As filed with the Securities and Exchange Commission on August 29, 1996
Registration No. 333-
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HFS INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3059335
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
339 JEFFERSON ROAD
PARSIPPANY, NEW JERSEY 07054
(201) 428-9700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------
JAMES E. BUCKMAN, ESQ.
339 JEFFERSON ROAD
PARSIPPANY, NEW JERSEY 07054
(201) 428-9700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------
COPIES TO:
VINCENT J. PISANO, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NY 10022
(212) 735-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM
TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS
DETERMINED BY MARKET CONDITIONS.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE
OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE
SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH
DIVIDEND OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN
OFFERING PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE
FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE
EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE
462(C) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE
SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE
434, PLEASE CHECK THE FOLLOWING BOX. [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
PROPOSED MAXI- PROPOSED MAXIMUM AMOUNT
TITLE OF SHARES AMOUNT TO BE MUM AGGREGATE AGGREGATE OF
TO BE REGISTERED REGISTERED PRICE PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities (2) .........
Common Stock, $.01 } $1,000,000,000 (3) 100% } $1,000,000,000 (3) (4) } $344,828
par value....................
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i).
(2) Also includes such indeterminate number of shares of Common Stock as may
be issued upon conversion or exchange of any of the Debt Securities that
provide for conversion or exchange for shares of Common Stock.
(3) Such amount represents the principal amount of any Debt Securities issued
at their principal amount, the issue price rather than the principal amount
of any Debt Securities issued at original issue discount, and the amount
computed pursuant to Rule 457(i) for any Common Stock.
(4) No separate consideration will be received for Common Stock issuable upon
conversion or exchange of the Debt Securities.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
2
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SUBJECT TO COMPLETION
DATED AUGUST 29, 1996
PROSPECTUS
HFS INCORPORATED
DEBT SECURITIES AND COMMON STOCK
HFS Incorporated (the "Company"), directly or through such agents,
dealers or underwriters as may be designated from time to time, may offer,
issue and sell, together or separately, its (i) debt securities (the "Debt
Securities"), which may be senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), and (ii) shares of its common stock, par value $0.01 per share
(the "Common Stock", together with the Debt Securities, the "Securities"), with
an aggregate public offering price of up to $1,000,000,000 (or its equivalent
in foreign currencies or foreign currency units based on the applicable
exchange rate at the time of offering) in amounts, at prices and on terms to be
determined at the time of sale. The Debt Securities may be issued as
exchangeable and/or convertible Debt Securities exchangeable for or convertible
into shares of Common Stock. When a particular series of Securities is offered,
a supplement to this Prospectus (each a "Prospectus Supplement") will be
delivered with this Prospectus. The Prospectus Supplement will set forth the
terms of the offering and sale of the offered Securities.
The Company's Common Stock is listed on the New York Stock Exchange
under the symbol "HFS". On August 28, 1996, the last reported sale price of the
Common Stock on the New York Stock Exchange was $61 3/8 per share. The Company
has not yet determined whether any of the Debt Securities offered hereby will
be listed on any exchange or over-the-counter market. If the Company decides to
seek listing of any such Debt Securities, the Prospectus Supplement relating
thereto will disclose such exchange or market.
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS, SEE "RISK FACTORS" ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. The
Company reserves the sole right to accept, and together with its agents, from
time to time, to reject in whole or in part any proposed purchase of Securities
to be made directly or through agents. See "Plan of Distribution." If any
agents or underwriters are involved in the sale of any Securities, the names of
such agents or underwriters and any applicable fees, commissions or discounts
will be set forth in the applicable Prospectus Supplement.
This Prospectus may not be used to consummate any sale of Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is August __, 1996.
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER, DEALER OR AGENT INVOLVED IN THE OFFERING DESCRIBED HEREIN. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR OF ANY
SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information can be inspected and
copied at prescribed rates at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661 and 7 World
Trade Center, 13th Floor, New York, New York 10048. The Commission also
maintains a website that contains reports, proxy and information statements and
other information. The website address is http.//www.sec.gov. In addition, such
material can be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
The Company has filed a registration statement (the "Registration
Statement") on Form S-3 with respect to the Securities offered hereby with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement,
certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
agreement, instrument or other document referred to herein are not necessarily
complete. With respect to each such agreement, instrument or other document
filed as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complete description of the matter involved, and each such
statement is qualified in its entirety by reference to such agreement,
instrument or document.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the year ended
December 31, 1995; (ii) description of the Company's Capital Stock which is
contained in its Registration Statement on Form 8-A dated September 16, 1992,
including the amendment on Form 8-A/A dated September 1, 1995, including any
amendment or report filed for the purpose of updating such description; (iii)
Quarterly Report on Form 10-Q for the quarter ending March 31, 1996; (iv)
Quarterly Report on Form 10-Q for the quarter ending June 30, 1996 as amended
by the Quarterly Report on Form 10-Q/A filed on August 19, 1996; (v) Current
Reports on Form 8-K dated February 16, 1996, March 8, 1996 and April 5, 1996,
May 8, 1996, May 21, 1996 and August 29, 1996; and (vi) Current Report on Form
8-K/A, dated August 18, 1995, all of which have previously been filed by the
Company with the Commission, are incorporated herein by reference.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities shall be deemed to
be incorporated herein by reference and to be a part hereof from the date of
filing of such documents. Any statement contained in this Prospectus or in a
document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated herein by reference or
in any Prospectus Supplement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
2
<PAGE>
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to James E.
Buckman, Esq., Executive Vice President and General Counsel, 339 Jefferson
Road, Parsippany, New Jersey 07054, (201) 428-9700.
IN CONNECTION WITH ANY UNDERWRITTEN OFFERING OF THE SECURITIES, THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICES OF SUCH SECURITIES OR OTHER SECURITIES OF THE COMPANY AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
3
<PAGE>
THE COMPANY
GENERAL
HFS Incorporated ("HFS" or the "Company"), formerly named
Hospitality Franchise Systems, Inc., is the world's largest franchisor of hotels
and residential real estate brokerage offices. The Company operates nine
national hotel franchise systems: Days Inn(R), Ramada(R) (in the United States),
Howard Johnson's(R), Super 8(R), Travelodge(R) (in North America), Park Inn
International(R) (in the United States and Canada), Villager(sm) Lodge, Knights
Inn(R) and Wingate Inn(sm). In aggregate, these franchise systems consist of
approximately 5,300 properties and 490,000 hotel rooms worldwide. The Company
operates the CENTURY 21(R), Coldwell Banker(R) and Electronic Realty Associates
or ERA(R) (collectively "ERA") real estate brokerage franchise systems which it
acquired on August 1, 1995, May 30, 1996 and February 12, 1996, respectively.
Century 21, Coldwell Banker and ERA are the world's largest, second largest and
fourth largest franchisors, respectively, of residential real estate brokerage
offices, with an aggregate of more than 11,200 independently owned and operated
franchised offices located worldwide.
As a franchisor of hotels and residential real estate brokerage
offices, the Company licenses the owners and operators of independent
businesses, principally hotels and real estate brokerage offices, to use the
Company's brand names. The Company does not own or operate hotels or real
estate brokerage offices. Instead, the Company provides its customers with
services designed to increase their revenue and profitability. These services
allow customers to retain independence and local control while benefiting from
the economies of scale of widely promoted brand names and standards of service,
national and regional direct marketing and co-marketing arrangements and global
procurement. The most important of these services for hotel owners are access
to a national reservation system, national advertising and promotional
campaigns, co-marketing programs and volume purchasing discounts. The most
significant services to real estate brokerages are national advertising and
promotion, referrals and training. The Company believes significant
opportunities exist to expand the co-marketing and volume purchasing benefits
that it currently provides to its hotel franchisees and to its real estate
brokerage franchisees.
The Company also operates the Coldwell Banker corporate employee
relocation business, which the Company estimates is the second largest provider
of corporate relocation services in the United States based on the number of
transferred employees assisted. The Coldwell Banker corporate employee
relocation business offers its relocation clients a variety of services in
connection with the transfer of its clients' employees. These services include
the selling of a transferee's home, appraisals, inspections, assistance in
finding a new home, property marketing advice, rental assistance, equity
advances, purchasing a transferee's home at the appraised value when no higher
bid is obtained, educational and school placement counseling, career
counseling, spouse/partner employment assistance and group move services.
The Company continually explores and conducts discussions with regard
to acquisitions and other strategic corporate transactions in its industries
and in other franchise or franchisable businesses. Historically, the Company
has been involved in numerous transactions of various magnitudes for
consideration which included cash or securities (including Common Stock) or
combinations thereof. The Company is continuing to evaluate and to pursue
appropriate acquisition and combination opportunities as they arise in the
expansion of its operations. No assurance can be given with respect to the
timing, likelihood or financial or business effect of any possible transaction.
In the past, acquisitions by the Company have involved both relatively small
acquisitions and acquisitions which have been significant, including the
pending acquisition of Avis, Inc. ("Avis") pursuant to the Merger Agreement (as
defined) and the Stock Purchase Agreement (as defined) for approximately $800
million. See "The Avis Acquisition."
As part of its regular on-going evaluation of acquisition
opportunities, the Company is currently engaged in a number of separate and
unrelated preliminary discussions concerning possible acquisitions. The
Company is in the early stages of such discussions and has not entered into any
agreement in principle with respect to any of these possible acquisitions. The
purchase price for the possible acquisitions may be paid in cash, through the
issuance of Common Stock (which would increase the number of shares of Common
Stock outstanding) or other securities of the Company, borrowings, or a
combination thereof. Prior to consummating any such possible acquisitions, the
Company, among other things, will have to initiate and satisfactorily complete
its due diligence investigation; negotiate the financial and other terms
(including price) and conditions of such acquisitions; obtain appropriate Board
of Directors', regulatory and other necessary consents and approvals; and secure
financing. The Company cannot predict whether any such acquisitions will be
consummated or, if consummated, will result in a financial or other benefit to
the Company.
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The Company's principal executive offices are located at 339 Jefferson
Road, Parsippany, New Jersey 07054 (telephone number: (201) 428-9700).
THE AVIS ACQUISTION
The Avis Acquistion On August 23, 1996, the Company entered into an
Agreement and Plan of Merger (the "Merger Agreement"),
by and among HFS, Avis Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of HFS, U.S. Trust Company of California, N.A., as Trustee of
the Trust forming a part of The Avis, Inc. Employee Stock Ownership Plan and
Avis and, on August 28, 1996, the Company entered into the Stock Purchase
Agreement (the "Stock Purchase Agreement") by and between HFS and General Motors
Corporation. Pursuant to the Merger Agreement and the Stock Purchase Agreement,
the Company has agreed to pay approximately $800 million for all of the
outstanding capital stock of Avis, including payments under certain employee
stock plans of Avis and the redemption of certain series of preferred stock of
Avis (the "Preferred Stock"). While completion of this transaction is not
assured, the Company expects that the transaction will be completed on or about
October 1, 1996.
Avis, together with its subsidiaries, licensees and affiliates,
operates the Avis System, which the Company believes to be the second largest
car rental system in the world. The Avis System consists of approximately 4,139
worldwide locations, including locations at most major airports as well as
downtown locations in major cities in the United States and in approximately
149 countries and territories. Approximately 84% of the Avis System rental
revenues in the United States are received from locations operated by Avis
directly or under agency arrangements, with the remainder being received from
locations operated by independent licensees. Avis's international business is
conducted by a network of several, wholly owned subsidiaries and joint ventures
along with a number of licensees and sublicensees. The Avis System in Europe,
Africa and the Middle East is operated by Avis Europe Limited, a United Kingdom
based company ("Avis Europe") which is approximately 9% owned by Avis. The Avis
System in Canada, Latin America, the Caribbean and Asia Pacific, comprising
some 65 countries or territories, is operated by Avis subsidiaries, joint
ventures and licensees. See "The Avis Acquisition."
Following the acquisition of Avis, the Company currently intends to
dispose of a majority interest in the corporation which owns all company owned
Avis car rental locations (the "Operating Company") through an initial public
offering of the common stock of the Operating Company during 1997. It is
expected that the Operating Company would operate under a license from Avis
pursuant to which the Operating Company would pay Avis a royalty based upon the
revenue of the Operating Company. The Company expects that the acquisition of
Avis will also provide further opportunities to expand the Company's preferred
vendor program.
RISK FACTORS
Prior to making an investment decision with respect to the Securities
offered hereby, prospective investors should carefully consider the specific
factors set forth below, together with all of the other information appearing
herein, in light of their particular investment objectives and financial
circumstances.
RISKS RELATED TO HFS'S OPERATIONS
HOLDING COMPANY STRUCTURE
The Company has no significant operations other than those incidental
to its ownership of the capital stock of its subsidiaries. As a holding
company, the Company is dependent on dividends or other intercompany transfers
of funds from its subsidiaries to meet the Company's debt service and other
obligations. Claims of creditors of the Company's subsidiaries, including trade
creditors, will generally have priority as to the assets of such subsidiaries
over the claims of the Company and the holders of the Company's indebtedness,
including the Debt Securities. See "Description of the Debt Securities."
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COMPETITION FOR NEW FRANCHISE PROPERTIES AND GENERAL RISKS OF THE LODGING AND
RESIDENTIAL REAL ESTATE BROKERAGE INDUSTRIES
As a franchisor, the Company's products are its brand names and the
support services it provides to its franchisees. Competition among national
brand franchisors in the lodging and residential real estate brokerage
industries to grow their franchise systems is intense. In addition, smaller
chains pose some degree of competitive pressure in selected markets. The
Company believes that competition for the sale of franchises in such industries
is based principally upon the perceived value and quality of the brand and
services as well as the nature of those services offered to franchisees. The
Company believes that prospective franchisees value a franchise based upon
their view of the relationship of conversion costs and future charges to the
potential for increased revenue and profitability.
The Company's revenue varies directly with franchisees' gross revenue,
but is not directly dependent upon franchisees' profitability. However, the
Company believes that the perceived value of its brand names to prospective
franchisees is in part a function of the success of its existing franchisees.
The ability of the Company's franchisees to compete in the lodging and
residential real estate brokerage industries is important to the Company's
prospects because franchise fees are based on franchisees' gross revenue. The
Company's franchisees are generally in intense competition with franchisees of
other systems, independent properties and realtors, and owner-operated chains.
Competition in the lodging business for hotel guests and in the residential
real estate brokerage business for house sales is based upon many factors, each
of which may be more or less important in a given market and location. A
franchisee's success may also be affected by general, regional and local
economic conditions.
REGULATION
The sale of franchises is regulated by various state laws as well as
by the Federal Trade Commission (the "FTC"). The FTC requires that franchisors
make extensive disclosure to prospective franchisees but does not require
registration. A number of states require registration or disclosure in
connection with franchise offers and sales. In addition, several states have
"franchise relationship laws" or "business opportunity laws" that limit the
ability of franchisors to terminate franchise agreements or to withhold consent
to the renewal or transfer of these agreements. While the Company's franchising
operations are not materially adversely affected by such existing regulations,
the Company cannot predict the effect any future legislation or regulation may
have on its business operations or financial condition. The Company's casino
marketing business is also subject to extensive government regulation and
licensing requirements. The Federal Real Estate Settlement Procedures Act and
state real estate brokerage laws restrict payments which real estate brokers
may receive in connection with the sale of residences. Such laws may to some
extent restrict preferred vendor arrangements involving the Company's real
estate brokerage franchisees.
DEPENDENCE ON RAMADA LICENSE AGREEMENT
The Company franchises the Ramada brand names to lodging facility
owners in the United States pursuant to a license agreement from an indirect
subsidiary of New World Development Co., Ltd., a Hong Kong company ("New
World"). The license terminates in 2024, but the Company has the right to renew
the license for up to an additional 45 years. In addition, the license may be
terminated by New World for the failure on the part of the Company to satisfy
certain conditions. Termination of this license would result in the loss of the
income stream from franchising the Ramada brand names and, if such termination
occurred prior to its scheduled termination date, would result in the payment
by the Company of liquidated damages equal to three years of license fees. The
license termination provisions are such that the Company does not believe that
it will have any difficulty complying with all of the material terms of the
license agreement; however, termination of such license, if it occurred, would
have a material adverse effect on the Company's business and financial
condition and would constitute an event of default under the Company's Credit
Agreement, dated as of December 16, 1993, among the Company, Chemical Bank, as
agent, and the banks signatories thereto (the "Credit Agreement").
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CERTAIN ANTI-TAKEOVER EFFECTS; DIVESTITURE AND LOSS OF VOTING RIGHTS
Certain provisions of the Company's Amended and Restated Certificate
of Incorporation may have the effect of requiring a stockholder of the Company
to divest its shares of Common Stock or Debt Securities or forfeit its voting
rights in certain circumstances where such stockholder's ownership of Common
Stock or Debt Securities would adversely affect the Company's ability to secure
requisite gaming related approvals or comply with certain governmental
requirements (the "Gaming Provisions"). The Gaming Provisions may be deemed to
have anti-takeover effects and may delay, defer or prevent a takeover attempt
that a stockholder might consider in its best interest.
In addition, the Company's Board of Directors has the ability to
establish by resolution one or more series of preferred stock having such
number of shares, designation, relative voting rights, dividend rate,
liquidation and other rights, preferences and limitations as may be fixed by
the Company's Board of Directors, without any further stockholder approval. The
issuance of a new series of preferred stock could have the effect of making it
more difficult for a third party to acquire, or discouraging a third party from
acquiring, a majority of the outstanding voting stock of the Company. See
"Description of the Debt Securities -- Disqualified Holders."
ABSENCE OF PUBLIC MARKET
There is currently no established market for the Debt Securities. It
is uncertain whether the Company will seek to list the Debt Securities on any
recognized stock exchange or on the Nasdaq National Market. If the Company
applies to list the Debt Securities on any stock exchange or on the Nasdaq
National Market there can be no assurance that such a listing will occur, that
an active trading market for the Debt Securities will develop subsequent to
such listing, or as to the price at which the Debt Securities may trade in the
public market from time to time subsequent to such listing. The absence of an
active trading market for the Debt Securities may adversely affect the
liquidity of the Debt Securities. Such a decline may adversely affect the
liquidity of, and trading markets, if available, for the Debt Securities,
independent of the financial performance of the Company. The Company's 5 7/8%
Senior Notes due 1998, 4 1/2% Convertible Senior Notes due 1999 and 4 3/4%
Convertible Senior Notes due 2003 are listed on the New York Stock Exchange.
ENTRY INTO CAR RENTAL INDUSTRY
By acquiring Avis, the Company is entering the car rental industry in
which it has not previously participated. While the Company believes that its
experience as a franchisor and service provider in the hotel and residential
real estate brokerage industries will enable it to succeed in the car rental
industry, there can be no assurance that the Company will be able to compete
successfully as a car rental business operator and franchisor.
RISKS RELATED TO AVIS'S OPERATIONS
LEVERAGE; AVAILABILITY OF FINANCING; REQUIREMENTS FOR CAPITAL
Avis maintains a substantial amount of secured indebtedness to finance
its fleet purchases. At June 30, 1996, Avis and its subsidiaries had
approximately $2.467 billion of indebtedness outstanding, approximately $2.139
billion of which represented secured indebtedness for the purchase of vehicles.
Of the remaining indebtedness, approximately $170.5 million represents debt of
Avis's foreign subsidiaries and is unsecured. At June 30, 1996, Avis had
subordinated indebtedness of approximately $249.9 million, of which
approximately $97.4 million is secured but subordinated to the fleet debt and
approximately $152.5 million is unsecured and structurally subordinated to the
fleet debt. At June 30, 1996, Avis had approximately $734 million of additional
availability under these vehicle financing facilities to finance the purchase
of additional fleet vehicles.
The level of Avis's indebtedness could have important consequences to
Avis's operation, including: (i) the potential limitation of Avis's ability to
obtain additional financing for certain purposes; (ii) the commitment of a
substantial portion of
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Avis's cash flow from operations for debt service; and (iii) the limitation of
Avis's ability to react to changes in the car rental industry and general
economic conditions.
Avis depends upon third-party financing to purchase its fleet
vehicles. Continued availability of such financing upon favorable terms is
critical to Avis's operations. Since a substantial portion of such indebtedness
is incurred in connection with major vehicle manufacturers' repurchase programs
("Repurchase Programs"), a significant change in the financial condition of the
vehicle manufacturers, particularly GM, would significantly affect Avis's
ability to obtain such financing on favorable terms. In addition, under the
terms of certain of Avis's credit facilities, including the Prime Vehicles
Trust, if the senior indebtedness of a repurchase party (such as GM) fails to
maintain certain rating standards, or upon the bankruptcy of a repurchase party
or upon the occurrence of certain other events, certain adverse consequences
may result. These adverse consequences include a prohibition on borrowing
additional amounts under such facilities for the purchase of vehicles from such
repurchase party, a requirement to repay a lender, and a requirement to
increase the overall level of subordinated debt as additional asset support for
such facilities. The inability of Avis to obtain vehicle financing on favorable
terms would have a material adverse effect on Avis's financial condition and
results of operations. See "The Avis Acquisition - Rental Vehicle Purchases."
POTENTIAL CHANGES IN MANUFACTURERS' REPURCHASE PROGRAMS
At August 1, 1996, approximately 94% of the vehicles in Avis's rental
car fleet were subject to the terms of manufacturers' Repurchase Programs
("Program Vehicles"). Repurchase Programs are methods of purchasing vehicles
whereby a buyer, such as Avis, purchases vehicles from the manufacturer at a
specified and stipulated price and, under the program, the manufacturer agrees
to buy the same vehicles back from the purchaser at a future date at a price
based on a pre-determined formula. The formula typically consists of the
capitalized cost less a depreciation factor minus damage and excess mileage.
The availability of Program Vehicles limits Avis's risk of a decline in
residual value at the time of disposition of the vehicles and enables Avis to
fix its depreciation expense in advance. Vehicle depreciation is the largest
cost factor in Avis's car rental operations. Avis could be adversely affected
if automobile manufacturers reduce the availability of Repurchase Programs or
related incentives. See "The Avis Acquisition - Rental Vehicle Disposition."
Avis could be at a competitive disadvantage if U.S. automobile
manufacturers selectively restrict eligibility to participate in their
Repurchase Programs. Over the past decade, U.S. automobile manufacturers have
acquired direct or indirect equity stakes in most of the major car rental
systems. At August 1, 1996, GM had an equity interest in Avis which will be
sold to the Company pursuant to the Stock Purchase Agreement; Ford Motor
Company ("Ford") owned The Hertz Corporation ("Hertz") and had an equity
interest in Budget Rent a Car Corporation ("Budget") and announced its
intention to purchase the remaining outstanding equity of Budget; and Chrysler
Corporation ("Chrysler") had equity interests in Dollar Rent a Car Systems,
Inc. ("Dollar") and Thrifty Rent-A-Car Systems, Inc. ("Thrifty"), although
Chrysler has been reducing its rental car investments. For the 1996 model year,
Avis purchased a significant number of its vehicles pursuant to Repurchase
Programs sponsored by GM. Any effort by GM to restrict eligibility to
participate in Repurchase Programs to car rental systems could adversely
affect Avis's ability to compete with those of its competitors that have
continued access to such programs.
COMPETITION
The car rental industry is characterized by intense competition,
particularly with respect to price and service. In any geographic market, Avis
may encounter competition from national, regional and local car rental
companies. Avis's largest competitors for car rentals include Alamo Rent-A-Car,
Inc. ("Alamo"), Budget, Dollar, Enterprise Rent a Car ("Enterprise"), Hertz,
National Car Rental System, Inc. ("National") and Thrifty.
There have been occasions during the history of the car rental
industry in which the major car rental companies have been adversely affected
by industry-wide price pressures, and Avis has, on such occasions, priced its
product in response to such pressures. Moreover, at times when the car rental
industry has experienced vehicle oversupply, there has been intensified
competitive pressure. This oversupply has had a negative impact on the
industry's ability to raise rental rates. Avis has taken steps to address its
fixed cost structure to improve its overall competitive position; however,
future oversupply or other factors affecting competition could still adversely
affect Avis's financial condition and results of operations.
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SEASONALITY
Based on the Avis fiscal year which begins on March 1 and ends on
February 28, Avis's second quarter, which covers the peak summer travel months,
has historically been the strongest quarter of the year. Avis's second quarter
accounted for over 26% and 71% of Avis's combined total revenue and pre-tax
profit, respectively, in fiscal years 1995 and 1996. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on Avis's annual performance. Avis's fourth quarter is
generally its weakest, when there is limited leisure travel and a greater
potential for adverse weather conditions. Many of Avis's operating expenses
such as rent, general insurance and administrative personnel are fixed and
cannot be reduced during periods of decreased rental demand.
REGULATION OF LOSS DAMAGE WAIVERS
A traditional revenue source for the car rental industry has been the
sale of loss damage waivers, by which rental companies agree to relieve a
customer from financial responsibility arising from vehicle damage to a rented
vehicle incurred during the rental period. Approximately 3% of Avis's rental
revenue during fiscal 1996 was generated by the sale of loss damage waivers.
