<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended: January 4, 1998
Commission file number: 1-11012
GLACIER WATER SERVICES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0493559
- --------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2261 Cosmos Court,
Carlsbad, CA 92009
- --------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (760) 930-2420
--------------------
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Name of each exchange on
which registered
Common Stock, $.01 Par Value Per Share American Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K of any amendment to this
Form 10-K. [ ]
As of March 6, 1998, the aggregate market value of the voting stock held by non-
affiliates of the registrant was $49,624,000 (calculated at the closing price on
the American Stock Exchange multiplied by outstanding shares held by non-
affiliates). For purposes of the foregoing calculation, certain persons who
have filed reports on Schedule 13D with the SEC with respect to their beneficial
ownership of more than 5% of the registrant's outstanding common stock and
directors and officers have been excluded from the group of stockholders deemed
to be non-affiliates of the registrants.
As of March 6, 1998, the registrants had 3,201,825 shares of common stock
outstanding.
The total number of pages in this Form 10-K is 32; the Index to Exhibits is
located on page 31.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III (Items 10, 11, 12 and 13) is incorporated
by reference to portions of the registrant's definitive proxy statement for the
1998 Annual Meeting of Stockholders which will be filed with the Securities and
Exchange Commission within 120 days after the close of the 1997 fiscal year.
================================================================================
<PAGE>
Statements in this Annual Report that are not purely historical are forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward looking statements with respect to the
financial condition and results of operations of the Company involve risks and
uncertainties including, but not limited to, trade relations, dependence on
certain locations and competition, as described in Part I below, that could
cause actual results to differ materially from those projected.
PART I
ITEM 1. BUSINESS
INTRODUCTION
- ------------
Glacier Water Services, Inc. ("Glacier" or the "Company") 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
throughout the sunbelt and midwest regions of the United States. 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 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 home 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 machines 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 12,444 machines as of January 4, 1998. During fiscal year 1997, the
Company's growth was primarily a result of the acquisition of the Company's
largest competitor, Aqua-Vend, a division of McKesson Water Products Company.
Historically, the Company has operated water vending machines designed
primarily for outside use in fair-weather climates. Because it is impractical
to use outdoor vending machines in cold-weather climates, the Company 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 machines afford the Company significant opportunities
to expand within its existing locations, as well as into new market areas in
cold-weather 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 awareness; and (iv) maximizing
operating efficiencies and asset productivity.
1
<PAGE>
BUSINESS BACKGROUND
- -------------------
The following table presents the number of machines installed annually since
December 31, 1992:
<TABLE>
<CAPTION>
<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.......................................................................... 3,280
------
Total installed machines as of January 4, 1998...................................... 12,444
======
</TABLE>
Total machines installed as of January 4, 1998 are distributed by state as
follows:
<TABLE>
<S> <C>
California.................................................................... 7,185
Texas......................................................................... 1,789
Florida....................................................................... 1,741
Arizona....................................................................... 870
Nevada........................................................................ 300
Other......................................................................... 559
------
12,444
======
</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 adsorption and ultraviolet sterilization in
order to provide high quality drinking water. The design of the Company's
machines provides a high degree of reliability and serviceability through the
use of interchangeable parts and a durable fiberglass cabinet. The machines are
also designed to be easy for consumers to use, with clear and simple
instructions.
THE BOTTLED WATER INDUSTRY
- --------------------------
The bottled water market in the United States is comprised of 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 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 provide their own
containers, and transportation.
2
<PAGE>
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
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 the
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 products.
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 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. The 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 the machines 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
3
<PAGE>
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
$ 9.0 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.
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
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.
The Company's competitors within the water vending market are
primarily smaller, independent operators. 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
4
<PAGE>
may be able to compete with the Company. There can be no assurance that any
competitors will not be able to raise the capital required to effectively
compete with the Company.
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 contain 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
Officer (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 by 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.
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 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 margin based
on increases in licensing or inspection fees payable by the Company or other
additional compliance costs.
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 January 4, 1998, the Company had 342 employees, including 52 in
administration and 290 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.
5
<PAGE>
ITEM 2. PROPERTIES
The Company's principal facility, a 30,000-square-foot building in
Carlsbad, California containing its executive offices and assembly shop is under
lease through May 1999. The Company also leases various other facilities
containing its area service centers. These leases range in square footage from
2,100 to 13,400 square feet, and expire on various dates from April 1998 through
September 2002.
ITEM 3. LEGAL PROCEEDINGS
In response to an allegation by Pure Fill Corporation and Dennis
DiSanto that certain features of the Company's water vending machines violate
their patents, on October 28, 1997, the Company filed a lawsuit in the United
States District Court for the Southern District of California against Pure Fill
Corporation and Dennis DiSanto, as named defendants, seeking a declaration that
the patents held by them 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 defendants filed an answer to the complaint and
counterclaim alleging that the Company is infringing its patents. Although the
Company believes, based on advice 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of the
Company during the fourth quarter of 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of Glacier is traded on the American Stock Exchange
under the symbol "HOO." The following table sets forth the range of high and
low sales prices on the American Stock Exchange for the Common Stock for the
periods indicated.
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year 1997
----------------
First Quarter $27.00 $22.00
Second Quarter 25.88 22.38
Third Quarter 30.13 25.75
Fourth Quarter 31.25 26.25
Fiscal Year 1996
----------------
First Quarter $19.50 $16.50
Second Quarter 20.00 18.13
Third Quarter 23.00 19.00
Fourth Quarter 23.25 19.63
</TABLE>
The Company did not pay dividends on its Common Stock in 1997 and 1996
and presently intends to continue this policy. The Company had approximately 47
stockholders of record as of January 4, 1998.
6
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following sets forth selected financial data as of and for the
periods presented. Effective January 1, 1997, the Company prospectively changed
its fiscal year from twelve calendar months to a 52- or 53-week year ending the
Sunday closest to December 31. As a result of this change, the Company's fiscal
year 1997, which ended on January 4, 1998, contained 369 days. This data should
be read in conjunction with the Consolidated Financial Statements and the
accompanying Notes thereto and other financial information appearing elsewhere
in this Form 10-K. The earnings per share amounts prior to the 1997 fiscal year
ended January 4, 1998 have been restated as required to comply with Statement of
Accounting Standards No. 128, Earnings Per Share ("Statement No. 128"). For
further discussion of earnings per share and the impact of Statement No. 128,
see the notes to the consolidated financial statements beginning on page 21.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------------------------
JANUARY 4, DECEMBER 31,
------------ --------------------------------------------------------
1998 1996 1995 1994 1993
---------- ---------- ------------- ------------ ------------
(in thousands, except shares and per share amounts)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Income Data:
Revenues.................................... $ 57,294 $ 46,091 $ 42,409 $ 36,557 $ 30,636
Costs and expenses:
Operating expenses........................ 35,569 28,088 25,933 23,504 20,065
General and administrative expenses....... 7,200 5,749 5,467 4,831 4,504
Depreciation and amortization............. 8,852 6,769 5,756 3,662 2,692
Non-recurring charges..................... 3,062 -- -- -- --
---------- ---------- ---------- ---------- ----------
Total costs and expenses................ 54,683 40,606 37,156 31,997 27,261
---------- ---------- ---------- ---------- ----------
Income from operations...................... 2,611 5,485 5,253 4,560 3,375
Other expenses:
Interest expense, net..................... 1,988 767 739 277 46
---------- ---------- ---------- ---------- ----------
Income before provision for income taxes.... 623 4,718 4,514 4,283 3,329
Provision for income taxes.................. 193 1,415 1,805 1,578 1,282
---------- ---------- ---------- ---------- ----------
Net income.................................. $ 430 $ 3,303 $ 2,709 $ 2,705 $ 2,047
========== ========== ========== ========== ==========
Basic earnings per share.................... $ .13 $ .99 $ .81 $ .83 $ .63
========== ========== ========== ========== ==========
Weighted average common shares outstanding.. 3,219,082 3,334,504 3,334,851 3,255,078 3,236,986
========== ========== ========== ========== ==========
Diluted earnings per share.................. $ .13 $ .98 $ .80 $ .80 $ .62
========== ========== ========== ========== ==========
Weighted average common and potential
common shares outstanding................ 3,332,890 3,374,482 3,405,104 3,367,151 3,299,130
========== ========== ========== ========== ==========
</TABLE>
SELECTED BALANCE SHEET DATA
- ---------------------------
<TABLE>
<CAPTION>
JANUARY 4, DECEMBER 31,
---------- ---------------------------------------------------------
1998 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Total assets............................ $59,473 $46,067 $40,638 $34,042 $23,415
Long-term debt, including current $28,732 $15,820 $11,087 $ 8,199 $ 1,510
portion................................
Stockholders' equity.................... $24,623 $23,986 $24,087 $20,376 $17,265
</TABLE>
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion should be read in conjunction with the information
contained in the Consolidated Financial Statements and the accompanying Notes
thereto of the Company appearing elsewhere in this Form 10-K. 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>
FISCAL YEAR ENDED
-----------------------------
JANUARY 4, DECEMBER 31,
----------- ---------------
1998 1996 1995
----------- ------ ------
<S> <C> <C> <C>
Revenues................................ 100.0% 100.0% 100.0%
Costs and expenses:
Operating expenses................. 62.1% 60.9% 61.2%
General and administrative
expenses......................... 12.6% 12.5% 12.9%
Depreciation and amortization...... 15.4% 14.7% 13.6%
Non-recurring charges.............. 5.3% -- --
----- ----- -----
Total costs and expenses...... 95.4% 88.1% 87.7%
----- ----- -----
Income from operations.................. 4.6% 11.9% 12.3%
Interest expense, net................... 3.5% 1.7% 1.7%
----- ----- -----
Income before income taxes.............. 1.1% 10.2% 10.6%
===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
- ---------------------
OVERVIEW
In order to more closely align its fiscal reporting to its business
cycle, effective January 1, 1997 the Company prospectively changed its fiscal
year from twelve calendar months ending December 31, to a 52- or 53-week fiscal
year ending on the Sunday closet to December 31. As a result of this change,
the Company's fiscal 1997 quarters each contained 13 calendar weeks, and the
fiscal year which ended January 4, 1998 contained 369 days. Results of
operations for the period from January 1, 1997 to January 5, 1997 have not been
reported separately, as then are not material to the fiscal year ended January
4, 1998.
