, on a consolidated basis, the entire
$65,000,000 principal amount of Junior Subordinated Debentures had been
outstanding throughout the periods, total interest expense would have been
approximately $6,094,000 and $4,570,000, respectively.
(9) Information presented in the table does not exclude non-recurring charges.
Excluding non-recurring charges of $3,062,000 for the nine months ended
October 5, 1997, income from operations, net income and net income per
share would have been $4,894,000, $2,432,000 and $.73, respectively.
(10) Information presented in the table does not exclude non-recurring charges.
Excluding non-recurring charges of $3,062,000 for the nine months ended
October 5, 1997, income from operations growth would have been 6.3% and
income from operations margin would have been 11.0%.
(11) The assets of Water Trust I consist solely of an aggregate principal
amount of $67,010,300 of Glacier's % Junior Subordinated Debentures.
(12) As adjusted to reflect the issuance by Water Trust I of the 2,600,000
Trust Preferred Securities offered hereby and the receipt by Glacier of
the proceeds, net of estimated underwriting compensation and other
estimated offering expenses, from the corresponding sale of the Junior
Subordinated Debentures to Water Trust I, and the application of the net
proceeds therefrom as described under "Use of Proceeds."
* Numbers are omitted as prior period has not been presented herein.
12
<PAGE>
THE OFFERING
Trust Preferred
Securities issuer......... Glacier Water Trust I ("Water Trust I")
Securities offered........ 2,600,000 Trust Preferred Securities having a
Liquidation Amount of $25 per Trust Preferred
Security. The Trust Preferred Securities represent
preferred undivided beneficial interests in Water
Trust I's assets, which will consist solely of the
Junior Subordinated Debentures and payments
thereunder.
Distributions............. The Distributions payable on each Trust Preferred
Security will be fixed at a rate per annum of
% of the Liquidation Amount of $25 per Trust
Preferred Security, will be cumulative, will
accrue from the date of issuance of the Trust
Preferred Securities, and will be payable monthly
in arrears on the 15th day of each calendar month
of each year, commencing on , 1998 (subject
to possible deferral as described below). The
amount of each Distribution due with respect to
the Trust Preferred Securities will include
amounts accrued through the date the Distribution
payment is due. See "Description of the Trust
Preferred Securities."
Extension periods......... So long as no Debenture Event of Default (as
defined herein) has occurred and is continuing,
Glacier will have the right, at any time, to defer
payments of interest on the Junior Subordinated
Debentures by extending the interest payment
period thereon for a period not exceeding 60
consecutive months with respect to each deferral
period (each an "Extension Period"), provided that
no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. If
interest payments are so deferred, Distributions
on the Trust Preferred Securities will also be
deferred and Glacier will not be permitted,
subject to certain exceptions described herein, to
declare or pay any cash distributions with respect
to Glacier's capital stock or debt securities that
rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension
Period, Distributions will continue to accumulate
with income thereon compounded quarterly. Because
interest would continue to accrue and compound on
the Junior Subordinated Debentures, to the extent
permitted by applicable law, holders of the Trust
Preferred Securities will be required to accrue
income for United States federal income tax
purposes. See "Description of Junior Subordinated
Debentures--Option to Defer Interest Payment
Period" and "Certain Federal Income Tax
Consequences--Interest Income and Original Issue
Discount."
Maturity..................
The Junior Subordinated Debentures will mature on
, 2028 which date may be shortened (such
date, as it may be shortened, the "Stated
Maturity") to a date not earlier than ,
2003.
Redemption................
The Trust Preferred Securities are subject to
mandatory redemption upon repayment of the Junior
Subordinated Debentures at their Stated Maturity
or their earlier redemption at a redemption price
equal to the aggregate Liquidation Amount of the
Trust Preferred Securities plus accumulated and
unpaid Distributions thereon to the date of
redemption. The Junior Subordinated Debentures are
redeemable prior to maturity at the option of
Glacier (i) on or after , 2003 in whole
at any time or in part
13
<PAGE>
from time to time, or (ii) at any time, in whole
(but not in part), within 90 days following the
occurrence of a Tax Event or an Investment Company
Event, in each case at a redemption price equal to
100% of the principal amount of the Junior
Subordinated Debentures so redeemed, together with
any accrued but unpaid interest to the date fixed
for redemption. See "Description of the Trust
Preferred Securities--Redemption" and "Description
of Junior Subordinated Debentures--Redemption."
Distribution of Junior
Subordinated Debentures..
Glacier has the right at any time to dissolve
Water Trust I, and, after satisfaction of
creditors of Water Trust I as required by
applicable law, to cause the Junior Subordinated
Debentures to be distributed to holders of Trust
Preferred Securities in liquidation of Water Trust
I. See "Description of the Trust Preferred
Securities--Distribution of Junior Subordinated
Debentures."
Guarantee.................
Taken together, Glacier's obligations under the
various documents described herein, including the
Guarantee Agreement, provide a full and
unconditional guarantee of payments by Water Trust
I of Distributions and other amounts due on the
Trust Preferred Securities. Under the Guarantee
Agreement, Glacier guarantees the payment of
Distributions by Water Trust I and payments on
liquidation or redemption of the Trust Preferred
Securities (subordinate to the right to payment of
Senior Debt and Subordinated Debt of Glacier, as
defined herein) to the extent of funds held by
Water Trust I. If Water Trust I has insufficient
funds to pay Distributions on the Trust Preferred
Securities (i.e., if Glacier has failed to make
required payments under the Junior Subordinated
Debentures), a holder of the Trust Preferred
Securities would have the right to institute a
legal proceeding directly against Glacier to
enforce payment of such Distributions to such
holder. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by
Holders of the Trust Preferred Securities,"
"Description of Junior Subordinated Debentures--
Debenture Events of Default" and "Description of
Guarantee."
Ranking...................
The Trust Preferred Securities will rank pari
passu, and payments thereon will be made pro rata,
with the Common Securities of Water Trust I held
by Glacier, except as described under "Description
of the Trust Preferred Securities--Subordination
of Common Securities of Water Trust I Held by
Glacier." The obligations of Glacier under the
Guarantee, the Junior Subordinated Debentures and
other documents described herein are unsecured and
rank subordinate and junior in right of payment to
all current and future Senior Debt and
Subordinated Debt of Glacier, the amount of which
is unlimited. The Company will apply a portion of
the net proceeds of this offering to pay off the
outstanding balance under the Credit Facility,
which was approximately $29.0 million as of the
date hereof. The Credit Facility will then be
terminated. The Company has entered into
negotiations regarding a new credit facility,
which will be for an amount anticipated to be less
than the Company's current Credit Facility.
Because Glacier is a holding company, all
obligations of Glacier relating to the securities
described herein will be effectively subordinated
14
<PAGE>
to all existing and future liabilities of
Glacier's subsidiaries, including GW Services,
Inc. Glacier may cause additional Trust Preferred
Securities to be issued by trusts similar to Water
Trust I in the future, and there is no limit on
the amount of such securities that may be issued.
In this event, Glacier's obligations under the
Junior Subordinated Debentures to be issued to
such other trusts and Glacier's guarantees of the
payments by such trusts will rank pari passu with
Glacier's obligations under the Junior
Subordinated Debentures and the Guarantee,
respectively.
Voting rights.............
The holders of the Trust Preferred Securities will
have no voting rights except in limited
circumstances. Except as provided below, the
affirmative consent of the holders of at least a
majority of the outstanding Trust Preferred
Securities will be required by Water Trust I for
amendments to the Trust Agreement that would
affect adversely the rights or privileges of the
holders of the Trust Preferred Securities. The
Property Trustee, the Administrative Trustees and
Glacier may amend the Trust Agreement without the
consent of holders of the Trust Preferred
Securities to ensure that Water Trust I will be
classified for United States federal income tax
purposes as a grantor trust or to ensure that
Water Trust I will not be required to register as
an "investment company" under the Investment
Company Act, even if such action adversely affects
the interests of such holders. See "Description of
the Trust Preferred Securities--Voting Rights;
Amendment of the Trust Agreement."
ERISA considerations...... Prospective purchasers should carefully consider
the information set forth under the caption "ERISA
Considerations."
Proposed American Stock
Exchange symbol..........
HOO.pf
Use of proceeds...........
The proceeds to Water Trust I from the sale of the
Trust Preferred Securities offered hereby will be
invested by Water Trust I in the Junior
Subordinated Debentures of Glacier. Glacier will
use approximately $29.0 million of the net
proceeds of the offering to payoff in full the
indebtedness outstanding under the Credit
Facility. Glacier intends to use the remaining net
proceeds for general corporate purposes, which may
include without limitation, funding additional
investments in, or extensions of credit to, GW
Services or its other operating subsidiaries for
the expansion of operations and possible future
acquisitions if and when suitable opportunities
arise. Pending application as described above, the
net proceeds from the offering will be invested in
a portfolio of securities (which may include non-
investment grade debt and equity securities)
managed by Kayne Anderson Investment Management
("Kayne Anderson"), an affiliate of the Company.
Kayne Anderson manages funds for certain insurance
companies, other institutional investors and
individuals and will charge Glacier a reasonable
management fee for its services. See "Use of
Proceeds."
15
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to the other information set forth in this Prospectus before making
an investment in the Trust Preferred Securities offered hereby.
RISK FACTORS RELATING TO THE OFFERING
RANKING OF GLACIER'S OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT AND THE
GUARANTEE
All obligations of Glacier under the Guarantee, the Junior Subordinated
Debentures and other documents described herein are unsecured and rank
subordinate and junior in right of payment to all current and future Senior
Debt and Subordinated Debt of Glacier, the amount of which is unlimited. The
Company will use a portion of the proceeds from this offering to pay off the
outstanding balance of approximately $29.0 million under the Credit Facility.
The Credit Facility will then be terminated. The Company has entered into
negotiations regarding a new credit facility, which will be for an amount
which is anticipated to be less than the Company's current Credit Facility. No
assurances can be given that the Company will be successful in obtaining a
replacement credit facility that will be on terms favorable to the Company. In
addition, no assurance can be given that any such replacement credit facility
will not contain terms and conditions in addition to those already contained
in the Junior Subordinated Debentures which might cause Glacier to exercise
its existing right under the Junior Subordinated Debentures to defer the
payment of interest on the Junior Subordinated Debentures or otherwise
restrict the ability of Glacier to pay interest on the Junior Subordinated
Debentures and, consequently, Water Trust I's ability to pay Distributions on
the Trust Preferred Securities.
In addition, because Glacier is a holding company, substantially all of
Glacier's assets consist of the capital stock of its subsidiaries. All
obligations of Glacier relating to the securities described herein will be
effectively subordinated to all existing and future liabilities of Glacier's
subsidiaries, including GW Services, Glacier's primary operating subsidiary.
As a holding company, the right of Glacier to participate in any distribution
of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Trust
Preferred Securities to benefit indirectly from such distribution) is subject
to the prior claims of creditors of that subsidiary, except to the extent that
Glacier may itself be recognized as a creditor of that subsidiary.
Accordingly, the Junior Subordinated Debentures and all obligations of Glacier
relating to the Trust Preferred Securities will be effectively subordinated to
all existing and future liabilities of GW Services, and holders of the Trust
Preferred Securities should look only to the assets of Glacier, and not of its
subsidiaries, for principal and interest payments on the Junior Subordinated
Debentures. None of the Indenture, the Guarantee, the Guarantee Agreement or
the Trust Agreement places any limitation on the amount of secured or
unsecured debt, including Senior Debt and Subordinated Debt, that may be
incurred by Glacier or its subsidiaries. Further, there is no limitation on
Glacier's ability to issue additional Junior Subordinated Debentures in
connection with any further offerings of Trust Preferred Securities, and such
additional debentures would rank pari passu with the Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures--Subordination"
and "Description of Guarantee--Status of the Guarantee."
OPTION TO DEFER INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, Glacier has the right under the Indenture to defer payment
of interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 60 consecutive months with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a consequence of any
such deferral, monthly Distributions on the Trust Preferred Securities by
Water Trust I will be deferred (and the amount of Distributions to which
holders of the Trust Preferred Securities are entitled will accumulate
additional amounts thereon at the rate of % per annum, compounded
quarterly, from the relevant payment date for such Distributions) during any
such Extension Period. During any such Extension Period, Glacier will be
prohibited from making certain payments or distributions with respect to
Glacier's capital stock (including dividends on or redemptions of common or
preferred stock) and from making
16
<PAGE>
certain payments with respect to any debt securities of Glacier that rank pari
passu with or junior in interest to the Junior Subordinated Debentures;
however, Glacier will not be restricted from (a) paying dividends or
distributions in common stock of Glacier, (b) redeeming rights or taking
certain other actions under a shareholders rights plan, (c) making payments
under the Guarantee or (d) making purchases of common stock related to the
issuance of common stock or rights under any of Glacier's benefit plans for
its directors, officers, employees or consultants. Further, during an
Extension Period, Glacier would have the ability to continue to make payments
on its Senior Debt and Subordinated Debt, if any. Prior to the termination of
any Extension Period, Glacier may further extend such Extension Period
provided that such extension does not cause such Extension Period to exceed 60
consecutive months or to extend beyond the Stated Maturity. Upon the
termination of any Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at the annual rate of
%, compounded quarterly), Glacier may elect to begin a new extension
Period subject to the above requirements. There is no limitation on the number
of times that Glacier may elect to begin an Extension Period. As a consequence
of Glacier's deferral of interest payments, holders of the Trust Preferred
Securities will not receive cash distributions during such deferral periods
(although the Distributions to which holders of the Trust Preferred Securities
are entitled will continue to accumulate until payment in full), and the
market price of the Trust Preferred Securities is likely to be adversely
affected by such deferral. A holder that disposes of such holder's Trust
Preferred Securities during an Extension Period, therefore, might not receive
the same return on such holder's investment as a holder that continues to hold
Trust Preferred Securities. See "Description of the Trust Preferred
Securities--Distributions," "Description of Junior Subordinated Debentures--
Option to Defer Interest Payment Period," and "Description of Junior
Subordinated Debentures--Debenture Events of Default."
TAX CONSEQUENCES OF OPTION TO DEFER INTEREST PAYMENT PERIOD AND OF A DEFERRAL
OF INTEREST PAYMENT
Because Glacier has no current plan to exercise its option to defer payments
of interest and considers the likelihood of exercising the option to be a
remote contingency as of the issue date of the Junior Subordinated Debentures,
it is Glacier's position that the Junior Subordinated Debentures will be
treated as issued without "original issue discount" for United States federal
income tax purposes. As a result, holders of Trust Preferred Securities will
include interest in taxable income under their own methods of accounting
(i.e., cash or accrual). However, if the Internal Revenue Service were to
successfully challenge Glacier's position, or if Glacier exercises its right
to defer payments of interest, the holders of Trust Preferred Securities will
be required to include their pro rata share of original issue discount in
gross income as it accrues for United States federal income tax purposes in
advance of the receipt of cash. If the tax authorities successfully asserted
that, as of the issue date of the Junior Subordinated Debentures, exercise of
the deferment option is not a remote or incidental contingency, interest would
be reportable under the contingent payment debt rules of the Treasury
Regulations as of the issue date. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount." Should Glacier
elect to exercise its right to defer payments of interest in the future, the
market price of the Trust Preferred Securities is likely to be adversely
affected. A holder that disposes of such holder's Trust Preferred Securities
during an Extension Period, therefore, might not receive the same return on
such holder's investment as a holder that continues to hold Trust Preferred
Securities. See "Description of Junior Subordinated Debentures--Option to
Defer Interest Payment Period" and "--Option to Defer Interest Payment
Period."
REDEMPTION PRIOR TO STATED MATURITY
Glacier may, at its option, on or after , 2003, redeem the
Junior Subordinated Debentures in whole at any time or in part from time to
time at 100% of the principal amount together with accrued but unpaid interest
to the date fixed for redemption and therefore cause a mandatory redemption of
the Trust Securities.
In addition, upon the occurrence and during the continuation of a Tax Event
or an Investment Company Event (whether occurring before or after
, 2003), Glacier has the right, if certain conditions are met, to
redeem the Junior Subordinated Debentures in whole (but not in part) at 100%
of the principal amount
17
<PAGE>
together with accrued but unpaid interest to the date fixed for redemption
within 90 days following the occurrence of such Tax Event or Investment
Company Event and therefore cause a mandatory redemption of Trust Securities.
See "Description of the Trust Preferred Securities--Redemption."
A "Tax Event" means the receipt by Glacier and Water Trust I of an opinion
of counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such prospective change, pronouncement or decision is announced on or after
the original issuance of the Trust Preferred Securities, there is more than an
insubstantial risk that (i) Water Trust I is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Junior Subordinated Debentures, (ii)
interest payable by Glacier on the Junior Subordinated Debentures is not, or
within 90 days of such opinion, will not be, deductible by Glacier, in whole
or in part, for United States federal income tax purposes, or (iii) Water
Trust I is, or will be within 90 days of the date of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
An "Investment Company Event" means the receipt by Glacier and Water Trust I
of an opinion of counsel experienced in such matters to the effect that, as a
result of any change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, Water Trust I is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change
becomes effective on or after the original issuance of the Trust Preferred
Securities.
If less than all of the Trust Securities issued by Water Trust I are to be
redeemed on a Redemption Date, then the aggregate Redemption Price for such
Trust Securities to be redeemed shall be allocated pro rata to the Trust
Preferred Securities and the Common Securities based upon the relative
Liquidation Amounts of such classes. The particular Trust Preferred Securities
to be redeemed shall be selected by the Property Trustee from the outstanding
Trust Preferred Securities not previously called for redemption, by such
method as the Property Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $25 or an
integral multiple thereof) of the Liquidation Amount of Trust Preferred
Securities.
POSSIBLE DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TRUST
PREFERRED SECURITIES; RISK OF TAXATION UPON A DISTRIBUTION
Glacier will have the right at any time to dissolve Water Trust I and, after
satisfaction of liabilities to creditors of Water Trust I as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Preferred Securities in liquidation of Water Trust I.
Because holders of the Trust Preferred Securities may receive Junior
Subordinated Debentures in liquidation of Water Trust I and because
Distributions are otherwise limited to payments on the Junior Subordinated
Debentures, prospective purchasers of the Trust Preferred Securities are also
making an investment decision with regard to the Junior Subordinated
Debentures and should carefully review all the information regarding the
Junior Subordinated Debentures contained herein. See "Description of the Trust
Preferred Securities--Liquidation Distribution Upon Dissolution" and
"Description of Junior Subordinated Debentures." If a Tax Event were to occur
which would cause Water Trust I to be subject to United States federal income
tax with respect to income received or accrued on the Junior Subordinated
Debentures, a distribution of the Junior Subordinated Debentures by Water
Trust I could be a taxable event to Water Trust I and the holders of the Trust
Preferred Securities. See "Certain Federal Income Tax Consequences--
Distribution of Junior Subordinated Debentures to Holders of Trust Preferred
Securities."
18
<PAGE>
SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES
Glacier will have the right at any time to shorten the maturity of the
Junior Subordinated Debentures to a date not earlier than five years from the
date of issuance and thereby cause the Trust Preferred Securities to be
redeemed on such earlier date. See "Description of Junior Subordinated
Debentures--Redemption."
LIMITATIONS ON DIRECT ACTIONS AGAINST GLACIER AND ON RIGHTS UNDER THE
GUARANTEE
The Guarantee guarantees to the holders of the Trust Preferred Securities
the following payments, to the extent not paid by Water Trust I: (i) any
accumulated and unpaid Distributions required to be paid on the Trust
Preferred Securities, to the extent that Water Trust I has funds on hand
available therefor at such time, (ii) the redemption price with respect to any
Trust Preferred Securities called for redemption, to the extent that Water
Trust I has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of Water Trust
I (unless the Junior Subordinated Debentures are distributed to holders of the
Trust Preferred Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment to the extent that Water Trust I has funds on hand available therefor
at such time (the "Liquidation Distribution") and (b) the amount of assets of
Water Trust I remaining available for distribution to holders of the Trust
Preferred Securities after satisfaction of liabilities to creditors of Water
Trust I as required by applicable law. The holders of not less than a majority
in aggregate liquidation amount of the Trust Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust power conferred upon the Guarantee Trustee
under the Guarantee Agreement. Any holder of the Trust Preferred Securities
may institute a legal proceeding directly against Glacier to enforce its
rights under the Guarantee without first instituting a legal proceeding
against Water Trust I, the Guarantee Trustee or any other person or entity. If
Glacier were to default on its obligation to pay amounts payable under the
Junior Subordinated Debentures, Water Trust I would lack funds for the payment
of Distributions or amounts payable on redemption of the Trust Preferred
Securities or otherwise, and, in such event, holders of the Trust Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, in the event a Debenture Event of Default shall have
occurred and be continuing and such event is attributable to the failure of
Glacier to pay interest on or principal of the Junior Subordinated Debentures
on the date on which such payment in due and payable, then a holder of Trust
Preferred Securities may institute a legal proceeding directly against Glacier
for enforcement of payment to such holder of the principal of or interest on
such Junior Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Trust Preferred Securities of such holder
(a "Direct Action"). In connection with such Direct Action, Glacier will have
a right of set-off under the Indenture to the extent of any payment made by
Glacier to such holder of Trust Preferred Securities in the Direct Action.
Except as described herein, holders of Trust Preferred Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures or assert directly any other rights in respect
of the Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Trust Preferred
Securities" and "Description of Guarantee." The Trust Agreement provides that
each holder of Trust Preferred Securities by acceptance thereof agrees to the
provisions of the Guarantee Agreement and the Indenture.
ABILITY TO MAKE PAYMENTS ON THE TRUST PREFERRED SECURITIES AND JUNIOR
SUBORDINATED DEBENTURES; DEPENDENCE ON SUBSIDIARIES
The ability of Water Trust I to pay amounts due on the Trust Preferred
Securities is solely dependent upon Glacier making payments on the Junior
Subordinated Debentures as and when required. Glacier will have significant
interest expense under the Junior Subordinated Debentures. As of October 5,
1997, after giving effect to the offering and the application of net proceeds
therefrom, Glacier would have had approximately $65 million of indebtedness
outstanding on a consolidated basis. As a holding company without significant
assets other than its equity interest in GW Services, Glacier's ability to pay
interest on the Junior Subordinated Debentures to Water Trust I (and
consequently, Water Trust I's ability to pay distributions on the Trust
Preferred Securities and Glacier's ability to pay its obligations under the
Guarantee) depends primarily on cash and liquid investments
at Glacier and upon cash dividends and interest payments Glacier may receive
in the future from GW Services
19
<PAGE>
and its other subsidiaries. Such subsidiaries' ability to make payments to
Glacier is subject to such subsidiaries' profitability, financial condition,
and capital expenditure and other cash flow requirements. In addition, the
Indenture does not prohibit Glacier or such subsidiaries from incurring
additional indebtedness including indebtedness secured by their assets or
properties, or from entering into credit agreements or other financial
arrangements that restrict such subsidiaries' from making payments to Glacier.
The Company has entered into negotiations regarding a new credit facility.
While the Company expects that its operating cash flow will be sufficient to
cover its expenses including interest costs, there can be no assurance with
respect thereto. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation."
LIMITED COVENANTS; ABSENCE OF SINKING FUND
The covenants in the Indenture are limited. The Company is not required
under the Indenture to meet any financial tests that measure the Company's
working capital, interest coverage or net worth in order to comply with the
terms of the Indenture. There are no covenants relating to Glacier in the
Trust Agreement. As a result, neither the Indenture nor the Trust Agreement
protects holders of Junior Subordinated Debentures, or Trust Preferred
Securities, respectively, in the event of a material adverse change in
Glacier's or the Company's financial condition or results of operations, or
limits the ability of Glacier or any subsidiary to incur additional
indebtedness. Therefore, the provisions of these governing instruments should
not be considered a significant factor in evaluating whether Glacier will be
able to comply with its obligations under the Junior Subordinated Debentures
or the Guarantee. Further, the Junior Subordinated Debentures do not have the
benefit of any sinking fund payments by Glacier.
LIMITED VOTING RIGHTS
The holders of the Trust Preferred Securities will have no voting rights
except in limited circumstances relating only to the modification of the Trust
Preferred Securities and the exercise of the rights of Water Trust I as
holders of the Junior Subordinated Debentures and the Guarantee. Except as
provided below, the affirmative consent of the holders of at least a majority
of the outstanding Trust Preferred Securities will be required by Water Trust
I for amendments to the Trust Agreement that would affect adversely the rights
or privileges of the holders of the Trust Preferred Securities. Holders of
Trust Preferred Securities will not be entitled to vote to appoint, remove or
replace the Property Trustee or the Delaware Trustee, and such voting rights
are vested exclusively in the holder of the Common Securities except upon the
occurrence of certain events described herein. In no event will the holders of
the Trust Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees; such voting rights are vested exclusively
in the holder of the Common Securities. The Property Trustee, the
Administrative Trustees and Glacier may amend the Trust Agreement without the
consent of holders of the Trust Preferred Securities to ensure that Water
Trust I will be classified for United States federal income tax purposes as a
grantor trust or to ensure that Water Trust I will not be required to register
as an "investment company" under the Investment Company Act, even if such
action adversely affects the interests of such holders. See "Description of
the Trust Preferred Securities--Voting Rights; Amendment of the Trust
Agreement" and "--Removal of Trustees."
ABSENCE OF EXISTING PUBLIC MARKET; MARKET PRICES
There is no existing market for the Trust Preferred Securities. The Trust
Preferred Securities have been approved for listing on the American Stock
Exchange, subject to notice of issuance. There can be no assurance, however,
that an active and liquid trading market for the Trust Preferred Securities
will develop or that a continued listing of the Trust Preferred Securities
will be available on the American Stock Exchange. Although the Underwriters
have informed Water Trust I and the Company that the Underwriters intend to
make a market in the Trust Preferred Securities offered hereby, the
Underwriters are not obligated to do so and any such market making activity
may be terminated at any time without notice to the holders of the Trust
Preferred Securities. Future trading prices of the Trust Preferred Securities
will depend on many factors including, among other things, prevailing interest
rates, the operating results and financial condition of the Company, and the
market for similar securities. As a result of the existence of Glacier's right
to defer interest payments on or shorten the Stated Maturity of the Junior
Subordinated Debentures, the market price of the Trust Preferred Securities
may be more
20
<PAGE>
volatile than the market prices of debt securities that are not subject to
such optional deferrals or reduction in maturity. There can be no assurance as
to the market prices for the Trust Preferred Securities or the Junior
Subordinated Debentures that may be distributed in exchange for the Trust
Preferred Securities if Glacier exercises its right to terminate Water Trust
I. Accordingly, the Trust Preferred Securities that an investor may purchase,
or the Junior Subordinated Debentures that a holder of the Trust Preferred
Securities may receive in liquidation of Water Trust I, may trade at a
discount from the price that the investor paid to purchase the Trust Preferred
Securities offered hereby.
RISK FACTORS RELATING TO THE COMPANY
MANAGEMENT OF GROWTH
The Company's growth strategy includes adding new machines within the states
in which the Company currently operates, as well as placing new machines
throughout the United States and in select markets internationally. In
addition, the Company intends to evaluate and pursue select strategic
acquisition opportunities. There can be no assurance that the Company's growth
strategy will be successful or that the Company will be able to successfully
manage any such growth. Rapid growth may adversely affect the Company's
operating results because of many factors, including start-up costs, diversion
of management time and resources and difficulties and complications in
integrating expanded operations and acquisitions.
TRADE RELATIONS OF THE COMPANY
The Company's arrangements with its retail trade accounts generally are
evidenced by written contracts with durations ranging from 30 days up to 5
years. However, substantially all of the Company's arrangements are terminable
by the retailers on short notice. Typically, supermarket chains and other
retailers in the food and beverage industry do not enter into long-term
contracts with suppliers. There can be no assurance that retailers will not
terminate their relationships with the Company or that the Company's retailers
will renew their contracts on similar terms.
The Company's most significant account in fiscal 1996 was Ralphs Grocery
Company, a California-based chain of supermarkets operating under the names
Ralphs, Food-4-Less, Cala Foods, Bell Markets and Foods Co. (referred to
collectively herein as "Ralphs"). During fiscal 1996, approximately 10% of the
Company's total revenues were derived from sales from machines located at
Ralphs stores. Prior to fiscal year 1996, the Company's most significant
account was Vons, a California-based chain of supermarkets. Approximately 9%
of the Company's total revenues were derived from sales from machines located
at Vons stores during fiscal 1996. The Company entered into its most recent
contract with Ralphs in December of 1996. This contract, which succeeds a
previous contract with certain Ralphs locations, has a five-year term. The
Company currently is negotiating a new contract with Safeway, the parent
company of Vons, to replace its recently expired written agreement with Vons.
During the negotiations, the Company and Vons are continuing to operate under
the terms of the prior contract. While the Company believes its relations with
Ralphs, Vons and its other accounts are good, any termination of the Company's
relationships with its significant accounts would adversely affect the
Company. See "Business--Maintain Trade Relations."
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
Although the Company currently does not conduct significant operations
outside of the United States, the Company intends to expand its operations
into select international markets. The Company is planning to place water
vending machines in Mexico City, Mexico during 1998 as its initial entry into
the international market. Such operations may be affected by risks associated
with economic, political and governmental conditions in the countries where
the Company may choose to operate, such as exchange rate fluctuation, adverse
currency or exchange controls, restrictions imposed on the Company's
operations, general political instability or expropriation. If the Company
operates in foreign countries and such conditions occur in such countries, the
Company's international operations may be materially adversely affected.
21
<PAGE>
COMPETITION
The bottled water market is highly competitive. The Company competes in the
nonsparkling segment of the bottled water market with companies that deliver
water to homes and offices, with off-the-shelf marketers and with other water
vending machine operators. Many of the Company's competitors have
significantly greater resources than the Company. Since the Company's primary
competitive advantage over delivered water and off-the-shelf marketers is
price, a substantial decline in the price of either delivered or off-the-shelf
bottled water could adversely affect the demand for water dispensed from the
Company's water vending machines.
Although the Company believes that there are significant barriers to entry
to new and existing competitors in the water vending market due to, among
other things, the substantial capital outlay required to purchase the number
of machines needed to achieve competitive operating efficiencies, a competitor
with significant financial resources may be able to compete with the Company.
There can be no assurance that any competitors will not be able to raise the
required capital to effectively compete with the Company. See "Business--
Competition."
PRODUCT LIABILITY
The Company could be subject to claims for personal injury resulting from
the use or consumption of its products, including liability due to the
presence of contaminants in its vended water. The Company currently maintains
product liability insurance which it believes to be adequate. However, such
coverage is limited, and there can be no assurance that the Company will not
be subject to a damage award in excess of its coverage which could adversely
affect its business. In addition to direct losses resulting from product
liability claims, the Company may suffer adverse publicity and damage to its
reputation in the event of a claim regarding the quality of the Company's
vended water, which could have a material adverse effect on sales and
profitability regardless of the merits of such claim.
INTELLECTUAL PROPERTY PROTECTION OF THE COMPANY
The tradename and trademarks "Glacier Water" and "Glacier Water & Penguin
Design" used by the Company include the word "Glacier" which is commonly used
and has been registered in connection with other marks and designs by a number
of other entities for water and related services. The mark "Glacier Water," by
itself, is considered by the United States Patent and Trademark Office (the
"PTO") to be generic in relation to water and related services. One party
claiming to sell bottled water in a limited area near Incline Village, Nevada,
informed the Company that it objected to the Company's use of the mark
"Glacier Water." However, the PTO has cancelled this party's registration.
Accordingly, the Company believes that no party can claim exclusive rights in
"Glacier Water," and the Company may only claim rights to stylized forms of
the mark or the mark with design elements. Notwithstanding the foregoing, no
assurance can be given that other entities might not assert superior or
exclusive rights in the marks and seek to obtain damages from and injunctive
relief against the Company. Thus, there can be no assurance that the Company's
use of the tradename and trademarks "Glacier Water" and "Glacier Water &
Penguin Design" will not violate the proprietary rights of others, which, if
such party challenged the use of such name and marks, could have a material
adverse effect on the Company.
The Company does not hold any patents. Additionally, in response to a third
party alleging that certain features of the Company's water vending machines
violate such party's patents, the Company filed a lawsuit against such third
party on October 28, 1997, seeking a declaration that the patents held by such
third party are invalid under United States patent law and that the Company's
water vending machines do not infringe any valid claim of the patents. On
November 17, 1997, the defendant filed an answer to the complaint and a
counterclaim alleging that the Company is infringing its patents. There can be
no assurance that the lawsuit ultimately will be resolved in favor of the
Company or that the Company will not have to make modifications to its
machines. See "Business--Intellectual Property."
22
<PAGE>
GOVERNMENT REGULATION OF THE COMPANY'S OPERATIONS
The water vending industry is subject to various federal, state and local
laws and regulations, which require the Company, among other things, to obtain
licenses for its business and vending machines, to pay annual license and
inspection fees, to comply with certain detailed design and quality standards
regarding the vending machines and the vended water, and to continuously
control the quality of the vended water. The Company's vending machines are
subject to routine and random regulatory quality inspections. Although the
Company believes it is operating in substantial compliance with these laws and
regulations, such laws and regulations and their interpretations and
enforcement are subject to change. There can be no assurance that additional
or more stringent requirements will not be imposed on the Company's operations
in the future. Failure to comply with such current or future laws and
regulations could result in fines against the Company, a temporary shutdown of
the Company's operations, the loss of certification to sell its product or,
even in the absence of governmental action, a reduction in the Company's
profit margins based on increases in licensing or inspection fees payable by
the Company or other additional compliance costs. See "Business--Government
Regulation."
BROAD DISCRETION IN USE OF PROCEEDS; RISKS INHERENT TO INVESTMENT OF PROCEEDS
Although the Company will use approximately $29.0 million of the proceeds
from the offering to pay off the outstanding indebtedness under the Credit
Facility, the remaining proceeds from the offering will be used for general
corporate purposes, including financing the Company's expansion. Thus,
management will have broad discretion in allocating the remaining proceeds of
the offering. The Company may invest a portion of the proceeds of the offering
in investment grade and non-investment grade debt and equity securities, which
securities have varying risks of loss. See "Use of Proceeds" and "Certain
Relationships."
23
<PAGE>
USE OF PROCEEDS
All of the proceeds from the sale of Trust Preferred Securities will be
invested by Water Trust I in the Junior Subordinated Debentures. The net
proceeds to Glacier from the sale of the Junior Subordinated Debentures are
estimated to be approximately $62.0 million, net of estimated underwriting
compensation and other estimated offering expenses. Glacier will use
approximately $29.0 million of the net proceeds of the sale of the Trust
Preferred Securities to pay off its outstanding indebtedness under the Credit
Facility. Glacier intends to use the remaining net proceeds for general
corporate purposes, which may include, without limitation, funding additional
investments in, or extensions of credit to, GW Services and its other
operating subsidiaries for the expansion of operations and possible future
acquisitions. Thus, management will have broad discretion in allocating such
remaining proceeds.
Pending their application, the net proceeds may be invested in a portfolio
of securities (which may include non-investment grade debt or equity
securities) managed by Kayne Anderson, an affiliate of the Company. Kayne
Anderson manages funds for certain insurance companies, institutional
investors and individuals and will charge Glacier a reasonable management fee
for its services. Three members of the Company's Board of Directors, including
Mr. Welch, also serve as executive officers of Kayne Anderson. See "Risk
Factors--Broad Discretion in Use of Proceeds; Risks Inherent to Investment of
Proceeds" and "Certain Relationships."
The Credit Facility provides for borrowings of up to $35.0 million, and
requires monthly interest payments at the bank's prime rate (8.5% per annum at
October 5, 1997) or LIBOR plus 1.75%. Approximately $26.0 million of
borrowings were outstanding under the Credit Facility as of October 5, 1997
and approximately $29.0 million as of the date hereof. The Credit Facility
provides for a two-year interest-only revolving period which converts into a
five-year term note due and payable on July 1, 2003. Borrowings under the
Credit Facility were used to finance the Aqua-Vend acquisition, to fund the
expansion of operations and for general corporate purposes.
ACCOUNTING TREATMENT
For financial reporting purposes, Water Trust I will be treated as a
subsidiary of Glacier and, accordingly, the accounts of Water Trust I will be
included in the consolidated financial statements of the Company. The Trust
Preferred Securities will be presented as a separate line item in the
consolidated balance sheet of the Company under the caption "Company Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely
Junior Subordinated Debentures," and appropriate disclosures about the Trust
Preferred Securities, the Guarantee and the Junior Subordinated Debentures
will be included in the notes to consolidated financial statements. For
financial reporting purposes, the Company will record Distributions payable on
the Trust Preferred Securities as interest expense in the consolidated
statements of operations.
Future reports of Glacier filed under the Exchange Act, will include a
footnote to the financial statements stating that (i) Water Trust I is wholly
owned, (ii) the sole assets of Water Trust I are the Junior Subordinated
Debentures (specifying the principal amount, interest rate and maturity date
of such Junior Subordinated Debentures), and (iii) the back up obligations, in
the aggregate, constitute a full and unconditional guarantee by Glacier of the
obligations of Water Trust I under the Trust Preferred Securities. Water Trust
I will not provide separate reports under the Exchange Act.
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<PAGE>
CAPITALIZATION
The following table sets forth the cash and capitalization of the Company at
October 5, 1997 and as adjusted to reflect the issuance by Water Trust I of
the 2,600,000 Trust Preferred Securities offered hereby and the receipt by
Glacier of the proceeds, net of estimated underwriting compensation and other
estimated offering expenses, from the corresponding sale of the Junior
Subordinated Debentures to Water Trust I, and the application of the net
proceeds therefrom as described under "Use of Proceeds."
<TABLE>
<CAPTION>
OCTOBER 5, 1997
-----------------
AS
ACTUAL ADJUSTED
------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash......................................................... $ 10 $35,978
======= =======
Long-term debt............................................... $26,022 $ --
Company obligated mandatorily redeemable preferred securities
of subsidiary trust holding solely junior subordinated
debentures(1)............................................... -- 65,000
Stockholders' Equity:
Preferred stock, $.01 par value: 100,000 shares authorized,
none outstanding.......................................... -- --
Common Stock, $.01 par value: 10,000,000 shares authorized,
3,283,228 shares outstanding(2)(3)........................ 34 34
Additional paid-in capital................................. 15,481 15,481
Retained earnings.......................................... 12,550 12,550
Treasury stock, 170,500 shares, at cost(3)................. (3,563) (3,563)
------- -------
Total stockholders' equity............................... 24,502 24,502
------- -------
Total capitalization..................................... $50,524 $89,502
======= =======
</TABLE>
- --------
(1) The subsidiary trust is Water Trust I, which will hold an aggregate
principal amount of $67,010,300 of Glacier's % Junior Subordinated
Debentures as its sole asset. The Trust Preferred Securities are issued by
Water Trust I. The sole asset of Water Trust I is the Junior Subordinated
Debentures issued by Glacier to Water Trust I. The Junior Subordinated
Debentures will bear interest at the rate of % per annum and will
mature on , 2028, which date may be shortened to a date not earlier
than , 2003 if certain conditions are met. The Junior Subordinated
Debentures are redeemable prior to maturity at the option of Glacier (i)
on or after , 2003, in whole at any time or in part from time to
time, or (ii) at any time, in whole (but not in part), within 90 days
following the occurrence and continuation of a Tax Event or an Investment
Company Event (each as defined herein). See "Description of Junior
Subordinated Debentures--Redemption." Glacier owns all of the Common
Securities of Water Trust I.
(2) Excludes 542,250 shares of Common Stock reserved for issuance under the
Company's 1994 Stock Compensation Program, of which 413,556 shares were
issuable upon exercise of options outstanding as of October 5, 1997.
(3) In December 1995 and December 1996, the board of directors of the Company
authorized the repurchase of an aggregate of 500,000 shares of Common
Stock, of which 170,500 had been repurchased as of October 5, 1997. An
additional 329,500 shares of Common Stock, approximately 10.2% of the
Company's total shares outstanding, remained available for repurchase
under the Company's stock repurchase program as of October 5, 1997.
25
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION
The following selected consolidated statements of income data and
consolidated balance sheet data of the Company as of and for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992 has been derived from the
Company's audited consolidated financial statements. The following selected
consolidated statements of income data and consolidated balance sheet data of
the Company as of and for the nine months ended October 5, 1997 and September
30, 1996 have been derived from the Company's unaudited consolidated quarterly
financial statements which, in the opinion of management, include all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation. The information contained herein should be read in
conjunction with the Company's consolidated financial statements and related
notes included elsewhere herein. The consolidated financial information for
the nine months ended October 5, 1997 is not necessarily indicative of the
operating results to be expected for the entire year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------- SEPTEMBER 30, OCTOBER 5,
1992 1993 1994 1995 1996 1996 1997(1)
--------- --------- --------- --------- --------- ------------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF INCOME DATA:(2)
Revenues................ $ 27,182 $ 30,636 $ 36,557 $ 42,409 $ 46,091 $ 35,760 $ 44,352
Costs and expenses:
Operating expenses..... 18,356 20,065 23,504 25,933 28,088 22,009 27,482
General and
administrative
expenses.............. 3,702 4,512 4,791 5,483 5,733 4,155 5,461
Depreciation and
amortization.......... 1,995 2,692 3,662 5,756 6,769 4,991 6,515
Non-recurring
charges(3)............ -- -- -- -- -- -- 3,062
--------- --------- --------- --------- --------- --------- ---------
Total costs and
expenses............ 24,053 27,269 31,957 37,172 40,590 31,155 42,520
--------- --------- --------- --------- --------- --------- ---------
Income from operations.. 3,129 3,367 4,600 5,237 5,501 4,605 1,832(9)
Interest expense, net... 476 38 317 723 783 553 1,370
--------- --------- --------- --------- --------- --------- ---------
Income before income
taxes.................. 2,653 3,329 4,283 4,514 4,718 4,052 462
Income tax provision.... 1,016 1,282 1,578 1,805 1,415 1,337 143
--------- --------- --------- --------- --------- --------- ---------
Net income.............. $ 1,637 $ 2,047 $ 2,705 $ 2,709 $ 3,303 $ 2,715 $ 319(9)
========= ========= ========= ========= ========= ========= =========
Net income per share.... $ 0.54 $ 0.62 $ 0.80 $ 0.80 $ 0.98 $ 0.80 $ 0.10(9)
========= ========= ========= ========= ========= ========= =========
Weighted average common
and common equivalent
shares outstanding..... 3,058,029 3,299,130 3,367,151 3,405,104 3,374,482 3,389,893 3,324,525
========= ========= ========= ========= ========= ========= =========
OTHER DATA (UNAUDITED):
EBITDA(4)............... $ 5,124 $ 6,059 $ 8,262 $ 10,993 $ 12,270 $ 9,596 $ 11,409
Net cash provided by
operating activities... 3,275 4,277 3,490 7,385 7,193 7,531 6,801
Net cash used in
investing
opportunities.......... (5,040) (6,131) (10,597) (10,791) (8,540) (5,478) (17,454)
Net cash provided by
financing activities... 2,752 901 7,095 3,362 1,329 (1,216) 10,652
MACHINE DATA:
Number of machines at
beginning of period.... 2,990 3,666 4,780 6,725 8,518 8,518 9,164
Number of machines added
during period, net..... 676 1,114 1,945 1,793 646 376 3,006
Number of machines at
end of period.......... 3,666 4,780 6,725 8,518 9,164 8,894 12,170
GROWTH RATES:
Revenue growth.......... * 12.7% 19.3% 16.0% 8.7% * 24.0 %
EBITDA growth(4)........ * 18.2% 36.4% 33.1% 11.6% * 18.9 %
Income from operations
growth................. * 7.6% 36.6% 13.8% 5.0% * (60.2)%(10)
MARGINS:
EBITDA margin(4)(5)..... 18.9% 19.8% 22.6% 25.9% 26.6% 26.8% 25.7 %
Income from operations
margin(6).............. 11.5% 11.0% 12.6% 12.3% 11.9% 12.9% 4.1 %(10)
RATIOS:
EBITDA to interest
expense, net(4)........ 10.8x 159.4x 26.1x 15.2x 15.7x 17.4x 8.3x
Earnings to fixed
charges(7)............. 8.8x 22.5x 9.0x 5.2x 5.1x 6.0x 1.3x
Pro forma ratio of
earnings to fixed
charges(7)(8).......... -- -- -- -- 3.9x -- 1.2x
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
SEPTEMBER 30, OCTOBER 5,
1992 1993 1994 1995 1996 1996 1997(1)
------- ------- ------- ------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Total assets............ $20,119 $23,415 $34,042 $40,638 $46,067 $43,443 $58,515
Long-term debt,
including current
portion................ 880 1,510 8,199 11,087 15,820 10,289 26,022
Stockholders' equity.... 15,218 17,265 20,376 24,087 23,986 26,384 24,502
</TABLE>
- --------
(1) The Company elected on May 8, 1997 to change its fiscal year end from
December 31 to the fifty-two or fifty-three week period ending on the
Friday closest to December 31. On October 23, 1997, the Company further
modified its fiscal year end to more closely align its fiscal reporting to
its business cycle to the fifty-two or fifty-three week period ending on
the Sunday closest to December 31.
(2) Certain amounts have been reclassified to conform to the current
presentation.
(3) Non-recurring charges in 1997 represent costs incurred to integrate Aqua-
Vend's operations with the Company's following the March 28, 1997 asset
purchase.
(4) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization and non-recurring charges. EBITDA is not
intended to represent cash flow from operations as defined by generally
accepted accounting principles and should not be considered as an
alternative to cash flow or as a measure of liquidity or as an alternative
to net earnings as indicative of operating performance. The Company's
reported EBITDA may not be comparable to similarly titled measures of
other companies that do not have non-recurring charges. EBITDA, EBITDA
margin, EBITDA growth and EBITDA to interest expense, net are included
herein because management believes they are useful for measuring the
Company's ability to service its debt.
(5) EBITDA margins represent EBITDA divided by revenues.
(6) Income from operations margins represents income from operations divided
by revenues.
(7) For purposes of calculating the ratio and pro forma ratio of earnings to
fixed charges, earnings consist of income before income taxes, plus fixed
charges. Fixed charges consist of the interest expense on all indebtedness
and the estimated representative interest factor of rental expense.
(8) The average outstanding debt balances for the year ending December 31,
1996 and the nine-month period ending October 5, 1997 were approximately
$13,454,000 and $22,621,000, respectively. The pro forma ratios assume the
replacement of this indebtedness with a corresponding amount of Junior
Subordinated Debentures. If, on a consolidated basis, the entire
$65,000,000 principal amount of Junior Subordinated Debentures had been
outstanding throughout the periods, total interest expense would have been
approximately $6,094,000 and $4,570,000, respectively.
(9) Information presented in the table does not exclude non-recurring charges.
Excluding non-recurring charges of $3,062,000 for the nine months ended
October 5, 1997, income from operations, net income and net income per
share would have been $4,894,000, $2,432,000 and $.73, respectively.
(10) Information presented in the table does not exclude non-recurring
charges. Excluding non-recurring charges of $3,062,000 for the nine
months ended October 5, 1997, income from operations growth would have
been 6.3% and income from operations margin would have been 11.0%.
* Numbers are omitted as prior period has not been presented herein.
QUARTERLY DATA
The following table sets forth certain unaudited consolidated operating
results for each of the periods presented. This information has been prepared
on the same basis as the audited consolidated financial statements contained
herein and includes all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of such periods.
The Company's revenues are subject to seasonal fluctuations with decreased
revenues during cold weather months and increased revenues during hot weather
months.
<TABLE>
<CAPTION>
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, APRIL 4, JULY 4, OCT. 5,
1995 1995 1996 1996 1996 1996 1997 1997 1997
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 13,193 $ 9,553 $ 10,015 $ 12,036 $ 13,709 $ 10,331 $ 11,176 $ 16,038 $ 17,138
Costs and expenses:
Operating expenses...... 7,969 5,877 6,301 7,407 8,302 6,078 7,075 9,834 10,573
General and
administrative
expenses............... 1,451 1,355 1,286 1,460 1,408 1,579 1,613 1,856 1,992
Depreciation and
amortization........... 1,509 1,582 1,634 1,653 1,704 1,778 1,880 2,318 2,317
Non-recurring charges... -- -- -- -- -- -- 471 870 1,721
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Income from operations.. 2,264 739 794 1,516 2,295 896 137 1,160 535
Interest expense, net... 210 168 195 184 174 230 314 524 532
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) before
income taxes........... 2,054 571 599 1,332 2,121 666 (177) 636 3
Income tax provision
(benefit).............. 821 228 239 533 565 78 (66) 238 (29)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss)....... $ 1,233 $ 343 $ 360 $ 799 $ 1,556 $ 588 $ (111) $ 398 $ 32
========= ========= ========= ========= ========= ========= ========= ========= =========
Income (loss) per share. $ 0.36 $ 0.10 $ 0.11 $ 0.24 $ 0.46 $ 0.18 $ (0.03) $ 0.12 $ 0.01
========= ========= ========= ========= ========= ========= ========= ========= =========
Weighted average common
and common equivalent
shares................. 3,397,746 3,405,572 3,406,797 3,389,589 3,398,650 3,327,953 3,316,391 3,310,010 3,351,034
========= ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the percentage of
revenues represented by certain items included in the Consolidated Statements
of Income:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED ------------------------
DECEMBER 31,
------------------- SEPTEMBER 30, OCTOBER 5,
1994 1995 1996 1996 1997
----- ----- ----- ------------- ----------
<S> <C> <C> <C> <C> <C>
Revenues...................... 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Operating expenses.......... 64.3% 61.2% 60.9% 61.5% 62.0%
General and administrative
expenses................... 13.1% 12.9% 12.4% 11.6% 12.3%
Depreciation and
amortization............... 10.0% 13.6% 14.8% 14.0% 14.7%
Non-recurring charges....... -- -- -- -- 6.9%
----- ----- ----- ----- -----
Total costs and expenses.. 87.4% 87.7% 88.1% 87.1% 95.9%
----- ----- ----- ----- -----
Income from operations........ 12.6% 12.3% 11.9% 12.9% 4.1%
Interest expense, net......... .9% 1.7% 1.7% 1.6% 3.1%
----- ----- ----- ----- -----
Income before income taxes.... 11.7% 10.6% 10.2% 11.3% 1.0%
===== ===== ===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
Nine Months Ended October 5, 1997 and September 30, 1996
OVERVIEW
The Company previously reported that effective January 1, 1997, it had
prospectively changed its fiscal year from twelve calendar months ending
December 31, to a 52- or 53-week fiscal year ending on the Friday closest to
December 31. In order to more closely align its fiscal reporting to its
business cycle, the Company has further modified its fiscal reporting to end
its fiscal year on the Sunday closest to December 31. As a result of these
changes, the Company's 1997 fiscal quarters each contained 13 calendar weeks.
Accordingly, the third quarter ended on October 5, 1997 and contained 93 days,
and the Company's fiscal year will end on January 4, 1998. The change in
fiscal reporting was not applied retroactively, as there would be no impact on
the operating results for the first two quarters.
On March 28, 1997, the Company purchased substantially all of the assets of
the Aqua-Vend division of McKesson Water Products Company, a wholly-owned
subsidiary of McKesson Corporation. The assets purchased included
approximately 3,000 water vending machines. In connection with the
acquisition, the Company developed a detailed integration plan which included
the removal of approximately 600 Aqua-Vend machines from service, the
upgrading and modification of the majority of the remaining Aqua-Vend machines
and the rationalization and relocation of Aqua-Vend machines within Glacier's
network of machines. The revenues and operating costs associated with these
machines from March 29, 1997 are included in the Company's results of
operations.
During the third quarter, the Company substantially completed the Aqua-Vend
integration activities and incurred non-recurring expenses of $1,721,000
related to these activities. As of October 5, 1997, the Company had incurred
total non-recurring expenses of $3,062,000 to complete the integration of the
Aqua-Vend machines. The Company does not expect to incur any further non-
recurring expenses associated with the Aqua-Vend integration.
During the third quarter, the Company installed 109 new outside machines and
83 in-store machines and removed 326 Aqua-Vend machines, to finish the third
quarter with a total of 12,170 machines in operation, compared with 8,894 at
September 30, 1996. Included in the total at October 5, 1997 are 460 in-store
machines, compared with 87 at September 30, 1996.
28
<PAGE>
REVENUES
Revenues for the quarter ended October 5, 1997 increased 25.0% to
$17,138,000, from $13,709,000 in the third quarter of 1996. Revenues for the
first nine months of 1997 increased 24.0% to $44,352,000, from $35,760,000 in
the same period last year. The increases are primarily the result of the
increased number of machines in operation throughout the quarter and nine-
month periods. The increases in revenues, however, did not keep pace with the
36.8% increase in the number of machines in operation since September 30, 1996
due primarily to unusually mild weather during July and August in California,
the Company's largest and most important market.
COSTS AND EXPENSES
Operating expenses for the quarter increased to $10,573,000, or 61.7% of
revenues, compared to $8,302,000, or 60.6% of revenues in the second quarter
of 1996. Operating expenses for the nine-month period increased to
$27,482,000, or 62.0% of revenues, compared to $22,009,000, or 61.5% of
revenues in 1996. The total dollar increase is due to the additional
commissions and service costs associated with the additional machines in 1997.
The total dollar increase in operating expenses is due also in part to
inefficiencies in servicing and other short term increases in service costs
experienced as the Company focused its efforts on completing the integration
of Aqua-Vend in the third quarter. These increased costs related to Aqua-Vend
are in addition to the specific costs associated with the Company's identified
integration projects that are reported separately as non-recurring charges.
The increase in operating expenses as a percentage of revenues for both the
quarter and nine-month period is a result of the increase in servicing costs,
as well as the effect of softer revenues in the third quarter, discussed
above.
General and administrative expenses ("G&A") for the quarter increased to
$1,992,000, or 11.6% of revenues, compared to $1,408,000, or 10.3% of revenues
in the third quarter of 1996. G&A expenses for the nine-month period increased
to $5,461,000, or 12.3% of revenues, compared to $4,155,000, or 11.6% of
revenues in 1996. The increase in total dollars is due to an increase in the
Company's activities supporting and promoting the in-store machine program, as
well as additional administrative expenses incurred as a result of the Aqua-
Vend acquisition. The increase in G&A as a percentage of revenues for both the
quarter and nine-month period resulted primarily from the effect of softer
sales in the third quarter, discussed above.
Depreciation and amortization expense for the quarter increased to
$2,317,000, compared to $1,704,000 in the third quarter of 1996. Depreciation
and amortization expense for the nine-month period increased to $6,515,000,
compared to $4,991,000 in the prior year. The increases are the result of the
net installation of approximately 875 new Glacier machines and the addition of
approximately 2,400 Aqua-Vend machines since September 30, 1996.
The Company had expected to incur a total of approximately $3.5 million in
non-recurring expenses related to the integration of Aqua-Vend's operations
with Glacier's. Specifically, the integration plan included costs to close
certain Glacier locations and write-off obsolete assets, to upgrade the Aqua-
Vend machines to Glacier's servicing and operability standards, to rationalize
and relocate equipment between Aqua-Vend and Glacier locations and to change
the signage on Aqua-Vend machines to that used by Glacier. As of October 5,
1997, the Company has completed substantially all of these activities at a
total cost of $3,062,000. The Company does not expect to incur any additional
costs related to the integration project in the fourth quarter.