The U.S. House of Representatives has from time to time considered legislation
that would regulate the conditions under which loss damage waivers may be sold
by car rental companies. House Bill H.R. 175, introduced in January 1995, seeks
to prohibit the imposition of liability on renters for loss of, or damage to,
rented vehicles, except in certain circumstances, and to prohibit the sale of
loss damage waivers. To date, no action has been taken on this bill. In
addition, approximately 40 states have considered legislation affecting the
sale of loss damage waivers. To date, 24 states have enacted legislation
regulating the sale of loss damage waivers, most of which require disclosure to
each customer at the time of rental that damage to the rented vehicle may be
covered by the customer's personal automobile insurance and that loss damage
waivers may not be necessary. In addition, in the late 1980's, New York and
Illinois enacted legislation which eliminated Avis's right to offer loss damage
waivers for sale and limited potential customer liability to $100 and $200,
respectively. In 1996, the New York Legislature approved legislation to
increase this amount to $300. The bill is awaiting the Governor's action.
Moreover, California, Nevada and Indiana have capped rates that may be charged
for collision damage waivers to $9.00, $10.00 and $5.00 per day, respectively.
Texas requires that the rate charged for loss damage waivers be reasonably
related to the direct cost of repairs. Adoption of national or additional state
legislation eliminating or limiting the sale of loss damage waivers could
result in the loss or reduction of this revenue source and additional
limitations on potential customers liability could increase Avis's costs.
ENVIRONMENTAL RISKS INHERENT IN ON-SITE PETROLEUM STORAGE
232 of Avis's domestic and international facilities contain underground
or aboveground tanks for the storage of petroleum products, such as gasoline,
diesel fuel and waste oils. At 211 of Avis's operating locations, one or more of
these tanks are located underground. Avis maintains an environmental compliance
program that includes the replacement of steel tanks and the implementation of
required technical and operational procedures designed to minimize the potential
for leaks and spills, maintenance of records and the regular testing of tank
systems for tightness. However, there can be no assurance that these tank
systems will at all times remain free from leaks or that the use of these tanks
will not result in spills. Any leak or spill, depending on such factors as the
material involved, quantity and environmental setting, could result in
interruptions to Avis's operations and expenditures that could have a material
adverse effect on Avis's results of operations and financial condition. Avis
carries environmental impairment liability coverage with limits of $4 million
per site and $4 million in the aggregate and a deductible generally of
$250,000. This policy covers against liability to third parties and clean-up
costs, but not business interruption in Avis's own operations. See "The Avis
Acquisition - Regulatory and Environmental Matters."
RISK OF NON-RENEWAL OF AIRPORT CONCESSIONS
Avis conducts rental operations at 229 airports domestically and
internationally, with each of these operations conducted pursuant to a
concession agreement granted by the local airport authority. In general, these
concession agreements are subject to competitive bidding at the time of
renewal. The terms of Avis's airport concession agreements are varied and
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include month-to-month terms at certain locations and fixed terms of various
durations at other locations. Avis is at risk of losing its ability to operate
at an airport if it is not a successful bidder at the time its concession
agreement is subject to renewal. The loss of one or more airport operations may
have an adverse effect on Avis.
DEPENDENCE ON AIR TRAVEL INDUSTRY AND FUEL SUPPLY
A significant amount of Avis's North American revenue is generated at
its on-airport or near-airport facilities. A decrease in air travel or any
event that disrupts air travel patterns at such facilities for a continued
period of time could have a material adverse effect on Avis's financial
condition and results of operations. Such events could include labor unrest,
airline bankruptcies or consolidations, substantially higher air fares, a
downturn in the economy, the outbreak of war, high-profile crimes against
tourists, terrorist incidents and natural occurrences, such as earthquakes,
floods and hurricanes.
Avis's operations, as well as those of its competitors, could be
affected by any limitations in fuel supplies or by any imposition of mandatory
allocations or rationing regulations or significant increases in fuel prices.
In the event of a severe disruption of fuel supplies or significant increases
in fuel prices, the operations of Avis and other car rental companies would be
adversely affected.
DEPENDENCE ON PRINCIPAL SUPPLIER
Since approximately 1978, GM has been Avis's principal supplier of
vehicles. The number of vehicles purchased from GM varies from year to year. In
model year 1995, Avis made approximately 82% of its vehicle purchases in North
America from GM. In model year 1996, Avis made approximately 81% of its vehicle
fleet purchases in North America from GM. Under the terms of the GM Repurchase
Program, Avis must purchase at least 100,000 vehicles and maintain a minimum of
51% GM share penetration of its domestic vehicles during model years 1996
through 2000. Given the volume of vehicles purchased from GM by Avis, shifting
significant portions of the fleet purchases to other manufacturers would
require lead time. As a result, if GM were unable to supply Avis with the
planned number and types of vehicles, it could have a material adverse effect
on Avis's financial condition and results of operations.
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USE OF PROCEEDS
Unless otherwise set forth in the Prospectus Supplement, the net
proceeds from the offering of the Securities will be used for general corporate
purposes, which may include acquisitions, repayment of other debt, working
capital and capital expenditures. When a particular series of Securities is
offered, the Prospectus Supplement relating thereto will set forth the
Company's intended use for the net proceeds received from the sale of such
Securities. Pending application for specific purposes, the net proceeds may be
invested in short-term marketable securities.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited consolidated ratio of
earnings to fixed charges of the Company for the periods indicated.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (2) PRO FORMA (2) HISTORICAL
---------------------------- ------------- ------------- ----------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
Six Months Six Months Six Months
Ended Ended Ended
June 30, 1996 June 30, 1995 June 30, 1996 1995 1995 1994 1993 1992 1991
------------- ------------- ------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
fixed Charges (1) 7.55 5.94 5.62 5.36 6.73 5.48 3.77 2.10 *
Excess (deficiency) of
earnings to fixed
charges
(amounts in thousands) $102,888 $54,744 $158,526 $317,052 $134,823 $90,397 $60,228 $28,703 $(4,909)
</TABLE>
- --------------------------------------------------
* Earnings were inadequate to cover fixed charges.
(1) The ratio of earnings to fixed charges is computed by dividing
income before income taxes and extraordinary items plus fixed charges, less
capitalized interest by fixed charges. Fixed charges consist of interest
expense on all indebtedness (including amortization of deferred financing
costs) and the portion of operating lease rental expense that is representative
of the interest factor (deemed to be one-third of operating lease rentals).
(2) The pro forma Consolidated Ratio of Earnings to Fixed Charges for
the year ended December 31, 1995 is presented as if each of the following
occurred as of January 1, 1995: the acquisition of Avis, Coldwell Banker,
Century 21, ERA, the six non-owned Century 21 regions, Travelodge and Casino &
Credit Services, Inc.'s gambling patron credit information business, Central
Credit, Inc.
THE AVIS ACQUISITION
GENERAL
On August 23, 1996, the Company entered into the Merger Agreement and,
on August 28, 1996, the Company entered into the Stock Purchase Agreement.
Pursuant to the Merger Agreement and the Stock Purchase Agreement, the Company
has agreed to pay approximately $800 million for all of the outstanding capital
stock of Avis, including payments under certain employee stock plans of Avis
and the redemption of certain series of Preferred Stock of Avis. While
completion of this transaction is not assured, the Company expects that the
transaction will be completed on or about October 1, 1996.
Avis, together with its subsidiaries, licensees and affiliates,
operates the Avis System, which the Company believes to be the second largest
car rental system in the world. The Avis System consists of over approximately
4,139 locations, including locations at most major airports as well as downtown
locations in major cities in the United States and in approximately 149
countries and territories. Approximately 84% of the Avis System rental revenues
in the United States are received from locations operated by Avis directly or
under agency arrangements, with the remainder being received from locations
operated by independent licensees. Avis's international business is conducted
by a network of several wholly owned
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subsidiaries and joint ventures along with a number of licensees and
sublicensees. The Avis System in Europe, Africa and the Middle East is operated
by Avis Europe, which is approximately 9% owned by Avis. The Avis System in
Canada, Latin America, the Caribbean and Asia Pacific, comprising some 65
countries and territories, is operated by Avis subsidiaries, joint ventures and
licensees. During the peak summer season, the Avis System fleet worldwide
consists of more than approximately 386,548 vehicles representing the following
allocations of vehicles throughout the system: (i) 240,548 in the Avis U.S.
Corporate fleet; (ii) 44,000 vehicles in the Avis International fleet; (iii)
50,932 in the Avis U.S. Licensee fleet; and (iv) 102,000 in the Avis Europe
fleet.
In the United States, Avis's principal rental base is business
travelers who use the Avis System under contractual arrangements between Avis
and their employers. Because business travel normally is heaviest between
Monday and Thursday of each week, Avis's concentration on serving business
travelers has led to excess fleet capacity from Friday through Sunday of most
weeks.
Following the acquisition of Avis, the Company currently intends to
dispose of a majority interest in the Operating Company through an initial
public offering of the common stock of the Operating Company during 1997. It is
expected that the Operating Company would operate under a license from Avis
pursuant to which the Operating Company would pay Avis a royalty based upon the
revenue of the Operating Company. The Company expects that the acquisition of
Avis will also provide further opportunities to expand the Company's preferred
vendor program.
CAR RENTAL INDUSTRY OVERVIEW
The car rental industry provides car and truck rentals to business and
individual customers worldwide. The industry has been composed of two principal
segments: general use (mainly at airport and downtown locations) and
local/replacement (mainly at downtown and suburban locations). The car rental
industry rents primarily from on-airport, near-airport, downtown and suburban
locations to business and leisure travelers and to individuals who have lost
the use of their vehicles through accident, theft or breakdown. In addition to
revenue from vehicle rentals, the industry derives significant revenue from the
sale of rental related products such as insurance, refueling services and
collision damage waivers.
The domestic car rental industry includes eight major companies,
Alamo, Avis, Budget, Dollar, Enterprise, Hertz, National, and Thrifty, and a
large number of smaller and regional or local firms, serving on-airport,
near-airport and other locations. Most of Avis's major competitors operate
through a combination of wholly owned and franchised operations. Other smaller
car rental companies operate primarily through franchises.
The domestic car rental industry has experienced significant growth
over the last decade. The total annual U.S. revenue for the car rental industry
has been estimated by industry sources at $13.5 billion in 1995, an 11.8%
compound annual growth rate from $4.4 billion in 1985, and the total number of
rental vehicles in service in the United States has been estimated by industry
sources at 1.5 million in 1995, a 7% compound annual growth rate from 760,000
in 1985. The Company believes that the factors driving this industry growth
include increases in airline passenger traffic due to lower airfares,
overcapacity in the hotel industry, the trend toward shorter, more frequent
vacations resulting from the growth of the number of households with two wage
earners, the demographic trend toward older, more affluent Americans who travel
more frequently, and increased business travel. The Company believes that
future growth of the car rental industry will be determined by general economic
conditions, developments in the travel industry, and a variety of other
factors, including the car rental industry's relationship with major vehicle
manufacturers. Accordingly, the Company cannot predict whether such growth will
continue and, if so, whether it will continue at rates comparable to those of
the recent past.
Car renters generally are (i) business travelers renting under
negotiated contractual arrangements between specified rental companies and the
travelers' employers, (ii) business travelers who do not rent under negotiated
contractual arrangements (but who may receive discounts through travel,
professional or other organizations), and (iii) leisure travelers, including
renters who have lost the use of their own vehicles through accident, theft or
breakdown. Contractual arrangements normally are the result of negotiations
between rental companies and large corporations, based upon rates, billing and
service arrangements, and influenced by reliability and renter convenience.
Business travelers who are not parties to negotiated contractual arrangements
and leisure travelers generally are influenced by advertising, renter
convenience and access to special rates because of membership in travel,
professional and other organizations.
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Many of Avis's major competitors are owned by, or are affiliated with,
the major automobile manufacturers, and each of the major domestic car rental
companies maintains a close relationship with one or more United States
automobile manufacturers. At August 1, 1996, Ford owned Hertz and had an equity
interest in Budget and announced its intention to purchase the remaining
outstanding equity of Budget; and Chrysler had equity interests in Dollar and
Thrifty, although Chrysler has been reducing its rental car investments.
Automobile manufacturers often provide financing for the purchase of
vehicles and provide payments to car rental companies in consideration of
advertising and promotional programs that benefit the manufacturers. In
addition, manufacturers provide fleet assistance programs, including Repurchase
Programs and similar arrangements, which protect rental companies against loss
on disposition of vehicles and enable car rental companies to adjust their
fleet size to take account of seasonal variations in demand.
AVIS CAR RENTAL OPERATIONS
THE AVIS SYSTEM
System-Wide Services. Avis provides the Avis System with: (i) national
promotion, advertising and public relations services; (ii) reservations and
information systems; (iii) data processing support; (iv) marketing programs
with hotels and airlines; (v) a sales staff for marketing to corporate
customers and the travel community; (vi) credit card services for commercial
customers; (vii) training in local marketing techniques; and (viii) operation
and training support. Avis's on-line real-time data processing and information
system, known as the Wizard System, connects more than 2,000 Avis locations in
the United States, Canada, Europe and a number of other countries.
The Wizard System. The Wizard System is a telecommunications and
computer processing system which is used in the Avis System for reservations,
rental agreement processing, accounting, fleet control and a variety of other
purposes. It is operated by WizCom International, Ltd. ("WizCom"), a wholly
owned subsidiary of Avis. In 1995, Budget entered into a computer services
agreement with WizCom that provides Budget with certain reservation system
computer services that are substantially similar to computer services provided
to the Avis System. WizCom has also entered in agreements with hotel and other
rental car companies to provide travel related reservation and distribution
system services. Avis uses the Wizard System as a marketing tool and benefits
from the operating efficiencies obtained through the Wizard System.
The Wizard System is operated by Avis, and is linked to more than
12,000 terminals in more than 2,000 rental locations through telephone lines
and satellite communications. Among the features of the Wizard System which are
not available on most competitors' systems are (a) an advanced graphical
interface reservation system; (b) "Rapid Return," which permits customers who
are returning cars to obtain completed charge records from radio-connected
"Roving Rapid Return" agents who complete and deliver the charge record at the
car as it is being returned; (c) "Wizard on Wheels," which enables Avis
locations to assign cars and complete rental agreements while customers are
being transported to the car; (d) "Avis Link," which automatically identifies a
customer using American Express or other major credit card who is entitled to
special rental rates and conditions, and therefore sharply reduces the number
of instances in which Avis inadvertently fails to honor the benefits of
negotiated rate arrangements to which they are entitled; (e) interactive
interfaces through the airline computerized reservation systems described under
"Marketing"; (f) sophisticated fleet control and revenue management programs
which, among other things, enable rental agents to ensure that a customer who
rents a particular type of vehicle will receive the available vehicle of that
type which has the lowest mileage (benefitting the customer and Avis by more
evenly dispersing utilization among cars of a particular type); and (g) a
comprehensive control and reporting system that enables Avis to adapt quickly
to changes in customer requirements. Avis also benefits from the low cost and
speed of billing available as a result of broad use of the Wizard System and
believes that the Wizard System keeps its clerical and communications costs
below those of its competitors.
RENTAL OPERATIONS
Avis rents a wide variety of automobiles and minivans, most of which
consist of the current and immediately preceding model years. Car rentals are
generally made on a daily, weekly or monthly basis. Rental charges in the
United States usually are computed on the basis of the length of the rental or
on the length of the rental plus a mileage charge. Additional charges are made
for refueling service, loss damage waivers (a waiver of Avis's right to make a
renter pay for damage to the rented car), personal accident insurance, personal
effects protection and, in some instances, additional liability insurance.
Rates vary at different locations depending on the type of vehicle, the local
market and competitive and cost factors. Most rentals are made utilizing rate
plans under which the customer is responsible for gasoline used during the
rental.
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Avis also generally offers its customers the convenience of leaving a rented
car at an Avis location in a city other than the one in which it was rented
under its "Rent it Here -- Leave it There" program, although, consistent with
industry practices, a drop-off charge or special intercity rate may be
imposed.
North American Operations. Approximately 88% of Avis's United States
rental revenue is generated at 174 of the busiest airports in the United
States. Avis's rental revenue as a percentage of total rental revenues at those
airports for the five-year period ended February 29, 1996 approximated 26%;
23.7%; 24.1%; 22.3% and 23.8%, respectively.
At August 1, 1996, Avis owned and operated approximately 406 corporate
car rental facilities at airport, near-airport and downtown locations
throughout the United States and approximately 36 corporate car rental
facilities in Canada. Of these facilities, approximately 191 primarily serve
airport business and approximately 251 are non-airport locations. By focusing
on travelers at the major airports, Avis has been able to operate more vehicles
from significantly fewer rental sites than its competitors, yielding
significant economies of scale. Avis's emphasis on airport traffic has resulted
in a strong competitive position at the major domestic rental-revenue airports.
Avis has 77 independent licensees which operate locations in the
United States. The two largest licensees operate the Avis System in the Los
Angeles and Dallas area and account for approximately half of all United States
licensees' rentals. Certain licensees in the United States pay Avis a fee equal
to 5% of their total time and mileage charges, less all customer discounts, of
which Avis is required to pay 40% for corporate licensee-related programs,
while six licensees pay 8% of their gross revenue. Licensees outside the United
States normally pay higher fees. Most of Avis's United States licensees
currently pay 50 cents per rental agreement for use of the Wizard System, and
they are charged for use of other aspects of the Wizard System.
Avis is in many cases one of five to seven vehicle concessionaires at
the airports at which it operates. In general, concession fees for airport
locations are based on a percentage of total commissionable revenues (as
determined by each airport authority), subject to a minimum guaranteed amount.
Concessions are typically awarded by airport authorities every three to five
years based upon competitive bids. Avis's concession arrangements with the
various airport authorities generally include minimum requirements for vehicle
age, operating hours and employee conduct, and provide for relocation in the
event of future construction and abatement of fees in the event of extended low
passenger volume.
International Operations. In addition to countries served by Avis
Europe and its affiliates and licensees, Avis's subsidiaries, joint ventures
and licensees operate the Avis System internationally in approximately 65
countries and territories, with wholly owned subsidiaries in Canada, Argentina,
Australia, New Zealand, Puerto Rico and the United States Virgin Islands, and
joint ventures in Jamaica, Singapore and Malaysia. The principal business of
Avis's foreign subsidiaries is car rentals.
Avis's international system (not including Avis Europe) operates a
combined peak rental and leasing fleet of approximately 44,000 vehicles, of
which approximately 23,000 are operated by subsidiaries, and the balance by
joint ventures and licensees. Revenues of the foreign subsidiaries in the
fiscal year ended February 29, 1996, totaled approximately $212 million,
without taking account of revenues of joint ventures or licensees.
MARKETING
In the United States, approximately 70% of Avis's fiscal 1996 rentals
were generated by travelers who used the Avis System under contractual
arrangements negotiated by Avis with either the travelers' corporate employers
or organizations such as American Association of Retired Persons in which the
travelers have memberships. The remainder of the rental activity is from
business travelers who are not affiliated with corporations or organizations
with which Avis has contractual arrangements, and from leisure renters. Avis's
corporate sales organization is the principal source of contractual
arrangements with corporate accounts. Unaffiliated business travelers are
solicited by direct mail, telemarketing and advertising campaigns.
Avis solicits contractual arrangements with corporate accounts by
emphasizing the Wizard System's advanced technology, customer service, pricing
and a worldwide rental network. The Wizard System plays a significant part in
securing business of this type because the Wizard System enables Avis to offer
a wide variety of pricing combinations, special reports and tracking techniques
tailored to the particular needs of each account, and to assure adherence to
agreed-upon rates.
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Avis's presence in the United States leisure and incidental business
segment is substantially less significant than its presence in the United
States commercial account segment. Leisure rental activity is important in
enabling Avis to balance the use of its fleet. Typically, business renters use
cars from Monday through Thursday, while in most areas of the United States
leisure renters use cars primarily over weekends.
Avis maintains strong links to the air travel industry. It has
arrangements with American Airlines, American West Airlines, Continental
Airlines, Delta Airlines, Trans World Airlines, United Airlines, USAir and
Northwest Airlines (collectively, the "Airlines") under which participants in
the Airlines' frequent flier programs can earn mileage credits whenever they
rent Avis cars. Frequent flier programs (under which travelers can earn reduced
fares or free flights based upon miles flown on particular airlines) are a
significant sales incentive to United States travelers, and the Company
believes Avis benefits significantly from its frequent flier arrangements with
the Airlines. All the other major car rental companies also participate in one
or more airline frequent flier programs.
Car renters can make Avis reservations through all four major United
States based global distribution systems and several international based
systems. Users of the United States based global distribution systems can
obtain access through these systems to the Avis reservation system concerning
among other things, rental locations, vehicle availability, applicable rate
structures and gives them the ability to reserve and confirm Avis vehicles
directly through these systems.
Avis also maintains strong links to the hotel industry. Avis has
arrangements with Hilton Corporation, the Hyatt Corporation and the Sheraton
Marketing Corporation frequent traveler programs, which provide various
incentives to all program participants.
RENTAL VEHICLE PURCHASES
Avis participates in a variety of vehicle purchase programs with major
domestic and foreign manufacturers, although actual purchases are made directly
through local car dealers. The average price for automobiles purchased by Avis
in 1996 for its rental fleet was approximately $16,250.00. On average during
model year 1996, 82% of the purchases were comprised of GM vehicles, 13% of
Chrysler vehicles and 5% of Nissan, Subaru, Hyundai, Ford, Toyota and Land
Rover vehicles. These percentages vary among Avis's operations and will most
likely change from year to year. The vehicle purchase programs sponsored by
manufacturers sometimes provide Avis with sales incentives for the purchase of
certain models, and most of these programs allow Avis to serve as a drop-ship
location for vehicles, thus enabling Avis to receive a fee from the
manufacturers for preparing newly purchased vehicles for use. There can be no
assurance that Avis will continue to be able to benefit from sales incentives
in the future.
Most of Avis's cars in the United States are purchased, owned and sold
by Prime Vehicles Trust, a trust created by Avis of which Avis is the sole
beneficiary, or by corporate nominees of Prime Vehicles Trust. All decisions
regarding Prime Vehicles Trust purchases and sales of cars are made by Avis,
and Prime Vehicles Trust is combined with Avis for both financial and tax
accounting. The existence of Prime Vehicles Trust has no effect on Avis's
control of the cars in its fleet. However, Avis believes the existence of Prime
Vehicles Trust has been useful in obtaining financing secured by its cars. Avis
expects to continue to take advantage of Prime Vehicles Trust to finance future
fleet purchases.
FLEET UTILIZATION AND SEASONALITY
Avis's business is subject to seasonal variations in customer demand,
with the summer vacation period representing the peak season for vehicle
rentals. This general seasonal variation in demand, along with more localized
changes in demand at each of Avis's operations, causes Avis to vary its fleet
size over the course of the year. In fiscal year 1996, Avis's average monthly
fleet size ranged from a low of 127,000 vehicles in January to a high of
149,000 vehicles in August. Fleet utilization, which is based on the average
number of days vehicles are rented compared to the total number of days
vehicles are available for rental, ranged from 65% in December to 82% in August
and averaged 74% for all of fiscal year 1996.
RENTAL VEHICLE DISPOSITION
Avis's current operating strategy is to maintain its fleet at an
average age of 12 months or less. Approximately 90% of the vehicles purchased
by Avis in model year 1996 were eligible for participation in manufacturers'
Repurchase Programs. These programs currently require that Avis maintain
Program Vehicles in its fleet for a minimum of six months and impose numerous
return conditions, including those related to mileage and repair condition.
Less than 2.5% of the Program Vehicles
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purchased by Avis and scheduled to be returned in 1995 were ineligible for
return. At the time of return to the manufacturer, Avis receives the price
guaranteed at the time of purchase and is thus protected from fluctuations in
the prices of previously-owned vehicles in the wholesale market at the time of
disposition. The future percentage of Program Vehicles in Avis's fleet will be
dependent on the availability and attractiveness of the manufacturers'
Repurchase Programs, over which Avis has no control. See "Risk Factors --
Potential Changes in Manufacturers' Repurchase Programs."
In addition, Avis sells cars wholesale to dealers in the United States
either through informal arrangements or at auction through standard consignment
agreements.
AVIS CAR RENTAL FACILITIES
Avis leases almost all of its airport and non-airport car rental
facilities and currently operates from 406 corporate rental locations. The
airport facilities are located on airport property owned by airport authorities
or located near the airport on locations convenient for bus transport of
customers to the airport. One of Avis's airport facilities in each Avis region
serves as the administrative headquarters for the region and, as a general
rule, each airport facility includes vehicle storage areas, a vehicle
maintenance facility, a car wash, a refueling station and rental and return
facilities. In all airport locations, the facility leases are not co-terminus
with the local airport concession agreement. See "Risk Factors--Risk of
Non-Renewal of Airport Concessions." Avis's non-airport facilities generally
consist of a limited parking facility and a rental and return desk and are
generally subject to long-term leases with renewal options. Certain of these
leases also have purchase options at the end of their terms.
AGENCY RENT A CAR SYSTEM, INC.
Agency, a wholly owned subsidiary of Avis, rents used vehicles under a
separate brand name to insurance companies, auto body repair shops and
individual customers to replace vehicles that have either been stolen, damaged
or are undergoing repair. As of August 1, 1996, the Agency business was
comprised of approximately 304 separate locations. See "Legal Matters."
INSURANCE
Avis generally assumes the risk of liability to third parties in the
United States for up to $1 million per occurrence. It has purchased significant
excess insurance coverage against risks which exceed $1 million per occurrence.
One of the benefits of Avis's retaining the risk up to $1 million per
occurrence is that Avis maintains its own claims department, which controls the
disposition of most claims. The Company believes that the maintenance by Avis
of its own claims department in recent years has helped contain Avis's cost of
claims paid.