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
fiscal 1997, the Company substantially completed the Aqua-Vend integration
activities and incurred non-recurring expenses of $3,062,000 related to these
activities.
During fiscal 1997, the Company installed 390 new outside machines and
418 in-store machines, as well as acquiring a net of 2,472 Aqua-Vend machines,
to finish the year with a total of 12,444 machines in operation, compared with
9,164 at December 31, 1996. Included in the total at January 4, 1998 are 538
in-store machines, compared with 120 at December 31, 1996.
8
<PAGE>
REVENUES
- --------
Revenues for fiscal year 1997 increased 24.3% to $57,294,000 from
$46,091,000 in fiscal year 1996. 1996 revenues increased 8.7%, from $42,409,000
in fiscal year 1995. The increases in both years are primarily the result of
the increased number of machines in operation. The increase in revenues in
1997, however, did not keep pace with the 35.8% increase in the number of
machines in operation since December 31, 1996 due primarily to cooler than usual
weather in California in the third quarter, and unusually cold and rainy weather
caused by the El Nino weather conditions in the fourth quarter. Because
California is the Company's largest and most important market the softer third
and fourth quarter revenues had a significant impact on the Company's revenues
overall.
COSTS AND EXPENSES
- ------------------
Operating expenses for fiscal year 1997 increased to $35,569,000 or
62.1% of revenues, compared to $28,088,000, or 60.9% of revenues in 1996, and
$25,933,000 or 61.2% of revenues in 1995. The total dollar increases in both
years are due to the additional commissions and service costs associated with
the additional machines on location. The increase in operating expenses as a
percentage of revenues in 1997 is primarily the result of softer revenues during
the third and fourth quarters. The increase is also due 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. 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.
General and administrative expenses ("G&A") for fiscal year 1997
increased to $7,200,000 or 12.6% of revenues, compared to $5,749,000, or 12.5%
of revenues in 1996 and $5,467,000, or 12.9% of revenues in 1995. The increase
in total dollars is due to an increase in the Company's activities supporting
and promoting the in-store machines program, as well as additional
administrative expenses incurred as a result of the Aqua-Vend acquisition. The
slight increase in G&A as a percentage of revenues in 1997 resulted primarily
from the effect of softer sales in the third and fourth quarters, discussed
above.
Depreciation and amortization expense for fiscal year 1997 increased
to $8,852,000, compared to $6,769,000 in 1996 and $5,756,000 in 1995. The
increases in each year are the result of the installation of additional
machines.
The Company had expected to incur a total of approximately $3.5
million in non-recurring expenses in 1997 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. The
actual total cost incurred in connection with the completion of these activities
in 1997 was $3,062,000.
Interest expense for fiscal year 1997 increased to $1,988,000,
compared to $767,000 in 1996 and $739,000 in 1995. The increases are due to the
higher outstanding balances on the Company's bank line of credit during each
year. In 1997, the acquisition of Aqua-Vend and the Company's investment in new
machines were financed through additional borrowing on the line of credit.
The Company's effective tax rate in fiscal year 1997 was 31%, compared
to effective rates of 30% in 1996 and 40% in 1995. The lower effective tax
rates in 1997 and 1996 resulted from the Company's realization of the effect of
certain income tax credits.
As a result of the foregoing, net income for fiscal year 1997 declined
to $430,000, or $.13 per basic and diluted share, from $3,303,000, or $.99 per
basic share and $.98 per diluted share in 1996. Net income in 1996 increased
from $2,709,000, or $.81 basic share and $.80 per diluted share in 1995.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary sources of liquidity and capital resources in
fiscal year 1997 were cash flows from operations and funds available under the
Company's Credit Facility. The Credit Facility, which was repaid in full and
terminated on January 27, 1998, provided for borrowings of up to $35.0 million
and required monthly interest payments at the bank's prime rate (8.5% per annum
at January 4, 1998) or LIBOR plus 1.75% (7.7% per annum at January 4, 1998).
For fiscal year 1997, net cash provided by operations was
approximately $6.4 million, the Company made capital investments in vending
machines and other equipment of approximately $10.0 million and invested
approximately $9.4 million in the purchase of Aqua-Vend. During 1997, the
Company invested approximately $315,000 in short-term investments. As of
January 4, 1998, the Company had working capital of $2.0 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 January 4, 1998, approximately $28.7 million of borrowings were
outstanding and $6.3 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.
On January 27, 1998, Glacier Water Trust I (the "Trust"), a newly
created Delaware business trust and a wholly-owned subsidiary of the Company,
issued 105,154 in common securities to the Company and completed a public
offering of 3.4 million of 9.0625% Cumulative Trust Preferred Securities with a
liquidation amount of $25 per security (the "Trust Preferred Securities" and
together with the common securities the "Trust Securities"). Concurrent with the
issuance of such securities, the Trust invested the proceeds therefrom in an
aggregate principal amount of $85.0 million of 9.0625% Junior Subordinated
Debentures (the "Subordinated Debentures") issued by the Company. The Trust
exists for the sole purpose of issuing Trust Securities and purchasing
Subordinated Debentures. With the proceeds from the issuance of the Subordinated
Debentures, the Company repaid in full all amounts outstanding under its bank
credit agreement and terminated the agreement.
The Company believes that its cash flow from operations and the
proceeds from the issuance of the Subordinated Debentures, after prepayment of
its Credit Facility, will be sufficient to meet its anticipated operating and
capital requirements, including its investment in vending machines, as well as
distributions related to the Trust Securities, for at least the next twelve
months.
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.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements together with
accompanying Notes and the Report of Arthur Andersen LLP Independent Public
Accountants are set forth on pages 16 through 30 after Part IV of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has had no changes in or disagreements with its
accountants on its accounting and financial disclosure.
10
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated herein by reference the information required by
this Item in the Company's definitive proxy statement for the 1998 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission no later than 120 days after the close of the fiscal year ended
January 4, 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
Jerry R. Welch Chairman of the Board, Chief Executive Officer 47
and Director
Jerry A. Gordon President, Chief Operating Officer and Director 52
Glen A. Skumlien Executive Vice President, Operations 48
S. Dane Seibert Senior Vice President, Marketing 49
John T. Vuagniaux Senior Vice President, Operations 49
Gerald E. Compas Vice President, Sales 54
Brenda K. 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
Brian T. Nakagawa Vice President, Technology & Information Systems 44
Raymond J. Schweitzer Vice President, International Operations 50
</TABLE>
The executive officers are elected by and serve at the discretion of
the Board of Directors until their successors are duly chosen and qualified.
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 in September 1994. He also served as Chairman of the Board
from January 1992 through September 1992. From October 1991 until his
resignation in September 1992, Mr. Welch served as the Company's Chief Executive
Officer. 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 served as the President and Chief Operating Officer of
Glacier Water Services, Inc. since September 1994, and as a Director of the
Company 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.
GLEN A. SKUMLIEN
Mr. Skumlien has served as Executive Vice President, Operations since
September 1994. From November 1991 to September 1994, Mr. Skumlien served as
Vice President-Operations.
11
<PAGE>
S. DANE SEIBERT
Mr. Seibert has served as Senior Vice President of Marketing since
joining the Company in March 1995. From 1990 until joining the Company Mr.
Seibert was Corporate Vice President - International Marketing for Miller/Zell
Inc.
JOHN T. VUAGNIAUX
Mr. Vuagniaux has served as 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 E. 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 McKesson Water Products Company.
BRENDA K. 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 a 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.
12
<PAGE>
Raymond J. Schweitzer
Mr. Schweitzer has served as the Company's Vice President, International
Operations since 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.
Item 11. Executive Compensation
There is incorporated herein by reference the information required by this
Item in the Company's definitive proxy statement for the 1998 Annual Meeting of
Stockholders which will be filed with the Securities and Exchange Commission no
later than 120 days after the close of the year ended January 4, 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
There is incorporated herein by reference the information required by this
Item in the Company's definitive proxy statement for the 1998 Annual Meeting of
Stockholders which will be filed with the Securities and Exchange Commission no
later than 120 days after the close of the fiscal year ended January 4, 1998.
Item 13. Certain Relationships and Related Transactions
There is incorporated herein by reference the information required by this
Item in the Company's definitive proxy statement for the 1998 Annual Meeting of
Stockholders which will be filed with the Securities and Exchange Commission no
later than 120 days after the close of the fiscal year ended January 4, 1998.
13
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents Filed with Report
---------------------------
1. Consolidated Financial Statements
---------------------------------
The consolidated financial statements listed on the accompanying Index
to Consolidated Financial Statements are filed as part of this report.
The financial statement schedules have been omitted as they are either
not required or not applicable.
2. Exhibits
--------
The exhibits listed on the accompanying Index to Exhibits on page 31
are filed as part of this report.
(b) Reports on Form 8-K
-------------------
A report on Form 8-K was filed on November 6, 1997, in connection with
the Company's determination to change its fiscal year end to the
fifty-two or fifty-three week period ending on the Sunday closest to
December 31.