Interest expense for the quarter increased to $532,000, compared to $174,000
in the third quarter of 1996. Interest expense for the nine-month period
increased to $1,370,000 compared to $553,000 in the prior year. The increases
are due to the higher outstanding balances on the Company's bank line of
credit throughout 1997. Borrowings throughout the year were used to finance
the Company's investment in new machines, and to finance the acquisition of
Aqua-Vend.
In the third quarter, the Company recorded an income tax benefit to reflect
the cumulative effect of reducing the effective tax rate from 37.5% to 31.0%
for the nine-month period ended October 5, 1997. The Company
29
<PAGE>
reduced its tax rate to reflect the impact of certain tax credits, and it
expects the tax rate to approximate 31.0% for the fiscal year 1997. In the
third quarter of 1996, the Company's effective tax rate of 26.6% reflects a
similar cumulative adjustment to reduce the tax rate to 33.0% for the nine-
month period ended September 30, 1996.
As a result of the foregoing, net income for the quarter ended October 5,
1997 declined to $32,000, or $.01 per share, from $1,556,000, or $.46 per
share in the prior year. For the nine-month period ended October 5, 1997, net
income declined to $319,000, or $.10 per share, from $2,715,000, or $.80 per
share for the same period last year.
For the quarter ended October 5, 1997, EBITDA increased 14.4% to $4,573,000,
from $3,999,000 in the prior year. For the nine-month period ended October 5,
1997, EBITDA increased 18.9% to $11,409,000, from $9,596,000 for the same
period last year. The EBITDA margin for the quarter ended October 5, 1997 was
26.7%, compared to 29.2% last year, while the EBITDA margin for the nine-month
period was 25.7%, compared to 26.8% for the same period last year.
Years Ended December 31, 1996, 1995 and 1994
REVENUES
Revenues consist primarily of revenues generated from consumer use of the
Company's water vending machines. Revenues in 1996 increased by 8.7% over
1995, to $46.1 million. Revenues in 1995 increased by 16.0% over 1994, to
$42.4 million. The growth in revenues in both years is primarily attributable
to the increase in the number of Company vending machines in operation.
COSTS AND EXPENSES
Operating expenses and general and administrative expenses increased in
absolute dollars from 1995 to 1996 and from 1994 to 1995 principally due to
the increase in the number of Company vending machines in operation described
above. Operating expenses decreased as a percentage of revenues to 60.9% in
1996, compared to 61.2% in 1995 and 64.3% in 1994. The decreases were due
primarily to increased efficiencies in route servicing.
G&A expenses decreased as a percentage of revenues to 12.4% in 1996, from
12.9% in 1995 and 13.1% in 1994. The decreases as a percentage of revenue in
each year result from the Company's ability to more efficiently utilize its
corporate infrastructure in supporting the growth in its installed base of
machines.
Depreciation and amortization increased 17.6% over 1995 to $6.8 million in
1996, and 57.2% over 1994 to $5.8 million in 1995. The increases are due
primarily to the Company's continued investment in new vending machines.
Net interest expense was 1.7% of revenues in both 1996 and 1995, compared to
0.9% in 1994. The increase is due to higher outstanding balances on the
Company's bank loans during 1996 and 1995. The increased borrowings were
utilized to fund the increased installation of machines in both years, and in
1996 were also used to fund the Company's repurchase of 170,500 shares.
The Company's effective income tax rate decreased to 30% in 1996 from 40% in
1995 as the Company realized the cumulative effect of certain income tax
credits. The Company's effective rate in 1994 was approximately 37%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources are cash
flows from operations and funds available under the Company's Credit Facility.
The Credit Facility provides for borrowings of up to $35 million and requires
monthly interest payments at the bank's prime rate (8.5% per annum at October
5, 1997) or LIBOR
30
<PAGE>
plus 1.75%. The Credit Facility provides for a two-year interest-only
revolving period which converts to a five-year term note due and payable July
1, 2003. The agreement is collateralized by substantially all assets of the
Company and requires, among other things, that the Company maintain certain
debt coverage and other financial ratios.
For the nine-month period ended October 5, 1997, net cash provided by
operations was approximately $6.8 million, the Company made capital
investments in vending machines and other equipment of approximately
$8.2 million, and invested approximately $9.4 million in the purchase of Aqua-
Vend. As of October 5, 1997, the Company had a deficit in working capital of
$1.4 million. Because the Company does not have significant trade accounts
receivable and product inventories, working capital will vary from time to
time depending on the timing of payables.
At October 5, 1997, approximately $26.0 million of borrowings were
outstanding and $9.0 million was available under the Credit Facility. The
purchase price of the Aqua-Vend assets was funded by additional borrowings
under the Company's Credit Facility. The Company will apply a portion of the
net proceeds of this offering to pay off the outstanding balance, under the
Credit Facility, which was approximately $29.0 million as of the date hereof.
The Credit Facility will then be terminated. The Company has entered into
negotiations regarding a new credit facility, which will be for an amount
anticipated to be less than the Company's current Credit Facility. There can
be no assurances that a new credit facility will be made available to the
Company on favorable terms or that the Company will enter into a new credit
facility.
Glacier is a holding company and its ability to pay dividends and meet its
other obligations is dependent upon receiving dividends or other payments from
its operating subsidiaries. Such subsidiaries' ability to make payments to
Glacier is subject to such subsidiaries' profitability, financial condition
and capital expenditure and other cash flow requirements. It is anticipated
that upon the closing of the offering no contractual restrictions will exist
on Glacier's subsidiaries to pay dividends to Glacier, although any new credit
facility that Glacier may enter into after the closing of the offering may
contain such restrictions. The Company believes its cash flow generated from
operations and borrowings available under a replacement credit facility to be
entered into after consummation of the offering will be sufficient to meet its
anticipated operating and capital requirements, including its investment in
vending equipment, for at least the next twelve months.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no changes in or disagreements with its accountants on
its accounting and financial disclosure.
31
<PAGE>
BUSINESS
INTRODUCTION
Glacier Water Services, Inc. is the leading provider of high quality, low
priced drinking water dispensed to consumers through self-service vending
machines. Since its inception in 1983, the Company has created a network of
over 12,000 water vending machines in Arizona, California, Florida, Georgia,
Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Nevada, New Mexico,
Ohio and Texas. The Company's water vending machines are placed at
supermarkets and other retail locations in order to take advantage of the
regular customer traffic at such locations. The Company's retail accounts
include Albertsons, Fiesta Markets, Frys, HEB, Hughes, KashNKarry, Kroger,
Longs Drugs, Lucky, Osco/Savon, Pantry Foods, Publix, Ralphs, Randall's,
Safeway, Smith's, Stater Bros., Thrifty/Payless, Vons, Wal-Mart, Winn Dixie
and others. Based on information contained in Bottled Water in the U.S.--1997
Edition, management believes that sales by the Company account for over 75% of
the volume of water sold through water vending machines.
The Company's internally developed and manufactured water vending machines
are connected to the municipal water source at each of its retail locations.
The vending machines reduce impurities in the water through a combination of
micron filtration, reverse osmosis, carbon absorption and ultraviolet
sterilization. The Company generally charges $.25 to $.35 per gallon, which is
significantly lower than the price of water sold off-the-shelf in retail
locations or sold through delivery services. The Company's water vending
machines are clustered in close proximity to one another within the geographic
areas served in order to assure cost-effective, quality service. Each water
vending machine is serviced and tested weekly.
The Company has experienced significant growth. The number of water vending
machines in operation has increased from 3,666 machines as of December 31,
1992 to 9,164 machines as of December 31, 1996, representing a compounded
annual growth rate of 25.7%. For the year ended December 31, 1996, the
Company's revenues, EBITDA and net income were $46.1 million, $12.3 million
and $3.3 million, respectively, representing compounded annual growth rates
over the prior four years of 14.1%, 24.4% and 19.2%, respectively. During the
nine months ended October 5, 1997, the Company added 3,006 machines, primarily
as a result of the acquisition in March 1997 of the Company's largest
competitor, Aqua-Vend, a division of McKesson Water Products Company. For such
nine-month period, the Company achieved revenues and EBITDA of $44.4 million
and $11.4 million, respectively. Net income was $319,000 for the same period
after recording non-recurring charges of approximately $3.1 million
representing costs incurred to integrate Aqua-Vend's operations with the
Company's.
Historically, the Company has operated water vending machines designed
primarily for outside use in fair-weather climates. Of the Company's 12,170
machines in operation as of October 5, 1997, 11,961 were located in nine
sunbelt states. Because it is impractical to use vending machines in cold-
weather climates, the Company has developed a new water vending machine
specifically designed to be installed inside retail locations. The "in-store"
machine is smaller and has a sleeker exterior, thereby making it more
compatible with an interior retail layout. The Company believes that the in-
store machine affords the Company significant opportunities to expand within
its existing locations, as well as into new market areas in cold-weather
states. The Company currently operates machines at less than 10% of the
estimated 72,000 grocery stores (excluding convenience stores) in the
United States.
In addition to its growth strategy, the Company intends to maintain its
leading position in the water vending industry by: (i) providing high quality,
low priced water to consumers; (ii) developing and maintaining good
relationships with retail accounts; (iii) increasing brand and product
awareness; and (iv) maximizing operating efficiencies and asset productivity.
32
<PAGE>
BUSINESS BACKGROUND
The following table presents the number of machines installed annually since
December 31, 1992:
<TABLE>
<S> <C>
Total installed machines as of December 31, 1992: 3,666
Machines added during the year:
1993............................................................ 1,114
1994............................................................ 1,945
1995............................................................ 1,793
1996............................................................ 646
1997 (to date).................................................. 3,006
------
Total installed machines as of October 5, 1997.................... 12,170
======
</TABLE>
Total installed machines as of October 5, 1997 are distributed by state as
follows:
<TABLE>
<S> <C>
California........................................................ 6,990
Texas............................................................. 1,850
Florida........................................................... 1,746
Arizona........................................................... 803
Nevada............................................................ 288
Other............................................................. 493
------
12,170
======
</TABLE>
The placement of the Company's vending machines at retail locations is based
upon a thorough review of each site. Included in the site review is an
analysis of the surrounding trade area in order to determine the neighborhood
demographics, the level of overall retail activity, the level of direct
competition and the proximity of the site to other vending machines operated
by the Company. Further, the Company reviews each site in order to ensure high
visibility and easy access for the consumer, along with appropriate access to
the retailer's water supply and power source. Upon completion of this review,
the Company makes a determination as to the viability of the location and
whether a single machine or multiple machines are required at the time of
initial installation. With large chains of supermarkets, the Company generally
places machines at all of the chains' locations as part of its business
agreements. To attain optimum efficiency, multiple vending machines may be
installed at a site if the volume of sales so warrants.
Glacier's internally developed water vending machines utilize micron
filtration, reverse osmosis, carbon absorption and ultraviolet sterilization
in order to provide high quality drinking water. The design of the Company's
water vending machines provides a high degree of reliability and
serviceability through the use of interchangeable parts and a durable
fiberglass cabinet. The water vending machines are also designed to be easy
for consumers to use, with clear and simple instructions.
THE BOTTLED WATER INDUSTRY
According to a report entitled Bottled Water in the U.S.--1997 Edition, the
bottled water market has grown from approximately 300 million gallons sold in
1976 to approximately 3.1 billion gallons sold in 1996, representing a
compounded annual growth rate of 12.4%. The bottled water market in the United
States, which in 1996 totaled approximately $3.6 billion, comprises four
segments: nonsparkling, sparkling, club soda/seltzer and imported water.
Nonsparkling water is the segment in which the Company competes and is
consumed as an alternative to tap water. Nonsparkling water is the largest of
the four segments and represented approximately 85% of the total market in
terms of gallons sold and approximately 65% of the total market in terms of
dollars sold for 1996.
33
<PAGE>
Nonsparkling water is distributed through three principal channels: packaged
water sold off-the-shelf in retail locations, packaged water delivered to
homes and offices and water sold through vending machines. Like water sold
off-the-shelf or through home delivery services, vended water is processed
using the reverse osmosis or deionization methods. Although equivalent in
quality, vended water is sold at a substantially lower price than off-the-
shelf and delivered water. Vended water eliminates two principal cost
components, packaging, because consumers provides their own containers and
transportation. By competing on price, management believes Glacier Water has
become the leading brand sold in the nonsparkling water market segment, with
approximately a 6.8% share at the end of 1996 based on gallons sold.
BUSINESS STRATEGY
Provide High Quality, Low Priced Drinking Water. The Company intends to
maintain its leading position in the water vending industry by providing high
quality, low priced drinking water delivered to the consumer through a network
of conveniently located water vending machines. In order to maintain the
Company's superior quality standards, the Company provides frequent, regular
and reliable service and support to its network of water vending machines. The
Company's service technicians visit and service each vending machine on a
weekly basis. The service technicians test the quality of the Company's
processed water in order to assure compliance with all Company, federal, state
and local standards. The Company believes that providing clean, operating
water vending machines is a significant factor in the Company's ability to
continue to build consumer usage.
The Company's drinking water competes with nonsparkling water sold in
containers inside retail outlets and with water sold in containers delivered
directly to homes and offices. The principal costs associated with water sold
off-the-shelf and through delivery are packaging and distribution, which costs
are reflected in the retail price to the consumer. Because the Company's water
is processed on-site in its vending machines and the consumer provides the
container for the Company's product, the Company is able to avoid the
packaging and distribution costs incurred by these competitors. Accordingly,
the Company passes on these savings to consumers by charging a retail price of
$0.25 to $0.35 per gallon, compared with retail pricing ranging from
approximately $0.69 to over a dollar per gallon for water sold in containers
in retail outlets. Nonsparkling water sold in containers delivered directly to
consumers' homes generally sells at an effective price in excess of $1.00 per
gallon, including the cost of renting the dispensing unit.
Develop and Maintain Relationships With Retail Accounts. The Company
arranges to place its outdoor and in-store water vending machines on the
premises of supermarkets and other retail locations. The Company provides the
water vending machines and pays for all installation costs, while the retailer
provides and pays for the required municipally supplied water and for the
electricity to operate the machines. The Company generally pays monthly
commissions to retailers based upon a percentage of sales, typically ranging
from 25% to 60%. The Company believes it can continue to capitalize on its
existing relationships to place in-store water vending machines at locations
where the Company has already successfully placed its outdoor water vending
machines, as retailers become increasingly cognizant of the growing demand for
vended water.
Substantially all of the Company's arrangements with its retail trade
accounts are evidenced by written contracts, some of which contain termination
clauses as well as automatic renewal clauses. The terms of these agreements
range from 30 days to five years, during which time the Company has the
exclusive right to provide water vending machines at specified locations. The
Company aggressively competes to maintain existing retail accounts and to
establish new retail relationships. In some cases, the Company provides
marketing incentives in order to encourage certain retailers to promote the
Company's product.
Increase Brand and Product Awareness. The Company believes that it will
continue to benefit from increasing consumer awareness and trial usage. To
date, the Company has used point-of-purchase signage, special introductory and
promotional pricing, and promotional activities coinciding with the
installation of new machines as its primary marketing tools. Additionally,
since 1994, with the introduction of a new logo, the Company's marketing
efforts have focused on the development and promotion of "Glacier" as a
recognizable brand to the consumer and the supermarket industry. The Company
is considering the testing of media
34
<PAGE>
advertising in markets with high population densities and where many Glacier
Water vending machines are installed.
Maximize Operating Efficiencies. The Company creates economies of scale in
its operations and achieves a competitive advantage over other vended water
suppliers by clustering machines in close proximity to one another within the
geographic areas served in order to assure cost-effective, frequent service.
This clustering has allowed the Company over the last five years to increase
the number of machines serviced by technicians from 40 machines to 70 machines
per week. The Company continuously strives to develop technical improvements
to its water vending machines that make them easier to use and easier to
service. To this end, the Company has made improvements to its water vending
machines including the introduction of its fast-flow nozzle which increases
the speed of water flow from the Company's water vending machines, thereby
cutting consumer fill-time, and the introduction of the Company's dual-vend
technology which doubles the number of nozzles on a machine to allow consumers
to fill two water containers simultaneously. The Company continually monitors
and evaluates demand for the Company's product at each location. This allows
the Company to continue to evaluate the productivity of each of its machines
and relocate machines as necessary to optimize their productivity.
GROWTH STRATEGY
According to an industry source, there are approximately 72,000 grocery
stores (excluding convenience stores) in the United States. The Company
currently operates water vending machines at less than 10% of such locations.
The Company intends to continue its expansion into these locations as well as
into select international markets. The Company's growth strategy includes the
following:
. Increase Penetration of Existing Domestic Markets. The Company primarily
operates in nine sunbelt states through the use of its outdoor water
vending machine. Management believes it can place additional outdoor
machines with both existing and new retail accounts in those states.
Management also believes there are significant opportunities to add in-
store water vending machines at its current retail account locations,
without adversely affecting revenues generated by its outdoor machines
at such locations.
. Expand Into New Domestic Markets. The Company intends to place its in-
store water vending machines inside retail locations in cold-weather
regions throughout the United States. In addition, the Company intends
to expand into new warm-weather markets using both in-store and outdoor
machines.
. Expand Into Select International Markets. The Company intends to
capitalize on the demand for bottled water outside of the United States
by expanding into select international markets. The Company currently is
in the process of establishing operations in Mexico as its initial entry
into the international market.
. Pursue Select Acquisition Opportunities. The Company intends to evaluate
and pursue select strategic acquisition opportunities, but has no firm
commitments with respect to acquisitions at this time.
THE AQUA-VEND ACQUISITION
On March 28, 1997, the Company purchased substantially all of the assets of
the Aqua-Vend division of McKesson Water Products Company, a wholly-owned
subsidiary of McKesson Corporation, for a purchase price of approximately $9
million, subject to certain post-closing adjustments. Prior to the
acquisition, Aqua-Vend was the Company's largest competitor, with
approximately 3,000 water vending machines. In connection with the
acquisition, the Company developed a detailed integration plan which included
the removal of approximately 600 Aqua-Vend machines and the rationalization
and relocation of Aqua-Vend machines within Glacier's network of machines.
35
<PAGE>
COMPETITION
The bottled water market is highly competitive. The Company competes in the
nonsparkling segment of the bottled water market with companies that deliver
water to homes and offices, with off-the-shelf marketers and with other water
vending machine operators. Many of the Company's competitors have
significantly greater resources than the Company. Since the Company's primary
competitive advantage over water delivery services and off-the-shelf marketers
is price, a substantial decline in the price of either delivered or off-the-
shelf bottled water could adversely affect the demand for water dispensed from
the Company's water vending machines.
Although the Company believes that there are significant barriers to entry
to new and existing competitors in the water vending market due to, among
other things, the substantial capital outlay required to purchase the number
of machines needed to achieve competitive operating efficiencies, a competitor
with significant financial resources may be able to compete with the Company.
There can be no assurance that any competitors will not be able to raise the
required capital to effectively compete with the Company. See "Risk Factors--
Competition."
SEASONALITY
The Company's revenues are subject to seasonal fluctuations with decreased
revenues during rainy or cold weather months and increased revenues during hot
weather months.
INTELLECTUAL PROPERTY
The tradename and trademarks "Glacier Water" and "Glacier Water & Penguin
Design" used by the Company include the word "Glacier" which is commonly used
and has been registered in connection with other marks and designs by a number
of other entities for water and related services. The mark "Glacier Water," by
itself, is considered by the United States Patent and Trademark Office (the
"PTO") to be generic in relation to water and related services. One party
claiming to sell bottled water in a limited area near Incline Village, Nevada,
informed the Company that it objected to the Company's use of the mark
"Glacier Water." However, the PTO has cancelled this party's registration.
Accordingly, the Company believes that no party can claim exclusive rights in
"Glacier Water," and the Company may only claim rights to stylized forms of
the mark or the mark with design elements. Notwithstanding the foregoing, no
assurance can be given that other entities might not assert superior or
exclusive rights in the marks and seek to obtain damages from and injunctive
relief against the Company. Thus, there can be no assurance that the Company's
use of the tradename and trademarks "Glacier Water" and "Glacier Water &
Penguin Design" will not violate the proprietary rights of others, which, if
such party challenged the use of such name and marks, could have a material
adverse effect on the Company.
The Company does not hold any patents. Additionally, in response to a third
party alleging that certain features of the Company's water vending machines
violate such party's patents, the Company filed a lawsuit against such third
party on October 28, 1997, seeking a declaration that the patents held by such
third party are invalid under United States patent law and that the Company's
water vending machines do not infringe any valid claim of the patents. On
November 17, 1997, the defendant filed an answer to the complaint and
counterclaim alleging that the Company is infringing its patents. Although the
Company believes, based on advise of patent counsel, that this litigation will
not have a material adverse effect on the Company's business, financial
condition or operating results, there can be no assurance that the lawsuit
ultimately will be resolved in favor of the Company or that the Company will
not have to make modifications to its machines. See "Risk Factors--
Intellectual Property."
GOVERNMENT REGULATION
The water vending industry is subject to various federal, state and local
laws and regulations, which require the Company, among other things, to obtain
licenses for its business and vending machines, to pay annual license and
inspection fees, to comply with certain detailed design and quality standards
regarding the vending machines
36
<PAGE>
and the vended water, and to continuously control the quality of the vended
water. The Company's vending machines are subject to routine and random
regulatory quality inspections. Although the Company believes it is operating
in substantial compliance with these laws and regulations, such laws and
regulations and their interpretations and enforcement are subject to change.
There can be no assurance that additional or more stringent requirements will
not be imposed on the Company's operations in the future. Failure to comply
with such current or future laws and regulations could result in fines against
the Company, a temporary shutdown of the Company's operations, the loss of
certification to sell its product or, even in the absence of governmental
action, a reduction in the Company's profit margins based on increases in
licensing or inspection fees payable by the Company or other additional
compliance costs. See "Risk Factors--Government Regulation of the Company's
Operations."
INSURANCE
The Company carries general and product liability insurance. Its combined
coverage is $26,000,000 per occurrence and $27,000,000 in the aggregate, which
amounts the Company believes to be adequate. Although the Company is not aware
of any actions having ever been filed and believes that the technology
contained in its machines makes unlikely any contamination of the products
dispensed by its machines, any significant damage awards against the Company
in excess of the Company's insurance coverage could result in a material loss
to the Company.
EMPLOYEES
As of October 5, 1997, the Company had 350 employees, including 56 in
administration and 294 in operations. The Company's employees are not
represented by a labor union and the Company has experienced no work
stoppages. The Company believes that its employee relations are good.
WATER TRUST I
Water Trust I is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement and (ii) the filing of a Certificate of
Trust with the Delaware Secretary of State on November 13, 1997. Water
Trust I's business and affairs are conducted by the Property Trustee, the
Delaware Trustee and three individual Administrative Trustees who are officers
of the Company. Water Trust I exists for the exclusive purposes of (i) issuing
and selling the Trust Securities, (ii) using the proceeds from the sale of the
Trust Securities to acquire the Junior Subordinated Debentures issued by
Glacier, and (iii) engaging in only those other activities necessary,
advisable or incidental thereto. The Junior Subordinated Debentures will be
the sole assets of Water Trust I, and payments by Glacier under the Junior
Subordinated Debentures and the Expense Agreement will be the sole revenues of
Water Trust I. All of the Common Securities will be owned by Glacier. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Trust Preferred Securities, except that upon the occurrence and
during the continuance of an event of default under the Trust Agreement
resulting from an event of default under the Indenture, the rights of Glacier
as holder of the Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated to the
rights of the holders of the Trust Preferred Securities. See "Description of
the Trust Preferred Securities--Subordination of Common Securities of Water
Trust I Held by Glacier." Glacier will acquire Common Securities in an
aggregate liquidation amount equal to 3% of the total capital of Water Trust
I. Water Trust I has a term of 31 years, but may dissolve earlier as provided
in the Trust Agreement.
37
<PAGE>
MANAGEMENT
The table below sets forth certain information for the directors and
executive officers of Glacier, as of January 4, 1998.
<TABLE>
<CAPTION>
NAME POSITION(S) AGE
---- ----------- ---
<C> <S> <C>
Chairman of the Board and Chief Executive
Jerry R. Welch.......... Officer of Glacier 47
President, Chief Operating Officer and
Jerry A. Gordon......... Director 52
Douglas C. Boyd......... Director 52
Peter B. Foreman........ Director 61
Richard A. Kayne........ Director 52
Scott H. Shlecter....... Director 44
Robert V. Sinnott....... Director 48
S. Dane Seibert......... Senior Vice President, Marketing and Sales 49
Glen A. Skumlien........ Executive Vice President 48
John T. Vuagniaux....... Senior Vice President, Operations 49
Gerald Compas........... Vice President, Sales 54
Brenda Foster........... Vice President, Controller and Secretary 31
Dana B. Gilbert......... Vice President, National Accounts 49
Roger J. Gilchrist...... Vice President, Eastern Operations 49
Luz E. Gonzales......... Vice President, Human Resources 45
Vice President, Technology and Information
Brian T. Nakagawa....... Systems 43
Raymond J. Schweitzer... Vice President, International Operations 50
</TABLE>
JERRY R. WELCH. Mr. Welch has been a Director of the Company since October
1991, has been the Chairman of the Board since April 1993 and was appointed
Chief Executive Officer of Glacier in 1994. From October 1991 until his
resignation in September 1992, Mr. Welch served as the Company's Chief
Executive Officer. He also served as Chairman of the Board from January 1992
through September 1992. Mr. Welch currently serves as a Senior Vice President
of Kayne Anderson Investment Management and has served in such a capacity
since January 1993. Mr. Welch is also the Chairman of the Board and Chief
Executive Officer of The Right Start, Inc. Kayne Anderson Investment
Management holds an equity ownership position in The Right Start, Inc.
JERRY A. GORDON. Mr. Gordon has been the Company's President and Chief
Operating Officer since September 1994 and Director of Glacier since June
1997. Mr. Gordon joined the Company in June 1993 as Vice President of
Marketing. From 1992 to 1993, Mr. Gordon was a business consultant
specializing in management operations in start-up companies.
DOUGLAS C. BOYD. Mr. Boyd has been a Director of Glacier since June 1997.
Mr. Boyd is the President and Chief Executive Officer of Boyd Communications,
an integrated marketing communications company based in Los Angeles,
California. Mr. Boyd has served in such capacity since 1972.
PETER B. FOREMAN. Mr. Foreman has been a Director of Glacier since June
1989. Mr. Foreman is currently the President of Sirius Corporation, an
investment management firm located in Chicago, Illinois. From 1976 to January
1994, Mr. Foreman was a partner of Harris Associates, an investment advisory
firm located in Chicago, Illinois. Mr. Foreman presently serves on the board
of directors of National Picture and Framing Company, Eagle Food Centers, Inc.
and PCA International, Inc.
RICHARD A. KAYNE. Mr. Kayne has been a Director of the Company since March
1995. Mr. Kayne currently serves as President and Chief Executive Officer of
Kayne Anderson Investment Management and its broker-dealer affiliate, KA
Associates, Inc. Mr. Kayne has been with Kayne Anderson Investment Management
since 1985 when it was founded by Mr. Kayne and John E. Anderson. Mr. Kayne is
also a Director of Foremost Corporation of America and The Right Start, Inc.
38
<PAGE>
SCOTT H. SHLECTER. Mr. Shlecter has been a Director of the Company since
June 1997. Mr. Shlecter is President and founder of the North American
practice of LEK/Alcar Consulting Group, an international business consulting
firm. Mr. Shlecter has served in such capacity since 1974.
ROBERT V. SINNOTT. Mr. Sinnott has been a Director of the Company since
April 1993. Mr. Sinnott currently serves as a Senior Vice President of Kayne
Anderson Investment Management and has served in such a capacity since 1992.
Mr. Sinnott is also a Director of Plains Resources Inc. and National Energy
Group, Inc.
S. DANE SEIBERT. Mr. Seibert has been Glacier's Senior Vice President,
Marketing and Sales since March 1995. Prior to that, Mr. Seibert was Corporate
Vice President--International Marketing for Miller/Zell Inc., from 1990 until
joining the Company.
GLEN A. SKUMLIEN. Mr. Skumlien has been Glacier's Executive Vice President,
Operations since September 1994. Prior to that, Mr. Skumlien served as Vice
President-Operations from November 1991. Mr. Skumlien served as the Company's
Director of Field Operations from 1989 to November 1991.
JOHN T. VUAGNIAUX. Mr. Vuagniaux has been Glacier's Senior Vice President,
Operations since November 1996, after joining the Company in January 1995 as
Vice President, Service Support. From April 1994 to January 1995, Mr.
Vuagniaux was owner of Logistics Solutions, a consulting firm specializing in
logistics and operations management. From January 1992 to April 1994, Mr.
Vuagniaux was Director of Distribution for Blockbuster Entertainment
Corporation.
GERALD COMPAS. Mr. Compas has served as Vice President, Sales since March
1997. From June 1991 to March 1997, Mr. Compas served as the Director of Sales
and Marketing for the Aqua-Vend Division of the McKesson Water Products
Company.
BRENDA FOSTER. Ms. Foster has served as Vice President, Controller since
February 1996, after joining the Company as Controller in September 1995. Ms.
Foster is a Certified Public Accountant, and worked as an auditor for Ernst &
Young LLP from 1988 to 1995.
DANA B. GILBERT. Mr. Gilbert has served as Vice President, National Accounts
since February 1996. Mr. Gilbert joined the Company in January 1992 as a Sales
Manager. From January 1994 to February 1996, Mr. Gilbert served as Regional
Sales Manager for the Western Division.
ROGER J. GILCHRIST. Mr. Gilchrist has served as Vice President, Eastern
Operations since February 1996. Mr. Gilchrist joined the Company in April 1988
as District Manager. In May 1993, Mr. Gilchrist assumed the position of
Regional Sales Manager for the Eastern Division.
LUZ E. GONZALES. Mrs. Gonzales joined the Company in February 1995 as Vice
President of Human Resources. From 1981 to February 1995, Mrs. Gonzales was
Corporate Director of Human Resources for Southwest Water Company, a water
service company.
BRIAN T. NAKAGAWA. Mr. Nakagawa has served as Vice President, Technology and
Information Systems since February 1996, after joining the Company as Director
of Technology and Information Systems in June 1995. Prior to joining the
Company Mr. Nakagawa was the owner of New Frontier Technologies, an
information systems consulting company.
RAYMOND J. SCHWEITZER. Mr. Schweitzer became the Company's Vice President,
International Operations in December 1997. From March 1993 to December 1997,
Mr. Schweitzer served as the Vice President, International Sales and Marketing
for Shelcor, Inc., an international toy manufacturer.
39
<PAGE>
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Trust Agreement. The Trust Agreement will be qualified as an indenture under
the Trust Indenture Act. Initially, Wilmington Trust Company will be the
Delaware Trustee and the Property Trustee. The Property Trustee is the
independent trustee whose sole responsibility is to fulfill the trustee
obligations specified in the Trust Indenture Act. Wilmington Trust Company
will act as trustee for the purpose of fulfilling these obligations. The terms
of the Trust Preferred Securities will include those stated in the Trust
Agreement and those made part of the Trust Agreement by the Trust Indenture
Act. This summary of certain terms and provisions of the Trust Preferred
Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the
provisions of the Trust Agreement, including the definitions therein of
certain terms, and the Trust Indenture Act. However, all material provisions
of the Trust Agreement have been disclosed herein. Wherever particular defined
terms of the Trust Agreement (as amended or supplemented from time to time)
are referred to herein, such defined terms are incorporated herein. The form
of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Administrative Trustees on
behalf of Water Trust I will issue the Trust Preferred Securities and the
Common Securities (collectively, the "Trust Securities"). The Trust Preferred
Securities will represent preferred undivided beneficial interests in the
assets of Water Trust I and the holders thereof will be entitled to a
preference over the Common Securities of Water Trust I (which will be held by
Glacier) in certain circumstances with respect to Distributions and amounts
payable on redemption or liquidation, as well as other benefits as described
in the Trust Agreement.
The Trust Preferred Securities will rank pari passu, and payments will be
made thereon pro rata, with the Common Securities of Water Trust I, except as
described under "Subordination of Common Securities of Water Trust I Held by
Glacier" below. Legal title to the Junior Subordinated Debentures will be held
by the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The Guarantee executed by Glacier for the benefit of the holders
of the Trust Preferred Securities (the "Guarantee") will be a guarantee on a
subordinated basis with respect to the Trust Preferred Securities but will not
guarantee payment of Distributions or amounts payable on redemption or on
liquidation of the Trust Preferred Securities if Water Trust I does not have
funds on hand available to make such payments. See "Description of Guarantee."
DISTRIBUTIONS
Payment of Distributions. Distributions on the Trust Preferred Securities
will be payable at the annual rate of % of the stated Liquidation Amount
of $25, payable monthly in arrears on the 15th day of each calendar month of
each year to the holders of the Trust Preferred Securities on the relevant
record dates (each date on which Distributions are payable in accordance with
the foregoing, a "Distribution Date"). The amount of each Distribution due
with respect to the Trust Preferred Securities will include amounts accrued
through the date the Distribution payment is due. Distributions on the Trust
Preferred Securities will be payable to the holders thereof as they appear on
the register of Water Trust I on the relevant record date which will be, so
long as such securities remain in book-entry form, one Business Day (as
defined below) prior to the relevant Distribution Date or, in the event that
the Trust Preferred Securities are not then in book-entry form, the relevant
record date will be the date 15 days prior to the relevant Distribution Date.
Distributions will accumulate from the date of original issuance. The first
Distribution Date for the Trust Preferred Securities will be , 1998.
The amount of Distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which Distributions are payable on the Trust Preferred Securities is not a
Business Day, payment of the Distribution payable on such date will be made on
the next Business Day (and without any interest or other payment in respect of
any such delay), with the same force and effect as if made on the date such
payment was originally payable. As used in this Prospectus, a "Business Day"
shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in the State of
40
<PAGE>
California are authorized or required by law or executive order to remain
closed or a day on which the corporate trust office of the Property Trustee or
the Indenture Trustee in closed for business.
The funds of Water Trust I available for distribution to holders of its
Trust Preferred Securities will be limited to payments by Glacier under the
Junior Subordinated Debentures in which Water Trust I will invest the proceeds
from the issuance and sale of its Trust Preferred Securities. See "Description
of Junior Subordinated Debentures." If Glacier does not make interest payments
on the Junior Subordinated Debentures, the Property Trustee will not have
funds available to pay Distributions on the Trust Preferred Securities. The
payment of Distributions (if and to the extent Water Trust I has funds legally
available for the payment of such Distributions and cash sufficient to make
such payments) is guaranteed by Glacier. See "Description of Guarantee."
Extension Period. So long as no Debenture Event of Default has occurred and
is continuing, Glacier has the right under the Indenture to defer the payment
of interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 60 consecutive months with respect to each
such period (each, an "Extension Period"), provided that no Extension Period
may extend beyond the Stated Maturity of the Junior Subordinated Debentures.
As a consequence of any such election, monthly Distributions on the Trust
Preferred Securities will be deferred by Water Trust I during any such
Extension Period. Distributions to which holders of Trust Preferred Securities
are entitled will accumulate additional amounts thereon at the rate per annum
of % thereof, compounded quarterly from the relevant Distribution Date,
to the extent permitted under applicable law. The term "Distribution," as used
herein shall include any such additional accumulated amounts. During any such
Extension Period, Glacier may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of Glacier's capital stock (which includes common and
preferred stock), (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of Glacier that
rank pari passu with or junior in interest to the Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by
Glacier of the debt securities of any subsidiary of Glacier if such guarantee
ranks pari passu with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in Glacier's capital
stock (which includes common and preferred stock), (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of Glacier's benefit plans for its directors,
officers, employees or consultants) or (iii) redeem, purchase or acquire less
than all of the Junior Subordinated Debentures or any of the Trust Preferred
Securities. Prior to the termination of any such Extension Period, Glacier may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 60 consecutive months or extend beyond
the Stated Maturity. Upon the termination of any such Extension Period and the
payment of all amounts then due, and subject to the foregoing limitations,
Glacier may elect to begin a new Extension Period. Subject to the foregoing,
there is no limitation on the number of times that Glacier may elect to begin
an Extension Period. Glacier has no current intention of exercising its right
to defer payments of interest by extending the interest payment period on the
Junior Subordinated Debentures.
REDEMPTION
Mandatory Redemption. Upon the repayment or redemption at any time, in whole
or in part, of any Junior Subordinated Debentures, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days' notice of a date of redemption (the "Redemption Date"),
at the Redemption Price (as defined below). See "Description of Junior
Subordinated Debentures--Redemption." If less than all of the Junior
Subordinated Debentures are to be repaid or redeemed on a Redemption Date,
then the proceeds from such repayment or redemption shall be allocated to the
redemption of the Trust Securities on a pro rata basis. The amount of premium,
if any, paid by Glacier upon the redemption of all or any part of the Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the Trust Securities.
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Optional Redemption. Glacier will have the right to redeem the Junior
Subordinated Debentures (i) on or after , 2003, in whole at any time
or in part from time to time at a redemption price equal to the accrued and
unpaid interest on the Junior Subordinated Debentures so redeemed to the date
fixed for redemption, plus 100% of the principal amount thereof, or (ii) at
any time, in whole (but not in part), upon the occurrence of a Tax Event or an
Investment Company Event at a redemption price equal to the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed
for redemption, plus 100% of the principal amount thereof. See "Description of
Junior Subordinated Debentures--Redemption."
Tax Event Redemption, Investment Company Event Redemption or Distribution of
Junior Subordinated Debentures. If a Tax Event or an Investment Company Event
shall occur and be continuing, Glacier has the right to redeem the Junior
Subordinated Debentures in whole (but not in part) and thereby cause a
mandatory redemption of the Trust Securities in whole (but not in part) at the
Redemption Price (as defined below) within 90 days following the occurrence of
such Tax Event or Investment Company Event. If a Tax Event or an Investment
Company Event has occurred and is continuing and Glacier does not elect to
redeem the Junior Subordinated Debentures and thereby cause a mandatory
redemption of the Trust Securities or to liquidate Water Trust I and cause the
Junior Subordinated Debentures to be distributed to holders of the Trust
Securities in liquidation of Water Trust I as described below, such Trust
Securities will remain outstanding and Additional Sums (as defined below) may
be payable on the Junior Subordinated Debentures.
DEFINITIONS
"Additional Sums" means the additional amounts an may be necessary to be
paid by Glacier with respect to the Junior Subordinated Debentures in order
that the amount of Distributions then due and payable by Water Trust I on the
outstanding Trust Securities of Water Trust I shall not be reduced an a result
of any additional taxes, duties and other governmental charges to which Water
Trust I has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Trust Preferred Securities based upon the
relative Liquidation Amounts of such classes and the proceeds of which will be
used to pay the Redemption Price of such Trust Securities, and (ii) with
respect to a distribution of Junior Subordinated Debentures to holders of
Trust Securities in connection with a dissolution or liquidation of Water
Trust I, Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the Trust Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Subject to Glacier and Water Trust I having received an opinion of counsel
to the effect that such distribution will not be a taxable event to the
holders of the Trust Preferred Securities, Glacier will have the right at any
time to dissolve Water Trust I and, after satisfaction of the liabilities of
creditors of Water Trust I as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of Trust Securities
in liquidation of Water Trust I. After the liquidation date fixed for any
distribution of Junior Subordinated Debentures for Trust Preferred Securities
(i) such Trust Preferred Securities will no longer be deemed to be
outstanding, and (ii) certificates representing Trust Preferred Securities
that are not then held by the Depositary or its nominee will be deemed to
represent the Junior Subordinated Debentures having a principal
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amount equal to the Liquidation Amount of such Trust Preferred Securities, and
bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on the Trust Preferred Securities until such certificates
are presented to the Administrative Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Trust Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Preferred Securities if a dissolution and liquidation
of Water Trust I were to occur. Accordingly, the Trust Preferred Securities
that an investor may purchase, or the Junior Subordinated Debentures that the
investor may receive on dissolution and liquidation of Water Trust I, may
trade at a discount to the price that the investor paid to purchase the Trust
Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Trust Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Junior Subordinated Debentures. Redemptions
of the Trust Preferred Securities shall be made and the Redemption Price shall
be payable on each Redemption Date only to the extent that Water Trust I has
funds on hand available for the payment of such Redemption Price. See "--
Subordination of Common Securities of Water Trust I Held by Glacier" herein
and "Description of Guarantee."
If Water Trust I gives a notice of redemption in respect of the Trust
Preferred Securities, then, by 12:00 noon, Eastern time on the Redemption
Date, to the extent funds are available, the Property Trustee will deposit
with the paying agent for such Trust Preferred Securities funds sufficient to
pay the aggregate Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Trust Preferred
Securities. If such Trust Preferred Securities are no longer in book-entry
form, the Property Trustee, to the extent funds are available, will deposit
with the Depositary funds sufficient to pay the aggregate Redemption Price and
will give the Depositary irrevocable instructions and authority to pay the
Redemption Price to the holders of such Trust Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of such Trust Preferred
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then upon the date of such deposit, all rights of the holders of the Trust
Preferred Securities will cease, except the right of the holders of the Trust
Preferred Securities to receive the applicable Redemption Price, but without
interest on such Redemption Price, and such Trust Preferred Securities will
cease to be outstanding. In the event that any date fixed for redemption of
such Trust Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. In the event that payment of the Redemption Price in
respect of Trust Preferred Securities called for redemption is improperly
withheld or refused and not paid either by Water Trust I or by Glacier
pursuant to the Guarantee, Distributions on such Trust Preferred Securities
will continue to accrue at the then applicable rate, from the Redemption Date
originally established by Water Trust I for such Trust Preferred Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price. See "Description of Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law), and further provided that Glacier is not then
exercising its right to defer interest payments on the Junior Subordinated
Debentures, the Company (other than Water Trust I) may at any time and from
time to time purchase outstanding Trust Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Trust Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Trust Preferred
Securities shall be made to the applicable recordholders thereof as they
appear on the register for such Trust Preferred Securities on the relevant
record date, which date
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shall be, so long as such securities remain in book-entry form, one Business
Day prior to the Redemption Date or Liquidation Date, as applicable. In the
case of a liquidation, the record date shall be no more than 45 days before
the Liquidation Date. In the event that the Trust Preferred Securities are not
in book-entry form, the relevant record date for such Trust Preferred
Securities shall be the date 15 days prior to the relevant Redemption Date or
Liquidation Date, as applicable.
If less than all of the Trust Securities issued by Water Trust I are to be
redeemed on a Redemption Date, then the aggregate Redemption Price for such
Trust Securities to be redeemed shall be allocated pro rata to the Trust
Preferred Securities and Common Securities based upon the relative Liquidation
Amounts of such classes. The particular Trust Preferred Securities to be
redeemed shall be selected by the Property Trustee from the outstanding Trust
Preferred Securities not previously called for redemption, by such method as
the Property Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $25 or an integral multiple
thereof) of the Liquidation Amount of Trust Preferred Securities. The Property
Trustee shall promptly notify the Security registrar in writing of the Trust
Preferred Securities selected for redemption and, in the case of any Trust
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of Trust
Preferred Securities shall relate to the portion of the aggregate Liquidation
Amount of Trust Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities at such
holder's registered address. Unless Water Trust I defaults in payment of the
applicable Redemption Price, on and after the Redemption Date, Distributions
will cease to accrue on such Trust Preferred Securities called for redemption.
SUBORDINATION OF COMMON SECURITIES OF WATER TRUST I HELD BY GLACIER
Payment of Distributions on, and the Redemption Price of, the Trust
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amounts of the Trust Preferred Securities and
Common Securities; provided, however, that if on any Distribution Date or
Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or applicable Redemption Price
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of the Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions on all of the outstanding Trust Preferred Securities for all
Distribution periods terminating on or prior thereto, or in the case of
payment of the applicable Redemption Price, the full amount of such Redemption
Price on all of the outstanding Trust Preferred Securities then called for
redemption, shall have been made or provided for, and all funds available to
the Property Trustee shall first be applied to the payment in full in cash of
all Distributions on, or Redemption Price of, the Trust Preferred Securities
then due and payable.
In the case of any Event of Default under the Trust Agreement resulting from
a Debenture Event of Default, Glacier as holder of the Common Securities, will
be deemed to have waived any right to act with respect to any such Event of
Default until the effect of all such Events of Default have been cured, waived
or otherwise eliminated. Until any such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the holders of the Trust Preferred Securities and not on behalf of
Glacier as holder of the Common Securities, and only the holders of the Trust
Preferred Securities will have the right to direct the Property Trustee to act
on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Glacier will have the right at any time to dissolve Water Trust I and, after
satisfaction of liabilities to creditors of Water Trust I as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Preferred Securities. See "--Distribution of Junior
Subordinated Debentures" above. Glacier might exercise its right to dissolve
Water Trust I under circumstances where a "Tax
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Event," "Investment Company Event" or other undesirable event could be avoided
simply by dissolving Water Trust I and causing the Junior Subordinated
Debentures to be distributed to holders of the Trust Preferred Securities.
In addition, pursuant to the Trust Agreement, Water Trust I shall
automatically dissolve upon expiration of its term and shall earlier dissolve
on the first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of Glacier; (ii) the distribution of a Like Amount of the Junior
Subordinated Debentures to the holders of its Trust Securities, if Glacier, as
Depositor, has delivered written direction to the Property Trustee to dissolve
Water Trust I (which direction is optional and, except an described above,
wholly within the discretion of Glacier, as Depositor); (iii) redemption of
all of the Trust Preferred Securities as described under "--Redemption--
Mandatory Redemption;" and (iv) the entry of an order for the dissolution of
Water Trust I by a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii), or (iv)
above, Water Trust I shall be liquidated by the Trustees as expeditiously as
the Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of Water Trust I as provided by applicable law, to
the holders of such Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such holders will be entitled to receive out
of the assets of Water Trust I available for distribution to holders, after
satisfaction of liabilities to creditors of Water Trust I as provided by
applicable law, an amount equal to, in the case of holders of Trust Preferred
securities, the aggregate of the Liquidation Amount plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because Water Trust I has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
Water Trust I on the Trust Preferred Securities shall be paid on a pro rata
basis. The holder(s) of the Common Securities will be entitled to receive
distributions upon any such liquidation on a pro rata basis with the holders
of the Trust Preferred Securities, except that if a Debenture Event of Default
has occurred and is continuing, the Trust Preferred Securities shall have a
priority over the Common Securities.
Under current United States federal income tax law and interpretations, and
assuming that Water Trust I is treated an a grantor trust, a distribution of
the Junior Subordinated Debentures should not be a taxable event to holders of
the Trust Preferred Securities. Should there be a change in law, a change in
distribution, a Tax Event or other circumstances, however, the distribution
could be a taxable event to Water Trust I and to holders of the Trust
Preferred Securities. See "Certain Federal Income Tax Consequences." If
Glacier elects neither to redeem the Junior Subordinated Debentures prior to
maturity nor to liquidate Water Trust I and distribute the Junior Subordinated
Debentures to holders of the Trust Preferred Securities, the Trust Preferred
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures.
If Glacier elects to dissolve Water Trust I and thereby causes the Junior
Subordinated Debentures to be distributed to holders of the Trust Preferred
Securities in liquidation of Water Trust I, Glacier shall continue to have the
right to shorten the Stated Maturity of such Junior Subordinated Debentures.
See "Description of Junior Subordinated Debentures--General."
EVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Trust Preferred Securities (whatever the reason
for such event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures--Debenture Events of Default"); or
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(ii) Default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Property Trustee in the Trust Agreement
(other than a default or breach in the performance of a covenant or
warranty which is addressed in clause (ii) or (iii) above), and
continuation of such default or breach, for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Property
Trustee by the holders of at least 25% in aggregate Liquidation Amount of
the outstanding Trust Preferred Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by Glacier to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Trust Preferred
Securities, the Administrative Trustees and Glacier, as Depositor, unless such
Event of Default shall have been cured or waived. Glacier, as Depositor, and
the Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities shall have a preference over the Common Securities upon
termination of Water Trust I as described above. See "--Liquidation
Distribution upon Dissolution" herein. Upon a Debenture Event of Default
(other than with respect to certain events in bankruptcy, insolvency or
reorganization), unless the principal of all the Junior Subordinated
Debentures has already became due and payable, either the Property Trustee or
the holders of not less than 25% in aggregate principal amount of the Junior
Subordinated Debentures then outstanding may declare all of the Junior
Subordinated Debentures to be due and payable immediately by giving notice in
writing to Glacier (and to the Property Trustee, if notice is given by holders
of the Junior Subordinated Debentures). If the Property Trustee or the holders
of the Junior Subordinated Debentures fail to declare the principal of all of
the Junior Subordinated Debentures due and payable upon a Debenture Event of
Default, the holders of at least 25% in Liquidation Amount of the Trust
Preferred Securities then outstanding shall have the right to declare the
Junior Subordinated Debentures immediately due and payable. In either event,
payment of principal and interest on the Junior Subordinated Debentures shall
remain subordinated to the extent provided in the Indenture. In addition,
holders of the Trust Preferred Securities have the right in certain
circumstances to bring a Direct Action (as hereinafter defined). See
"Description of Junior Subordinated Debentures--Enforcement of Certain Rights
by Holders of Trust Preferred Securities."
If a Debenture Event of Default with respect to certain events in
bankruptcy, insolvency or reorganization occurs, the Junior Subordinated
Debentures shall automatically, and without any declaration or other action on
the part of the Property Trustee or the holders of the Junior Subordinated
Debentures, become immediately due and payable. In such event, payment of
principal and interest on the Junior Subordinated Debentures will also remain
subordinated to the extent provided in the Indenture.
REMOVAL OF TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any of
the Property Trustee, the Depositary Trustee or the Administrative Trustees
may be removed at any time by the holder of the Common Securities. For
example, the holder of the Common Securities may seek to remove such trustees
upon substandard performance or non-performance of their duties or upon a
significant increase in a trustee's fee. If a Debenture Event of Default has
occurred and is continuing, the Property Trustee and the Delaware Trustee also
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may be removed at such time by the holders of a majority in Liquidation Amount
of the outstanding Trust Preferred Securities. In no event will the holders of
the Trust Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees, which voting rights are vested
exclusively in Glacier as the holder of the Common Securities. No resignation
or removal of a Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of Trust Property may
at the time be located, Glacier, as the holder of the Common Securities, and
the Administrative Trustees shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or
any part of such Trust Property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to
make such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person (as defined in the Trust Agreement) into which the Property
Trustee, the Delaware Trustee or any Administrative Trustee (that is not a
natural person) may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Issuer Trustee shall be a party, or any person
succeeding to all or substantially all the corporate trust business of such
Issuer Trustee, shall be the successor of such Issuer Trustee under the Trust
Agreement, provided such corporation shall be otherwise qualified and
eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF WATER TRUST I
Water Trust I may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below or as described in "--Liquidation Distribution Upon
Dissolution." Water Trust I may, at the request of Glacier, with the consent
of the Administrative Trustees and without the consent of the holders of the
Trust Preferred Securities, merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of
any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of Water Trust I with respect to the Trust
Preferred Securities or (b) substitutes for the Trust Preferred Securities
other securities having substantially the same terms as the Trust Preferred
Securities (the "Successor Securities") so long as the Successor Securities
rank the same as the Trust Preferred Securities rank in priority with respect
to distributions and payments upon liquidation, redemption and otherwise, (ii)
Glacier expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Junior
Subordinated Debentures, (iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange, national stock market or other organization on
which the Trust Preferred Securities are then listed, if any, (iv) such
merger, consolidation, amalgamation, conveyance, transfer or lease does not
cause the Trust Preferred Securities to be downgraded by any nationally
recognized statistical rating organization which gives ratings to the Trust
Preferred Securities; (v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Trust Preferred
Securities (including any Successor Securities) in any material respect, (vi)
such successor entity has a purpose substantially identical to that of Water
Trust I, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, Glacier has received an opinion from
independent counsel to Water Trust I experienced in such matters to the effect
that
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(a) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Trust Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither Water Trust I nor such successor entity will be required to register
as an investment company under the Investment Company Act and (viii) Glacier
or any permitted successor or designee owns all of the common securities of
such successor entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the
Guarantee. Notwithstanding the foregoing, Water Trust I shall not, except with
the consent of holders of 100% in Liquidation Amount of the Trust Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or loan its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or loan would cause
Water Trust I or the successor entity to be classified as other than a grantor
trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Trust Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by Glacier, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities, (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters
or questions arising under the Trust Agreement, which shall not be
inconsistent with the other provisions of the Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that Water Trust I will be classified
for United States federal income tax purposes an a grantor trust at all times
that any Trust Securities are outstanding or to ensure that Water Trust I will
not be required to register an "investment company" under the Investment
Company Act; provided, however, that in the case of clause (i), such action
shall not adversely affect in any material respect the interests of any holder
of Trust Securities, and any such amendments of the Trust Agreement shall
become effective when notice thereof is given to the holders of the Trust
Securities. The Trust Agreement may be amended by the Issuer Trustees and the
Company with (i) the consent of holders representing not less than a majority
of the aggregate Liquidation Amount of the outstanding Trust Securities, and
(ii) receipt by the Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer
Trustees in accordance with such amendment will not affect Water Trust I's
status as a grantor trust for United States federal income tax purposes or
Water Trust I's exemption from status as an "investment company" under the
Investment Company Act, provided that without the consent of each holder of
Trust Securities, the Trust Agreement may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long an any Junior Subordinated Debentures are held by the Property
Trustee, the issuer Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Indenture
Trustee, or executing any trust or power conferred on the Property Trustee
with respect to the Junior Subordinated Debentures, (ii) waive any past
default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required, without, in
each case, obtaining the prior approval of the holders of a majority in
aggregate Liquidation Amount of all outstanding Trust Preferred
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Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior consent of each holder of the Trust Preferred Securities. The Issuer
Trustees shall not revoke any action previously authorized or approved by a
vote of the holders of the Trust Preferred Securities except by subsequent
vote of the holders of the Trust Preferred Securities. The Property Trustee
shall notify each holder of the Trust Preferred Securities of any notice of
default with respect to the Junior Subordinated Debentures. In addition to
obtaining the foregoing approvals of such holders of the Trust Preferred
Securities, prior to taking any of the foregoing actions, the Issuer Trustees
shall obtain an opinion of counsel experienced in such matters to the effect
that such action will not cause Water Trust I to fail to be classified as a
grantor trust for United States federal income tax purposes.
Any required approval of holders of the Trust Preferred Securities may be
given at a meeting of holders of Trust Preferred Securities convened for such
purpose or pursuant to written consent. The Property Trustee will cause a
notice of any meeting at which holders of the Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be given to each holder of record of the Trust
Preferred Securities in the manner set forth in the Trust Agreement.
No vote or consent of the holders of the Trust Preferred Securities will be
required for Water Trust I to redeem and cancel the Trust Preferred Securities
in accordance with the Trust Agreement.
Notwithstanding that holders of the Trust Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Trust Preferred Securities that are owned by Glacier, the Trustees or any
affiliate of Glacier or any Trustees, shall, for purposes of such vote or
consent, be treated an if they were not outstanding.
GLOBAL TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be represented by one or more global
certificates registered in the name of the Depositary or its nominee ("Global
Trust Preferred Security"). Beneficial interests in the Trust Preferred
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by participants in the Depositary. Except as
described below, Trust Preferred Securities in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance."