Under its standard car rental contract, Avis provides its renters
liability coverage up to the minimum financial responsibility limits required
by applicable law. Higher limits are provided by separate agreement to some
United States national corporate accounts and Avis makes available to renters,
for an additional daily charge, participation in a group policy underwritten by
a major national insurer which increases renters' coverage to one million
dollars. Avis also offers renters, for additional daily charges, "Personal
Accident Insurance," which pays medical expenses and accidental death benefits
for accidents during the rental period, and "Personal Effects Protection,"
which ensures against loss or damage to the renters' personal belongings during
the rental period. Both these coverages are underwritten by major national
insurers.
REGULATORY AND ENVIRONMENTAL MATTERS
Avis is subject to federal, state and local laws and regulations
including those relating to taxing and licensing of vehicles, franchising,
consumer credit, environmental protection, retail vehicle sales and labor
matters. The principal environmental regulatory requirements applicable to
Avis's operations relate to the ownership or use of tanks for the storage of
petroleum products, such as gasoline, diesel fuel and waste oils; the treatment
or discharge of waste waters; and the generation, storage, transportation and
off-site treatment or disposal of solid or liquid wastes. Avis operates 232
domestic and international facilities at which petroleum products are stored in
underground or aboveground tanks. At 211 of Avis's operating locations, one or
more of these tanks are located underground. Avis has instituted an
environmental compliance program designed to ensure that these tanks are in
compliance with applicable technical and operational requirements, including the
replacement of underground steel tanks and periodic integrity testing of
underground
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storage tanks. The Company believes that the locations where Avis currently
operates are in compliance, in all material respects, with such regulatory
requirements.
Avis may also be subject to requirements related to the remediation
of, or the liability for remediation of, substances that have been released to
the environment at properties owned or operated by Avis or at properties to
which Avis sends substances for treatment or disposal. Such remediation
requirements may be imposed without regard to fault and liability for
environmental remediation can be substantial. See "Risk Factors --
Environmental Risks Inherent in On-Site Petroleum Storage."
Avis may be eligible for reimbursement or payment of remediation costs
associated with future releases from its regulated underground storage tanks.
Certain of the states in which Avis maintains underground storage tanks have
established funds to assist in the payment of remediation costs for releases
from certain registered underground tanks. Subject to certain deductibles, the
availability of funds, compliance status of the tanks and the nature of the
release, these tank funds may be available to Avis for use in remediating
future releases from its tank systems.
A traditional revenue source for the car rental industry has been the
sale of loss damage waivers, by which car rental companies agree to relieve a
customer from financial responsibility arising from vehicle damage to the
rented car incurred during the rental period. Approximately 3% of Avis's rental
revenue during 1995 was generated by the sale of loss damage waivers. The U.S.
House of Representatives has from time to time considered legislation that
would regulate the conditions under which loss damage waivers may be sold by
car rental companies. House Bill H.R. 175, introduced in January 1995, seeks to
prohibit the imposition of liability on renters for loss of, or damage to,
rented vehicles, except in certain circumstances, and would prohibit the sale
of loss damage waivers. To date, no action has been taken on this bill. In
addition, approximately 40 states have considered legislation affecting the
sale of loss damage waivers. To date, 24 states have enacted legislation which
regulates the sale of loss damage waivers, most of which requires disclosure to
each customer at the time of rental that damage to the rented vehicle may be
covered by the customer's personal automobile insurance and that loss damage
waivers may not be necessary. In addition, in the late 1980's, New York and
Illinois enacted legislation which eliminated Avis's right to offer loss damage
waivers for sale and limited potential customer liability to $100 and $200,
respectively. In 1996, the New York Legislature approved to increase this
amount to $300. The bill is awaiting the Governor's action. Moreover,
California, Nevada and Indiana have capped rates that may be charged for
collision damage waivers to $9.00, $10.00 and $5.00 per day, respectively.
Texas requires that the rate charged for loss damage waivers be reasonably
related to the direct cost of the repairs. Adoption of national or additional
state legislation eliminating or limiting the sale of loss damage waivers could
result in the loss or reduction of this revenue source and additional
limitations on potential customers liability could increase Avis's costs.
LEGAL MATTERS
From time to time, Avis is subject to routine litigation incidental to
its business. Avis maintains insurance policies that cover most of the actions
brought against Avis. See "-- Insurance." Other than as discussed below, Avis
is currently not involved in any legal proceeding which it believes would have
a material adverse effect upon its financial condition or operations.
Avis and two of its subsidiaries, Agency and Avis Rent A Car System,
Inc. ("ARACS"), are involved in litigation with certain licensees of ARACS
("Licensees") that have entered into the Standard Form 1955 Exclusive License
Agreement, as amended (the "ELA"). This litigation concerns Avis's right to
operate Agency as a stand-alone insurance replacement car rental business,
under its own brand name and separate from the Avis System. Several Licensees
conduct their own insurance replacement car rental businesses, and the parties
disagree as to whether such businesses can be operated within any licensee
territory granted by the ELA. Agency operates approximately 304 separate
locations, some of which are located within a geographic territory in which a
Licensee does business pursuant to the ELA.
On September 22, 1995, Avis, ARACS and Agency filed a complaint in the
United States District Court for the Eastern District of New York (the
"E.D.N.Y. Action") against thirteen Licensees (the "Licensee Defendants"),
which sought a declaration that the Agency business did not violate the ELA and
an injunction against the Licensee Defendants and all those similarly situated
from instituting litigation in other courts concerning the Agency business. The
district court issued a temporary restraining order ("TRO") barring the
Licensee Defendants from instituting any other lawsuits. The court subsequently
dismissed the E.D.N.Y. Action for lack of personal jurisdiction and dissolved
the TRO. The parties appealed this decision
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to the Court of Appeals for the Second Circuit. Oral argument was held in
mid-July 1996 and no decision has been rendered yet by the Court of Appeals for
the Second Circuit.
Upon dissolution of the TRO, Avis filed suit in both the United States
District Court for the Central District of California and the United States
District Court for the Northern District of Texas. Each action seeks relief
identical to the relief sought in the E.D.N.Y. Action and each could be
dismissed or consolidated if the E.D.N.Y. Action is reinstated. Various
Licensee Defendants also filed two state court actions, in California and in
Texas, respectively, against Avis, ARACS and Agency. Avis subsequently removed
each state court action to its respective federal court, and these state court
actions have now been consolidated with the federal court actions in California
and Texas, respectively.
EMPLOYEES
Avis has more than 20,000 employees worldwide. Of these, approximately
375 are employed in executive, financial and administrative capacities,
approximately 240 are engaged in marketing or sales capacities, approximately
460 are involved in system design and constant upgrading of the Wizard System,
approximately 700 are engaged in clerical activities in connection with the
administration of Avis and the balance are engaged in car rentals and car care
at rental locations. Approximately 20% of Avis's employees are represented by
65 various local unions under contracts expiring on a variety of dates. No
local union represents more than 2.5% of Avis's employees. Avis believes its
relationships with its employees are good.
PROPERTIES
Avis leases or has concessions relating to space at 707 locations in
the United States and 117 locations outside the United States for all of its
operations. Of those locations, 182 in the United States and 47 outside the
United States are at airports. Additionally, 38 locations in the United States
are owned and three locations outside the United States are owned. Typically,
an airport receives a percentage of car rental revenues, with a guaranteed
minimum. Because there is a limit to the number of car rental locations in an
airport, car rental companies frequently bid for the available locations,
usually on the basis of the size of the guaranteed minimums. Avis and other car
rental firms also rent parking space on or near airports and at their other car
rental locations.
Avis's principal offices are in a 405,000 square foot complex in
Garden City, New York, for which Avis currently pays approximately $875,000 per
year under a lease which, by exercising renewal options, has been extended to
2015. The Avis reservation system is run from leased space in Tulsa, Oklahoma.
Avis also maintains terminal network facilities which it uses in connection
with the Wizard System in Garden City, Tulsa, San Francisco, California and
Bracknell, England. Avis also owns a 166,000 square foot building in Virginia
Beach, Virginia which serves as a satellite administrative and reservation
facility.
GENERAL DESCRIPTION OF SECURITIES
The Company directly or through agents, dealers, or underwriters
designated from time to time, may offer, issue and sell, together or
separately, its (a) secured or unsecured debt securities (the "Debt
Securities") of the Company, in one or more series, which may be either senior
debt securities (the "Senior Debt Securities") and/or subordinated debt
securities (the "Subordinated Debt Securities") and/or (b) shares of common
stock of the Company, par value $.01 per share (the "Common Stock", together
with the Debt Securities, the "Securities"), or any combination of the
foregoing, with an aggregate public offering price of up to $1,000,000,000 (or
its equivalent in foreign currencies or foreign currency units based on the
applicable exchange rate at the time of offering) in amounts, at prices and on
terms to be determined at the time of sale. The Debt Securities may be issued
as exchangeable and/or convertible Debt Securities exchangeable for or
convertible into shares of Common Stock. When a particular series of Securities
is offered, a supplement to this Prospectus (each a "Prospectus Supplement")
will be delivered with this Prospectus. The Prospectus Supplement will set
forth the terms of the offering and sale of the offered Securities.
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DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities may be offered from time to time by the Company as
Senior Debt Securities and/or as Subordinated Debt Securities. The Senior Debt
Securities will be issued under an Indenture, as it may be supplemented from
time to time (the "Senior Indenture"), between the Company and The Bank of Nova
Scotia Trust Company of New York, as trustee (the "Senior Trustee"). The
Subordinated Debt Securities will be issued under an Indenture, as it may be
supplemented from time to time (the "Subordinated Indenture"), between the
Company and The Bank of Nova Scotia Trust Company of New York, as trustee (the
"Subordinated Trustee"). The term "Trustee", as used herein, refers to either
the Senior Trustee or the Subordinated Trustee, as appropriate. The forms of
the Senior Indenture and the Subordinated Indenture (being sometimes referred
to herein collectively as the "Indentures" and individually as an "Indenture")
have been filed as exhibits to the Registration Statement. The terms of the
Indentures are also governed by certain provisions of the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The following summary of
certain material provisions of the Debt Securities does not purport to be
complete and is qualified in its entirety by reference to the Indentures. All
capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Indentures. For a summary of certain definitions
used in this section, see "Certain Definitions" below.
GENERAL
The Indentures will provide for the issuance of Debt Securities in
series up to the aggregate amount from time to time authorized by the Company
for each series. The Prospectus Supplement sets forth the following terms (to
the extent such terms are applicable to such Debt Securities) of and
information relating to the Debt Securities in respect of which this Prospectus
is delivered: (1) the designation of such Debt Securities; (2) classification
as senior or subordinated Debt Securities; (3) the aggregate principal amount
of such Debt Securities; (4) the percentage of their principal amount at which
such Debt Securities will be issued; (5) the date or dates on which such Debt
Securities will mature; (6) the rate or rates, if any, per annum, at which such
Debt Securities will bear interest, or the method of determination of such rate
or rates; (7) the times and places at which such interest, if any, will be
payable; (8) provisions for sinking, purchase or other analogous fund, if any;
(9) the date or dates, if any, after which such Debt Securities may be redeemed
at the option of the Company or of the holder and the redemption price or
prices; (10) the date or the dates, if any, after which such Debt Securities
may be converted or exchanged at the option of the holder into or for shares of
Common Stock of the Company and the terms for any such conversion or exchange;
and (11) any other specific terms of the Debt Securities. Principal, premium,
if any, and interest, if any, will be payable and the Debt Securities offered
hereby will be transferable, at the corporate trust office of the Trustee's
agent in the borough of Manhattan, City of New York, provided that payment of
interest, if any, may be made at the option of the Company by check mailed to
the address of the person entitled thereto as it appears in the Security
Register. (Section 301 of each Indenture).
If the Prospectus Supplement specifies that a series of Debt
Securities is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Debt Securities will be issued and the coin or currency in which
the principal, premium, if any, and interest, if any, on such Debt Securities
will be payable, which may be United States dollars based upon the exchange
rate for such other currency or currency unit existing on or about the time a
payment is due. Special United States federal income tax considerations
applicable to any Debt Securities so denominated are also described in the
Prospectus Supplement.
The Debt Securities may be issued in registered or bearer form and,
unless otherwise specified in the Prospectus Supplement, in denominations of
$1,000 and integral multiples thereof. Debt Securities may be issued in
book-entry form, without certificates. Any such issue will be described in the
Prospectus Supplement relating to such Debt Securities. No service charge will
be made for any transfer or exchange of the Debt Securities, but the Company or
the Trustee may require payment of a sum sufficient to cover any tax or other
government charge payable in connection therewith.
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be sold at a substantial discount from their stated
principal amount. United States Federal income tax consequences and other
considerations applicable thereto will be described in the Prospectus
Supplement.
CERTAIN COVENANTS
The Indentures will contain, among others, the covenants described
below.
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Limitation on Liens. The Indentures will provide that, subject to the
next succeeding paragraph, neither the Company nor any Restricted Subsidiary
shall create, incur, assume or suffer to exist any Lien on any asset now owned
or hereafter acquired by it, except:
(A) Liens existing on the Issue Date, or arising after the Issue Date
pursuant to contracts existing on the Issue Date and any extensions or renewals
thereof not in excess of the amount of the original Lien;
(B) Liens for taxes or assessments and similar charges either (x) not
delinquent or (y) contested in good faith by appropriate proceedings;
(C) Liens incurred or pledges and deposits in connection with
workmen's compensation, unemployment insurance and other social security
benefits, or securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations,
progress payments, surety and appeal bonds and other obligations of like
nature, incurred in the ordinary course of business;
(D) Liens imposed by law, such as mechanics', carriers',
warehousemen's, landlords', materialmen's and vendors' liens, incurred in good
faith in the ordinary course of business;
(E) purchase money Liens granted to the vendor or Person financing the
acquisition of property, plant or equipment if (i) limited to the specific
assets acquired; (ii) the debt secured by the Lien is the unpaid balance of the
acquisition cost of the specific assets on which the Lien is granted; and (iii)
the total amount of all such purchase money Liens does not exceed $30 million
at any one time on a consolidated basis;
(F) Liens upon real and/or personal property (whether tangible or
intangible), which property was acquired after the Issue Date (by purchase,
construction or otherwise) by the Company or any Subsidiary, each of which Lien
existed on such property before the time of its acquisition and was not created
in anticipation thereof; provided, however, that no such Lien shall extend to
or cover any property of the Company or such Subsidiary other than the
respective property so acquired and improvements thereon;
(G) Liens arising under or in connection with sale and leaseback
transactions permitted under Limitation on Sale and Leaseback Transactions;
(H) Liens arising by reason of any attachment, judgment, decree or
order of any court, so long as any appropriate legal proceedings which may have
been initiated shall not have been finally terminated or so long as the period
within which such proceedings may be initiated shall not have expired, any
deposit or pledge with any surety company or clerk of any court, or in escrow,
as collateral in connection with, or in lieu of, any bond on appeal from any
judgment or decree against the Company or any Restricted Subsidiary, or in
connection with other proceedings or actions at law or in equity by or against
the Company, provided that such deposits, pledges, or bonds in the aggregate
shall not exceed $10 million at any one time;
(I) Liens other than those enumerated paragraphs (A) through (I) above
arising in connection with Debt of the Company and of any one or more
Restricted Subsidiaries in an aggregate amount not exceeding at any one time
10% of Consolidated Net Tangible Assets; and
(J) any extension, renewal, substitution or replacement (or successive
extensions, renewals, substitutions or replacements), as a whole or in part, of
any of the Liens referred to in paragraphs (A) through (I) above or the Debt
secured thereby; provided that (1) such extension, renewal, substitution or
replacement Lien shall be limited to all or any part of the same Principal
Property that secured the Lien extended, renewed, substituted or replaced (plus
improvements on such property, and plus any other property or assets not then
constituting a Principal Property) and (2) in the case of paragraphs (A) and
(F) above, the Debt secured by such Lien at such time is not increased.
The Company or any Restricted Subsidiary may create or assume any Lien
not permitted by the previous paragraph upon any of its property or assets,
whether now owned or hereafter acquired, if (i) prior written consent to the
creation or assumption thereof shall have been obtained from the Trustee with
the consent of the Holders of a majority in principal amount of the then
Outstanding Debt Securities, or (ii) the Company will make or cause to be made
effective a provision whereby the Debt Securities and all coupons appertaining
thereto will be secured by such Lien equally and ratably with any and all other
Debt so secured. (Section 1009 of each Indenture)
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Limitation on Sale and Leaseback Transactions. The Indentures will
provide that the Company will not itself, and will not permit any Restricted
Subsidiary to, enter into any arrangement after the Issue Date with any bank,
insurance company or other lender or investor (other than the Company or
another Restricted Subsidiary) providing for the leasing by the Company or any
such Restricted Subsidiary of any Principal Property (except a lease for a
temporary period not to exceed three years by the end of which it is intended
that the use of such Principal Property by the lessee will be discontinued)
which was or is owned or leased by the Company or a Restricted Subsidiary and
which has been or is to be sold or transferred, more than 120 days after the
completion of construction and commencement of full operation thereof by the
Company or such Restricted Subsidiary, to such lender or investor or to any
Person to whom funds have been or are to be advanced by such lender or investor
on the security of such Principal Property (herein referred to as a "sale and
leaseback transaction") unless, either:
(1) the Attributable Debt of the Company and its Restricted
Subsidiaries in respect of such sale and leaseback transaction and all other
sale and leaseback transactions entered into after the Issue Date (other than
such sale and leaseback transactions as are permitted by paragraph (2) below),
plus the aggregate principal amount of Debt secured by Liens on Principal
Properties then outstanding (excluding any such Debt secured by Liens covered
in paragraphs (A) through (I) of Limitation on Liens above) without equally and
ratably securing the Debt Securities, would not exceed 10% of Consolidated Net
Tangible Assets, or
(2) the Company, within 120 days after the sale or transfer, applies
or causes a Restricted Subsidiary to apply an amount equal to the greater of
the net proceeds of such sale or transfer or the fair market value of the
Principal Property so sold and leased back at the time of entering into such
sale and leaseback transaction (in either case as determined by any two of the
following: the Chairman, the President, any Vice President, the Treasurer and
the Controller of the Company) to the retirement of Debt Securities of any
series or other Debt of the Company (other than Debt subordinated to the Debt
Securities) or Debt of a Restricted Subsidiary, having a stated maturity more
than 12 months from the date of such application or which is extendible at the
option of the obligor thereon to a date more than 12 months from the date of
such application and, unless otherwise expressly provided with respect to any
one or more series of Debt Securities, any redemption of Debt Securities
pursuant to this provision shall not be deemed to constitute a refunding
operation or anticipated refunding operation for the purposes of any provision
limiting the Company's right to redeem Debt Securities of any one or more such
series when such redemption involves a refunding operation or anticipated
refunding operation; provided that the amount to be so applied shall be reduced
by (i) the principal amount of Debt Securities delivered within 120 days after
such sale or transfer to the Trustee for retirement and cancellation, and (ii)
the principal amount of any such Debt of the Company or a Restricted
Subsidiary, other than Debt Securities voluntarily retired by the Company or a
Restricted Subsidiary within 120 days after such sale or transfer.
Notwithstanding the foregoing, no retirement referred to in this paragraph (2)
may be effected by payment at maturity or pursuant to any mandatory sinking
fund payment or any mandatory prepayment provision.
Notwithstanding the foregoing, where the Company or any Restricted
Subsidiary is the lessee in any sale and leaseback transaction, Attributable
Debt shall not include any Debt resulting from the guarantee by the Company or
any other Restricted Subsidiary of the lessee's obligation thereunder. (Section
1010 of each Indenture)
Limitation on Debt of Restricted Subsidiaries. The Indentures will
provide that the Company will not permit any Restricted Subsidiary to create,
incur, assume or directly or indirectly guarantee or in any manner become
directly liable for the payment of, any Debt other than (i) trade debt incurred
in the ordinary course of business; (ii) Debt owing by any Restricted
Subsidiary to the Company or any other Restricted Subsidiary arising in the
ordinary course of business for normal business purposes; (iii) Debt in
existence on the Issue Date or required to be incurred pursuant to a
contractual obligation in existence on the Issue Date; or (iv) other Debt not
in excess of 10% of Pro Forma Consolidated Net Tangible Assets. (Section 1011
of each Indenture)
Limitation on Transfers of Principal Franchise Assets. The Indentures
will provide that, except as permitted under the "Merger, Consolidation and
Sale of Assets" section below, neither the Company nor any of its Restricted
Subsidiaries shall in one or a series of related transactions convey, sell,
lease, transfer, assign or otherwise dispose of, directly or indirectly, any of
its Principal Franchise Assets (an "Asset Sale") other than in the ordinary
course of business (which shall be any transaction or series of related
transactions having a dollar amount of less than $3 million), unless the
consideration received is at least equal to the Fair Market Value of the assets
sold or otherwise disposed of. (Section 1012 of each Indenture)
Limitation on Restrictions on Subsidiary Dividends and Other
Distributions. The Indentures will provide that the Company shall not permit
any Restricted Subsidiary to suffer to exist any encumbrance or restriction
(other than pursuant to
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law, regulation or order or in accordance with the terms of the Credit
Agreement or agreements entered into in connection with the Credit Agreement)
on the ability of any Restricted Subsidiary (i) to pay, directly or indirectly,
dividends or make any other distributions in respect of its Capital Stock or
pay any Debt or other obligation owed to the Company or any other Restricted
Subsidiary; (ii) to make loans or advances to the Company or any Restricted
Subsidiary; or (iii) to transfer any of its property or assets to the Company
or any Restricted Subsidiary, except any encumbrance or restriction (a)
pursuant to any agreement in effect on the Issue Date, including, without
limitation, the Credit Agreement, (b) pursuant to an agreement entered into by
such Restricted Subsidiary prior to the date on which such Restricted Subsidiary
was acquired by the Company and not entered into in anticipation of becoming a
Restricted Subsidiary, (c) permitted under Limitation on Transfers of Principal
Franchise Assets above, (d) pursuant to customary non-assignment provisions of
any lease governing a leasehold interest, a security agreement, mortgage or deed
of trust issued in connection with Liens permitted under Limitation on Liens
above or any other agreement which does not relate to Debt, provided that any
such non-assignment provision would not have a material adverse effect on the
Company and its Restricted Subsidiaries taken as a whole (as determined in good
faith by the Board of Directors of the Company) or (e) pursuant to an agreement
effecting a renewal, extension, refinancing or refunding of Debt incurred
pursuant to an agreement referred to in clause (a) or (b) above, provided,
however, that the provisions contained in such renewal, extension, refinancing
or refunding agreement relating to such encumbrance or restriction are no more
restrictive in any material respect than the provisions contained in the
agreement the subject thereof. (Section 1013 of each Indenture)
MERGER, CONSOLIDATION AND SALE OF ASSETS
The Indentures will provide that the Company shall not consolidate
with or merge into any other corporation or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, unless: (1)
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 (A) shall
be a corporation, partnership, limited liability company or trust organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and (B) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the Company's obligation for the due and punctual
payment of the principal of (and premium, if any, on) and interest on all the
Debt Securities and the performance and observance of every covenant of the
Indentures on the part of the Company to be performed or observed; (2)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (3) the Company or such
Person shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and such supplemental indenture comply with this "Merger,
Consolidation and Sale of Assets" section and that all conditions precedent
herein provided for relating to such transaction have been complied with. This
paragraph shall apply only to a merger or consolidation in which the Company is
not the surviving corporation and to conveyances, leases and transfers by the
Company as transferor or lessor. (Section 801 of each Indenture)
The Indentures will further provide that upon any consolidation by the
Company with or merger by the Company into any other corporation or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety to any Person in accordance with the preceding
paragraph, the successor Person 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 the Indentures with the same effect as if such successor
Person had been named as the Company therein, and in the event of any such
conveyance or transfer, the Company (which term shall for this purpose mean HFS
Incorporated or any successor Person which shall theretofore become such in the
manner described in the preceding paragraph), except in the case of a lease,
shall be discharged of all obligations and covenants under the Indentures and
the Debt Securities and the coupons and may be dissolved and liquidated.
(Section 802 of each Indenture)
EVENTS OF DEFAULT
The following will be "Events of Default" under the Indentures with
respect to Debt Securities of any series:
(1) default in the payment of any interest on any Debt Securities of
that series or any related coupon, when such interest or coupon becomes due and
payable, and continuance of such default for a period of 30 days; or
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(2) default in the payment of the principal of (or premium, if any,
on) any Debt Securities of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment when and as due
pursuant to the terms of the Debt Securities of that series and Article Twelve
of the Indentures; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in the Indentures (other than a default in the performance, or
breach, of a covenant or warranty which is specifically dealt with elsewhere
under this "Events of Default" section), and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of all Outstanding Debt
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"
thereunder; or
(5) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under the Federal Bankruptcy Code
or any other applicable federal or state 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
(6) the institution by the Company of proceedings to be adjudicated
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 the Federal Bankruptcy Code
or any other applicable federal or state 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 of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due; or
(7) (A) there shall have occurred one or more defaults by the Company
or any Restricted Subsidiary in the payment of the principal of (or premium, if
any, on) Debt aggregating $10 million or more, when the same becomes due and
payable at the stated maturity thereof, and such default or defaults shall have
continued after any applicable grace period and shall not have been cured or
waived or (B) Debt of the Company or any Restricted Subsidiary aggregating $10
million or more shall have been accelerated or otherwise declared due and
payable, or required to be prepaid or repurchased (other than by regularly
scheduled required prepayment), prior to the stated maturity thereof; or
(8) any other Event of Default provided with respect to Debt
Securities of that series.