14
<PAGE>
Index
-----
<TABLE>
<CAPTION>
Page
Number
------
Consolidated Financial Statements
- ---------------------------------
<S> <C>
Report of Independent Public Accountants..................................................... 16
Consolidated Balance Sheets at January 4, 1998 and December 31, 1996......................... 17
Consolidated Statements of Income for the fiscal years ended January 4, 1998,
December 31, 1996, and December 31, 1995.................................................. 18
Consolidated Statements of Stockholders' Equity for the fiscal years ended January 4, 1998,
December 31, 1996, and December 31, 1995.................................................. 19
Consolidated Statements of Cash Flows for the fiscal years ended January 4, 1998,
December 31, 1996, and December 31, 1995.................................................. 20
Notes to Consolidated Financial Statements................................................... 21
</TABLE>
15
<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 January 4,
1998 and December 31, 1996, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three fiscal years in the
period ended January 4, 1998. 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 January 4, 1998 and December 31, 1996, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended January 4, 1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
San Diego, California
February 6, 1998
16
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
------
<TABLE>
<CAPTION>
January 4, December 31,
1998 1996
--------- ----------
<S> <C> <C>
Current assets:
Cash..................................................................... $ 13 $ 11
Short-term investments, at fair value.................................... 315 --
Accounts receivable...................................................... 467 311
Inventories.............................................................. 3,007 1,693
Prepaid commissions and other............................................ 1,164 1,084
--------- ----------
Total current assets................................................. 4,966 3,099
Property and equipment, net of accumulated depreciation...................... 48,523 38,007
Other assets................................................................. 5,984 4,961
--------- ----------
Total assets................................................................. $ 59,473 $ 46,067
========= ==========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<S> <C> <C>
Current liabilities:
Accounts payable......................................................... $ 602 $ 640
Accrued commissions...................................................... 1,515 988
Accrued liabilities...................................................... 874 1,654
--------- ----------
Total current liabilities............................................ 2,991 3,282
Long-term debt............................................................... 28,732 15,820
Deferred income taxes........................................................ 3,127 2,979
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,
3,226,175 and 3,208,575 shares issued and outstanding at
January 4, 1998 and December 31, 1996, respectively.................. 34 34
Additional paid-in capital............................................... 15,548 15,284
Retained earnings........................................................ 12,661 12,231
Treasury stock, at cost, 172,600 and 170,500 shares at January 4, 1998
and December 31, 1996, respectively............................... (3,620) (3,563)
--------- ----------
Total stockholders' equity........................................... 24,623 23,986
--------- ----------
Total liabilities and stockholders' equity................................... $ 59,473 $ 46,067
========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
17
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------
JANUARY 4, DECEMBER 31,
---------- ---------------------
1998 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Revenues................................ $57,294 $46,091 $42,409
Costs and expenses:
Operating expenses................. 35,569 28,088 25,933
General and administrative
expenses......................... 7,200 5,749 5,467
Depreciation and amortization...... 8,852 6,769 5,756
Non-recurring charges.............. 3,062 -- --
------- ------- -------
Total costs and expenses....... 54,683 40,606 37,156
------- ------- -------
Income from operations.................. 2,611 5,485 5,253
Interest expense, net................... 1,988 767 739
------- ------- -------
Income before provision for
income taxes.......................... 623 4,718 4,514
Provision for income taxes.............. 193 1,415 1,805
------- ------- -------
Net income.............................. $ 430 $ 3,303 $ 2,709
======= ======= =======
Basic earnings per share................ $ .13 $ .99 $ .81
======= ======= =======
Diluted earnings per share.............. $ .13 $ .98 $ .80
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
18
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(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, 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
Exercise of Stock Options.... 19,700 -- 264 -- -- 264
Purchase of Treasury Stock... (2,100) -- -- -- (57) (57)
Net Income................... -- -- -- 430 -- 430
--------- --- ------- ------- ------- -------
Balance, January 4, 1998..... 3,226,175 $34 $15,548 $12,661 $(3,620) $24,623
========= === ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
19
<PAGE>
GLACIER WATER SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------
JANUARY 4, DECEMBER 31,
------------- ---------------------
1998 1996 1995
------------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 430 $ 3,303 $ 2,709
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 8,852 6,769 5,756
Loss (gain) on disposal of assets (3) 74 13
Deferred tax provision (benefit) 148 (120) 682
Change in operating assets and liabilities:
Accounts receivable (158) 303 105
Inventories (1,106) (117) (440)
Prepaid commissions and other 175 (196) 99
Payments for prepaid marketing incentives (1,262) (2,966) (750)
Other assets (261) (124) (201)
Accounts payable, accrued liabilities and (444) 896 (455)
accrued commissions
-------- -------- --------
Total adjustments 5,941 4,519 4,809
-------- -------- --------
Net cash provided by operating activities 6,371 7,822 7,518
-------- -------- --------
Cash flows from investing activities:
Net investment in vending equipment (9,647) (8,693) (10,742)
Purchase of property and equipment (304) (476) (182)
Proceeds from sales of property and equipment 132 -- --
Purchase of Aqua-Vend (9,355) -- --
Purchase of short-term investments (315) -- --
-------- -------- --------
Net cash used in investing activities (19,489) (9,169) (10,924)
-------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt 30,485 19,778 15,588
Principal payments on long-term debt (17,572) (15,045) (12,700)
Proceeds from issuance of stock 264 159 474
Purchase of treasury stock (57) (3,563) --
-------- -------- --------
Net cash provided by financing activities 13,120 1,329 3,362
-------- -------- --------
Net increase (decrease) in cash 2 (18) (44)
Cash, beginning of year 11 29 73
-------- -------- --------
Cash, end of year $ 13 $ 11 $ 29
======== ======== ========
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 2,074 $ 748 $ 735
======== ======== ========
Cash paid for income taxes $ 400 $ 1,010 $ 580
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
20
<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 rainy or cold weather months and increased revenues
during hot weather months. The Company's machines are located throughout the
sunbelt and midwest regions of the United States. As of January 4, 1998,
approximately 58% of the Company's machines are located in California.
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.
Change in Fiscal Year
In order to more closely align its fiscal reporting to its business cycle,
effective January 1, 1997, the Company 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 Sunday closest to December 31.
As a result of this change, the Company's fiscal 1997 quarters each contained 13
weeks, and fiscal year which ended January 4, 1998 contained 369 days. Results
of operations for the period from January 1, 1997 to January 5, 1997 are not
significant to the fiscal year ended January 4, 1998, and have not been reported
separately.
Investments
Investments are accounted for in accordance with FASB Statement No. 115,
Accounting for Certain Investments in Debt and Equity Securities, which requires
that the Company determine the appropriate classification of investments at the
time of purchase and reevaluate such designation as of each balance sheet date.
At January 4, 1998, the Company considered all investments as available for use
in its current operations, and therefore classified them as short-term,
available-for-sale investments. Available-for-sale investments are stated at
fair value, with unrealized gains and losses, if any, net of tax, reported as a
separate component of stockholders' equity. Interest, dividends, realized gains
and losses and declines in value judged to be other-than-temporary are included
in interest expense, net. The cost of securities sold is based on the specific
identification method.
21
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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.
At January 4, 1998, and December 31, 1996, inventories consist primarily of
raw materials and spare parts.
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 January 4, 1998, and December 31, 1996, were $254,000 and
$490,000, respectively. Commission expense for the years ended January 4, 1998,
December 31, 1996, and December 31, 1995 was $27,219,000, $21,678,000 and
$19,643,000, respectively.
Property and Equipment and Depreciation
Property and equipment are recorded at cost and consist of the
following (in thousands):
<TABLE>
<CAPTION>
January 4, December 31,
1998 1996
----------- -------------
<S> <C> <C>
Vending equipment....................... $ 69,547 $ 52,686
Equipment, furniture and fixtures....... 1,948 1,617
Leasehold improvements.................. 578 520
-------- --------
72,073 54,823
Less: Accumulated depreciation and
amortization........................... (23,550) (16,816)
-------- --------
$ 48,523 $ 38,007
</TABLE> ======== ========
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets as follows:
Vending equipment 10 years
Equipment, furniture and fixtures 5 to 10 years
Leasehold improvements Life of Lease
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.
22
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings Per Share ("Statement No. 128"). Statement No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share includes the dilutive effect of such
securities. All earnings per share amounts for all periods have been presented,
and where appropriate, restated to conform to the requirements of Statement No.
128.
Reclassifications
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 value of assets acquired and
liabilities assumed, as follows (in thousands):
<TABLE>
<CAPTION>
<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>
The unaudited consolidated pro forma results of operations for the fiscal
years ended January 4, 1998 and December 31, 1996 presented below assume that
the transaction occurred as of the beginning of the respective periods (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------
January 4, December 31,
----------- -------------
1998 1996
----------- -------------
<S> <C> <C>
Net revenues.................................... $60,452 $62,673
Income from operations.......................... 1,865 4,069
Net loss........................................ (215) (2,992) /(1)/
Net loss per common share - basic and diluted... $ (.07) $ (.90) /(1)/
</TABLE>
23
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
/(1)/ Includes a $7.0 million charge for the reduction in carrying value of
equipment. Excluding this charge, pro forma net income for the year ended
December 31, 1996 would be $1,698,000 and pro forma net income per share
would be $.51 on a basic basis and $.50 on a diluted basis.