A global security shall be exchangeable for Trust Preferred Securities
registered in the names of persons other than the Depositary or its nominee
only if (i) the Depositary notifies Glacier that it is unwilling or unable to
continue as a depositary for such global security and no successor depositary
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the
Depositary is required to be so registered to act as such depositary, (ii)
Glacier in its sole discretion determines that such global security shall be
so exchangeable, or (iii) there shall have occurred and be continuing an Event
of Default under the Indenture. Any global security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for definitive
certificates registered in such names as the Depositary shall direct. It is
expected that such instructions will be based upon directions received by the
Depositary with respect to ownership of beneficial interests in such global
security. In the event that Trust Preferred Securities are issued in
definitive form, such Trust Preferred Securities will be in denominations of
$25 and integral multiples thereof and may be transferred or exchanged at the
offices of the Depositary described below.
Unless and until it is exchanged in whole or in part for the individual
Trust Preferred Securities represented thereby, a Global Trust Preferred
Security may not be transferred except as a whole by the Depositary to a
nominee of such Depositary or by a nominee of the Depositary to such
Depositary or another nominee of such Depositary or by the Depositary or any
nominee to a successor Depositary or any nominee of such successor.
Payments on Trust Preferred Securities represented by a global security will
be made to the Depositary, as the depositary for the Trust Preferred
Securities. In the event the Trust Preferred Securities are issued in
definitive
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form, Distributions will be payable, the transfer of the Trust Preferred
Securities will be registrable, and Trust Preferred Securities will be
exchangeable for Trust Preferred Securities of other denominations of a like
aggregate Liquidation Amount, at the corporate office of the Property Trustee,
or at the offices of any paying agent or transfer agent appointed by the
Administrative Trustees, provided that payment of any Distribution may be made
at the option of the Administrative Trustees by check mailed to the address of
the persons entitled thereto or by wire transfer. In addition, if the Trust
Preferred Securities are issued in certificated form, the record dates for
payment of Distributions will be the first day of the month in which the
relevant Distribution Date occurs. For a description of the terms of the
depositary arrangements relating to payments, transfer, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance."
Upon the issuance of a Global Trust Preferred Security, and the deposit of
such Global Trust Preferred Security with or on behalf of the Depositary, the
Depositary for such Global Trust Preferred Security or its nominee will
credit, on its book-entry registration and transfer system, the respective
aggregate Liquidation Amounts of the individual Trust Preferred Securities
represented by such Global Trust Preferred Securities to the accounts of
Participants. Such accounts shall be designated by the dealers, underwriters
or agents with respect to such Trust Preferred Securities. Ownership of
beneficial interests in a Global Trust Preferred Security will be limited to
Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Trust Preferred Security will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depositary or its nominee (with respect
to interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Trust Preferred Security.
So long as the Depositary for a Global Trust Preferred Security, or its
nominee, is the registered owner of such Global Trust Preferred Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Trust Preferred Securities represented by such Global
Trust Preferred Security for all purposes under the Trust Agreement governing
such Trust Preferred Securities. Except as provided below, owners of
beneficial interests in a Global Trust Preferred Security will not be entitled
to have any of the individual Trust Preferred Securities represented by such
Global Trust Preferred Security registered in their names, will not receive or
be entitled to receive physical delivery of any such Trust Preferred
Securities in definitive form and will not be considered the owners or holders
thereof under the Trust Agreement.
None of Glacier, the Property Trustee, any Paying Agent, or the Securities
Registrar (defined below) for such Trust Preferred Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Trust
Preferred Security representing such Trust Preferred Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Glacier expects that the Depositary for Trust Preferred Securities or its
nominee, upon receipt of any payment of the Liquidation Amount or
Distributions in respect of a permanent Global Trust Preferred Security
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the aggregate
Liquidation Amount of such Global Trust Preferred Security as shown on the
records of such Depositary or its nominee. Glacier also expects that payments
by Participants to owners of beneficial interests in such Global Trust
Preferred Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
If the Depositary for the Trust Preferred Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by Glacier within 90 days, Water Trust I will
issue individual Trust Preferred Securities in exchange for the Global Trust
Preferred Security. In addition, Water Trust I may at any time and in its sole
discretion, subject to any limitations described herein relating to such
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Trust Preferred Securities, determine not to have any Trust Preferred
Securities represented by one or more Global Trust Preferred Securities and,
in such event, will issue individual Trust Preferred Securities in exchange
for the Global Trust Preferred Security or Securities representing the Trust
Preferred Securities. Further, if Water Trust I so specifies with respect to
the Trust Preferred Securities, an owner of a beneficial interest in a Global
Trust Preferred Security representing Trust Preferred Securities may, on terms
acceptable to Glacier, the Property Trustee and the Depositary for such Global
Trust Preferred Security, receive individual Trust Preferred Securities in
exchange for such beneficial interests, subject to any limitations described
herein. In any such instance, an owner of a beneficial interest in a Global
Trust Preferred Security will be entitled to physical delivery of individual
Trust Preferred Securities represented by such Global Trust Preferred Security
equal in Liquidation Amount to such beneficial interest and to have such Trust
Preferred Securities registered in its name. Individual Trust Preferred
Securities so issued will be issued in denominations, unless otherwise
specified by Water Trust I, of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENT
Payments in respect of the Trust Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any of the Trust Preferred Securities are
not held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. The paying agent (the "Paying Agent") shall initially be the
Property Trustee and any co-paying agent chosen by the Property Trustee and
acceptable to the Administrative Trustees and Glacier. The Paying Agent shall
be permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees, the Property Trustee and Glacier. In the event that
the Property Trustee shall no longer be the Paying Agent, the Administrative
Trustees shall appoint a successor (which shall be a bank or trust company
acceptable to the Administrative Trustees and Glacier) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the Trust
Preferred Securities. Registration of transfers of the Trust Preferred
Securities will be effected without charge by or on behalf of Water Trust I,
but upon payment of any tax or other governmental charges that may be imposed
in connection with any transfer or exchange. Water Trust I will not be
required to register or cause to be registered the transfer of the Trust
Preferred Securities after such Trust Preferred Securities have been called
for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to
this provision, the Property Trustee is under no obligation to exercise any of
the powers vested in it by the Trust Agreement at the request of any holder of
Trust Preferred Securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred thereby. If no
Event of Default has occurred and is continuing and the Property Trustee is
required to decide between alternative causes of action, construe ambiguous
provisions in the Trust Agreement or is unsure of the application of any
provision of the Trust Agreement, and the matter is not one on which holders
of the Trust Preferred Securities are entitled under the Trust Agreement to
vote, then the Property Trustee shall take such action as is directed by
Glacier and if not so directed, shall take such action as it deems advisable
and in the best interests of the holders of the Trust Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
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MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate Water Trust I in such a way that Water Trust I will
not be deemed to be an "investment company" required to be registered under
the Investment Company Act or fail to be classified as a grantor trust for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of Glacier for United States
federal income tax purposes. In this connection, Glacier and the
Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of Water Trust I or the Trust
Agreement, that Glacier and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of
the Trust Preferred Securities. Holders of the Trust Preferred Securities have
no preemptive or similar rights.
Water Trust I may not borrow money, issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
Concurrently with the issuance of the Trust Preferred Securities, Water
Trust I will invest the proceeds thereof, together with the consideration paid
by Glacier for the Common Securities, in Junior Subordinated Debentures issued
by Glacier. The Junior Subordinated Debentures will be issued as unsecured
debt under the Junior Subordinated Indenture, dated as of , 1998
(the "Indenture"), between Glacier and the Indenture Trustee. The following
summary of the terms and provisions of the Junior Subordinated Debentures and
the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, and to the Trust Indenture Act. However, all material provisions of the
Indenture have been described herein. The Indenture is qualified under the
Trust Indenture Act. Whenever particular defined terms of the Indenture are
referred to herein, such defined terms are incorporated herein or therein by
reference.
GENERAL
The Junior Subordinated Debentures will bear interest at the annual rate of
% of the principal amount thereof, payable monthly in arrears on the 15th
day of each calendar month of each year (each, an "Interest Payment Date"),
commencing January , 1998, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the first day of the month in which such payment is made.
Notwithstanding the above, in the event that either the (i) Junior
Subordinated Debentures are held by the Property Trustee and the Trust
Preferred Securities are registered in book-entry only form or (ii) the Junior
Subordinated Debentures are represented by a Global Subordinated Debenture (as
defined herein), the record date for such payment shall be the Business Day
next preceding such Interest Payment Date. The amount of each interest payment
due with respect to the Junior Subordinated Debentures will include amounts
accrued through the date the interest payment is due. It is anticipated that,
until the liquidation, if any, of Water Trust I, each Junior Subordinated
Debenture will be held in the name of the Property Trustee, in trust for the
benefit of the holders of the Trust Preferred Securities. The amount of
interest payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months. In the event that any date on which interest is
payable on the Junior Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next Business
Day (and without any interest or other payment in respect of any such delay),
in each case with the same force and effect as if made on the date such
payment was originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of %
thereof. The term "interest" as used herein shall include monthly interest
payments, interest on monthly interest payments not paid on the applicable
Interest Payment Date and Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on , 2028 (such
date, as it may be shortened as hereinafter described, the "Stated Maturity").
Such date may be shortened at any time by Glacier to any date
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not earlier than , 2003. Glacier might exercise its right to shorten
the maturity of the Junior Subordinated Debentures under circumstances where a
"Tax Event," "Investment Company Event" or other undesirable event could be
avoided simply by shortening the maturity of the Junior Subordinated
Debentures. In the event that Glacier elects to shorten the Stated Maturity of
the Junior Subordinated Debentures, it shall give notice to the Indenture
Trustee, and the Indenture Trustee shall give notice of such shortening to the
holders of the Junior Subordinated Debentures no less than 60 days prior to
the effectiveness thereof.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt and Subordinated
Debt of Glacier. Because Glacier is a holding company, the right of Glacier to
participate in any distribution of assets of any subsidiaries, including GW
Services, upon any such subsidiaries' liquidation or reorganization or
otherwise (and thus the ability of holders of the Trust Preferred Securities
to benefit indirectly from such distribution), is subject to the prior claims
of creditors of that subsidiary, except to the extent that Glacier may itself
be recognized as a creditor of that subsidiary. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of GW Services and any other subsidiaries of Glacier, and
holders of Junior Subordinated Debentures should look only to the assets of
Glacier for payments on the Junior Subordinated Debentures. The Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of
Glacier, including Senior Debt and Subordinated Debt, whether under the
Indenture or any existing or other indenture that Glacier may enter into in
the future or otherwise. See "--Subordination" below.
OPTION TO DEFER INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
Glacier has the right under the Indenture at any time during the term of the
Junior Subordinated Debentures to defer the payment of interest at any time or
from time to time for a period not exceeding 60 consecutive months (each such
period an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity. At the end of such Extension Period, Glacier must
pay all interest then accrued and unpaid (together with interest thereon at
the annual rate of %, compounded quarterly, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures will be required to accrue
interest income for United States federal income tax purposes. See "Certain
Federal Income Tax Consequences--Interest Income and Original Issue Discount."
Neither the default by Glacier on any Senior Debt and Subordinated Debt, nor a
default with respect to Senior Debt and Subordinated Debt resulting in
acceleration of the maturity thereof, constitutes a Debenture Event of
Default. See "--Debenture Events of Default" below.
During any such Extension Period, Glacier may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of Glacier's capital stock (which
includes common and preferred stock), or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of Glacier (including other Junior Subordinated Debentures) that
rank pari passu with or junior in interest to the Junior Subordinated
Debentures, (iii) make any guarantee payments with respect to any guarantee by
Glacier of the debt securities of any subsidiary of Glacier if such guarantee
ranks pari passu with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in capital stock of
Glacier (which includes common and preferred stock), (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, and (d) purchases of common stock related to the issuance of common
stock or rights under any of Glacier's benefit plans for its directors,
officers or employees), or (iv) redeem, purchase or acquire less than all of
the Junior Subordinated Debentures or any of the Trust Preferred Securities.
Prior to the termination of any such Extension Period, Glacier may further
extend such Extension Period, provided that such extension does not cause such
Extension Period to exceed 60 consecutive months or extend beyond the Stated
Maturity. Upon the termination of any such Extension Period and the payment of
all amounts then due on any Interest Payment Date, Glacier may elect to begin
a new Extension Period subject to the above requirements. No interest shall be
due and payable during an Extension Period, except at the end thereof. Glacier
must give notice to the Property Trustee, the Administrative Trustees and the
Indenture Trustee of its election of any Extension
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Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Trust Preferred Securities would have been payable except
for the election to begin or extend such Extension Period, (ii) the date the
Administrative Trustees are required to give notice to the American Stock
Exchange, the New York Stock Exchange, The Nasdaq Stock Market or any
applicable stock exchange or automated quotation system on which the Trust
Preferred Securities are then listed or quoted or to the holders of the Trust
Preferred Securities on the record date or (iii) the date such Distributions
are payable, but in any event not less than one Business Day prior to such
record date. The Indenture Trustee shall give notice of Glacier's election to
begin or extend a new Extension Period the holders of the Trust Preferred
Securities. There in no limitation on the number of times that Glacier may
elect to begin an Extension Period.
Distributions on the Trust Preferred Securities will be deferred by Water
Trust I during any such Extension Period. See "Description of the Trust
Preferred Securities--Distributions." For a description of certain federal
income tax consequences and special considerations applicable to any such
Junior Subordinated Debentures, see "Certain Federal Income Tax Consequences."
ADDITIONAL SUMS
If Water Trust I is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, Glacier will pay as
additional amounts on the Junior Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by
Water Trust I shall not be reduced as a result of any such additional taxes,
duties or other governmental charges.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of Glacier (i) on or after , 2003, in whole at any time or in
part from time to time, or (ii) at any time in whole (but not in part), within
90 days following the occurrence of a Tax Event or an Investment Company
Event, in each case at a redemption price equal to the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed
for redemption, plus 100% of the principal amount thereof.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at such holder's registered address. Unless Glacier
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
If Water Trust I is required to pay additional taxes, duties or other
governmental charges as a result of a Tax Event, Glacier will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums
(as defined herein).
The Junior Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Trust Preferred Securities--
Liquidation Distribution Upon Dissolution," under certain circumstances
involving the dissolution of Water Trust I, the Junior Subordinated Debentures
may be distributed to the holders of the Trust Preferred Securities in
liquidation of Water Trust I after satisfaction of liabilities to creditors of
Water Trust I as provided by applicable law. If the Junior Subordinated
Debentures are distributed to the holders of Trust Preferred Securities upon
the liquidation of Water Trust I, Glacier will use its best efforts to list
the Junior Subordinated Debentures on the American Stock Exchange or such
other stock exchanges or automated quotation system, if any, on which the
Trust Preferred Securities are then listed or quoted. There can be no
assurance as to the market price of any Junior Subordinated Debentures that
may be distributed to the holders of Trust Preferred Securities.
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RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there shall have occurred a Debenture Event of Default,
(ii) Glacier shall have given notice of its election of an Extension Period as
provided in the Indenture with respect to the Junior Subordinated Debentures
and shall not have rescinded such notice, or such Extension Period, or any
extension thereof, shall be continuing, or (iii) while the Junior Subordinated
Debentures are held by Water Trust I, Glacier shall be in default with respect
to its payment of any obligation under the Guarantee, then Glacier will not
(1) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of Glacier's
capital stock, (2) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of Glacier (including
other Junior Subordinated Debt) that rank pari passu with or junior in
interest to the Junior Subordinated Debentures or make any guarantee payments
with respect to any guarantee by Glacier of the debt securities of any
subsidiary of Glacier if such guarantee ranks pari passu with or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in capital stock of Glacier, (b) any declaration of a dividend
in connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee and (d) purchases of common stock related to issuance of common
stock or rights under any of Glacier's benefit plans for its directors,
officers, employees or consultants) or (3) redeem, purchase or acquire less
than all of the Junior Subordinated Debentures or any of the Trust Preferred
Securities.
SUBORDINATION
In the Indenture, Glacier has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt and Subordinated Debt to the extent
provided in the Indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any
bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of Glacier, the
holders of Senior Debt and Subordinated Debt will first be entitled to receive
payment in full of principal of all Allocable Amounts (as defined below) on
such Senior Debt and Subordinated Debt before the holders of Junior
Subordinated Debentures will be entitled to receive or retain any payment in
respect thereof.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Senior Debt and Subordinated Debt outstanding
at the time of such acceleration will first be entitled to receive payment in
full of all amounts due thereon (including any amounts due upon acceleration)
before the holders of Junior Subordinated Debentures will be entitled to
receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal or interest, if any, in respect of the
Junior Subordinated Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Debt and
Subordinated Debt or an event of default with respect to any Senior Debt and
Subordinated Debt resulting in the acceleration of the maturity thereof, or if
any judicial proceeding shall be pending with respect to any such default.
"Allocable Amounts," when used with respect to any Senior Debt and
Subordinated Debt, means all amounts due or to become due on such Senior Debt
and Subordinated Debt less, if applicable, any amount which would have been
paid to, and retained by, the holders of such Senior Debt and Subordinated
Debt (whether as a result of the receipt of payments by the holders of such
Senior Debt and Subordinated Debt from Glacier or any other obligor thereon or
from any holders of, or trustee in respect of, other indebtedness that is
subordinate and junior in right of payment to such Senior Debt and
Subordinated Debt pursuant to any provision of such indebtedness for the
payment over of amounts received on account of such indebtedness to the
holders of such Senior Debt and Subordinated Debt or otherwise) but for the
fact that such Senior Debt and Subordinated Debt is subordinated or junior in
right of payment to (or subject to a requirement that amounts received on such
Senior
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Debt and Subordinated Debt be paid over to obligees on) trade accounts payable
or accrued liabilities arising in the ordinary course of business.
"Debt" means, with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent: (i) every
obligation of such person for money borrowed; (ii) every obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; (vi) all
indebtedness of such person whether incurred on or prior to the date of the
Indenture or thereafter incurred, for claims in respect of derivative products
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another person and all
dividends of another person the payment of which, in either case, such person
has guaranteed or is responsible or liable, directly or indirectly, as obligor
or otherwise.
"Senior Debt and Subordinated Debt" means the principal of (and premium, if
any) and interest, if any (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to Glacier whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt of Glacier whether incurred on or prior to the date of the Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the same
or pursuant to which the same in outstanding, it is provided that such
obligations are not superior in right of payment to the Junior Subordinated
Debentures or to other Debt which is pari passu with, or subordinated to, the
Junior Subordinated Debentures; provided, however, that Senior Debt and
Subordinated Debt shall not be deemed to include (i) any Debt of Glacier which
when incurred and without respect to any election under Section 1111(b) of the
United States Bankruptcy Code of 1978, as amended, was without recourse to
Glacier, (ii) any Debt of Glacier to any of its subsidiaries, (iii) Debt to any
employee of Glacier, and (iv) any other debt securities issued pursuant to the
Indenture.
The Indenture places no limitation on the amount of additional Senior Debt
and Subordinated Debt that may be incurred by Glacier. Glacier expects from
time to time to incur additional indebtedness constituting Senior Debt and
Subordinated Debt.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Junior Subordinated Debentures will be represented by global certificates
registered in the name of the Depositary or its nominee ("Global Subordinated
Debenture"). Beneficial interests in the Junior Subordinated Debentures will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary. Except as described below, Junior Subordinated
Debentures in certificated form will not be issued in exchange for the global
certificates. See "Book-Entry Issuance."
Unless and until a Global Subordinated Debenture is exchanged in whole or in
part for the individual Junior Subordinated Debentures represented thereby, it
may not be transferred except as a whole by the Depositary for such Global
Subordinated Debenture to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.
A global security shall be exchanged for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee
only if (i) the Depositary notifies Glacier that it is unwilling or unable to
continue as a depositary for such global security and no successor depositary
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Securities Exchange Act, at a time when
the Depositary is required to be so registered to act as such depositary, (ii)
Glacier in its sole discretion determines that such global security shall be so
exchangeable or (iii) there shall have occurred and be continuing
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a Debenture Event of Default with respect to such global security. Any global
security that is exchanged pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as the
Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants with respect
to ownership of beneficial interests in such global security. In the event
that Junior Subordinated Debentures are issued in definitive form, such Junior
Subordinated Debentures will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Junior Subordinated Debentures represented by a global security
will be made to the Depositary, as the depositary for the Junior Subordinated
Debentures. In the event Junior Subordinated Debentures are issued in
definitive form, principal and interest will be payable, the transfer of the
Junior Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate office of
the Indenture Trustee, or at the offices of any paying agent or transfer agent
appointed by Glacier, provided that payment of interest may be made at the
option of Glacier by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Junior Subordinated
Debentures are issued in certificated form, the record dates for payment of
interest will be the first day of the month in which such payment is to be
made. For a description of the Depositary and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Book-Entry Issuance."
Glacier will appoint the Indenture Trustee as securities registrar under the
Indenture (the "Securities Registrar"). Junior Subordinated Debentures may be
presented for exchange as provided above, and may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the Securities Registrar. Glacier may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, provided that Glacier maintains a transfer agent in
the place of the payment. Glacier may at any time designate additional
transfer agents with respect to the Junior Subordinated Debentures.
In the event of any redemption, neither Glacier not the Indenture Trustee
shall be required to (i) issue, register the transfer of or exchange Junior
Subordinated Debentures during a period beginning at the opening of business
15 days before the day of selection for redemption of Junior Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Junior
Subordinated Debentures so selected for redemption, except, in the case of any
Junior Subordinated Debentures being redeemed in part, any portion thereof not
to be redeemed.
GLOBAL SUBORDINATED DEBENTURES
Upon the issuance of the Global Subordinated Debenture, and the deposit of
such Global Subordinated Debenture with or on behalf of the Depositary, the
Depositary for such Global Subordinated Debenture or its nominee will credit,
on its book-entry registration and transfer system, the respective principal
amounts of the individual Junior Subordinated Debentures represented by such
Global Subordinated Debenture to the accounts of persons that have accounts
with such Depositary ("Participants"). Ownership of beneficial interests in a
Global Subordinated Debenture will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such Global Subordinated Debenture will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests
in a Global Subordinated Debenture.
So long as the Depositary for a Global Subordinated Debenture, or its
nominee, is the registered owner of such Global Subordinated Debenture, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Junior Subordinated Debentures represented by such
Global Subordinated
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Debenture for all purposes under the Indenture governing such Junior
Subordinated Debentures. Except as provided below, owners of beneficial
interests in a Global Subordinated Debenture will not be entitled to have any
of the individual Junior Subordinated Debentures represented by such Global
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated
Debentures in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Payments of principal of and interest on individual Junior Subordinated
Debentures represented by a Global Subordinated Debenture registered in the
name of the Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global
Subordinated Debenture representing such Junior Subordinated Debentures. None
of Glacier, the Indenture Trustee, any Paying Agent, or the Securities
Registrar for such Junior Subordinate Debentures will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Global Subordinated Debenture
representing such Junior Subordinated Debentures or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Glacier expects that the Depositary or its nominee, upon receipt of any
payment of principal or interest in respect of a permanent Global Subordinated
Debenture representing the Junior Subordinated Debentures, immediately will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of the Global
Subordinated Debenture as shown on the records of such Depositary or its
nominee. Glacier also expects that payments by Participants to owners of
beneficial interests in such Global Subordinated Debenture held through such
Participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
If the Depositary is at any time unwilling, unable or ineligible to continue
as depositary and a successor depositary is not appointed by Glacier within 90
days, Glacier will issue individual Junior Subordinated Debentures in exchange
for the Global Subordinated Debenture. In addition, Glacier may at any time
and in its sole discretion, determine not to have the Junior Subordinated
Debentures represented by one or more Global Subordinated Debentures and, in
such event, will issue individual Junior Subordinated Debentures in exchange
for the Global Subordinated Debenture. Further, if Glacier so specifies with
respect to the Junior Subordinated Debentures, an owner of a beneficial
interest in a Global Subordinated Debenture representing Junior Subordinated
Debentures may, on terms acceptable to Glacier, the Indenture Trustee and the
Depositary for such Global Subordinated Debenture, receive individual Junior
Subordinated Debentures in exchange for such beneficial interests. In any such
instance, an owner of a beneficial interest in a Global Subordinated Debenture
will be entitled to physical delivery of individual Junior Subordinated
Debentures equal in principal amount to such beneficial interest and to have
such Junior Subordinated Debentures registered in its name. Individual Junior
Subordinated Debentures so issued will be issued in denominations, unless
otherwise specified by Glacier, of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and any interest on the Junior
Subordinated Debentures will be made at the office of the Indenture Trustee,
except that at the option of Glacier payment of any interest may be made (i)
except in the case of Global Junior Subordinated Debentures, by check mailed
to the address of the person entitled thereto as such address shall appear in
the securities register or (ii) by transfer to an account maintained by the
person entitled thereto as specified in the securities register, provided that
proper transfer instructions have been received by the regular record date.
Payment of any interest on Junior Subordinated Debentures will be made to the
person in whose name such Junior Subordinated Debenture is registered at the
close of business on the regular record date for such interest. Glacier may at
any time designate additional Paying Agents or rescind the designation of any
Paying Agent; however Glacier will at all times be required to maintain a
Paying Agent in each place of payment for the Junior Subordinated Debentures.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or then
held by Glacier in trust, for the payment of the principal of
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or interest on the Junior Subordinated Debentures and remaining unclaimed for
two years after such principal or interest has become due and payable shall,
at the request of Glacier, be repaid to Glacier and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured creditor,
only to Glacier for payment thereof.
MODIFICATION OF INDENTURE
From time to time Glacier and the Indenture Trustee may, without the consent
of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interests of the holders of
the Junior Subordinated Debentures or the Trust Preferred Securities so long
as they remain outstanding) and qualifying, or maintaining the qualification
of, the Indenture under the Trust Indenture Act. The Indenture contains
provisions permitting Glacier and the Indenture Trustee, with the consent of
the holders of not less than a majority in principal amount of the outstanding
Junior Subordinated Debentures, to modify the Indenture in a manner affecting
the rights of the holders of the Junior Subordinated Debentures; provided,
that no such modification may, without the consent of the holder of each
outstanding Subordinated Debenture, (i) change the Stated Maturity of the
Junior Subordinated Debentures, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or
(ii) reduce the percentage of principal amount of Junior Subordinated
Debentures, the holders of which are required to consent to any such
modification of the Indenture, provided that so long as any of the Trust
Preferred Securities remain outstanding, no such modification may be made that
adversely affects the holders of such Trust Preferred Securities in any
material respect, and no termination of the Indenture may occur, and no waiver
of any Debenture Event of Default or compliance with any covenant under the
Indenture may be effective, without the prior consent of the holders of at
least a majority of the aggregate Liquidation Amount of the Trust Preferred
Securities unless and until the principal of the Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions have been satisfied. Where a consent under the
Indenture would require the consent of each holder of Junior Subordinated
Debentures, no such consent shall be given by the Property Trustee without the
prior consent of each holder of Trust Preferred Securities. In addition,
Glacier and the Indenture Trustee may execute, without the consent of any
holder of Junior Subordinated Debentures, any supplemental Indenture for the
purpose of creating any new series of Junior Subordinated Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred
and is continuing constitutes a "Debenture Event of Default," with respect to
the Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures, when due (subject to the deferral of any due date in the case
of an Extension Period), or
(ii) failure to pay any principal on the Junior Subordinated Debentures
when due whether at maturity, upon redemption by declaration or otherwise;
or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
Glacier from the Indenture Trustee or to Glacier and the Indenture Trustee
by the holders of at least 25% in aggregate outstanding principal amount of
the Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of
Glacier.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in
aggregate outstanding principal
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amount of the Junior Subordinated Debentures may declare the principal due and
payable immediately upon a Debenture Event of Default. If the Indenture
Trustee or such holders of such Junior Subordinated Debentures fail to make
such declaration, the holders of at least 25% in aggregate Liquidation Amount
of the Trust Preferred Securities shall have such right. The holders of a
majority in aggregate outstanding principal amount of the Junior Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of the Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the Indenture
Trustee. Should the holders of the Junior Subordinated Debentures fail to
annul such declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of the Trust Preferred Securities shall have such
right.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures affected thereby may, on behalf of the holders
of all the Junior Subordinated Debentures, waive any past default, except a
default in the payment of principal or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Indenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Junior Subordinated Debenture.
In case a Debenture Event of Default shall occur and be continuing as to the
Junior Subordinated Debentures, the Property Trustee will have the right to
declare the principal of and the interest on such Junior Subordinated
Debentures, and any other amounts payable under the Indenture, to be forthwith
due and payable and to enforce its other rights as a creditor with respect to
such Junior Subordinated Debentures.
Glacier is required to file annually with the Indenture Trustee a
certificate as to whether or not Glacier is in compliance with all the
conditions and covenants applicable to it under the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of Glacier to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal
is otherwise payable, a holder of Trust Preferred Securities may institute a
legal proceeding directly against Glacier for enforcement of payment to such
holder of the principal of or interest on such Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Trust Preferred Securities of such holder (a "Direct Action"). Glacier may not
amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Trust Preferred
Securities outstanding. If the right to bring a Direct Action is removed,
Water Trust I may become subject to the reporting obligations under the
Exchange Act. Glacier shall have the right under the Indenture to set-off any
payment made to such holder of Trust Preferred Securities by Glacier in
connection with a Direct Action.
The holders of the Trust Preferred Securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See
"Description of the Trust Preferred Securities--Events of Default Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that Glacier shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate
with or merge into Glacier or convey, transfer or lease its properties and
assets substantially as an entirety to Glacier, unless (i) in case Glacier
consolidates with or merges into another Person or conveys, transfers or
leases its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
Glacier's obligations on the Junior Subordinated Debentures issued under the
Indenture;
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(ii) immediately after giving effect thereto, no Debenture Event of Default,
and no event which, after notice or lapse of time or both, would become a
Debenture Event of Default, shall have occurred and be continuing; and
(iii) certain other conditions an prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
similar transaction involving Glacier that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and
payable at their Stated Maturity within one year, and Glacier deposits or
causes to be deposited with the Indenture Trustee trust funds, in trust, for
the purpose and in an amount in the currency or currencies in which the Junior
Subordinated Debentures are payable sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Indenture Trustee for cancellation, for the principal and interest to the
date of the deposit or to the Stated Maturity, as the case may be, then the
Indenture will cease to be of further effect (except as to Glacier's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers, certificates and opinions of counsel described therein), and
Glacier will be deemed to have satisfied and discharged the Indenture.
COVENANTS OF GLACIER
Glacier will covenant in the Indenture, as to the Junior Subordinated
Debentures, that if and so long as (i) Water Trust I in the holder of all such
Junior Subordinated Debentures, (ii) a Tax Event in respect of Water Trust I
has occurred and is continuing and (iii) Glacier has elected, and has not
revoked such election, to pay Additional Sums (as defined under "Description
of the Trust Preferred Securities--Redemption") in respect of the Trust
Preferred Securities, Glacier will pay to Water Trust I such Additional Sums.
Glacier will also covenant, as to the Junior Subordinated Debentures, (i) to
maintain directly or indirectly 100% ownership of the Common Securities of
Water Trust I to which Junior Subordinated Debentures have been issued,
provided that certain successors which are permitted pursuant to the Indenture
may succeed to Glacier's ownership of the Common Securities, (ii) not to
voluntarily dissolve, wind up or liquidate Water Trust I, except (a) in
connection with a distribution of Junior Subordinated Debentures to the
holders of the Trust Preferred Securities in liquidation of Water Trust I or
(b) in connection with certain mergers, consolidations, or amalgamations
permitted by the Trust Agreement and (iii) to use its reasonable efforts,
consistent with the terms and provisions of the Trust Agreement, to cause
Water Trust I to remain classified as a grantor trust and not an association
taxable as a corporation for United States federal income tax purposes.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of California, except that
the immunities and standard of care of the Indenture Trustee will be governed
by Delaware law.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Indenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Junior Subordinated Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Indenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
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BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the Trust
Preferred Securities and the Junior Subordinated Debentures. The Trust
Preferred Securities and the Junior Subordinated Debentures will be issued
only as fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global certificates will
be issued for the Trust Preferred Securities and the Junior Subordinated
Debentures and will be deposited with the Depositary.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary also facilitates the settlement among Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. "Direct Participants" include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
The Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the Depositary system is
also available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain custodial relationships with
Direct Participants, either directly or indirectly ("Indirect Participants").
The rules applicable to the Depositary and its Participants are on file with
the Commission.
Purchases of Trust Preferred Securities or Junior Subordinated Debentures
within the Depositary system must be made by or through Direct Participants,
which will receive a credit for the Trust Preferred Securities or Junior
Subordinated Debentures on the Depositary's records. The ownership interest of
each actual purchaser of each Trust Preferred Security and each Junior
Subordinated Debenture ("Beneficial Owner") will be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners purchased
Trust Preferred Securities or Junior Subordinated Debentures. Transfers of
ownership interests in the Trust Preferred Securities or Junior Subordinated
Debentures are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Trust Preferred
Securities or Junior Subordinated Debentures, except in the event that use of
the book-entry system for the Junior Subordinated Debentures is discontinued.
The Depositary has no knowledge of the actual Beneficial owners of the Trust
Preferred Securities or Junior Subordinated Debentures; the Depositary's
records reflect only the identity of the Direct Participants to whose accounts
such Trust Preferred Securities or Junior Subordinated Debentures are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Trust Preferred Securities or Junior Subordinated Debentures. If less than
all of the Trust Preferred Securities or the Junior Subordinated Debentures
are being redeemed, the Depositary will determine by lot or pro rata the
amount of the Trust Preferred Securities of each Direct Participant to be
redeemed.
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Although voting with respect to the Trust Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Trust
Preferred Securities or Junior Subordinated Debentures, as applicable, in
those instances in which a vote is required, neither the Depositary nor Cede &
Co. will itself consent or vote with respect to Trust Preferred Securities or
Junior Subordinated Debentures. Under its usual procedures, the Depositary
would mail an omnibus proxy (the "Omnibus Proxy") to the relevant Trustee as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts
such Trust Preferred Securities or Junior Subordinated Debentures are credited
on the record date (identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Trust Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to the
Depositary. The Depositary's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices and will be the responsibility of such Participant and
not of the Depositary, the relevant Trustee, Water Trust I or Glacier, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of Distributions to the Depositary is the responsibility of the
relevant Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Trust Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the
relevant Trustee and Glacier. In the event that a successor securities
depositary is not obtained, definitive Trust Preferred Securities or Junior
Subordinated Debenture certificates representing such Trust Preferred
Securities or Junior Subordinated Debentures are required to be printed and
delivered. Glacier, at its option, may decide to discontinue use of the system
of book-entry transfers through the Depositary (or a successor depositary).
After a Debenture Event of Default, the holders of a majority in liquidation
preference of Trust Preferred Securities or aggregate principal amount of
Junior Subordinated Debentures may determine to discontinue the system of
book-entry transfers through the Depositary. In any such event, definitive
certificates for such Trust Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that Water Trust
I and Glacier believe to be accurate, but Water Trust I and Glacier assume no
responsibility for the accuracy thereof. Neither Water Trust I nor Glacier has
any responsibility for the performance by the Depositary or its Participants
of their respective obligations as described herein or under the rules and
procedures governing their respective operations.
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DESCRIPTION OF GUARANTEE
The Guarantee Agreement will be executed and delivered by Glacier
concurrently with the issuance of the Trust Preferred Securities for the
benefit of the holders of the Trust Preferred Securities. Wilmington Trust
Company will act as Guarantee Trustee under the Guarantee Agreement for the
purposes of compliance with the Trust Indenture Act, and the Guarantee will be
qualified as an Indenture under the Trust Indenture Act. The following summary
of certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the
provisions of the Guarantee Agreement, including the definition therein of
certain terms, and the Trust Indenture Act. However, all material provisions
of the Guarantee have been described herein. The form of the Guarantee has
been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Trust Preferred Securities.
GENERAL
The Guarantee will be an irrevocable guarantee on a subordinated basis of
Water Trust I's obligations under the Trust Preferred Securities, but will
apply only to the extent that Water Trust I has funds sufficient to make such
payments, and is not a guarantee of collection.
Glacier will irrevocably agree to pay in full on a subordinated basis, to
the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Trust Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that Water Trust I may have or
assert other than the defense of payment. The following payments with respect
to the Trust Preferred Securities, to the extent not paid by or on behalf of
Water Trust I (the "Guarantee Payment"), will be subject to the Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on the Trust
Preferred Securities, to the extent that Water Trust I has funds on hand
available therefor at such time, (ii) the redemption price with respect to any
Trust Preferred Securities called for redemption, to the extent that Water
Trust I has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of Water Trust
I (unless the Junior Subordinated Debentures are distributed to holders of the
Trust Preferred Securities), the lesser of (a) the Liquidation Distribution
and (b) the amount of assets of Water Trust I remaining available for
distribution to holders of Trust Preferred Securities after satisfaction of
liabilities to creditors of Water Trust I as required by law. Glacier's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by Glacier to the holders of the Trust Preferred
Securities or by causing Water Trust I to pay such amounts to such holders.
If Glacier does not make interest payments on the Junior Subordinated
Debentures held by Water Trust I, Water Trust I will not be able to pay
Distributions on the Trust Preferred Securities and will not have funds
legally available therefor. The Guarantee will rank subordinate and junior in
right of payment to all Senior Debt and Subordinated Debt of Glacier. See
"Status of the Guarantee" below. Because Glacier is a holding company, the
right of Glacier to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise,
is subject to the prior claims of creditors of that subsidiary, except to the
extent Glacier may itself be recognized as a creditor of that subsidiary.
Accordingly, Glacier's obligations under the Guarantee will be effectively
subordinated to all existing and future liabilities of Glacier's subsidiaries,
and claimants should look only to the assets of Glacier for payments
thereunder. Except as otherwise described herein, the Guarantee does not limit
the incurrence or issuance of other secured or unsecured debt of Glacier,
including Senior Debt and Subordinated Debt whether under the Indenture, any
other indenture that Glacier may enter into in the future, or otherwise.
Glacier has, through the Guarantee, the Guarantee Agreement, the Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed
all of Water Trust I's obligations under the Trust Preferred Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It in only the combined
operation of these documents that has the effect of providing a full,
irrevocable and
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unconditional guarantee of Water Trust I's obligations under the Trust
Preferred Securities. See "Relationship Among the Trust Preferred Securities,
the Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of Glacier and will
rank subordinate and junior in right of payment to all Senior Debt and
Subordinated Debt in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of collection.
For example, the guaranteed party may institute a legal proceeding directly
against Glacier to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity. The
Guarantee will be held for the benefit of the holders of the Trust Preferred
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by Water Trust I or upon
distribution to the holders of the Trust Preferred Securities of the Junior
Subordinated Debentures to the holders of the Trust Preferred Securities. The
Guarantee does not place a limitation on the amount of additional Senior Debt
and Subordinated Debt that may be incurred by Glacier. Glacier expects from
time to time to incur additional indebtedness constituting Senior Debt and
Subordinated Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee Agreement may not be amended without the
prior approval of the holders of not less than a majority of the aggregate
Liquidation Amount of such outstanding Trust Preferred Securities. See
"Description of the Trust Preferred Securities-- Voting Rights; Amendment of
the Trust Agreement." All guarantees and agreements contained in the Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of Glacier and shall inure to the benefit of the holders of
the Trust Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee Agreement will occur upon the
failure of Glacier to perform any of its payment or other obligations
thereunder. The holders of not less than a majority in aggregate Liquidation
Amount of the Trust Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee
Agreement. Any holder of the Trust Preferred Securities may institute a legal
proceeding directly against Glacier to enforce its rights under the Guarantee
without first instituting a legal proceeding against Water Trust I, the
Guarantee Trustee or any other person or entity.
Glacier, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not Glacier is in compliance with all
the conditions and covenants applicable to it under the Guarantee Agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by Glacier in performance of the Guarantee, has undertaken to perform
only such duties as are specifically set forth in the Guarantee Agreement and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee
Agreement at the request of any holder of the Trust Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
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TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Trust Preferred Securities, upon full
payment of the amounts payable upon liquidation of Water Trust I or upon
distribution of Junior Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Trust
Preferred Securities must restore payment of any sums paid under the Trust
Preferred Securities or the Guarantee.
GOVERNING LAW
The Guarantee Agreement will be governed by and construed in accordance with
the laws of the State of California.
EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by Glacier under the Trust
Agreement, Glacier will irrevocably and unconditionally guarantee to each
person or entity to whom Water Trust I becomes indebted or liable, the full
payment of any costs, expenses or liabilities of Water Trust I (including,
without limitation, expenses relating to the offering of the Trust Securities
and any expenses the Property Trustee may incur relating to the enforcement of
the rights of the holders of the Trust Preferred Securities or the Junior
Subordinated Debentures pursuant to the Trust Agreement and the Indenture,
respectively) other than obligations of Water Trust I to pay to the holders of
the Trust Preferred Securities or other similar interests in Water Trust I of
the amounts due such holders pursuant to the terms of the Trust Preferred
Securities or such other similar interests, as the case may be. The Expense
Agreement may be enforced against Glacier by any person or entity to whom
Water Trust I is or becomes indebted or liable.
RELATIONSHIP AMONG THE TRUST PREFERRED
SECURITIES, THE JUNIOR SUBORDINATED
DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent Water Trust I has funds available for the payment of
such Distributions) are irrevocably guaranteed by Glacier as and to the extent
set forth under "Description of Guarantee." Taken together, Glacier's
obligations under the Junior Subordinated Debentures, the Indenture, the Trust
Agreement, the Expense Agreement, the Guarantee Agreement and the Guarantee
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of distributions and other amounts due on the Trust Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only
the combined operation of those documents that has the effect of providing a
full, irrevocable and unconditional guarantee of Water Trust I's obligations
under the Trust Preferred Securities. If and to the extent that Glacier does
not make payments on the Junior Subordinated Debentures, Water Trust I will
not pay Distributions or other amounts due on the Trust Preferred Securities.
The Guarantee does not cover payment of Distributions when Water Trust I does
not have sufficient funds to pay such Distributions. In such event, the remedy
of a holder of the Trust Preferred Securities is to institute a legal
proceeding directly against Glacier for enforcement of payment of such
Distributions to such holder. The obligations of Glacier under the Guarantee
are subordinate and junior in right of payment to all Senior Debt and
Subordinated Debt of Glacier.
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SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Trust Preferred Securities,
primarily because: (i) the aggregate principal amount of the Junior
Subordinated Debentures will be equal to the sum of the aggregate Liquidation
Amount of the Trust Preferred Securities and Common Securities; (ii) the
interest rate and interest and other payment dates on the Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Trust Preferred Securities; (iii) Glacier shall pay for all and
any costs, expenses and liabilities of Water Trust I except Water Trust I's
obligations to holders of Trust Preferred Securities; and (iv) the Trust
Agreement further provides that Water Trust I will not engage in any activity
that is not consistent with its limited purposes.
Notwithstanding anything to the contrary in the Indenture, Glacier has the
right to set-off any payment it is otherwise required to make thereunder with
and to the extent Glacier has theretofore made, or is concurrently on the date
of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE TRUST PREFERRED SECURITIES UNDER THE
GUARANTEE
A holder of any the Trust Preferred Securities may institute a legal
proceeding directly against Glacier to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee,
Water Trust I or any other person or entity.
A default or event of default under any Senior Debt and Subordinated Debt
would not constitute a default or Event of Default. However, in the event of
payment defaults under, or acceleration of, Senior Debt and Subordinated Debt,
the Subordination provisions of the Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior Debt
and Subordinated Debt has been paid in full or any payment default thereunder
has been cured or waived. Failure to make required payments on Junior
Subordinated Debentures would constitute an Event of Default.
LIMITED PURPOSE OF WATER TRUST I
The Trust Preferred Securities evidence a beneficial interest in Water Trust
I, and Water Trust I exists for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in Junior Subordinated
Debentures. A principal difference between the rights of a holder of the Trust
Preferred Securities and a holder of a Junior Subordinated Debenture is that a
holder of a Junior Subordinated Debenture is entitled to receive from Glacier
the principal amount of and interest accrued on Junior Subordinated Debentures
held, while a holder of the Trust Preferred Securities is entitled to receive
Distributions from Water Trust I (or from Glacier under the Guarantee) if and
to the extent Water Trust I has funds available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
Water Trust I involving the liquidation of the Junior Subordinated Debentures,
after satisfaction of liabilities to creditors of Water Trust I as provided by
applicable law, the holders of Trust Preferred Securities will be entitled to
receive, out of assets held by Water Trust I, the Liquidation Distribution in
cash. See "Description of the Trust Preferred Securities-- Liquidation
Distribution Upon Dissolution." Upon any voluntary or involuntary liquidation
or bankruptcy of Glacier, the Property Trustee, as holder of the Junior
Subordinated Debentures, would be a subordinated creditor of Glacier,
subordinated in right of payment to all Senior Debt and Subordinated Debt as
set forth in the Indenture, but entitled to receive payment in full of
principal and interest, before any stockholders of Glacier receive payments or
distributions. Since Glacier is the guarantor under the Guarantee and has
agreed to pay for all costs, expenses and liabilities of Water Trust I (other
than Water Trust I's obligations to the holders of its Trust Preferred
Securities), the positions of a holder of the Trust Preferred Securities and a
holder of Junior Subordinated Debentures relative to other creditors and to
stockholders of Glacier in the event of liquidation or bankruptcy of Glacier
are substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is for general information purposes and is not tax advice. The
information set forth below, to the extent it addresses matters of law or
legal conclusions has been reviewed by Milbank, Tweed, Hadley & McCloy,
counsel to the Company ("Counsel"), and it is the opinion of Counsel that such
information is accurate in all material respects. Unless otherwise stated, the
following deals only with Trust Preferred Securities held as capital assets by
United States Persons (defined below) who purchase the Trust Preferred
Securities upon original issuance at their original offering price. As used
herein, a "United States Person" means a person that is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any
political subdivision thereof, (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source, or (iv) a
trust if a U.S. court is able to exercise primary supervision over the
administration of such trust and one or more United States fiduciaries have
the authority to control all substantial decisions of such trust. The tax
treatment of holders may vary depending on their particular situation. This
summary does not address all the tax consequences that may be relevant to a
particular holder or to holders who may be subject to special tax treatment,
such as banks, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt
investors, foreign investors, investors that hold the Trust Preferred
Securities as part of a hedging, straddle or conversion transaction or whose
functional currency is not the U.S. dollar. In addition, this summary does not
include any description of any alternative minimum tax consequences or the tax
laws of any state, local or foreign government that may be applicable to a
holder of Trust Preferred Securities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly
on a retroactive basis.
The following does not address the tax consequences that might be relevant
to persons that are not United States Persons ("non-United States Persons").
Non-United States Persons should consult their own tax advisors an to the
specific United States federal income tax consequences of the purchase,
ownership and disposition of Trust Preferred Securities.
The authorities on which this summary is based are subject to various
interpretations, and the opinions of Counsel are not binding on the Internal
Revenue Service ("Service") or the courts, either of which could take a
contrary position. Moreover, no rulings have been or will be sought from the
Service with respect to the transactions described herein. Accordingly, there
can be no assurance that the Service will not challenge the opinions expressed
herein or that a court would not sustain such a challenge.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION
OF THE TRUST PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS,
SEE "DESCRIPTION OF THE TRUST PREFERRED SECURITIES--REDEMPTION."
CLASSIFICATION OF WATER TRUST I
In connection with the issuance of the Trust Preferred Securities, Counsel
is of the opinion that, under current law and assuming compliance with the
terms of the Trust Agreement, and based on certain facts and assumptions
contained in such opinion, Water Trust I will be classified as a grantor trust
and not as an association taxable as a corporation for United States federal
income tax purposes. As a result, each beneficial owner of the Trust Preferred
Securities (a "Securityholder") will be treated as owning an undivided
beneficial interest in the Junior Subordinated Debentures. Accordingly, each
Securityholder will be required to include in its gross income its pro rata
share of the interest income or original issue discount ("OID") that is paid
or accrued on the Junior Subordinated Debentures. See "--Interest Income and
Original Issue Discount" herein. No amount included in income with respect to
the Trust Preferred Securities will be eligible for the dividends received
deduction.
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CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Company intends to take the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes an
indebtedness of the Company under current law, and, by acceptance of a Trust
Preferred Security, each holder covenants to treat the Junior Subordinated
Debentures as indebtedness and the Trust Preferred Securities as evidence of
an indirect beneficial ownership interest in the Junior Subordinated
Debentures. Counsel has not delivered any opinion relating to the
classification of the Junior Subordinated Debentures as indebtedness and no
assurance can be given, however, that such position of the Company will not be
challenged by the Internal Revenue Service or, if challenged, that such a
challenge will not be successful. The remainder of this "Certain Federal
Income Tax Consequences" section assumes that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the Junior Subordinated
Debentures generally will be included in income by a Securityholder at the
time such interest income is paid or accrued in accordance with such
Securityholder's regular method of tax accounting.
Under the applicable Treasury regulations, the Junior Subordinated
Debentures will not be considered to have been issued with OID within the
meaning of Section 1273(a) of the Code. Unless Junior Subordinated Debentures
have terms and conditions that render the likelihood of Glacier's exercising
its right to defer payments of interest on the Junior Subordinated Debentures
to be remote, Glacier believes that the terms and conditions of the Junior
Subordinated Debentures are such that the likelihood of its exercising such
right is remote, and intends to take the position that the Junior Subordinated
Debentures are not issued with OID. Because this issue is inherently factual,
Counsel is unable to express any opinion regarding whether the Junior
Subordinated Debentures are issued with OID. If, however, Glacier exercises
its right to defer payments of interest on the Junior Subordinated Debentures,
the Junior Subordinated Debentures will become OID instruments at such time
and all Securityholders will be required to accrue the stated interest on the
Junior Subordinated Debentures on a daily basis during the Extension Period,
even though Glacier will not pay such interest until the end of the Extension
Period, and even though some Securityholders may use the cash method of tax
accounting. Moreover, thereafter the Junior Subordinated Debentures will be
taxed as OID instruments for as long as they remain outstanding. Thus, even
after the end of the Extension Period, all Securityholders will be required to
continue to include the stated interest on the Junior Subordinated Debentures
in income on a daily economic accrual basis, regardless of their method of tax
accounting and in advance of receipt of the cash attributable to such interest
income. Under the economic accrual rules, a Securityholder is required to
accrue an amount of interest income each year that approximates the stated
interest payments called for under the Junior Subordinated Debentures, and
actual cash payments of interest on the Junior Subordinated Debentures are not
reported separately as taxable income.
The Treasury regulations described above have not yet been addressed in any
definitive interpretations by the Service, and it is possible that the Service
could take a contrary position. If the Service were to assert successfully
that the stated interest on the Junior Subordinated Debentures was OID
regardless of whether Glacier exercises its right to defer payments of
interest on such debentures, all Securityholders will be required to include
such stated interest in income on a daily economic accrual basis as described
above.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBTS TO HOLDERS OF TRUST PREFERRED
SECURITIES
Under current law, a distribution by Water Trust I of the Junior
Subordinated Debentures as described under the caption "Description of the
Trust Preferred Securities--Liquidation Distribution Upon Dissolution" will be
non-taxable and will result in the Securityholder receiving directly its pro
rata share of the Junior Subordinated Debentures previously held indirectly
through Water Trust I, with a holding period and aggregate tax basis equal to
the holding period and aggregate tax basis such Securityholder had in its
Trust Preferred Securities before
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such distribution. If, however, the liquidation of Water Trust I were to occur
because Water Trust I is subject to United States federal income tax with
respect to income accrued or received on the Junior Subordinated Debentures as
a result of a Tax Event or otherwise, the distribution of Junior Subordinated
Debentures to Securityholders by Water Trust I could be a taxable event to
Water Trust I and each Securityholder, and a Securityholder would recognize
gain or loss as if the Securityholder had exchanged its Trust Preferred
Securities for the Junior Subordinated Debentures it received upon the
liquidation of Water Trust I. A Securityholder would recognize interest income
in respect of Junior Subordinated Debentures received from Water Trust I in
the manner described above under "--Interest Income and Original Issue
Discount" herein.
SALES OR REDEMPTION OF TRUST PREFERRED SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Trust
Preferred Securities (including a redemption for cash) in an amount equal to
the difference between the amount realized (which for this purpose, will
exclude amounts attributable to accrued interest or OID not previously
included in income) and the Securityholder's adjusted tax basis in the Trust
Preferred Securities sold or so redeemed. Gain or loss recognized by a
Securityholder on Trust Preferred Securities held for more than one year will
generally be taxable as long-term capital gain or loss, although the
preferential 20% rate applicable to individuals applies only in the case of a
capital asset sold or exchanged having a holding period in excess of 18
months. Amounts attributable to accrued interest or OID with respect to a
Securityholder's pro rata share of the Junior Subordinated Debentures not
previously included in income will be taxable as ordinary income.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of OID accrued on the Trust Preferred Securities held of record
by United States Persons (other than corporations and other exempt
Securityholders), if any, will be reported to the Service. "Backup"
withholding at a rate of 31% will apply to payments of interest to non-exempt
United States Persons unless the Securityholder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions. Any
amounts withheld from a Securityholder under the backup withholding rules will
be allowed as a refund or a credit against such Securityholder's United States
federal income tax liability, provided the required information is furnished
to the Service.
POSSIBLE TAX LAW CHANGES AFFECTING THE TRUST PREFERRED SECURITIES
There can be no assurance that future legislative proposals or final
legislation will not affect the ability of the Company to deduct interest on
the Junior Subordinated Debentures. Such a change could give rise to a Tax
Event, which may permit Glacier to cause a redemption of the Trust Preferred
Securities. See "Description of the Trust Preferred Securities--Redemption--
Tax Event Redemption" and "Description of Junior Subordinated Debentures--
Redemption."
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ERISA CONSIDERATIONS
GENERAL
A fiduciary of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") should consider
the fiduciary standards under ERISA in the context of the particular
circumstances of such plan before authorizing an investment in the Trust
Preferred Securities. Such fiduciary should consider whether the investment
satisfies ERISA's diversification and prudence requirements, whether the
investment constitutes an unauthorized delegation of fiduciary authority and
whether the investment is in accordance with the documents and instruments
governing the plan. In addition, ERISA and the Code prohibit a wide range of
transactions ("Prohibited Transactions") involving the assets of a plan
subject to ERISA or the assets of an individual retirement account or plan
subject to Section 4975 of the Code or any entity in which such plan invests
whose assets are deemed "plan assets" (hereinafter an "ERISA Plan") and
persons who have certain specified relationships to the ERISA Plan ("parties
in interest," within the meaning of ERISA, and "disqualified persons," within
the meaning of the Code). Such transactions may require "correction" and may
cause the ERISA Plan fiduciary to incur certain liabilities and the parties in
interest or disqualified persons to be subject to excise taxes.
Governmental plans and certain church plans (each as defined under ERISA)
are not subject to the Prohibited Transactions rules. Such plans may, however,
be subject to federal, state or local laws or regulations which may affect
their investment in the Trust Preferred Securities. Any fiduciary of such a
governmental or church plan considering an investment in the Trust Preferred
Securities should determine the need for, and the availability, if necessary,
of any exemptive relief under such laws or regulations.
TRUST ASSETS AS "PLAN ASSETS"
The Department of Labor has issued final regulations (the "Labor
Regulations") as to what constitutes assets of an employee benefit plan ("plan
asset") under ERISA. The Labor Regulations provide that, as a general rule,
when an ERISA Plan acquires an equity interest in an entity and such interest
does not represent a "publicly offered security" nor a security issued by an
investment company registered under the 1940 Act, the ERISA Plan's assets
include both the equity interest and an undivided interest in each of the
underlying assets of the entity, unless it is established either that the
entity is an operating company or that equity participation in the entity by
"benefit plan investors," as defined in the Labor Regulations, is not
"significant." For purposes of the Labor Regulations, Water Trust I will be
neither an investment company nor an operating company.