If an Event of Default described in clause (1), (2), (3), (4), (7) or
(8) above with respect to Debt Securities of any series at the time Outstanding
occurs and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
that series may declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount as may be specified in the terms of that
series) of all of the Debt 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), and upon any such declaration such principal amount (or specified
portion thereof) shall become immediately due and payable. If an Event of
Default described in clause (5) or (6) above occurs and is continuing, then the
principal amount of all the Debt Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
At any time after a declaration of acceleration with respect to Debt
Securities of any series (or of all series, as the case may be) has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as provided in Article Five of the Indentures, the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series
(or of all series, as the case may be), by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the Currency in which the Debt Securities of such
series are payable (except as otherwise specified pursuant to Section
301 of the Indentures for the Debt Securities of such series and
except, if applicable, as provided in certain provisions of Section
312 of the Indentures):
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(A) all overdue interest on all Outstanding Debt
Securities of that series (or of all series, as the case may be) and
any related coupons,
(B) all unpaid principal of (and premium, if any,
on) any Outstanding Debt Securities of that series (or of all series,
as the case may be) which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid principal at
the rate or rates prescribed therefor in such Debt Securities,
(C) to the extent that payment of such interest is
lawful, interest on overdue interest at the rate or rates prescribed
therefor in such Debt Securities, and
(D) all sums paid or advanced by the Trustee
thereunder and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Debt
Securities of that series (or of all series, as the case may be),
other than the non-payment of amounts of principal of (or premium, if
any, on) or interest on Debt Securities of that series (or of all
series, as the case may be) which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513 of the Indentures.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the preceding paragraph, in the event of a declaration
of acceleration in respect of the Debt Securities because of an Event of
Default specified in clause (7) of the first paragraph of this section shall
have occurred and be continuing, such declaration of acceleration shall be
automatically annulled if the Debt that is the subject of such Event of Default
has been discharged or the holders thereof have rescinded their declaration of
acceleration in respect of such Debt, and written notice of such discharge or
rescission, as the case may be, shall have been given to the Trustee by the
Company and countersigned by the holders of such Debt or a trustee, fiduciary
or agent for such holders, within 30 days after such declaration of
acceleration in respect of the Debt Securities, and no other Event of Default
has occurred during such 30-day period which has not been cured or waived
during such period. (Section 502 of each Indenture)
Subject to Section 502 of each Indenture, the Holders of not less than
a majority in principal amount of the Outstanding Debt Securities of any series
may on behalf of the Holders of all the Debt Securities of such series waive
any past default described in clause (1), (2), (3), (4), (7), or (8) of the
first paragraph of this section (or, in the case of a default described in
clause (5) or (6) of the first paragraph of this section, the Holders of not
less than a majority in principal amount of all Outstanding Debt Securities may
waive any such past default), and its consequences, except a default (i) in
respect of the payment of the principal of (or premium, if any, on) or interest
on any Debt Security or any related coupon, or (ii) in respect of a covenant or
provision which under the Indentures cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series
affected. (Section 513 of each Indenture)
Upon any such waiver, any such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of the Indentures; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. (Section 513 of each Indenture)
No Holder of any Debt Security of any series or any related coupons
shall have any right to institute any proceeding, judicial or otherwise, with
respect to the Indentures, or for the appointment of a receiver or trustee, or
for any other remedy thereunder, unless (i) such Holder has previously given
written notice to the Trustee of a continuing Event of Default with respect to
the Debt Securities of that series; (ii) the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series in the case
of any Event of Default under clause (1), (2), (3), (4), (7) or (8) of the
first paragraph of this section, or, in the case of any Event of Default
described in clause (5) or (6) of the first paragraph of this section, the
Holders of not less than 25% in principal amount of all Outstanding Debt
Securities, shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
under each of the Indentures; (iii) 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; (iv) the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity has failed to
institute any such proceeding; and (v) no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by the
Holders of a majority or more in principal amount of the Outstanding Debt
Securities of that series in the case of any Event of Default described in
clause (1), (2), (3), (4), (7) or (8) of the first paragraph of this section,
or, in the case of any Event of Default described in clause (5) or (6) of the
first paragraph of this
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section, by the Holders of a majority or more in principal amount of all
Outstanding Debt Securities. (Section 507 of each Indenture)
During the existence of an Event of Default, the Trustee is required
to exercise such rights and powers vested in it under either Indenture in good
faith. Subject to the provisions of the Indentures relating to the duties of
the Trustee, in case an Event of Default shall occur and be continuing, the
Trustee under the Indentures is not under any obligation to exercise any of its
rights or powers under the Indentures at the request or direction of any of the
Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, with respect to the Securities of any series, the Holders of not
less than a majority in principal amount of the Outstanding Debt Securities of
such 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 under the Indentures.
Within 90 days after the occurrence of any Default with respect to
Debt Securities of any series, the Trustee shall transmit in the manner and to
the extent provided in TIA Section 313(c), notice of such Default known to the
Trustee, 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, on) or interest on any Debt Securities of such series,
or in the payment of any sinking fund installment with respect to Debt
Securities 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 interest of the
Holders of Debt Securities of such series and any related coupons; and provided
further that, in the case of any Default of the character specified in clause
(7) of the first paragraph of this section with respect to Debt Securities of
such series, no such notice to Holders shall be given until at least 30 days
after the occurrence thereof.
The Company is required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a brief certificate of the Company's
compliance with all of the conditions and covenants under the Indentures.
DISQUALIFIED HOLDERS
The Company's Amended and Restated Certificate of Incorporation
provides that no holder of debt securities who: (1) beneficially owns five
percent or more of the outstanding Capital Stock (whether by reason of
ownership of debt securities or otherwise) and who has not fully cooperated
with the Company and/or any Gaming Authority with respect to providing all
requested information (including financial statements) relating to such holder,
responding to all inquiries and questions raised by the Company and/or any
Gaming Authority, consenting to relevant background investigations or complying
with any other requests of the Company and/or any Gaming Authority in
connection with any Gaming License; (2) is required by any Gaming Authority to
be qualified with respect to any Gaming License and who has neither been
qualified by nor obtained a waiver of qualification from each Gaming Authority
requiring qualification with respect to any Gaming License in a timely manner;
or (3) has been found to be disqualified or unsuitable with respect to any
Gaming License, which finding has not been reversed, vacated or superseded
(each, a "Disqualified Holder"), shall be entitled to vote, directly or
indirectly, any shares of Capital Stock beneficially owned by such holder on
any matter, and no shares of Capital Stock beneficially owned by a Disqualified
Holder shall be considered as outstanding stock entitled to vote for any
purpose.
A Disqualified Holder shall, upon the request of the Company, dispose
of such holder's debt securities (and publicly-traded Capital Stock) within 10
days after receipt of such request. Alternatively, the Company may, at its
option, redeem such Disqualified Holder's Capital Stock as provided in the
Company's Amended and Restated Certificate of Incorporation and such
Disqualified Holder's debt securities at the lowest of: (i) the market value
thereof; (ii) the principal amount thereof; and (iii) the amount which such
holder paid for the debt securities, together with accrued and unpaid interest,
if any, to the date upon which such holder is determined to be a Disqualified
Holder. (Section 1108 of each Indenture)
Holders of debt securities shall be required to pay any costs and
investigative fees incurred in connection with any background investigation by,
or qualification or suitability application with, any Gaming Authority. Upon
becoming a Disqualified Holder, such holder shall have no further right to
exercise, directly or through any trustee or nominee, any right conferred by
its debt securities and no further right to receive any interest or other
distribution with respect to any such debt securities. (Section 1108 of each
Indenture)
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DEFEASANCE OR COVENANT DEFEASANCE OF THE INDENTURES
The Indentures will provide that the Company may, at its option and at
any time, terminate the obligations of the Company with respect to the
Outstanding Debt Securities of any series ("defeasance"). Such defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the Outstanding Debt Securities and any related
coupons, except for the following which shall survive until otherwise
terminated or discharged under the Indentures: (A) the rights of Holders of
such Outstanding Debt Securities and any related coupons (i) to receive, solely
from the trust fund described in the Indentures, payments in respect of the
principal of (and premium, if any, on) and interest on such Debt Securities and
any related coupons when such payments are due, and (ii) to receive shares of
common stock or other Securities from the Company upon conversion of any
convertible securities issued hereunder, (B) the Company's obligations to issue
temporary Debt Securities, register the transfer or exchange of any Debt
Securities, replace mutilated, destroyed, lost or stolen Debt Securities,
maintain an office or agency for payments in respect of the Debt Securities
and, if the Company acts as its own Paying Agent, hold in trust, money to be
paid to such Persons entitled to payment, and with respect to Additional
Amounts, if any, on such Debt Securities as contemplated in the Indentures, (C)
the rights, powers, trusts, duties and immunities of the Trustee under the
Indentures and (D) the defeasance provisions of the Indentures. With respect to
Subordinated Debt Securities, money and securities held in trust pursuant to
the Defeasance and Covenant Defeasance provisions described herein, shall not
be subject to the subordination provisions of the Subordinated Indenture. In
addition, the Company may, at its option and at any time, elect to terminate
the obligations of the Company with respect to certain covenants that are set
forth in the Indentures, some of which are described in the "Certain Covenants"
section above, and any omission to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Debt Securities
("covenant defeasance"). (Section 1403 of each Indenture)
In order to exercise either defeasance or covenant defeasance, (1) the
Company shall irrevocably have deposited or caused to be deposited with the
Trustee, in trust, for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of such Debt Securities and any related coupons, (A) money in an
amount (in such Currency in which such Debt Securities and any related coupons
are then specified as payable at Stated Maturity), or (B) Government
Obligations applicable to such Debt Securities (determined on the basis of the
Currency in which such Debt Securities are then specified as payable at Stated
Maturity) which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than one
day before the due date of any payment of principal (including any premium) and
interest, if any, under such Debt Securities and any related coupons, money in
an amount or (C) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public accountants to pay and
discharge (i) the principal of (and premium, if any, on) and interest on the
Outstanding Debt Securities and any related coupons on the Stated Maturity (or
Redemption Date, if applicable) of such principal (and premium, if any) or
installment or interest and (ii) any mandatory sinking fund payments or
analogous payments applicable to the Outstanding Debt Securities and any
related coupons on the day on which such payments are due and payable in
accordance with the terms of the Indentures and of such Debt Securities and any
related coupons; provided that the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such Government Obligations
to said payments with respect to such Debt Securities and any related coupons.
Before such a deposit, the Company may give to the Trustee, in accordance with
certain redemption provisions in the Indentures, a notice of its election to
redeem all or any portion of such Outstanding Debt Securities at a future date
in accordance with the terms of the Debt Securities of such series and the
redemption provisions of the Indentures, which notice shall be irrevocable.
Such irrevocable redemption notice, if given, shall be given effect in applying
the foregoing;
(2) no Default or Event of Default with respect to the Debt Securities and any
related coupons shall have occurred and be continuing on the date of such
deposit or, insofar as the Event of Default described in clauses (5) and (6) of
the Events of Default section above are concerned, at any time during the period
ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period); (3) such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a default under, the Indentures or any other
material agreement or instrument to which the Company is a party or by which it
is bound; (4) in the case of a defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel stating that (x) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling or
(y) since the Issue Date, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of the Outstanding Debt Securities and
any related coupons will not recognize income, gain or loss for federal income
tax purposes as a result of such defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance had not occurred; (5) in the case of
a covenant defeasance, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the Outstanding Debt
Securities and any related coupons will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not
occurred; (6) notwithstanding any other provisions of the defeasance and
covenant defeasance provisions of the Indentures, such defeasance or covenant
defeasance
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shall be effected in compliance with any additional or substitute terms,
conditions or limitations in connection therewith pursuant to Section 301 of
the Indentures; and (7) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent under the Indentures to either defeasance or covenant
defeasance, as the case may be, have been complied with. (Section 1404 of each
Indenture)
SATISFACTION AND DISCHARGE
The Indentures shall upon Company Request cease to be of further
effect with respect to any series of Debt Securities (except as to any
surviving rights of registration of transfer or exchange of Debt Securities of
such series herein expressly provided for and the obligation of the Company to
pay any Additional Amounts as contemplated by Section 1005 of each Indenture)
and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of such Indenture as to
such series when (1) either (A) all Debt Securities of such series theretofore
authenticated and delivered and all coupons, if any, appertaining thereto
(other than (i) coupons appertaining to Bearer Securities surrendered for
exchange for Registered Securities and maturing after such exchange, whose
surrender is not required or has been waived as provided in Section 305 of the
Indentures, (ii) Debt Securities and coupons of such series which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 306 of the Indentures, (iii) coupons appertaining to Debt Securities
called for redemption and maturing after the relevant Redemption Date, whose
surrender has been waived as provided in Section 1106 of the Indentures, and
(iv) Debt Securities and coupons of such series for whose payment money has
theretofore been deposited in trust with the Trustee or any Paying Agent or
segregated and held in trust by the Company and thereafter repaid to the
Company, as provided in Section 1003 of the Indentures) have been delivered to
the Trustee for cancellation; or (B) all Debt Securities of such series and, in
the case of (i) or (ii) below, any coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year, or
(iii) if redeemable at the option of the Company, 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 (i), (ii) or (iii)
above, has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount, in the Currency in which the
Debt Securities of such series are payable, sufficient to pay and discharge the
entire indebtedness on such Debt Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and interest to
the date of such deposit (in the case of Debt Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder
by the Company; and (3) 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 the
Indentures as to such series have been complied with. (Section 401 of each
Indenture)
AMENDMENTS AND WAIVERS
The Indentures will provide that at any time and from time to time,
the Company and the Trustee may, without the consent of any holder of Debt
Securities, enter into one or more indentures supplemental thereto for certain
specified purposes, including, among other things, (i) to cure ambiguities,
defects or inconsistencies, or to make any other provisions with respect to
questions or matters arising under the Indentures (provided that such action
shall not adversely affect the interests of the Holders in any material
respect), (ii) to effect or maintain the qualification of the Indentures under
the Trust Indenture Act, or (iii) to evidence the succession of another person
to the Company and the assumption by any such successor of the obligations of
the Company in accordance with the Indentures and the Debt Securities. (Section
901 of each Indenture). Other amendments and modifications of the Indentures or
the Debt Securities may be made by the Company and the Trustee with the consent
of the holders of not less than a majority of the aggregate principal amount of
all of the then Outstanding Debt Securities of any Series; provided, however,
that no such modification or amendment may, without the consent of the holder
of each Outstanding Debt Security affected thereby, (1) change the Stated
Maturity of the principal of, or any installment of interest on, any Debt
Security or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or change any obligation of
the Company to pay Additional Amounts contemplated by Section 1005 of each
Indenture (except as contemplated and permitted by certain provisions of the
Indentures), or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 of the Indentures
of the amount thereof provable in bankruptcy pursuant to Section 504 of the
Indentures, or adversely affect any right of repayment at the option of any
Holder of any Debt Security, or change any Place of Payment where, or the
Currency in which, any Debt Security or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption
or repayment at the option of the Holder, on or after the Redemption Date or
Repayment Date, as the case
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may be), or adversely affect any right to convert or manage any Debt Securities
as may be provided pursuant to Section 301 of the Indentures, or (2) reduce the
percent in principal amount of the Outstanding Debt Securities of any series,
the consent of whose Holders is required for any such supplemental indenture,
for any waiver of compliance with certain provisions of the Indentures or
certain defaults thereunder and their consequences provided for in the
Indentures, or reduce the requirements for quorum or voting.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by and
construed in accordance with the laws of the State of New York. The Indentures
are subject to the provisions of the Trust Indenture Act that are required to
be a part thereof and shall, to the extent applicable, be governed by such
provisions.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in
the Indentures.
"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.
"Attributable Debt" means, as to any particular lease that is the
subject of a sale and leaseback transaction which has a remaining term of more
than 12 months, at any date as of which the amount thereof is to be determined,
the principal amount of outstanding Capital Lease Obligation.
"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 a committee of the Board of Directors empowered to
exercise all of the powers of the Board of Directors) and to be in full force
and effect on the date of such certification, and delivered to the Trustee.
"Capital Lease Obligation" means any obligation that, in accordance
with generally accepted accounting principles, is required to be classified and
accounted for as a capital lease, and the principal amount of Debt represented
by such obligation shall be the capitalized amount of such obligation
determined in accordance with such principles; provided, however, Capital Lease
Obligation shall not include any operating lease of the Company or any of its
Subsidiaries in existence prior to the Issue Date which has been or is
recharacterized as a capital lease in accordance with generally accepted
accounting principles after the Issue Date. The stated maturity of any Capital
Lease Obligation shall be the last payment of rent or any other amount due
under such lease.
"Capital Stock" means any and all shares, interests, participations,
rights or equivalents (however designated) of corporate stock of the Company or
any Restricted Subsidiary.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated Net Tangible Assets", as of any date of determination,
means the total amount of assets, including, without limitation, franchise
agreements, which would appear on the most currently available consolidated
balance sheet of the Company determined in accordance with generally accepted
accounting principles, after deducting therefrom, to the extent otherwise
included, goodwill.
"Credit Agreement" means the Credit Agreement dated as of December 16,
1993 among the Company, Chemical Bank, as agent, and the banks signatories
thereto, as the same may be amended from time to time, be further supplemented
or amended, or the terms thereof waived or modified, to the extent permitted
by, and in accordance with, the terms thereof and any credit agreement entered
into in replacement of or refinancing of the existing Credit Agreement.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
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"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Fair Market Value" means the fair market value of the item in
question as determined by the Board of Directors acting in good faith and in
exercise of its fiduciary duties.
"Franchise Contract" means any contract between the Company and its
subsidiaries and a third party for the franchise of a Days Inn, Ramada, Howard
Johnson, Super 8, Park Inn International or Villager Lodge.
"Franchise Fee Revenues" means the total amount of revenues derived
from franchise fees as set forth on the most recent year-end income statement
of the Company and its consolidated Subsidiaries and computed in accordance
with generally accepted accounting principles.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal or foreign government, any state, province or any
city or other political subdivision or otherwise and whether now or hereafter
in existence (including, without limitation, the National Indian Gaming
Commission or any other tribal authority), or any officer or official thereof
with authority to regulate any gaming operation (or proposed gaming operation)
owned, managed, or operated by the Company or any of its Subsidiaries.
"Gaming License" means all licenses and other regulatory approvals
necessary for the lawful operation of any gaming and related business.
"Holder" means a Person in whose name a Debt Security is registered in
the Security Register.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Debt Securities.
"Issue Date" means the date of first issuance of the Debt Securities
under either Indenture.
"Lien" means any pledge, mortgage, lien, charge, encumbrance or
security interest except that a Lien shall not mean any license or right to use
intellectual property of the Company or a Subsidiary granted by the Company or
a Subsidiary.
"Maturity", when used with respect to any Debt Securities, means the
date on which the principal of such Debt Security or an installment of
principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, notice of redemption, notice
of option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, including an employee of the Company, and who shall be
acceptable to the Trustee.
"Original Issue Discount Security" means any Debt 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 502 of the Indentures.
"Outstanding", when used with respect to Debt Securities, means, as of
the date of determination, all Debt Securities theretofore authenticated and
delivered under the Indentures, except:
(i) Debt Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debt Securities, or portions thereof, for whose payment,
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Debt Securities;
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(iii) Debt Securities, except to the extent provided in the
"Defeasance or Covenant Defeasance of the Indentures" section, with
respect to which the Company has effected defeasance and/or covenant
defeasance as provided in the Indenture; and
(iv) Mutilated, destroyed, lost or stolen Debt Securities
which have become or are about to become due and payable which have
been paid pursuant to Section 306 of the Indentures or in exchange for
or in lieu of which other Debt Securities have been authenticated and
delivered pursuant to the Indenture, other than any such Debt
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debt Securities are held by
a bona fide purchaser in whose hands the Debt Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Debt Securities have given any request, demand,
authorization, direction, notice, consent or waiver under the Indentures, and
for the purpose of making the calculations required by TIA Section 313, Debt
Securities owned by the Company or any other obligor upon the Debt Securities
or any Affiliate of the Company or such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in making such calculation or in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Debt
Securities which the Trustee knows to be so owned shall be so disregarded. Debt
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 Debt Securities and that the
pledgee is not the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or such other obligor.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (and premium,
if any, on) or interest on any Debt Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Principal Franchise Assets" means (i) any intellectual property
rights that are associated with Days Inn, Ramada, Howard Johnson and Super 8,
but excluding Villager Lodge and Park Inn International, including, without
limitation, service marks, trademarks, trade names and licenses to use the same
but excluding service marks and trademarks which do not incorporate Days Inn,
Ramada, Howard Johnson or Super 8 Motel names or marks, and (ii) Franchise
Contracts from which the Company derived during the preceding 12 full calendar
months an aggregate revenue on the date as of which the determination of such
revenue is being made and determined in accordance with generally accepted
accounting principles in excess of 10% of Franchise Fee Revenues.
"Principal Property" means any reservation centers, leaseholds,
telecommunications contracts, computerized systems contracts, intellectual
property rights, or franchise contracts, owned by the Company or any Restricted
Subsidiary and located in the United States, the gross book value (without
deduction of any reserve for depreciation) of which on the date as of which the
determination is being made is an amount which exceeds 5% of Total Assets,
other than any such property which, in the opinion of the Board of Directors,
is not of material importance to the total business conducted by the Company
and its Subsidiaries, taken as a whole.
"Pro Forma Consolidated Net Tangible Assets" means, in connection with
the acquisition of a Restricted Subsidiary, Consolidated Net Tangible Assets
after giving effect to such acquisition on a pro forma basis.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or
any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary (other than Park Inn
International and Villager Lodge) of which, at the time of determination, all
of the outstanding capital stock (other than directors' qualifying shares) is
owned by the Company directly and/or indirectly and which, at the time of
determination, is primarily engaged in the franchising, developing,
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financing, and providing marketing services for hotel systems and casino gaming
facilities. In the event that there shall at any time be a question as to
whether a Subsidiary is primarily engaged in franchising, developing,
financing, and providing marketing services for hotel systems and casino gaming
facilities, or a combination thereof, such matter shall be determined for all
purposes of the Indentures by a Board Resolution.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305 of the Indenture.
"Stated Maturity", when used with respect to any Debt Security or any
installment of principal thereof or interest thereon, means the date specified
in such Debt Security as the fixed date on which the principal of such Debt
Security or such installment of principal or interest is due and payable.
"Subsidiary" means any corporation of which at the time of
determination the Company, directly and/or indirectly through one or more
Subsidiaries, owns more than 50% of the Voting Stock.
"Total Assets" means the total amount of assets (less applicable
reserves and other properly deductible items), as set forth on the most recent
balance sheet of the Company and its consolidated Subsidiaries and computed in
accordance with generally accepted accounting principles.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force at the date as of which the Indentures were executed, except that
any supplemental indenture executed pursuant to the Indentures shall conform to
the requirements of the Trust Indenture Act as in effect on the date of
execution thereof.
"Trustee" means Bank of Nova Scotia until a successor Trustee shall
have become such pursuant to the applicable provisions of the Indentures, and
thereafter "Trustee" shall mean such successor Trustee.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of a corporation (irrespective of
whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 300,000,000
shares of Common Stock, par value $.01 per share, and 10,000,000 shares of
Preferred Stock. As of August 26, 1996, 123,445,314 shares of Common Stock were
issued and outstanding and held of record by 411 stockholders. There are no
shares of Preferred Stock outstanding on the date hereof.
The Company's Amended and Restated Certificate of Incorporation and
By-laws provide that directors shall be removed from office only for cause at
any time by the affirmative vote of the holders of a majority of the shares
entitled to vote for the election of directors at any annual or special meeting
of stockholders for that purpose.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held
of record on all matters on which shareholders are entitled to vote. There are
no cumulative voting rights and holders of Common Stock have no preemptive
rights. All issued and outstanding shares of Common Stock are validly issued,
fully paid and non-assessable. Holders of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
funds legally available for that purpose. Upon dissolution, holders of Common
Stock are entitled to share pro rata in the assets of the Company remaining
after payment in full of all its liabilities and obligations, including payment
of the liquidation preference, if any, of any preferred stock then outstanding.
PREFERRED STOCK
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The Board of Directors, without further action by the stockholders, is
authorized to issue Preferred Stock in one or more series and to designate as
to any such series the dividend rate, redemption prices, preferences on
liquidation or dissolution, conversion rights, voting rights and any other
preferences, and relative, participating, optional or other special rights and
qualifications, limitations or restrictions. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any Preferred Stock that may be issued in the future.
Issuance of a new series of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions or other corporate
purposes, could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, a majority of the
outstanding voting stock of the Company. The Company has no present plans to
issue any new series of Preferred Stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Generally, Section 203 of the Delaware General Corporation Law (the
"DGCL") prohibits a publicly held Delaware corporation from engaging in any
"business combination" with an "interested stockholder" for a period of three
years following the time that such stockholder became an interested
stockholder, unless (i) prior to such time either the business combination or
the transaction which resulted in the stockholder becoming an interested
stockholder is approved by the board of directors of the corporation, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding, for purposes of determining the number of shares
outstanding, those shares owned (A) by persons who are both directors and
officers and (B) certain employee stock plans, or (iii) at or after such time
the business combination is approved by the board and authorized at an annual
or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. A "business combination" includes
certain mergers, consolidations, asset sales, transfers and other transactions
resulting in a financial benefit to the interested stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within the preceding three years, did own) 15% or more of the corporation's
voting stock.