3. SUPPLEMENTARY BALANCE SHEET INFORMATION
Short-Term Investments
At January 4, 1998, short-term investments consisted of high-yield
corporate bonds and convertible corporate bonds. Cost of these investments
approximated fair value at January 4, 1998; accordingly, no unrealized gain
or loss is included in stockholders' equity. There were no sales of
available-for-sale investments during the year ended January 4, 1998.
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, was non-interest bearing,
and was repaid in full subsequent to December 31, 1996.
<TABLE>
<CAPTION>
Other Assets
Other assets consist of the following (in thousands): January 4, December 31,
1998 1996
------ ------
<S> <C> <C>
Prepaid marketing incentives, net of accumulated amortization
of $2,429 in fiscal 1997 and $3,167 in fiscal 1996........... $5,181 $4,606
Other......................................................... 803 355
------ ------
$5,984 $4,961
====== ======
</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.
Accrued Liabilities
<TABLE>
<CAPTION>
Accrued liabilities consist of the following (in thousands): January 4, December 31,
1998 1996
---------- -----------
<S> <C> <C>
Accrued compensation and related taxes.......................... $ 471 $ 789
Accrued income and other taxes.................................. 228 639
Other accrued liabilities....................................... 175 226
----- ------
$ 874 $1,654
===== ======
</TABLE>
4. LONG-TERM DEBT
Long-term debt at January 4, 1998, and December 31, 1996, represents
borrowings under the Company's bank credit agreement.
24
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The credit agreement provides for long-term borrowings of up to $35.0
million. Borrowings bear interest at the bank's prime rate (8.5% at January 4,
1998) or LIBOR plus 1.75% (7.7% at January 4, 1998), and the entire principal
balance is due July 1, 2003. As of January 4, 1998, the Company had
approximately $6.3 million of funds available under the agreement. Borrowings
under the agreement are secured by substantially all of the assets of the
Company.
On January 27, 1998, the Company repaid the outstanding balance and all
accrued interest on the line of credit and terminated the credit agreement. See
Note 12 - Subsequent Events.
5. LEASES
The Company leases certain vehicles, warehouse and office facilities
under non-cancelable operating leases which expire on various dates through
2002.
Future minimum lease payments under non-cancelable operating leases with
initial terms of one or more years are as follows (in thousands):
<TABLE>
<S> <C>
1998........................... $1,185
1999........................... 874
2000........................... 419
2001........................... 253
2002........................... 122
------
Total minimum lease payments... $2,853
======
</TABLE>
Total lease expense for the years ended January 4, 1998, December 31, 1996,
and December 31, 1995, was $1,503,000, $1,284,000, and $1,109,000, respectively.
6. INCOME TAXES
Significant components of the provision (benefit) for income taxes are as
follows (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------
January 4, December 31,
---------- -----------------------
1998 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal Income Taxes:
Current.............................. $ 14 $1,418 $ 934
Deferred............................. 82 (75) 460
------ ------ ------
96 1,343 1,394
State and Local Income Taxes:
Current.............................. 31 117 189
Deferred............................. 66 (45) 222
------ ------ ------
97 72 411
------ ------ ------
Total $ 193 $1,415 $1,805
====== ====== ======
</TABLE>
25
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred tax liabilities and assets result from the following (in thousands):
<TABLE>
<CAPTION>
January 4, December 31,
1998 1996
----------- ------------
<S> <C> <C>
Deferred tax liabilities:
Property and equipment.................. $ 6,036 $ 4,801
------- -------
Total deferred tax liabilities.......... 6,036 4,801
------- -------
Deferred tax assets:
Alternative minimum tax credit.......... (1,369) (1,183)
Net operating loss...................... (612) --
Manufacturer's investment credit........ (577) (492)
State deferred tax adjustment........... (56) (16)
Accruals and reserves................... (295) (131)
------- -------
Total deferred tax assets............... (2,909) (1,822)
------- -------
Net deferred tax liabilities............ $ 3,127 $ 2,979
======= =======
</TABLE>
The Company's effective income tax rate differs from the federal statutory rate
as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------
January 4, December 31,
------------ --------------
1998 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate........................... 34.0% 34.0% 34.0%
State and local taxes, net of federal benefit.... 6.0% 6.7% 6.0%
Manufacturer's investment credit generated....... (9.0%) (10.7%) --
---- ----- -----
Effective rate................................... 31.0% 30.0% 40.0%
==== ===== =====
</TABLE>
During 1997, the Internal Revenue Service completed its examination
for the Company's fiscal year ended December 31, 1992. The IRS has proposed
adjustments that the Company is in the process of appealing. Management does
not believe that the results of such appeal will have a material impact on the
Company's financial statements.
7. 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. 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 January 4, 1998, 172,600 shares had
been repur-
26
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
chased under this program, and the Company was authorized to repurchase an
additional 327,400 shares, approximately 10.1% of the Company's total shares
outstanding.
8. STOCK OPTION PLANS
The Company has shares outstanding under 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 (loss) and earnings (loss)
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>
Fiscal Year Ended
--------------------------------
January 4, December 31,
---------- ------------------
1998 1996 1995
---- ---- ----
<S> <C> <C> <C>
Pro forma net income (loss) (in thousands).............. $ ( 57) $2,984 $2,568
Pro forma basic earnings (loss) per share............... $ (.02) $ .89 $ .77
Pro forma diluted earnings (loss) per share............. $ (.02) $ .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.
27
<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
January 4, 1998 and activity during the year then ended follows:
<TABLE>
<CAPTION>
Wtd. Avg.
Exercise
Shares Price
-------- -------
<S> <C> <C>
Balance at December 31, 1996............................ 344,654 $15.88
Granted................................................. 106,902 $25.71
Exercised............................................... (19,700) $10.09
------- ------
Balance at January 4, 1998.............................. 431,856 $18.57
Exercisable at January 4, 1998.......................... 235,704 $15.40
Weighted average fair value of options granted.......... $12.44
</TABLE>
The 117,250 shares outstanding under the 1992 plan at January 4, 1998
have exercise prices between $8.25 and $13.63, with a weighted average exercise
price of $11.62 and a weighted average remaining contractual life of 5.4 years.
110,375 of these options are exercisable; their weighted average exercise price
is $11.50.
The 314,606 shares outstanding under the 1994 plan at January 4, 1998
have exercise prices between $15.25 and $30.00, with a weighted average exercise
price of $21.16 and a weighted average remaining contractual life of 6.9 years.
125,329 of these options are exercisable; their weighted average exercise price
is $18.84.
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 fiscal 1997, 1996 and 1995, respectively: average
risk-free interest rates of 6.5%, 5.8% and 7.2%; no expected dividend yield;
expected lives of 8 years for regular options and 5 years for Deferral Options
in all years; expected volatility of approximately 30% all years.
9. EARNINGS PER SHARE
The following table sets forth the calculation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------
January 4, December 31,
----------- -------------------------
1998 1996 1995
---- ---- ----
<S> <C> <C> <C>
Numerator:
Net income.............................. $ 430,000 $3,303,000 $2,709,000
---------- ---------- ----------
Numerator - basic and diluted........... $ 430,000 $3,303,000 $2,709,000
========== ========== ==========
Denominator:
Weighted-average shares................. 3,219,082 3,334,504 3,334,851
Effect of dilutive securities -
employee stock options.................. 113,808 39,978 70,253
---------- ---------- ----------
Weighted-average common and
potential common shares................. 3,332,890 3,374,482 3,405,104
========== ========== ==========
Basic earnings per share................ $ .13 $ .99 $ .81
========== ========== ==========
Diluted earnings per share.............. $ .13 $ .98 $ .80
========== ========== ==========
</TABLE>
28
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. SIGNIFICANT CUSTOMERS
The following table sets forth the percentage of the Company's total
revenues that were derived from major customers:
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------
January 4, December 31,
---------- -------------
1998 1996 1995
---- ---- ----
<S> <C> <C> <C>
Company A 11.9% 10.2% 5.8%
Company B 8.5% 9.0% 9.8%
</TABLE>
11. CONTINGENCIES
The Company is involved in a legal proceeding resulting from
allegations by a third party that the Company is infringing on certain patents.
Based on advice of patent counsel, management does not believe that the final
disposition of this case will have a material impact on the financial position
or results of operations of the Company.
12. SUBSEQUENT EVENTS
Company Obligated Mandatorily Redeemable Preferred Securities of a
Subsidiary Trust Holding Solely Subordinated Debt Securities of the Company
On January 27, 1998, Glacier Water Trust I (the "Trust"), a newly
created Delaware business trust and a wholly-owned subsidiary of the Company,
issued 105,154 common securities to the Company and completed a public offering
of 3.4 million of 9.0625% Cumulative Trust Preferred Securities with a
liquidation amount of $25 per security (the "Trust Preferred Securities" and
together with the common securities the "Trust Securities"). The Trust exists
for the sole purpose of issuing Trust Securities. Concurrent with the issuance
of such securities, the Trust invested the proceeds therefrom in an aggregate
principal amount of $85.0 million of 9.0625% Junior Subordinated Debentures (the
"Subordinated Debentures") issued by the Company.
Distributions on the Trust Securities are payable monthly in arrears
by the Trust. The Company may cause the Trust to defer the payment of
distributions for a period not to exceed 60 consecutive months. During any such
deferral period, distributions will accrue and compound quarterly, and the
Company may not declare or pay distributions on its common or preferred stock or
debt securities that rank equal or junior to the Subordinated Debentures.
The Subordinated Debentures are unsecured obligations of the Company
and are subordinate and junior in right of payment to certain other indebtedness
of the Company. The Trust Securities are subject to mandatory redemption upon
the repayment of the Subordinated Debentures at a redemption price equal to the
aggregate liquidation amount of the Securities plus any accumulated and unpaid
distributions. The Subordinated Debentures mature on January 31, 2028, but may
be redeemed at the option of the Company at any time after January 31, 2003.