Under the Labor Regulations, equity participation by benefit plan investors
will not be considered "significant" on any date only if, immediately after
the most recent acquisition of Trust Preferred Securities, the aggregate
interest in the Trust Preferred Securities held by benefit plan investors will
be less than 25% of the aggregate outstanding principal amount of the Trust
Preferred Securities. Although it is possible that the equity participation by
benefit plan investors on any date will not be "significant" for purposes of
the Labor Regulations, such result cannot be assured. Consequently, if ERISA
Plans or investors using plan assets of ERISA Plans purchase the Trust
Preferred Securities, Water Trust I's assets could be deemed to be "plan
assets" of such ERISA Plans for purposes of the fiduciary responsibility
provisions of ERISA and the Prohibited Transactions rules of ERISA and the
Code. Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of an ERISA Plan is
considered to be fiduciary of such ERISA Plan. For example, the Property
Trustee could therefore become a fiduciary of the ERISA Plans that invest in
the Trust Preferred Securities and be subject to the general fiduciary
requirements of ERISA in exercising its authority with respect to the
management of the assets of Water Trust I. However, the Property Trustee will
have only limited discretionary authority with respect to Water Trust I assets
and the remaining functions and responsibilities performed by the Property
Trustee will be for the most part custodial and ministerial in nature.
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PROHIBITED TRANSACTIONS
Glacier or the Property Trustee may be a party in interest or a disqualified
person with respect to an ERISA Plan investing in the Trust Preferred
Securities or acquiring Junior Subordinated Debentures, and therefore, such
investment by an ERISA Plan may give rise to a Prohibited Transaction in the
form of a direct or indirect extension of credit by the investing ERISA Plan
to the Company. Consequently, before investing in the Trust Preferred
Securities or acquiring Junior Subordinated Debentures, any person who is, or
who is acquiring such securities for, or on behalf of, an ERISA Plan should
determine that either a statutory or an administrative exemption from the
Prohibited Transaction rules discussed below or otherwise available is
applicable to such investment in the Trust Preferred Securities or acquisition
of Junior Subordinated Debentures, or that such investment in, or acquisition
of, such securities will not result in a non-exempt Prohibited Transaction.
The statutory or administrative exemptions from the Prohibited Transaction
rules under ERISA and the Code which may be available to an ERISA Plan which
is investing in the Trust Preferred Securities include: Prohibited Transaction
Class Exemption ("PTCE") 90-1, regarding investments by insurance company
pooled separate accounts; PTCE 91-38, regarding investments by bank collective
investment funds; PTCE 84-14, regarding transactions effected by qualified
professional asset managers; PTCE 96-23, regarding transactions effected by
in-house asset managers; and PTCE 95-60, regarding investments by insurance
company general accounts (collectively referred to as the "ERISA Investor
Exemptions").
Notwithstanding the foregoing, Trust Preferred Securities may not be
acquired by any person who is, or who in acquiring such Trust Preferred
Securities is using the assets of, an ERISA Plan unless one of the ERISA
Investor Exemptions or another applicable exemption is available to the ERISA
Plan. The acquisition of the Trust Preferred Securities by any person who is,
or who in acquiring such Trust Preferred Securities is using the assets of, an
ERISA Plan shall be deemed to constitute a representation by such person to
the Water Trust I that such person is eligible for exemptive relief available
pursuant to one or more of the ERISA Investor Exemptions or another applicable
exemption with respect to the acquisition and holding of such Trust Preferred
Securities and will not result in a non-exempt Prohibited Transaction.
THE DISCUSSION HEREIN OF ERISA IS GENERAL IN NATURE AND IS NOT INTENDED TO
BE ALL INCLUSIVE. ANY FIDUCIARY OF AN ERISA PLAN, GOVERNMENTAL PLAN OR CHURCH
PLAN CONSIDERING AN INVESTMENT IN THE TRUST PREFERRED SECURITIES SHOULD
CONSULT WITH ITS LEGAL ADVISORS REGARDING THE CONSEQUENCES OF SUCH INVESTMENT
AND CONSIDER WHETHER THE ERISA PLAN CAN MAKE THE REPRESENTATIONS NOTED ABOVE.
72
<PAGE>
CERTAIN RELATIONSHIPS
As of the date hereof, affiliates of Kayne Anderson owned approximately
1,317,680 shares or approximately 41% of the outstanding common stock of
Glacier. In addition, three members of Glacier's Board of Directors, including
Mr. Welch, also serve as executive officers of Kayne Anderson. See
"Management." Pending their application, the net proceeds from this offering
may be invested in a portfolio of securities managed by Kayne Anderson. Kayne
Anderson manages funds for certain insurance companies, institutional
investors and individuals, and will charge Glacier a reasonable management fee
for its services. See "Use of Proceeds." In addition, an affiliate of Kayne
Anderson, KA Associates, Inc., may serve as an underwriter in this Offering,
for which it will be entitled to be compensated on the same terms and
conditions as the other Underwriters. See "Underwriting."
73
<PAGE>
UNDERWRITING
The Underwriters named below, represented by Sutro & Co. Incorporated,
EVEREN Securities, Inc. and Crowell, Weedon & Co. (the "Representatives"),
have severally agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase from Water Trust I the number of Trust
Preferred Securities set forth opposite their respective names below. The
several Underwriters have agreed in the Underwriting Agreement, subject to the
terms and conditions set forth therein, to purchase all the Trust Preferred
Securities offered hereby if any of the Trust Preferred Securities are
purchased. In the event of default by an Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
<TABLE>
<CAPTION>
NUMBER OF TRUST
PREFERRED
UNDERWRITERS SECURITIES
------------ ---------------
<S> <C>
Sutro & Co. Incorporated.....................................
EVEREN Securities, Inc. .....................................
Crowell, Weedon & Co.........................................
---------
Total.................................................... 2,600,000
=========
</TABLE>
The Representatives have advised Glacier and Water Trust I that they propose
initially to offer the Trust Preferred Securities to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession not in excess of $ per Trust
Preferred Security. The Underwriters may allow, and such dealers may reallow,
a discount not in excess of $ per Trust Preferred Security to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be used to purchase the Junior Subordinated Debentures of
Glacier, the Underwriting Agreement provides that Glacier will pay as
compensation to the Underwriters arranging the investment therein of such
proceeds, an amount in immediately available funds of $ per Trust
Preferred Security (or $ in the aggregate) for the accounts of the
Underwriters.
In connection with the offering of the Trust Preferred Securities, the
Underwriters and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the
Commission's Regulation M that are intended to stabilize, maintain or
otherwise affect the market price of the Trust Preferred Securities. Such
transactions may include stabilizing transactions in which the Underwriters
bid for and purchase shares of the Trust Preferred Securities at a level above
that which might otherwise prevail in the open market for the purpose of
preventing or retarding a decline in the market price of the Trust Preferred
Securities. The Underwriters also may reclaim any selling concession allowed
to an Underwriter or dealer. Any of the foregoing transactions may result in
the maintenance of a price for the Trust Preferred Securities at a level above
that which might otherwise prevail in the open market. Neither the Company nor
the Underwriters makes any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Trust Preferred Securities. The Underwriters are not required to
engage in any of the foregoing transactions and, if commenced, such
transactions may be discounted at any time without notice.
During a period of 180 days from the date of this Prospectus, neither Water
Trust I nor the Company will, subject to certain exceptions, without the prior
written consent of Sutro & Co. Incorporated, directly or indirectly, sell,
offer to sell, grant any option for sale of, or otherwise dispose of, any
Trust Preferred Securities, any security convertible into or exchangable into
or exercisable for Trust Preferred Securities or Junior Subordinated
Debentures or any debt securities substantially similar to the Junior
Subordinated Debentures or equity securities substantially similar to the
Trust Preferred Securities (except for Junior Subordinated Debentures and the
Trust Preferred Securities offered hereby).
74
<PAGE>
The Trust Preferred Securities are a new issue of securities with no
established trading market. The Trust Preferred Securities have been approved
for listing on the American Stock Exchange, subject to notice of issuance. In
order to meet the listing requirements of the American Stock Exchange, the
Underwriters have undertaken to distribute the Trust Preferred Securities to a
minimum of 400 public shareholders. The Underwriters have advised Glacier and
Water Trust I that they presently intend to make a market in the Trust
Preferred Securities after the commencement of trading on the American Stock
Exchange, but no assurances can be made as to the liquidity of the Trust
Preferred Securities or that an active and liquid trading market will develop
or, if developed, that it will continue. The offering price and distribution
rate have been determined by negotiations among representatives of Glacier and
the Representatives, and the offering price of the Trust Preferred Securities
may not be indicative of the market price following the offering. The
Underwriters will have no obligation to make a market in the Trust Preferred
Securities, however, and may cease market-making activities, if commenced, at
any time.
Glacier and Water Trust I have agreed to indemnify the Underwriters against,
or contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities
Act.
The Representatives have informed Glacier that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority, without the prior specific written approval of the customer.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities, the enforceability of the Trust Agreement and the
creation of Water Trust I will be passed upon by Richards, Layton & Finger,
P.A., Wilmington, Delaware, special counsel to Glacier and Water Trust I. The
validity of the Guarantee and the Junior Subordinated Debentures will be
passed upon for the Company by Milbank, Tweed, Hadley & McCloy, Los Angeles,
California, counsel to the Company. Certain legal matters in connection with
this Offering will be passed upon for the Underwriters by Manatt, Phelps &
Phillips, LLP. Milbank, Tweed, Hadley & McCloy and Manatt, Phelps & Phillips,
LLP will rely on the opinions of Richards, Layton & Finger, P.A. as to matters
of Delaware law. Certain matters relating to United States federal income tax
considerations will be passed upon for the Company by Milbank, Tweed, Hadley &
McCloy.
EXPERTS
The consolidated financial statements of Glacier Water Services, Inc. as of
December 31, 1995 and 1996, and for the years ended December 31, 1994, 1995
and 1996, included and incorporated by reference in this Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their report with respect thereto, and in reliance upon the authority of
said firm as experts in accounting and auditing in giving such reports.
The financial statements of the Aqua-Vend Business (Certain Operations of
McKesson Water Products Company) as of and for the years ended March 31, 1996
and 1997, included and incorporated by reference in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein and incorporated by reference, and in reliance upon
the report of such firm as experts in accounting and auditing.
75
<PAGE>
GLACIER WATER SERVICES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Public Accountants................................ F-2
Consolidated Balance Sheets as of December 31, 1996 and 1995............ F-3
Consolidated Statements of Income for the years ended December 31, 1996,
1995 and 1994.......................................................... F-4
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994....................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994.................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Consolidated Balance Sheet as of October 5, 1997.............. F-14
Unaudited Consolidated Statements of Income for the Nine and Three
Months ended October 5, 1997 and September 30, 1996.................... F-15
Unaudited Consolidated Statements of Cash Flows for the Nine Months
ended October 5, 1997 and September 30, 1996........................... F-16
Notes to Unaudited Consolidated Financial Statements.................... F-17
AUDITED FINANCIAL STATEMENTS OF AQUA-VEND BUSINESS
Independent Auditors' Report............................................ F-19
Statements of Assets to Be Sold as of March 31, 1996 and 1997........... F-20
Statements of Revenues, Direct Expenses and Identified Corporate
Expenses Before Interest and Income Taxes for the years ended March 31,
1996 and 1997.......................................................... F-21
Notes to Financial Statements........................................... F-22
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Summary Information Related to the Pro Forma Consolidated Financial
Information............................................................ F-24
Unaudited Consolidated Balance Sheet as of April 4, 1997................ F-25
Unaudited Pro Forma Consolidated Statement of Operations for the Three
Months Ended April 4, 1997............................................. F-26
Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1996................................................ F-27
Notes to Unaudited Pro Forma Consolidated Statements of Operations...... F-28
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Glacier Water Services, Inc.
We have audited the accompanying consolidated balance sheets of Glacier
Water Services, Inc. (a Delaware corporation) and subsidiaries as of December
31, 1996 and 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Glacier Water Services,
Inc. and subsidiaries as of December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
San Diego, California
January 23, 1997
F-2
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
------- -------
ASSETS
------
<S> <C> <C>
Current assets:
Cash........................................................ $ 11 $ 29
Accounts receivable......................................... 311 614
Inventories................................................. 2,946 2,200
Prepaid commissions and other............................... 1,084 888
------- -------
Total current assets...................................... 4,352 3,731
Property and equipment, net of accumulated depreciation..... 36,754 33,272
Other assets................................................ 4,961 3,635
------- -------
Total assets.............................................. $46,067 $40,638
======= =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable............................................ $ 640 $ 342
Accrued commissions......................................... 988 734
Accrued liabilities......................................... 1,654 1,289
------- -------
Total current liabilities................................. 3,282 2,365
Long-term debt................................................ 15,820 11,087
Deferred income taxes......................................... 2,979 3,099
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 100,000 shares authorized,
no shares issued and outstanding........................... -- --
Common stock, $.01 par value, 10,000,000 shares authorized,
3,208,575 and 3,367,825 shares issued and outstanding in
1996 and 1995, respectively................................ 34 34
Additional paid-in capital.................................. 15,284 15,125
Retained earnings........................................... 12,231 8,928
Treasury stock, 170,500 shares, at cost..................... (3,563) --
------- -------
Total stockholders' equity................................ 23,986 24,087
------- -------
Total liabilities and stockholders equity................. $46,067 $40,638
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Revenues......................................... $ 46,091 $ 42,409 $ 36,557
Costs and expenses:
Operating expenses........................... 28,088 25,933 23,504
General and administrative expenses.......... 5,733 5,483 4,791
Depreciation and amortization................ 6,769 5,756 3,662
--------- --------- ---------
Total costs and expenses................... 40,590 37,172 31,957
--------- --------- ---------
Income from operations........................... 5,501 5,237 4,600
Interest expense, net............................ 783 723 317
--------- --------- ---------
Income before provision for income taxes......... 4,718 4,514 4,283
Provision for income taxes....................... 1,415 1,805 1,578
--------- --------- ---------
Net income....................................... $ 3,303 $ 2,709 $ 2,705
========= ========= =========
Net income per share............................. $ .98 $ .80 $ .80
========= ========= =========
Weighted average common and common equivalent
shares outstanding.............................. 3,374,482 3,405,104 3,367,151
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
--------- ------ ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1993................... 3,236,986 $ 33 $13,718 $ 3,514 $ -- $17,265
Exercise of Stock
Options................ 57,108 -- 406 -- -- 406
Net Income.............. -- -- -- 2,705 -- 2,705
--------- ---- ------- ------- ------- -------
Balance, December 31,
1994................... 3,294,094 33 14,124 6,219 -- 20,376
Exercise of Stock
Options................ 73,731 1 1,001 -- -- 1,002
Net Income.............. -- -- -- 2,709 -- 2,709
--------- ---- ------- ------- ------- -------
Balance, December 31,
1995................... 3,367,825 34 15,125 8,928 -- 24,087
Exercise of Stock
Options................ 11,250 -- 159 -- -- 159
Purchase of Treasury
Stock.................. (170,500) -- -- -- (3,563) (3,563)
Net Income.............. -- -- -- 3,303 -- 3,303
--------- ---- ------- ------- ------- -------
Balance, December 31,
1996................... 3,208,575 $ 34 $15,284 $12,231 $(3,563) $23,986
========= ==== ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 3,303 $ 2,709 $ 2,705
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................ 6,769 5,756 3,662
Loss (gain) on disposal of assets............ 74 13 (46)
Deferred tax provision (benefit)............. (120) 682 596
Change in operating assets and liabilities:
Accounts receivable.......................... 303 105 (323)
Inventories.................................. (746) (573) 11
Prepaid commissions and other................ (196) 99 (109)
Payments for prepaid marketing incentives.... (2,966) (750) (2,144)
Other assets................................. (124) (201) (1,093)
Accounts payable, accrued liabilities and
accrued commissions......................... 896 (455) 231
-------- -------- --------
Total adjustments.......................... 3,890 4,676 785
-------- -------- --------
Net cash provided by operating activities.. 7,193 7,385 3,490
-------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment............. (476) (182) (525)
Net investment in vending equipment............ (8,064) (10,609) (10,874)
Proceeds from sales of equipment............... -- -- 802
-------- -------- --------
Net cash used in investing activities...... (8,540) (10,791) (10,597)
-------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt................... 19,778 15,588 16,897
Principal payments on long-term debt........... (15,045) (12,700) (10,208)
Proceeds from issuance of stock................ 159 474 406
Purchase of treasury stock..................... (3,563) -- --
-------- -------- --------
Net cash provided by financing activities.. 1,329 3,362 7,095
-------- -------- --------
Net decrease in cash............................. (18) (44) (12)
Cash, beginning of year.......................... 29 73 85
-------- -------- --------
Cash, end of year................................ $ 11 $ 29 $ 73
======== ======== ========
SUPPLEMENTAL INFORMATION
Cash paid for interest........................... $ 748 $ 735 $ 235
======== ======== ========
Cash paid for income taxes....................... $ 1,010 $ 580 $ 793
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The Company is primarily engaged in the operation of self-service vending
machines that dispense drinking water to consumers. The machines are placed at
supermarkets and other retail outlets under commission arrangements with the
retailers. The Company's revenues are subject to seasonal fluctuations, with
decreased revenues during cold weather months and increased revenues during
hot weather months. The Company's machines are located in California, Nevada,
Arizona, New Mexico, Texas, Louisiana, Mississippi, Georgia, Florida, and
Illinois.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Glacier Water Services, Inc. and its wholly owned subsidiaries. All
significant inter-company accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make certain estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses, and the disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Inventories
Inventories consist of raw materials, repair parts and vending machines in
process of assembly, and are stated at the lower of cost (moving weighted
average) or market. Costs associated with the assembly of vending machines are
accumulated until finished machines are ready for installation at a retail
location, at which time the costs are transferred to property and equipment.
Inventories consist primarily of raw materials and repair parts at December
31, 1996 and 1995.
Prepaid Commissions
Prepaid commissions represent payments made to certain retailers based on a
percentage of estimated monthly or quarterly vending machine revenues. Prepaid
commissions at December 31, 1996 and 1995 were $490,000 and $371,000,
respectively. Commission expense for the years ended December 31, 1996, 1995
and 1994 was $21,678,000, $19,643,000 and $17,320,000, respectively.
Property and Equipment and Depreciation
Property and equipment are recorded at cost and consist of the following at
December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Vending equipment...................................... $ 51,433 $ 44,415
Equipment, furniture and fixtures...................... 1,617 1,186
Leasehold improvements................................. 520 437
-------- --------
53,570 46,038
Less: Accumulated depreciation and amortization........ (16,816) (12,766)
-------- --------
$ 36,754 $ 33,272
======== ========
</TABLE>
F-7
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets as follows:
<TABLE>
<S> <C>
Vending equipment............................................ 10 years
Equipment, furniture and fixtures............................ 5 to 10 years
Leasehold improvements....................................... Life of Lease
</TABLE>
The Company's vending equipment is depreciated to a 20% salvage value. Costs
associated with installing vending equipment are capitalized and depreciated
over five years.
All maintenance, repair and refurbishment costs are charged to operations as
incurred. Additions and major improvements are capitalized.
Income Taxes
Income taxes have been provided for using the liability method in accordance
with FASB Statement No. 109, Accounting for Income Taxes.
Net Income Per Share
Net income per share of common stock is computed on the basis of the
weighted average shares of common stock outstanding plus common equivalent
shares arising from the effect of dilutive stock options, using the treasury
stock method.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current
presentation.
2. SUPPLEMENTARY BALANCE SHEET INFORMATION
Accounts Receivable
Included in accounts receivable at December 31, 1996 is a $100,000 note
receivable from Jerry A. Gordon, the Company's President and Chief Operating
Officer. The note, issued during 1996, is non-interest bearing, and was repaid
in full subsequent to December 31, 1996.
Other Assets
Other assets consist of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Prepaid marketing incentives, net of accumulated
amortization of $3,167 in 1996 and $2,867 in 1995......... $4,606 $3,180
Other...................................................... 355 455
------ ------
$4,961 $3,635
====== ======
</TABLE>
Prepaid marketing incentives consist of fees paid to retailers for future
benefits associated with the ongoing placement of the Company's vending
equipment at those locations. These fees are amortized over the life of the
contract, generally ranging from three to five years.
F-8
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Accrued liabilities consist of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Accrued compensation and related taxes...................... $ 789 $ 570
Accrued income and other taxes.............................. 639 500
Other accrued liabilities................................... 226 219
------ ------
$1,654 $1,289
====== ======
</TABLE>
3. LONG-TERM DEBT
Long-term debt at December 31, 1996 and 1995 represents borrowings under the
Company's bank credit agreement.
The credit agreement provides for long-term borrowings of up to $18,000,000.
Borrowings bear interest at the bank's prime rate (8.25% at December 31, 1996)
or LIBOR plus 1.75% (7.4% at December 31, 1996), and the entire principal
balance is due July 1, 2003. As of December 31, 1996, the Company had
approximately $2,200,000 of funds available under the agreement. Borrowings
under the agreement are secured by substantially all of the assets of the
Company. The agreement provides, among other things, that the Company maintain
certain debt coverage and other financial ratios, as defined in the agreement.
The agreement also limits the payment of dividends and additional borrowings
by the Company.
4. LEASES
The Company leases certain vehicles, warehouse and office facilities under
non-cancelable operating leases which expire on various dates through 2001.
Future minimum lease payments under non-cancelable operating leases with
initial terms of one or more years for the years ending December 31 are as
follows (in thousands):
<TABLE>
<S> <C>
1997.............................................................. $1,019
1998.............................................................. 653
1999.............................................................. 332
2000.............................................................. 21
2001.............................................................. 16
------
Total minimum lease payments...................................... $2,041
======
</TABLE>
Total lease expense for the years ended December 31, 1996, 1995 and 1994 was
$1,284,000, $1,109,000, and $864,000, respectively.
F-9
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. INCOME TAXES
Significant components of the provision (benefit) for income taxes for the
years ended December 31, 1996, 1995 and 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Federal Income Taxes:
Current........................................... $1,418 $ 934 $ 835
Deferred.......................................... (75) 460 507
------ ------ ------
1,343 1,394 1,342
State and Local Income Taxes and Other:
Current........................................... 117 189 147
Deferred.......................................... (45) 222 89
------ ------ ------
72 411 236
------ ------ ------
Total........................................... $1,415 $1,805 $1,578
====== ====== ======
</TABLE>
Deferred tax liabilities and assets result from the following at December 31
(in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred tax liabilities:
Property and equipment................................. $ 4,801 $ 4,431
Other.................................................. -- 43
------- -------
Total deferred tax liabilities....................... 4,801 4,474
------- -------
Deferred tax assets:
Alternative minimum tax credit......................... (1,183) (1,091)
Manufacturer's investment credit....................... (492) --
State deferred tax adjustment.......................... (16) (238)
Accruals and reserves.................................. (131) (46)
------- -------
Total deferred tax assets............................ (1,822) (1,375)
------- -------
Net deferred tax liabilities......................... $ 2,979 $ 3,099
======= =======
</TABLE>
The Company's effective income tax rate differs from the federal statutory
rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ---- ----
<S> <C> <C> <C>
Federal statutory rate................................. 34.0 % 34.0% 34.0%
State and local taxes, net of federal benefit.......... 6.7 % 6.0% 2.8%
Manufacturer's investment credit generated............. (10.7)% -- --
----- ---- ----
Effective rate......................................... 30.0 % 40.0% 36.8%
===== ==== ====
</TABLE>
The Company is currently under examination by the Internal Revenue Service
for the year ended December 31, 1992. Management does not anticipate that the
results of such audit will have a material impact on the Company's financial
statements.
F-10
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. STOCKHOLDERS' EQUITY
Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
100,000 shares of preferred stock, par value $.01 per share. The rights,
preferences and privileges of the authorized shares (none of which have been
issued) may be established by the Board of Directors without further action by
the holders of the Company's common stock.
Treasury Stock
In December 1995, the Board of Directors authorized the purchase of up to
250,000 shares of the Company's common stock in the open market. During 1996,
170,500 shares were repurchased under this program. In December 1996, the
Board of Directors authorized the additional purchase of up to 250,000 shares
of the Company's common stock. As of December 31, 1996, the Company was
authorized to repurchase 329,500 shares, approximately 10.3% of the Company's
total shares outstanding.
7. STOCK OPTION PLANS
The Company has two stock option plans, the 1992 Stock Option Plan, which
was terminated in 1994, and the 1994 Stock Compensation Program. The Company
accounts for these plans under APB Opinion No. 25, under which no compensation
cost has been recognized. The following pro forma disclosures represent what
the Company's net income and earnings per share would have been had the
Company recorded compensation cost for these plans in accordance with the
provisions of FASB Statement No. 123, "Accounting for Stock-Based
Compensation." (Statement No. 123).
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Pro Forma Net Income (in thousands)......................... $2,984 $2,568
Pro Forma EPS............................................... $ .88 $ .75
</TABLE>
Because the method of accounting required under Statement No. 123 has not
been applied to options granted prior to January 1, 1995, the resulting pro
forma compensation cost may not be representative of that to be expected in
future years.
The Company has reserved 275,000 shares of common stock under the 1994 Stock
Compensation Program, as amended, for issuance under a stock option plan that
provides for the issuance of incentive and non-qualified stock options to key
employees, including directors and consultants. Incentive stock options are
granted at no less than the fair market value on the date of the grant. Non-
qualified options may be granted at prices determined by the Board of
Directors, but at no less than 85% of the fair market value on the date of the
grant. Options generally have a term of 10 years and become exercisable at a
rate of 25% per annum. The Program also allows directors to receive stock
options in lieu of their annual directors' fees. Options granted under this
provision (Deferral Options) have a term of five years and become exercisable
one year following the date of grant.
The Company had reserved 360,000 shares of common stock under the 1992 Stock
Option Plan for issuance under a stock option plan that provides for the
issuance of incentive and non-qualified stock options to key employees,
including directors and consultants. Incentive stock options are granted at no
less than the fair market value on the date of the grant. Non-qualified
options may be granted at prices determined by the Board of Directors, but at
no less than 85% of the fair market value on the date of the grant. Options
become exercisable at a rate of 25% per annum. The 1992 Stock Compensation
Plan was terminated in 1994 with a balance of 42,250 shares of common stock
available for grant which were transferred to the 1994 Stock Compensation
Program.
F-11
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A summary of the status of the Company's two stock option plans at December
31, 1996 and activity during the year then ended follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
------- ----------------
<S> <C> <C>
Balance at December 31, 1995..................... 305,354 $15.08
Granted.......................................... 76,300 $19.45
Exercised........................................ (11,250) $ 9.88
Canceled......................................... (25,750) $19.63
------- ------
Balance at December 31, 1996..................... 344,654 $15.88
Exercisable at December 31, 1996................. 153,604 $13.76
Weighted average fair value of options granted... $ 8.57
</TABLE>
The 136,750 shares under the 1992 plan outstanding at December 31, 1996 have
exercise prices between $8.25 and $13.63, with a weighted average exercise
price of $11.39 and a weighted average remaining contractual life of 6.4
years. 98,500 of these options are exercisable; their weighted average
exercise price is $11.08.
The 207,904 shares under the 1994 plan outstanding at December 31, 1996 have
exercise prices between $15.25 and $19.88, with a weighted average exercise
price of $18.82 and a weighted average remaining contractual life of 7.5
years. 55,104 of these options are exercisable; their weighted average
exercise price is $18.55.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1995 and 1996, respectively: risk-free interest
rates of 7.2% and 5.8%; no expected dividend yield; expected lives of 7 years
for regular options and 5 years for Deferral Options in both years; expected
volatility of 30% in both years.
8. SIGNIFICANT CUSTOMERS
The following table sets forth the percentage of the Company's total
revenues that were derived from major customers for the years ended December
31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Company A................................................. 10.2% 5.8% --
Company B................................................. 9.0% 9.8% 13.3%
</TABLE>
9. SUBSEQUENT EVENT (UNAUDITED)
On March 28, 1997, the Company acquired substantially all of the assets of
the Aqua-Vend division of McKesson Water Products Company, a wholly-owned
subsidiary of McKesson Corporation, for $9.0 million. The transaction was
accounted for under the purchase method of accounting, resulting in the
valuation of the purchased assets at fair market value, with no resulting
goodwill. In March 1997, the Company's bank line of credit was amended to
provide for borrowings of up to $35 million. The asset purchase was funded
with additional borrowing on this line of credit.
F-12
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Year Ended December 31,
1996:
Net revenues.......... $ 10,015 $ 12,036 $ 13,709 $ 10,331
Income from
operations........... 794 1,516 2,295 896
Net income............ 360 799 1,556 588
Earnings per share.... .11 .24 .46 .18
Weighted average
shares............... 3,406,797 3,389,589 3,398,650 3,327,953
Year Ended December 31,
1995:
Net revenues.......... $ 9,193 $ 10,470 $ 13,193 $ 9,553
Income from
operations........... 925 1,309 2,264 739
Net income............ 472 661 1,233 343
Earnings per share.... .14 .20 .36 .10
Weighted average
shares............... 3,419,851 3,385,400 3,397,746 3,405,572
</TABLE>
F-13
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OCTOBER 5,
1997
-----------
(UNAUDITED)
<S> <C>
ASSETS
------
Current assets:
Cash............................................................. $ 10
Accounts receivable.............................................. 290
Inventories...................................................... 2,251
Prepaid commissions and other.................................... 1,044
-------
Total current assets........................................... 3,595
Property and equipment, net of accumulated depreciation............ 48,619
Other assets....................................................... 6,301
-------
Total assets................................................... $58,515
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable................................................. $ 871
Accrued commissions.............................................. 2,193
Accrued liabilities.............................................. 1,948
-------
Total current liabilities...................................... 5,012
Long-term debt..................................................... 26,022
Deferred income taxes.............................................. 2,979
Stockholders' equity:
Preferred stock, $.01 par value; 100,000 shares authorized, no
shares issued or outstanding.................................... --
Common stock, $.01 par value; 10,000,000 shares authorized,
3,228,075 shares issued and outstanding......................... 34
Additional paid-in capital......................................... 15,481
Retained earnings.................................................. 12,550
Treasury stock; 170,500 shares, at cost............................ (3,563)
-------
Total stockholders' equity..................................... 24,502
-------
Total liabilities and stockholders' equity..................... $58,515
=======
</TABLE>
See accompanying notes.
F-14
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- ------------------------
OCTOBER 5, SEPTEMBER 30, OCTOBER 5, SEPTEMBER 30,
1997 1996 1997 1996
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Revenues..................... $ 17,138 $ 13,709 $ 44,352 $ 35,760
Operating costs and expenses:
Operating expenses......... 10,573 8,302 27,482 22,009
Selling, general and
administrative expenses... 1,992 1,408 5,461 4,155
Depreciation and
amortization.............. 2,317 1,704 6,515 4,991
Non-recurring acquisition
charges................... 1,721 -- 3,062 --
--------- --------- --------- ---------
Total operating costs and
expenses................ 16,603 11,414 42,520 31,155
--------- --------- --------- ---------
Income from operations....... 535 2,295 1,832 4,605
Interest expense (net) and
other....................... 532 174 1,370 553
--------- --------- --------- ---------
Income before income taxes... 3 2,121 462 4,052
Income tax provision
(benefit)................... (29) 565 143 1,337
--------- --------- --------- ---------
Net income................... $ 32 $ 1,556 $ 319 $ 2,715
========= ========= ========= =========
Net income per common and
common equivalent share..... $ .01 $ .46 $ .10 $ .80
========= ========= ========= =========
Weighted average common and
common equivalent shares
outstanding................. 3,351,034 3,398,650 3,324,525 3,389,893
========= ========= ========= =========
</TABLE>
See accompanying notes.
F-15
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
OCTOBER 5, SEPTEMBER 30,
1997 1996
---------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income.......................................... $ 319 $ 2,715
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 6,515 4,991
Loss on disposal of assets........................ 195 --
Change in operating assets and liabilities:
Accounts receivable............................... (108) 262
Inventories....................................... (383) (711)
Prepaid commissions and other..................... 296 (370)
Payments for prepaid marketing incentives......... (1,295) (502)
Other assets...................................... (61) (139)
Accounts payable, accrued commissions and other
accrued liabilities.............................. 1,323 1,285
-------- --------
Net cash provided by operating activities....... 6,801 7,531
-------- --------
Cash flows from investing activities:
Purchase of property and equipment.................. (241) (411)
Net investment in vending equipment................. (7,969) (5,067)
Proceeds from sale of property and equipment........ 111 --
Purchase of Aqua-Vend............................... (9,355) --
-------- --------
Net cash used in investing activities........... (17,454) (5,478)
-------- --------
Cash flows from financing activities:
Proceeds from long-term borrowings.................. 25,140 10,010
Principal payments on long-term borrowings.......... (14,684) (10,808)
Proceeds from issuance of stock..................... 196 111
Purchase of treasury stock.......................... -- (529)
-------- --------
Net cash provided by (used in) financing
activities..................................... 10,652 (1,216)
-------- --------
Net increase (decrease) in cash....................... (1) 837
Cash, beginning of period............................. 11 29
-------- --------
Cash, end of period................................... $ 10 $ 866
======== ========
Supplemental disclosure of cash flow information:
Interest paid....................................... $ 1,506 $ 702
======== ========
Income taxes paid................................... $ 365 $ 563
======== ========
</TABLE>
See accompanying notes
F-16
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 5, 1997
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Change in Fiscal Year
In the first quarter of 1997, the Company reported that it had prospectively
changed its financial reporting year from a fiscal year of twelve calendar
months ending December 31 to a fiscal year of 52 or 53 weeks ending on the
Friday closest to December 31. In order to more closely align its fiscal
reporting to its business cycle, the Company has modified its fiscal reporting
to end its fiscal year on the Sunday closest to December 31. Accordingly, the
third quarter ended on October 5, 1997 and contained 93 days, and the
Company's fiscal year will end on January 4, 1998. The period from December
31, 1996 to January 3, 1997 is not significant to the Company's nine-month
operations, and has not been reported separately.
Basis of Presentation
In the opinion of the Company's management, the accompanying consolidated
financial statements reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the consolidated
financial position of the Company and the consolidated results of its
operations and its cash flows for the three- and nine-month periods ending
October 5, 1997 and September 30, 1996. Although the Company believes that the
disclosures in these financial statements are adequate to make the information
presented not misleading, certain information, including footnote information,
normally included in financial statements prepared in accordance with
generally accepted accounting principles has been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. Results of operations for the period ended October 5, 1997 are not
necessarily indicative of results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
Reclassification
Certain prior year amounts have been reclassified to conform to the current
presentation.
2. ACQUISITION
On March 28, 1997, the Company purchased substantially all of the assets of
the Aqua-Vend division of McKesson Water Products Company, a wholly-owned
subsidiary of McKesson Corporation, for $9.0 million in cash plus certain
direct costs, including sales tax on assets purchased. The transaction was
accounted for under the purchase method, and the purchase price and related
direct costs were allocated based on the estimated fair values of assets
acquired and liabilities assumed, as follows (in thousands):
<TABLE>
<S> <C>
Inventories...................................................... $ 208
Prepaid expenses................................................. 255
Vending equipment................................................ 7,565
Other fixed assets............................................... 145
Prepaid marketing incentives..................................... 1,225
Other non-current assets......................................... 110
Sales tax liability.............................................. (153)
------
$9,355
======
</TABLE>
F-17
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
OCTOBER 5, 1997
(UNAUDITED)
The unaudited consolidated pro forma results of operations for the nine
months ended October 5, 1997 and September 30, 1996 presented below assume
that the transaction occurred as of the beginning of the respective periods
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
OCTOBER 5, SEPTEMBER 30,
1997 1996
---------- -------------
<S> <C> <C>
Net revenues........................................ $47,580 $48,943
Income from operations.............................. 825 3,961
Net income (loss)................................... (689) 2,053
Net income (loss) per common share.................. $ (.21) $ .61
</TABLE>
3. INVENTORIES
Inventories consist of raw materials, repair and spare parts and vending
machines in process of assembly, and are stated at the lower of cost (moving
weighted average) or market. Costs associated with the assembly of vending
machines are accumulated until machines are completed, at which time the costs
are transferred to property and equipment.
At October 5, 1997 and December 31, 1996, inventories consisted primarily of
raw materials and repair and spare parts.
4. SUPPLEMENTARY BALANCE SHEET INFORMATION
Included in the Prepaid commissions and other are commission payments made
to certain retailers based on a percentage of estimated quarterly vending
machine revenues, as well as other prepaid expenses incurred in the normal
course of business. Prepaid commissions were $79,000 and $490,000 at October
5, 1997 and December 31, 1996, respectively.
Included in Other assets are prepaid marketing incentives which represent
payments made to the Company's retailers for the placement of the Company's
machines at store locations. Prepaid marketing incentives, net of accumulated
amortization were $5,695,000 and $4,606,000 at October 5, 1997 and December
31, 1996, respectively.
5. NET INCOME PER SHARE
Net income per share of common stock is computed on the basis of weighted
average shares of common stock outstanding plus common equivalent shares
arising from the effect of dilutive stock options, using the treasury stock
method.
In March, 1997, the Financial Accounting Standards Board adopted Statement
No. 128 "Earnings Per Share" ("Statement No. 128"), which is effective for the
periods ending after December 15, 1997. Pro forma net income per share
computed pursuant to Statement No. 128 would be $.01 and $.10, respectively,
for the three- and nine-month periods ended October 5, 1997, and $.46 and
$.80, respectively, for the three- and nine-month periods ended September 30,
1996.
F-18
<PAGE>
INDEPENDENT AUDITORS' REPORT
McKesson Corporation
San Francisco, California:
We have audited the accompanying statements of assets to be sold of the
Aqua-Vend Business ("Aqua-Vend"), which consist of certain operations of
McKesson Water Products Company ("MWPC"), a wholly owned subsidiary of
McKesson Corporation, as of March 31, 1996 and 1997 and the related statements
of revenues, direct expenses and identified corporate expenses before interest
and income taxes for the years then ended. These financial statements are the
responsibility of Aqua-Vend's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets to be sold of Aqua-Vend as of March 31, 1996 and 1997,
and its revenues, direct expenses, and identified corporate expenses before
interest and income taxes for the years ended March 31, 1996 and 1997 in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, Aqua-Vend consists of
certain operations of MWPC. Aqua-Vend receives managerial and administrative
services from MWPC. Certain expenses included in the financial statements
represent allocations of amounts applicable to McKesson Corporation and MWPC.
As a result, Aqua-Vend's assets to be sold and its revenues, direct expenses
and identified corporate expenses before interest and income taxes may not be
indicative of conditions that would have existed or results that would have
occurred had Aqua-Vend operated as a stand-alone entity.
Deloitte & Touche LLP
San Francisco, California
May 9, 1997
F-19
<PAGE>
AQUA-VEND BUSINESS
(CERTAIN OPERATIONS OF MCKESSON WATER PRODUCTS COMPANY)
STATEMENTS OF ASSETS TO BE SOLD
MARCH 31, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
----------- ----------
<S> <C> <C>
Assets to be sold:
Current assets--
Prepaid expenses and other assets................... $ 1,054,000 $ 488,000
Property, plant and equipment, Net (Note 4)........... 13,756,000 6,189,000
Other assets.......................................... 1,695,000 1,229,000
----------- ----------
Assets to be sold................................... $16,505,000 $7,906,000
=========== ==========
</TABLE>
See notes to financial statements.
F-20
<PAGE>
AQUA-VEND BUSINESS
(CERTAIN OPERATIONS OF MCKESSON WATER PRODUCTS COMPANY)
STATEMENTS OF REVENUES, DIRECT EXPENSES AND IDENTIFIED
CORPORATE EXPENSES BEFORE INTEREST AND INCOME TAXES
YEARS ENDED MARCH 31, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Revenues............................................. $18,416,000 $15,956,000
Cost of sales........................................ 15,675,000 13,671,000
----------- -----------
Gross margin......................................... 2,741,000 2,285,000
Selling, general and administrative (Note 5)......... 5,080,000 4,716,000
Reduction in carrying value of property, plant and
equipment (Note 4).................................. -- 7,000,000
----------- -----------
Loss before interest and income taxes................ $(2,339,000) $(9,431,000)
=========== ===========
</TABLE>
See notes to financial statements.
F-21
<PAGE>
AQUA-VEND BUSINESS
(CERTAIN OPERATIONS OF MCKESSON WATER PRODUCTS COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1996 AND 1997
1. ORGANIZATION AND OPERATIONS
The Aqua-Vend Business ("Aqua-Vend"), which consists of certain operations
of McKesson Water Products Company ("MWPC"), a wholly owned subsidiary of
McKesson Corporation ("McKesson"), owns and operates water vending machines
throughout the United States.
On March 28, 1997 McKesson and MWPC entered into an asset purchase agreement
with Glacier Water Services Inc. ("Glacier") whereby Glacier purchased for $9
million in cash certain assets and assumed certain real and personal property
lease obligations of Aqua-Vend.
2. BASIS OF PRESENTATION
Aqua-Vend has no separate legal status but rather is owned and operated by
McKesson through its wholly owned subsidiary, MWPC. The accompanying financial
statements have been prepared from the books and records of MWPC and present
substantially all of the operations of Aqua-Vend (including corporate
allocations) for the years ended March 31, 1996 and 1997 and the assets that
MWPC sold to Glacier as they existed at March 31, 1996 and 1997.
The statements of revenues, direct expenses and identified corporate
expenses before interest and income taxes may not necessarily be indicative of
the results of operations that would have resulted had Aqua-Vend been operated
as a stand-alone entity and include allocations of certain MWPC and McKesson
corporate expenses. Such allocations are based on formulas and include
compensation, facilities, administrative and other corporate costs (see Note
5).
Payroll, capital expenditures and all other expenditures are funded by
McKesson. Sales are collected and deposited by Aqua-Vend but immediately swept
into McKesson cash accounts. Accordingly, Aqua-Vend maintains only a minimal
petty cash balance. Statements of cash flows are not presented as separate and
complete cash flow information is not maintained.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Year-End--McKesson sold Aqua-Vend on March 28, 1997. Aqua-Vend describes its
operations through and as of the sale date as March 31, 1997.
Property, Plant and Equipment--Property, plant and equipment is initially
recorded at cost. Depreciation is provided for using the straight-line method
over the estimated useful lives of the assets, generally eight to twelve
years. The carrying amount of long-lived assets is evaluated whenever events
or changes in circumstances have indicated that such amounts may not be
recoverable (see Note 4).
Other Assets--Included in other assets are costs incurred to obtain sites
for water vending machines. These costs are amortized over the contract
period.
Revenue Recognition--Sales are recorded at the time of the water vend.
Commissions and other revenue sharing costs are included in cost of sales.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and disclosure of
contingent assets and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-22
<PAGE>
AQUA-VEND BUSINESS
(CERTAIN OPERATIONS OF MCKESSON WATER PRODUCTS COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996 AND 1997
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment primarily consist of water vending machines.
Purchases of equipment for the years ended March 31, 1996 and 1997 were
$4,676,000 and $1,564,000, respectively. Depreciation expense for the years
ended March 1996 and 1997 was $1,807,000 and $1,846,000, respectively, and is
included in cost of sales. Accumulated depreciation for the years ended March
31, 1996 and 1997 were $13,917,000 and $12,557,000, respectively.
During fiscal 1997, MWPC reviewed the carrying value of Aqua-Vend's assets
for recoverability in connection with the possible sale of Aqua-Vend and
determined that the carrying value should be reduced by $7.0 million to
reflect the fair value of the assets less costs to sell.
5. CORPORATE ALLOCATIONS
Aqua-Vend does not maintain stand-alone corporate treasury, legal, tax and
other similar corporate support functions. Aqua-Vend does record certain
direct expenses related primarily to employee payroll and benefits, insurance
and corporate facilities costs. For purposes of preparing the Aqua-Vend
statements of revenues, direct expenses and identified corporate expenses
before interest and income taxes, certain expenses of MWPC and McKesson were
allocated based upon a variety of factors, which included Aqua-Vend sales, the
number of Aqua-Vend employees, Aqua-Vend facility usage and the identification
of costs specifically attributable to Aqua-Vend. Allocated costs include
employee benefit expenses, such as pension and postretirement, of $171,000 and
$170,000 for the years ended March 31, 1996 and 1997, respectively. MWPC
management believes that these allocations are reasonable; however, they are
not necessarily indicative of expenses that would have been incurred by Aqua-
Vend on a stand-alone basis.
The following represents a summary of the corporate costs allocated to Aqua-
Vend which were included in the statements of revenues, direct expenses and
identified corporate expenses before interest and income taxes:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------
1996 1997
---------- ----------
<S> <C> <C>
Selling, general and administrative:
McKesson costs allocated through MWPC to Aqua-Vend... $ 659,000 $ 633,000
MWPC costs allocated to Aqua-Vend.................... 1,051,000 1,009,000
</TABLE>
F-23
<PAGE>
GLACIER WATER SERVICES, INC.
SUMMARY INFORMATION RELATED TO THE PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma consolidated financial information presented herein
reflects the pro forma effect of Glacier Water Services, Inc.'s purchase of
substantially all of the assets of the Aqua-Vend division of McKesson Water
Products Company ("Aqua-Vend"), a wholly-owned subsidiary of McKesson
Corporation effective as of March 28, 1997 (the "Acquisition").
The accompanying historical balance sheet of Glacier Water Services, Inc. as
of April 4, 1997, reflects the Acquisition, accordingly, no pro forma
adjustments are necessary. The unaudited pro forma consolidated statements of
operations present the historical operations of Glacier Water Services, Inc.
and Aqua-Vend for the quarter and year ended April 4, 1997 and December 31,
1996, respectively, as if the Acquisition had been consummated on January 1,
1996.
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of either the results of operations that might have
occurred had the Acquisition actually occurred on January 1, 1996, or the
results of operations of Glacier Water Services, Inc. for any future period.
F-24
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 4,
1997
--------
ASSETS
------
<S> <C>
Current assets:
Cash................................................................ $ 11
Accounts receivable................................................. 320
Inventories......................................................... 2,244
Prepaid commissions and other....................................... 1,390
-------
Total current assets.............................................. 3,965
Property and equipment, net of accumulated depreciation............. 47,298
Other assets........................................................ 6,507
-------
Total assets...................................................... $57,770
=======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C>
Current liabilities:
Accounts payable.................................................... $ 806
Accrued commissions................................................. 1,421
Accrued liabilities................................................. 1,725
-------
Total current liabilities......................................... 3,952
Long-term debt........................................................ 26,958
Deferred income taxes................................................. 2,979
Stockholders' equity:
Preferred stock, $.01 par value, 100,000 shares authorized, no
shares issued or outstanding....................................... --
Common stock, $.01 par value, 10,000,000 shares authorized,
3,209,075 shares issued and outstanding ........................... 34
Additional paid-in capital.......................................... 15,290
Retained earnings................................................... 12,120
Treasury stock, 170,500 shares, at cost............................. (3,563)
-------
Total stockholders' equity........................................ 23,881
-------
Total liabilities and stockholders' equity........................ $57,770
=======
</TABLE>
F-25
<PAGE>
GLACIER WATER SERVICES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
QUARTER ENDED APRIL 4, 1997
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
GLACIER WATER PRO FORMA PRO FORMA
SERVICES INC. AQUAVEND ADJUSTMENT CONSOLIDATED
------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues........................ $ 11,176 $ 3,228 $ (71) $ 14,333
Operating costs and expenses:
Operating expenses............ 7,075 2,962 (61) 9,976
Selling, general and
administrative expenses...... 1,613 789 (35) 2,367
Depreciation and amortization. 1,880 485 (237) 2,128
Non-recurring charges......... 471 -- -- 471
--------- ------- ----- ---------
Total operating costs and
expenses................... 11,039 4,236 (333) 14,942
--------- ------- ----- ---------
Income (loss) from operations... 137 (1,008) 262 (609)
Interest expense (net) and
other.......................... 314 -- 183 497
--------- ------- ----- ---------
Income (loss) before income
taxes.......................... (177) (1,008) 79 (1,106)
Income tax provision (benefit).. (66) -- (349) (415)
--------- ------- ----- ---------
Net income (loss)............... $ (111) $(1,008) $ 428 $ (691)
========= ======= ===== =========
Net income (loss) per common and
common equivalent share........ $ (.03) $ (.21)
========= =========
Weighted average common and
common equivalent shares
outstanding.................... 3,316,391 3,316,391
========= =========
</TABLE>
See notes to pro forma consolidated statements of operations
F-26
<PAGE>
GLACIER WATER SERVICES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
GLACIER WATER PRO FORMA PRO FORMA
SERVICES INC. AQUA-VEND ADJUSTMENT CONSOLIDATED
------------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues....................... $ 46,091 $16,810 $ (227) $ 62,674
Operating costs and expenses:
Operating expenses........... 28,095 14,110 (227) 41,978
Selling, general and
administrative expenses..... 5,726 3,207 (69) 8,864
Reduction in carrying value
of equipment................ -- 7,000 (7,000) --
Depreciation and
amortization................ 6,769 1,838 (846) 7,761
--------- ------- ------- ---------
Total operating costs and
expenses.................. 40,590 26,155 (8,142) 58,603
--------- ------- ------- ---------
Income from operations......... 5,501 (9,345) 7,915 4,071
Interest expense (net) and
other......................... 783 -- 761 1,544
--------- ------- ------- ---------
Income (loss) before income
taxes......................... 4,718 (9,345) 7,154 2,527
Income tax provision (benefit). 1,415 -- (577) 838
--------- ------- ------- ---------
Net income (loss).............. $ 3,303 $(9,345) $ 7,731 $ 1,689
========= ======= ======= =========
Net income (loss) per common
and common equivalent share... $ .98 $ .50
========= =========
Weighted average common and
common equivalent shares
outstanding................... 3,374,482 3,374,482
========= =========
</TABLE>
See notes to pro forma consolidated statements of operations
F-27
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
APRIL 4, 1997 AND DECEMBER 31, 1996
The unaudited pro forma consolidated statements of operations for the
quarter and year ended April 4, 1997 and December 31, 1996 combine the
following:
(a) The historical consolidated statements of operations of Glacier Water
Services, Inc. for the quarter and year ended April 4, 1997 and December
31, 1996, respectively.
(b) The historical statements of operations of Aqua-Vend for the quarter
and year ended March 28, 1997 and December 31, 1996, respectively.
(c) Pro forma adjustments.
These unaudited pro forma statements of operations reflect the consolidated
results of operations of Glacier Water Services, Inc. for the quarter and year
ended April 4, 1997 and December 31, 1996, respectively, (through the income
(loss) before income taxes financial statement line item) as if the
Acquisition had been consummated on January 1, 1996. These statements are not
necessarily indicative of the results which would have been obtained had the
Acquisition actually been consummated at such date. The pro forma adjustments
relating to the Acquisition set forth in the accompanying pro forma
consolidated statements of operations for the quarter and year ended April 4,
1997 and December 31, 1996, respectively, were made to reflect the following
(in thousands):
<TABLE>
<CAPTION>
QUARTER ENDED YEAR ENDED
APRIL 4, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
Decrease in revenue to reflect the elimination
of revenue generated by Aqua-Vend assets and
operations not acquired....................... $ (71) $ (227)
Decrease in operating expenses representing
costs incurred related specifically to the
Aqua-Vend assets and operations not acquired.. (61) (227)
Decrease in selling, general and administrative
expenses representing certain expenses
allocated to Aqua-Vend from McKesson
Corporation that do not relate to the assets
and operations acquired....................... (35) (69)
Pro forma adjustment to exclude charge and
reduce equipment value, assuming the assets
had been recorded at fair value at the time of
the acquisition January 1, 1996............... -- (7,000)
Pro forma adjustment reducing depreciation
expense to reflect calculation under Glacier's
methodology, based on the fair value of the
assets acquired............................... (237) (846)
Pro forma adjustment to reflect additional
interest expense. Interest expense represents
the Company's estimated effective borrowing
rate for the period multiplied by the
additional borrowing on the Company's line of
credit to finance the acquisition, net of
estimated repayments from additional cash
flows generated by the acquired operations
during the period. The estimated additional
cash flows available to repay debt represents
the Aqua-Vend historical EBITDA adjusted to
reflect the pro forma adjustments............. 183 761
Pro forma adjustment to income taxes to record
the tax benefit of the Aqua-Vend loss before
income taxes and the pro forma adjustments
above......................................... (349) (577)
</TABLE>
F-28
<PAGE>
[Company Logo]
[Picture depicting filtration process, people using the Company's water
vending machine and Company ad with Penguins holding banners with Company
slogans.]
[List of the Company's retail accounts.]
[Company slogan - "Great Taste! Great Price!"]
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
---------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 6
Incorporation of Certain Documents by Reference........................... 6
Prospectus Summary........................................................ 8
Risk Factors.............................................................. 16
Use of Proceeds........................................................... 24
Accounting Treatment...................................................... 24
Capitalization............................................................ 25
Selected Consolidated Financial and Other Information..................... 26
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 28
Business.................................................................. 32
Management................................................................ 38
Description of the Trust Preferred Securities............................. 40
Description of Junior Subordinated Debentures............................. 52
Book-Entry Issuance....................................................... 62
Description of Guarantee.................................................. 64
Expense Agreement......................................................... 66
Relationship Among the Trust Preferred Securities, the Junior Subordinated
Debentures and the Guarantee............................................. 66
Certain Federal Income Tax Consequences................................... 68
ERISA Considerations...................................................... 71
Certain Relationships..................................................... 73
Underwriting.............................................................. 74
Legal Matters............................................................. 75
Experts................................................................... 75
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2,600,000 TRUST
PREFERRED SECURITIES
GLACIER WATER TRUST I
% CUMULATIVE TRUST
PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
[LOGO OF GLACIER WATER SERVICES, INC.]
GLACIER WATER SERVICES, INC.
---------------
PROSPECTUS
---------------
SUTRO & CO. INCORPORATED
EVEREN SECURITIES, INC.
CROWELL, WEEDON & CO.
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 19,697
NASD fee........................................................... 7,000
American Stock Exchange fees....................................... 15,000
Trustees' fees and expenses........................................ 12,000*
Legal fees and expenses............................................ 200,000*
Blue Sky fees and expenses......................................... 10,000*
Accounting fees and expenses....................................... 40,000*
Printing expenses.................................................. 90,000*
Miscellaneous expenses............................................. 16,303*
--------
TOTAL.......................................................... $410,000
========
</TABLE>
- --------
* Estimated Amounts
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware permits the
indemnification of directors, officers, employees and agents of Delaware
corporations.
As permitted by Sections 102 and 145 of the Delaware General Corporation
Law, the Registrant's certificate of incorporation eliminates a director's
personal liability for monetary damages to the Registrant and its stockholders
arising from a breach or alleged breach of a director's fiduciary duty except
for liability under Section 174 of the Delaware General Corporation Law or
liability for any breach of the director's duty of loyalty to the Registrant
or its stockholders, for acts or omissions not in good faith or which involve
unintentional misconduct or a knowing violation of law or for any transaction
in which the director derived an improper personal benefit. The effect of this
provision in the certificate of incorporation is to eliminate the rights of
the Registrant and its stockholders (through stockholders' derivative suits on
behalf of the Registrant) to recover monetary damages against a director for
breach of fiduciary duty as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described
above.