LIMITATIONS ON CHANGE OF CONTROL
The Company is a party to certain employment agreements, an earnout
agreement, the Credit Agreement and certain indentures, each of which contain
provisions with respect to a change in control of the Company. In addition,
certain provisions of the Company's Amended Restated Certificate of
Incorporation may inhibit changes in control of the Company. See "Description
of Capital Stock--Disqualified Stockholders" and "Risk Factors--Certain
Anti-takeover Effects; Divestiture and Loss of Voting Rights."
DISQUALIFIED STOCKHOLDERS
The Company's Amended and Restated Certificate of Incorporation
provides that no holder of capital stock of the Company who: (1) beneficially
owns five percent or more of the outstanding capital stock of the Company and
who has not fully cooperated with the Company and/or any Gaming Authority with
respect to providing all requested information (including financial statements)
relating to such holder, responding to all inquiries and questions raised by
the Company and/or any Gaming Authority, consenting to relevant background
investigations or complying with any other requests of the Company and/or any
Gaming Authority in connection with any Gaming License; (2) is required by any
Gaming Authority to be qualified with respect to any Gaming License and who has
neither been qualified by nor obtained a waiver of qualification from each
Gaming Authority requiring qualification with respect to any Gaming License in
a timely manner; or (3) has been found to be disqualified or unsuitable with
respect to any Gaming License, which finding has not been reversed, vacated or
superseded (each, a "Disqualified Stockholder"), shall be entitled to vote,
directly or indirectly, any shares of capital stock of the Company beneficially
owned by such holder on any matter, and no shares of capital stock of the
Company beneficially owned by a Disqualified Stockholder shall be considered as
outstanding stock entitled to vote for any purpose.
A Disqualified Stockholder shall, upon the request of the Company,
dispose of such holder's publicly-traded capital stock of the Company within 10
days after receipt of such request. Alternatively, the Company may, at its
option, redeem such Disqualified Stockholder's capital stock of the Company as
provided in the Company's Amended and Restated Certificate of Incorporation at
the Redemption Price.
Holders of capital stock of the Company shall be required to pay any
costs and investigative fees incurred in connection with any background
investigation by, or qualification or suitability application with, any Gaming
Authority. Upon
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becoming a Disqualified Stockholder, such holder shall have no further right to
exercise, directly or through any trustee or nominee, any right conferred by
its capital stock of the Company and no further right to receive any
distribution with respect to any such capital stock of the Company.
As used herein, the term "Gaming Authorities" includes all federal,
state, local or foreign government authorities and the National Indian Gaming
Commission or other tribal authorities which issue or grant any license or
approval necessary or appropriate for the lawful operation of gaming and
related businesses now or hereafter engaged in by the Company or its
subsidiaries; the term "Gaming License" means all licenses and other regulatory
approvals necessary for the lawful operation of gaming and related businesses
now or hereafter engaged in by the Company or any subsidiary within or without
the United States from the Gaming Authorities empowered to issue or grant
Gaming Licenses; and the term "Redemption Price" for a share of capital stock
of the Company means the average closing sale price during the 20-day period
immediately preceding the date of the notice of redemption of a share of such
capital stock on the composite tape for New York Stock Exchange Listed Stocks,
or if such stock is not quoted on the composite tape, on the New York Stock
Exchange, or if such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the Exchange Act on which
such stock is listed, or if such stock is not listed on any such exchange, the
average last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market with respect to a share of such
capital stock during the 20-day period preceding the date of the notice of
redemption as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or any similar system then in use, or if no such
quotations are available, the fair market value on the date of the call for
redemption of a share of such stock as determined by the Board of Directors of
the Company.
TRANSFER AGENT
Mellon Securities Trust Company is the Registrar Agent for the
Company's Common Stock.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby in any
of, or any combination of, the following ways: (i) directly to purchasers, (ii)
through agents, (iii) through underwriters and/or (iv) through dealers.
Offers to purchase Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, who
may be deemed to be an underwriter as that term is defined in the Securities
Act, involved in the offer or sale of Securities, will be named, and any
commissions payable by the Company to such agent will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment (ordinarily five business days or less).
If an underwriter or underwriters are utilized in the offer or sale of
Securities, the Company will execute an underwriting agreement with such
underwriters at the time of sale of such Securities to such underwriters and
the names of such underwriters and the principal terms of the Company's
agreement with such underwriters will be set forth in the Prospectus
Supplement.
If a dealer is utilized in the offer or sale of Securities, the
Company will sell such Securities to such dealer, as principal. Such dealer may
then resell such Securities to the public at varying prices to be determined by
such dealer at the time of resale. The name of such dealer and the principal
terms of the Company's agreement with such dealer will be set forth in the
Prospectus Supplement.
Agents, underwriters, and dealers may be entitled under agreements
with the Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act. Agents, dealers and
underwriters may also be customers of, engage in transactions with, or perform
services for the Company in the ordinary course of their business.
The place and time of delivery for Securities will be set forth in the
accompanying Prospectus Supplement.
LEGAL OPINION
The validity of the Securities offered hereby will be passed on for
the Company by Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New
York, New York 10022.
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EXPERTS
The consolidated financial statements and the related financial
statement schedules incorporated in this Prospectus by reference from the HFS
Incorporated Annual Report on Form 10-K for the year ended December 31, 1995
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports which are incorporated herein by reference and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The balance sheet of Century 21 Real Estate of the Mid-Atlantic
States, Inc. as of December 31, 1995 and the related statements of income,
changes in stockholder's equity and cash flows for the year then ended, which
appear in the Form 8-K dated April 5, 1996 of HFS Incorporated, are
incorporated herein by reference, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated balance sheets of Century 21 Real Estate Corporation
(a wholly-owned subsidiary of MetLife) and its subsidiaries as of December 31,
1994, 1993 and 1992 and the related consolidated statements of income,
stockholder's equity and cash flows for the years then ended, which appear in
the Form 8-K dated August 8, 1995 of HFS Incorporated (formerly Hospitality
Franchise Systems, Inc.), are incorporated herein by reference, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report which is incorporated herein by reference and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The financial statements of Century 21 of Southwest, Inc. (an "S"
corporation) as of and for the years ended March 31, 1995 and 1994, which
appear in the Form 8-K dated February 16, 1996 of HFS Incorporated have been
incorporated by reference herein in reliance upon the report dated May 15,
1995, of Toback CPAs, P.C., independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements of Century 21 of Eastern Pennsylvania, Inc.
(an "S" corporation) as of and for the years ended April 30, 1995 and 1994,
which appear in the Form 8-K dated February 16, 1996 of HFS Incorporated have
been incorporated by reference herein in reliance upon the report dated June
22, 1995, of Woolard, Krajnik, & Company, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The financial statements of Century 21 Real Estate of the Mid-Atlantic
States, Inc. as of and for the years ended December 31, 1994 and 1993, which
appear in the Form 8-K dated February 16, 1996 of HFS Incorporated have been
incorporated by reference herein in reliance upon the report dated May 11,
1995, of Beers & Cutler PLLC, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
expert in accounting and auditing.
The consolidated financial statements of Century 21 Region V, Inc. as
of and for the year ended July 31, 1995, which appear in the Form 8-K dated
February 16, 1996 of HFS Incorporated have been incorporated by reference
herein in reliance upon the report dated January 12, 1995, of White, Nelson &
Co. LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as expert in accounting and
auditing.
The consolidated financial statements of Electronic Realty Associates,
Inc. for the years ended December 31, 1994 and 1993, included in the HFS
Incorporated Current Report on Form 8-K dated February 16, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
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The consolidated financial statements of Electronic Realty Associates,
L.P. for the years ended December 31, 1995 and 1994, included in the HFS
Incorporated Current Report on Form 8-K dated April 5, 1996, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The consolidated balance sheets of Coldwell Banker Corporation and
subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of operations, stockholders' equity (deficiency) and cash flows for
each of the two years in the period ended December 31, 1995, included in the HFS
Incorporated Current Report on Form 8-K dated May 8, 1996, audited by Coopers &
Lybrand LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity and
cash flows for the three months ended December 31, 1993 and the consolidated
statements of operations and cash flows for the nine months ended September
30, 1993 of Coldwell Banker Corporation and subsidiaries (formerly Coldwell
Banker Residential Holding Company and subsidiaries) have been audited by
Deloitte & Touche LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Avis, Inc. as of February 29,
1996 and February 28, 1995 and for each of the three years in the period ended
February 29, 1996, included in the HFS Incorporated Current Report on Form 8-K
dated August 29, 1996, have been so incorporated herein in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission
Registration Fee.......................... $ 344,828
Trustee's Expenses ......................... 5,000
Accounting Fees and Expenses................ 75,000
Legal Fees and Expenses..................... 100,000
Blue Sky Fees and Expenses.................. 25,000
Miscellaneous .......................... 10,000
-------
Total Expenses............................ $ 559,828
The Company will pay all fees and expenses associated with filing the
Registration Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation. Reference is made to Section
145 of the Delaware General Corporation Law, as amended ("GCL"), which provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by reason of the fact
that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at its request in such capacity of another
corporation or business organization against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interest of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe that such person's conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of a
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director actually and reasonably incurred.
Reference is also made to Section 102(b)(7) of the GCL, which permits
a corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the GCL or (iv) for any transaction from which the
director derived an improper personal benefit.
Articles Ninth and Tenth of the Company's Amended and Restated
Certificate of Incorporation provides for the elimination of personal liability
of a director for breach of fiduciary duty as permitted by Section 102(b)(7) of
the GCL, and provides that the Company shall indemnify its directors and
officers to the full extent permitted by Section 145 of the GCL.
The Company maintains at its expense, a policy of insurance which
insures its Directors and Officers, subject to certain exclusions and
deductions as are usual in such insurance policies, against certain liabilities
which may be incurred in those capacities.
II-1
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibit No. Description
- ----------- -----------
1.1 Form of Underwriting Agreement (Standard Provisions) for Debt
Securities.
1.2 Form of Underwriting Agreement (Standard Provisions) for Common
Stock.
4.1 Form of Certificate for the Company's Common Stock, par value
$.01 per share (incorporated by reference to the Company's
Registration Statement on Form S-1, Registration No. 33-51422,
Exhibit 4.1).
4.2 Form of Senior Indenture to be entered into by the Company and
The Bank of Nova Scotia Trust Company of New York, as Trustee.
4.3 Form of Subordinated Indenture to be entered into by the Company
and The Bank of Nova Scotia Trust Company of New York, as
Trustee.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom regarding the
legality of the Securities being registered hereby.
12.1 Statement re: Computation of Consolidated Ratio of Earnings to
Fixed Charges.
23.1 Consent of Deloitte & Touche LLP relating to the financial
statements of HFS Incorporated.
23.2 Consent of Deloitte & Touche LLP relating to the financial
statements of Century 21 Real Estate Corporation.
23.3 Consent of Deloitte & Touche LLP relating to the financial
statements of Century 21 Real Estate of Mid-Atlantic States, Inc.
23.4 Consent of Toback CPAs, P.C. relating to the financial
statements of Century 21 of Southwest, Inc.
23.5 Consent of Woolard, Krajnik & Company relating to the financial
statements of Century 21 of Eastern Pennsylvania, Inc.
23.6 Consent of Beers & Cutler PLLC relating to the financial
statements of Century 21 Real Estate of the Mid-Atlantic
States, Inc.
23.7 Consent of White, Nelson & Co. LLP relating to the financial
statements of Century 21 Region V, Inc.
23.8 Consent of Ernst & Young LLP relating to the financial statements
of Electronic Realty Associates, Inc. and Electronic Realty
Associates, L.P.
23.9 Consent of Coopers & Lybrand L.L.P. relating to the financial
statements of Coldwell Banker Corporation.
23.10 Consent of Deloitte & Touche LLP relating to the financial
statements of Coldwell Banker Corporation.
23.11 Consent of Price Waterhouse LLP relating to the financial
statements of Avis, Inc.
23.12 Consent of Skadden, Arps, Slate, Meagher & Flom (included in
Exhibit 5.1).
24.1 Power of attorney (included in the signature page to the
Registration Statement).
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25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of The Bank of Nova Scotia Trust Company of New York, as
Trustee for the Debt Securities.
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ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement, to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT, TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF PARSIPPANY, STATE OF NEW JERSEY, ON
AUGUST 29, 1996.
HFS INCORPORATED
By: /s/ James E. Buckman
-----------------------------------
James E. Buckman
Executive Vice President,
General Counsel and Director
POWER OF ATTORNEY
KNOW ALL THOSE BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS EACH OF HENRY R. SILVERMAN, STEPHEN P.
HOLMES AND JAMES E. BUCKMAN, OR ANY OF THEM, EACH ACTING ALONE, HIS TRUE AND
LAWFUL ATTORNEY-IN-FACT AND AGENT, WITH FULL POWER OF SUBSTITUTION AND
RESUBSTITUTION, FOR SUCH PERSON AND IN HIS NAME, PLACE AND STEAD, IN ANY AND
ALL CAPACITIES, IN CONNECTION WITH THE REGISTRANT'S REGISTRATION STATEMENT ON
FORM S-3 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, INCLUDING, WITHOUT
LIMITATION THE GENERALITY OF THE FOREGOING, TO SIGN THE REGISTRATION STATEMENT
IN THE NAME AND ON BEHALF OF THE REGISTRANT OR ON BEHALF OF THE UNDERSIGNED AS
A DIRECTOR OR OFFICER OF THE REGISTRANT, AND ANY AND ALL AMENDMENTS OR
SUPPLEMENTS TO THE REGISTRATION STATEMENT, INCLUDING ANY AND ALL STICKERS AND
POST-EFFECTIVE AMENDMENTS TO THE REGISTRATION STATEMENT, AND TO SIGN ANY AND
ALL ADDITIONAL REGISTRATION STATEMENTS RELATING TO THE SAME OFFERING OF
SECURITIES AS THE REGISTRATION STATEMENT THAT ARE FILED PURSUANT TO RULE 462(B)
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION AND ANY APPLICABLE SECURITIES EXCHANGE OR
SECURITIES SELF-REGULATORY BODY, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, OR THEIR SUBSTITUTES OR SUBSTITUTE, MAY LAWFULLY DO OR CAUSE TO BE DONE
BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
Signature Title Date
- --------- ----- ----
/s/ Henry R. Silverman Chairman of the Board, Chief August 29, 1996
- ------------------------ Executive Officer and Director
(Henry R. Silverman) (Principal Executive Officer)
/s/ John D. Snodgrass President, Chief Operating August 29, 1996
- ------------------------ Officer and Director
(John D. Snodgrass)
/s/ Stephen P. Holmes Executive Vice President, Chief August 29, 1996
- ------------------------ Financial Officer, Treasurer and
(Stephen P. Holmes) Director (Principal Financial
Officer and Principal Accounting
Officer)
/s/ James E. Buckman Executive Vice President, General August 29, 1996
- ------------------------ Counsel and Director
(James E. Buckman)
/s/ Robert F. Smith Director August 29, 1996
- ------------------------
(Robert F. Smith)
II-5
<PAGE>
/s/ Leonard Schutzman Director August 29, 1996
- -------------------------
(Leonard Schutzman)
/s/ Martin L. Edelman Director August 29, 1996
- -------------------------
(Martin L. Edelman)
Director August 29, 1996
- -------------------------
(Robert W. Pittman)
/s/ Roger J. Stone, Jr. Director August 29, 1996
- -------------------------
(Roger J. Stone, Jr.)
/s/ Robert E. Nederlander Director August 29, 1996
- -------------------------
(Robert E. Nederlander)
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
1.1 Form of Underwriting Agreement (Standard Provisions)
for Debt Securities.
1.2 Form of Underwriting Agreement (Standard Provisions)
for Common Stock.
4.1 Form of Certificate for the Company's Common Stock,
par value $.01 per share (incorporated by reference to
the Company's Registration Statement on Form S-1,
Registration No. 33-51422, Exhibit 4.1).
4.2 Form of Senior Indenture to be entered into by the
Company and The Bank of Nova Scotia Trust Company of
New York, as Trustee.
4.3 Form of Subordinated Indenture to be entered into
by the Company and The Bank of Nova Scotia Trust
Company of New York, as Trustee.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom
regarding the legality of the Securities being
registered hereby.
12.1 Statement re: Computation of Consolidated Ratio of
Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP relating to the
financial statements of HFS Incorporated.
23.2 Consent of Deloitte & Touche LLP relating to the
financial statements of Century 21 Real Estate
Corporation.
23.3 Consent of Deloitte & Touche LLP relating to the
financial statements of Century 21 Real Estate of
Mid-Atlantic States, Inc.
23.4 Consent of Toback CPAs, P.C. relating to the
financial statements of Century 21 of Southwest, Inc.
23.5 Consent of Woolard, Krajnik & Company relating to
the financial statements of Century 21 of Eastern
Pennsylvania, Inc.
23.6 Consent of Beers & Cutler PLLC relating to the financial
statements of Century 21 Real Estate of the
Mid-Atlantic States, Inc.
23.7 Consent of White, Nelson & Co. LLP relating to the
financial statements of Century 21 Region V, Inc.
<PAGE>
23.8 Consent of Ernst & Young LLP relating to the
financial statements of Electronic Realty Associates,
Inc. and Electronic Realty Associates, L.P.
23.9 Consent of Cooper & Lybrand LLP relating to the
financial statements of Coldwell Banker Corporation.
23.10 Consent of Deloitte & Touche LLP relating to the
financial statements of Coldwell Banker Corporation.
23.11 Consent of Price Waterhouse LLP relating to the
financial statements of Avis, Inc.
23.12 Consent of Skadden, Arps, Slate, Meagher & Flom
(included in Exhibit 5.1).
24.1 Power of attorney (included in the signature page
to the Registration Statement).
25.1 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Bank of Nova Scotia Trust
Company of New York, as Trustee for the Debt Securities.
II-8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HFS INCORPORATED
(a Delaware corporation)
$________________
Debt Securities
UNDERWRITING AGREEMENT
Dated:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
HFS INCORPORATED
(a Delaware corporation)
$________________
Debt Securities
UNDERWRITING AGREEMENT
[Date]
To the Underwriters named in Schedule I
Ladies and Gentlemen:
HFS Incorporated, a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule I the principal
amount of certain of its debt securities specified in Schedule II (the "Initial
Debt Securities") on the terms and conditions stated herein and in Schedule II.
The Company also grants to the Underwriters, severally and not jointly, the
option described in Section 2 to purchase all or any part of the additional
principal amount of debt securities as set forth in Schedule II to cover
over-allotments (the "Option Debt Securities") on the terms and conditions
stated herein and in Schedule II. The Option Debt Securities together with the
Initial Debt Securities are herein called the "Debt Securities". The Debt
Securities will be issued pursuant to an indenture dated as of , 199 (the
"Indenture") between the Company and The Bank of Nova Scotia Trust Company of
New York, trustee (the "Trustee"). As used herein, unless the context otherwise
requires, the term "Underwriters" shall mean the firm or firms named as
Underwriter or Underwriters in Schedule I and the term "you" shall mean the
Underwriter or Underwriters, if no underwriting syndicate is purchasing the
Offered Securities (as defined below), or the
<PAGE>
2
representative or representatives of the Underwriters, if an underwriting
syndicate is purchasing the Offered Securities, as indicated in Schedule I.
[The Initial Debt Securities and the Option Debt Securities
are convertible into shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock"), as specified in Schedule II. The shares of Common
Stock issuable upon conversion of any Initial Debt Securities are referred to
herein as the "Firm Shares". The shares of Common Stock issuable upon conversion
of any Option Debt Securities are referred to herein as the "Additional Shares",
which, together with the Firm Shares, are collectively herein called the
"Shares".] The Debt Securities and the Shares, if any, are collectively referred
to as the "Offered Securities". The Offered Securities may be sold pursuant to
delayed delivery contracts, a form of which is attached as Schedule IV (the
"Delayed Delivery Contracts"), as specified in Schedule II.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Registration
No. 33- ) including a prospectus, relating to certain of its debt securities
(including the Offered Securities) and Common Stock, and the offering thereof
from time to time in accordance with Rule 415 under the Securities Act of 1933,
as amended (the "1933 Act"). Such registration statement has been declared
effective by the Commission. As provided in Section 3(a), a prospectus
supplement reflecting the terms of the Offered Securities, the terms of the
offering thereof and the other matters set forth therein has been prepared and
will be filed pursuant to Rule 424 under the 1933 Act. Such prospectus
supplement, in the form first filed after the date hereof pursuant to Rule 424,
is herein referred to as the "Prospectus Supplement". Such registration
statement, as amended at the date hereof, together with the Rule 462(b)
Registration Statement under the 1933 Act, including the exhibits thereto and
the documents incorporated by reference therein, is herein called the
"Registration Statement", and the basic prospectus included therein relating to
all offerings of Debt Securities and Common Stock under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus", except that, if such basic prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to the basic prospectus,
as so amended or supplemented and as supplemented by the Prospectus Supplement,
in either case including the documents filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
that are incorporated by reference therein.
You have advised us that you and the other Underwriters,
acting severally and not jointly, desire to purchase the Initial Debt Securities
and that you have been authorized by the other Underwriters to execute this
Underwriting Agreement ("this Agreement") on their behalf.
<PAGE>
3
Section 1. Representations and Warranties. (a) The Company
represents and warrants to and agrees with each Underwriter that:
(i) On the original effective date of the Registration
Statement, on the effective date of the most recent post-effective
amendment thereto, if any, on the date of the filing of any Rule 462(b)
Registration Statement, and on the date of the filing by the Company of
any annual report on Form 10-K after the original filing of the
Registration Statement, the Registration Statement complied in all
material respects with the requirements of the 1933 Act and the rules
and regulations of the Commission thereunder (the "1933 Act
Regulations"), the Trust Indenture Act of 1939, as amended (the "1939
Act"), and the rules and regulations of the Commission under the 1939
Act (the "1939 Act Regulations") and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; on the date hereof, at the Closing Time (as defined below)
and at each Delivery Date (as defined below), if any, the Registration
Statement, and any amendments thereof, and the Prospectus, and any
amendments thereof and supplements thereto, comply and will comply in
all material respects with the requirements of the 1933 Act, the 1933
Act Regulations, the 1939 Act and the 1939 Act Regulations and neither
the Registration Statement nor any amendments thereof include or will
include an untrue statement of a material fact or omit or will omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and neither the Prospectus,
nor any amendments thereof and supplements thereto, include or will
include an untrue statement of a material fact or omit or will omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company
makes no representations or warranties as to statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter, directly or
through you, expressly for use in the Registration Statement or the
Prospectus. At the Closing Time and at each Delivery Date, if any, the
Designated Indenture (as defined below) will comply in all material
respects with the requirements of the 1939 Act and the 1939 Act
Regulations.
(ii) The documents incorporated by reference in the
Prospectus, at the time they were filed with the Commission, complied
in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations")
and, when read together with the other information in the Prospectus,
do not and will not, on the date hereof, at the Closing Time and at
each Delivery Date, if any, include an untrue statement of a material
fact or omit to state a material
<PAGE>
4
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(iii) Deloitte & Touche LLP, who has reported upon the audited
financial statements and schedules included or incorporated by
reference in the Registration Statement, is an independent public
accountant as required by the 1933 Act and the 1933 Act Regulations
with respect to the Company and each corporation whose financial
statements have been included in the Registration Statement for each of
the years reported on by such accountant.
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
(v) The consolidated financial statements included or
incorporated by reference in the Registration Statement present fairly
the consolidated financial position and stockholders' equity and the
consolidated results of operations and consolidated statements of cash
flows of the entities purported to be shown thereby at the indicated
dates and for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved. The financial statement schedules, if any, included or
incorporated by reference in the Registration Statement present fairly
the information required to be stated therein. The selected financial
data included or incorporated by reference in the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial statements
incorporated by reference in the Registration Statement. The pro forma
financial statements and other pro forma financial information included
or incorporated by reference in the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases
described therein, and, in the opinion of the Company, the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(vi) The Company is duly organized and is validly existing in
good standing as a corporation under the laws of the State of Delaware
with corporate power and corporate authority under such laws to own,
lease and operate its properties and conduct its business as described
in the Prospectus. The Company is duly qualified to transact business
as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification
necessary, except to the extent that the
<PAGE>
5
failure to so qualify or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise.
(vii) The Company's only subsidiaries are listed in Schedule
III hereto (each a "Company Subsidiary" and collectively hereinafter
referred to as the "Company Subsidiaries"). Each Subsidiary is duly
organized and is validly existing and in good standing under the laws
of the jurisdiction of its incorporation with corporate power and
corporate authority under such laws to own, lease and operate its
properties and conduct its business. Each Subsidiary is duly qualified
to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect
on the Company and its Subsidiaries, considered as one enterprise.
Except with respect to the ownership of 12.5% of the common stock of
C21 Holding Corp. ("Century 21") by certain managers, all of the
outstanding shares of capital stock of each Company Subsidiary have
been duly authorized and validly issued and are fully paid and
nonassessable and are owned by the Company, directly or through one or
more Company Subsidiaries, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind (each, a
"Lien") except for such Liens as are not, individually or in the
aggregate, material to the Company and its Subsidiaries considered as
one enterprise.