The Company effectively provides a full and unconditional guarantee of the
Trust's obligations under the Trust Securities.
Issuance costs of approximately $3.9 million related to the Trust
Securities are deferred and will be amortized over the period until the
mandatory redemption of the securities in January 2028.
29
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Bank Credit Agreement
With the proceeds from the issuance of the Subordinated Debentures,
the Company repaid in full all amounts outstanding under its bank credit
agreement and terminated the agreement.
13. 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 January 4, 1998:
Net revenues $ 11,176 $ 16,038 $ 17,138 $ 12,942
Income from operations 142 1,164 573 732
Net income (loss) (111) 398 32 111
Basic earnings (loss) per share (.03) .12 .01 .03
Weighted average shares 3,208,580 3,214,150 3,226,758 3,226,706
Diluted earnings (loss) per share (.03) .12 .01 .03
Weighted average shares and
potential shares 3,208,580 3,310,010 3,351,034 3,354,263
Year Ended December 31, 1996:
Net revenues $ 10,015 $ 12,036 $ 13,709 $ 10,331
Income from operations 800 1,518 2,283 884
Net income (loss) 360 799 1,556 588
Basic earnings (loss) per share .11 .24 .46 .18
Weighted average shares 3,367,627 3,348,778 3,349,341 3,273,200
Diluted earnings (loss) per share .11 .24 .46 .18
Weighted average shares and
potential shares 3,406,797 3,389,589 3,398,650 3,327,953
</TABLE>
30
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No.
- -------
<S> <C>
3.1 Certificate of Incorporation of Registrant (i.)
3.2 Bylaws of Registrant (i.)
4.1 Specimen Stock Certificate of Registrant (i.)
4.2 Junior Subordinated Indenture between Glacier Water Services, Inc. and Wilmington
Trust Company, as Indenture Trustees, dated January 28, 1997
4.3 Officers' Certificate and Company Order executed by Glacier Water Services, Inc.,
dated January 27, 1998
4.4 Certificate of Trust of Glacier Water Trust I, dated November 13, 1997 (vi.)
4.5 Trust Agreement of Glacier Water Trust I, dated November 13, 1997 (vi.)
4.5.1 Amended and Restated Trust Agreement of Glacier Water Trust I, dated January 27, 1998
4.6 Trust Preferred Certificate of Glacier Water Trust I
4.7 Common Securities Certificate of Glacier Water Trust I
4.8 Guarantee Agreement between Glacier Water Services, Inc. and Wilmington Trust Company,
as Trustee, dated January 27, 1998
4.9 Agreement as to Expenses and Liabilities between Glacier Water Services, Inc.
and Glacier Water Trust I, dated January 27, 1998
4.10 Junior Subordinated Deferrable Interest Debenture of Glacier Water Services, Inc.
10.1 Amended and Restated 1992 Stock Incentive Plan (ii.)
10.2 Vending Machine Agreement between the Vons Companies, Inc. and BWVI(i.)
10.3 Location Agreement between Ralph's Grocery Company, Cala Co., and GW Services, Inc. (v.)
10.4 Form of Indemnification Agreement with Officers and Directors (i.)
10.5 1994 Stock Compensation Plan (iii.)
10.5.1 Amendment No. 1 to 1994 Stock Compensation Plan (iv.)
10.5.2 Amendment No. 2 to 1994 Stock Compensation Plan (v.)
10.5.3 Amendment No. 3 to 1994 Stock Compensation Plan (v.)
21.1 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP Independent Public Accountants
27 Financial Data Schedule for the Fiscal Year Ended January 4, 1998.
- --------------------
(i.) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-45360) amendments thereto.
(ii.) Incorporated by reference to the Company's Registration
Statement on Form S-8 (File Number 33-61942) filed April 30, 1993.
(iii.) Incorporated by reference to the Company's Registration Statement on
Form S-8 (File Number 33-80016) filed June 8, 1994.
(iv.) Incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 dated March 15, 1995.
(v.) Incorporated by reference to the Company's Annual Report on From 10-K for the
year ended December 31, 1996 dated March 31, 1997.
(vi.) Incorporated by reference to the Company's Registration Statement on
Form S-2 (File Number 333-40335) filed January 22, 1998.
</TABLE>
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GLACIER WATER SERVICES, INC.
By /s/ Jerry A. Gordon
--------------------------------------
Jerry A. Gordon
President, Chief Operating Officer and
Director
By /s/ Brenda K. Foster
--------------------------------------
Brenda K. Foster
Vice President, Controller
Date: April 2, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on April 2, 1998.
Signature Title
- --------- -----
Principal Executive Officer:
/s/ Jerry A. Gordon President, Chief Operating Officer and
- ---------------------------- Director
Jerry A. Gordon
/s/ Jerry R. Welch Chairman of the Board, Chief Executive
- ---------------------------- Officer and Director
Jerry R. Welch
/s/ Douglas C. Boyd Director
- ----------------------------
Douglas C. Boyd
/s/ Peter B. Foreman Director
- ----------------------------
Peter B. Foreman
/s/ Richard A. Kayne Director
- ----------------------------
Richard A. Kayne
/s/ Scott H. Shlecter Director
- ----------------------------
Scott H. Shlecter
/s/ Robert V. Sinnott Director
- ----------------------------
Robert V. Sinnott
/s/ Brenda K. Foster Vice President, Controller
- ----------------------------
Brenda K. Foster
32
<PAGE>
EXHIBIT 4.2
GLACIER WATER SERVICES, INC.
to
WILMINGTON TRUST COMPANY
Trustee
JUNIOR SUBORDINATED INDENTURE
Dated as of January 27, 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
January 27, 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> <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..................................................................... 20
Section 2.4................ Additional Provisions Required in Global Security............................................... 22
Section 2.5................ Form of Trustee's Certificate of Authentication................................................. 23
ARTICLE III
THE SECURITIES.................................................................................................................. 24
Section 3.1................ Title and Terms................................................................................. 24
Section 3.2................ Denominations................................................................................... 26
Section 3.3................ Execution, Authentication, Delivery and Dating.................................................. 27
Section 3.4................ Temporary Securities............................................................................ 28
Section 3.5................ Registration, Transfer and Exchange............................................................. 29
Section 3.6................ Mutilated, Destroyed, Lost and Stolen Securities................................................ 30
Section 3.7................ Payment of Interest; Interest Rights Preserved.................................................. 31
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 3.8................ Persons Deemed Owners........................................................................... 33
Section 3.9................ Cancellation.................................................................................... 33
Section 3.10............... Computation of Interest......................................................................... 33
Section 3.11............... Deferrals of Interest Payment Dates............................................................. 33
Section 3.12............... Right of Set-Off................................................................................ 35
Section 3.13............... Agreed Tax Treatment............................................................................ 35
Section 3.14............... Shortening of Stated Maturity................................................................... 35
Section 3.15............... CUSIP Numbers................................................................................... 35
ARTICLE IV
SATISFACTION AND DISCHARGE...................................................................................................... 36
Section 4.1................ Satisfaction and Discharge of Indenture......................................................... 36
Section 4.2................ Application of Trust Money...................................................................... 37
ARTICLE V
REMEDIES........................................................................................................................ 37
Section 5.1................ Events of Default............................................................................... 37
Section 5.2................ Acceleration of Maturity; Rescission and Annulment.............................................. 38
Section 5.3................ Collection of Indebtedness and Suits for Enforcement by Trustee................................ 40
Section 5.4................ Trustee May File Proofs of Claim................................................................ 40
Section 5.5................ Trustee May Enforce Claim Without Possession of Securities...................................... 41
Section 5.6................ Application of Money Collected.................................................................. 41
Section 5.7................ Limitation on Suits............................................................................. 42
Section 5.8................ Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by
Holders of Preferred Securities................................................................. 43
Section 5.9................ Restoration of Rights and Remedies.............................................................. 43
Section 5.10............... Rights and Remedies Cumulative.................................................................. 43
Section 5.11............... Delay or Omission Not Waiver.................................................................... 44
Section 5.12............... Control by Holders.............................................................................. 44
Section 5.13............... Waiver of Past Defaults......................................................................... 44
Section 5.14............... Undertaking for Costs........................................................................... 45
Section 5.15............... Waiver of Usury, Stay or Extension Laws......................................................... 45
ARTICLE VI
THE TRUSTEE..................................................................................................................... 46
Section 6.1................ Certain Duties and Responsibilities............................................................. 46
Section 6.2................ Notice of Defaults.............................................................................. 47
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 6.3................ Certain Rights of Trustee....................................................................... 47
Section 6.4................ Not Responsible for Recitals or Issuance of Securities.......................................... 48
Section 6.5................ May Hold Securities............................................................................. 48
Section 6.6................ Money Held in Trust............................................................................. 49
Section 6.7................ Compensation and Reimbursement.................................................................. 49
Section 6.8................ Disqualification; Conflicting Interests......................................................... 50
Section 6.9................ Corporate Trustee Required; Eligibility......................................................... 50
Section 6.10............... Resignation and Removal; Appointment of Successor............................................... 50
Section 6.11............... Acceptance of Appointment by Successor.......................................................... 52
Section 6.12............... Merger, Conversion, Consolidation or Succession to Business..................................... 53
Section 6.13............... Preferential Collection of Claims Against Company............................................... 53
Section 6.14............... Appointment of Authenticating Agent............................................................. 53
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY............................................................................... 56
Section 7.1................ Company to Furnish Trustee Names and Addresses of Holders....................................... 56
Section 7.2................ Preservation of Information, Communications to Holders.......................................... 56
Section 7.3................ Reports by Trustee.............................................................................. 56
Section 7.4................ Reports by Company.............................................................................. 57
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE............................................................................ 57
Section 8.1................ Company May Consolidate, Etc., Only on Certain Terms............................................ 57
Section 8.2................ Successor Corporation Substituted............................................................... 58
ARTICLE IX
SUPPLEMENTAL INDENTURES......................................................................................................... 59
Section 9.1................ Supplemental Indentures without Consent of Holders.............................................. 59
Section 9.2................ Supplemental Indentures with Consent of Holders................................................. 60
Section 9.3................ Execution of Supplemental Indentures............................................................ 61
Section 9.4................ Effect of Supplemental Indentures............................................................... 62
Section 9.5................ Conformity with Trust Indenture Act............................................................. 62
Section 9.6................ Reference in Securities to Supplemental Indentures.............................................. 62
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE X
COVENANTS....................................................................................................................... 62
Section 10.1............... Payment of Principal, Premium and Interest...................................................... 62
Section 10.2............... Maintenance of Office or Agency................................................................. 63
Section 10.3............... Money for Security Payments to be Held in Trust................................................. 63
Section 10.4............... Statement as to Compliance...................................................................... 64
Section 10.5............... Waiver of Certain Covenants..................................................................... 65
Section 10.6............... Additional Sums................................................................................. 65
Section 10.7............... Additional Covenants............................................................................ 66
ARTICLE XI
REDEMPTION OF SECURITIES........................................................................................................ 67
Section 11.1............... Applicability of This Article................................................................... 67
Section 11.2............... Election to Redeem; Notice to Trustee........................................................... 67
Section 11.3............... Selection of Securities to be Redeemed.......................................................... 67
Section 11.4............... Notice of Redemption............................................................................ 68
Section 11.5............... Deposit of Redemption Price..................................................................... 69
Section 11.6............... Payment of Securities Called for Redemption..................................................... 69
Section 11.7............... Right of Redemption of Securities Initially Issued to a Glacier Trust........................... 69
ARTICLE XII
SINKING FUNDS................................................................................................................... 70
Section 12.1............... Applicability of Article........................................................................ 70
Section 12.2............... Satisfaction of Sinking Fund Payments with Securities........................................... 70