The Registrant's bylaws provide for indemnification of officers, directors
and employees and the Company has entered into an indemnification agreement
("Indemnification Agreement") with each officer and director of the Registrant
(an "Indemnitee"). Under the bylaws and these Indemnification Agreements, the
Registrant must indemnify an Indemnitee to the fullest extent permitted by
Delaware Law for losses and expenses incurred with actions in which the
Indemnitee is involved by reason of having been a director or employee of the
Registrant. The Registrant is also obligated to advance expenses an Indemnitee
may incur in connection with such actions before any resolution of the action,
and the Indemnitee may sue to enforce his or her right to indemnification or
advancement of expenses.
The Registrant has entered into indemnification agreements with its officers
directors in the form incorporated by reference hereto as Exhibit 10.5.
Under the Trust Agreement, Glacier will agree to indemnify each of the
Trustees of Water Trust I or any predecessor Trustee for Water Trust I, and to
hold each Trustee harmless against any loss, damage, claims, liability or
incurred without negligence or bad faith on its part, arising out of or
connection with the acceptance or administration of the Trust Agreement, the
costs and expenses of defending itself against any claim or in connection with
the exercise or performance of any of its powers or duties under the Trust
Agreement.
Glacier and Water Trust I have agreed to indemnify the Underwriters, the
Underwriters have agreed to indemnify Water Trust I and Glacier for certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. Reference is made to the Underwriting Agreement filed as Exhibit 1.1
herewith.
II-1
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
4.1 Form of Subordinated Indenture to be entered into between Glacier
Water Services, Inc. and Wilmington Trust Company, as the
Indenture Trustee.
4.2 Form of Officers' Certificate and Company Order.
4.3 Certificate of Trust of Water Trust I dated November 13, 1997.+
4.4 Trust Agreement of Water Trust I dated as of November 13, 1997.
4.4.1 Form of Amended and Restated Trust Agreement of Water Trust I.
4.5 Form of Trust Preferred Certificate of Water Trust I.
4.6 Form of Common Securities Certificate of Water Trust I.
4.7 Form of Guarantee Agreement.
4.8 Form of Agreement as to Expenses and Liabilities.
4.9 Form of Junior Subordinated Deferrable Interest Debenture of
Glacier.
5.1 Opinion and Consent of Milbank, Tweed, Hadley & McCloy.*
5.2 Opinion and Consent of Richards, Layton & Finger, P.A.
8.1 Opinion and Consent of Milbank, Tweed, Hadley & McCloy, as counsel
to Glacier Water Services, Inc., as to certain federal income tax
matters.
10.1 Amended and Restated 1992 Stock Incentive Plan.(2)
10.2 Vending Machine Agreement between the Vons Companies, Inc. and
BWVI.(1)
10.3 Location Agreement between Food 4 Less Supermarkets, Inc. and GW
Services, Inc.(7)
10.4 Location Agreement between Ralphs Grocery Company, Cala Co., and GW
Services, Inc.(8)
10.5 Form of Indemnification Agreement with Officers and Directors.(1)
10.6 Lease Agreement between Enterprise Leasing and GW Services, Inc.(3)
10.7 Lease Agreement between Robert N. and Jean K. Rindt and Glacier
Water Services, Inc. relating to the Carlsbad, CA facility.(4)
10.8 1994 Stock Compensation Plan.(5)
10.8.1 Amendment No. 1 to 1994 Stock Compensation Plan.(6)
10.8.2 Amendment No. 2 to 1994 Stock Compensation Plan.(8)
10.9 Asset Purchase Agreement dated March 28, 1997 by and between
Glacier Water Services, Inc., McKesson Corp. and McKesson Water
Products Company.(8)
10.10 Credit Agreement between Tokai Bank of California, Glacier Water
Services, Inc. and GW Services, Inc.(6)
10.10.1 Modification of Note and Credit Agreement between Tokai Bank of
California, Glacier Water Services, Inc. and GW Services, Inc.
effective February 6, 1996.(7)
10.10.2 Modification of Note and Credit Agreement between Tokai Bank of
California, Glacier Water Services, Inc. and GW Services, Inc.
effective June 20, 1996.(8)
10.10.3 Modification of Note and Credit Agreement between Tokai Bank of
California, Glacier Water Services, Inc. and GW Services, Inc.
effective March 28, 1997.(8)
10.10.4 Amendment to Guarantee of Note and Credit Agreement.(8)
12.1 Statement re Computation of Ratios.
23.1 Consent of Arthur Andersen LLP.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5.1
and 8.1 above).
23.4 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2
above).
23.5 Consent of Beverage Marketing Corporation.
24.1 Power of Attorney (set forth on the signature page of the Registration
Statement).
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Subordinated Indenture.
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Amended and Restated Trust Agreement.
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Trust Preferred Securities Guarantee Agreement.
27.1 Financial Data Schedule of Glacier Water Trust I.+
</TABLE>
- --------
*To be filed by amendment.
+Previously filed.
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-61942), and the amendments thereto.
(2) Incorporated by reference to the Company's Registration Statement on Form
S-8 (File Number 33-61942) filed April 30, 1993.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K and
amendments thereto dated March 11, 1994 for the year ended December 31,
1993.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the three months ended March 31, 1994.
(5) Incorporated by reference to the Company's Registration Statement on Form
S-8 (File Number 33-80016) filed June 8, 1994.
(6) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
(7) Incorporated by reference to the Company's proxy statement from the 1995
Annual Meeting of Stockholders filed May 1, 1995.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual reports pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such officer or controlling person in connection
with the securities being registered, the Registrants will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
(c) The Registrants hereby undertake 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 the
form of prospectus filed by the Registrants 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
for filing on Form S-2 and has duly caused this Amendment No. 1 to the
registration statement to be signed on its behalf by the undersigned,
thereunto duly in the City of Carlsbad, State of California, on January 8,
1998.
GLACIER WATER SERVICES, INC.
/s/ Jerry A. Gordon
By: _________________________________
Jerry A. Gordon
President and Chief Operating
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Glacier Water Services, Inc.,
hereby severally constitute and appoint Jerry R. Welch and Jerry A. Gordon,
each of them singly, acting alone, our true and lawful attorneys and agents,
to do any and all things and acts in our names in the capacities indicated
below to execute any and all instruments for us and in our names in the
capacities below which said persons, or either of them, may deem necessary or
proper to enable Glacier Water Services, Inc. to comply with the Securities of
1993, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with the offering
contemplated by this Registration Statement on Form S-2, including
specifically, but not limited to, power and authority to sign for us or any of
us in our names in the capacities indicated below and any and all amendments,
including post-effective amendments to this Registration Statement and any
Rule 462(b) registration or amendment thereto; and we hereby ratify and
confirm all that said or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the Requirements of the Securities Act of 1933, this Statement
has been signed below on the dates indicated, by following persons in the
capacities indicated.
<TABLE>
<S> <C>
Dated: January 8, 1998 *
___________________________________________
Douglas C. Boyd, Director
Dated: January 8, 1998 /s/ Peter B. Foreman
___________________________________________
Peter B. Foreman, Director
Dated: January 8, 1998 /s/ Jerry A. Gordon
___________________________________________
Jerry A. Gordon, President, Chief Operating
Officer and Director
Dated: January 8, 1998 *
___________________________________________
Richard A. Kayne, Director
Dated: January 8, 1998 /s/ Scott H. Shlecter
___________________________________________
Scott H. Shlecter, Director
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C>
Dated: January 8, 1998 *
___________________________________________
Robert V. Sinnott, Director
Dated: January 8, 1998 *
___________________________________________
Jerry R. Welch, Chairman of the Board and
Chief Executive Officer
Dated: January 8, 1998 *
___________________________________________
Brenda K. Foster, Vice President,
Controller (principal financial and
accounting officer)
</TABLE>
- --------
* Executed by Jerry A. Gordon as Attorney-in-fact.
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
Amendment No. 1 to the registration statement to be signed on its behalf by
the undersigned, thereunto duly in the City of Carlsbad, State of California,
on January 8, 1998.
GLACIER WATER TRUST I
<TABLE>
<S> <C>
Dated: January 8, 1998 *
___________________________________________
Jerry R. Welch
Administrative Trustee
Dated: January 8, 1998 /s/ Jerry A. Gordon
___________________________________________
Jerry A. Gordon
Administrative Trustee
Dated: January 8, 1998 *
___________________________________________
Brenda K. Foster
Administrative Trustee
</TABLE>
- --------
* Executed by Jerry A. Gordon as Attorney-in-fact.
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement. *
4.1 Form of Subordinated Indenture to be entered into between Glacier
Water Services, Inc. and Wilmington Trust Company, as Indenture
Trustee.
4.2 Form of Officers' Certificate and Company Order.
4.3 Certificate of Trust of Water Trust I dated November 13, 1997.+
4.4 Trust Agreement of Water Trust I dated as of November 13, 1997.
4.4.1 Form of Amended and Restated Trust Agreement of Water Trust I.
4.5 Form of Trust Preferred Certificate of Water Trust I.
4.6 Form of Common Securities Certificate of Water Trust I.
4.7 Form of Guarantee Agreement.
4.8 Form of Agreement as to Expenses and Liabilities.
4.9 Form of Junior Subordinated Deferrable Interest Debenture of Glacier.
5.1 Opinion and Consent of Milbank, Tweed, Hadley & McCloy. *
5.2 Opinion and Consent of Richards, Layton & Finger, P.A.
8.1 Opinion and Consent of Milbank, Tweed, Hadley & McCloy, as counsel to
Glacier Water Services, Inc., as to certain federal income tax
matters.
10.1 Amended and Restated 1992 Stock Incentive Plan.(2)
10.2 Vending Machine Agreement between the Vons Companies, Inc. and
BWVI.(1)
10.3 Location Agreement between Food 4 Less Supermarkets, Inc. and GW
Services, Inc.(7)
10.4 Location Agreement between Ralphs Grocery Company, Cala Co., and GW
Services, Inc.(8)
10.5 Form of Indemnification Agreement with Officers and Directors.(1)
10.6 Lease Agreement between Enterprise Leasing and GW Services, Inc.(3)
10.7 Lease Agreement between Robert N. and Jean K. Rindt and Glacier Water
Services, Inc. relating to the Carlsbad, CA facility.(4)
10.8 1994 Stock Compensation Plan.(5)
10.8.1 Amendment No. 1 to 1994 Stock Compensation Plan.(6)
10.8.2 Amendment No. 2 to 1994 Stock Compensation Plan.(8)
10.9 Asset Purchase Agreement dated March 28, 1997 by and between Glacier
Water Services, Inc., McKesson Corp. and McKesson Water Products
Company.(8)
10.10 Credit Agreement between Tokai Bank of California, Glacier Water
Services, Inc. and GW Services, Inc.(6)
10.10.1 Modification of Note and Credit Agreement between Tokai Bank of
California, Glacier Water Services, Inc. and GW Services, Inc.
effective February 6, 1996.(7)
10.10.2 Modification of Note and Credit Agreement between Tokai Bank of
California, Glacier Water Services, Inc. and GW Services, Inc.
effective June 20, 1996.(8)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.10.3 Modification of Note and Credit Agreement between Tokai Bank of
California, Glacier Water Services, Inc. and GW Services, Inc.
effective March 28, 1997.(8)
10.10.4 Amendment to Guarantee of Note and Credit Agreement.(8)
12.1 Statement re Computation of Ratios.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5.1
and 8.1 above).
23.4 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2
above).
23.5 Consent of Beverage Marketing Corporation.
24.1 Power of Attorney (set forth on the signature page of the Registration
Statement).
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Subordinated Indenture.
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Amended and Restated Trust Agreement.
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Trust Preferred Securities Guarantee Agreement.
27.1 Financial Data Schedule of Glacier Water Trust I.+
</TABLE>
- --------
* To be filed by Amendment.
+ Previously filed.
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-61942), and the amendments thereto.
(2) Incorporated by reference to the Company's Registration Statement on Form
S-8 (File Number 33-61942) filed April 30, 1993.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K and
amendments thereto dated March 11, 1994 for the year ended December 31,
1993.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the three months ended March 31, 1994.
(5) Incorporated by reference to the Company's Registration Statement on Form
S-8 (File Number 33-80016) filed June 8, 1994.
(6) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
(7) Incorporated by reference to the Company's proxy statement from the 1995
Annual Meeting of Stockholders filed May 1, 1995.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
<PAGE>
EXHIBIT 4.1
GLACIER WATER SERVICES, INC.
to
WILMINGTON TRUST COMPANY
Trustee
JUNIOR SUBORDINATED INDENTURE
Dated as of _______ __, 1998
<PAGE>
GLACIER WATER SERVICES, INC.
Reconciliation and tie between the Trust Indenture Act of 1939
(including cross-references to provisions of Sections 310 to and including 317
which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended
by the Trust Reform Act of 1990, are a part of and govern the Indenture whether
or not physically contained therein) and the Junior Subordinated Indenture,
dated as of _______ __, 1998.
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------- -------
<S> <C>
(S) 310(a)(1), (2) and (5) Not Applicable
(a) (3) Not Applicable
(a) (4) Not Applicable
(b) 6.8
6.10
(c) Not Applicable
(S) 311(a) 6.13(a)
(b) 6.13(bb)(2) 7.3(a)(2)
7.3(a)(2)
(S) 312(a) 7.1
7.2(a)
(b) 7.2(b)
(c) 7.2(c)
(S) 313(a) 7.3(a)
(b) 7.3(b)
(c) 7.3(a), 7.3(b)
(d) 7.3(c)
(S) 314(a) (1), (2) and (3) 7.4
(a) (4) 10.5
(b) Not Applicable
(c) (1) 1.2
(c) (2) 1.2
(c) (3) Not Applicable
(d) Not Applicable
(e) 1.2
(f) Not Applicable
(S) 315(a) 6.1(a)
(b) 6.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------- -------
<S> <C>
7.3(a) (6)
(c) 6.1(b)
(d) 6.1 (c)
(d) (1) 6.1(a) (1)
(d) (2) 6.1(c) (2)
(d) (3) 6.1(c) (3)
(e) 5.14
(S) 316(a) 1.1
(a) (1) (A) 5.12
(a) (1) (B) 5.13
(a) (2) Not Applicable
(b) 5.8
(c) 1.4(f)
(S) 317(a) (1) 5.3
(a) (2) 5.4
(b) 10.3
(S) 318(a) 1.7
</TABLE>
_____________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Junior Subordinated Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION......................................................... 1
Section 1.1 Definitions.......................................................................... 1
Section 1.2 Compliance Certificate and Opinions.................................................. 10
Section 1.3 Forms of Documents Delivered to Trustee.............................................. 10
Section 1.4 Acts of Holders...................................................................... 11
Section 1.5 Notices, Etc. to Trustee and Company................................................. 13
Section 1.6 Notice to Holders; Waiver............................................................ 13
Section 1.7 Conflict with Trust Indenture Act.................................................... 14
Section 1.8 Effect of Headings and Table of Contents............................................. 14
Section 1.9 Successors and Assigns............................................................... 14
Section 1.10 Separability Clause.................................................................. 14
Section 1.11 Benefits of Indenture................................................................ 14
Section 1.12 Governing Law........................................................................ 14
Section 1.13 Non-Business Days.................................................................... 15
ARTICLE II
SECURITY FORMS.................................................................................................. 15
Section 2.1 Forms Generally...................................................................... 15
Section 2.2 Form of Face of Security............................................................. 15
Section 2.3 Form of Reverse of Security.......................................................... 19
Section 2.4 Additional Provisions Required in Global Security.................................... 22
Section 2.5 Form of Trustee's Certificate of Authentication...................................... 22
ARTICLE III
THE SECURITIES.................................................................................................. 23
Section 3.1 Title and Terms...................................................................... 23
Section 3.2 Denominations........................................................................ 25
Section 3.3 Execution, Authentication, Delivery and Dating....................................... 26
Section 3.4 Temporary Securities................................................................. 27
Section 3.5 Registration, Transfer and Exchange.................................................. 28
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities..................................... 29
Section 3.7 Payment of Interest; Interest Rights Preserved....................................... 30
Section 3.8 Persons Deemed Owners................................................................ 32
Section 3.9 Cancellation......................................................................... 32
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 3.10 Computation of Interest.............................................................. 32
Section 3.11 Deferrals of Interest Payment Dates.................................................. 32
Section 3.12 Right of Set-Off..................................................................... 33
Section 3.13 Agreed Tax Treatment................................................................. 34
Section 3.14 Shortening of Stated Maturity........................................................ 34
Section 3.15 CUSIP Numbers........................................................................ 34
ARTICLE IV
SATISFACTION AND DISCHARGE...................................................................................... 34
Section 4.1 Satisfaction and Discharge of Indenture.............................................. 34
Section 4.2 Application of Trust Money........................................................... 35
ARTICLE V
REMEDIES........................................................................................................ 36
Section 5.1 Events of Default.................................................................... 36
Section 5.2 Acceleration of Maturity; Rescission and Annulment................................... 37
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee...................... 38
Section 5.4 Trustee May File Proofs of Claim..................................................... 39
Section 5.5 Trustee May Enforce Claim Without Possession of Securities........................... 40
Section 5.6 Application of Money Collected....................................................... 40
Section 5.7 Limitation on Suits.................................................................. 41
Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest; Direct Action by Holders of Preferred Securities........................... 41
Section 5.9 Restoration of Rights and Remedies................................................... 42
Section 5.10 Rights and Remedies Cumulative....................................................... 42
Section 5.11 Delay or Omission Not Waiver......................................................... 42
Section 5.12 Control by Holders................................................................... 42
Section 5.13 Waiver of Past Defaults.............................................................. 43
Section 5.14 Undertaking for Costs................................................................ 43
Section 5.15 Waiver of Usury, Stay or Extension Laws.............................................. 44
ARTICLE VI
THE TRUSTEE..................................................................................................... 44
Section 6.1 Certain Duties and Responsibilities.................................................. 44
Section 6.2 Notice of Defaults................................................................... 45
Section 6.3 Certain Rights of Trustee............................................................ 46
Section 6.4 Not Responsible for Recitals or Issuance of Securities............................... 47
Section 6.5 May Hold Securities.................................................................. 47
Section 6.6 Money Held in Trust.................................................................. 47
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 6.7 Compensation and Reimbursement....................................................... 47
Section 6.8 Disqualification; Conflicting Interests.............................................. 48
Section 6.9 Corporate Trustee Required; Eligibility.............................................. 48
Section 6.10 Resignation and Removal; Appointment of Successor.................................... 49
Section 6.11 Acceptance of Appointment by Successor............................................... 50
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.......................... 51
Section 6.13 Preferential Collection of Claims Against Company.................................... 52
Section 6.14 Appointment of Authenticating Agent.................................................. 52
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY............................................................... 53
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders............................ 53
Section 7.2 Preservation of Information, Communications to Holders............................... 54
Section 7.3 Reports by Trustee................................................................... 54
Section 7.4 Reports by Company................................................................... 54
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE............................................................ 55
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms................................. 55
Section 8.2 Successor Corporation Substituted.................................................... 56
ARTICLE IX
SUPPLEMENTAL INDENTURES......................................................................................... 56
Section 9.1 Supplemental Indentures without Consent of Holders................................... 56
Section 9.2 Supplemental Indentures with Consent of Holders...................................... 58
Section 9.3 Execution of Supplemental Indentures................................................. 59
Section 9.4 Effect of Supplemental Indentures.................................................... 59
Section 9.5 Conformity with Trust Indenture Act.................................................. 60
Section 9.6 Reference in Securities to Supplemental Indentures................................... 60
ARTICLE X
COVENANTS....................................................................................................... 60
Section 10.1 Payment of Principal, Premium and Interest........................................... 60
Section 10.2 Maintenance of Office or Agency...................................................... 60
Section 10.3 Money for Security Payments to be Held in Trust...................................... 61
Section 10.4 Statement as to Compliance........................................................... 62
Section 10.5 Waiver of Certain Covenants.......................................................... 62
Section 10.6 Additional Sums...................................................................... 63
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 10.7 Additional Covenants................................................................. 63
ARTICLE XI
REDEMPTION OF SECURITIES........................................................................................ 64
Section 11.1 Applicability of This Article........................................................ 64
Section 11.2 Election to Redeem; Notice to Trustee................................................ 65
Section 11.3 Selection of Securities to be Redeemed............................................... 65
Section 11.4 Notice of Redemption................................................................. 65
Section 11.5 Deposit of Redemption Price.......................................................... 66
Section 11.6 Payment of Securities Called for Redemption.......................................... 66
Section 11.7 Right of Redemption of Securities Initially Issued to a Glacier
Trust................................................................................ 67
ARTICLE XII
SINKING FUNDS................................................................................................... 67
Section 12.1 Applicability of Article............................................................. 67
Section 12.2 Satisfaction of Sinking Fund Payments with Securities................................ 68
Section 12.3 Redemption of Securities for Sinking Fund............................................ 68
ARTICLE XIII
SUBORDINATION OF SECURITIES..................................................................................... 70
Section 13.1 Securities Subordinate to Senior Debt and Subordinated Debt.......................... 70
Section 13.2 Payment Over of Proceeds Upon Dissolution, Etc....................................... 70
Section 13.3 Prior Payment to Senior Debt and Subordinated Debt Upon
Acceleration of Securities........................................................... 71
Section 13.4 No Payment When Senior Debt and Subordinated Debt in
Default.............................................................................. 72
Section 13.5 Payment Permitted If No Default...................................................... 73
Section 13.6 Subrogation to Rights of Holders of Senior Debt and Subordinated
Debt................................................................................. 73
Section 13.7 Provisions Solely to Define Relative Rights.......................................... 73
Section 13.8 Trustee to Effectuate Subordination.................................................. 74
Section 13.9 No Waiver of Subordination Provisions................................................ 74
Section 13.10 Notice to Trustee.................................................................... 75
Section 13.11 Reliance on Judicial Order or Certificate of Liquidating
Agent................................................................................ 75
Section 13.12 Trustee Not Fiduciary for Holders of Senior Debt and
Subordinated Debt.................................................................... 76
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Section 13.13 Rights of Trustee as Holder of Senior Debt and
Subordinated Debt; Preservation of Trustee's Rights.................................. 76
Section 13.14 Article Applicable to Paying Agents.................................................. 76
Section 13.15 Certain Conversions or Exchanges Deemed Payment...................................... 76
</TABLE>
v
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of _______ __, 1998, between
GLACIER WATER SERVICES, INC., a Delaware corporation (hereinafter called the
"Company") having its principal office at 2261 Cosmos Court, Carlsbad,
California 92009, and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
as Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including, without limitation,
Securities issued to evidence loans made to the Company of the proceeds from the
issuance from time to time by one or more business trusts (each a "Glacier
Trust," and, collectively, the "Glacier Trusts") of preferred trust interests in
such Trusts (the "Preferred Securities") and common interests in such Trusts
(the "Common Securities" and, collectively with the Preferred Securities, the
Trust Securities), and to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) All other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
1
<PAGE>
(c) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such computation;
provided, that when two or more principles are so generally accepted, it shall
mean that set of principles consistent with those in use by the Company; and
(d) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which a Glacier Trust has become subject from time to
time as a result of a Tax Event.
"Administrative Trustee" means, in respect of any Glacier Trust, each
Person identified as an "Administrative Trustee" or an "Administrative Agent" in
the related Amended and Restated Trust Agreement, solely in such Person's
capacity as Administrative Trustee or an Administrative Agent, as the case may
be, of such Glacier Trust under such Amended and Restated Trust Agreement and
not in such Person's individual capacity, or any successor administrative
trustee or successor administrative agent, as the case may be, appointed as
therein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, no Glacier Trust to which
Securities have been issued shall be deemed to be an Affiliate of the Company.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Allocable Amounts," when used with respect to any Senior Debt and
Subordinated Debt, means all amounts due or to become due on such Senior Debt
and Subordinated Debt less, if
2
<PAGE>
applicable, any amount which would have been paid to, and retained by, the
holders of such Senior Debt and Subordinated Debt (whether as a result of the
receipt of payments by the holders of such Senior Debt and Subordinated Debt
from the Company or any other obligor thereon or from any holders of, or trustee
in respect of, other indebtedness that is subordinate and junior in right of
payment to such Senior Debt and Subordinated Debt pursuant to any provision of
such indebtedness for the payment over of amounts received on account of such
indebtedness to the holders of such Senior Debt and Subordinated Debt or
otherwise) but for the fact that such Senior Debt and Subordinated Debt is
subordinate or junior in right of payment to (or subject to a requirement that
amounts received on such Senior Debt and Subordinated Debt be paid over to
obligees on) trade accounts payable or accrued liabilities arising in the
ordinary course of business.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities of
one or more series.
"Board of Directors" means either the board of directors of the Company or
any committee of that board duly authorized to act hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the State of California are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee, or, with respect to the Securities of a
series initially issued to a Glacier Trust, the principal office of the Property
Trustee under the related Trust Agreement, is closed for business.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means the common stock, $.01 par value per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
3
<PAGE>
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chief Executive
Officer, President or a Vice President, and by its Vice President, Controller,
its Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered.
"Corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) all
indebtedness of such Person whether incurred on or prior to the date of this
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depositary by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
"Discount Security" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions," with respect to the Trust Securities issued by a Glacier
Trust, means amounts payable in respect of such Trust Securities as provided in
the related Trust Agreement and referred to therein as "Distributions."
4
<PAGE>
"Dollar" or "U.S. $" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.
"Event of Default" has the meaning specified in Article V unless otherwise
specified in the supplemental indenture or the Officers' Certificate delivered
pursuant to Section 3.1 hereof creating a series of Securities.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Extension Period" has the meaning specified in Section 3.11.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depositary or
its nominee for such series, and registered in the name of such Depositary or
its nominee.
"Glacier Guarantee" means the guarantee by the Company of distributions on
the Preferred Securities of a Glacier Trust to the extent provided in the
related Guarantee Agreement.
"Glacier Trust" has the meaning specified in the first recital of this
Indenture.
"Guarantee Agreement" means the Guarantee Agreement substantially in the
form attached hereto as Annex C, or substantially in such form as may be
specified as contemplated by Section 3.1 with respect to the Securities of any
series, in each case as amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof or one or more
Officers' Certificates delivered pursuant to Section 3.1 and shall include the
terms of each particular series of Securities established as contemplated by
Section 3.1.
"Interest Payment Date" means as to each series of Securities, the Stated
Maturity of an installment of interest on such Securities.
"Investment Company Event" means, in respect of a Glacier Trust, the
receipt by the Company and a Glacier Trust of an Opinion of Counsel experienced
in such matters to the effect that, as a result of change in law or regulation
or a change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority, such
Glacier Trust is or will be considered an "investment company" that is required
to be registered
5
<PAGE>
under the 1940 Act, which change becomes effective on or after the date of
original issuance of the Preferred Securities of such Glacier Trust.
"Junior Subordinated Payment" has the meaning specified in Section 13.2.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"Officers' Certificate" means a certificate signed by the Chief Executive
Officer, the President or a Vice President, and by the Vice President,
Controller, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Date" means the date of issuance specified as such in each
Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or which have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company; provided, however, that in determining
whether the Holders of the requisite principal amount of Outstanding Securities
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that
6
<PAGE>
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor. Upon the written request of the
Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, if any, known by the Company
to be owned or held by or for the account of the Company, or any other obligor
on the Securities or any Affiliate of the Company or such obligor, and, subject
to the provisions of Section 6.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Securities not listed therein are Outstanding for the
purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the Company to
pay the principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, with respect to the Securities of any series, the
place or places where the principal of (and premium, if any) and interest on the
Securities of such series are payable pursuant to Sections 3.1 and 3.11.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any security
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, in respect of any Glacier Trust, the commercial
bank or trust company identified as the "Property Trustee" in the related Trust
Agreement, solely in its capacity as Property Trustee of such Glacier Trust
under such Trust Agreement and not in its individual capacity, or its successor
in interest in such capacity, or any successor property trustee appointed as
therein provided.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 3.1 with respect
7
<PAGE>
to Securities of a series, (i) in the case of Securities of a series represented
by one or more Global Securities, the Business Day next preceding such Interest
Payment Date and (ii) in the case of Securities of a series not represented by
one or more Global Securities, the date which is fifteen days next preceding
such Interest Payment Date (whether or not a Business Day).
"Responsible Officer" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee from time to time to administer
its corporate trust matters.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Senior Debt and Subordinated Debt" means the principal of (and premium, if
any) and interest, if any (including interest accruing on or after the filing of
any petition in bankruptcy or for reorganization relating to the Company whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt of the Company, whether incurred on or prior to the date of this Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Securities or to other
Debt which is pari passu with, or subordinated to, the Securities, provided,
however, that Senior Debt and Subordinated Debt shall not be deemed to include
(a) any Debt of the Company which, when incurred and without respect to any
election under Section 1111(b) of the Bankruptcy Reform Act of 1978, as amended,
was without recourse to the Company, (b) any Debt of the Company to any of its
Subsidiaries, (c) Debt to any employee of the Company, and (d) any Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" when used with respect to any Security or any installment
of principal thereof or interest thereon means the date specified pursuant to
the terms of such Security as the date on which the principal of such Security
or such installment of interest is due and payable, in the case of such
principal, as such date may be shortened or extended as provided pursuant to the
terms of such Security and this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
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"Tax Event" means the receipt by the Company and the Glacier Trust of an
Opinion of Counsel (as defined in the relevant Glacier Trust Agreement)
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such prospective
change, pronouncement or decision is announced on or after the date of issuance
of the Preferred Securities of such Glacier Trust, there is more than an
insubstantial risk that (i) such Glacier Trust is, or will be within 90 days of
the date of such Opinion of Counsel, subject to United States Federal income tax
with respect to income received or accrued on the corresponding series of
Securities, (ii) interest payable by the Company on such corresponding series of
Securities is not, or within 90 days of the date of such Opinion of Counsel,
will not be, deductible by the Company, in whole or in part, for United States
Federal income tax purposes or (iii) such Glacier Trust is, or will be within 90
days of the date of such Opinion of Counsel, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Trust" has the meaning specified in the first recital of this Indenture.
"Trust Agreement" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated Trust
Agreement substantially in the form attached hereto as Annex B, or substantially
in such form as may be specified as contemplated by Section 3.1 with respect to
the Securities of any series, in each case as amended from time to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
(S)(S) 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Vice President" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a word or words added
before or after the title "vice president," of the Company.
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Section 1.2 Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent (including covenants compliance with which
constitute a condition precedent), if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.5) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 1.3 Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
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erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4 Acts of Holders.
(i) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent or
proxy duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
is or are delivered to the Trustee, and, where it is hereby expressly required,
to the Company. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
(ii) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a Person acting in other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.
(iii) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(iv) The ownership of Securities shall be proved by the Securities
Register.
(v) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
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(vi) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities of the relevant series in
the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.6.
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With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 10.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(vii) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
Section 1.5 Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, any holder of Preferred Securities or
the Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
office, or
(b) the Company by the Trustee, any Holder or any holder of Preferred
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company, addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
Section 1.6 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
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Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
Section 1.7 Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture
Act through operation of Section 318(c) thereof, such imposed duties shall
control.
Section 1.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.9 Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.10 Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the Holders of Senior Debt and Subordinated Debt, the Holders of the
Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9,
5.11, 5.13, 9.1 and 9.2, the holders of Preferred Securities, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12 Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of California without regard to conflicts
of laws principles thereof, except that the immunities and standard of care of
the Trustee shall be governed by Delaware law.
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Section 1.13 Non-Business Days.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until such next succeeding Business Day, with the same force
and effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity).
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally.
The Securities of each series shall be in substantially the forms set forth
in this Article, or in such other form or forms as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with applicable tax
laws or the rules of any securities exchange or as may, consistently herewith,
be determined by the officers executing such securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Vice President,
Controller, the Secretary or an Assistant Secretary of the Company and delivered
to the Trustee at or prior to the delivery of the Company Order contemplated by
Section 3.3 with respect to the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
Section 2.2 Form of Face of Security.
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GLACIER WATER SERVICES, INC.
__% JUNIOR SUBORDINATED DEBENTURE DUE ___________
Registered Principal Amount:
No. CUSIP No.:
Glacier Water Services, Inc., a corporation organized and existing under
the laws of Delaware (hereinafter called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to __________, or registered assigns, the
principal sum of $_______ Dollars on ________; provided that the Company may
shorten the Stated Maturity of the principal of this Security to a date not
earlier than ________. The Company further promises to pay interest on said
principal sum from ________ or from the most recent interest payment date (each
such date, an "Interest Payment Date") on which interest has been paid or duly
provided for, monthly (subject to deferral as set forth herein) in arrears on
the 15th day of each calendar month of each year commencing ________ at the rate
of ____% per annum, until the principal hereof shall have become due and
payable, plus Additional Interest, if any, until the principal hereof is paid or
duly provided for or made available for payment and on any overdue principal and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
rate of ____% per annum. The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount of
interest payable for any partial period shall be computed on the basis of the
number of days elapsed in a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on this Security is not a Business
Day, then a payment of the interest payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on the date the payment was originally payable. A "Business Day" shall mean any
day other than a Saturday or Sunday a day on which banking institutions in the
State of California are authorized or required by law or executive order to
remain closed or on a day on which the Corporate Trust Office of the Trustee, or
the principal office of the Property Trustee under the Amended and Restated
Trust Agreement (hereinafter referred to) for [name of Trust] is closed for
business. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest installment, which shall be [insert Record Date] next
preceding such Interest Payment Date. Any such interest installment not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than ____
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days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
[If applicable insert--So long as no Event of Default has occurred and is
continuing, the Company shall have the right at any time during the term of this
Security to defer payment of interest on this Security, at any time or from time
to time, for up to 60 consecutive monthly interest payment periods with respect
to each deferral period (each an "Extension Period"), (during which Extension
Periods the Company shall have the right to make partial payments of interest on
any Interest Payment Date, and at the end of which the Company shall pay all
interest then accrued and unpaid (together with Additional Interest thereon to
the extent permitted by applicable law)); provided, however, that no Extension
Period shall extend beyond the Stated Maturity of the principal of this
Security; provided, further, that during any such Extension Period, the Company
shall not, and shall not permit any Subsidiary of the Company to, (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), or (ii) make any payment of principal of
or interest or premium, if any, on or repay, repurchase or redeem any debt
security of the Company (including Securities issued by the Company pursuant to
the Indenture other than the Securities represented by this certificate) that
ranks pari passu with or junior in interest to this Security, (iii) make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiaries of the Company (if such guarantee ranks pari
passu in all respects with or junior in interest to this Security (other than
(a) dividends or distributions in capital stock (which includes common and
preferred stock), (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Glacier Guarantee related to the
Preferred Securities issued by [name of Trust], and (d) purchases of Common
Stock related to the issuance of Common Stock or rights under any of the
Company's benefit plans for its directors, officers or employees or (iv) redeem,
purchase or acquire less than all of the Securities of this series or any of the
Preferred Securities. Prior to the termination of any such Extension Period,
the Company may further extend such Extension Period, provided that such
extension does not cause such Extension Period to exceed ___ consecutive
interest payment periods or to extend beyond the Stated Maturity. Upon the
termination of any such Extension Period and upon the payment of all amounts
then due on any Interest Payment Date, and subject to the foregoing limitation,
the Company may elect to begin a new Extension Period. No interest shall be due
and payable during an Extension Period except at the end thereof. The Company
shall give the Trustee, the Property Trustee and the Administrative Trustees of
[name of Trust] notice of its election to begin any Extension Period at least
___ Business Days prior to the earlier of (i) the date on which Distributions on
the Preferred Securities would be payable except for the election to begin such
Extension Period, or (ii) the date the Administrative Trustees are required to
give notice to the American Stock Exchange, the New York Stock Exchange, the
Nasdaq Stock Market or other applicable stock exchange or automated quotation
system on which the Preferred
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Securities are then listed or quoted or to holders of such Preferred Securities
of the record date or (iii) the date such Distributions are payable, but in any
event not less than ___ Business Days prior to such record date. The Trustee
shall give notice of the Company's election to begin a new Extension Period to
the holders of the Preferred Securities. There is no limitation on the number
of times that the Company may elect to begin an Extension Period.]
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee or at the office of
such paying agent or paying agents as the Company may designate from time to
time, maintained for that purpose in the United States, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the Securities
Register or (ii) by transfer to an account maintained by the person entitled
thereto, in immediately available funds, at such place and to such account as
may be designated by the Person entitled thereto as specified in the Securities
Register.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, unsecured and will rank junior and subordinate and subject in
right of payments to the prior payment in full of all Senior Debt and
Subordinated Debt, and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Security, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his behalf to take such actions as may be necessary or
appropriate to effectuate the subordination so provided and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof,
by his acceptance hereof, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Debt and Subordinated Debt, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Glacier Water Services, Inc.
By: ___________________________
[Chief Executive Officer,
President or Vice President]
Attest:
__________________________________
[Secretary or Assistant Secretary]
Section 2.3 Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Indenture, dated as of ________, 1998 (herein
called the "Indenture"), between the Company and __________ as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Trustee, the Company and the Holders of
the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $_________.
All terms used in this Security that are defined in the Indenture and in
the Amended and Restated Trust Agreement, dated as of _____________, 1998, as
amended (the "Amended and Restated Trust Agreement"), for [insert name of trust]
among Glacier Water Services, Inc., as Depositor, and the Trustees named
therein, shall have the meanings assigned to them in the Indenture or the
Amended and Restated Trust Agreement, as the case may be.
[If applicable, insert--The Company may at any time, at its option, on or
after ________, and subject to the terms and conditions of Article XI of the
Indenture, redeem this Security [in whole at any time] [or in part from time to
time], without premium or penalty, at a redemption price equal to [insert
redemption price] to the Redemption Date.]
[If applicable, insert--Upon the occurrence and during the continuation of
a Tax Event or Investment Company Event in respect of a Glacier Trust, the
Company may, at its option, at any time within 90 days of the occurrence of such
Tax Event or Investment Company Event redeem this Security, [if applicable,
insert--in whole but not in part], subject to the provisions of Section 11.7 and
the other provisions of Article XI of the Indenture, at a redemption price equal
to [insert redemption price] to the Redemption Date.]
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[If applicable, insert--In the event of redemption of this Security in part
only, a new Security or Securities of this series for the portion hereof not
redeemed will be issued in the name of the Holder hereof upon the cancellation
hereof.]
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of each series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
[If the Security is not a Discount Security,--As provided in and subject to
the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of this series may declare the
principal amount of all the Securities of this series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), provided that, in the case of the Securities of this series issued
to a Glacier Trust, if upon an Event of Default, the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities of this
series fails to declare the principal of all the Securities of this series to be
immediately due and payable, the holders of at least 25% in aggregate
Liquidation Amount of the Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any such
declaration the principal amount of and the accrued interest (including any
Additional Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of principal and interest
(including any Additional Interest) on such Securities shall remain subordinated
to the extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security,--As provided in and subject to the
provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than such portion
of the principal amount as may be specified in the terms of this series
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may declare an amount of principal of the Securities of this series to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), provided that, in the case of the Securities of
this series issued to a Glacier Trust, if upon an Event of Default, the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series fails to declare the principal of all the Securities
of this series to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Preferred Securities then outstanding shall
have such right by a notice in writing to the Company and the Trustee. Such
amount shall be equal to [insert formula for determining the amount]. Upon any
such declaration, such amount of the principal of and the accrued interest
(including any Additional Interest) on all the Securities of this series shall
become immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture. Upon
payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal and overdue interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
interest, if any, on this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in denominations of minimum denominations of $25 and any integral
multiples of $25 in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of
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such series of a different authorized denomination, as requested by the Holder
surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
Section 2.4 Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3, bear a legend in substantially the following
form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY."
Section 2.5 Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
[INSERT NAME OF TRUSTEE]
as Trustee
By: ______________________________
Authorized Officer
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ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate (such Officers' Certificate shall have the effect of a supplemental
indenture for all purposes hereunder), or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of a series:
(i) the title of the securities of such series, which shall distinguish
the Securities of the series from all other Securities;
(ii) the limit, if any, upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any
Securities which, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder); provided, however, that the authorized
aggregate principal amount of such series may be increased above such amount by
a Board Resolution to such effect;
(iii) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof;
(iv) the rate or rates, if any, at which the Securities of such series
shall bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable in respect of any Securities of such series,
the Interest Payment Dates on which such interest shall be payable, the right,
pursuant to Section 3.11 or as otherwise set forth therein, of the Company to
defer or extend an Interest Payment Date, and the Regular Record Date for the
interest payable on any Interest Payment Date or the method by which any of the
foregoing shall be determined;
(v) the place or places where the principal of (and premium, if any) and
interest on the Securities of such series shall be payable, the place or places
where the Securities of such series may be presented for registration of
transfer or exchange, and the place or places where notices and demands to or
upon the Company in respect of the Securities of such series may be made;
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(vi) the period or periods within or the date or dates on which, if any,
the price or prices at which and the terms and conditions upon which the
Securities of such series may be redeemed, in whole or in part, at the option of
the Company;
(vii) the obligation or the right, if any, of the Company to prepay, repay
or purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions, or at the option of a Holder thereof, and
the period or periods within which, the price or prices at which, the currency
or currencies (including currency unit or units) in which and the other terms
and conditions upon which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(viii) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $25 and any integral multiples of $25
in excess thereof;
(ix) if other than Dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if any) and
interest, if any, on the Securities of the series shall be payable, or in which
the Securities of the series shall be denominated;
(x) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(xi) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(xii) the additions or changes, if any, to this Indenture with respect to
the Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
(xiii) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Securities of such series or the manner
in which such amounts will be determined;
(xiv) whether the Securities of the series, or any portion thereof, shall
initially be issuable in the form of a temporary Global Security representing
all or such portion of the Securities of such series and provisions for the
exchange of such temporary Global Security for definitive Securities of such
series;
(xv) if applicable, that any Securities of the series shall be issuable
in whole or in part in the form of one or more Global Securities and, in such
case, the respective Depositaries for such Global Securities, the form of any
legend or legends which shall be borne by any such Global Security in addition
to or in lieu of that set forth in Section 2.4 and any circumstances
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in addition to or in lieu of those set forth in Section 3.5 in which any such
Global Security may be exchanged in whole or in part for Securities registered,
and any transfer of such Global Security in whole or in part may be registered,
in the name or names of Persons other than the Depositary for such Global
Security or a nominee thereof;
(xvi) the appointment of any Paying Agent or Agents for the Securities of
such series;
(xvii) the terms of any right to convert or exchange Securities of such
series into any other securities or property of the Company, and the additions
or changes, if any, to this Indenture with respect to the Securities of such
series to permit or facilitate such conversion or exchange;
(xviii) the form or forms of the Trust Agreement, Amended and Restated
Trust Agreement and Guarantee Agreement, if different from the forms attached
hereto as Annexes A, B and C, respectively;
(xix) the relative degree, if any, to which the Securities of the series
shall be senior to or be subordinated to other series of Securities in right of
payment, whether such other series of Securities are Outstanding or not; and
(xx) any other terms of the Securities of such series (which terms shall
not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided herein or in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior Debt and
Subordinated Debt as provided in Article XIII.
Section 3.2 Denominations.
The Securities of each series shall be in registered form without coupons
and shall be issuable in minimum denominations of $25 and integral multiples of
$25 in excess thereof, unless otherwise specified as contemplated by Section
3.1.
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Section 3.3 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its President
or one of its Vice Presidents under its corporate seal reproduced or impressed
thereon and attested by its Vice President, Controller, Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of
the Securities of the series have been established by or pursuant to one or more
Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(a) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such terms have
been established in conformity with the provisions of this Indenture; and
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to
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deliver the Officers' Certificate otherwise required pursuant to Section 3.1 or
the Company Order and Opinion of Counsel otherwise required pursuant to such
preceding paragraph at or prior to the authentication of each Security of such
series if such documents are delivered at or prior to the authentication upon
original issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 3.4 Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination, substantially of the tenor of the
definitive Securities of such series in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities
of the same series of authorized denominations having the same Original Issue
Date and Stated Maturity and having the same terms as such temporary Securities.
Until so exchanged, the temporary Securities of any series shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities
of such series.
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Section 3.5 Registration, Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series of any
authorized denominations, of a like aggregate principal amount, of the same
Original Issue Date and Stated Maturity and having the same terms.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
The provisions of Clauses (a), (b), (c) and (d) below shall apply only to
Global Securities:
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security
or a nominee thereof and
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delivered to such Depositary or a nominee thereof or custodian therefor, and
each such Global Security shall constitute a single Security for all purposes
of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and
no transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary (i) has notified the Company that
it is unwilling or unable to continue as Depositary for such Global Security
or (ii) has ceased to be a clearing agency registered under the Exchange Act
at a time when the Depositary is required to be so registered to act as
depositary, in each case unless the Company has approved a successor
Depositary within 90 days, (B) there shall have occurred and be continuing an
Event of Default with respect to such Global Security, (C) the Company in its
sole discretion determines that such Global Security will be so exchangeable
or transferable or (D) there shall exist such circumstances, if any, in
addition to or in lieu of the foregoing as have been specified for this
purpose as contemplated by Section 3.1.
(c) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued in
exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or
11.6 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name of
a Person other than the Depositary for such Global Security or a nominee
thereof.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of notice of redemption or
(b) to transfer or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new
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Security of the same issue and series of like tenor and principal amount, having
the same Original Issue Date and Stated Maturity, and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same issue and
series of like tenor and principal amount, having the same Original Issue Date
and Stated Maturity as such destroyed, lost or stolen Security, and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Payment of Interest; Interest Rights Preserved.
Interest on any Security of any series which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date, shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
in respect of Securities of such series, except that, unless otherwise provided
in the Securities of such series, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security of any series which is issued
between a Regular Record Date and the related Interest Payment Date shall be
payable as provided in such Security or in the Board Resolution pursuant to
Section 3.1 with respect to the related series of Securities.
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Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
in this Clause provided. Thereupon, the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class, postage prepaid, to each Holder of a
Security of such series at the address of such Holder as it appears in the
Securities Register not less than 10 days prior to such Special Record Date.
The Trustee may, in its discretion, in the name and at the expense of the
Company, cause a similar notice to be published at least once in a newspaper,
customarily published in the English language on each Business Day and of
general circulation in the state of California, but such publication shall not
be a condition precedent to the establishment of such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered on such Special Record Date
and shall no longer be payable pursuant to the following Clause (2).
(b) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of the series in respect of which interest is in default
may be listed and, upon such notice as may be required by such exchange (or by
the Trustee if the Securities are not listed), if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause, such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
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Section 3.8 Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.7) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 3.9 Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities shall be destroyed by the
Trustee and the Trustee shall deliver to the Company a certificate of such
destruction.
Section 3.10 Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series for any period shall be
computed on the basis of a 360-day year of twelve 30-day months and interest on
the Securities of each series for any partial period shall be computed on the
basis of the number of days elapsed in a 360-day year of twelve 30-day months.
Section 3.11 Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time during
the term of such series, from time to time to defer the payment of interest on
such Securities for such period or periods as may be specified as contemplated
by Section 3.1 (each, an "Extension Period") during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date. No Extension Period shall end on a date other than an
Interest Payment Date. At the end of any such Extension Period the Company shall
pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the Securities of
such series to the extent permitted by applicable law); provided, however, that
no Extension Period shall extend beyond the Stated Maturity of the principal of
the Securities of such series;
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provided, further, that during any such Extension Period, the Company shall not,
and shall not permit any Subsidiary to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock), (ii) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
(including Securities other than the Securities of such series) that ranks pari
passu in all respects with or junior in interest to the Securities of such
series or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any Subsidiary of the Company if such
guarantee rank pari passu in all respects with or junior in interest to the
securities of such series (other than (a) dividends or distributions in capital
stock (which includes common and preferred stock), (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Glacier Guarantee related to the Preferred Securities issued
by the Glacier Trust holding Securities of such series, and (d) purchases of
Common Stock related to the issuance of Common Stock or rights under any of the
Company's benefit plans for its directors, officers or employees) or (iii)
redeem, purchase or acquire less than all of the Securities of such series or
any of the Preferred Securities. Prior to the termination of any such Extension
Period, the Company may further extend such Extension Period, provided that such
extension does not cause such Extension Period to extend beyond the Stated
Maturity of the principal of such Securities. Upon termination of any Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Company shall give the Trustee, the Property Trustee and the Administrative
Trustees of the Glacier Trust holding Securities of such series notice of its
election of any Extension Period (or an extension thereof) at least one Business
Day prior to the earlier of (i) the next succeeding date on which Distributions
on the Preferred Securities of such Glacier Trust would be payable except for
the election to begin or extend such Extension Period or (ii) the date the
Administrative Trustees are required to give notice to the American Stock
Exchange, the New York Stock Exchange, the Nasdaq Stock Market or other
applicable stock exchange or automated quotation system on which the Preferred
Securities are then listed or quoted or to holders of such Preferred Securities
of the record date or (iii) the date such Distributions are payable, but in any
event not less than one Business Day prior to such record date. The Trustee
shall give notice of the Company's election to begin a new Extension Period to
the holders of the Securities. There is no limitation on the number of times
that the Company may elect to begin an Extension Period.
The Trustee shall promptly give notice of the Company's election to begin
any such Extension Period to the Holders of the Outstanding Securities of such
series.
Section 3.12 Right of Set-Off.
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With respect to the Securities of a series issued to a Glacier Trust,
notwithstanding anything to the contrary in the Indenture, the Company shall
have the right to set-off any payment it is otherwise required to make
thereunder in respect of any such Security to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee Agreement relating to such Security or under Section
5.8 of the Indenture.
Section 3.13 Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States Federal, state and local tax purposes it is intended that such
Security constitute indebtedness.
Section 3.14 Shortening of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, the Company shall have the right to
shorten the Stated Maturity of the principal of the Securities of such series at
any time to any date not earlier than the first date on which the Company has
the right to redeem the Securities of such series. In the event that the Company
elects to shorten the Stated Maturity of the Junior Subordinated Debentures, it
shall give notice to the Indenture Trustee, and the Indenture Trustee shall give
notice of such shortening to the holders of the Junior Subordinated Debentures
no less than 60 days prior to the effectiveness thereof.
Section 3.15 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
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Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in
(i) either
(a) all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3 have been delivered to the Trustee for
cancellation; or
(b) all such Securities not theretofore delivered to the Trustee for
cancellation
1) have become due and payable, or
2) will become due and payable at their Stated Maturity within
one year of the date of deposit, or
3) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of Clause (b) (1), (2) or (3) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for such
purpose an amount in the currency or currencies in which the Securities of such
series are payable sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest (including any Additional Interest)
to the date of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
Section 4.2 Application of Trust Money.
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Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
Section 5.1 Events of Default.
"Event of Default," wherever used herein with respect to the Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension Period); or
(b) default in the payment of the principal of (or premium, if any, on)
any Security of that series at its Maturity, upon redemption by declaration or
otherwise; or
(c) default in the performance, or breach, in any material respect, of any
covenant of the Company in this Indenture (other than a covenant, a default in
the performance of which is elsewhere in this Section 5.1 specifically dealt
with), and continuance of such default or breach for a period of 90 days after
there has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied; or
(d) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property or ordering
the winding up or liquidation of
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its affairs, and the continuance of any such decree or order unstayed and in
effect for a period of 90 consecutive days; or
(e) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit for creditors, or the admission by
it in writing of its inability to pay its debts generally as they become due and
its willingness to be adjudicated a bankrupt, or the taking of corporate action
by the Company in furtherance of any such action; or
(f) any other Event of Default provided with respect to Securities of that
series.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
5.1(4) or 5.1(5)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all the Securities of
that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided that, in the case of
the Securities of a series issued to a Glacier Trust, if, upon an Event of
Default, the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series fail to declare the principal of all
the Securities of that series to be immediately due and payable, the holders of
at least 25% in aggregate liquidation amount of the corresponding series of
Preferred Securities then outstanding shall have such right by a notice in
writing to the Company and the Trustee; and upon any such declaration such
principal amount (or specified portion thereof) of and the accrued interest
(including any Additional Interest) on all the Securities of such series shall
become immediately due and payable. Payment of principal and interest (including
any Additional Interest) on such Securities shall remain subordinated to the
extent provided in Article XIII notwithstanding that such amount shall become
immediately due and payable as herein provided. If an Event of Default specified
in Section 5.1(4) or 5.1(5) with respect to Securities of any series at the time
Outstanding occurs, the principal amount of all the Securities of that series
(or, if the Securities of that series are Discount Securities, such portion of
the principal amount of such Securities as may be specified by the terms of that
series) shall automatically, and without any declaration or other action on the
part of the Trustee or any Holder, become immediately due and payable.
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At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
(i) all overdue installments of interest (including any Additional
Interest) on all Securities of that series,
(ii) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of acceleration
and interest thereon at the rate borne by the Securities, and
(iii) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel; and
(b) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which has
become due solely by such acceleration, have been cured or waived as provided in
Section 5.13.
In the case of Securities of a series issued to a Glacier Trust, the
holders of a majority in aggregate Liquidation Amount (as defined in the Trust
Agreement under which such Glacier Trust is formed) of the related series of
Preferred Securities issued by such Glacier Trust shall also have the right to
rescind and annul such declaration and its consequences by written notice to the
Company and the Trustee subject to the satisfaction of the conditions set forth
in Clauses (1) and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
(a) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
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the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(A) the Trustee (irrespective of whether the principal of the Securities
of any series shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal (and premium, if
any) or interest (including any Additional Interest)) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing and
unpaid in respect to the Securities and to file such other papers or documents
as may be necessary or advisable and to take any and all actions as are
authorized under the Trust Indenture Act in order to have the claims of the
Holders and any predecessor to the Trustee under Section 6.7 allowed in any such
judicial proceedings; and
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2) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same in accordance with Section 5.6; and
(B) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
Section 5.5 Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing the Trustee and any predecessor Trustee
under Section 6.7, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
Section 5.6 Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due and
unpaid upon such series of Securities for principal (and premium, if any) and
interest (including any Additional Interest), in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and
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payable on such series of Securities for principal (and premium, if any) and
interest (including any Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section 5.7 Limitation on Suits.
No Holder of any Securities of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or for the
appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request:
(d) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
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Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7)
interest (including any Additional Interest) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder. In the case of Securities of a series issued to a Glacier Trust, any
holder of the corresponding series of Preferred Securities issued by such
Glacier Trust shall have the right, upon the occurrence of an Event of Default
described in Section 5.1(1) or 5.1(2), to institute a suit directly against the
Company for enforcement of payment to such holder of principal of (premium, if
any) and (subject to Section 3.7) interest (including any Additional Interest)
on the Securities having a principal amount equal to the aggregate Liquidation
Amount (as defined in the Trust Agreement under which such Glacier Trust is
formed) of such Preferred Securities of the corresponding series held by such
holder.
Section 5.9 Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee, such Holder or such holder of
Preferred Securities, then and in every such case the Company, the Trustee, the
Holders and such holder of Preferred Securities shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, the Holders and the holders of Preferred Securities shall continue as
though no such proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.6, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Preferred Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Preferred
Securities, as the case may be.
Section 5.12 Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that:
(a) such direction shall not be in conflict with any rule of law or with
this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, determine that the proceeding so directed
would be unjustly prejudicial to the Holders not joining in any such direction
or would involve the Trustee in personal liability.