(viii) The Designated Indenture, each supplement thereto, if
any, to the date hereof and the supplement thereto or resolutions
adopted by the Board of Directors of the Company (the "Board") or by a
special committee designated by the Board setting forth the terms of
the Offered Securities (the Indenture, as so supplemented by such
supplement or supplements or resolutions adopted by the Board or by a
special committee designated by the Board, being herein referred to as
the "Designated Indenture"), have been duly authorized by the Company.
The Designated Indenture as executed is or will be substantially in the
form filed as an exhibit to the Registration Statement. The Designated
Indenture, when duly executed and delivered (to the extent required by
the Indenture) by the Company and the Trustee, will constitute a valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law).
<PAGE>
6
(ix) The sale and issuance of the Offered Securities have been
duly authorized by requisite corporate action on the part of the
Company. When executed, authenticated, issued and delivered in the
manner provided for in the Designated Indenture and sold and paid for
as provided herein and in any Delayed Delivery Contracts, the Debt
Securities will constitute valid and binding obligations of the Company
entitled to the benefits of the Designated Indenture and enforceable
against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law); the Offered Securities conform to the description
thereof in the Prospectus and such description conforms to the rights
set forth in the instruments defining the same.
[(x) The Debt Securities will be convertible into Shares in
accordance with their terms as set forth in the Prospectus. The Shares
issuable upon conversion of such Debt Securities have been duly
authorized and, when issued in accordance with the terms of the
Designated Indenture, such Shares will be validly issued, fully paid
and non-assessable. All corporate action required to be taken for the
authorization, issuance and delivery of such Shares has been validly
taken. The issuance of the Debt Securities is not, and the issuance of
such Shares upon conversion thereof will not be, subject to any
preemptive rights of any stockholder of the Company.]
(xi) In the event that any of the Offered Securities are
purchased pursuant to Delayed Delivery Contracts, each of such Delayed
Delivery Contracts has been duly authorized by the Company and, when
executed and delivered on behalf of the Company and duly authorized,
executed and delivered on behalf of the purchaser thereunder, will
constitute a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law).
[(xii) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; no holder thereof is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding
shares of capital stock of the Company was issued in violation of the
preemptive rights of any stockholder of the Company.]
<PAGE>
7
(xiii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein or contemplated thereby, there has not been
(A) any material adverse change in the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise, whether or not arising in
the ordinary course of business, (B) any transaction entered into by
the Company or any Subsidiary, other than in the ordinary course of
business, that is material to the Company and its Subsidiaries,
considered as one enterprise, or (C) any dividend or distribution of
any kind declared, paid or made by the Company on its capital stock.
(xiv) Neither the Company nor any Subsidiary is in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which it is
a party or by which it may be bound or to which any of its properties
may be subject, except for such defaults that would not have a material
adverse effect on the condition (financial or otherwise), earnings or
business affairs of the Company and its Subsidiaries, considered as one
enterprise. The execution and delivery by the Company of this
Agreement, the Designated Indenture and any Delayed Delivery Contracts,
the issuance and delivery of the Offered Securities, the consummation
by the Company of the transactions concerning the Offered Securities
contemplated herein and in the Registration Statement and compliance by
the Company with the terms of this Agreement, the Designated Indenture
and any Delayed Delivery Contracts, have, in each case, been duly
authorized by all necessary corporate action on the part of the Company
and do not and will not result in any violation of the certificate of
incorporation or by-laws of the Company, and do not and will not
conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary under (A) any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Company or any Subsidiary is a party or by
which it may be bound or to which any of its properties may be subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise) or (B) any
existing applicable law, rule, regulation (other than state securities,
foreign securities or Blue Sky laws, rules and regulations), judgment,
order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective properties (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise).
<PAGE>
8
(xv) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act, the 1934 Act, the 1939 Act and the
securities or Blue Sky laws of the various states and foreign
securities laws), is required for the valid authorization, issuance,
sale and delivery of the Debt Securities, [the reservation and issuance
of the Common Stock] or for the execution, delivery or performance of
the Designated Indenture by the Company and for the compliance with the
other transactions contemplated in this Agreement.
(xvi) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against or affecting the Company
or any Subsidiary that is required to be disclosed in the Prospectus or
that could reasonably be expected to result in any material adverse
change in the condition (financial or otherwise), earnings or business
affairs of the Company and its Subsidiaries, considered as one
enterprise, or that could reasonably be expected to materially and
adversely affect the properties or assets of the Company and its
Subsidiaries, considered as one enterprise, or that could reasonably be
expected to adversely affect the consummation of the transactions
contemplated in this Agreement. The aggregate of all pending legal or
governmental proceedings to which the Company or its Subsidiaries is a
party or to which any of its or their respective properties is subject
that are not described in the Prospectus, including ordinary routine
litigation incidental to its or their business, could not reasonably be
expected to have a material adverse effect on the condition (financial
or otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise.
(xvii) There are no statutes, regulations, contracts or other
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described and filed as required.
(xviii) The Company and each Subsidiary have good and
marketable title to all properties and assets, including, without
limitation, intangible property rights described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances,
restrictions (other than as described in paragraph 1(a)(xx) hereof) or
defects, except such as (A) are described (1) in the Competitive
Advance and Revolving Credit Agreement dated as of December 16, 1993,
as amended, among the Company and Chemical Bank, as agent and lender,
and the other lenders named therein, (2) in the Indenture dated as of
December 16, 1993, as amended, between the Company and Bank of America
Illinois, as successor to Continental Bank, National Association, as
trustee, (3) in the Indenture dated as of October 1, 1994, between the
Company and Bank of America, Illinois, as trustee, (4) in the Indenture
and the
<PAGE>
9
Supplemental Indenture No. 1 dated as of February 28, 1996, between the
Company and First Trust of Illinois, National Association, as trustee,
(5) in the Credit Agreement dated October 5, 1994, as amended, among
Coldwell Banker and Citicorp North America, Inc., as agent and lender,
and the other lenders named therein, and (6) in the Amended and
Restated Pooling and Servicing Agreement dated as of October 5, 1994,
as amended, among Coldwell Banker Funding Corporation, Coldwell Banker
Relocation Services, Inc., Citicorp North America, Inc. and Bankers
Trust Company, the Amended and Restated Purchase Agreement dated as of
October 5, 1994, as amended, between Coldwell Banker Relocation
Services, Inc. and Coldwell Banker Funding Corporation and the Amended
and Restated Investor Funding Agreement dated as of October 5, 1994, as
amended, among Coldwell Banker Funding Corporation, Bankers Trust
Company, Citicorp North America, Inc., as agent, Bank of America
Illinois, as co-agent, and the investors named therein, (B) are leases
of real property in which the Company or its Subsidiaries have good
title and that would be marketable but for the requirement that the
landlord consent to an assignment of the lease or (C) are neither
material in amount nor materially significant in relation to the
business of the Company and its Subsidiaries, considered as one
enterprise; all of the leases and subleases material to the business of
the Company and the Subsidiaries, considered as one enterprise, and
under which the Company or any Subsidiary holds properties described in
the Prospectus, are in full force and effect, and neither the Company
nor any Subsidiary has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company
or any Subsidiary under any of the leases or subleases mentioned above,
or affecting or questioning the rights of such corporation to the
continued possession or use of the leased or subleased properties under
any such lease or sublease.
(xix) (a) The Company and each Subsidiary own, possess or have
obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own
or lease, as the case may be, and to operate its or their properties
and to carry on its or their business as presently conducted; (b)
neither the Company nor any of its Subsidiaries has received any notice
of proceedings relating to revocation or modification of any such
licenses, permits, certificates, consents, orders, approvals or
authorizations which could result in a material adverse change of the
condition (financial or otherwise), earnings or financial affairs of
the Company and its Subsidiaries, considered as one enterprise; and (c)
the Company and each Subsidiary are in all respects complying with each
license, permit, certificate, consent, order, approval and other
authorization, except where the failure to do so would not have a
material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise.
<PAGE>
10
(xx) Subject to each of the franchise and license agreements
entered into by the Company or any of its Subsidiaries, the Company and
each of the Subsidiaries own or have the unrestricted right to use such
patents, patent licenses, trademarks, trademark licenses, service
marks, service mark licenses and trade names and registrations thereof
as are necessary to carry on their respective businesses as described
in the Prospectus and as currently conducted, except where the failure
to own or possess any of the Marks or the Ramada Marks would not have a
material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise. Neither of the Company nor any of its
Subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the Marks or the
Ramada Marks, or any applications therefor or registrations thereof,
that in the aggregate would materially and adversely affect the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise. In addition
to, and not in limitation of, anything else contained in this paragraph
(xx), the Company or a Subsidiary (y) is the exclusive owner of all
rights, title and interest (subject to all existing franchise and
license agreements referred to above) in and to the Marks within the
United States and outside the United States is the owner of the
registrations and applications as are necessary to carry on its
business as described in the Prospectus and as currently conducted,
except where the failure to be such owner would not have a material
adverse effect on the condition (financial or otherwise), earnings or
business affairs of the Company and its Subsidiaries, considered as one
enterprise and (z) is the exclusive licensee in the United States of
the Ramada Marks. Such intellectual property with respect to the
Company's Century 21, Coldwell Banker and ERA, Days Inns of America,
Inc. ("Days Inn"), Super 8 Motels, Inc. ("Super 8"), the Villager Lodge
Franchise Systems, Inc. ("Villager Lodge"), the Knights Franchise
Systems, Inc. ("Knights Inn"), Howard Johnson and Travelodge Hotels,
Inc. ("Travelodge") businesses (each as described in the Prospectus and
as currently conducted) is referred to herein as the "Marks" and
such intellectual property with respect to the Company's Ramada
business (as described in the Prospectus and as currently conducted) is
hereinafter referred to as the "Ramada Marks."
(xxi) To the best knowledge of the Company, no labor problem
exists with its employees, with employees of any Subsidiary or, to the
best knowledge of the Company without having made any inquiry or
independent investigation, with the employees of any party which
licenses a franchise, directly or indirectly, from a Subsidiary (a
"Franchisee") or is imminent that could reasonably be expected to
materially adversely affect the Company and its Subsidiaries,
considered as one enterprise.
<PAGE>
11
(xxii) To the best knowledge of the Company, no dispute exists
or is imminent with any Franchisee or with the Franchisees that could
reasonably be expected to materially adversely affect the Company and
the Subsidiaries, considered as one enterprise.
(xxiii) Neither the Company nor any of its Subsidiaries has
taken or will take, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Offered Securities.
(xxiv) The Company and each Subsidiary are in material
compliance with all applicable existing federal, state and local laws
and regulations relating to protection of human health or the
environment and have no liability or, to the best knowledge of the
Company, alleged liability under any such law which is required to be
disclosed in the Registration Statement that is not so disclosed.
(xxv) All United States federal income tax returns of the
Company and each Subsidiary required by law to be filed have been filed
and all taxes shown on such returns or otherwise assessed which are due
and payable have been paid, except tax assessments being contested in
good faith and as to which adequate reserves have been provided. All
other tax returns of the Company and each Subsidiary required to be
filed pursuant to applicable foreign, state, local or other law have
been filed, except insofar as the failure to file such returns would
not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries considered as one enterprise, and all taxes shown on such
returns or otherwise assessed which are due and payable have been paid,
except for such taxes, if any, as are being contested in good faith and
as to which adequate reserves have been provided. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in
respect of any income and corporate franchise tax liability for any
years not finally determined are believed to be adequate to meet any
assessments or reassessments for additional income or corporate
franchise tax for any years not finally determined, except to the
extent of any inadequacy that would not have a material adverse effect
on the condition (financial or otherwise), earnings or business affairs
of the Company and its Subsidiaries considered as one enterprise.
(xxvi) Each Franchisee is such by virtue of being a party to a
franchise contract with either the Company or a Subsidiary and assuming
each such contract has been duly authorized, executed and delivered by
the parties thereto, other than the Company or a Subsidiary, each such
contract constitutes a valid, legal and binding obligation of each
party thereto, enforceable against the Company or a Subsidiary in
accordance with its terms, except (A) for any one or more of such
franchise contracts as would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one
<PAGE>
12
enterprise, and (B) to the extent that enforcement thereof may be
limited by (1) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (2) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law).
(xxvii) The Company and each Subsidiary have complied and are
currently complying in all material respects with the rules and
regulations of the United States Federal Trade Commission and the
comparable laws, rules and regulations of each state or state agency
applicable to the franchising business of the Company and such
Subsidiary in each state in which the Company or such Subsidiary is
doing business. The Company and each Subsidiary have complied and are
currently complying in all material respects with the Federal Real
Estate Settlement Procedures Act and the real estate brokerage laws,
rules and regulations of each state or state agency applicable to the
real estate franchising business of the Company and such Subsidiary in
each state in which the Company or such Subsidiary is doing business.
(xxviii) The Company is not an "investment company" or an
entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
(b) Any certificate signed by any officer of the Company or
any Subsidiary and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company or by a Subsidiary, as
applicable, to each Underwriter as to the matters covered thereby.
Section 2. Purchase and Sale. (a) On the basis of the
representations and warranties herein contained (except as may be otherwise
specified in Schedule II) and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at the purchase
price to the Underwriters set forth in Schedule II, the principal amount of
Initial Debt Securities set forth opposite the name of such Underwriter in
Schedule I.
(b) In addition, on the basis of the representations and
warranties herein contained, and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to the additional principal amount of Option Debt
Securities as set forth in Schedule II at the same purchase price as shall be
applicable to the Initial Debt Securities. The option hereby granted will expire
30 days after the date hereof, and may be exercised, in whole or from time to
time in part (but not more than twice), only for the purpose of covering
over-allotments that may be made in connection with the offering and
distribution of the Initial Debt Securities upon notice by you to the Company
setting forth the principal amount of
<PAGE>
13
Option Debt Securities as to which the several Underwriters are exercising this
option, and the time and date of payment and delivery thereof. Such time and
date of delivery (each, a "Delivery Date") shall be determined by you but shall
not be later than seven full business days after the exercise of such option,
nor in any event prior to the Closing Time. If the option is exercised as to all
or any portion of the Option Debt Securities, each of the Underwriters, acting
severally and not jointly, will purchase from the Company that portion of the
aggregate number of Option Debt Securities being purchased which the number of
Initial Debt Securities set forth opposite the name of such Underwriter bears to
the total number of Initial Debt Securities (such proportion is hereinafter
referred to as such Underwriter's "underwriting obligation proportion").
(c) Payment of the purchase price for, and delivery of, the
Initial Debt Securities shall be made at the date, time and location specified
in Schedule II, or at such other date, time or location as shall be agreed upon
by the Company and you, or as shall otherwise be provided in Section 11 (such
date and time of payment and delivery being herein called the "Closing Time").
Unless otherwise specified in Schedule II, payment shall be made to the Company
by you by wire or bank transfer of same day funds payable to the account of the
Company, against delivery to you for the respective accounts of the several
Underwriters of the Initial Debt Securities. Such Initial Debt Securities shall
be in such authorized denominations and registered in such names as you may
request in writing at least two full business days before the Closing Time. Such
Initial Debt Securities, which may be in temporary form, will be made available
in New York City for examination and packaging by you not later than 10:00 A.M.
on the business day prior to the Closing Time. In addition, in the event that
any or all of the Option Debt Securities are purchased by the Underwriters,
payment of the purchase price for, and delivery of, such Option Debt Securities
shall be made at the same location as set forth above, or at such other place as
the Company and you shall determine, on each Delivery Date as specified in the
notice from you to the Company. Payment for the Option Debt Securities shall be
made by wire or bank transfer of same day funds.
(d) If specified in Schedule II, the Underwriters may solicit
offers to purchase Offered Securities from the Company pursuant to Delayed
Delivery Contracts substantially in the form of Schedule IV with such changes
therein as the Company may approve. Any Delayed Delivery Contracts are to be
with institutional investors of the types set forth in the Prospectus. If
Delayed Delivery Contracts are specified in Schedule II, at the Closing Time,
the Company will enter into Delayed Delivery Contracts (for the minimum
principal amount of Offered Securities per Delayed Delivery Contract specified
in Schedule II) with all purchasers proposed by the Underwriters and previously
approved by the Company as provided below, but not for an aggregate principal
amount of Offered Securities less than or greater than the minimum and maximum
aggregate principal amounts specified in Schedule II. The Underwriters will not
have any responsibility for the validity or performance of Delayed Delivery
Contracts.
<PAGE>
14
(e) You are to submit to the Company, at least three business
days prior to the Closing Time, the names of any institutional investors with
which it is proposed that the Company enter into Delayed Delivery Contracts, the
principal amount of Offered Securities to be purchased by each of them and the
date of delivery thereof, and the Company will advise you, at least two business
days prior to the Closing Time, of the names of the institutions with which the
making of Delayed Delivery Contracts is approved by the Company and the
principal amount of Convertible Debt Securities to be covered by each such
Delayed Delivery Contract.
(f) As compensation for arranging Delayed Delivery Contracts,
the Company will pay (by wire or bank transfer of same day funds) to you at the
Closing Time, for the accounts of the Underwriters, a fee equal to that
percentage of the principal amount of Offered Securities for which Delayed
Delivery Contracts are made at the Closing Time as is specified in Schedule II
or the amount of such fee may be deducted from the payment delivered pursuant to
Section 2(b).
(g) The principal amount of Debt Securities agreed to be
purchased by each Underwriter shall be reduced by the principal amount of Debt
Securities covered by Delayed Delivery Contracts as to such Underwriter, as set
forth in a notice delivered by you to the Company; provided, however, that the
total principal amount of Debt Securities to be purchased by all Underwriters
shall be the principal amount of Debt Securities covered by this Agreement, less
the principal amount of Debt Securities covered by all Delayed Delivery
Contracts.
(h) It is understood that each Underwriter has authorized you,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Debt Securities that it has agreed to purchase. You,
individually and not as Representatives, may (but shall not be obligated to)
make payment of the purchase price for the Debt Securities to be purchased by
any Underwriter whose payments shall not have been received by the Closing Time
or each Delivery Date, if any, as the case may be.
Section 3. Certain Covenants of the Company. The Company
covenants with each Underwriter as follows:
(a) If reasonably requested by you in connection with the
offering of the Offered Securities, the Company will prepare a
preliminary prospectus supplement containing such information as you
and the Company deem appropriate and, immediately following the
execution of this Agreement, the Company will prepare a Prospectus
Supplement that complies with the 1933 Act and the 1933 Act Regulations
and that sets forth the principal amount of the Offered Securities and
their terms not otherwise specified in the Indenture, the name of each
Underwriter participating in the offering and the principal amount of
the Offered Securities that each severally has
<PAGE>
15
agreed to purchase, the name of each Underwriter, if any, acting as
representative of the Underwriters in connection with the offering, the
price at which the Offered Securities are to be purchased by the
Underwriters from the Company, any initial public offering price, any
selling concession and reallowance any delayed delivery arrangements
and such other information as you and the Company deem appropriate in
connection with the offering of the Offered Securities. The Company
will promptly transmit copies of the Prospectus Supplement to the
Commission for filing pursuant to Rule 424 under the 1933 Act and will
furnish to the Underwriters as many copies of any preliminary
prospectus supplement and the Prospectus as you shall reasonably
request.
(b) If at any time when the Prospectus is required by the 1933
Act to be delivered in connection with sales of the Offered Securities
any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or counsel
for the Company, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of either such
counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements
of the 1933 Act or the 1933 Act Regulations, the Company will promptly
prepare and file with the Commission, subject to Section 3(f), such
amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements.
(c) During the period when the Prospectus is required by the
1933 Act to be delivered in connection with sales of the Offered
Securities, the Company will, subject to Section 3(f), file promptly
all documents required to be filed with the Commission pursuant to
Section 13, Section 14 or Section 15(d) of the 1934 Act.
(d) During the period when the Prospectus is required by the
1933 Act to be delivered in connection with sales of the Offered
Securities, the Company will inform you of its intention to file any
amendment to the Registration Statement, any supplement to the
Prospectus or any document that would as a result thereof be
incorporated by reference in the Prospectus; and the Company will
furnish you with copies of any such amendment, supplement or other
document at a reasonable time in advance of filing, except any current
report on Form 8-K filed with the Commission with respect to a press
release issued by the Company that is not reasonably expected to have a
material effect on the Company or the price of the Common Stock;
provided, however, that the Company shall inform you of its intention
to file documents pursuant to Section 14(d) of the 1934 Act and shall
furnish you with
<PAGE>
16
copies of such documents immediately upon the filing thereof; and
provided further that you or your counsel shall not be entitled to
object thereto other than pursuant to Section 3(b).
(e) During the period when the Prospectus is required by the
1933 Act to be delivered in connection with sales of the Offered
Securities, the Company will notify you immediately, and confirm the
notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of any supplement to the Prospectus or any
document that would as a result thereof be incorporated by reference in
the Prospectus, (iii) of the receipt of any comments from the
Commission with respect to the Registration Statement, the Prospectus
or the Prospectus Supplement, (iv) of any request by the Commission for
any amendment to the Registration Statement or any supplement to the
Prospectus or for additional information relating thereto or to any
document incorporated by reference in the Prospectus and (v) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of the
qualification of the Offered Securities for offering or sale in any
jurisdiction, or of the institution or threatening of any proceeding
for any of such purposes. The Company will use every reasonable effort
to prevent the issuance of any such stop order or of any order
suspending such qualification and, if any such order is issued, to
obtain the lifting thereof at the earliest possible moment.
(f) The Company has furnished or will furnish to you one
signed copy of the Registration Statement (as originally filed), of any
Rule 462(b) Registration Statement, and of all amendments thereto,
whether filed before or after the Registration Statement became
effective, copies of all exhibits and documents filed therewith or
incorporated by reference therein (through the end of the period when
the Prospectus is required by the 1933 Act to be delivered in
connection with sales of the Offered Securities) and signed copies of
all consents and certificates of experts, as you may reasonably
request, and has furnished or will furnish to you, for each of the
Underwriters, ten conformed copies of the Registration Statement (as
originally filed), of any Rule 462(b) Registration Statement and of
each amendment thereto (including documents incorporated by reference
into the Prospectus but without exhibits).
(g) The Company will use its best efforts, in cooperation with
the Underwriters, to qualify the Offered Securities for offering and
sale under the applicable securities laws of such states and other
jurisdictions as you may designate and to maintain such qualifications
in effect for a period of not less than one year from the date hereof;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not
<PAGE>
17
otherwise so subject. The Company will file such statements and reports
as may be required by the laws of each jurisdiction in which the
Offered Securities have been qualified as above provided. The Company
will also supply you with such information as is necessary for the
determination of the legality of the Offered Securities for investment
under the laws of such jurisdictions as you may request.
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 45 days after the
close of the period covered thereby, an earnings statement of the
Company (in form complying with the provisions of Rule 158 of the 1933
Act Regulations), covering (i) a period of 12 months beginning after
the effective date of the Registration Statement (or, if applicable,
any Rule 462(b) Registration Statement) and covering a period of 12
months beginning after the effective date of any post-effective
amendment to the Registration Statement but not later than the first
day of the Company's fiscal quarter next following such respective
effective dates and (ii) a period of 12 months beginning after the date
of this Agreement but not later than the first day of the Company's
fiscal quarter next following the date of this Agreement.
(i) If and to the extent specified in Schedule II hereto, the
Company will use its best efforts to cause the Offered Securities to be
duly authorized for listing on the New York Stock Exchange and to be
registered under the 1934 Act.
(j) For a period of two years after the Closing Time, the
Company will furnish to you and, upon request, to each Underwriter,
copies of all annual reports, quarterly reports and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other
similar forms as may be designated by the Commission, and such other
documents, reports and information as shall be furnished by the Company
to its stockholders or security holders generally.
(k) Between the date hereof and the Closing Time or such other
date as may be specified in Schedule II, the Company will not, without
your prior consent, offer or sell, or enter into any agreement to sell,
any debt securities issued or guaranteed by the Company with a maturity
of more than one year in any public offering (other than the Offered
Securities). This limitation is not applicable to the public offering
of tax exempt securities guaranteed by the Company or to such other
public offering of long-term debt as may be specified in Schedule II.
(l) The Company has agreed not to sell or otherwise dispose
of, any shares of Common Stock or any securities convertible into, or
exercisable or exchangeable for, Common Stock [other than shares
issuable upon conversion of the Debt Securities] without the prior
written consent of [___________] on behalf of the Underwriters for a
period of 90 days after the date of the Prospectus Supplement
<PAGE>
18
(except for Common Stock issued upon conversion of the 4 3/4%
Convertible Senior Notes due 2003 or the Company's 4 1/2% Convertible
Senior Notes due 1999 or issued pursuant to the Company's stock option
or employee benefit plans or issued by the Company in connection with
strategic acquisitions or issued or sold pursuant to employee benefit
plans of the Company existing at the Closing Time or sold in connection
with an employee's decision to direct that 401(k) contributions be
invested in Common Stock, provided that any such shares in excess of 5%
of the then outstanding shares of Common Stock shall remain subject to
the foregoing restriction) or exercise any right to have securities of
the Company registered by the Company under the 1933 Act.
(m) The Company has complied and will comply with all the
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida statutes, and all regulations promulgated thereunder relating
to issuers doing business in Cuba.