Section 12.3............... Redemption of Securities for Sinking Fund....................................................... 71
ARTICLE XIII
SUBORDINATION OF SECURITIES..................................................................................................... 72
Section 13.1............... Securities Subordinate to Senior Debt and Subordinated Debt..................................... 72
Section 13.2............... Payment Over of Proceeds Upon Dissolution, Etc.................................................. 72
Section 13.3............... Prior Payment to Senior Debt and Subordinated Debt Upon Acceleration of Securities.............. 74
Section 13.4............... No Payment When Senior Debt and Subordinated Debt in Default.................................... 74
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 13.5............... Payment Permitted If No Default................................................................. 75
Section 13.6............... Subrogation to Rights of Holders of Senior Debt and Subordinated Debt........................... 75
Section 13.7............... Provisions Solely to Define Relative Rights..................................................... 76
Section 13.8............... Trustee to Effectuate Subordination............................................................. 76
Section 13.9............... No Waiver of Subordination Provisions........................................................... 76
Section 13.10.............. Notice to Trustee............................................................................... 77
Section 13.11.............. Reliance on Judicial Order or Certificate of Liquidating Agent.................................. 78
Section 13.12.............. Trustee Not Fiduciary for Holders of Senior Debt and Subordinated Debt.......................... 78
Section 13.13.............. Rights of Trustee as Holder of Senior Debt and Subordinated Debt; Preservation of Trustee's
Rights.......................................................................................... 78
Section 13.14.............. Article Applicable to Paying Agents............................................................. 78
Section 13.15.............. Certain Conversions or Exchanges Deemed Payment................................................. 79
</TABLE>
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of January 27, 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 I.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;
(c) All accounting terms not otherwise defined herein have the meanings
assigned to
1
<PAGE>
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 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
2
<PAGE>
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.
"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.
3
<PAGE>
"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."
"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.
4
<PAGE>
"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 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.
5
<PAGE>
"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, unless all the Securities of a series shall then be held by an
Affiliate of the Company, 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 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
6
<PAGE>
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 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
7
<PAGE>
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.
"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
8
<PAGE>
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.
Section I.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
9
<PAGE>
(d) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
Section I.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
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 I.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
10
<PAGE>
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.
(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
11
<PAGE>
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.
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 I.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 I.6 Notice to Holders; Waiver.
12
<PAGE>
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
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 I.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 I.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 I.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 I.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 I.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 I.12 Governing Law.
13
<PAGE>
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.
Section I.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 II.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 II.2 Form of Face of Security.
14
<PAGE>
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
15
<PAGE>
than ____ 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 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
16
<PAGE>
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.
17
<PAGE>
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]
18
<PAGE>
Section II.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 January 27, 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 $_____________________.
All terms used in this Security that are defined in the Indenture and in
the Amended and Restated Trust Agreement, dated as of ______________________, 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.
[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
19
<PAGE>
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 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, in any, on the 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
20
<PAGE>
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 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.
21
<PAGE>
Section II.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 II.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
22
<PAGE>
ARTICLE III
THE SECURITIES
Section III.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;
(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;
23
<PAGE>
(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 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;
24
<PAGE>
(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 issued 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 III.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.
25
<PAGE>
Section III.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
26
<PAGE>
of a series are not to be originally issued at one time, it shall not be
necessary to 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 III.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.
27
<PAGE>
Section III.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
28
<PAGE>
name of the Depositary designated for such Global Security or a nominee thereof
and 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 III.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 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.
29
<PAGE>
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 III.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.
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
30
<PAGE>
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.
31
<PAGE>
Section III.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 III.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 III.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.
32
<PAGE>
Section III.11 Deferrals of Interest Payment Dates.
33
<PAGE>
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; 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
34
<PAGE>
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 III.12 Right of Set-Off.
With respect to the Securities of a series issued to a Glacier Trust,
notwithstanding anything to the contrary in this 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 III.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 III.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 III.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.
35
<PAGE>
ARTICLE IV
SATISFACTION AND DISCHARGE
Section IV.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
(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;
(c) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
36
<PAGE>
(d) 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 IV.2 Application of Trust Money.
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 V.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 Stated 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
37
<PAGE>
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 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 V.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
38
<PAGE>
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.
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.
39
<PAGE>
Section V.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,
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 V.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,
40
<PAGE>
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
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 V.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 V.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;
41
<PAGE>
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 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 V.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.
42
<PAGE>
Section V.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 V.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 V.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.
43
<PAGE>
Section V.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 V.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 V.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.
44
<PAGE>
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 V.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 V.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.
45
<PAGE>
ARTICLE VI
THE TRUSTEE
Section VI.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
46
<PAGE>
or otherwise incur any financial liability in the performance of any of its
duties hereunder, 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 VI.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 VI.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;
(D) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of
47
<PAGE>
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 VI.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 VI.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.
48
<PAGE>
Section VI.6 Money Held in Trust.
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 VI.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.
49
<PAGE>
Section VI.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).
Section VI.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 VI.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
50
<PAGE>
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.
(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,
51
<PAGE>
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.
Section VI.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.
52
<PAGE>
(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.
(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 VI.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 VI.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).
53
<PAGE>
Section VI.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 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
54
<PAGE>
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:
55
<PAGE>
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
[INSERT NAME OF TRUSTEE]
As Trustee
By: __________________________________
As Authenticating Agent
By: __________________________________
Authorized Officer
56
<PAGE>
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section VII.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 VII.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 VII.3 Reports by Trustee.
(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.
57
<PAGE>
(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 VII.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 VIII.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 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;
58
<PAGE>
(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 VIII.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.
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.
59
<PAGE>
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section IX.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
(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
60
<PAGE>
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 IX.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 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
61
<PAGE>
(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.
Section IX.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 IX.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
62
<PAGE>
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 IX.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 IX.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.
ARTICLE X
COVENANTS
Section X.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.
63
<PAGE>
Section X.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 X.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 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
64
<PAGE>
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 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.
65
<PAGE>
Section X.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 X.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.
66
<PAGE>
Section X.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 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.
67
<PAGE>
Section X.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 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.
68
<PAGE>
ARTICLE XI
REDEMPTION OF SECURITIES
Section XI.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 XI.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 XI.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 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
69
<PAGE>
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 XI.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.
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.
70
<PAGE>
Section XI.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 XI.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 XI.7 Right of Redemption of Securities Initially Issued to a Glacier
Trust.
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.
71
<PAGE>
ARTICLE XII
SINKING FUNDS
Section XII.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 XII.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 so to be redeemed, for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
72
<PAGE>
Section XII.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 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
73
<PAGE>
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 XIII.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 XIII.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 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
74
<PAGE>
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.
75
<PAGE>
Section XIII.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 XIII.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 by the Company or any
Subsidiary, in each case unless and until all
76
<PAGE>
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 XIII.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.
77
<PAGE>
Section XIII.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 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 XIII.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.
78
<PAGE>
Section XIII.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 XIII.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.
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.
79
<PAGE>
Section XIII.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 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 XIII.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 XIII.12 Trustee Not Fiduciary for Holders of Senior Debt and
Subordinated Debt.
80
<PAGE>
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 XIII.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 XIII.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 XIII.15 Certain Conversions or Exchanges Deemed Payment.
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.