Section 5.13 Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series and, in the case of any Securities of a
series issued to a Glacier Trust, the holders of Preferred Securities issued by
such Glacier Trust may waive any past default hereunder and its consequences
with respect to such series except a default:
(a) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series, or
(b) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
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Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series or, in the case of a waiver by holders of Preferred
Securities issued by such Glacier Trust, by all holders of Preferred Securities
issued by such Glacier Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
Section 5.15 Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE VI
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities.
(A) Except during the continuance of an Event of Default;
a) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture.
(B) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(C) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
a) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
Holders pursuant to Section 5.12 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture with respect
to the Securities of such series.
(D) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder,
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or in the exercise of any of its rights or powers, if there shall be reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(E) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
6.1.
Section 6.2 Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Securities
Register, notice of such default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest (including any Additional
Interest) on any Security of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Securities of such series; and provided, further,
that, in the case of any default of the character specified in Section 5.1(3),
no such notice to Holders of Securities of such series shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.
Section 6.3 Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(A) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(B) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(C) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
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(D) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(E) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(F) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(G) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 6.4 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
Section 6.5 May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
Section 6.6 Money Held in Trust.
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Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
Section 6.7 Compensation and Reimbursement.
The Company agrees
(a) to pay to the Trustee from time to time compensation for all services
rendered by it hereunder in such amounts as the Company and the Trustee shall
agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense (including the reasonable compensation and the
expenses and disbursements of its agents and counsel) incurred without
negligence or bad faith, arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. This indemnification shall survive the termination of this
Agreement.
To secure the Company's payment obligations in this Section 6.7, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such lien
shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor statute.
Section 6.8 Disqualification; Conflicting Interests.
The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of said Section 301(b).
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Section 6.9 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
(A) a corporation organized and doing business under the laws of the United
States of America or of any State or Territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority, or
(B) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section 6.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
6.9, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article VI. Neither the Company nor any Person directly or
indirectly controlling, controlled by or under common control with the Company
shall serve as Trustee for the Securities of any series issued hereunder.
Section 6.10 Resignation and Removal; Appointment of Successor.
(A) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(B) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(C) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
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(D) If at any time:
a) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by any Holder who has been a bona fide Holder
of a Security for at least six months, or
b) the Trustee shall cease to be eligible under Section 6.9 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
c) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to all Securities, or (ii)
subject to Section 5.14, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(E) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee with respect to the Securities of
that or those series. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and supersede
the successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(F) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities of such series as their names and addresses appear in the
Securities Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
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Section 6.11 Acceptance of Appointment by Successor.
(A) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(B) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(C) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) or (b) of this Section 6.11, as the case may be.
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(D) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article VI.
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VI, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
Section 6.13 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 6.14 Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any State or Territory or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section 6.14 the combined capital and surplus of such
Authenticating Agent shall be deemed to be its
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combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 6.14, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 6.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 1.6 to all Holders
of Securities of the series with respect to which such Authenticating Agent will
serve. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provision of this Section 6.14.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.14, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment with respect to one or more series is made pursuant to
this Section 6.14, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
[INSERT NAME OF TRUSTEE]
As Trustee
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By: __________________________________
As Authenticating Agent
By: __________________________________
Authorized Officer
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(A) semi-annually, not more than 15 days after January 15 and July 15 in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of January 1 and July 1 of such year, and
(B) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Securities Registrar.
Section 7.2 Preservation of Information, Communications to Holders.
(A) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(B) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.
(C) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 7.3 Reports by Trustee.
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(A) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(B) Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 15 in each calendar year,
commencing with the first July 15 after the first issuance of Securities under
this Indenture.
(C) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any stock exchange.
Section 7.4 Reports by Company.
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall continue to file with the Commission and provide the
Trustee with the annual reports and the information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of Trust Indenture Act Section
314(a).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(a) in case the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the
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Company substantially as an entirety shall be a corporation, partnership or
trust organized and existing under the laws of the United States of America or
any State or the District of Columbia, and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest (including any Additional Interest) on all
the Securities and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(c) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and any such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee, subject to Section 6.1,
may rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
Section 8.2 Successor Corporation Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; and in the event of any such
conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication pursuant to such provisions and
any Securities which such successor Person thereafter shall cause to be signed
and delivered to the Trustee on its behalf for the purpose pursuant to such
provisions. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Securities had been issued at the date of the execution hereof.
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In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
provided, however, that the form and terms of Securities of any series may be
established by a Board Resolution, as set forth in the Officers' Certificate
delivered to the Trustee pursuant to Section 3.1, without entering into a
supplemental indenture for all purposes hereunder, for any of the following
purposes:
(a) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(b) to convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or to surrender any right or power herein conferred upon the
Company; or
(c) to establish the form or terms of Securities of any series as permitted
by Sections 2.1 or 3.1; or
(d) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are
expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(e) to add any additional Events of Default for the benefit of the Holders
of all or any series of Securities (and if such additional Events of Default are
to be for the benefit of less than all series of Securities, stating that such
additional Events of Default are expressly being included solely for the benefit
of such series); or
(f) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such provision;
or
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(g) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (g) shall not
adversely affect the interest of the Holders of Securities of any series in any
material respect or, in the case of the Securities of a series issued to a
Glacier Trust and for so long as any of the corresponding series of Preferred
Securities issued by such Glacier Trust shall remain outstanding, the holders of
such Preferred Securities; or
(h) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.11(b); or
(i) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
Section 9.2 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(a) except to the extent permitted by Sections 3.11 or 3.14 or as otherwise
specified as contemplated by Section 2.1 or Section 3.1 with respect to the
deferral of the payment of interest on the Securities of any series or the
shortening of the Stated Maturity of the Securities of any series, change the
Stated Maturity of the principal of, or any installment of interest (including
any Additional Interest) on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or reduce any premium payable upon the
redemption thereof, or reduce the amount of principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2, or change the place of payment where, or the
coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or
(b) reduce the percentage in principal amount of the Outstanding Securities
of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of
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this Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(c) modify any of the provisions of this Section, Section 5.13 or Section
10.5, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Security affected thereby; or
(d) modify the provisions in Article XIII of this Indenture with respect to
the subordination of Outstanding Securities of any series in a manner adverse to
the Holders thereof; provided, further, that, in the case of the Securities of a
series issued to a Glacier Trust, so long as any of the corresponding series of
Preferred Securities issued by such Glacier Trust remains outstanding, (i) no
such amendment shall be made that adversely affects the holders of such
Preferred Securities in any material respect, and no termination of this
Indenture shall occur, and no waiver of any Event of Default or compliance with
any covenant under this Indenture shall be effective, without the prior consent
of the holders of at least a majority of the aggregate liquidation preference of
such Preferred Securities then outstanding unless and until the principal (and
premium, if any) of the Securities of such series and all accrued and, subject
to Section 3.7, unpaid interest (including any Additional Interest) thereon have
been paid in full and (ii) no amendment shall be made to Section 5.8 of this
Indenture that would impair the rights of the holders of Preferred Securities
provided therein without the prior consent of the holders of each Preferred
Security then outstanding unless and until the principal (and premium, if any)
of the Securities of such series and all accrued and (subject to Section 3.7)
unpaid interest (including any Additional Interest) thereon have been paid in
full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or Preferred Securities,
or which modifies the rights of the Holders of Securities or holders of
Preferred Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities or holders of Preferred Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
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Section 9.3 Execution of Supplemental Indentures.
In executing or accepting the additional series of Securities created by
any supplemental indenture permitted by this Article or the modifications
thereby of any series of Securities previously created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture, and that all conditions precedent have been
complied with. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX or
delivery to the Trustee of the Officers' Certificate pursuant to Section 3.1
hereof (which Officers' Certificate shall have the effect of a supplemental
indenture for all purposes hereunder), this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article IX and every
Officers' Certificate delivered to the trustee pursuant to Section 3.1 hereof
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX or delivery to the Trustee of
the Officers' Certificate pursuant to Section 3.1 hereof (which Officers'
Certificate shall have the effect of a supplemental indenture for all purposes
hereunder) may, and shall if required by the Company, bear a notation in form
approved by the Company as to any matter provided for in such supplemental
indenture or such Officers' Certificate. If the Company shall so determine, new
Securities of any series so modified as to conform, in the opinion of the
Company, to any such supplemental indenture or such Officers's Certificate may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
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ARTICLE X
COVENANTS
Section 10.1 Payment of Principal Premium and Interest.
The Company covenants and agrees for the benefit of each series of
securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of such Securities and this Indenture.
Section 10.2 Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment and an office or agency where Securities of that
series may be surrendered for transfer or exchange and where notices and demands
to or upon the Company in respect of the Securities of that series and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation and any change in
the location of any such office or agency.
Section 10.3 Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m. California time on each due date of the principal of or interest
on any Securities, deposit with a
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Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal and premium (if any) or interest, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 10.3, that such
Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(d) comply with the provisions of the Trust Indenture Act applicable to it
as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request to the Company,
or (if then held by the Company) shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the state of
California, notice that such money remains unclaimed and
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that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 10.4 Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each calendar year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company shall
be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. For the purpose of this Section 10.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
Section 10.5 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition provided pursuant to Sections 3.1, 9.1(3), or 9.1(4) with respect
to the Securities of any series, if before or after the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
Section 10.6 Additional Sums.
In the case of the Securities of a series issued to a Glacier Trust, so
long as no Event of Default has occurred and is continuing and except as
otherwise specified as contemplated by Section 2.1 or Section 3.1, in the event
that (i) such Glacier Trust is the Holder of all of the Outstanding Securities
of such series, (ii) a Tax Event in respect of such Glacier Trust shall have
occurred and be continuing and (iii) the Company shall not have (A) redeemed the
Securities of such series pursuant to Section 11.7 or (B) terminated such
Glacier Trust pursuant to Section 9.2(b) of the related Trust Agreement, the
Company shall pay to such Glacier Trust (and its permitted successors or assigns
under the related Trust Agreement) for so long as such Glacier Trust (or its
permitted successor or assignee) is the registered holder of any Securities of
such series, such additional amounts as may be necessary in order that the
amount of Distributions (including any Additional Amounts (as defined in such
Trust Agreement)) then due and payable by such Glacier Trust on the related
Preferred Securities and Common Securities that at any time remain outstanding
in accordance with the terms thereof shall not be reduced as a result of any
Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the
Securities there is a reference in any context to the payment of principal of or
interest on the Securities, such mention shall be deemed to include mention of
the payments of the Additional Sums provided
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for in this paragraph to the extent that, in such context, Additional Sums are,
were or would be payable in respect thereof pursuant to the provisions of this
paragraph and express mention of the payment of Additional Sums (if applicable)
in any provisions hereof shall not be construed as excluding Additional Sums in
those provisions hereof where such express mention is not made; provided,
however, that the deferral of the payment of interest pursuant to Section 3.11
or the Securities shall not defer the payment of any Additional Sums that may be
due and payable.
Section 10.7 Additional Covenants.
If at any time (i) there shall have occurred an Event of Default, (ii) the
Company shall have given notice of its election of an Extension Period as
provided herein and shall not have rescinded such notice, or such Extension
Period, or any extension thereof, shall be continuing, or (iii) while Securities
are held by a Glacier Trust, the Company shall be in default with respect to its
payment of any obligation under the Guarantee, then the Company covenants and
agrees with each Holder of Securities of any series that it shall not, and it
shall not permit any Subsidiary of the Company to, (a) declare or pay any
dividends or distributions on, or redeem purchase, acquire or make a liquidation
payment with respect to, any shares of the Company's capital stock (which
includes common and preferred stock), (b) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company (including Securities other than the Securities of
such series) that rank pari passu in all respects with or junior in interest to
the Securities of such series or make any guarantee payments with respect to any
guarantee by the Company of debt securities of any subsidiary of the Company if
such guarantee ranks pari passu in all respects with or junior in interest to
the Securities (other than (i) dividends or distributions in capital stock
(which includes common and preferred stock), (ii) any declaration of a dividend
in connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan or the redemption or repurchase of any
such rights pursuant thereto, (iii) payments under the Glacier Guarantee related
to the Preferred Securities issued by the Glacier Trust holding Securities of
such series, and (iv) purchases of Common Stock related to the issuance of
Common Stock or rights under any of the Company's benefit plans for its
directors, officers, consultants or employees or (c) redeem, purchase or acquire
less than all of the Securities of such series or any of the Preferred
Securities if at such time (i) there shall have occurred an Event of Default
with respect to the Securities of such series, (ii) if the Securities of such
series are held by a Glacier Trust, the Company shall be in default with respect
to its payment of any obligations under the Glacier Guarantee relating to the
Preferred Securities issued by such Glacier Trust or, (iii) the Company shall
have given notice of its election to begin an Extension Period with respect to
the Securities of such series as provided herein and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing.
The Company also covenants with each Holder of Securities of a series
issued to a Glacier Trust (i) to maintain directly or indirectly 100% ownership
of the Common Securities of such Glacier Trust; provided, however, that any
permitted successor of the Company hereunder may succeed to the Company's
ownership of such Common Securities, (ii) not to voluntarily
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terminate, wind-up or liquidate such Glacier Trust, except (a) in connection
with a distribution of the Securities of such series to the holders of Trust
Securities in liquidation of such Glacier Trust or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the related Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of such Trust Agreement, to cause such Glacier Trust to remain
classified as a grantor trust and not an association taxable as a corporation
for United States federal income tax purposes.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Applicability of This Article.
Redemption of Securities of any series (whether by operation of a sinking
fund or otherwise) as permitted or required by any form of Security issued
pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of such series shall be
subject to partial redemption only in the amount of $25 or, in the case of the
Securities of a series issued to a Glacier Trust, $25, or integral multiples of
$25 in excess thereof.
Section 11.2 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of less than all of the Securities of any particular series and
having the same terms, the Company shall, not less than 30 nor more than 60 days
prior to the Redemption Date (unless a shorter notice shall be satisfactory to
the Trustee), notify the Trustee of such date and of the principal amount of
Securities of that series to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities, the Company shall furnish the Trustee
with an Officers' Certificate and an Opinion of Counsel evidencing compliance
with such restriction.
Section 11.3 Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and
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appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security of such series, provided that the
portion of the principal amount of any Security not redeemed shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed. If the
Company shall so direct, Securities registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
Section 11.4 Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall state:
(A) the Redemption Date;
(B) the Redemption Price;
(C) if less than all Outstanding Securities of such particular series
and having the same terms are to be redeemed, the identification (and, in the
case of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;
(D) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(E) the place or places where such Securities are to be surrendered
for payment of the Redemption Price; and
(F) that the redemption is for a sinking fund, if such is the case.
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Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
Section 11.5 Deposit of Redemption Price.
Prior to 12:00 noon, Eastern time on the Redemption Date specified in the
notice of redemption given as provided in Section 11.4, the Company will deposit
with the Trustee or with one or more Paying Agents (or if the Company is acting
as its own Paying Agent, the Company will segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and any accrued interest (including Additional Interest) on, all the
Securities which are to be redeemed on that date.
Section 11.6 Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4, the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the applicable Redemption Price. On presentation and surrender
of such Securities at a Place of Payment in said notice specified, the said
securities or the specified portions thereof shall be paid and redeemed by the
Company at the applicable Redemption Price, together with accrued interest
(including any Additional Interest) to the Redemption Date; provided, however,
that, unless otherwise specified as contemplated by Section 3.1, installments of
interest whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.7.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Security or Securities of the same series, of
authorized denominations, in aggregate principal amount equal to the portion of
the Security not redeemed so presented and having the same Original Issue Date,
Stated Maturity and terms. If a Global Security is so surrendered, such new
Security will also be a new Global Security.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 11.7 Right of Redemption of Securities Initially Issued to a Glacier
Trust.
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In the case of the Securities of a series initially issued to a Glacier
Trust, except as otherwise specified as contemplated by Section 3.1, the
Company, at its option, may redeem such Securities (i) on or after the date five
years after the Original Issue Date of such Securities, in whole at any time or
in part from time to time, or (ii) upon the occurrence and during the
continuation of a Tax Event or Investment Company Event, at any time within 90
days following the occurrence of such Tax Event or Investment Company Event in
respect of such Glacier Trust, in whole (but not in part), in each case at a
Redemption Price equal to 100% of the principal amount thereof.
ARTICLE XII
SINKING FUNDS
Section 12.1 Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any sinking fund payment in excess of such minimum amount which is
permitted to be made by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment". If provided for by the terms
of any Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.2. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of such Securities.
Section 12.2 Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund payment with
respect to any Securities of a series in cash, the Company may at its option, at
any time no more than 16 months and no less than 30 days prior to the date on
which such sinking fund payment is due, deliver to the Trustee Securities of
such series (together with the unmatured coupons, if any, appertaining thereto)
theretofore purchased or otherwise acquired by the Company, except Securities of
such series that have been redeemed through the application of mandatory or
optional sinking fund payments pursuant to the terms of the Securities of such
series, accompanied by a Company Order instructing the Trustee to credit such
obligations and stating that the Securities of such series were originally
issued by the Company by way of bona fide sale or other negotiation for value;
provided that the Securities to be so credited have not been previously so
credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the redemption price for such Securities, as
specified in the Securities
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so to be redeemed, for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.
Section 12.3 Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which the
Securities of such series are payable (except as provided pursuant to Section
3.1) and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 12.2 and will also deliver to the
Trustee any Securities to be so delivered. Such Officers' Certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date. In the case of the failure of the Company
to deliver such Officers' Certificate (or, as required by this Indenture, the
Securities and coupons, if any, specified in such Officers' Certificate), the
sinking fund payment due on the succeeding sinking fund payment date for such
series shall be paid entirely in cash and shall be sufficient to redeem the
principal amount of the Securities of such series subject to a mandatory sinking
fund payment without the right to deliver or credit securities as provided in
Section 12.2 and without the right to make the optional sinking fund payment
with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with respect
to the Securities of any particular series shall be applied by the Trustee (or
by the Company if the Company is acting as its own Paying Agent) on the sinking
fund payment date on which such payment is made (or, if such payment is made
before a sinking fund payment date, on the sinking fund payment date immediately
following the date of such payment) to the redemption of Securities of such
series at the Redemption Price specified in such Securities with respect to the
sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee
(or, if the Company is acting as its own Paying Agent, segregated and held in
trust by the Company as provided in Section 10.3) for such series and together
with such payment (or such amount so segregated) shall be applied in accordance
with the provisions of this Section 12.3. Any and all sinking fund moneys with
respect to the Securities of any particular series held by the Trustee (or if
the Company is acting as its own Paying Agent, segregated and held in trust as
provided in Section 10.3) on the last sinking fund payment date with respect to
Securities of such series and not held for the payment or redemption of
particular Securities of such series shall be applied by the Trustee (or by the
Company if the Company is acting as its own Paying Agent), together with other
moneys, if necessary, to be deposited (or segregated) sufficient for the
purpose, to the payment of the principal of the Securities of such series at
Maturity. The Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 11.3 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 11.4. Such notice having been
duly given, the
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redemption of such Securities shall be made upon the terms and in the manner
stated in Section 11.6. On or before each sinking fund payment date, the
Company shall pay to the Trustee (or, if the Company is acting as its own Paying
Agent, the Company shall segregate and hold in trust as provided in Section
10.3) in cash a sum in the currency in which Securities of such series are
payable (except as provided pursuant to Section 3.1) equal to the principal and
any interest accrued to the Redemption Date for Securities or portions thereof
to be redeemed on such sinking fund payment date pursuant to this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a series
with sinking fund moneys or mail any notice of redemption of Securities of such
series by operation of the sinking fund for such series during the continuance
of a default in payment of interest, if any, on any Securities of such series or
of any Event of Default (other than an Event of Default occurring as a
consequence of this paragraph) with respect to the Securities of such series,
except that if the notice of redemption shall have been provided in accordance
with the provisions hereof, the Trustee (or the Company, if the Company is then
acting as its own Paying Agent) shall redeem such Securities if cash sufficient
for that purpose shall be deposited with the Trustee (or segregated by the
Company) for that purpose in accordance with the terms of this Article XII.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such default or
Event of Default, be held as security for the payment of the Securities and
coupons, if any, of such series; provided, however, that in case such default or
Event of Default shall have been cured or waived herein, such moneys shall
thereafter be applied on the next sinking fund payment date for the Securities
of such series on which such moneys may be applied pursuant to the provisions of
this Section 12.3.
ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1 Securities Subordinate to Senior Debt and Subordinated Debt.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article XIII, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
amounts then due and payable in respect of all Senior Debt and Subordinated
Debt.
Section 13.2 Payment Over of Proceeds Upon Dissolution, Etc.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), then the
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holders of Senior Debt and Subordinated Debt shall be entitled to receive
payment in full of Allocable Amounts of such Senior Debt and Subordinated Debt,
or provision shall be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt and
Subordinated Debt, before the Holders of the Securities are entitled to receive
or retain any payment or distribution of any kind or character, whether in cash,
property or securities (including any payment or distribution which may be
payable or deliverable by reason of the payment of any other Debt of the Company
subordinated to the payment of the Securities, such payment or distribution
being hereinafter referred to as a "Junior Subordinated Payment"), on account of
principal of (or premium, if any) or interest (including any Additional
Interest) on the Securities or on account of the purchase or other acquisition
of Securities by the Company or any Subsidiary and to that end the holders of
Senior Debt and Subordinated Debt shall be entitled to receive, for application
to the payment thereof, any payment or distribution of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, which may be payable or deliverable in respect of the Securities in any
such Proceeding.
In the event that, notwithstanding the foregoing provisions of this Section
13.2, the Trustee or the Holder of any Security shall have received any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, including any Junior Subordinated Payment, before
all Allocable Amounts of all Senior Debt and Subordinated Debt are paid in full
or payment thereof is provided for in cash or cash equivalents or otherwise in a
manner satisfactory to the holders of Senior Debt and Subordinated Debt, and if
such fact shall, at or prior to the time of such payment or distribution, have
been made known to the Trustee or, as the case may be, such Holder, then and in
such event such payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Allocable Amounts of
all Senior Debt and Subordinated Debt remaining unpaid, to the extent necessary
to pay all Allocable Amounts of all Senior Debt and Subordinated Debt in full,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt and Subordinated Debt.
For purposes of this Article XIII only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which securities are subordinated in
right of payment to all then outstanding Senior Debt and Subordinated Debt to
substantially the same extent as the Securities are so subordinated as provided
in this Article XIII. The consolidation of the Company with, or the merger of
the Company into, another Person or the liquidation or dissolution of the
Company following the sale of all or substantially all of its properties and
assets as an entirety to another Person upon the terms and conditions set forth
in Article VIII shall not be deemed a Proceeding for the purposes of this
Section 13.2 if the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by sale such properties and
assets as an entirety, as the case may be, shall, as a part of such
consolidation, merger, or sale comply with the conditions set forth in Article
VIII.
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Section 13.3 Prior Payment to Senior Debt and Subordinated Debt Upon
Acceleration of Securities.
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of the Senior Debt and
Subordinated Debt outstanding at the time such Securities so become due and
payable shall be entitled to receive payment in full of all Allocable Amounts
due on or in respect of such Senior Debt and Subordinated Debt (including any
amounts due upon acceleration), or provision shall be made for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt and Subordinated Debt, before the Holders of the Securities are
entitled to receive any payment or distribution of any kind or character,
whether in cash, properties or securities (including any Junior Subordinated
Payment) by the Company on account of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Securities or on account of
the purchase or other acquisition of Securities by the Company or any
Subsidiary; provided, however, that nothing in this Section 13.3 shall prevent
the satisfaction of any sinking fund payment in accordance with this Indenture
or as otherwise specified as contemplated by Section 3.1 for the Securities of
any series by delivering and crediting pursuant to Section 12.2 or as otherwise
specified as contemplated by Section 3.1 for the Securities of any series
Securities which have been acquired (upon redemption or otherwise) prior to such
declaration of acceleration.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.3, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section 13.3 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section 13.4 No Payment When Senior Debt and Subordinated Debt in Default.
(a) In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on any Senior Debt and
Subordinated Debt, or in the event that any event of default with respect to any
Senior Debt and Subordinated Debt shall have occurred and be continuing and
shall have resulted in such Senior Debt and Subordinated Debt becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, unless and until such event of default shall have been
cured or waived or shall have ceased to exist and such acceleration shall have
been rescinded or annulled, or (b) in the event any judicial proceeding shall be
pending with respect to any such default in payment or such event or default,
then no payment or distribution of any kind or character, whether in cash,
properties or securities (including any Junior Subordinated Payment) shall be
made by the Company on account of principal of (or premium, if any) or interest
(including any Additional Interest), if any, on the Securities or on account of
the purchase or other acquisition of Securities
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by the Company or any Subsidiary, in each case unless and until all Allocable
Amounts of such Senior Debt and Subordinated Debt are paid in full; provided,
however, that nothing in this Section 13.4 shall prevent the satisfaction of any
sinking fund payment in accordance with this Indenture or as otherwise specified
as contemplated by Section 3.1 for the Securities of any series by delivering
and crediting pursuant to Section 12.2 or as otherwise specified as contemplated
by Section 3.1 for the Securities of any series Securities which have been
acquired (upon redemption or otherwise) prior to such default in payment or
event of default.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.4, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section 13.4 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section 13.5 Payment Permitted If No Default.
Nothing contained in this Article XIII or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any Proceeding referred to in Section 13.2 or under the
conditions described in Sections 13.3 and 13.4, from making payments at any time
of principal of (and premium, if any) or interest (including Additional
Interest) on the Securities, or (b) the application by the Trustee of any money
deposited with it hereunder to the payment of or on account of the principal of
(and premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article XIII.
Section 13.6 Subrogation to Rights of Holders of Senior Debt and Subordinated
Debt.
Subject to the payment in full of all amounts due or to become due on all
Senior Debt and Subordinated Debt, or the provision for such payment in cash or
cash equivalents or otherwise in a manner satisfactory to the holders of Senior
Debt and Subordinated Debt, the Holders of the Securities shall be subrogated to
the extent of the payments or distributions made to the holders of such Senior
Debt and Subordinated Debt pursuant to the provisions of this Article XIII
(equally and ratably with the holders of all indebtedness of the Company which
by its express terms is subordinated to Senior Debt and Subordinated Debt of the
Company to substantially the same extent as the Securities are subordinated to
the Senior Debt and Subordinated Debt and is entitled to like rights of
subrogation by reason of any payments or distributions made to holders of such
Senior Debt and Subordinated Debt) to the rights of the holders of such Senior
Debt and Subordinated Debt to receive payments and distributions of cash,
property and securities applicable to the Senior Debt and Subordinated Debt
until the principal
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of (and premium, if any) and interest on the Securities shall be paid in full.
For purposes of such subrogation, no payments or distributions to the holders of
the Senior Debt and Subordinated Debt of any cash, property or securities to
which the Holders of the Securities or the Trustee would be entitled except for
the provisions of this Article, and no payments over pursuant to the provisions
of this Article XIII to the holders of Senior Debt and Subordinated Debt by
Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Debt and Subordinated Debt, and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt and Subordinated Debt.
Section 13.7 Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Debt and Subordinated Debt on the other hand.
Nothing contained in this Article XIII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Company and the
Holders of the Securities, the obligations of the Company, which are absolute
and unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior Debt and Subordinated Debt; or (c) prevent
the Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture including, without
limitation, filing and voting claims in any Proceeding, subject to the rights,
if any, under this Article XIII of the holders of Senior Debt and Subordinated
Debt to receive cash, property and securities otherwise payable or deliverable
to the Trustee or such Holder.
Section 13.8 Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article XIII and appoints the Trustee his or her attorney-in-fact for any and
all such purposes.
Section 13.9 No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt and
Subordinated Debt to enforce subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder may
have or be otherwise charged with.
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Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Debt and Subordinated Debt may, at any time and
from to time, without the consent of or notice to the Trustee or the Holders of
the Securities, without incurring responsibility to the Holders of the
Securities and without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the Securities to the
holders of Senior Debt and Subordinated Debt, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Debt and Subordinated Debt, or
otherwise amend or supplement in any manner Senior Debt and Subordinated Debt or
any instrument evidencing the same or any agreement under which Senior Debt and
Subordinated Debt is outstanding; (ii) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing Senior Debt and
Subordinated Debt; (iii) release any Person liable in any manner for the
collection of Senior Debt and Subordinated Debt; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
Section 13.10 Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article XIII or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt and Subordinated Debt or from any trustee,
agent or representative therefor; provided, however, that if the Trustee shall
not have received the notice provided for in this Section 13.10 at least two
Business Days prior to the date upon which by the terms hereof any monies may
become payable for any purpose (including, without limitation, the payment of
the principal of (and premium, if any) or interest (including any Additional
Interest) on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
monies and to apply the same to the purpose for which they were received and
shall not be affected by any notice to the contrary which may be received by it
within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Debt and Subordinated Debt (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Debt and
Subordinated Debt (or a trustee therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Debt and Subordinated Debt to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt and Subordinated Debt held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence
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is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 13.11 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article XIII, the Trustee, subject to the provisions of Section 6.1, and
the Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt and
Subordinated Debt and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XIII.
Section 13.12 Trustee Not Fiduciary for Holders of Senior Debt and Subordinated
Debt.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Debt and Subordinated
Debt and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company or
to any other Person cash, property or securities to which any holders of Senior
Debt and Subordinated Debt shall be entitled by virtue of this Article or
otherwise.
Section 13.13 Rights of Trustee as Holder of Senior Debt and Subordinated Debt;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XIII with respect to any Senior Debt and Subordinated
Debt which may at any time be held by it, to the same extent as any other holder
of Senior Debt and Subordinated Debt, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Section 13.14 Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article XIII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XIII in addition to or in place of the Trustee.
Section 13.15 Certain Conversions or Exchanges Deemed Payment.
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For the purposes of this Article XIII only, (a) the issuance and delivery
of junior securities upon conversion or exchange of Securities shall not be
deemed to constitute a payment or distribution on account of the principal of
(or premium, if any) or interest (including any Additional Interest) on
Securities or on account of the purchase or other acquisition of Securities, and
(b) the payment, issuance or delivery of cash, property or securities (other
than junior securities) upon conversion or exchange of a Security shall be
deemed to constitute payment on account of the principal of such security. For
the purposes of this Section 13.15, the term "junior securities" means (i)
shares of any stock of any class of the Company and (ii) securities of the
Company which are subordinated in right of payment to all Senior Debt and
Subordinated Debt which may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article XIII.
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
GLACIER WATER SERVICES, INC.
By: _______________________________
Its:_______________________________
Attest:
By: _______________________________
Its:_____________________________
WILMINGTON TRUST COMPANY,
as Trustee
By:________________________________
Its:___________________________
Attest:
By: _______________________________
Its:_____________________________
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STATE OF CALIFORNIA )
) SS.
COUNTY OF SAN DIEGO )
On the _____ day of ________________, 1998 before me personally came
______________ to me known, who, being by me duly sworn, did depose and say that
he is ____________ of GLACIER WATER SERVICES, INC., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; and that he signed his name thereto by authority of the Board of Directors
of said corporation.
[SEAL] _______________________________
Notary Public
STATE OF DELAWARE )
) SS.
COUNTY OF )
On the _____ day of ________________, 1998 before me personally came
______________ to me known, who, being by me duly sworn, did depose and say that
he is ____________ of WILMINGTON TRUST COMPANY one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
and that he signed his name thereto by authority of the Board of Directors of
said corporation.
[SEAL] _______________________________
Notary Public
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EXHIBIT 4.2
GLACIER WATER SERVICES, INC.
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE __________, 2028
OFFICERS' CERTIFICATE AND COMPANY ORDER
---------------------------------------
Pursuant to the Indenture dated as of __________, 1998 (the "Indenture"),
between Glacier Water Services, Inc., a Delaware corporation (the "Company") and
Wilmington Trust Company, as Debenture Trustee (the "Debenture Trustee") and
resolutions adopted by the Pricing Committee of the Company's Board of Directors
on _________, 1998; this Officers' Certificate is being delivered to the
Debenture Trustee to establish the terms of one series of securities (the
"Securities") in accordance with Section 3.1 of the Indenture, to establish the
form of the Securities of such series in accordance with Section 2.1 of the
Indenture, to request the authentication and delivery of the Securities of such
series pursuant to Section 3.3 of the Indenture and to comply with the
provisions of Section 1.2 of the Indenture. This Officers' Certificate shall be
treated for all purposes under the Indenture as a supplemental indenture
thereto.
All conditions precedent provided for in the Indenture relating to the
establishment of (i) a series of Securities and (ii) the form of Securities of
such series have been complied with.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Indenture.
I. Establishment of Series of Securities pursuant to Section 3.1 of the
--------------------------------------------------------------------
Indenture.
- ---------
There are hereby established pursuant to Section 3.1 of the Indenture a
series of Securities which shall have the following terms:
A. The Securities of such series shall bear the title "_____% Junior
Subordinated Deferrable Interest Debentures Due ____________, 2028."
B. The aggregate principal amount of such series of Securities to be
issued pursuant to this Officers' Certificate and Company Order shall be limited
to the sum of (i) $67,010,300 (except for Securities authenticated and delivered
upon registration of, transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7 of the
Indenture and except for any Securities which, pursuant to Section 3.3 of the
Indenture, are deemed never to have been authenticated and delivered
thereunder).
C. The date on which the principal of the Securities is due and
payable shall be ______________, 2028.
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D. The Securities shall bear interest at the rate of _____% per
annum (based upon a 360-day year of twelve 30-day months), compounded quarterly,
from and including the date of original issuance or from and including the most
recent Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, payable monthly in arrears on the 15th day of each
calendar month of each year (each, an "Interest Payment Date"), commencing
________, 1998, until the principal thereof is paid or made available for
payment. The Business Day next preceding an Interest Payment Date shall be the
"Regular Record Date" for the interest payable on such Interest Payment Date.
Accrued interest that is not paid on such applicable Interest Payment Date will
bear additional interest on the amount thereof (to the extent permitted by law)
at a rate per annum of ______% thereof compounded quarterly.
In addition, so long as no Event of Default with respect to the Securities
has occurred or is continuing, the Company has the right under the Indenture at
any time during the term of such Securities to defer the payment of interest at
any time or from time to time for a period not exceeding 60 consecutive monthly
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity. At the end of such Extension Period, the
Company must pay all interest then accrued and unpaid (together with interest
thereon at the annual rate of _____%, compounded quarterly, to the extent
permitted by applicable law).
E. Principal of (and premium, if any) and interest on the Securities
will be payable, and, except as provided in Section 3.5 of the Indenture with
respect to a Global Security (as defined below), the transfer of the Securities
will be registrable and Securities (except as provided in paragraph (Q) hereof)
will be exchangeable for Securities bearing identical terms and provisions at
the corporate trust office of Wilmington Trust Company in the City of
Wilmington, Delaware.
F. The Securities will be redeemable in whole at any time and in
part from time to time, at the option of the Company at any time on or after
__________, 2003, at a redemption price equal to the accrued and unpaid interest
on the Securities so redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof.
In addition, upon the occurrence of a Tax Event or an Investment Company
Event (as each such term is defined below) the Company may, at its option,
prepay the Securities in whole (but not in part) at any time within 90 days of
the occurrence of such Tax Event or Investment Company Event, at a redemption
price equal to the accrued and unpaid interest on the Securities so redeemed to
the date fixed for redemption, plus 100% of the principal amount thereof.
"Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or
2
<PAGE>
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the Preferred
Securities of the Trust, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date of such opinion, subject to
United States Federal income tax with respect to income received or accrued on
the Securities, (ii) interest payable by the Company on the Securities is not,
or within 90 days of the date of such opinion, will not be, deductible by the
Company, in whole or in part, for United States Federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Investment Company Event" means, in respect of the Trust, the receipt by
the Trust of an Opinion of Counsel, rendered by a law firm experienced in such
matters, to the extent that, as a result of a change in law or regulation or a
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, the Trust is or will
be considered an "investment company" that is required to be registered under
the 1940 Act, which change becomes effective on or after the date of original
issuance of the Preferred Securities of the Trust.
G. The Company shall not be obligated to redeem or purchase any
Securities pursuant to any sinking fund or analogous provisions or at the option
of the Holder.
H. The Securities will be issued only in fully registered form and
the authorized minimum denomination of the Securities shall be $25.00 and any
integral multiple of $25.00 in excess thereof.
I. The Securities shall be denominated, and payments of principal of
(and premium, if any) and interest on the Securities of such series will be
made, in United States dollars.
J. The Securities shall be subject to the Events of Default
specified in Section 5.1, paragraphs (1) through (5), of the Indenture.
K. The portion of the principal amount of the Securities which shall
be payable upon declaration of acceleration of maturity thereof shall not be
other than the principal amount thereof, provided, that, if such acceleration is
declared by the Holders of at least 25% in aggregate liquidation amount of the
Preferred Securities then outstanding, then, upon such declaration of
acceleration, the Securities which shall be payable shall be the principal
amount thereof plus accrued interest (including any Additional Interest).
L. The Securities will be issued in fully registered form, without
coupons. The Securities will not be issued in bearer form.
3
<PAGE>
M. The amount of payments of principal of and any premium or
interest on the Securities will not be determined with reference to an index.
N. The Securities shall not be issued in the form of a temporary
Global Security (as defined below).
O. The Securities will initially be in certificated form registered
in the name of the name of Wilmington Trust Company as Property Trustee for the
Trust (the "Certificated Securities"). The Securities may, in the sole
discretion of the Company, be deposited with, and on behalf of, The Depository
Trust Company, New York, New York, as Depositary, and will be represented by a
global security (a "Global Security") registered in the name of a nominee of the
Depositary. If and so long as the Depositary or its nominee is the registered
holder of any Global Security, the Depositary or its nominee, as the case may
be, will be considered the sole Holder of the Securities of such series
represented by such Global Security for all purposes under the Indenture and the
Securities. The Certificated Securities or the Global Securities, as the case
may be, shall bear no legends.
P. The Trustee shall be Paying Agent.
Q. The Securities will not be convertible into any other securities
or property of the Company. The Securities of any series may not be exchanged
for Securities of any other series.
R. The Trust Agreement, the Amended and Restated Trust Agreement and
the Guarantee Agreement are in the forms attached hereto as Exhibits A, B and C
respectively.
S. The Securities are subordinate and subject in right of payment to
the prior payment in full of all amounts then due and payable in respect of all
Senior Debt and Subordinated Debt, as provided in the Indenture.
T. The Securities shall have additional terms, which terms shall not
be inconsistent with the provisions of the Indenture.
II. Establishment of Forms of Securities Pursuant to Section 2.1 of
---------------------------------------------------------------
Indenture.
- ---------
It is hereby established pursuant to Section 2.1 of the Indenture that the
Securities shall be substantially in the form attached as Exhibit D hereto.
III. Order for the Authentication and Delivery of Securities Pursuant to
-------------------------------------------------------------------
Section 3.3 of the Indenture.
- ----------------------------
It is hereby ordered pursuant to Section 3.3 of the Indenture that the
Trustee authenticate, in the manner provided by the Indenture, Securities in the
aggregate principal amount of
4
<PAGE>
$67,010,300 registered in the name of Wilmington Trust Company, as Property
Trustee, which Securities have been heretofore duly executed by the proper
officers of the Company and delivered to you as provided in the Indenture, and
to deliver said authenticated Securities to Wilmington Trust Company or its
custodian on or before 9:30 a.m., Los Angeles time, on __________, 1998.
IV. Other Matters.
-------------
Attached as Exhibit E hereto are true and correct copies of resolutions
adopted by the Pricing Committee of the Board of Directors of the Company at a
meeting on _________, 1998. Attached as Exhibit F hereto are true and correct
copies of resolutions adopted by the Board of Directors of the Company at a
meeting on November ___, 1997, authorizing the issuance of the Securities. Such
resolutions have not been further amended, modified or rescinded and remain in
full force and effect; and such resolutions (together with this Officers'
Certificate) are the only resolutions or other action adopted by the Company's
Board of Directors or any committee thereof or by any Authorized Officers
relating to the offering and sale of the Securities.
The undersigned have read the pertinent sections of the Indenture including
the related definitions contained therein. The undersigned have examined the
resolutions adopted by the Board of Directors and the Pricing Committee of the
Board of Directors of the Company. In the opinion of the undersigned, the
undersigned have made such examination or investigation as is necessary to
enable the undersigned to express an informed opinion as to whether or not the
conditions precedent to the establishment of (i) a series of Securities, (ii)
the forms of such Securities and (iii) authentication of such series of
Securities, contained in the Indenture have been complied with. In the opinion
of the undersigned, such conditions have been complied with.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
___th day of ________ 1998.
Glacier Water Services, Inc.
By: _______________________________
Name: Jerry A. Gordon
Title: President and Chief
Operation Officer
By ________________________________
Name: Jerry R. Welch
Title: Chief Executive Officer
6
<PAGE>
EXHIBIT 4.4
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of November 13, 1997 (this "Trust
Agreement"), among Glacier Water Services, Inc., a Delaware corporation (the
"Depositor"), (ii) Wilmington Trust Company a Delaware banking corporation, as
trustee (the "Delaware Trustee"), and (iii) Jerry R. Welch, Jerry A. Gordon and
Brenda K. Foster, each an individual, as trustees (the "Administrative Trustees"
and, together with the Delaware Trustee, the "Trustees"). The Depositor and the
Trustees hereby agree as follows:
1. The trust created hereby (the "Trust") shall be known as "Glacier
Water Trust I" in which name the Trustees, or the Depositor to the extent
provided herein, may engage in the transactions contemplated hereby, make and
execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of Ten Dollars ($10.00). The Trustees hereby acknowledge
receipt of such amount in trust from the Depositor, which amount shall
constitute the initial trust estate. The Trustees hereby declare that they will
hold the trust estate in trust for the Depositor. It is the intention of the
parties hereto that the Trust created hereby constitute a business trust under
Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801, et seq.
(the "Business Trust Act"), and that this document constitutes the governing
instrument of the Trust. The parties hereto hereby ratify the Trustees' filing
of a Certificate of Trust with the Delaware Secretary of State under the name
"Glacier Water Trust I."
3. The Depositor and the Trustees will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as an exhibit to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Trust Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise.
4. The Depositor and the Trustees hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-2 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the registration
under the Securities Act of 1933, as amended, of the Trust Preferred Securities
of the Trust and possibly certain other securities and (b) if required, a
Registration Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto) relating to
the registration of the Trust Preferred Securities of the Trust under the
Securities
1
<PAGE>
Exchange Act of 1934, as amended; (ii) to file with the American Stock Exchange
or a national stock exchange (each, an "Exchange") and execute on behalf of the
Trust one or more listing applications and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Trust Preferred Securities to be listed on any of the
Exchanges; (iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as shall be necessary or
desirable to register the Trust Preferred Securities under the securities or
blue sky laws of such jurisdictions as the Depositor, on behalf of the Trust,
may deem necessary or desirable; and (iv) to execute on behalf of the Trust that
certain Underwriting Agreement relating to the Trust Preferred Securities, among
the Trust, the Depositor and the Underwriters named therein, substantially in
the form included as an exhibit to the 1933 Act Registration Statement. In the
event that any filing referred to in clauses (i), (ii) and (iii) above is
required by the rules and regulations of the Commission, an Exchange or state
securities or blue sky laws to be executed on behalf of the Trust by one or more
of the Trustees, each of the Trustees, in such Trustee's capacity as a trustee
of the Trust, is hereby authorized and, to the extent so required, directed to
join in any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that the Delaware Trustee in its capacity as a
trustee of the Trust shall not be required to join in any such filing or execute
on behalf of the Trust any such document unless required by the rules and
regulations of the Commission, the Exchange or state securities or blue sky
laws. In connection with the filings referred to above, the Depositor and Jerry
R. Welch, Jerry A. Gordon and Brenda K. Foster, each as Trustees and not in
their individual capacities, hereby constitutes and appoints Jerry R. Welch,
Jerry A. Gordon and Brenda K. Foster, and each of them, as the Depositor's or
such Trustee's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the Depositor or such Trustee or in the
Depositor's or such Trustee's name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to the 1933
Act Registration Statement and the 1934 Act Registration Statement (if required)
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Commission, the Exchange and administrators of
the state securities or blue sky laws, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully and to all
intents and purposes as the Depositor or such Trustee might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their respective substitute or substitutes, shall do
or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be four (4) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to
2
<PAGE>
appoint or remove without cause any Trustee at any time. The Trustees may
resign upon thirty (30) days' prior notice to the Depositor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws of principles).
[Remainder of Page Intentionally Blank]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.
GLACIER WATER SERVICES, INC.
as Depositor
By: /s/ Jerry A. Gordon
-----------------------------------------
Name: Jerry A. Gordon
Title: President and Chief Operating Officer
WILMINGTON TRUST COMPANY
as Trustee
By: /s/ James P. Lawler
-----------------------------------------
James P. Lawler
Vice President
By: /s/ Jerry R. Welch
-----------------------------------------
Jerry R. Welch, as Administrative Trustee
By: /s/ Jerry A. Gordon
-----------------------------------------
Jerry A. Gordon, as Administrative Trustee
By: /s/ Brenda K. Foster
-----------------------------------------
Brenda K. Foster, as Administrative Trustee
4
<PAGE>
EXHIBIT 4.4.1
AMENDED AND RESTATED TRUST AGREEMENT
among
Glacier Water Services, Inc., as Depositor,
Wilmington Trust Company,
as Property Trustee,
Wilmington Trust Company,
as Delaware Trustee,
and
The Administrative Trustees Named Herein
Dated as of _______ __, 1998
GLACIER WATER TRUST I
<PAGE>
GLACIER WATER TRUST I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
----------------- ---------------
<S> <C>
(S) 310 (a) (1) 8.7
(a) (2) 8.7
(a) (3) 8.7
(a) (4) 2.7 (a) (ii)
(b)
(S) 311 (a) 8.13
(b) 8.13
(S) 312 (a) 5.7
(b) 5.7
(c) 5.7
(S) 313 (a) 8.14 (a)
(a) (4) 8.14 (b)
(b) 8.14 (b)
(c) 10.8
(d) 8.14 (c)
(S) 314 (a) 8.15
(b) Not Applicable
(c) (1) 8.16
(c) (2) 8.16
(c) (3) Not Applicable
(d) Not Applicable
(e) 1.1, 8.16
(S) 315 (a) 8.1 (a), 8.3 (a)
(b) 8.2, 10.8
(c) 8.1 (a)
(d) 8.1, 8.3
(e) Not Applicable
(S) 316 (a) Not Applicable
(a) (1) (A) Not Applicable
(a) (1) (B) Not Applicable
(a) (2) Not Applicable
(b) 5.14
(c) 6.7
(S) 317 (a) (1) Not Applicable
(a) (2) Not Applicable
(b) 5.9
(S) 318 (a) 10.10
</TABLE>
___________
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Trust Agreement.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINED TERMS............................................................................ 1
ARTICLE II
ESTABLISHMENT OF THE TRUST............................................................... 10
Section 2.1 Name................................................................... 10
Section 2.2 Office of the Delaware Trustee; Principal Place of Business............ 11
Section 2.3 Initial Contribution of Trust Property; Organizational Expenses........ 11
Section 2.4 Issuance of the Preferred Securities................................... 11
Section 2.5 Issuance of the Common Securities; Subscription and Purchase
of Debentures.......................................................... 11
Section 2.6 Declaration of Trust................................................... 12
Section 2.7 Authorization to Enter into Certain Transactions....................... 12
Section 2.8 Assets of Trust........................................................ 15
Section 2.9 Title to Trust Property................................................ 15
ARTICLE III
PAYMENT ACCOUNT.......................................................................... 16
Section 3.1 Payment Account........................................................ 16
ARTICLE IV
DISTRIBUTIONS; REDEMPTION................................................................ 16
Section 4.1 Distributions.......................................................... 16
Section 4.2 Redemption............................................................. 17
Section 4.3 Subordination of Common Securities..................................... 19
Section 4.4 Payment Procedures..................................................... 20
Section 4.5 Tax Returns and Reports................................................ 20
Section 4.6 Payment of Taxes, Duties, Etc. of the Trust............................ 20
Section 4.7 Payments under Indenture or Pursuant to Direct Actions................. 20
ARTICLE V
TRUST SECURITIES CERTIFICATES............................................................ 21
Section 5.1 Initial Ownership...................................................... 21
Section 5.2 The Trust Securities Certificates...................................... 21
Section 5.3 Execution and Delivery of Trust Securities Certificates................ 21
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.4 Registration of Transfer and Exchange of Preferred Securities
Certificates........................................................... 21
Section 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates..... 22
Section 5.6 Persons Deemed Securityholders......................................... 23
Section 5.7 Access to List of Securityholders' Names and Addresses................. 23
Section 5.8 Maintenance of Office or Agency........................................ 23
Section 5.9 Appointment of Paying Agent............................................ 24
Section 5.10 Ownership of Common Securities by Depositor............................ 24
Section 5.11 Book-Entry Preferred Securities Certificates; Common Securities
Certificate............................................................ 25
Section 5.12 Notices to Clearing Agency............................................. 25
Section 5.13 Definitive Preferred Securities Certificates........................... 26
Section 5.14 Rights of Securityholders.............................................. 26
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING................................................ 28
Section 6.1 Limitations on Voting Rights........................................... 28
Section 6.2 Notice of Meetings..................................................... 29
Section 6.3 Meetings of Preferred Securityholders.................................. 29
Section 6.4 Voting Rights.......................................................... 30
Section 6.5 Proxies, etc........................................................... 30
Section 6.6 Securityholder Action by Written Consent............................... 30
Section 6.7 Record Date for Voting and Other Purposes.............................. 30
Section 6.8 Acts of Securityholders................................................ 31
Section 6.9 Inspection of Records.................................................. 32
ARTICLE VII
REPRESENTATIONS AND WARRANTIES........................................................... 32
Section 7.1 Representations and Warranties of the Bank............................. 32
Section 7.2 Representations and Warranties of Depositor............................ 33
ARTICLE VIII
THE TRUSTEES............................................................................. 33
Section 8.1 Certain Duties and Responsibilities.................................... 33
Section 8.2 Certain Notices........................................................ 35
Section 8.3 Certain Rights of Property Trustee..................................... 35
Section 8.4 Not Responsible for Recitals or Issuance of Securities................. 37
Section 8.5 May Hold Securities.................................................... 37
Section 8.6 Compensation; Indemnity; Fees.......................................... 37
Section 8.7 Corporate Property Trustee Required; Eligibility of Trustees........... 39
Section 8.8 Conflicting Interests.................................................. 39
Section 8.9 Co-Trustees and Separate Trustee....................................... 39
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 8.10 Resignation and Removal; Appointment of Successor...................... 41
Section 8.11 Acceptance of Appointment by Successor................................. 42
Section 8.12 Merger, Conversion, Consolidation or Succession to Business............ 43
Section 8.13 Preferential Collection of Claims Against Depositor or Trust........... 43
Section 8.14 Reports by Property Trustee............................................ 44
Section 8.15 Reports to the Property Trustee........................................ 44
Section 8.16 Evidence of Compliance with Conditions Precedent....................... 44
Section 8.17 Number of Trustees..................................................... 45
Section 8.18 Delegation of Power.................................................... 45
Section 8.19 Voting................................................................. 45
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER...................................................... 46
Section 9.1 Dissolution Upon Expiration Date....................................... 46
Section 9.2 Early Dissolution...................................................... 46
Section 9.3 Dissolution............................................................ 46
Section 9.4 Liquidation............................................................ 46
Section 9.5 Mergers, Consolidations, Amalgamations or Replacements of the
Trust.................................................................. 48
ARTICLE X
MISCELLANEOUS PROVISIONS................................................................. 49
Section 10.1 Limitation of Rights of Securityholders............................... 49
Section 10.2 Amendment............................................................. 49
Section 10.3 Counterparts.......................................................... 50
Section 10.4 Separability.......................................................... 50
Section 10.5 Governing Law......................................................... 51
Section 10.6 Payments Due on Non-Business Day...................................... 51
Section 10.7 Successors............................................................ 51
Section 10.8 Headings.............................................................. 51
Section 10.9 Reports, Notices and Demands.......................................... 51
Section 10.10 Agreement Not to Petition............................................. 52
Section 10.11 Trust Indenture Act; Conflict with Trust Indenture Act................ 52
Section 10.12 Acceptance of Terms of Trust Agreement, Guarantee and
Indenture............................................................. 53
EXHIBIT A .............................................................................. 55
EXHIBIT B .............................................................................. 56
EXHIBIT C .............................................................................. 61
EXHIBIT D .............................................................................. 62
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
EXHIBIT E .............................................................................. 63
</TABLE>
iv
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT (this "Trust Agreement"), dated as of
________ __, 1998, among (i) Glacier Water Services, Inc., a Delaware
corporation (including any successors or assigns, the "Depositor"), (ii)
Wilmington Trust Company, a Delaware banking corporation duly organized and
existing under the laws of the State of Delaware, as property trustee, (in such
capacity, the "Property Trustee" and, in its separate corporate capacity and not
in its capacity as Property Trustee, the "Bank"), (iii) Wilmington Trust
Company, a Delaware banking corporation organized under the laws of the State of
Delaware, as Delaware trustee (the "Delaware Trustee"), (iv) Jerry R. Welch, an
individual, Jerry A. Gordon, an individual, and Brenda K. Foster, an individual,
each of whose address is c/o Glacier Water Services, Inc., 2261 Cosmos Court,
Carlsbad, California, 92009 (each an "Administrative Trustee" and collectively
the "Administrative Trustees") (the Property Trustee, the Delaware Trustee and
the Administrative Trustees are referred to collectively herein as the
"Trustees") and (v) the several Holders, as hereinafter defined.
Witnesseth
Whereas, the Depositor, the Delaware Trustee and Jerry R. Welch and Jerry
A. Gordon, and Brenda K. Foster, each as an Administrative Trustee, have
heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act by the entering into that certain Trust Agreement,
dated as of November 13, 1997 (the "Original Trust Agreement"), and by the
execution and filing by the Delaware Trustee with the Secretary of State of the
State of Delaware of the Certificate of Trust, filed on November 13, 1997,
attached as Exhibit A; and
Whereas, the Depositor and the Trustees desire to amend and restate the
Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance of the Common Securities by the Trust to
the Depositor, (ii) the issuance and sale of the Preferred Securities by the
Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures and
(iv) the appointment of the Administrative Trustees;
Now Therefore, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, each party, for the benefit of the other parties and for
the benefit of the Securityholders, hereby agrees as follows:
ARTICLE I
Defined Terms
Section 1.1 Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
1
<PAGE>
(a) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) unless the context otherwise requires, any reference to an "Article" or
a "Section" refers to an Article or a Section, as the case may be, of this Trust
Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Trust Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustee" means each of the Persons identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in such
Person's capacity as Administrative Trustee of the Trust created and continued
hereunder and not in such Person's individual capacity, or such Administrative
Trustee's successor in interest in such capacity, or any successor trustee
appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable Bankruptcy Law,
or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 90 consecutive
days; or
2
<PAGE>
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Bankruptcy Law,
or the consent by it to the filing of any such petition or to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Law" means any Federal or state bankruptcy, insolvency,
reorganization or similar law.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the appropriate Trustees.
"Book-Entry Preferred Securities Certificates" means a beneficial interest
in the Preferred Securities Certificates, ownership and transfers of which shall
be made through book entries by a Clearing Agency as described in Section 5.11.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of California are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the Trust, the
Depositor and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Preferred Securities Certificates,
substantially in the form attached as Exhibit B, as the same may be amended and
supplemented from time to time.