Section 4. Payment of Expenses. The Company will pay and bear
all costs and expenses incident to the performance of its obligations under this
Agreement, including, without limitation, (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, any preliminary prospectus
supplements and the Prospectus and any amendments or supplements thereto, and
the cost of furnishing copies thereof to the Underwriters, (b) the preparation,
printing and distribution of this Agreement, the Designated Indenture, the
Offered Securities, any Delayed Delivery Contracts, the Blue Sky Survey, (c) the
delivery of the Debt Securities to the Underwriters, (d) the fees and
disbursements of the Company's counsel and accountants and the fees and
disbursements of the Company's counsel (including, without limitation, local
counsel upon whom such counsel may rely in rendering their opinion required by
Section 5 and 6 hereof), (e) the qualification of the Offered Securities under
the applicable securities laws, (f) any fees charged by rating agencies for
rating the Debt Securities, (g) the reasonable fees and disbursements of counsel
in connection with the Blue Sky Survey, (h) any applicable fees for listing the
Offered Securities on an exchange and (i) the fees and expenses of the Trustee,
including the fees and disbursements of counsel for the Trustee, in connection
with the Designated Indenture and the Offered Securities.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or Section 10(a)(i), the Company shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters, incurred by
them in connection with the public offering of the Offered Securities.
Section 5. Conditions of the Underwriters' Obligations. Except
as otherwise provided in Schedule II hereto, the obligations of the several
Underwriters to purchase and pay for the Debt Securities that they have
respectively agreed to purchase
<PAGE>
19
hereunder, including any Option Debt Securities as to which the option granted
in Section 2 has been exercised and the Delivery Date determined by you is the
same as the Closing Time, are subject to (i) the accuracy of the representations
and warranties of the Company contained herein or in certificates of the
Company's officers delivered pursuant to the provisions hereof, (ii) the
performance by the Company of its obligations hereunder, (iii) the delivery to
the Underwriters at the Closing Time by the Company of all of the Initial Debt
Securities, and (iv) the following further conditions:
(a) The Registration Statement shall have become effective
prior to the date hereof or, with your consent, at a later time and
date no later, however, than the first business day following the date
hereof, or at such later date as you may agree to in writing with the
approval of a majority in interest of the several underwriters; and at
the Closing Time, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act and no
proceedings for that purpose shall have been instituted or shall be
pending or, to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel for the Underwriters.
(b) At the Closing Time, you shall have received a signed
opinion of Skadden, Arps, Slate, Meagher & Flom, in New York, in its
capacity as special counsel for the Company, dated as of the Closing
Time, together with signed or reproduced copies of such opinion for
each of the other Underwriters, in form and substance reasonably
satisfactory to Counsel for the Underwriters to the effect as attached
hereto as Exhibit 1.
(c) At the Closing Time, you shall have received signed
opinions of James Buckman, Esq., General Counsel for the Company, and
Siegal, Barnett & Schutz, special South Dakota counsel for the Company,
dated as of the Closing Time, together with signed or reproduced copies
of such opinions for each of the other Underwriters, in form and
substance reasonably satisfactory to counsel for the Underwriters to
the effect, with respect to the opinion of James Buckman, Esq., as
attached hereto as Exhibit 2.
(d) At the Closing Time, you shall have received a signed
opinion of Schaefer, Rosenwein & Fleming, special trademark counsel for
the Company with respect to the Coldwell Banker franchise system, dated
as of the Closing Time, together with signed or reproduced copies of
such opinion for each of the other Underwriters, in form and substance
reasonably satisfactory to counsel for the Underwriters.
<PAGE>
20
The opinions referred to above in clauses (b), (c)
and (d) shall be to such further effect with respect to other legal
matters relating to this Agreement and the sale of the Offered
Securities pursuant to this Agreement as counsel for the Underwriters
may reasonably request. Such counsel may also state that, insofar as
such opinion involves factual matters, they have relied, to the extent
they deem proper, upon certificates of officers of the Company, as the
case may be, and certificates of public officials; provided that such
certificates have been delivered to the Underwriters.
In giving the opinions referred to above in clauses
(b), (c) and (d), such counsel may rely, as to all matters governed by
the laws of jurisdictions other than those in which they are expert,
upon opinions of other counsel who shall be counsel reasonably
satisfactory to counsel for the Underwriters, in which case the opinion
shall state that they believe you and they are justified and entitled
to so rely.
(d) At the Closing Time, you shall have received the favorable
opinion of [________], counsel for the Underwriters, dated as of the
Closing Time, together with signed or reproduced copies of such opinion
for each of the other Underwriters.
(e) At the Closing Time, (i) the Registration Statement and
the Prospectus, as they may then be amended or supplemented, shall
contain all statements that are required to be stated therein under the
1933 Act and the 1933 Act Regulations and in all material respects
shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations and the 1939 Act and the 1939 Act Regulations, the Company
shall have complied in all material respects with Rule 430A (if it
shall have elected to rely thereon) and (A) the Registration Statement,
as it may then be amended or supplemented, shall not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and (B) the Prospectus, as it may be amended or
supplemented, will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, (ii) there shall not have been, since the
respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (iii) no action, suit
or proceeding shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary that would be required
to be set forth in the Prospectus other than as set forth therein and
no proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary before or by any
federal, state or other commission,
<PAGE>
21
board or administrative agency wherein an unfavorable decision, ruling
or finding would materially adversely affect the condition (financial
or otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise, other than
as set forth in the Prospectus, (iv) the Company shall have complied in
all material respects with all agreements and satisfied in all material
respects all conditions included herein on its part to be performed and
satisfied at or prior to the Closing Time and (v) the other
representations and warranties of the Company set forth in Section 1(a)
shall be accurate as though expressly made at and as of the Closing
Time. At the Closing Time, you shall have received a certificate of the
Chairman of the Board or the President and the Chief Financial Officer
of the Company, dated as of the Closing Time, to such effect, it being
understood that such certificate shall not constitute personal
representations and warranties of the signing individual.
(g) You shall have received a letter or letters at the date
hereof substantially in the form attached hereto as Schedule V hereto,
and a letter or letters to be delivered at the Closing Time reaffirming
the statements made in each such letter or letters, except that the
inquiries and procedures specified therein shall have been carried out
to a specified date not more than five days prior to the Closing Time.
(h) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Time, there shall not have been any
downgrading, nor any notice given of intended or potential downgrading
or of a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities, including the Offered Securities, by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the 1933 Act.
(i) The Company shall have complied with the provisions of
Section 3(a) hereof with respect to the furnishing of Prospectuses and
Supplemental Prospectuses on the business day next succeeding the date
of this Agreement, in such quantities as you reasonably request.
(j) At the Closing Time, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions
as they may reasonably request for the purpose of enabling them to pass
upon the issuance and sale of the Offered Securities as herein
contemplated and the matters referred to in Section 5(c) and in order
to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment
of any of the conditions herein contained; and all proceedings taken by
the Company at or prior to the Closing Time in connection with
<PAGE>
22
the authorization, issuance and sale of the Offered Securities as
herein contemplated shall be reasonably satisfactory in form and
substance to you and to counsel for the Underwriters.
(k) The Debt Securities shall have been duly authorized for
listing by the New York Stock Exchange subject to official notice of
issuance thereof and notice of a satisfactory distribution of the Debt
Securities.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section 4 herein.
Notwithstanding any such termination, the provisions of Sections 7, 8 and 9
shall remain in effect.
Section 6. Conditions to Purchase of Option Debt Securities.
In the event that the Underwriters exercise their option granted in Section 2 to
purchase all or any of the Option Debt Securities, and each Delivery Date
determined by you pursuant to Section 2 is later than the Closing Time, the
obligations of the several Underwriters to purchase and pay for the Option Debt
Securities that they shall have respectively agreed to purchase pursuant to this
Agreement (collectively, the "purchased Option Debt Securities") are subject to
the accuracy of the representations and warranties of the Company herein
contained, to the performance by the Company of its obligations hereunder, the
delivery to the Underwriters at the Delivery Date by the Company of such Option
Debt Securities and to the following further conditions:
(a) The Registration Statement shall remain effective at each
Delivery Date, and, at each Delivery Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending, or, to your knowledge or the knowledge
of the Company, shall be threatened by the Commission, and any request
on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel for the
Underwriters.
(b) At each Delivery Date, the provisions of Sections 5(e)(i)
through 5(e)(v) shall have been complied with at and as of each
Delivery Date and, at each Delivery Date, you shall have received a
certificate of the Chairman of the Board or the President and the Chief
Financial Officer of the Company, dated as of each Delivery Date, to
such effect, it being understood that such certificate shall not
constitute personal representations and warranties of the signing
individual.
<PAGE>
23
(c) At each Delivery Date, you shall have received the
favorable opinion of Skadden, Arps, Slate, Meagher & Flom, in its role
as special counsel for the Company, James Buckman, Esq., General
Counsel for the Company, together with signed or reproduced copies of
such opinions for each of the other Underwriters, respectively, dated
as of each Delivery Date, relating to the purchased Option Debt
Securities and otherwise to the same effect required by Sections 5(b)
and 5(c), as the case may be, and each such counsel shall have been
furnished with all such documents, certificates and opinions as such
counsel may reasonably request for the purpose of enabling such counsel
to deliver such opinion or opinions.
The opinions referred to above shall be to such
further effect with respect to other legal matters relating to this
Agreement and the sale of the Offered Securities pursuant to this
Agreement as counsel for the Underwriters may reasonably request. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company, and certificates of public
officials; provided that such certificates have been delivered to the
Underwriters.
In giving the opinions referred to above, each such
counsel may rely, as to all matters governed by the laws of
jurisdictions other than those in which they are expert, upon opinions
of other counsel who shall be counsel reasonably satisfactory to
counsel for the Underwriters, in which case the opinion shall state
that they believe you and they are justified and entitled to so rely.
(d) At each Delivery Date, you shall have received the
favorable opinion of [ ], counsel for the Underwriters, dated as of
each Delivery Date, relating to the purchased Option Debt Securities
and otherwise to the same effect as the opinion required by Section
5(d).
(e) At each Delivery Date, you shall have received a separate
letter from Deloitte & Touche, in form and substance satisfactory to
you and dated as of each Delivery Date, to the effect that they
reaffirm the statements made in their respective letter furnished
pursuant to Section 5(f), except that the specified date referred to
shall be a date not more than five days prior to each Delivery Date.
(f) At each Delivery Date, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions
as they may reasonably request for the purpose of enabling them to pass
upon the issuance and sale of the purchased Option Debt Securities as
contemplated in the Underwriting Agreement and the matters referred to
in Section 6(d) and in order to evidence the accuracy and completeness
of any of the representations, warranties or statements of the Company,
the performance of any of the covenants of the Company, or the
fulfillment of any of
<PAGE>
24
the conditions herein contained; and all proceedings taken by the
Company at or prior to each Delivery Date in connection with the
authorization, issuance and sale of the purchased Option Debt
Securities as contemplated in the Underwriting Agreement shall be
reasonably satisfactory in form and substance to you and to counsel for
the Underwriters.
Section 7. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter, as the case may be, within the meaning of Section 15
of the 1933 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of an untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus supplement or the Prospectus (or
any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred,
including fees and disbursements of counsel chosen by you, reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus
<PAGE>
25
supplement or the Prospectus (or any amendment or supplement thereto); and
provided, further, however, that the foregoing indemnification with respect to
any preliminary prospectus supplement shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such losses, claims, damages or liabilities purchased any of the
Offered Securities if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if such is
required by law, at or prior to the written confirmation of the sale of such
Offered Securities to such person and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act, and of Section 20 of the 1934 Act,
from and against any and all loss, liability, claim, damage and expense
described in the indemnity agreement in Section 7(a), as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or any
preliminary prospectus supplement or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Underwriter expressly for use
in the Registration Statement (or any amendment thereto) or such preliminary
prospectus supplement or the Prospectus (or any amendment or supplement
thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to any of the two preceding paragraphs, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all
<PAGE>
26
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of
Underwriters, such firm shall be designated in writing by ______________. In the
case of any such separate firm for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
Section 8. Contribution. If the indemnification provided for
in Sections 7(a) and 7(b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, then each
indemnifying party under such paragraph (it being understood that an
indemnifying party is one who would have had an obligation to provide
indemnification pursuant to Section 7 had such indemnification been
enforceable), in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect (A) the relative benefits received by the Underwriters,
and (B) that the Company is responsible for the balance or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the allocation referred to
in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Offered Securities shall be deemed to be in the same respective proportions as
the net proceeds from the offering of the Offered Securities (before deducting
expenses) received by the Company and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover of the Prospectus Supplement, bear to the aggregate public offering
price of the Offered Securities. The relative fault of the Company on the one
hand and of the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
<PAGE>
27
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective number of Offered Securities they have purchased hereunder,
and not joint.
The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The remedies provided for in this Section 8
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
Section 9. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements and
other statements of the Company or its officers set forth in or made pursuant to
this Agreement will remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of Section
15 of the 1933 Act and will survive delivery of and payment for the Offered
Securities.
Section 10. Termination of Agreement. (a) You may terminate
this Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation thereof or other calamity or
crisis the effect of which on the financial markets of the United States is such
as to make it, in your judgment, impracticable to market the Offered Securities
or enforce contracts for the sale of the Offered Securities or (iii) if trading
in any securities of the Company has been suspended by the Commission, the New
York Stock Exchange or any other exchange or quotation system on
<PAGE>
28
which securities of the Company are listed, or if trading generally on either
the American Stock Exchange or the New York Stock Exchange or in the
over-the-counter market has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by such exchange or by order of the Commission or any other
governmental authority or (iv) if a banking moratorium has been declared by
either federal, New Jersey or New York authorities.
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party,
except to the extent provided in Section 4 herein. Notwithstanding any such
termination, the provisions of Sections 7, 8 and 9 shall remain in effect.
Section 11. Default by One or More of the Underwriters. If one
or more of the Underwriters shall fail at the Closing Time to purchase the
Offered Securities that it or they are obligated to purchase (the "Defaulted
Offered Securities"), you shall have the right, within 24 hours thereafter, to
make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Offered Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, you have not completed such arrangements within
such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Offered
Securities does not exceed 10% of the aggregate principal amount of the
Offered Securities to be purchased pursuant to this Agreement, the
non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligation proportions bear to the underwriting obligation proportions
(as defined below) of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Offered
Securities exceeds 10% of the aggregate principal amount of the Offered
Securities to be purchased pursuant to this Agreement, this Agreement
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Time or the Delivery Date, as applicable for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 11.
<PAGE>
29
Section 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed as set forth in Schedule I.
Notices to the Company shall be directed to it at 339 Jefferson Road,
Parsippany, New Jersey 07054, attention of James Buckman, Esq., General Counsel.
Section 13. Parties. This Agreement is made solely for the
benefit of the several Underwriters, the Company and, to the extent expressed,
any person who controls the Company or any of the Underwriters within the
meaning of Section 15 of the 1933 Act, and the directors of the Company, its
officers who have signed the Registration Statement, and their respective
executors, administrators, successors and assigns and, subject to the provisions
of Section 11, no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include
any purchaser, as such purchaser, from any Underwriter of the Offered
Securities. If there are two or more Underwriters, all of their obligations
hereunder are several and not joint.
Section 14. Governing Law and Time. This Agreement shall be
governed by the laws of the State of New York. Specified times of the day refer
to New York City time.
Section 15. Counterparts. This Agreement may be executed in
one or more counterparts and when a counterpart has been executed by each party,
all such counterparts taken together shall constitute one and the same
agreement.
Section 16. Headings. All headings of the sections and
subparts thereof of this Agreement are for convenience of reference only and
shall not be deemed a part of this Agreement.
<PAGE>
30
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and each
Underwriter in accordance with its terms.
Very truly yours,
HFS INCORPORATED
By:_____________________________
Name:
Title:
Confirmed and Accepted, as of the date first above written:
[UNDERWRITERS]
By:
By: ____________________________
Name:
Title:
<PAGE>
SCHEDULE I
to Underwriting
Agreement dated
[______________]
HFS INCORPORATED
Debt Securities
Principal Amount
Underwriter Purchased
- ----------- ----------------
$
Total........................................................ $_______________
<PAGE>
SCHEDULE II
to Underwriting
Agreement
dated [________]
HFS Incorporated
Debt Securities
Principal amount to be issued: $
Over-allotment option: $
Current ratings: [ ]
Interest rate: ____% per annum, payable semiannually
Interest accrues from:
Date of maturity:
Initial Conversion Price: $ ______ per share (___________shares of
Common Stock for every $1,000 principal
amount of Convertible Debt Securities)
Redemption provisions:
Sinking fund requirements:
Initial public offering price: ____% of the principal amount plus accrued
interest from the date of issuance of the
Initial Debt Securities.
Purchase price: ____% of the principal amount plus accrued
interest from the date of issuance of the
Initial Debt Securities to the date
of delivery (payable in same day funds).
Closing date, time and location:
Delayed delivery contracts:
Listing requirement:
Other terms and conditions:
<PAGE>
SCHEDULE III
to
Underwriting Agreement
dated [____________]
SUBSIDIARIES OF THE COMPANY
C21 Holding Corp.
Century 21 Real Estate Corporation
Central Credit, Inc.
CTM Holding Corp.
Days Inns of America, Inc.
General Franchise Systems, Inc.
HFS Gaming Corp.
Howard Johnson International, Inc.
Knights Franchise Systems, Inc.
Park Inns International, Inc.
Ramada Franchise Systems, Inc.
Super 8 Motels, Inc.
TM Acquisition Corp.
Travelodge Hotels, Inc.
Villager Franchise Systems, Inc.
Western Relocation Management, Inc.
CBC Acquisition Corp.
ERA Franchise Systems, Inc.
ERA Home Protection Plans, Inc.
Home Protection Plans, Inc.
HFS Canada, Ltd.
Coldwell Banker Corporation
Berry Referral Network, Inc. (a Missouri corporation)
Coldwell Banker Affiliates (a Delaware corporation)
Coldwell Banker Canada Partners, Inc. (a Delaware corporation)
Coldwell Banker Commercial Affiliates, Inc. (a Delaware corporation)
Coldwell Banker Escrow Services, Inc. (a California corporation)
Coldwell Banker Funding Corporation (a Delaware corporation)
Coldwell Banker Ira E. Berry, Inc. (a Missouri corporation)
Coldwell Banker Mortgage Partners, Inc. (a Delaware corporation)
Coldwell Banker Moving Services, Inc. (a California corporation)
Coldwell Banker Real Estate, Inc. (a Pennsylvania corporation)
Coldwell Banker Real Estate Services, Inc. (a New Jersey corporation)
Coldwell Banker Real Property Services Corporation (a Delaware corporation)
Coldwell Banker Relocation Services, Inc. (a New York corporation)
Coldwell Banker Residential Affiliates, Inc. (a California corporation)
Coldwell Banker Residential Brokerage Company (a California corporation)
<PAGE>
2
Coldwell Banker Residential Real Estate (a California corporation)
Coldwell Banker Residential Real Estate Services Of Wisconsin, Inc. (a
Wisconsin corporation)
Coldwell Banker Residential Referral Network (a California corporation)
Coldwell Banker Residential Referral Network, Inc. (a Pennsylvania
corporation)
Coldwell Banker Settlement And Title Services, Inc. (a Virginia
corporation)
Coldwell Banker Settlement And Title Services Of Maryland, Inc. (a
Virginia corporation)
Executrans Canada Limited (a Canadian corporation)
Executrans, Inc. (a New York corporation)
Forest E. Olson, Inc. (a California corporation)
Fox Realty Corporation (a California corporation)
Gray City Graphics, Inc. (an Illinois corporation)
Guardian Title Company (a California corporation)
Holiday Homes International Corp. (a Delaware corporation)
Neighborhood Brokerage Office Corporation (a California corporation)
Previews Incorporated (a New York corporation)
Referral Network, Inc. (a Florida corporation)
Referral Network, Inc. (a Texas corporation)
Relocation 1, Inc. (a Delaware corporation)
Valley of California, Inc. (a California corporation)
Orange County Shipper's Association (a California corporation)
Coldwell Banker Affiliates of Canada (an Ontario general partnership)
THMN, Inc. (a Delaware corporation)
The Home Mortgage Network (a Delaware limited partnership)
<PAGE>
SCHEDULE IV
to Underwriting Agreement
dated [_______________]
HFS Incorporated
Debt Securities
DELAYED DELIVERY CONTRACT
HFS Incorporated
339 Jefferson Road
Parsippany, New Jersey 07054
Dear Sirs:
The undersigned hereby agrees to purchase from HFS Incorporated,
a Delaware corporation (the "Company"), and the Company agrees to sell to the
undersigned on
, 19 (the "Delivery Date"),
principal amount of the Company's [Title of Offered Securities] (the "Offered
Securities"), offered by the Company's Prospectus dated _______, 1996, as
supplemented by its Prospectus Supplement dated , 19 , receipt of which is
hereby acknowledged, at a purchase price of % of the principal amount thereof,
plus interest accrued on the amount thereof, principal amount at the rate borne
by the Offered Securities from , 19 to the Delivery Date, and on the further
terms and conditions set forth in this contract.
Payment for the Offered Securities shall be made to the Company
or its order by certified or official bank check in New York Clearing House
funds, at the offices of _______________, _____________, New York, New York, at
A.M., New York City time, on the Delivery Date (or in such other funds and/or at
such other place as the Company and the undersigned may agree upon in writing),
upon delivery of the Offered Securities to the undersigned, in such authorized
denominations and registered in such names as the undersigned may request in
writing addressed to the Company not less than five business days prior to the
Delivery Date.
The obligation of the undersigned to take delivery of and make
payment for the Offered Securities on the Delivery Date shall be subject only to
the conditions that (1) the purchase of the Offered Securities by the
undersigned shall not, on the Delivery Date, be prohibited under the laws of any
jurisdiction to which the undersigned is subject and that govern such
investment, and (2) the Company, on or before , 19 , shall have sold
<PAGE>
2
to the Underwriters of the Offered Securities (the "Underwriters") such
principal amount of the Offered Securities as is to be sold to them pursuant to
the Underwriting Agreement dated the date hereof between the Company and the
Underwriters. The obligation of the undersigned to take delivery of and make
payment for the Offered Securities shall not be affected by the failure of any
Underwriter or other purchaser to take delivery of and make payment for the
Offered Securities pursuant to other contracts similar to this contract.
Promptly after completion of the sale to the Underwriters, the
Company will mail or deliver to the undersigned, at its address set forth below,
a notice to such effect, accompanied by a copy of the opinion of counsel for the
Company delivered to the Underwriters in connection therewith.
By the execution hereof, the undersigned represents and warrants
to the Company that (1) its investment in the Offered Securities is not, as of
the date hereof, prohibited under the laws of any jurisdiction to which the
undersigned is subject and that govern such investment, (2) all necessary
corporate action for the due execution and delivery of this contract and the
payment for and purchase of the Offered Securities has been taken by it and no
further authorization or approval of any governmental or other regulatory
authority is required for such execution, delivery, payment or purchase and (3)
upon the acceptance by the Company and the mailing or delivery of a copy as
provided below, this contract will constitute a valid and binding agreement of
the undersigned in accordance with its terms.
This contract will inure to the benefit of and be binding upon
the parties hereto and their respective successors, but will not be assignable
by either party hereto without the written consent of the other.
It is understood that the Company will not accept Delayed
Delivery Contracts for an aggregate principal amount of the Offered Securities
in excess of $ and that the acceptance of any Delayed Delivery Contract is in
the Company's sole discretion and, without limiting the foregoing, need not be
on a first-come, first-served basis. If this contract is acceptable to the
Company, it is requested that the Company sign the form of acceptance on a copy
hereof and mail or deliver a signed copy to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such copy is so mailed or delivered.
<PAGE>
3
This contract shall be governed by the laws of the State of New York.
Yours very truly,
___________________________
(Name of Purchaser)
By:________________________
Title:
___________________________
___________________________
(Address)
Accepted as of the date first above written:
HFS Incorporated
By:___________________________
Name:
Title:
PURCHASER - PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed is as
follows: (Please print.)
Telephone No.
Name (including Area Code)
- ---- ---------------------
<PAGE>
SCHEDULE V
to Underwriting Agreement
dated [_______________]
MATTERS TO BE COVERED BY LETTER OR LETTERS
OF INDEPENDENT PUBLIC ACCOUNTANTS
To the extent that a report or opinion of Deloitte & Touche,
LLP, on the Consolidated Financial Statements of HFS Incorporated is included or
incorporated by reference in the Registration Statement or any exhibit thereto,
the Prospectus or any Prospectus Supplement, such firm, to the extent
applicable, shall have furnished to you the following letter or letters (in each
case in form and substance satisfactory to you):
(1) At the date hereof, a letter (the "Comfort Letter"), to
the effect that:
(a) They are independent accountants with respect to
the Company and its subsidiaries within the meaning of the
1933 Act and the applicable published 1933 Act Regulations.
(b) In their opinion, the audited consolidated
financial statements and the related financial statement
schedules of the Company reported on by them included or
incorporated by reference in such annual report on Form 10-K
comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published 1933
Act Regulations with respect to Registration Statements on
Form S-3 and the 1934 Act and the published 1934 Act
Regulations with respect to annual reports on Form 10-K.
(c) Such letter shall further state that they have
performed such other procedures, specified by you, not
constituting an audit, as they have agreed to perform and
report on with respect to certain amounts, percentages,
numerical data and other financial information in the Form
10-K identified by you and have compared certain of such
amounts, percentages, numerical data and financial information
with, and have found such items to be in agreement with or
derived from, the detailed accounting records of the Company
and its subsidiaries.