81
<PAGE>
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: ________________________________________
Name: Jerry A. Gordon
Title: President and Chief Operating Officer
Attest:
By: _________________________________________
Name: Brenda K. Foster
Title: Vice President, Controller and Secretary
WILMINGTON TRUST COMPANY,
as Trustee
By: ________________________________
Its:____________________________
Attest:
By: _____________________________
Its:_________________________
82
<PAGE>
STATE OF CALIFORNIA )
) SS.
COUNTY OF SAN DIEGO )
On the _____ day of January, 1998 before me personally came Jerry A. Gordon
and Brenda K. Foster, each to me known, who, being by me duly sworn, did depose
and say that they are the President and Chief Operating Officer, and the Vice
President, Controller and Secretary, respectively, of GLACIER WATER SERVICES,
INC., one of the corporations described in and which executed the foregoing
instrument; that each knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; and that each signed such person's
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
______________ and ______________ to me known, who, being by me duly sworn, did
depose and say that they are the ____________ and ______________, respectively,
of WILMINGTON TRUST COMPANY, one of the corporations described in and which
executed the foregoing instrument; that they know the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; and that they
signed their respective names thereto by authority of the Board of Directors of
said corporation.
[SEAL] _______________________________
Notary Public
83
<PAGE>
EXHIBIT 4.3
GLACIER WATER SERVICES, INC.
OFFICERS' CERTIFICATE AND COMPANY ORDER
RELATING TO THE
9 1/16% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE JANUARY 31, 2028
OF GLACIER WATER SERVICES, INC.
-------------------------------
Pursuant to the Indenture dated as of January 27, 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 January 21, 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 "9 1/16% Junior
Subordinated Deferrable Interest Debentures Due January 31, 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 $87,628,850 (except for Securities authenticated and delivered upon
registration of, transfer of, 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
1
<PAGE>
never to have been authenticated and delivered thereunder).
C. The date on which the principal of the Securities is due and
payable shall be January 31, 2028.
D. The Securities shall bear interest at the rate of 9 1/16% 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 March
15, 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 9 1/16% 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 9 1/16%, 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 January
31, 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.
2
<PAGE>
"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 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).
3
<PAGE>
L. The Securities will be issued in fully registered form, without
coupons. The Securities will not be issued in bearer form.
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 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.
4
<PAGE>
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 $87,628,850 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 10:00 a.m., Los Angeles time, on
January 27, 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 January 21, 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 11, 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 Officers'
Certificate and Company Order this 27th day of January 1998.
Glacier Water Services, Inc.
By: ________________________________________
Name: Jerry A. Gordon
Title: President and Chief Operating Officer
By: ________________________________________
Name: Brenda K. Foster
Title: Vice President, Controller and Secretary
6
<PAGE>
EXHIBIT 4.5.1
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 JANUARY 27, 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> <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..................................................... 16
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
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
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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............................................... 38
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
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............................ 45
Section 8.17 Number of Trustees.......................................................... 45
Section 8.18 Delegation of Power......................................................... 45
Section 8.19 Voting...................................................................... 46
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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................................................................ 47
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............................................................... 51
Section 10.4 Separability............................................................... 51
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............................................... 52
Section 10.10 Agreement Not to Petition.................................................. 52
Section 10.11 Trust Indenture Act; Conflict with Trust Indenture Act..................... 53
Section 10.12 Acceptance of Terms of Trust Agreement, Guarantee and Indenture............ 54
</TABLE>
Index of Exhibits:
EXHIBIT A -- Certificate of Trust
EXHIBIT B -- DTC Letter of Representations
EXHIBIT C -- Form of Certificate Evidencing Common Securities
EXHIBIT D -- Agreement as to Expenses and Liabilities
EXHIBIT E -- Form of Certificate Evidencing Trust Preferred Securities
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT (this "Trust Agreement"), dated as of
January 27, 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 I.1 Definitions.
For all purposes of this Trust Agreement, 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;
1
<PAGE>
(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
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or
2
<PAGE>
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 pledges of securities deposited with the Clearing
Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
3
<PAGE>
"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 9
1/16% 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 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.
4
<PAGE>
"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.
"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.
5
<PAGE>
"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 January
27, 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.
"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,
6
<PAGE>
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
(c) 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 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
7
<PAGE>
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 "9 1/16% 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.
"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.
8
<PAGE>
"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.
"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
9
<PAGE>
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 January 21, 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 II.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.
Section II.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, Rodney Square North, 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 II.3 Initial Contribution of Trust Property; Organizational
Expenses.
10
<PAGE>
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 II.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
3,400,000 Preferred Securities having an aggregate Liquidation Amount of
$85,000,000, against receipt of such aggregate purchase price of such Preferred
Securities of $85,000,000, which amount the Administrative Trustee shall
promptly deliver to the Property Trustee.
Section II.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 105,154
Common Securities having an aggregate Liquidation Amount of $2,628,850, 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 $87,628,850 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 $87,628,850, 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.
Section II.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
11
<PAGE>
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 II.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 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;
12
<PAGE>
(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;
(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;
13
<PAGE>
(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):
(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;
14
<PAGE>
(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 II.8 Assets of Trust.
The assets of the Trust shall consist of the Trust Property.
Section II.9 Title to Trust Property.
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 III.1 Payment Account.
15
<PAGE>
(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 IV.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 March 15, 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 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 9 1/16%
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
16
<PAGE>
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 IV.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 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
17
<PAGE>
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; 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
18
<PAGE>
(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 IV.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 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 IV.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
19
<PAGE>
mutually agreed between the Property Trustee and the Common Securityholder.
Section IV.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 IV.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 IV.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.
ARTICLE V
Trust Securities Certificates
Section V.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 V.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.
20
<PAGE>
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 V.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 V.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 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
21
<PAGE>
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 V.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 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 V.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 V.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
22
<PAGE>
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 V.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.
23
<PAGE>
Section V.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 V.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."
24
<PAGE>
Section V.11 Book-Entry Preferred Securities Certificates; Common
Securities 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 Owners' 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 V.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.
25
<PAGE>
Section V.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 V.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 Securities then
Outstanding shall have such right by a notice in writing to the Depositor and
the Debenture Trustee;
26
<PAGE>
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 be entitled to join in such
notice, whether or not such Holders remain Holders after such record date;
provided, that, unless
27
<PAGE>
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 VI.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 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
28
<PAGE>
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 VI.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 VI.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 of Securityholders.
29
<PAGE>
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 VI.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 VI.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 VI.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 VI.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 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.
30
<PAGE>
Section VI.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 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
31
<PAGE>
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 VI.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 VII.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 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
32
<PAGE>
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 VII.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 VIII.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 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
33
<PAGE>
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 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
34
<PAGE>
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 VIII.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 VIII.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 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
35
<PAGE>
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 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
36
<PAGE>
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 VIII.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 VIII.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 VIII.6 Compensation; Indemnity; Fees.
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
37
<PAGE>
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 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 VIII.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
38
<PAGE>
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 VIII.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 VIII.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 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,
39
<PAGE>
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.
(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 VIII.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.
40
<PAGE>
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
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.
41
<PAGE>
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 VIII.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.
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 VIII.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.
42
<PAGE>
Section VIII.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.
Section VIII.14 Reports by Property Trustee.
(a) Not later than July 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
43
<PAGE>
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 VIII.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 VIII.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, 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 VIII.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
44
<PAGE>
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 VIII.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 VIII.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.
ARTICLE IX
Dissolution, Liquidation and Merger
Section IX.1 Dissolution Upon Expiration Date.
Unless dissolved earlier, the Trust shall automatically dissolve on
February 1, 2029 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.4.
Section IX.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;
45
<PAGE>
(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 IX.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 IX.4 Liquidation.
(a) If an Early Dissolution Event specified in clause (a), (b) or (d) of
Section 9.2 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
46
<PAGE>
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 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 IX.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
47
<PAGE>
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, 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 X.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
48
<PAGE>
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 X.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 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
49
<PAGE>
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 X.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 X.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 provisions shall not in any way be affected
or impaired thereby.
Section X.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 X.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 X.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
50
<PAGE>
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 X.8 Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section X.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.
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 X.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
51
<PAGE>
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 X.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.
(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 X.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.
52
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated
Trust Agreement this 27th day of January, 1998.
<TABLE>
<S> <C>
GLACIER WATER SERVICES, INC. GLACIER WATER TRUST I
By:
--------------------- --------------------------------------------------
Name: Jerry A. Gordon Name: Jerry R. Welch
Title: President and Title: Administrative Trustee
Chief Operating Officer
WILMINGTON TRUST COMPANY, --------------------------------------------------
as Property Trustee Name: Jerry A. Gordon
Title:
By:
---------------------
Name:
Title: ---------------------------------------------------
Name: Brenda K. Foster
Title: Administrative Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By:
---------------------
Name:
Title:
</TABLE>
<PAGE>
CERTIFICATE OF TRUST
<PAGE>
EXHIBIT B
DTC LETTER OF REPRESENTATIONS
<PAGE>
EXHIBIT C
CERTIFICATE EVIDENCING COMMON SECURITIES
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
<PAGE>
EXHIBIT E
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
<PAGE>
EXHIBIT 4.6
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 "DEPOSITARY") OR A NOMINEE OF THE
DEPOSITARY. THIS TRUST PREFERRED SECURITY IS EXCHANGEABLE FOR TRUST PREFERRED
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY 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 DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS TRUST PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (55 WATER STREET, NEW YORK) TO GLACIER WATER
TRUST 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 DEPOSITARY 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: 3,400,000
CUSIP NO.