"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act. The Depository Trust Company will
act as the initial Clearing Agency hereunder.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and
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pledges of securities deposited with the Clearing Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, as amended, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Security" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Corporate Trust Office" means (i) when used with respect to the Property
Trustee, the principal office of the Property Trustee located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration, and (ii) when used with respect to the Debenture
Trustee, the principal office of the Debenture Trustee located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
"Debenture Event of Default" means an "Event of Default" as defined in the
Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation organized under the laws of the State of Delaware and any successor
thereto, as trustee under the Indenture.
"Debentures" means the aggregate principal amount of the Depositor's ____%
Junior Subordinated Deferrable Interest Debentures, issued pursuant to the
Indenture.
"Definitive Preferred Securities Certificates" means either or both (as the
context requires) of (a) Preferred Securities Certificates issued as Book-Entry
Preferred Securities Certificate as provided in Section 5.11(a) and (b)
Preferred Securities Certificates issued in certificated, fully
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registered form as provided in Section 5.13.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ((S)) 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the Person identified as the "Delaware Trustee" in
the preamble to this Trust Agreement solely in its capacity as Delaware Trustee
of the Trust created and continued hereunder and not in its individual capacity,
or its successor in interest in such capacity, or any successor trustee
appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust Preferred
Securities as provided in Section 4.1.
"Early Dissolution Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust in the payment of any Distribution when it becomes
due and payable, and continuation of such default for a period of 30 days; or
(c) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Property Trustee in this Trust Agreement (other than
a covenant or warranty a default in the performance or breach of which is dealt
with in clause (b) or (c) above) and continuation of such default or breach for
a period of 60 days after there has been given, by registered or certified mail,
to the defaulting Property Trustee by the Holders of at least 25% in aggregate
liquidation preference of the Outstanding Preferred Securities a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property Trustee
within 60 days thereof.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Guarantee" means the Guarantee Agreement executed and delivered by the
Depositor and Wilmington Trust Company, as trustee, contemporaneously with the
execution and delivery of this Trust Agreement, for the benefit of the holders
of the Preferred Securities, as amended from time to time.
"Holder" means a Securityholder.
"Indenture" means the Junior Subordinated Indenture, dated as of ________
__, 1998, between the Depositor and the Debenture Trustee, as trustee, as
amended or supplemented from time to time.
"Investment Company Event" means the receipt by the Depositor and the Trust
of an Opinion of Counsel experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in Investment
Company Act Law"), the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company Act, which Change
in Investment Company Act Law becomes effective on or after the date or original
issuance of the Preferred Securities under this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, adverse claim, hypothecation, assignment,
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Debentures to be contemporaneously redeemed in accordance with the Indenture,
allocated to the Common Securities and the Trust Preferred Securities based upon
the relative Liquidation Amounts of such classes and the proceeds of which will
be used to pay the Redemption Price of such Trust Securities, and (b) with
respect to a distribution of Debentures to Holders of Trust Securities in
connection with a dissolution or liquidation of the Trust, Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
Holder to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
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"Liquidation Date" means the date on which Debentures are to be distributed
to Holders of Trust Securities in connection with a dissolution and liquidation
of the Trust pursuant to Section 9.4(a).
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
"Officers' Certificate" means a certificate signed by the Chairman and
Chief Executive Officer, President or a Vice President, and by the Vice
President, Controller, the Secretary or an Assistant Secretary, of the
Depositor, and delivered to the appropriate Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 8.16 shall be the
principal executive, financial or accounting officer of the Depositor. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Trust, the Property Trustee, the Delaware Trustee or the Depositor, but
not an employee of any thereof, and who shall be reasonably acceptable to the
Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.
"Outstanding", when used with respect to Trust Securities, means, as of the
date of determination, all Trust Securities theretofore executed and delivered
under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Property Trustee or any Paying
Agent for the Holders of
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such Trust Securities; provided that, if such Trust Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this Trust
Agreement; and
(c) Trust Securities which have been paid or in exchange for or in lieu of
which other Trust Securities have been executed and delivered pursuant to
Sections 5.4, 5.5, 5.11 and 5.13; provided, however, that in determining whether
the Holders of the requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Preferred Securities owned by the Depositor, any
Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded
and deemed not to be Outstanding, except that (a) in determining whether any
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Preferred Securities
that such Trustee knows to be so owned shall be so disregarded and (b) the
foregoing shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Preferred Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Administrative Trustees the pledgee's right so to act with
respect to such Preferred Securities and that the pledgee is not the Depositor
or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 5.9 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Securityholders in which all amounts paid in respect of
the Debentures will be held and from which the Property Trustee, through the
Paying Agent, shall make payments to the Securityholders in accordance with
Sections 4.1 and 4.2.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the assets
of the Trust designated as "___% Cumulative Trust Preferred Securities," having
a Liquidation Amount of $25 per security and having the rights provided therefor
in this Trust Agreement, including the right to receive Distributions and a
Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit E.
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"Property Trustee" means the Person identified as the "Property Trustee" in
the preamble to this Trust Agreement solely in its capacity as Property Trustee
of the Trust heretofore created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Debenture Redemption Date and the stated maturity of the
Debentures shall be a Redemption Date for a Like Amount of Trust Preferred
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among
the Trust Preferred Securities.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.4.
"Securityholder" means a Person in whose name a Trust Security is
registered in the Securities Register; any such Person shall be deemed to be a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under this Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days after the
date of such Opinion of Counsel, subject to United States Federal income tax
with respect to income received or accrued on the Debentures, (ii) interest
payable by the Depositor on the Debentures is not, or within 90 days after the
date of such Opinion of Counsel, will not be, deductible by the Depositor, in
whole or in part, for United States Federal income tax purposes or (iii) the
Trust is, or will be within 90 days after the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges.
"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
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"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all exhibits hereto and (ii) for all purposes
of this Amended and Restated Trust Agreement and any such modification,
amendment or supplement, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this Trust Agreement and any such
modification, amendment or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Payment Account and (c) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed to
be held by the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.
"Underwriters" means each of the Underwriters named in the Underwriting
Agreement.
"Underwriting Agreement" means that certain Underwriting Agreement dated as
of _______ ___, 1998, among the Trust, the Depositor, Sutro & Co. Incorporated,
EVEREN Securities, Inc. and Crowell, Weedon & Co., as the representatives of the
Underwriters.
ARTICLE II
Establishment of the Trust
Section 2.1 Name.
The Trust continued hereby shall be known as "GLACIER WATER TRUST I," as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Trustees, in which name the Trustees may engage in the transactions contemplated
hereby, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
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Section 2.2 Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890-
0001, Attention: Corporate Trust Administration, or such other address in the
State of Delaware as the Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal executive office of the Trust
is c/o Glacier Water Services, Inc., 2261 Cosmos Court, Carlsbad, California,
92009.
Section 2.3 Initial Contribution of Trust Property; Organizational
Expenses.
The Trustees acknowledges receipt in trust from the Depositor in connection
with the Trust Agreement of the sum of $10, which constituted the initial Trust
Property. The Depositor shall pay organizational expenses of the Trust as they
arise or shall, upon request of any Trustee, promptly reimburse such Trustee for
any such expenses paid by such Trustee. The Depositor shall make no claim upon
the Trust Property for the payment of such expenses.
Section 2.4 Issuance of the Preferred Securities.
The Depositor and an Administrative Trustee, on behalf of the Trust and
pursuant to the Trust Agreement, have executed and delivered the Underwriting
Agreement. Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 5.2 and deliver to the Underwriters named in the
Underwriting Agreement, Preferred Securities Certificates, registered in the
name of the nominee of the initial Clearing Agency, as instructed by Sutro & Co.
Incorporated, as representative of the Underwriters, in an aggregate amount of
2,600,000 Preferred Securities having an aggregate Liquidation Amount of
$65,000,000, against receipt of such aggregate purchase price of such Preferred
Securities of $65,000,000, which amount the Administrative Trustee shall
promptly deliver to the Property Trustee.
Section 2.5 Issuance of the Common Securities; Subscription and Purchase
of Debentures.
Contemporaneously with the execution and delivery of this Trust Agreement,
an Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 5.2 and deliver to the Depositor Common Securities Certificates,
registered in the name of the Depositor, in an aggregate amount of 80,412 Common
Securities having an aggregate Liquidation Amount of $2,010,300, against payment
by the Depositor of such amount, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee. Contemporaneously therewith, an
Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase
from the Depositor Debentures, registered in the name of the Trust and having an
aggregate principal amount equal to $67,010,300 and, in satisfaction of the
purchase price for such Debentures, the Property Trustee, on behalf of the
Trust, shall deliver to the Depositor the sum of $67,010,300, such amount being
the sum of the amounts delivered to the Property Trustee pursuant to (i) the
second sentence of Section 2.4 and (ii) the first sentence of this Section 2.5.
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Section 2.6 Declaration of Trust.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Debentures,
and (b) to engage in those activities necessary, advisable or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust,
to have all the rights, powers and duties to the extent set forth herein, and
the Trustees hereby accept such appointment. The Property Trustee hereby
declares that it will hold the Trust Property in trust upon and subject to the
conditions set forth herein for the benefit of the Trust and the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of
the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act.
Section 2.7 Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section and Section 2.6, and in accordance with the
following provisions (i) and (ii), the Trustees shall have the authority to
enter into all transactions and agreements determined by the Trustees to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Trustees under this Trust Agreement, and to perform all acts in
furtherance thereof, including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall have the
power and authority to act on behalf of the Trust with respect to the
following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Expense Agreement and the
Certificate Depository Agreement and such other agreements as may be
necessary or desirable in connection with the purposes and function of
the Trust;
(C) assisting in the registration (including the execution of a
registration statement on the appropriate form) of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of this Trust
Agreement as a trust indenture under the Trust Indenture Act;
(D) assisting in the listing of the Preferred Securities upon such
securities exchange or exchanges as shall be determined by the
Depositor and the registration of the Preferred Securities under the
Exchange Act, and the
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preparation and filing of all periodic and other reports and other
documents pursuant to the foregoing;
(E) the sending of notices (other than notices of default) and
other information regarding the Trust Securities and the Debentures to
the Securityholders in accordance with this Trust Agreement;
(F) the appointment of a Paying Agent, authenticating agent and
Securities Registrar in accordance with this Trust Agreement;
(G) registering transfer of the Trust Securities in accordance
with this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding up
of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(I) unless otherwise determined by the Depositor, the Property
Trustee or the Administrative Trustees, or as otherwise required by the
Delaware Business Trust Act or the Trust Indenture Act, to execute on
behalf of the Trust (either acting alone or together with any or all of
the Administrative Trustees) any documents that the Administrative
Trustees have the power to execute pursuant to this Trust Agreement;
and
(J) the taking of any action incidental to the foregoing as the
Trustees may from time to time determine is necessary or advisable to
give effect to the terms of this Trust Agreement for the benefit of the
Securityholders (without consideration of the effect of any such action
on any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments
made in respect of the Debentures in the Payment Account;
(D) the distribution through the Paying Agent of amounts owed to
the Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Debentures;
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(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding up
of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(I) after an Event of Default (other than under paragraph (b),
(c), (d) or (e) of the definition of such term if such Event of Default
is by or with respect to the Property Trustee) the taking of any action
incidental to the foregoing as the Property Trustee may from time to
time determine is necessary or advisable to give effect to the terms of
this Trust Agreement and protect and conserve the Trust Property for
the benefit of the Securityholders (without consideration of the effect
of any such action on any particular Securityholder);
(J) so long as the Property Trustee is the Securities Registrar,
registering transfers of the Trust Securities in accordance with this
Trust Agreement; and
(K) except as otherwise provided in this Section 2.7(a)(ii), the
Property Trustee shall have none of the duties, liabilities, powers or
the authority of the Administrative Trustees set forth in Section
2.7(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt or (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property. The Administrative Trustees
shall defend all claims and demands of all Persons at any time claiming any Lien
on any of the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):
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(i) the preparation and filing by the Trust with the Commission and
the execution by the Trust of a registration statement on the appropriate
form in relation to the Preferred Securities, including any amendments
thereto;
(ii)) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice to
the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of any
such States;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to the New York Stock Exchange, the American
Stock Exchange or any other national stock exchange or the Nasdaq Stock
Market, Inc. for listing upon notice of issuance of any Preferred
Securities;
(iv) the preparation for filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement on Form 8-
A relating to the registration of the Preferred Securities under Section
12(b) or 12(g) of the Exchange Act, including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Preferred
Securities; and
(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act, or fail to be classified
as a grantor trust for United States federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, the Depositor and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Trust Agreement, that each of
the Depositor and any Administrative Trustee determines in its discretion to be
necessary or desirable for such purposes, as long as such action does not
adversely affect in any material respect the interests of the holders of the
Preferred Securities.
Section 2.8 Assets of Trust.
The assets of the Trust shall consist of the Trust Property.
Section 2.9 Title to Trust Property.
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Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Trust and the Securityholders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
Section 3.1 PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits in and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the exclusive benefit of
the Securityholders and for distribution as herein provided, including (and
subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1 Distributions.
(a) The Trust Securities represent undivided beneficial interests in the
Trust Property, and Distributions (including of Additional Amounts) will be made
on the Trust Securities at the rate and on the dates that payments of interest
(including of Additional Interest, as defined in the Indenture) are made on the
Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative, and
will accumulate whether or not there are funds of the Trust available for
the payment of Distributions. Distributions shall accrue from the date of
original issuance of the Trust Securities, and, except in the event (and to
the extent) that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable
monthly in arrears on the 15th day of each calendar month of each year,
commencing on __________, 1998. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such
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Distribution shall be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such
delay) with the same force and effect as if made on such date (each date on
which distributions are payable in accordance with this Section 4.1(a), a
"Distribution Date").
(ii) Assuming payments of interest on the Debentures are made when due
(and before giving effect to Additional Amounts, if applicable),
Distributions on the Trust Securities shall be payable at a rate of _____%
per annum of the Liquidation Amount of the Trust Securities. The amount of
Distributions payable for any full period shall be computed on the basis of
a 360-day year of twelve 30-day months. The amount of Distributions for any
partial period shall be computed on the basis of the number of days elapsed
in a 360-day year of twelve 30-day months. The amount of Distributions
payable for any period shall include the Additional Amounts, if any.
(iii) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Distributions.
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
one Business Day prior to such Distribution Date; provided, however, that in the
event that the Preferred Securities do not remain in book-entry-only form, the
relevant record date shall be the date fifteen days prior to the relevant
Distribution Date (or, if such date is not a Business Day, the next Business Day
following such date).
Section 4.2 Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Trust will be required to redeem, subject to Section 4.3, a Like
Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by first-
class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior
to the Redemption Date to each Holder of Trust Securities to be redeemed, at
such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the
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identification and the total Liquidation Amount of the particular Trust
Securities to be redeemed; and
(v) that on the Redemption Date the Redemption Price will become due
and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accrue on and after said date.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has funds then on hand and available in the Payment Account for
the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, Eastern time, on the Redemption Date,
subject to Section 4.2(c), with respect to Preferred Securities held in
certificated form, the Property Trustee, subject to Section 4.2(c), will
irrevocably deposit with the Paying Agent funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable instructions and
authority to pay the Redemption Price to the Holders thereof upon surrender of
their Preferred Securities Certificates. With respect to Preferred Securities
held in book-entry form, the Property Trustee, subject to Section 4.2(c), will
irrevocably deposit with the Clearing Agency for the Preferred Securities funds
sufficient to pay the applicable Redemption Price and will give such Clearing
Agency irrevocable instructions and authority to pay the Redemption Price to the
holders thereof. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Trust Securities called for redemption
shall be payable to the Holders of such Trust Securities as they appear on the
Register for the Trust Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of
Securityholders holding Trust Securities so called for redemption will cease,
except the right of such Securityholders to receive the Redemption Price and any
Distribution payable on or prior to the Redemption Date, but without interest,
and such Securities will cease to be outstanding. In the event that any date on
which any Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), with the same force and effect as if made on such date. In the
event that payment of the Redemption Price in respect of any Trust Securities
called for redemption is improperly withheld or refused and not paid either by
the Trust or by the Depositor pursuant to the Guarantee, Distributions on such
Trust Securities will continue to accrue, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be made
to the recordholders thereof as they appear on the Securities Register for the
Trust Securities on the relevant record date, which shall be one Business Day
prior to the relevant Redemption Date;
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provided, however, that in the event that the Preferred Securities do not remain
in book-entry-only form, the relevant record date shall be the date fifteen days
prior to the relevant Redemption Date (or, if such date is not a Business Day,
the next Business Day following such date).
(f) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Redemption Price of Trust Securities to be redeemed shall be allocated on a pro
rata basis (based on Liquidation Amounts) among the Common Securities and the
Preferred Securities. The particular Preferred Securities to be redeemed shall
be selected on a pro rata basis (based upon Liquidation Amounts) not more than
60 days prior to the Redemption Date by the Property Trustee from the
Outstanding Preferred Securities not previously called for redemption, by such
method (including, without limitation, by lot) as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $25 or an integral multiple of $25 in excess thereof) of
the Liquidation Amount of Preferred Securities of a denomination larger than
$25. The Property Trustee shall promptly notify the Security Registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the Liquidation
Amount of Preferred Securities that has been or is to be redeemed.
Section 4.3 Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable, shall be
made, subject to Section 4.2(f), pro rata among the Common Securities and the
Preferred Securities based on the Liquidation Amount of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Preferred Securities, shall have
been made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on, or the
Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
this Trust Agreement until the effect of all such Events of Default with respect
to the Preferred Securities have been cured, waived or
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otherwise eliminated. Until any such Event of Default under this Trust Agreement
with respect to the Preferred Securities has been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders of
the Preferred Securities and not the Holder of the Common Securities, and only
the Holders of the Preferred Securities will have the right to direct the
Property Trustee to act on their behalf.
Section 4.4 Payment Procedures.
Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Preferred Securities shall be made by check mailed to the address
of the Person entitled thereto as such address shall appear on the Securities
Register or, if the Preferred Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which shall credit the relevant Persons' accounts at such Clearing Agency
on the applicable Distribution Dates. Payments in respect of the Common
Securities shall be made in such manner as shall be mutually agreed between the
Property Trustee and the Common Securityholder.
Section 4.5 Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
form required to be filed in respect of the Trust in each taxable year of the
Trust and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service form required to be
provided on such form. The Administrative Trustees shall provide the Depositor
and the Property Trustee with a copy of all such returns and reports promptly
after such filing or furnishing. The Trustees shall comply with United States
federal withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
Section 4.6 Payment of Taxes, Duties, Etc. of the Trust.
Upon receipt under the Debentures of Additional Sums, the Property Trustee
shall promptly pay any taxes, duties or governmental charges of whatsoever
nature (other than withholding taxes) imposed on the Trust by the United States
or any other taxing authority.
Section 4.7 Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities shall be
reduced by the amount of any corresponding payment that such Holder (and any
Owner with respect thereto) has directly received pursuant to Section 5.8 of the
Indenture or Section 5.14 of this Trust Agreement.
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ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1 Initial Ownership.
Upon the formation of the Trust and the contribution by the Depositor
pursuant to Section 2.3 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are outstanding, the Depositor shall
be the sole beneficial owner of the Trust.
Section 5.2 The Trust Securities Certificates.
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in excess
thereof, and the Common Securities Certificates shall be issued in denominations
of $25 Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Trust by signature of at least
one Administrative Trustee. Trust Securities Certificates bearing the signatures
of individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trust, shall be validly issued and
entitled to the benefits of this Trust Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
delivery of such Trust Securities Certificates or did not hold such offices at
the date of delivery of such Trust Securities Certificates. A transferee of a
Trust Securities Certificate shall become a Securityholder, and shall be
entitled to the rights and subject to the obligations of a Securityholder
hereunder, upon due registration of such Trust Securities Certificate in such
transferee's name pursuant to Sections 5.4, 5.11 and 5.13.
Section 5.3 Execution and Delivery of Trust Securities Certificates.
On or prior to the Closing Date, the Administrative Trustees shall cause
Trust Securities Certificates, in an aggregate Liquidation Amount as provided in
Section 2.4, to be executed on behalf of the Trust and delivered to or upon the
written order of the Depositor, signed by its Chief Executive Officer, its
president, any executive vice president or any vice president, treasurer or
assistant treasurer or controller without further corporate action by the
Depositor, in authorized denominations.
Section 5.4 Registration of Transfer and Exchange of Preferred Securities
Certificates.
The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 5.8, a register or registers for the purpose of
registering Trust Securities Certificates and transfers and exchanges of
Preferred Securities Certificates (the "Securities Register") in which, the
registrar designated by the Depositor (the "Securities Registrar"), subject to
such reasonable regulations as it may prescribe, shall provide for the
registration of Preferred Securities Certificates and Common Securities
Certificates (subject to Section 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. The Property Trustee shall be the
initial Securities
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Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount dated the date of execution by such Administrative Trustee or
Trustees.
The Securities Registrar shall not be required to register the transfer of
any Preferred Securities that have been called for redemption. At the option of
a Holder, Preferred Securities Certificates may be exchanged for other Preferred
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Preferred Securities
Certificates to be exchanged at the office or agency maintained pursuant to
Section 5.8.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly authorized
in writing. Each Preferred Securities Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently disposed of by an
Administrative Trustee in accordance with such Person's customary practice. The
Trust shall not be required to (i) issue, register the transfer of, or exchange
any Preferred Securities during a period beginning at the opening of business 15
calendar days before the date of mailing of a notice of redemption of any
Preferred Securities called for redemption and ending at the close business on
the day of such mailing or (ii) register the transfer of or exchange any
Preferred Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any such Preferred Securities being redeemed in part.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
Section 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Administrative Trustees such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Securities Certificate shall have been acquired by a bona fide purchaser, the
Administrative Trustees, or any one of them, on behalf of the Trust shall
execute and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection with
the issuance of any new Trust Securities Certificate under this Section, the
Administrative Trustees or the
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Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section shall
constitute conclusive evidence of an undivided beneficial interest in the assets
of the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
Section 5.6 Persons Deemed Securityholders.
The Trustees or the Securities Registrar shall treat the Person in whose
name any Trust Securities Certificate shall be registered in the Securities
Register as the owner of such Trust Securities Certificate for the purpose of
receiving Distributions and for all other purposes whatsoever, and neither the
Trustees nor the Securities Registrar shall be bound by any notice to the
contrary.
Section 5.7 Access to List of Securityholders' Names and Addresses.
At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished to the Property Trustee (a) semi-annually on or before January 1
and July 1 in each year, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Securityholders as of the
most recent Record Date and (b) promptly after receipt by any Administrative
Trustee or the Depositor of a request therefor from the Property Trustee, such
other information as the Property Trustee may reasonably require in order to
enable the Property Trustee to discharge its obligations under this Trust
Agreement, in each case to the extent such information is in the possession or
control of the Administrative Trustees or the Depositor and is not identical to
a previously supplied list or has not otherwise been received by the Property
Trustee in its capacity as Securities Registrar. The rights of Securityholders
to communicate with other Securityholders with respect to their rights under
this Trust Agreement or under the Trust Securities, and the corresponding rights
of the Trustee shall be as provided in the Trust Indenture Act. Each
Securityholder, by receiving and holding a Trust Securities Certificate, and
each Owner shall be deemed to have agreed not to hold the Depositor, the
Property Trustee or the Administrative Trustees accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
Section 5.8 Maintenance of Office or Agency.
The Administrative Trustees shall maintain an office or offices or agency
or agencies where Preferred Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustees in respect of the Trust Securities Certificates may be served. The
Administrative Trustees initially designate the principal corporate trust office
of the Property Trustee, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890- 0001, Attention: Corporate Trust Administration, as
the principal corporate trust office for such purposes. The Administrative
Trustees shall give prompt written notice to the Depositor and to the
Securityholders of any change in the location of the Securities Register or any
such office or agency.
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Section 5.9 Appointment of Paying Agent.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the Distributions referred to above. The Administrative Trustees may
revoke such power and remove the Paying Agent if such Trustees determine in
their sole discretion that the Paying Agent shall have failed to perform its
obligations under this Trust Agreement in any material respect. The Paying Agent
shall initially be the Property Trustee, and any co-paying agent chosen by the
Property Trustee, and acceptable to the Administrative Trustees and the
Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees, the
Property Trustee and the Depositor. In the event that the Property Trustee shall
no longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act as
Paying Agent (which shall be a bank or trust company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying Agent
shall return all unclaimed funds to the Property Trustee and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall
apply to the Property Trustee also in its role as Paying Agent, for so long as
the Property Trustee shall act as Paying Agent and, to the extent applicable, to
any other paying agent appointed hereunder. Any reference in this Trust
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
Section 5.10 Ownership of Common Securities by Depositor.
At the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, other than a transfer in connection with a consolidation or merger of the
Depositor into another Person, or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
Person, pursuant to Section 8.1 of the Indenture, any attempted transfer of the
Common Securities shall be void. The Administrative Trustees shall cause each
Common Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
Section 5.11 Book-Entry Preferred Securities Certificates; Common
Securities
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Certificate.
(a) The Preferred Securities Certificates, upon original issuance, will be
issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Preferred Securities Certificate or Certificates
shall initially be registered on the Securities Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Owner will receive a
Definitive Preferred Securities Certificate representing such Owner's interest
in such Preferred Securities, except as provided in Section 5.13.
Unless and until Definitive Preferred Securities Certificates have been
issued to Owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full force
and effect;
(ii) the Securities Registrar, the Paying Agent and the Trustees
shall be entitled to deal with the Clearing Agency for all purposes of this
Trust Agreement relating to the Book-Entry Preferred Securities
Certificates (including the payment of the Liquidation Amount of and
Distributions on the Preferred Securities evidenced by Book-Entry Preferred
Securities Certificates) the Book-Entry Preferred Securities Certificates
and shall have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section 5.11 conflict
with any other provisions of this Trust Agreement, the provisions of this
Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred Securities
Certificates shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such Owners
and the Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Certificate Depository Agreement, unless and until Definitive
Preferred Securities Certificates are issued pursuant to Section 5.13, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments on the Preferred
Securities to such Clearing Agency Participants. Any Clearing Agency
designated pursuant here to will not be deemed an agent of the Trustee for
any purpose.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
Section 5.12 Notices to Clearing Agency.
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
5.13, the Trustees shall give all such notices and communications specified
herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
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Section 5.13 Definitive Preferred Securities Certificates.
If (a) the Depositor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Preferred Securities Certificates, and the Depositor is
unable to locate a qualified successor, (b) the Depositor at its option advises
the Trustees in writing that it elects to terminate the book-entry system
through the Clearing Agency or (c) after the occurrence of a Debenture Event of
Default, Owners of Preferred Securities Certificates representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Property Trustee in writing that the continuation of a book-entry system through
the Clearing Agency is no longer in the best interest of the Owners of Preferred
Securities Certificates, then the Property Trustee shall notify the Clearing
Agency and the Clearing Agency shall notify all Owners of Preferred Securities
Certificates and the other Trustees of the occurrence of any such event and of
the availability of the Definitive Preferred Securities Certificates to Owners
of such class or classes, as applicable, requesting the same. Upon surrender to
the Property Trustee of the typewritten Preferred Securities Certificate or
Certificates representing the Book-Entry Preferred Securities Certificates by
the Clearing Agency, accompanied by registration instructions, the
Administrative Trustees, or any one of them, shall execute the Definitive
Preferred Securities Certificates in accordance with the instructions of the
Clearing Agency. Neither the Securities Registrar nor the Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Preferred Securities Certificates, the Trustees shall recognize
the Holders of the Definitive Preferred Securities Certificates as
Securityholders. The Definitive Preferred Securities Certificates shall be
engraved and executed in accordance with the applicable rules of the American
Stock Exchange or such other national exchange or over-the-counter market on
which the Preferred Securities are then listed for trading.
Section 5.14 Rights of Securityholders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust Securities
shall have no preemptive or similar rights and when issued and delivered to
Securityholders against payment of the purchase price therefor will be fully
paid and nonassessable by the Trust. The Holders of the Trust Securities, in
their capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Preferred
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Securities then Outstanding shall have such right by a notice in writing to the
Depositor and the Debenture Trustee; and upon any such declaration such
principal amount of and the accrued interest on all of the Debentures shall
become immediately due and payable, provided that the payment of principal and
interest on such Debentures shall remain subordinated to the extent provided in
the Indenture.
At any time after such a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, the Holders of a majority in Liquidation Amount of the Preferred
Securities, by written notice to the Property Trustee, the Depositor and the
Debenture Trustee, may rescind and annul such declaration and its consequences
if:
(i) the Depositor has paid or deposited with the Debenture Trustee a
sum sufficient to pay
(A) all overdue installments of interest (including any
Additional Interest (as defined in the Indenture)) on all of the
Debentures,
(B) the principal of (and premium, if any, on) any Debentures
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures,
and
(C) all sums paid or advanced by the Debenture Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and
advances of the Debenture Trustee and the Property Trustee, their
agents and counsel; and
(ii) all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures which has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.13 of the Indenture.
The Holders of a majority in aggregate Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of the Preferred
Securities all or part of which is represented by Book-Entry Preferred
Securities Certificates, a record date shall be established for determining
Holders of Outstanding Preferred Securities entitled to join in such notice,
which record date shall be at the close of business on the day the Property
Trustee receives such notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall
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be entitled to join in such notice, whether or not such Holders remain Holders
after such record date; provided, that, unless such declaration of acceleration,
or rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of
a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.14(b).
(c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Preferred Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Debentures having a principal amount equal to
the Liquidation Amount of the Preferred Securities of such Holder (a "Direct
Action"). Except as set forth in Section 5.14(b) and this Section 5.14(c), the
Holders of Preferred Securities shall have no right to exercise directly any
right or remedy available to the holders of, or in respect of, the Debentures.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 6.1 Limitations on Voting Rights.
(a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.2
and in the Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Debenture Trustee with respect to such
Debentures, (ii) waive any past default which is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable or (iv) consent to
any amendment, modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation
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Amount of all Outstanding Preferred Securities, provided, however, that where a
consent under the Indenture would require the consent of each Holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior written consent of each Holder of Preferred
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of Preferred Securities, except by a
subsequent vote of the Holders of Preferred Securities. The Property Trustee
shall notify all Holders of the Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the Debentures. In addition
to obtaining the foregoing approvals of the Holders of the Preferred Securities,
prior to taking any of the foregoing actions, the Trustees shall, at the expense
of the Depositor, obtain an Opinion of Counsel experienced in such matters to
the effect that such action shall not cause the Trust to fail to be classified
as a grantor trust for United States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a majority in Liquidation
Amount of the Outstanding Preferred Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Trust to fail to be
classified as a grantor trust for United States federal income tax purposes.
Section 6.2 Notice of Meetings.
Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.8 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.
Section 6.3 Meetings of Preferred Securityholders.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Preferred
Securityholders to vote on any matter upon the written request of Holders of
record of 25% of the Outstanding Preferred Securities (based upon their
Liquidation Amount) and the Administrative Trustees or the Property Trustee may,
at any time in their discretion, call a meeting of Preferred Securityholders to
vote on any matters as to which Preferred Securityholders are entitled to vote.
Holders of record of 50% of the Outstanding Preferred Securities (based
upon their Liquidation Amount), present in person or by proxy, shall constitute
a quorum at any meeting
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of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the Preferred
Securityholders of record present, in person or by proxy, holding more than a
majority of the Preferred Securities (based upon their Liquidation Amount) held
by the Preferred Securityholders of record present, either in person or by
proxy, at such meeting shall constitute the action of the Preferred
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
Section 6.4 Voting Rights.
Securityholders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Trust Securities in respect of any matter as to
which such Securityholders are entitled to vote.
Section 6.5 Proxies, etc.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of the Property Trustee, proxies may be solicited in
the name of the Property Trustee or one or more officers of the Property
Trustee. Only Securityholders of record shall be entitled to vote. When Trust
Securities are held jointly by several Persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust Securities. A
proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.
Section 6.6 Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Securityholders holding a majority of all Outstanding Trust
Securities (based upon their aggregate Liquidation Amount) entitled to vote in
respect of such action (or such larger proportion thereof as shall be required
by any express provision of this Trust Agreement) shall consent to the action in
writing (based upon their aggregate Liquidation Amount).
Section 6.7 Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees may from time to time fix a
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date, not more than 90 days prior to the date of any meeting of Securityholders
or the payment of a Distribution or other action, as the case may be, as a
record date for the determination of the identity of the Securityholders of
record for such purposes.
Section 6.8 Acts of Securityholders.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Securityholders or Owners may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Securityholders
or Owners in person or by an agent duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders or
Owners signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 8.1) conclusive in favor
of the Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature
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of any request, demand, authorization, direction, consent, waiver or other Act
of such Securityholder or Trustee under this Article VI, then the determination
of such matter by the Property Trustee shall be conclusive with respect to such
matter.
A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person.
Section 6.9 Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by Securityholders
during normal business hours for any purpose reasonably related to such
Securityholder's interest as a Securityholder.
ARTICLE VII
Representations and Warranties
Section 7.1 Representations and Warranties of the Bank.
The Bank hereby represents and warrants for the benefit of the Depositor
and the Securityholders that:
(a) the Bank is a Delaware banking corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered
by the Bank and constitutes the valid and legally binding agreement of the Bank
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(d) the execution, delivery and performance of this Trust Agreement has
been duly authorized by all necessary corporate or other action on the part of
the Bank and does not require any approval of stockholders of the Bank and such
execution, delivery and performance will not (i) violate the charter or bylaws
of the Bank, (ii) violate any provision of, or constitute, with or without
notice or lapse of time, a default under, or result in the creation or
imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Bank is a party or by
which it is bound, or (iii) violate any law, governmental rule or regulation of
the United
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States or the State of Delaware, as the case may be, governing the banking,
trust or general powers of the Bank or any order, judgment or decree applicable
to the Bank;
(e) neither the authorization, execution or delivery by the Bank of this
Trust Agreement nor the consummation of any of the transactions by the Property
Trustee or the Delaware Trustee (as appropriate in context) contemplated herein
or therein requires the consent or approval of, the giving of notice to, the
registration with or the taking of any other action with respect to any
governmental authority or agency under any existing federal law governing the
banking, trust or general powers of the Bank, as the case may be, under the laws
of the United States or the State of Delaware;
(f) there are no proceedings pending or, to the best the Bank's knowledge,
threatened against or affecting the Property Trustee or the Delaware Trustee in
any court or before any governmental authority, agency or arbitration board or
tribunal which, individually or in the aggregate, would materially and adversely
affect the Trust or would question the right, power and authority of the Bank to
enter into or perform its obligations as one of the Trustees under this Trust
Agreement.
Section 7.2 Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at the Closing Date on behalf
of the Trust have been duly authorized and will have been, duly and validly
executed, issued and delivered by the Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust Agreement
and the Securityholders will be, as of each such date, entitled to the benefits
of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Bank, the Property Trustee or the Delaware
Trustee, as the case may be, of Bank, this Trust Agreement.
ARTICLE VIII
The Trustees
Section 8.1 Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees shall be as provided by
this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable
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grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustees
shall be subject to the provisions of this Section. No Administrative Trustee
or the Delaware Trustee shall be subject to any liability under this Trust
Agreement except for its own grossly negligent action, its own grossly negligent
failure to act, or its own willful misconduct. To the extent that, at law or in
equity, a Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to the Securityholders, such Trustee shall not
be liable to the Trust or to any Securityholder for such Trustee's good faith
reliance on the provisions of this Trust Agreement. The provisions of this
Trust Agreement, to the extent that they restrict the duties and liabilities of
the Trustees otherwise existing at law or in equity, are agreed by the Depositor
and the Securityholders to replace such other duties and liabilities of the
Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each
Securityholder, by its acceptance of a Trust Security, agrees that it will look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of the Trust Securities given in accordance
with this Trust Agreement relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Payment
Account shall be to deal with such Property in a similar manner as the
Property Trustee deals with similar property for its own account, subject
to the protections and limitations on liability afforded to the
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Property Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the Depositor;
and money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Payment Account maintained by
the Property Trustee pursuant to Section 3.1 and except to the extent
otherwise required by law; and
(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of the Administrative
Trustees or the Depositor.
Section 8.2 Certain Notices.
(a) Within 5 Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
10.9, notice of such Event of Default to the Securityholders, the Administrative
Trustees and the Depositor, unless the Event of Default shall have been cured or
waived. For purposes of this Section the term "Event of Default" means any
event that is, or after notice or lapse of time or both would become, and Event
of Default.
(b) The Administrative Trustees shall transmit, to the Securityholders in
the manner and to the extent provided in Section 10.9, notice of the Depositor's
election to begin or further extend an Extension Period on the Debentures
(unless such election shall have been revoked) within the time specified for
transmitting such notice to the holders of the Debentures pursuant to the
Indenture as originally executed.
Section 8.3 Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action or (ii) in
construing any of the provisions of this Trust Agreement the Property Trustee
finds the same ambiguous or inconsistent with any other provisions contained
herein or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Preferred Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee
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shall deliver a notice to the Depositor requesting written instructions of the
Depositor as to the course of action to be taken and the Property Trustee shall
take such action, or refrain from taking such action, as the Property Trustee
shall be instructed in writing to take, or to refrain from taking, by the
Depositor; provided, however, that if the Property Trustee does not receive such
instructions of the Depositor within ten Business Days after it has delivered
such notice, or such reasonably shorter period of time set forth in such notice
(which to the extent practicable shall not be less than two Business Days), it
may, but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Trust Agreement as it shall deem advisable and in the
best interests of the Securityholders, in which event the Property Trustee shall
have no liability except for its own bad faith, negligence or willful
misconduct;
(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Depositor or the Administrative
Trustees;
(e) the Property Trustee shall have no duty to see to any recording, filing
or registration of any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any rerecording,
refiling or registration thereof;
(f) the Property Trustee may consult with counsel (which counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees) 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 in good faith and in reliance thereon and in accordance with
such advice, such counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees; the Property Trustee shall
have the right at any time to seek instructions concerning the administration of
this Trust Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it
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may see fit;
(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, provided that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or attorney
appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be protected in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
Section 8.4 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Debentures.
Section 8.5 May Hold Securities.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, except as provided in the definition of the term "Outstanding"
in Article I and subject to Sections 8.8 and 8.13, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
Section 8.6 Compensation; Indemnity; Fees.
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The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation for
all services rendered by them hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust) as specified in a separate agreement between any of the Trustees and the
Depositor;
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its gross negligence (or ordinary
negligence in the case of the Property Trustee), bad faith or willfulness; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee, representative or agent of any
Trustee, and (iv) any employee or agent of the Trust or its Affiliates,
(referred to herein as an "Indemnified Person") from and against any loss,
damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the creation,
operation or dissolution of the Trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Trust Agreement, except
that no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of gross
negligence (or ordinary negligence in the case of the Property Trustee), bad
faith or willful misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement.
No Trustee may claim any lien or charge on any Trust Property as a result
of any amount due pursuant to this Section 8.6.
The Depositor and any Trustee may (subject to Section 8.8) engage in or
possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the Holders of Trust Securities shall have no rights by
virtue of this Trust Agreement in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. Neither the Depositor, nor any Trustee, shall be obligated to present
any particular investment or other opportunity to the Trust even if such
opportunity is of a character that, if presented to the Trust, could be taken by
the Trust, and the Depositor or any Trustee shall have the right to take for its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Trustee may
engage or be interested in any financial or other transaction with the Depositor
or any Affiliate of the Depositor, or may act as
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depository for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Depositor or its Affiliates.
Section 8.7 Corporate Property Trustee Required; Eligibility of Trustees.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Property Trustee with respect to the
Trust Securities shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
Section 8.8 Conflicting Interests.
If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
Section 8.9 Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property may
at the time be located, the Depositor and the Administrative Trustees, by agreed
action of the majority of such Trustees, shall have power to appoint, and upon
the written request of the Administrative Trustees, the Depositor shall for such
purpose join with the Administrative Trustees in the execution, delivery, and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Property Trustee either to act as co-
trustee, jointly with the Property Trustee, of all or any part of such Trust
Property, or to the extent required by law to act as separate trustee of any
such
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property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. If the Depositor does not join in such
appointment within 15 days after the receipt by it of a request so to do, or in
case a Debenture Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make such appointment. Any co-trustee or
separate trustee appointed pursuant to this Section shall either be (i) a
natural person who is at least 21 years of age and a resident of the United
States or (ii) a legal entity with its principal place of business in the United
States that shall act through one or more persons authorized to bind such
entity.
Should any written instrument from the Depositor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:
(a) The Trust Securities shall be executed and delivered and all rights,
powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder shall be exercised
solely by such Trustees and not by such co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or imposed
upon the Property Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Property
Trustee or by the Property Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such co-
trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing executed
by it, with the written concurrence of the Depositor, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Property Trustee or any other trustee
hereunder.
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(e) The Property Trustee shall not be liable by reason of any act of a co-
trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee.
Section 8.10 Resignation and Removal; Appointment of Successor.
No resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Common
Securityholder. If the instrument of acceptance by the successor Trustee
required by Section 8.11 shall not have been delivered to the Relevant Trustee
within 30 days after the giving of such notice of resignation, the Relevant
Trustee may petition, at the expense of the Trust, any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by Act of the Common Securityholder. If
a Debenture Event of Default shall have occurred and be continuing, the Property
Trustee or the Delaware Trustee, or both of them, may be removed at such time by
Act of the Holders of a majority in Liquidation Amount of the Preferred
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust). In no event will the Holders of the Preferred Securities
have the right to vote to appoint, remove or replace the Administrative Trustee.
An Administrative Trustee may be removed by the Common Securityholder at any
time.
If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any cause,
at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees, and the retiring Trustee shall comply with the applicable requirements
of Section 8.11. If the Property Trustee or the Delaware Trustee shall resign,
be removed or become incapable of continuing to act as the Property Trustee or
the Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and be continuing, the Preferred Securityholders, by
Act of the Securityholders of a majority in Liquidation Amount of the Preferred
Securities then Outstanding delivered to the retiring Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees, and such successor
Trustee shall comply with the applicable requirements of Section 8.11. If an
Administrative Trustee shall resign, be removed or become incapable of acting as
Administrative Trustee, at a time when a Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder by Act of the Common
Securityholder delivered to the Administrative Trustee shall promptly appoint a
successor Administrative Trustee or Administrative Trustees and such successor
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Administrative Trustee or Trustees shall comply with the applicable requirements
of Section 8.11. If no successor Relevant Trustee shall have been so appointed
by the Common Securityholder or the Preferred Securityholders and accepted
appointment in the manner required by Section 8.11, any Securityholder who has
been a Securityholder of Trust Securities for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each removal
of a Trustee and each appointment of a successor Trustee to all Securityholders
in the manner provided in Section 10.8 and shall give notice to the Depositor.
Each notice shall include the name of the successor Relevant Trustee and the
address of its Corporate Trust Office if it is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees or Delaware Trustee, as the case may be, set forth
in Section 8.7).
Section 8.11 Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Trust by more than one Relevant Trustee, it
being understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust or any successor Relevant Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Relevant
Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
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No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.
Section 8.12 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of such Relevant Trustee, shall be the
successor of such Relevant Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
Section 8.13 Preferential Collection of Claims Against Depositor or Trust.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Trust Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
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Section 8.14 Reports by Property Trustee.
(a) Not later than March 31 of each year commencing with the year
commencing January 1, 1998, the Property Trustee shall transmit to all
Securityholders in accordance with Section 10.8, and to the Depositor, a brief
report dated as of the immediately preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section, a
written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of
its obligations under this Trust Agreement during the twelve-month period
(or, in the case of the initial report, the period since the Closing Date)
ending with such December 31 or, if the Property Trustee has not complied
in any material respect with such obligations, a description of such
noncompliance; and
(iii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by
the Property Trustee in the performance of its duties hereunder which it
has not previously reported and which in its opinion materially affects the
Trust Securities.
(b) In addition the Property Trustee shall transmit to Securityholders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with each national stock exchange
(including the American Stock Exchange), the Nasdaq Stock Market, Inc. or such
other interdealer quotation system or self-regulatory organization upon which
the Trust Securities are listed or traded, with the Commission and with the
Depositor.
Section 8.15 Reports to the Property Trustee.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
Section 8.16 Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any,
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provided for in this Trust Agreement that relate to any of the matters set forth
in Section 314 (c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act shall be given in the form of an Officers' Certificate.
Section 8.17 Number of Trustees.
(a) The number of Trustees shall be five (5) provided that the Holder of
all of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware Trustee
may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Trust Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
Section 8.18 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.7(a), including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of this Trust Agreement, as set forth herein.
Section 8.19 Voting.
Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by not
less than a majority of the Administrative Trustees, unless there are only two,
in which case both must consent.
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ARTICLE IX
Dissolution, Liquidation and Merger
Section 9.1 Dissolution Upon Expiration Date.
Unless dissolved earlier, the Trust shall automatically dissolve on
________ __, 2029 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.4.
Section 9.2 Early Dissolution.
The first to occur of any of the following events is an "Early Dissolution
Event," upon the occurrence of which the Trust shall dissolve:
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from the Depositor at
any time to dissolve the Trust and distribute Debentures to Securityholders in
exchange for a Like Amount of the Preferred Securities (which direction is
optional and wholly within the discretion of the Depositor);
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all the Debentures; and
(d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction.
Section 9.3 Dissolution.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall dissolve upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 9.4, or upon the
redemption of all of the Trust Securities pursuant to Section 4.2, of all
amounts required to be distributed hereunder upon the final payment of the Trust
Securities; (b) the payment of any expenses owed by the Trust; and (c) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust or
the Securityholders, and (d) the filing of a Certificate of Cancellation by the
Administrative Trustee under the Business Trust Act.
Section 9.4 Liquidation.
(a) If an Early Dissolution Event specified in clause (a), (b) or (d) of
Section 9.2
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occurs or upon the Expiration Date, the Trust shall be liquidated by the
Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of Debentures,
subject to Section 9.4(d). Notice of liquidation shall be given by the Property
Trustee by first-class mail, postage prepaid mailed not later than 30 nor more
than 60 days prior to the Liquidation Date to each Holder of Trust Securities at
such Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for certificates
representing the Like Amount of the Debentures, or if Section 9.4(d)
applies receive a Liquidation Distribution, as the Administrative Trustees
or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Administrative Trustees shall establish a record date for such distribution
(which shall be not more than 45 days prior to the Liquidation Date) and, either
itself acting as exchange agent or through the appointment of a separate
exchange agent, shall establish such procedures as it shall deem appropriate to
effect the distribution of Debentures in exchange for the Outstanding Trust
Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Debentures will be issued to holders
of Trust Securities Certificates, upon surrender of such certificates to the
Administrative Trustees or their agent for exchange, (iii) the Depositor shall
use its best efforts to have the Debentures listed on the American Stock
Exchange or on such other exchange, interdealer quotation system or self-
regulatory organization as the Preferred Securities are then listed, (iv) any
Trust Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures, accruing interest at the rate provided
for in the Debentures from the last Distribution Date on which a Distribution
was made on such Trust Securities Certificates until such certificates are so
surrendered (and until such certificates are so surrendered, no payments of
interest or principal will be made to Holders of Debentures represented by such
certificates) and (v) all rights of Securityholders holding Trust Securities
will cease, except the right of such Securityholders to receive a Like Amount of
Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
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wound-up or terminated, by the Property Trustee in such manner as the Property
Trustee determines. In such event, on the date of the dissolution of the Trust,
Securityholders will be entitled to receive out of the assets of the Trust
available for distribution to Securityholders, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, an amount equal to the
Liquidation Amount per Trust Security plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If, upon any such winding up or termination, the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then, subject
to the next succeeding sentence, the amounts payable by the Trust on the Trust
Securities shall be paid on a pro rata basis (based upon Liquidation Amounts).
The Holder of the Common Securities will be entitled to receive Liquidation
Distributions upon any such winding-up or termination pro rata (determined as
aforesaid) with Holders of Preferred Securities, except that, if a Debenture
Event of Default has occurred and is continuing, Holders of the Preferred
Securities shall have a priority over the Holders of Common Securities.
Section 9.5 Mergers, Consolidations, Amalgamations or Replacements of the
Trust.
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5 or Section 9.4. At the request of the Depositor, with the
consent of the Administrative Trustees and without the consent of the Holders of
the Preferred Securities, the Property Trustee or the Delaware Trustee, the
Trust may merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State; provided, that (i)
such successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) the Depositor expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the Debentures, (iii) the Successor Securities are listed or traded,
or any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed or traded, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Depositor has received an
Opinion of Counsel to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease,
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neither the Trust nor such successor entity will be required to register as an
investment company under the 1940 Act and (viii) the Depositor owns all of the
Common Securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
ARTICLE X
Miscellaneous Provisions
Section 10.1 Limitation of Rights of Securityholders.
The death or incapacity of any person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such person or any
Securityholder for such person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
Section 10.2 Amendment.
(a) This Trust Agreement may be amended from time to time by the Property
Trustee, the Administrative Trustees and the Depositor, without the consent of
any Securityholders, (i) to cure any ambiguity, correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, which shall not be inconsistent with the other provisions
of this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes as a
grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Trust will not be required to register as an investment company
under the 1940 Act; provided, however, that in the case of clause (i), such
action shall not adversely affect in any material respect the interests of any
Securityholder, and any such amendments of this Trust Agreement shall become
effective when notice thereof is given to the Securityholders.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Administrative Trustees and the Property
Trustee with (i) the consent of Trust Securityholders representing not less than
a majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding and (ii) receipt by the Trustees of an Opinion
49
<PAGE>
of Counsel to the effect that such amendment or the exercise of any power
granted to the Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status of an investment company under the 1940
Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Administrative Trustee shall enter into or consent to any amendment to this
Trust Agreement which would (i) cause the Trust to fail or cease to qualify for
the exemption from status of an investment company under the 1940 Act, (ii)
cause the Trust to fail or cease to be classified as a grantor trust for United
States federal income tax purposes, or (iii) cause the Preferred Securities to
be delisted by the American Stock Exchange.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Delaware Trustee or the Depositor, as the case may
be, this Trust Agreement may not be amended in a manner which imposes any
additional obligation on the Depositor or the Delaware Trustee.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be required
to enter into any amendment to this Trust Agreement which affects its own
rights, duties or immunities under this Trust Agreement. The Property Trustee
shall be entitled to receive an Opinion of Counsel and an Officers' Certificate
stating that any amendment to this Trust Agreement is in compliance with this
Trust Agreement.
Section 10.3 Counterparts.
This Trust Agreement may be executed in one or more counterparts, each of
which shall be an original and all of which shall constitute one and the same
instrument.
Section 10.4 Separability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining
50
<PAGE>
provisions shall not in any way be affected or impaired thereby.
Section 10.5 Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES).
Section 10.6 Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day that is a Business Day (except as otherwise
provided in Sections 4.1(a) and 4.2(d)), with the same force and effect as
though made on the date fixed for such payment, and no interest shall accrue
thereon for the period after such date.
Section 10.7 Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust or the Relevant Trustee, including
any successor by operation of law. Except in connection with a consolidation,
merger or sale involving the Depositor that is permitted under Article Eight of
the Indenture and pursuant to which the assignee agrees in writing to perform
the Depositor's obligations hereunder, the Depositor shall not assign its
obligations hereunder.
Section 10.8 Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 10.9 Reports, Notices and Demands.
Any report, notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Securityholder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a
Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Common Securityholder or the Depositor, to Glacier Water
Services, Inc., 2261 Cosmos Court, Carlsbad, California, 92009, Attention:
Jerry A. Gordon, facsimile number: (760) 930-0058. Such notice, demand or other
communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
51
<PAGE>
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee, the Delaware Trustee or the Administrative Trustees
shall be given in writing addressed (until another address is published by the
Trust) as follows: (a) with respect to the Property Trustee to Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington , Delaware
19890- 0001; (b) with respect to the Delaware Trustee, to Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration; and (c) with respect to
the Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention Administrative Trustees of GLACIER WATER TRUST I."
Such notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
Section 10.10 Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any Bankruptcy Laws or
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor takes action in violation of this
Section 10.10, the Property Trustee agrees, for the benefit of Securityholders,
that at the expense of the Depositor, it shall file an answer with the
bankruptcy court or otherwise properly contest the filing of such petition by
the Depositor against the Trust or the commencement of such action and raise the
defense that the Depositor has agreed in writing not to take such action and
should be stopped and precluded therefrom and such other defenses, if any, as
counsel for the Trustee or the Trust may assert. The provisions of this Section
10.10 shall survive the termination of this Trust Agreement.
Section 10.11 Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or excluded, as the case may be.
52
<PAGE>
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 10.12 Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
Glacier Water Services, Inc.
By:___________________________
Name: Jerry A. Gordon
Title: President and Chief Operating Officer
Wilmington Trust Company,
as Property Trustee
By:___________________________
Name:
Title:
Wilmington Trust Company,
as Delaware Trustee
By:___________________________
Name:
Title:
______________________________
Jerry R. Welch,
53
<PAGE>
as Administrative Trustee
________________________________
Jerry A. Gordon,
as Administrative Trustee
________________________________
Brenda K. Foster,
as Administrative Trustee
54
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
55
<PAGE>
EXHIBIT B
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099
__________, 1997
Attention: __________________
General Counsel's Office
Re: GLACIER WATER TRUST I ____% Cumulative Trust Preferred Securities
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the GLACIER
WATER TRUST I ____% Cumulative Trust Preferred Securities, (the "Trust Preferred
Securities"), of GLACIER WATER TRUST I, a Delaware business trust (the
"Issuer"), formed pursuant to an Amended and Restated Trust Agreement between
Glacier Water Services, Inc. ("Glacier") and Wilmington Trust Company, as
Property Trustee, Wilmington Trust Company, as Delaware Trustee, and the
Administrative Trustees named therein. The payment of distributions on the Trust
Preferred Securities, and payments due upon liquidation of the Issuer or
redemption of the Trust Preferred Securities, to the extent the Issuer has funds
available for the payment thereof are guaranteed by Glacier to the extent set
forth in a Guarantee Agreement dated ____________, 1998 by Glacier with respect
to the Trust Preferred Securities. Glacier and the Issuer propose to sell the
Trust Preferred Securities to certain Underwriters (the "Underwriters") pursuant
to a Underwriting Agreement dated ____________, 1998 by and among the
Underwriters, the Issuer and Glacier, and the Underwriters wish to take delivery
of the Trust Preferred Securities through DTC. Wilmington Trust Company is
acting as transfer agent and registrar with respect to the Trust Preferred
Securities (the "Transfer Agent and Registrar").
To induce DTC to accept the Trust Preferred Securities as eligible for
deposit at DTC, and to act in accordance with DTC's rules with respect to the
Trust Preferred Securities, the Issuer, the Transfer Agent and Registrar and DTC
agree among each other as follows:
1. Prior to the closing of the sale of the Trust Preferred Securities to
the Underwriters, which is expected to occur on or about ____________, 1998,
there shall be deposited with DTC
56
<PAGE>
one or more global certificates (individually and collectively, the "Global
Certificate") registered in the name of DTC's Trust Preferred Securities
nominee, Cede & Co., representing an aggregate of 2,600,000 Trust Preferred
Securities and bearing the following legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer or its agent for registration
of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for the
voting by holders of the Trust Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Trust Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event at least 5
business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Trust Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Trust Preferred Securities is required; and (c) the date any required notice is
to be mailed by or on behalf of the Issuer to holders of Trust Preferred
Securities or published by or on behalf of the Issuer (whether by mail or
publication, the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before the
Publication Date. The Issuer or the Transfer Agent and Registrar will forward
such notice either in a separate secure transmission for each CUSIP number or in
a secure transmission of multiple CUSIP numbers (if applicable) that includes a
manifest or list of each CUSIP number submitted in that transmission. (The
party sending such notice shall have a method to verify subsequently the use of
such means and the timeliness of such notice.) The Publication Date shall be not
less than 30 calendar days nor more than 60 calendar days prior to the payment
of any such distribution or any such offering or issuance of rights with respect
to the Trust Preferred Securities. After establishing the amount of payment to
be made on the Trust Preferred Securities, the Issuer or the Transfer Agent and
Registrar will notify DTC's Dividend Department of such payment 5 business days
prior to payment date. Notices to DTC's Dividend Department by telecopy shall
be sent to (212) 709-1723. Such notices by mail or by any other
57
<PAGE>
means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's receipt
of such telecopy by telephoning the Dividend Department at (212) 709-1270.