376 398 202
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
GLACIER WATER TRUST I
9 1/16% 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 Three Million Four Hundred Thousand
(3,400,000) Trust Preferred Securities of the Trust representing an undivided
beneficial interest in the assets of the Trust and designated the GLACIER WATER
TRUST I 9 1/16% 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,
restrictions, preferences and other
<PAGE>
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 January 27, 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
January 27, 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.
(remainder of page intentionally left blank)
<PAGE>
In Witness Whereof, an Administrative Trustee of the Trust has
executed this Certificate Evidencing Trust Preferred Securities this 27th day of
January, 1998.
GLACIER WATER TRUST I
By: _____________________________________________
Name: Jerry A. Gordon
Title: Adminstrative 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 4.7
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES: 105,154
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
GLACIER WATER TRUST I
9 1/16% 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 One Hundred Five
Thousand One Hundred and Fifty-Four (105,154) common securities of the Trust
representing an undivided beneficial interest in the assets of the Trust and
designated the 9 1/16% 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 January 27, 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.
<PAGE>
In Witness Whereof, an Administrative Trustee of the Trust has executed
this Certificate this 27th day of January, 1998.
GLACIER WATER TRUST I
By:
------------------------------------
Name: Jerry A. Gordon
Title: Administrative Trustee
<PAGE>
EXHIBIT 4.8
GUARANTEE AGREEMENT
BETWEEN
GLACIER WATER SERVICES, INC.
(AS GUARANTOR)
AND
WILMINGTON TRUST COMPANY
(AS TRUSTEE)
DATED AS OF
JANUARY 27, 1998
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust Section of
Indenture Act of 1939, as amended Guarantee Agreement
- --------------------------------- -------------------
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)
____________
* 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> <C>
ARTICLE I. DEFINITIONS................................................. 1
SECTION 1.1 Definitions................................................. 1
ARTICLE II. TRUST INDENTURE ACT......................................... 4
SECTION 2.1 Trust Indenture Act; Application............................ 4
SECTION 2.2 List of Holders............................................. 4
SECTION 2.3 Reports by the Guarantee Trustee............................ 4
SECTION 2.4 Periodic Reports to the Guarantee Trustee................... 4
SECTION 2.5 Evidence of Compliance with Conditions Precedent............ 5
SECTION 2.6 Events of Default; Waiver................................... 5
SECTION 2.7 Event of Default; Notice.................................... 5
SECTION 2.8 Conflicting Interests....................................... 5
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE........................................... 6
SECTION 3.1 Powers and Duties of the Guarantee Trustee.................. 6
SECTION 3.2 Certain Rights of Guarantee Trustee......................... 7
SECTION 3.3 Indemnity................................................... 9
ARTICLE IV. GUARANTEE TRUSTEE........................................... 9
SECTION 4.1 Guarantee Trustee: Eligibility.............................. 9
SECTION 4.2 Appointment, Removal and Resignation of the Guarantee
Trustee..................................................... 9
ARTICLE V. GUARANTEE................................................... 10
SECTION 5.1 Guarantee................................................... 10
SECTION 5.2 Waiver of Notice and Demand................................. 10
SECTION 5.3 Obligations Not Affected.................................... 10
SECTION 5.4 Rights of Holders........................................... 11
SECTION 5.5 Guarantee of Payment........................................ 12
SECTION 5.6 Subrogation................................................. 12
SECTION 5.7 Independent Obligations..................................... 12
ARTICLE VI. COVENANTS AND SUBORDINATION................................. 12
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.1 Subordination............................................... 12
SECTION 6.2 Pari Passu Guarantees....................................... 12
ARTICLE VII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........ 13
SECTION 7.1 Guarantor May Consolidate, Etc., Only on Certain Terms...... 13
SECTION 7.2 Successor Guarantor Substituted............................. 13
ARTICLE VIII. TERMINATION................................................. 14
SECTION 8.1 Termination................................................. 14
ARTICLE IX. MISCELLANEOUS............................................... 14
SECTION 9.1 Successors and Assigns...................................... 14
SECTION 9.2 Amendments.................................................. 14
SECTION 9.3 Notices..................................................... 14
SECTION 9.4 Benefit..................................................... 15
SECTION 9.5 Interpretation.............................................. 16
SECTION 9.6 Governing Law............................................... 16
</TABLE>
2
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of January 27, 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
January 27, 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 $85,000,000 aggregate Liquidation Amount (as defined in the Trust
Agreement) of its 9 1/16% 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 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
1
<PAGE>
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 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 January 27,
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
2
<PAGE>
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.
"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.
3
<PAGE>
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.
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.
4
<PAGE>
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.
(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.
5
<PAGE>
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.
(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 require ments 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 speci-
fically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to
6
<PAGE>
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 repay ment 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.
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
7
<PAGE>
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.
(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.
8
<PAGE>
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.
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
9
<PAGE>
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.
(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;
10
<PAGE>
(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), 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.
SECTION 5.5 Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection. This
Guarantee will
11
<PAGE>
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.
12
<PAGE>
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, transfer or lease the Guarantor shall be discharged from all
obligations and covenants under this Guarantee Agreement.
13
<PAGE>
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 Secu rities 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
termi nated 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.
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:
14
<PAGE>
(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
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Facsimile No.: (302) 427-4749
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 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.
15
<PAGE>
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.
16
<PAGE>
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:
17
<PAGE>
EXHIBIT 4.9
AGREEMENT AS TO EXPENSES AND LIABILITIES
This Agreement As To Expenses And Liabilities (this "Agreement"), dated as
of January 27, 1998, is between GLACIER WATER SERVICES, INC., a Delaware
corporation (the "Company"), and GLACIER WATER TRUST I, a Delaware statutory
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 its 9 1/16%
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 January 27,
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 sums paid under the Trust Preferred Securities, under any
Obligation, under the Guarantee Agreement dated the date
1
<PAGE>
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.
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
2
<PAGE>
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.
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).
3
<PAGE>
This Agreement as to Expenses and Liabilities 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
4
<PAGE>
EXHIBIT 4.10
THIS JUNIOR SUBORDINATED DEBENTURE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY.
THIS JUNIOR SUBORDINATED DEBENTURE IS EXCHANGEABLE FOR JUNIOR SUBORDINATED
DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE CIRCUMSTANCES DESCRIBED IN THE JUNIOR SUBORDINATED INDENTURE
AND NO TRANSFER OF THIS JUNIOR SUBORDINATED DEBENTURE (OTHER THAN A TRANSFER OF
THIS JUNIOR SUBORDINATED DEBENTURE 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) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS JUNIOR SUBORDINATED DEBENTURE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (55 WATER STREET, NEW YORK) TO GLACIER WATER
SERVICES, INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY JUNIOR SUBORDINATED DEBENTURE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY 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.
Face of Security
GLACIER WATER SERVICES, INC.
9 1/16% JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURE DUE JANUARY 31, 2028
CUSIP No.: 376395 AA 7
Registered No. 1 Principal Amount: $87,628,850
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 certifies that Cede & Co. is the registered owner of
the principal sum of Eighty-Seven Million Six Hundred Twenty-Eight Thousand
Eight Hundred and Fifty Dollars ($87,628,850.00) of the Company's 9-1/16% Junior
Subordinated Deferrable Interest Debentures due January 31, 2028; provided that
the Company may shorten the Stated Maturity of the principal of this Security to
a date not earlier than January 31, 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
1
<PAGE>
set forth herein) in arrears on the 15th day of each calendar month of each year
commencing March 15, 1998 at the rate of 9 1/16% 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 9 1/16% 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) 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 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
2
<PAGE>
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 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
3
<PAGE>
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.
4
<PAGE>
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: Jerry A. Gordon
Title: President and
Chief Operating Officer
Attest:
__________________________________
Name: Brenda K. Foster
Title: Vice President, Controller
and Secretary
5
<PAGE>
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 January 27, 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 $87,628,850.
All terms used in this Security that are defined in the Indenture and
in the Amended and Restated Trust Agreement, dated as of January 27, 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 January 31,
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.
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
6
<PAGE>
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 Cede & Co. for the benefit of 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 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.
7
<PAGE>
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.
8
<PAGE>
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: January 27, 1998
WILMINGTON TRUST COMPANY,
as Trustee
By: ___________________________
Authorized Officer
9
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME OF STATE OF NAME UNDER WHICH
SUBSIDIARY INCORPORATION SUBSIDIARY OPERATES
- ---------- ------------- -------------------
<S> <C> <C>
GW Services, Inc. California GW Services Inc.,
except for the state of
Texas where DBA is Bottle
Water Vending, Inc. and the
State of Arizona where DBA is
Glacier Water, Inc.
Glacier Water Trust I Delaware Glacier Water Trust I
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K for the fiscal year ended January 4, 1998,
into Glacier Water Services, Inc.'s previously filed Registration Statements
File No. 33-61942 and File No. 33-80016.
Arthur Andersen LLP
San Diego, California
April 1, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-04-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> JAN-04-1998
<CASH> 13
<SECURITIES> 315
<RECEIVABLES> 467
<ALLOWANCES> 0
<INVENTORY> 3,007
<CURRENT-ASSETS> 4,996
<PP&E> 72,073
<DEPRECIATION> (23,550)
<TOTAL-ASSETS> 59,473
<CURRENT-LIABILITIES> 2,991
<BONDS> 0
0
0
<COMMON> 34
<OTHER-SE> 24,589
<TOTAL-LIABILITY-AND-EQUITY> 59,473
<SALES> 57,294
<TOTAL-REVENUES> 57,294
<CGS> 0
<TOTAL-COSTS> 51,621
<OTHER-EXPENSES> 3,062
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,988
<INCOME-PRETAX> 623
<INCOME-TAX> 193
<INCOME-CONTINUING> 430
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 430
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