5. In the event of a redemption by the Issuer of the Trust Preferred
Securities, notice specifying the terms of the redemption and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC not less than 30 calendar days prior to such event by a secure
means in the manner set forth in paragraph 4. Such redemption notice shall be
sent to DTC's Call Notification Department at (516) 227-4164 or (516) 227-4190,
and receipt of such notice shall be confirmed by telephoning (516) 227-4070.
Notice by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Trust Preferred Securities,
notice specifying the terms of the tender and the Publication Date of such
notice shall be sent by the Issuer or the Transfer Agent and Registrar to DTC by
a secure means and in a timely manner as described in paragraph 4. Notices to
DTC pursuant to this paragraph and notices of other corporate actions (including
mandatory tenders, exchanges and capital changes) shall be sent, unless
notification to another department is expressly provided for herein, by telecopy
to DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094 and
receipt of such notice shall be confirmed by telephoning (212) 709-6884, or by
mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Trust Preferred Securities and the accompanying
designation of the Trust Preferred Securities, which, as of the date of this
letter, is "GLACIER WATER TRUST I ____% Cumulative Trust Preferred Securities.
58
<PAGE>
8. Distribution payments or other cash payments with respect to the Trust
Preferred Securities evidenced by the Global Certificate shall be received by
Cede & Co., as nominee of DTC, or its registered assigns in next day funds on
each payment date (or in accordance with existing arrangements between the
Issuer or the Transfer Agent and Registrar and DTC). Such payments shall be
made payable to the order of Cede & Co., and shall be addressed as follows:
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
9. DTC may by prior written notice direct the Issuer and the Transfer Agent
and Registrar to use any other telecopy number or address of DTC as the number
or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Trust Preferred Securities outstanding evidenced by Global
Certificates, DTC, in its discretion: (a) may request the Issuer or the Transfer
Agent and Registrar to issue and countersign a new Global Certificate; or (b)
may make an appropriate notation on the Global Certificate indicating the date
and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Trust Preferred Securities at any time by giving at least 90
days' prior written notice to the Issuer and the Transfer Agent and Registrar
(at which time DTC will confirm with the Issuer or the Transfer Agent and
Registrar the aggregate number of Trust Preferred Securities deposited with it)
and discharging its responsibilities with respect thereto under applicable law.
Under such circumstances, the Issuer may determine to make alternative
arrangements for book-entry settlement for the Trust Preferred Securities, make
available one or more separate global certificates evidencing Trust Preferred
Securities to any Participant having Trust Preferred Securities credited to its
DTC account, or issue definitive Trust Preferred Securities to the beneficial
holders thereof, and in any such case, DTC agrees to cooperate fully with the
Issuer and the Transfer Agent and Registrar, and to return the Global
Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of Trust
Preferred Securities shall be able to obtain definitive Trust Preferred
Securities, the Issuer or the Transfer Agent and Registrar shall notify DTC of
the availability of certificates. In such event, the Issuer or the Transfer
Agent and Registrar shall issue, transfer and exchange certificates in
appropriate amounts, as required by DTC and others, and DTC agrees to cooperate
fully with the Issuer and the Transfer Agent and Registrar and to return the
Global Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
59
<PAGE>
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of GLACIER WATER TRUST I.
Very truly yours,
GLACIER WATER TRUST I
(as Issuer)
By:____________________________________
Name:
Title:
Wilmington Trust Company,
as Trustee, Paying Agent and Registrar
By:____________________________________
Name:
Title:
Received and Accepted:
The Depository Trust Company
By:________________________________
Authorized Officer
60
<PAGE>
EXHIBIT C
CERTIFICATE EVIDENCING COMMON SECURITIES
61
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
62
<PAGE>
EXHIBIT E
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
63
<PAGE>
EXHIBIT 4.5
THIS TRUST PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") OR A NOMINEE OF THE DEPOSITORY. THIS
TRUST PREFERRED SECURITY IS EXCHANGEABLE FOR TRUST PREFERRED SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND NO TRANSFER OF
THIS TRUST PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS TRUST PREFERRED
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS TRUST PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK) TO
CFAC CAPITAL I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY TRUST PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
CERTIFICATE NUMBER P-1 NUMBER OF TRUST PREFERRED SECURITIES: _________
CUSIP NO.
_____________
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
GLACIER WATER TRUST I
_____% CUMULATIVE TRUST PREFERRED SECURITIES,
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GLACIER WATER TRUST I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder")
is the registered owner of ________________________________ (_________) Trust
Preferred Securities of the Trust representing an undivided beneficial interest
in the assets of the Trust and designated the GLACIER WATER TRUST I _____%
Cumulative Trust Preferred Securities, (liquidation amount $25 per Trust
Preferred Security) (the "Trust Preferred Securities"). The Trust Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in Section 5.4 of the Trust
Agreement (as defined below). The designations, rights, privileges,
<PAGE>
restrictions, preferences and other terms and provisions of the Trust Preferred
Securities are set forth in, and this certificate and the Trust Preferred
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of __________ ____, 1998, as the same may be amended from time to
time (the "Trust Agreement") including the designation of the terms of Trust
Preferred Securities as set forth therein. The Holder is entitled to the
benefits of the Guarantee Agreement entered into by Glacier Water Services,
Inc., a Delaware corporation, and Wilmington Trust Company, a Delaware banking
corporation, as guarantee trustee, dated as of _____________, 1998, (the
"Guarantee"), to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee to the Holder without charge upon written
request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust Agreement and
is entitled to the benefits thereunder.
In Witness Whereof, one of the Administrative Trustees of the Trust has
executed this certificate this ____________ day of ________, 1998.
GLACIER WATER TRUST I
By: _____________________________________
Jerry A. Gordon
Administrative Trustee
<PAGE>
ASSIGNMENT
For Value Received, the undersigned assigns and transfers this Trust
Preferred Security to: _________________________________________________.
________________________
(Insert assignee's social security or tax identification number)
___________________________________
___________________________________
(Insert address and zip code of assignee)
and irrevocably appoints________________________________________________________
_____________________________________________________________, as agent to
transfer this Trust Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ________________
Signature:______________________________________________________________________
(Sign exactly as your name appears on the other side of this Trust
Preferred Security Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
Rule 17Ad-15 of the regulations promulgated under Securities Exchange Act of
1934, as amended.
<PAGE>
EXHIBIT 4.6
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES: 80,412
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
GLACIER WATER TRUST I
____% COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
GLACIER WATER TRUST I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Glacier Water
Services, Inc. (the "Holder") is the registered owner of Eighty Thousand Four
Hundred and Twelve (80,412) common securities of the Trust representing an
undivided beneficial interest in the assets of the Trust and designated the
____% Common Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof shall be void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of __________, 1998, as the same may be amended from time to time (the "Trust
Agreement") including the designation of the terms of the Common Securities as
set forth therein. The Trust will furnish a copy of the Trust Agreement to the
Holder without charge upon written request to the Trust at its principal place
of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
In Witness Whereof, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of _________, 1998.
GLACIER WATER TRUST I
By: ___________________________________
Name: Jerry A. Gordon
Title: Administrative Trustee
<PAGE>
EXHIBIT 4.7
GUARANTEE AGREEMENT
BETWEEN
GLACIER WATER SERVICES, INC.
(AS GUARANTOR)
AND
WILMINGTON TRUST COMPANY
(AS TRUSTEE)
DATED AS OF
_____________, 1998
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of 1939, as amended Guarantee Agreement
- --------------------------------- -------------------
<S> <C>
310(a). 4.1(a)
310(b). 4.1(c), 2.8
310(c). Inapplicable
311(a). 2.2(b)
311(b). 2.2(b)
311(c). Inapplicable
312(a). 2.2(a)
312(b). 2.2(b)
313. 2.3
314(a). 2.4
314(b). Inapplicable
314(c). 2.5
314(d). Inapplicable
314(e). 1.1, 2.5, 3.2
314(f). 2.1, 3.2
315(a). 3.1 (d)
315(b). 2.7
315(c). 3.1
315(d). 3.1(d)
316(a). 1.1, 2.6, 5.4
316(b). 5.3
316(c). 9.2
317(a). Inapplicable
317(b). Inapplicable
318(a). 2.1(b)
318(b). 2.1
318(c). 2.1(a)
</TABLE>
______________
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS......................................................................................... 1
SECTION 1. Definitions................................................................................ 1
ARTICLE II. TRUST INDENTURE ACT................................................................................ 4
SECTION 1. Trust Indenture Act; Application........................................................... 4
SECTION 2. List of Holders............................................................................ 4
SECTION 3. Reports by the Guarantee Trustee........................................................... 5
SECTION 4. Periodic Reports to the Guarantee Trustee.................................................. 5
SECTION 5. Evidence of Compliance with Conditions Precedent........................................... 5
SECTION 6. Events of Default; Waiver.................................................................. 5
SECTION 7. Event of Default; Notice................................................................... 5
SECTION 8. Conflicting Interests...................................................................... 6
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE................................................................................................ 6
SECTION 1. Powers and Duties of the Guarantee Trustee................................................. 6
SECTION 2. Certain Rights of Guarantee Trustee........................................................ 8
SECTION 3. Indemnity.................................................................................. 9
ARTICLE IV. GUARANTEE TRUSTEE.................................................................................. 10
SECTION 1. Guarantee Trustee: Eligibility............................................................. 10
SECTION 2. Appointment, Removal and Resignation of the Guarantee
Trustee....................................................................................... 10
ARTICLE V. GUARANTEE........................................................................................... 11
SECTION 1. Guarantee.................................................................................. 11
SECTION 2. Waiver of Notice and Demand................................................................ 11
SECTION 3. Obligations Not Affected................................................................... 11
SECTION 4. Rights of Holders.......................................................................... 12
SECTION 5. Guarantee of Payment....................................................................... 13
SECTION 6. Subrogation................................................................................ 13
SECTION 7. Independent Obligations.................................................................... 13
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ARTICLE VI. COVENANTS AND SUBORDINATION........................................................................ 13
SECTION 1. Subordination.............................................................................. 13
SECTION 2. Pari Passu Guarantees...................................................................... 13
ARTICLE VII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR
LEASE.................................................................................................. 14
SECTION 1. Guarantor May Consolidate, Etc., Only on Certain Terms..................................... 14
SECTION 2. Successor Guarantor Substituted............................................................ 14
ARTICLE VIII. TERMINATION...................................................................................... 15
SECTION 1. Termination................................................................................ 15
ARTICLE IX. MISCELLANEOUS...................................................................................... 15
SECTION 1. Successors and Assigns..................................................................... 15
SECTION 2. Amendments................................................................................. 15
SECTION 3. Notices.................................................................................... 16
SECTION 4. Benefit.................................................................................... 17
SECTION 5. Interpretation............................................................................. 17
SECTION 6. Governing Law.............................................................................. 17
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of _____________, 1998, is executed and
delivered by GLACIER WATER SERVICES, INC., a Delaware corporation (the
"Guarantor") having its principal office at 2261 Cosmos Court, Carlsbad,
California, 92009, and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders from time
to time of the Preferred Securities (as defined herein) of Glacier Water Trust
I, a Delaware statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
_____________, 1998 (the "Trust Agreement"), among the Guarantor, as Depositor,
Wilmington Trust Company as Property Trustee, Wilmington Trust Company, as
Delaware Trustee, the Administrative Trustees named therein and the Holders from
time to time of undivided beneficial interests in the assets of the Trust, the
Trust issued $65,000,000 aggregate Liquidation Amount (as defined in the Trust
Agreement) of its _____% Cumulative Trust Preferred Securities, Liquidation
Amount $25 per Trust Preferred Security (the "Preferred Securities");
WHEREAS, the Preferred Securities will be issued by the Trust and the
proceeds thereof, together with the proceeds from the issuance of the Trust's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which was deposited with
Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets;
WHEREAS, as an incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement and
pursuant to Section 5.1 hereof extends the Guarantee for the benefit of the
Holders from time to time of the Preferred Securities.
ARTICLE I. DEFINITIONS
SECTION 1.1 Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in
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the Trust Agreement and the Indenture (as defined herein), each as in effect on
the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of the
Guarantor shall not be deemed to be an Affiliate of the Trust. For purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Board of Directors" means either the board of directors of the Guarantor
or any committee of that board duly authorized to act hereunder.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 90 days after receipt of such notice.
"Guarantee" has the meaning set forth in Section 5.1.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Trust: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Preferred Securities,
to the extent the Trust shall have funds on hand available therefor at such
time, (ii) the applicable Redemption Price (as defined in the Trust Agreement),
to the extent the Trust shall have funds on hand available therefor at such
time, and (iii) upon a voluntary or involuntary termination, winding up or
liquidation of the Trust, unless Debentures are distributed to the Holders, the
lesser of (a) the aggregate of the Liquidation Distribution (as defined in the
Trust Agreement) and (b) the amount of assets of the Trust remaining available
for distribution to Holders of Preferred Securities after satisfaction of
liabilities to creditors of the Trust as required by applicable law.
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Trust, of any Preferred Securities; provided, however, that in determining
whether the holders of the
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requisite percentage of Preferred Securities have given any request, notice,
consent or waiver hereunder, "Holder" shall not include the Guarantor, the
Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
______________, 1998, as supplemented and amended between the Guarantor and
Wilmington Trust Company, as trustee.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, a vote by the Holder(s), voting
separately as a class, of more than 50% of the Liquidation Amount of all then
outstanding Preferred Securities issued by the Trust.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman or a Vice Chairman of the Board of Directors of such
Person or the President or a Vice President of such Person, and by the Chief
Financial Officer, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each officer, such
condition or covenant has been complied with.
"Other Guarantees" means any guarantees similar to the Guarantee issued,
from time to time, by the Guarantor on behalf of holders of one or more series
of Preferred Securities issued by any Glacier Trust (as defined in the
Indenture) other than the Trust.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
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"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer of the Corporate Trust Department of the Guarantee Trustee and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before January 15 and July 15 of each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of a date not more than 15
days prior to the delivery thereof, and (b) at such other times as the Guarantee
Trustee may request in writing, within 30 days after the receipt by the
Guarantor of any such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished, in each case to the extent such
information is in the possession or control of the Guarantor and is not
identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Guarantee Trustee.
Not later than July 15 of each year, commencing on the year beginning
January 1, 1998, the Guarantee Trustee shall provide to the Holders such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act, in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee, on an annual basis,
such evidence of compliance with such conditions precedent, if any, provided for
in this Guarantee Agreement that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred Securities
may, by vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
SECTION 2.7 Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Guarantee Trustee, unless such
defaults have been cured before the giving of such notice, provided, that,
except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the Board of Directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
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(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained written notice, of such Event of
Default.
SECTION 2.8 Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee for the benefit
of the Holders, and the Guarantee Trustee shall not transfer this Guarantee to
any Person except to a Holder exercising his or her rights pursuant to Section
5.4(iv) or to a Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The
right, title and interest of the Guarantee Trustee shall automatically vest in
any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee
Trustee of its appointment hereunder, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
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(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions that
by any provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
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SECTION 3.2 Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document reasonably believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or opinion. Such legal
counsel may be legal counsel to the Guarantor or any of its Affiliates and
may be one of its employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Guarantee Agreement from any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement.
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(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (C) shall be
protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3 Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without negligence or
bad faith on the part of the Guarantee Trustee, arising out of or in connection
with the acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
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ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee: Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(a) of the Trust Indenture Act. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority, then, for the purposes of this
Section 4.1(a)(ii) and to the extent permitted by the Trust Indenture Act,
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
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(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Trust may
have or assert other than the defense of payment (the "Guarantee"). The
Guarantee is a continuing guarantee, and the Guarantor fully, knowingly and
unconditionally waives any right the Guarantor may have to revoke the Guarantee
as to any future transactions under Section 2815 of the California Civil Code or
otherwise. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Trust to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Guarantee Trustee, Trust or
any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as provided in the Indenture),
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Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee will be
deposited with the Guarantee Trustee to be held for the benefit of the Holders;
(ii) the Guarantee Trustee has the right to enforce this Guarantee on behalf of
the Holders; (iii) the Holders of a Majority in Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder
may institute a legal proceeding directly against the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Trust or any other Person.
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SECTION 5.5 Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection. This
Guarantee will not be discharged except by payment of the Guarantee Payments in
full (without duplication of amounts theretofore paid by the Trust) or upon
distribution of Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to the Holders by the Guarantor
under this Guarantee Agreement and shall have the right to waive payment by the
Trust pursuant to Section 5.1; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Trust with respect to the Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION 6.1 Subordination.
The obligations of the Guarantor under this Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in
right of payment to all Senior Debt and Subordinated Debt (as defined in the
Indenture) in the same manner as Debentures (as defined in the Trust Agreement).
SECTION 6.2 Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee shall rank pari passu
with the obligations of the Guarantor under all Other Guarantees.
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ARTICLE VII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 7.1 Guarantor May Consolidate, Etc., Only on Certain Terms.
The Guarantor shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Guarantor
or convey, transfer or lease its properties and assets substantially as an
entirety to the Guarantor, unless:
(1) in case the Guarantor shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Guarantor is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Guarantor substantially as an
entirety shall be a corporation, partnership or trust organized and existing
under the laws of the United States of America or any State or the District of
Columbia, and shall expressly assume the Guarantor's obligations under this
Guarantee;
(2) immediately after giving effect thereto, no Event of Default, and no
event which, after notice or lapse of time, or both, would become an Event of
Default, shall have happened and be continuing;
(3) such consolidation, merger, conveyance, transfer or lease is permitted
under the Trust Agreement and the Indenture and does not give rise to any breach
or violation of the Trust Agreement or the Indenture; and
(4) the Guarantor has delivered to the Guarantee Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and assumption of the Guarantor's
obligations under this Guarantee Agreement comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with; and the Guarantee Trustee, subject to Section 3.1 hereof, may
rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 7.1.
SECTION 7.2 Successor Guarantor Substituted.
Upon any consolidation or merger by the Guarantor with or into any other
Person, or any conveyance, transfer or lease by the Guarantor of its properties
and assets substantially as an entirety to any Person in accordance with Section
7.1, the successor Person formed by such consolidation or into which the
Guarantor is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Guarantor under this Guarantee Agreement with the same effect as if such
successor Person had been named as the Guarantor herein; and in the event of any
such conveyance,
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transfer or lease the Guarantor shall be discharged from all obligations and
covenants under this Guarantee Agreement.
ARTICLE VIII. TERMINATION
SECTION 8.1 Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon the earliest of (i) full payment of the applicable Redemption Price
of all Preferred Securities, (ii) the distribution of Debentures to the Holders
in exchange for all of the Preferred Securities or (iii) full payment of the
amounts payable in accordance with the Trust Agreement upon liquidation of the
Trust. Notwithstanding the foregoing clauses (i) through (iii), this Guarantee
Agreement will continue to be effective or will be reinstated if it has been
terminated pursuant to one of such clauses (i) through (iii), as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Preferred Securities or this Guarantee Agreement.
ARTICLE IX. MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VII hereof and
Article VIII of the Indenture, the Guarantor shall not assign its obligations
hereunder.
SECTION 9.2 Amendments.
Except with respect to any changes which do not adversely affect the rights
of the Holders in any material respect (in which case no vote will be required),
this Guarantee Agreement may not be amended without the prior approval of the
Holders of not less than a Majority in Liquidation Amount of the Preferred
Securities. The provisions of Article VI of the Trust Agreement concerning
meetings of the Holders shall apply to the giving of such approval.
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SECTION 9.3 Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address, facsimile number or to the attention of such other Person as the
Guarantor may give notice to the Holders:
Glacier Water Services, Inc.
2261 Cosmos Court
Carlsbad, California 92009
Facsimile No.: (760) 930-0058
Attention: Jerry A. Gordon
(b) if given to the Trust, in care of the Guarantee Trustee, at the
Trust's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Trust may give notice to the
Holders:
Glacier Water Trust I
2261 Cosmos Court
Carlsbad, California 92009
Facsimile No.: (760) 930-0058
Attention: Jerry A. Gordon
with a copy to:
Wilmington Trust Company
1100 North Market
Wilmington, Delaware 19890
Facsimile No.: (302) 651-1000
Attention: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on the books and
records of the Trust.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed
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address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or inability to
deliver.
SECTION 9.4 Benefit.
This Guarantee is solely for the benefit of the Holders and is not
separately transferable from the Preferred Securities.
SECTION 9.5 Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 9.6 Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
Glacier Water Services, Inc.
By: ___________________________________
Name: Jerry A. Gordon
Title: President and Chief Operating Officer
Wilmington Trust Company
as Guarantee Trustee
By: ___________________________________
Name:
Title:
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EXHIBIT 4.8
AGREEMENT AS TO EXPENSES AND LIABILITIES
Agreement As To Expenses And Liabilities (this "Agreement"), dated as of
____________, 1998, between GLACIER WATER SERVICES, INC., a Delaware corporation
(the "Company"), and GLACIER WATER TRUST I, a Delaware business trust (the
"Trust").
Whereas, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Junior Subordinated Deferrable Interest Debentures
(the "Debentures") from the Company and to issue and sell ____% Cumulative Trust
Preferred Securities (the "Trust Preferred Securities") with such powers,
preferences and special rights and restrictions as are set forth in the Amended
and Restated Trust Agreement of the Trust dated as of __________, 1998 as the
same may be amended from time to time (the "Trust Agreement");
Whereas, the Company will directly or indirectly own all of the Common
Securities of the Trust and will issue the Debentures;
Now, Therefore, in consideration of the purchase by each holder of the
Trust Preferred Securities, which purchase the Company hereby agrees shall
benefit the Company and which purchase the Company acknowledges will be made in
reliance upon the execution and delivery of this Agreement, the Company and the
Trust hereby agree as follows:
ARTICLE I
Section 1.1. Guarantee by the Company.
Subject to the terms and conditions hereof, the Company hereby irrevocably
and unconditionally guarantees to each person or entity to whom the Trust is now
or hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to holders
of any Trust Preferred Securities or other similar interests in the Trust the
amounts due such holders pursuant to the terms of the Trust Preferred Securities
or such other similar interests, as the case may be. This Agreement is intended
to be for the benefit of, and to be enforceable by, all such Beneficiaries,
whether or not such Beneficiaries have received notice hereof.
Section 1.2. Term of Agreement.
This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Trust Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise) and (b) the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Trust Preferred Securities or any Beneficiary must restore
payment of any
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sums paid under the Trust Preferred Securities, under any Obligation, under the
Guarantee Agreement dated the date hereof by the Company and Wilmington Trust
Company, a Delaware banking corporation, as guarantee trustee or under this
Agreement for any reason whatsoever. This Agreement is continuing, irrevocable,
unconditional and absolute and the Company fully, knowingly and unconditionally
waives any right to revoke the guarantee under Section 2895 of the California
Civil Code or otherwise.
Section 1.3. Waiver of Notice.
The Company hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and the Company hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
Section 1.4. No Impairment.
The obligations, covenants, agreements and duties of the Company under this
Agreement shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation under,
arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Trust granting indulgence or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Company with respect to the happening of any of the
foregoing.
Section 1.5. Enforcement.
A Beneficiary may enforce this Agreement directly against the Company and
the Company waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding against the
Company.
Section 1.6. Subrogation.
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The Company shall be subrogated to all (if any) rights of the Trust in
respect of any amounts paid to the Beneficiaries by the Company under this
Agreement; provided, however, that the Company shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any
rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Agreement, if, at the time of any such payment, any amounts are due and unpaid
under this Agreement.
ARTICLE II
Section 2.1. Binding Effect.
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the Beneficiaries.
Section 2.2. Amendment.
So long as there remains any Beneficiary or any Trust Preferred Securities
are outstanding, this Agreement shall not be modified or amended in any manner
adverse to such Beneficiary or to the holders of the Trust Preferred Securities.
Section 2.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or by registered
or certified mail, addressed as follows (and if so given, shall be deemed given
when mailed or upon receipt of an answer-back, if sent by telex):
GLACIER WATER TRUST I
c/o Glacier Water Services, Inc.
2261 Cosmos Court
Carlsbad, California 92009
Facsimile No.: (760) 930-0058
Attention: Jerry A. Gordon
GLACIER WATER SERVICES, INC.
2261 Cosmos Court
Carlsbad, California 92009
Facsimile No.: (760) 930-0058
Attention: Jerry A. Gordon
Section 2.4. Choice of Law.
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THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES).
This Agreement is executed as of the day and year first above written.
Glacier Water Services, Inc.
By:_____________________________________
Name: Jerry A. Gordon
Title: President and Chief Operating
Officer
Glacier Water Trust I
By:_____________________________________
Name: Brenda K. Foster
Title: Administrative Trustee
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EXHIBIT 4.9
Face of Security
GLACIER WATER SERVICES, INC.
___% JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURE DUE ___________, 2028
Registered No. ____________ Principal Amount: $___________
GLACIER WATER SERVICES, INC., a corporation organized and existing
under the laws of Delaware (hereinafter called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to Wilmington Trust Company, as
Property Trustee, for GLACIER WATER TRUST I, or registered assigns, the
principal sum of $____________ on __________, 2028; provided that the Company
may shorten the Stated Maturity of the principal of this Security to a date not
earlier than __________, 2003. The Company further promises to pay interest,
compounded quarterly, on said principal sum from the date of original issuance
or from the most recent interest payment date (each such date, an "Interest
Payment Date") on which interest has been paid or duly provided for, monthly
(subject to deferral as set forth herein) in arrears on the 15th day of each
calendar month of each year commencing __________ 15, 1998 at the rate of ____%
per annum, until the principal hereof shall have become due and payable, plus
Additional Interest, if any, until the principal hereof is paid or duly provided
for or made available for payment and on any overdue principal and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the rate of ____% per
annum, compounded quarterly. The amount of interest payable for any period
shall be computed on the basis of twelve 30-day months and a 360-day year. The
amount of interest payable for any partial period shall be computed on the basis
of the number of days elapsed in a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Security is not a
Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on the date the payment was originally payable. A "Business Day" shall
mean any day other than a Saturday or Sunday a day on which banking institutions
in the State of California are authorized or required by law or executive order
to remain closed or on a day on which the Corporate Trust Office of the Trustee,
or the principal office of the Property Trustee under the Trust Agreement
(hereinafter referred to) for GLACIER WATER TRUST I is closed for business. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
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installment, which shall be the next Business Day preceding such Interest
Payment Date. Any such interest installment not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right at any time during the term of this Security to
defer payment of interest on this Security, at any time or from time to time,
for up to 60 consecutive monthly interest payment periods with respect to each
deferral period (each an "Extension Period"), (during which Extension Periods
the Company shall have the right to make partial payments of interest on any
Interest Payment Date, and at the end of which the Company shall pay all
interest then accrued and unpaid (together with Additional Interest thereon to
the extent permitted by applicable law)); provided, however, that no Extension
Period shall extend beyond the Stated Maturity of the principal of this
Security; provided, further, that during any such Extension Period, the Company
shall not, and shall not permit any Subsidiary of the Company to, (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt security
of the Company (including Securities issued by the Company pursuant to the
Indenture other than the Securities represented by this certificate) that ranks
pari passu with or junior in interest to this Security, (iii) make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any Subsidiaries of the Company (if such guarantee ranks pari passu in all
respects with or junior in interest to this Security (other than (a) dividends
or distributions in capital stock of the Company (which includes common and
preferred stock), (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Glacier Water Services, Inc. Guarantee
related to the Trust Preferred Securities issued by GLACIER WATER TRUST I, and
(d) purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers, employees
or consultants or (iv) redeem, purchase or acquire less than all of the
Securities represented by this certificate or any of the Preferred Securities.
Prior to the termination of any such Extension Period, the Company may further
extend such Extension Period, provided that such extension does not cause such
Extension Period to exceed 60 consecutive interest payment periods or to extend
beyond the Stated Maturity. Upon the termination of any such Extension Period
and upon the payment of all amounts then due on any Interest Payment Date, and
subject to the foregoing limitation, the Company may elect to begin a new
Extension Period. No interest shall be due and
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payable during an Extension Period except at the end thereof. The Company shall
give the Trustee, the Property Trustee and the Administrative Trustees of
GLACIER WATER TRUST I notice of its election to begin any Extension Period at
least one Business Day prior to the earlier of (i) the date on which
Distributions on the Trust Preferred Securities would be payable except for the
election to begin such Extension Period, (ii) the date the Administrative
Trustees are required to give notice to the American Stock Exchange, the New
York Stock Exchange, the Nasdaq Stock Market, Inc. or other applicable stock
exchange or automated quotation system on which the Preferred Securities are
then listed or quoted or to holders of such Preferred Securities of the record
date, or (iii) the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Trustee shall give
notice of the Company's election to begin a new Extension Period to the holders
of the Preferred Securities. There is no limitation on the number of times that
the Company may elect to begin an Extension Period.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee or at the office of
such paying agent or paying agents as the Company may designate from time to
time, maintained for that purpose in the United States, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the address
of the person entitled thereto as such address shall appear in the Securities
Register of (ii) by transfer to an account maintained by the person entitled
thereto, in immediately available funds, at such place and to such account as
may be designated by the Person entitled thereto as specified in the Securities
Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, unsecured and will rank junior and subordinate and subject in
right of payments to the prior payment in full of all Senior Debt and
Subordinated Debt, and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Security, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his behalf to take such actions as may be necessary or
appropriate to effectuate the subordination so provided, and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof,
by his acceptance hereof, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Debt and Subordinated Debt, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
GLACIER WATER SERVICES, INC.,
a Delaware corporation
By: ___________________________________
Name:
Title:
Attest:
__________________________________
Name:
Title:
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Reverse of Security
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Indenture, dated as of __________, 1998
(herein called the "Indenture"), between the Company and Wilmington Trust
Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof, limited in aggregate principal
amount to $67,010,300.
All terms used in this Security that are defined in the Indenture and
in the Amended and Restated Trust Agreement, dated as of _____________, 1998, as
amended (the "Trust Agreement"), for GLACIER WATER TRUST I among Glacier Water
Services, Inc., as Depositor, and the Trustees named therein, shall have the
meanings assigned to them in the Indenture or the Trust Agreement, as the case
may be.
The Company may at any time, at its option, on or after __________,
2003, and subject to the terms and conditions of Article XI of the Indenture,
redeem this Security in whole at any time or in part from time to time, without
premium or penalty, at a redemption price equal to the accrued and unpaid
interest on the Security so redeemed to the Redemption Date, plus 100% of the
principal amount thereof.
Upon the occurrence and during the continuation of a Tax Event or
Investment Company Event in respect of GLACIER WATER TRUST I, the Company may,
at its option, at any time within 90 days of the occurrence of such Tax Event or
Investment Company Event redeem this Security, in whole but not in part, subject
to the provisions of Section 11.7 and the other provisions of Article XI of the
Indenture, at a redemption price equal to the accrued and unpaid interest on the
Security so redeemed to the Redemption Date, plus 100% of the principal amount
thereof.
In the event of redemption of this Security in part only, a new
Security or Securities of this series for the portion hereof not redeemed will
be issued in the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of
the entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
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The Indenture permits, with certain exceptions as therein provided,
the Company and the Trustee at any time to enter into a supplemental indenture
or indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange therefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities of this series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series may declare the principal amount of all the Securities
of this series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided that, in the case of
the Securities of this series issued to GLACIER WATER TRUST I, if upon an Event
of Default, the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Securities of this series fails to declare the principal of
all the Securities of this series to be immediately due and payable, the holders
of at least 25% in aggregate Liquidation Amount of the Trust Preferred
Securities then outstanding shall have such right by a notice in writing to the
Company and the Trustee; and upon any such declaration the principal amount of
and the accrued interest (including any Additional Interest) on all the
Securities of this series shall become immediately due and payable, provided
that the payment of principal and interest (including any Additional Interest)
on such Securities shall remain subordinated to the extent provided in Article
XIII of the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained under Section 10.2 of
the Indenture duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing and
thereupon one or more new Securities of this series, of authorized denominations
and for the same aggregate principal amount, will be issued to the
6
<PAGE>
designated transferee or transferees. No service charge shall be made for any
such registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities of this series are issuable only in registered form
without coupons in denominations of minimum denominations of $25 and any
integral multiples of $25 in excess thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of such series
of a different authorized denomination, as requested by the Holder surrendering
the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: ____________, 1998
WILMINGTON TRUST COMPANY,
as Trustee
By: _____________________________
Authorized Officer
7
<PAGE>
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger]
January 7, 1998
Glacier Water Trust I
c/o Glacier Water Services, Inc.
2261 Cosmos Court
Carlsbad, CA 92009
Re: Glacier Water Trust I
---------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Glacier Water Services,
Inc, a Delaware corporation (the "Company"), and Glacier Water Trust I, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust (the "Certificate"), as
filed in the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on November 13, 1997;
(b) The Trust Agreement of the Trust, dated as of November 13, 1997,
among the Company, as Depositor, and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-2, as amended, including a prospectus (the "Prospectus") relating to the Trust
Preferred Securities of the Trust representing preferred undivided beneficial
interests in the assets of the Trust (each, a "Preferred Security" and
collectively, the "Preferred Securities"), as filed by the Company and the Trust
with the Securities and Exchange Commission on November 17, 1997;
(e) A form of Amended and Restated Trust Agreement of the Trust
(including Exhibits A, C and E), to be entered into among the Company, as
Depositor, the trustees of the
<PAGE>
Glacier Water Trust I
January 7, 1998
Page 2
Trust named therein, and the holders, from time to time, of undivided beneficial
interests in the assets of the Trust (the "Trust Agreement"), attached as an
exhibit to the Registration Statement; and
(f) A Certificate of Good Standing for the Trust, dated January 7,
1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (f) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (f) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined
<PAGE>
Glacier Water Trust I
January 7, 1998
Page 3
by us has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Preferred Security is to be issued by the Trust
(collectively, the "Preferred Security Holders") of a Preferred Securities
Certificate for such Preferred Security and the payment for the Preferred
Security acquired by it, in accordance with the Trust Agreement and the
Registration Statement, and (vii) that the Preferred Securities are issued and
sold to the Preferred Security Holders in accordance with the Trust Agreement
and the Registration Statement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the
<PAGE>
Glacier Water Trust I
January 7, 1998
Page 4
Securities and Exchange Commission as an exhibit to the Registration Statement.
In addition, we hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus. In giving the foregoing consents, we do not thereby
admit that we come within the category of Persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, PA
EAM
<PAGE>
Exhibit 8.1
[Letterhead of Milbank, Tweed, Hadley & McCloy]
January 8, 1998
Glacier Water Services, Inc.
2261 Cosmos Court
Carlsbad, California 92009
Glacier Water Trust I
2261 Cosmos Court
Carlsbad, California 92009
Re: CERTAIN FEDERAL INCOME TAX CONSEQUENCES
---------------------------------------
OF THE PURCHASE AND OWNERSHIP OF CUMULATIVE
-------------------------------------------
TRUST PREFERRED SECURITIES ISSUED BY
------------------------------------
GLACIER WATER TRUST I
---------------------
Ladies and Gentlemen:
We have acted as counsel to Glacier Water Services, Inc. ("Glacier") in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), of a
Registration Statement on Form S-2, as amended, Registration No. 333-40335 (the
"Registration Statement"). The Registration Statement relates to the offer for
sale of 2,600,000 shares of Cumulative Trust Preferred Securities (the "Trust
Preferred Securities") of Glacier Water Trust I ("Glacier Water Trust I"), a
statutory business trust formed at the direction of Glacier under the laws of
the State of Delaware, the Junior Subordinated Debentures to be issued by
Glacier to Glacier Water Trust I in connection with the sale of the Trust
Preferred Securities, and the Guarantee to be issued by Glacier with respect to
the Trust Preferred Securities.
<PAGE>
January 8, 1998
Page 2
This opinion letter relates to the material federal income tax consequences
of the purchase and ownership of the Trust Preferred Securities by investors.
All capitalized terms used in this opinion letter and not otherwise defined
herein have the same meaning as set forth in the Registration Statement.
We have examined the Registration Statement, the Trust Agreement of Glacier
Water Trust I, and such other documents as we have deemed necessary to render
our opinions expressed below. In our examination of such material, we have
relied upon the current and continued accuracy of the factual matters we have
considered, and we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all copies of documents submitted to us. In addition, we
also have assumed that the transactions related to the issuance of the Junior
Subordinated Debentures, the Trust Preferred Securities and the Guarantee will
be consummated in accordance with the terms and forms of such documents.
Based on the foregoing, and assuming that Glacier Water Trust I was formed
and will be maintained in compliance with the terms of the Trust Agreement of
Glacier Water Trust I, it is our opinion that:
(1) Glacier Water Trust I will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation and, as a result, each beneficial owner of Trust Preferred
Securities will be treated as owning an undivided beneficial interest in the
Junior Subordinated Debentures held by Glacier Water Trust I; and
(2) The discussion under "Certain Federal Income Tax Consequences" in the
Registration Statement insofar as it addresses matters of law or legal
conclusions is correct in all material respects.
This opinion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), the Treasury Regulations promulgated thereunder and other relevant
authorities and law, all as in effect on the date hereof. Future changes in the
law or interpretations of the law may cause the tax treatment of the
transactions referred to herein to be materially different from that described
above. We have undertaken no obligation to update this opinion in such event.
Other than the specific tax opinions set forth in this
<PAGE>
January 8, 1998
Page 3
letter, no other opinion has been requested of us or rendered by us with respect
to the tax treatment of the proposed issuance and sale of the Junior
Subordinated Debentures, the Trust Preferred Securities or the Guarantee,
including, but not limited to, the tax treatment of the proposed transactions
under other provisions of the Code and the Treasury Regulations or the tax
treatment of the proposed transactions under state, local, foreign or any other
tax laws.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and the use of our name in the Registration Statement
under the caption "Certain Federal Income Tax Consequences." In giving such
consent, we do not concede that this consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
/s/ MILBANK, TWEED, HADLEY & McCLOY
BK/SF
<PAGE>
EXHIBIT 12.1
GLACIER WATER SERVICES, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
YEAR ENDED DECEMBER 31,
---------------------------------- SEPT. 30, OCT. 5,
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income
taxes.................. $2,653 $3,329 $4,283 $4,514 $4,718 $4,052 $ 462
Fixed charges from
below.................. 342 155 536 1,077 1,152 809 1,729
------ ------ ------ ------ ------ ------ ------
Earnings................ $2,995 $3,484 $4,819 $5,591 $5,870 $4,861 $2,191
====== ====== ====== ====== ====== ====== ======
Fixed Charges:
Total rents............. $ 236 $ 299 $ 864 $1,109 $1,284 $ 863 $1,042
====== ====== ====== ====== ====== ====== ======
Percent of rents
allocable to interest
(Rents x 30%).......... $ 71 $ 90 $ 259 $ 333 $ 385 $ 259 $ 313
Interest expense........ 271 65 277 744 767 550 1,416
------ ------ ------ ------ ------ ------ ------
Fixed charges........... $ 342 $ 155 $ 536 $1,077 $1,152 $ 809 $1,729
====== ====== ====== ====== ====== ====== ======
Earnings to fixed charges. 8.76x 22.48x 8.99x 5.19x 5.10x 6.01x 1.27x
====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made part of this
registration statement.
Arthur Andersen LLP
San Diego, California
January 7, 1998
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference and the use in this Registration
Statement of Glacier Water Services, Inc. on Form S-2 of our report dated
May 9, 1997 relating to the financial statements of the Aqua-Vend Business
(Certain Operations of McKesson Water Products Company) appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Deloitte & Touche LLP
San Francisco, California
January 7, 1998
<PAGE>
Exhibit 23.5
To Whom It May Concern:
On behalf of Beverage Marketing Corporation, I consent to Glacier Water
Services, Inc.'s reference to "Bottled Water in the U.S.-1997 Edition" in its
registration statement and prospectus.
By: /s/ Charlene Salito Date: 1/6/98
----------------------------- -----------------------
Title: Sales Associate
Beverage Marketing Corporation
<PAGE>
EXHIBIT 25.1
Registration No.
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)________
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
GLACIER WATER SERVICES, INC.
(Exact name of obligor as specified in its charter)
Delaware 33-0493559
(State of incorporation) (I.R.S. employer identification no.)
2261 Cosmos Court 92009
Carlsbad, California (Zip Code)
(Address of principal executive
offices)
Junior Subordinated Deferrable Interest Debentures of
Glacier Water Services, Inc.
(Title of the indenture securities)
===============================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes
the certificate of authority of Wilmington Trust Company to
commence business and the authorization of Wilmington Trust
Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf of the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of December, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Christopher L. Kaiser By: /s/ Norma P. Closs
---------------------------- ----------------------------
Name: Chris L. Kaiser Name: Norma P. Closs
Title: Vice President Title: Vice President
-2-
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
-3-
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the
<PAGE>
Corporation shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and generally to
use, exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or necessary
for the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
2
<PAGE>
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person,
or persons, corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within the
State of Delaware or elsewhere, or which may now or hereafter be
required by any law, judge, officer or court in the State of Delaware
or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or authority
such trustee, trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security for
the performance of the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any private,
public or municipal corporation within and without the State of
Delaware, or of the Government of the United States, or of any state,
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and dispose
of interest, dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property
held and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property,
any and all the rights, powers and privileges of individual
3
<PAGE>
owners thereof, including the right to vote thereon; to invest and
deal in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper, and
from time to time to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when the Board
of Directors shall determine, and in the promotion of its said
corporate business of investment and to the extent authorized by law,
to lease, purchase, hold, sell, assign, transfer, pledge, mortgage
and convey real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of, real
and personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any
foreign country or place.
4
<PAGE>
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance of any shares
of a particular series of Preferred Stock, the voting powers and the
designations, preferences and relative, optional and other special rights,
and the qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of
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stock and whether such dividends shall be cumulative or non-
cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to
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receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of
Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
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(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from
time to time by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such
election, the stockholders shall elect a successor to such director to
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the
8
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Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
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NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
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(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or more,
or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any one
or more of clauses (A) through (E) of paragraph 1 of the section
(a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on
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such business combination, or immediately prior to the consummation of any
such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
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(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an Affiliate
or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in paragraph (3) of section (c), or (4) whether the assets subject
to any business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
-4-
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its
<PAGE>
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who
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shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.
(B) The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be kept and
promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.
(B) An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote. An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such
5
<PAGE>
powers and perform such duties as may from time to time be agreed upon between
himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
-------------------------------
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
6
<PAGE>
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive
7
<PAGE>
Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and
8
<PAGE>
validity as although expressly authorized by the Board of Directors and/or the
Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
-------- -------
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been
9
<PAGE>
received by the Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting such claim. In any such action the
Corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification of payment of expenses under applicable law.
(D) The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the Charter or Act of Incorporation, these By-
Laws, agreement, vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
<PAGE>
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
/s/ Norma P. Closs
Dated: December 30, 1997 By: __________________________
Name: Norma P. Closs
Title: Vice President
-11-
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------------------- ------------
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1997.
<TABLE>
<CAPTION>
ASSETS Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins................. 206,619
Interest-bearing balances........................................... 0
Held-to-maturity securities.............................................. 364,899
Available-for-sale securities............................................ 1,038,826
Federal funds sold and securities purchased under agreements to resell... 126,000
Loans and lease financing receivables:
Loans and leases, net of unearned income............. 3,830,772
LESS: Allowance for loan and lease losses............ 55,936
LESS: Allocated transfer risk reserve................ 0
Loans and leases, net of unearned income, allowance, and reserve.... 3,774,836
Assets held in trading accounts.......................................... 0
Premises and fixed assets (including capitalized leases)................. 118,895
Other real estate owned.................................................. 1,830
Investments in unconsolidated subsidiaries and associated companies...... 34
Customers' liability to this bank on acceptances outstanding............. 0
Intangible assets........................................................ 5,215
Other assets............................................................. 91,240
Total assets............................................................. 5,728,394
</TABLE>
CONTINUED ON NEXT PAGE
-12-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices.......................................................... 3,980,001
Noninterest-bearing.....................................859,817
Interest-bearing......................................3,120,184
Federal funds purchased and Securities sold under agreements to repurchase... 327,543
Demand notes issued to the U.S. Treasury..................................... 89,508
Trading liabilities (from Schedule RC-D)..................................... 0
Other borrowed money:........................................................ ///////
With original maturity of one year or less.............................. 734,000
With original maturity of more than one year............................ 43,000
Bank's liability an acceptances executed and outstanding..................... 0
Subordinated notes and debentures............................................ 0
Other liabilities (from Schedule RC-G)....................................... 104,674
Total liabilities............................................................ 5,278,726
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common Stock................................................................. 500
Surplus (exclude all surplus related to preferred stock)..................... 62,118
Undivided profits and capital reserves....................................... 380,993
Net unrealized holding gains (losses) an available-for-sale securities....... 6,057
Total equity capital......................................................... 449,668
Total liabilities, limited-life preferred stock, and equity capital.......... 5,728,394
</TABLE>
-13-
<PAGE>
EXHIBIT 25.2
Registration No.
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)________
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
GLACIER WATER SERVICES, INC.
GLACIER WATER TRUST I
(Exact name of obligor as specified in its charter)
Delaware 33-0493559
Delaware 33-0779340
(State of incorporation) (I.R.S. employer identification no.)
2261 Cosmos Court
Carlsbad, California 92009
(Address of principal executive offices) (Zip Code)
____% Cumulative Trust Preferred Securities of Glacier Water Trust I
(Title of the indenture securities)
==============================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of December, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Christopher L. Kaiser By: /s/ Norma P. Closs
--------------------------- ----------------------------
Name: Christopher L. Kaiser Name: Norma P. Closs
Title: Vice President Title: Vice President
-2-
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
-3-
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the
<PAGE>
Corporation shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and generally to
use, exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or necessary
for the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
2
<PAGE>
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person,
or persons, corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within the
State of Delaware or elsewhere, or which may now or hereafter be
required by any law, judge, officer or court in the State of Delaware
or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or authority
such trustee, trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security for
the performance of the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any private,
public or municipal corporation within and without the State of
Delaware, or of the Government of the United States, or of any state,
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and dispose
of interest, dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property
held and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property,
any and all the rights, powers and privileges of individual
3
<PAGE>
owners thereof, including the right to vote thereon; to invest and
deal in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper, and
from time to time to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when the Board
of Directors shall determine, and in the promotion of its said
corporate business of investment and to the extent authorized by law,
to lease, purchase, hold, sell, assign, transfer, pledge, mortgage
and convey real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of, real
and personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any
foreign country or place.
4
<PAGE>
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance of any shares
of a particular series of Preferred Stock, the voting powers and the
designations, preferences and relative, optional and other special rights,
and the qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of
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stock and whether such dividends shall be cumulative or non-
cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to
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receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of
Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
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(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from
time to time by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such
election, the stockholders shall elect a successor to such director to
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the
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Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
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NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
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(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or more,
or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any one
or more of clauses (A) through (E) of paragraph 1 of the section
(a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on
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such business combination, or immediately prior to the consummation of any
such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
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(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an Affiliate
or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in paragraph (3) of section (c), or (4) whether the assets subject
to any business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
-4-
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its
<PAGE>
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who
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shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.
(B) The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be kept and
promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.
(B) An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote. An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such
5
<PAGE>
powers and perform such duties as may from time to time be agreed upon between
himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
-------------------------------
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
6
<PAGE>
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive
7
<PAGE>
Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and
8
<PAGE>
validity as although expressly authorized by the Board of Directors and/or the
Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
-------- -------
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been
9
<PAGE>
received by the Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting such claim. In any such action the
Corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification of payment of expenses under applicable law.
(D) The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the Charter or Act of Incorporation, these By-
Laws, agreement, vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
<PAGE>
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
/s/ Norma P. Closs
Dated: December 30, 1997 By: __________________________
Name: Norma P. Closs
Title: Vice President
-11-
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------------------- ------------
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1997.
<TABLE>
<CAPTION>
ASSETS Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins................. 206,619
Interest-bearing balances........................................... 0
Held-to-maturity securities.............................................. 364,899
Available-for-sale securities............................................ 1,038,826
Federal funds sold and securities purchased under agreements to resell... 126,000
Loans and lease financing receivables:
Loans and leases, net of unearned income............. 3,830,772
LESS: Allowance for loan and lease losses............ 55,936
LESS: Allocated transfer risk reserve................ 0
Loans and leases, net of unearned income, allowance, and reserve..... 3,774,836
Assets held in trading accounts.......................................... 0
Premises and fixed assets (including capitalized leases)................. 118,895
Other real estate owned.................................................. 1,830
Investments in unconsolidated subsidiaries and associated companies...... 34
Customers' liability to this bank on acceptances outstanding............. 0
Intangible assets........................................................ 5,215
Other assets............................................................. 91,240
Total assets............................................................. 5,728,394
</TABLE>
CONTINUED ON NEXT PAGE
-12-
<PAGE>
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices.......................................................... 3,980,001
Noninterest-bearing................................. 859,817
Interest-bearing.................................... 3,120,184
Federal funds purchased and Securities sold under agreements to repurchase... 327,543
Demand notes issued to the U.S. Treasury..................................... 89,508
Trading liabilities (from Schedule RC-D)..................................... 0
Other borrowed money:........................................................ ///////
With original maturity of one year or less.............................. 734,000
With original maturity of more than one year............................ 43,000
Bank's liability an acceptances executed and outstanding..................... 0
Subordinated notes and debentures............................................ 0
Other liabilities (from Schedule RC-G)....................................... 104,674
Total liabilities............................................................ 5,278,726
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common Stock................................................................. 500
Surplus (exclude all surplus related to preferred stock)..................... 62,118
Undivided profits and capital reserves....................................... 380,993
Net unrealized holding gains (losses) an available-for-sale securities....... 6,057
Total equity capital......................................................... 449,668
Total liabilities, limited-life preferred stock, and equity capital.......... 5,728,394
</TABLE>
-13-
<PAGE>
EXHIBIT 25.3
Registration No.
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)________
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
GLACIER WATER SERVICES, INC.
(Exact name of obligor as specified in its charter)
Delaware 33-0493559
(State of incorporation) (I.R.S. employer identification no.)
2261 Cosmos Court
Carlsbad, California 92009
(Address of principal executive offices) (Zip Code)
Glacier Water Services, Inc. Guarantee with respect to
____% Cumulative Trust Preferred Securities of Glacier Water Trust I
(Title of the indenture securities)
==============================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 30th day
of December 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Christopher L. Kaiser By: /s/ Norma P. Closs
---------------------------- ----------------------------
Name: Christopher L. Kaiser Name: Norma P. Closs
Title: Vice President Title: Vice President
-2-
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
-3-
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the
<PAGE>
Corporation shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and generally to
use, exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or necessary
for the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
2
<PAGE>
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person,
or persons, corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within the
State of Delaware or elsewhere, or which may now or hereafter be
required by any law, judge, officer or court in the State of Delaware
or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or authority
such trustee, trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security for
the performance of the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any private,
public or municipal corporation within and without the State of
Delaware, or of the Government of the United States, or of any state,
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and dispose
of interest, dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property
held and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property,
any and all the rights, powers and privileges of individual
3
<PAGE>
owners thereof, including the right to vote thereon; to invest and
deal in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper, and
from time to time to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when the Board
of Directors shall determine, and in the promotion of its said
corporate business of investment and to the extent authorized by law,
to lease, purchase, hold, sell, assign, transfer, pledge, mortgage
and convey real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of, real
and personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any
foreign country or place.
4
<PAGE>
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance of any shares
of a particular series of Preferred Stock, the voting powers and the
designations, preferences and relative, optional and other special rights,
and the qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of
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stock and whether such dividends shall be cumulative or non-
cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to
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receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of
Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
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(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from
time to time by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such
election, the stockholders shall elect a successor to such director to
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the
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Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
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NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
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(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or more,
or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any one
or more of clauses (A) through (E) of paragraph 1 of the section
(a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on
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such business combination, or immediately prior to the consummation of any
such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
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(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an Affiliate
or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in paragraph (3) of section (c), or (4) whether the assets subject
to any business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
-4-
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its
<PAGE>
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who
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shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.
(B) The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be kept and
promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.
(B) An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote. An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such
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powers and perform such duties as may from time to time be agreed upon between
himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
-------------------------------
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
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Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive
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Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and
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<PAGE>
validity as although expressly authorized by the Board of Directors and/or the
Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
-------- -------
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been
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received by the Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting such claim. In any such action the
Corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification of payment of expenses under applicable law.
(D) The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the Charter or Act of Incorporation, these By-
Laws, agreement, vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
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EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
/s/ Norma P. Closs
Dated: December 30, 1997 By: __________________________
Name: Norma P. Closs
Title: Vice President
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<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------------------- ------------
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1997.
<TABLE>
<CAPTION>
ASSETS Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins................. 206,619
Interest-bearing balances........................................... 0
Held-to-maturity securities.............................................. 364,899
Available-for-sale securities............................................ 1,038,826
Federal funds sold and securities purchased under agreements to resell... 126,000
Loans and lease financing receivables:
Loans and leases, net of unearned income............. 3,830,772
LESS: Allowance for loan and lease losses............ 55,936
LESS: Allocated transfer risk reserve................ 0
Loans and leases, net of unearned income, allowance, and reserve..... 3,774,836
Assets held in trading accounts.......................................... 0
Premises and fixed assets (including capitalized leases)................. 118,895
Other real estate owned.................................................. 1,830
Investments in unconsolidated subsidiaries and associated companies...... 34
Customers' liability to this bank on acceptances outstanding............. 0
Intangible assets........................................................ 5,215
Other assets............................................................. 91,240
Total assets............................................................. 5,728,394
</TABLE>
CONTINUED ON NEXT PAGE
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<PAGE>
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices.......................................................... 3,980,001
Noninterest-bearing................................. 859,817
Interest-bearing.................................... 3,120,184
Federal funds purchased and Securities sold under agreements to repurchase... 327,543
Demand notes issued to the U.S. Treasury..................................... 89,508
Trading liabilities (from Schedule RC-D)..................................... 0
Other borrowed money:........................................................ ///////
With original maturity of one year or less.............................. 734,000
With original maturity of more than one year............................ 43,000
Bank's liability an acceptances executed and outstanding..................... 0
Subordinated notes and debentures............................................ 0
Other liabilities (from Schedule RC-G)....................................... 104,674
Total liabilities............................................................ 5,278,726
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common Stock................................................................. 500
Surplus (exclude all surplus related to preferred stock)..................... 62,118
Undivided profits and capital reserves....................................... 380,993
Net unrealized holding gains (losses) an available-for-sale securities....... 6,057
Total equity capital......................................................... 449,668
Total liabilities, limited-life preferred stock, and equity capital.......... 5,728,394
</TABLE>
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