(d) On the basis of procedures (but not an
examination in accordance with generally accepted auditing
standards) consisting of:
(i) a reading of minutes of all meetings of the
Company's shareholders, Board of Directors
(including the audit, executive and
<PAGE>
2
compensation committees) from the date of the
latest audited con- solidated financial statements
of the Company and its subsidiaries;
(ii) a reading of the unaudited condensed
consolidated financial statements of the Company and
its subsidiaries included or incorporated by
reference in the quarterly report on Form 10-Q for
each Form 10-Q filed 1996; and
(iii) inquiries of certain officials of the
Company who have responsibility for financial and
accounting matters as to (A) whether the unaudited
condensed consolidated financial statements referred
to in (ii) above comply as to form in all material
respects with the applicable accounting requirements
of the 1934 Act and the published 1934 Act
Regulations with respect to Form 10-Q and (B)
whether such unaudited condensed consolidated
financial statements are in conformity with
generally accepted accounting principles applied on
a basis substantially consistent with that of the
audited consolidated financial statements referred
to above;
nothing came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements included or incorporated by
reference in such quarterly report on Form 10-Q do not comply as to form in all
material respects with the applicable accounting requirements of the 1934 Act
and the published 1934 Act Regulations with respect to Form 10-Q, or that such
unaudited condensed consolidated financial statements are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of audited consolidated financial statements referred to
above, except as disclosed in the notes to such unaudited condensed consolidated
financial statements.
(e) Such letter shall further state that they have
performed such other procedures, specified by you, not
constituting an audit, as they have agreed to perform and
report on with respect to certain amounts, percentages,
numerical data and other financial information in the Form
10-Qs identified by you and have compared certain of such
amounts, percentages, numerical data and financial information
with, and have found such items to be in agreement with or
derived from, the detailed accounting records of the Company
and its subsidiaries.
(f) On the basis of the inquiries and procedures
referred to in Section 1(d) of Schedule III (but carried out
to the specified date referred to in Section 2(a) of Schedule
III), nothing came to their attention that caused them to
believe that, from the date of the latest balance sheet of the
Company and
<PAGE>
3
its subsidiaries included or incorporated by reference in the
Prospectus to such specified date, there was:
(i) any change in the capital stock of the
Company, as compared with the amount shown in such
latest balance sheet;
(ii) any decrease in stockholders' equity of the
Company and its subsidiaries, as compared with the
amounts shown in such latest balance sheet;
(iii) any increase in long-term debt of the
Company and its subsidiaries, as compared with the
corresponding total amount of such debt outstanding
at the date of such latest balance sheet; or
(iv) any decrease from the date of such latest
balance sheet to such specified date in consolidated
net revenue of the Company and its subsidiaries or
in the total amount or per share amount (on a
primary and fully diluted basis) of consolidated net
income of the Company and its subsidiaries, as
compared with the corresponding period of the
preceding year, except in all instances for changes
or decreases that the Prospectus discloses have
occurred or may occur or that are described in the
Closing Letter.
(g) Such letter shall further state that they have
performed such other procedures, specified by you, not
constituting an audit, as they have agreed to perform and
report on with respect to certain amounts, percentages,
numerical data and other financial information in the
Registration Statement, the Prospectus and the exhibits to the
Registration Statement or in the documents incorporated by
reference in the Prospectus identified by you, and have
compared certain of such amounts, percentages, numerical data
and financial information with, and have found such items to
be in agreement with or derived from, the detailed accounting
records of the Company and its subsidiaries.
(2) At the Closing Time, a letter dated the Closing Time (the
"Closing Letter"), to the effect that they reaffirm as of the date of
the Closing Letter (and as though made on the date of the Closing
Letter) all statements made in the comfort letter, if any, except that
the inquiries and procedures specified therein shall have been carried
out to a specified date not more than five days prior to the date of
the Closing Letter.
<PAGE>
EXHIBIT 1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM OPINION
Based upon and subject to the limitations, qualifications,
exceptions and assumptions set forth above, we are of the opinion that:
(1) the Notes, the Indenture and the authorized capital stock
of the Company conform in all material respects as to legal matters to the
description thereof contained in the Prospectus;
(2) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(3) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting Agreement
will not (i) contravene any provision of the Amended and Restated Certificate of
Incorporation of the Company as currently in effect or the Amended and Restated
By-Laws of the Company as currently in effect, (ii) contravene any agreement or
other instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to (a) the Registration Statement or (b) the Company's
Annual Report on Form 10-K for the fiscal year ending December 31, ____, as
amended, or (iii) violate any present statute, rule or regulation (collectively,
"Requirements of Law") or any order, judgment or decree of any court or
governmental agency or body (collectively, "Orders") having jurisdiction over
the Company or any of its properties or assets. The opinion expressed in clause
(iii) of this paragraph (3) is based on our review of those Requirements of Law
which are ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without making any special investigation concerning
any other Requirements of Law, and those Orders specifically identified to us by
the Company as being Orders to which it is subject (no such Orders have been so
identified to such counsel). In addition, we express no opinion in this
paragraph (3) with respect to (i) any state securities or Blue Sky laws, rules
or regulations or (ii) the information contained in, or the accuracy,
completeness or correctness of, the Prospectus or the Registration Statements or
the compliance thereof as to form with the Securities Act of 1933 (the "Act")
and the General Rules and Regulations thereunder, which matters are dealt with
in paragraphs (1) above and (5) below and the second paragraph following
paragraph (7) below;
(4) based upon our review of those Requirements of Law which
are ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without having made any special investigation
concerning any other Requirements of Law, no consent, approval, authorization or
Order of, or filing or registration with, any
<PAGE>
2
court or governmental agency or body having jurisdiction over the Company and
its Subsidiaries or any of their respective properties or assets is required for
the execution, delivery and performance of the Underwriting Agreement by the
Company or the consummation by the Company of the transactions contemplated
thereby except for (i) such as have been obtained under the Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (ii) such
as may be required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Offered Securities by you, as to which we
express no opinion;
[(5) the statements made in the Prospectus under the caption
"Description of Capital Stock," to the extent such statements constitute
summaries of legal matters and documents or legal conclusions, have been
reviewed by us and fairly present the information disclosed therein in all
material respects;]
(6) (i) each document filed pursuant to the Exchange Act, and
incorporated by reference in the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information included
in or omitted from such document as to which we need express no opinion), when
filed, appeared on its face to be responsive as to form in all material respects
with the requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder and (ii) each of the Registration
Statements and the Prospectus (other than the financial statements, notes and
schedules thereto and other financial information included in or omitted from
the Registration Statement or Prospectus, and the Form T-1, as to which we
express no opinion), as of their respective effective or issue dates, appeared
on their face to be responsive as to form in all material respects with the
requirements of the Act and the applicable rules and regulations thereunder; and
such counsel does not have actual knowledge of any contracts or other documents
of a character required to be filed as an exhibit to the Registration Statement
which are not filed as required; and
(7) the Company is not required to be registered or regulated
as an "investment company" as such term is defined under the Investment Company
Act of 1940, as amended.
[We have been orally advised by the Commission that] [The
Designated Indenture has been qualified under the Trust Indenture Act and] the
Registration Statement was declared effective under the Act at __ a.m. on April
__, 1996 and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement under the Act has been issued and no
proceedings for that purpose have been initiated or are threatened by the
Commission.
In addition, we have participated in conferences with officers
and representatives of the Company, representatives of the independent
accountants of the
<PAGE>
3
Company, and you and your counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and, although we
are not passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and we have made no independent check or
verification thereof, except as set forth in numbered paragraph 5 hereof, on the
basis of the foregoing, no facts have come to our attention that have led us to
believe that the Registration Statement, on the original effective date of the
Registration Statement, on the effective date of the most recent post-effective
amendment thereto, if any, on the date of the filing of any annual report on
Form 10-K after the filing of the Registration Statement, on the date of the
Underwriting Agreement, or at the Closing Time, contained an untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus, or any amendment or supplement thereto, at the time the Prospectus
Supplement was issued at the time any such amended or supplemented Prospectus
was issued or at the Closing Time, contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that we express no opinion or belief with
respect to the financial statements, schedules and other financial data included
therein or excluded therefrom.
Very truly yours,
<PAGE>
EXHIBIT 2
JAMES BUCKMAN OPINION
Based upon and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, I am of the opinion that:
1. the Company has been duly organized and is subsisting in
good standing as a corporation under the laws of the State of Delaware with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the Prospectus;
2. the Company is qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would make
such qualification necessary except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the Company
and its subsidiaries, considered as one enterprise;
3. each of the subsidiaries that is incorporated in Delaware
(a "Delaware Subsidiary") has been duly organized and is subsisting and in good
standing as a corporation under the laws of Delaware with corporate power and
corporate authority under such laws to own, lease and operate its properties and
conduct its business;
4. each subsidiary is qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would make
such qualification necessary except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the Company
and its subsidiaries, considered as one enterprise;
5. each of the Indenture and the Supplemental Indenture has
been duly authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Trustee, constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent that (a) enforcement thereof may be limited
by (1) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or similar laws affecting enforcement of creditors' rights generally and
(2) general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and (b) the waiver contained in
Section 514 of the Designated Indenture may be limited by applicable law;
6. the Notes have been duly authorized by the Company and
assuming that the Notes have been duly authenticated by the Trustee in the
manner described in its certificate delivered today (which fact I have not
independently determined), the Notes have been duly executed, issued and
delivered by the Company and constitute valid and binding
<PAGE>
3
obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except to the
extent that (a) enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
affecting enforcement of creditors' rights generally and (2) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and (b) the waiver contained in Section 514 of
the Indenture may be limited by applicable law;
[7. all of the outstanding shares of capital stock of the
Company have been duly authorized by all requisite corporate action on the part
of the Company and have been validly issued and are fully paid and
nonassessable; no holder thereof is or will be subject to personal liability by
reason of being such a holder; and none of the outstanding shares of capital
stock of the Company were issued in violation of the preemptive rights of any
stockholder of the Company;]
[8. the Shares issuable upon conversion of the Notes have been
duly authorized and validly reserved for issuance by the Company upon such
conversion and, when issued in accordance with the terms of the Indenture, such
Shares will be validly issued, fully paid and nonassessable; all corporate
action required to be taken for the authorization, issuance and delivery of such
Shares has been validly taken; the issuance of the Notes is not, and the
issuance of such Shares upon conversion thereof will not be, subject to any
preemptive rights of any stockholder of the Company;]
[9. the authorized, issued and outstanding capital stock of
the Company is as described in the Prospectus under the caption "Description of
Capital Stock";]
10. all of the outstanding shares of capital stock of each
Delaware Subsidiary have been duly authorized by all requisite corporate action
on the part of the relevant Delaware Subsidiary and have been validly issued and
are fully paid and nonassessable; except with respect to the ownership of 12.5%
of the common stock of Century 21 Holding Corp. by certain managers, all of the
shares of capital stock of each of the Company Subsidiaries are owned by the
Company free and clear of any pledge, lien, security interest, charge, claim,
encumbrance or equity (each a "Lien") except for such Liens as are not,
individually or in the aggregate, material to the Company and its subsidiaries,
considered as one enterprise;
11. there are no statutes or regulations, or any pending or,
to my knowledge, threatened legal or governmental proceedings against the
Company or any subsidiary, required to be described in the Prospectus that are
not described as required, nor are there any contracts or documents required to
be described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; furthermore, no default exists in the due performance or
<PAGE>
4
observance by the Company, or any subsidiary, or, to my knowledge, any other
party thereto, of any material obligation, agreement, covenant or condition
contained in any contract, indenture, loan agreement, note, lease or other
agreement or instrument that is described in the Registration Statement or the
Prospectus or filed as an exhibit to the Registration Statement, except such
defaults that do not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise;
12. the provisions of the contracts and agreements that are
summarized in the Prospectus or in the Company's Proxy Statement dated [_______]
(the "Proxy") under the heading "Certain Relationships and Related
Transactions" and "Executive Compensation" conform in all material
respects to the description thereof contained in the Prospectus or Proxy and
such description fairly presents the information disclosed;
13. the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
14. the execution and delivery of the Underwriting Agreement
by the Company, the execution and delivery of the Indenture, the Supplemental
Indenture and the Notes by the Company and compliance by the Company with the
terms of the Underwriting Agreement, the Indenture and the Supplemental
Indenture (a) do not and will not constitute or result in a breach of or a
default under any of the terms or provisions of, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary under (i) any indenture, mortgage or loan agreement,
or any other agreement, including without limitation the Credit Agreement (as
defined in the Prospectus) or instrument to which the Company or any subsidiary
is a party or by which it may be bound or to which any of its properties may be
subject, (ii) any judgment, order or decree applicable to the Company or any
subsidiary of any government, governmental instrumentality or court, domestic,
or foreign, having jurisdiction over the Company or any subsidiary or any of
their properties, and (B) do not and will not result in a violation of any
applicable law, rule or regulation (except for the federal securities laws, and
the securities or blue sky laws of the various states, as to which I express no
opinion) except, in each case, for such breaches, defaults or violations that
would not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its subsidiaries,
considered as one enterprise;
15. except as previously disclosed to you in writing, (i) the
Company or its subsidiaries are the beneficial owners of the U.S. trademarks and
service marks set forth in the Prospectus, with the exception of the Ramada
mark; (ii) there is no claim, suit, action or proceeding pending or, to the best
of my knowledge, threatened against the Company or any subsidiary that involves
a claim of infringement of any trademark or service marks which infringement (if
the subject of any unfavorable decision) would have a material adverse effect on
the Company and its subsidiaries, considered as one enterprise; and (iii) the
current use of
<PAGE>
5
the trademarks and service marks by the Company or any of its subsidiaries does
not, to the best of my knowledge, infringe upon any right of any third party
which infringement (if the subject of any unfavorable decision) would reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise;
16. all corporate action required to be taken for consummation
of the Merger has been validly taken.
In addition, I have participated in conferences with other
officers and representatives of the Company, representatives of the independent
accountants of the Company, and you and your counsel at which the contents of
the Registration Statement and the Prospectus and related matters were discussed
and, although I am not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and I have made no independent check or
verification thereof, except as otherwise specifically referred to in paragraph
12 of this opinion, on the basis of the foregoing, no facts have come to my
attention that have led me to believe that the Registration Statement, on the
original effective date of the Registration Statement, on the effective date of
the most recent post-effective amendment thereto, if any, on the date of the
filing of any annual report on Form 10-K after the filing of the Registration
Statement, on the date of the Underwriting Agreement, or at the Closing Time,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, or any amendment or supplement
thereto, at the time the Prospectus Supplement was issued, at the time any such
amended or supplemented Prospectus was issued or at the Closing Time, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that I
express no opinion or belief with respect to the financial statements, schedules
and other financial data included therein or excluded therefrom or with respect
to the Statement of Eligibility of the Trustee under the Trust Indenture Act on
Form T-1.
Very truly yours,
James E. Buckman
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HFS INCORPORATED
(a Delaware corporation)
[_______________]
Common Stock
UNDERWRITING AGREEMENT
Dated:____________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
HFS INCORPORATED
(a Delaware corporation)
_______ Shares of Common Stock
Par Value $0.01 Per Share
UNDERWRITING AGREEMENT
[Date]
To the Underwriters named in Schedule I
Ladies and Gentlemen:
HFS Incorporated, a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule I the number of
shares of Common Stock specified in Schedule II (the "Firm Shares") on the terms
and conditions stated herein and in Schedule II. The Company also grants to the
Underwriters, severally and not jointly, the option described in Section 2 to
purchase all or any part of the additional shares of Common Stock as set forth
in Schedule II to cover over-allotments (the "Additional Shares") on the terms
and conditions stated herein and in Schedule II. The Additional Shares together
with the Firm Shares are herein called the "Shares". As used herein, unless the
context otherwise requires, the term "Underwriters" shall mean the firm or firms
named as Underwriter or Underwriters in Schedule I and the term "you" shall mean
the Underwriter or Underwriters, if no underwriting syndicate is purchasing the
Shares, or the representative or representatives of the Underwriters, if an
underwriting syndicate is purchasing the Shares, as indicated in Schedule I. The
Shares may be sold pursuant to delayed delivery contracts, a form of which is
attached as Schedule IV (the "Delayed Delivery Contracts"), as specified in
Schedule II.
<PAGE>
2
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Registration
No. 33- ) including a prospectus, relating to certain of its debt securities
and Common Stock, and the offering thereof from time to time in accordance with
Rule 415 under the Securities Act of 1933, as amended (the "1933 Act"). Such
registration statement has been declared effective by the Commission. As
provided in Section 3(a), a prospectus supplement reflecting the terms of the
Shares, the terms of the offering thereof and the other matters set forth
therein has been prepared and will be filed pursuant to Rule 424 under the 1933
Act. Such prospectus supplement, in the form first filed after the date hereof
pursuant to Rule 424, is herein referred to as the "Prospectus Supplement". Such
registration statement, as amended at the date hereof, together with the Rule
462(b) Registration Statement under the 1933 Act, including the exhibits thereto
and the documents incorporated by reference therein, is herein called the
"Registration Statement", and the basic prospectus included therein relating to
all offerings of debt securities and Common Stock under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus", except that, if such basic prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to the basic prospectus,
as so amended or supplemented and as supplemented by the Prospectus Supplement,
in either case including the documents filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
that are incorporated by reference therein.
You have advised us that you and the other Underwriters,
acting severally and not jointly, desire to purchase the Firm Shares and that
you have been authorized by the other Underwriters to execute this Underwriting
Agreement ("this Agreement") on their behalf.
Section 1. Representations and Warranties. (a) The Company
represents and warrants to and agrees with each Underwriter that:
(i) On the original effective date of the Registration
Statement, on the effective date of the most recent post-effective
amendment thereto, if any, on the date of the filing of any Rule 462(b)
Registration Statement, and on the date of the filing by the Company of
any annual report on Form 10-K after the original filing of the
Registration Statement, the Registration Statement complied in all
material respects with the requirements of the 1933 Act and the rules
and regulations of the Commission thereunder (the "1933 Act
Regulations") and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; on the date
hereof, at the Closing Time (as defined below) and at each Delivery
Date (as defined below), if any, the Registration Statement, and any
amendments thereof, and the Prospectus, and any amendments thereof and
supplements thereto, comply and will
<PAGE>
3
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations, and neither the Registration Statement
nor any amendments thereof include or will include an untrue statement
of a material fact or omit or will omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and neither the Prospectus, nor any amendments
thereof and supplements thereto, include or will include an untrue
statement of a material fact or omit or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no
representations or warranties as to statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter, directly or through
you, expressly for use in the Registration Statement or the Prospectus.
(ii) The documents incorporated by reference in the
Prospectus, at the time they were filed with the Commission, complied
in all material respects with the requirements of the 1934 Act, and the
rules and regulations of the Commission thereunder (the "1934 Act
Regulations") and, when read together with the other information in the
Prospectus, do not and will not, on the date hereof, at the Closing
Time and at each Delivery Date, if any, include an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iii) Deloitte & Touche LLP, who has reported upon the audited
financial statements and schedules included or incorporated by
reference in the Registration Statement, is an independent public
accountant as required by the 1933 Act and the 1933 Act Regulations
with respect to the Company and each corporation whose financial
statements have been included in the Registration Statement for each of
the years reported on by such accountant.
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
(v) The consolidated financial statements included or
incorporated by reference in the Registration Statement present fairly
the consolidated financial position and stockholders' equity and the
consolidated results of operations and consolidated statements of cash
flows of the entities purported to be shown thereby at the indicated
dates and for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved. The financial statement schedules, if any, included or
incorporated by reference in the Registration Statement present fairly
<PAGE>
4
the information required to be stated therein. The selected financial
data included or incorporated by reference in the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial statements
incorporated by reference in the Registration Statement. The pro forma
financial statements and other pro forma financial information included
or incorporated by reference in the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases
described therein, and, in the opinion of the Company, the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(vi) The Company is duly organized and is validly existing in
good standing as a corporation under the laws of the State of Delaware
with corporate power and corporate authority under such laws to own,
lease and operate its properties and conduct its business as described
in the Prospectus. The Company is duly qualified to transact business
as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be in
good standing would not have a material adverse effect on the Company
and its subsidiaries, considered as one enterprise.
(vii) The Company's only subsidiaries are listed in Schedule
III hereto (each a "Company Subsidiary" and collectively hereinafter
referred to as the "Company Subsidiaries"). Each Subsidiary is duly
organized and is validly existing and in good standing under the laws
of the jurisdiction of its incorporation with corporate power and
corporate authority under such laws to own, lease and operate its
properties and conduct its business. Each Subsidiary is duly qualified
to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect
on the Company and its Subsidiaries, considered as one enterprise.
Except with respect to the ownership of 12.5% of the common stock of
C21 Holding Corp. ("Century 21") by certain managers, all of the
outstanding shares of capital stock of each Company Subsidiary have
been duly authorized and validly issued and are fully paid and
nonassessable and are owned by the Company, directly or through one or
more Company Subsidiaries, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind (each, a
"Lien") except for such Liens as are not, individually or in the
aggregate, material to the Company and its Subsidiaries, considered as
one enterprise.
<PAGE>
5
(viii) The authorized capital stock of the Company conforms to
the description thereof under the caption "Description of Capital
Stock" contained in the Prospectus and such description conforms to the
rights set forth in the instruments defining the same.
(ix) The Shares have been duly authorized and, when issued and
paid for in accordance with this Agreement, will be validly issued,
fully paid and non-assessable. All corporate action required to be
taken for the authorization, issuance and delivery of such Shares has
been validly taken. The issuance of the Shares is not subject to any
preemptive rights of any stockholder of the Company.
[(x) In the event that any of the Shares are purchased
pursuant to Delayed Delivery Contracts, each of such Delayed Delivery
Contracts has been duly authorized by the Company and, when executed
and delivered on behalf of the Company and duly authorized, executed
and delivered on behalf of the purchaser thereunder, will constitute a
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium
or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law).]
(xi) All of the other outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully
paid and non-assessable; no holder thereof is or will be subject to
personal liability by reason of being such a holder; and none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive rights of any stockholder of the Company.
(xii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein or contemplated thereby, there has not been
(A) any material adverse change in the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise, whether or not arising in
the ordinary course of business, (B) any transaction entered into by
the Company or any Subsidiary, other than in the ordinary course of
business, that is material to the Company and its Subsidiaries,
considered as one enterprise, or (C) any dividend or distribution of
any kind declared, paid or made by the Company on its capital stock.
(xiii) Neither the Company nor any Subsidiary is in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other
<PAGE>
6
agreement or instrument to which it is a party or by which it may be
bound or to which any of its properties may be subject, except for such
defaults that would not have a material adverse effect on the condition
(financial or otherwise), earnings or business affairs of the Company
and its Subsidiaries, considered as one enterprise. The execution and
delivery by the Company of this Agreement [and any Delayed Delivery
Contracts,] the issuance and delivery of the Shares, the consummation
by the Company of the transactions concerning the Shares contemplated
herein and in the Registration Statement and compliance by the Company
with the terms of this Agreement [and any Delayed Delivery Contracts]
have, in each case, been duly authorized by all necessary corporate
action on the part of the Company and do not and will not result in any
violation of the certificate of incorporation or by-laws of the
Company, and do not and will not conflict with, or result in a breach
of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any Subsidiary under (A)
any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company or any Subsidiary is a
party or by which it may be bound or to which any of its properties may
be subject (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not have a material adverse effect
on the condition (financial or otherwise), earnings or business affairs
of the Company and its Subsidiaries, considered as one enterprise) or
(B) any existing applicable law, rule, regulation (other than state
securities, foreign securities or Blue Sky laws, rules and
regulations), judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any Subsidiary or any of their respective properties
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise).
(xiv) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act and the 1934 Act and the securities or
Blue Sky laws of the various states and foreign securities laws), is
required for the valid authorization, issuance, sale and delivery of
the Shares or for the compliance with the transactions contemplated in
this Agreement.
(xv) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against or affecting the Company
or any Subsidiary that is required to be disclosed in the Prospectus or
that could reasonably be expected to result in any material adverse
change in the condition (financial or otherwise), earnings or business
affairs of the
<PAGE>
7
Company and its Subsidiaries, considered as one enterprise, or that
could reasonably be expected to materially and adversely affect the
properties or assets of the Company and its Subsidiaries, considered as
one enterprise, or that could reasonably be expected to adversely
affect the consummation of the transactions contemplated in this
Agreement. The aggregate of all pending legal or governmental
proceedings to which the Company or its Subsidiaries is a party or to
which any of its or their respective properties is subject that are not
described in the Prospectus, including ordinary routine litigation
incidental to its or their business, could not reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise.
(xvi) There are no statutes, regulations, contracts or other
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described and filed as required.
(xvii) The Company and each Subsidiary have good and
marketable title to all properties and assets, including, without
limitation, intangible property rights described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances,
restrictions (other than as described in paragraph 1(a)(ix) hereof) or
defects, except such as (A) are described (1) in the Competitive
Advance and Revolving Credit Agreement dated as of December 16, 1993,
as amended, among the Company and Chemical Bank, as agent and lender,
and the other lenders named therein, (2) in the Indenture dated as of
December 16, 1993, as amended, between the Company and Bank of America
Illinois, as successor to Continental Bank, National Association, as
trustee, (3) in the Indenture dated as of October 1, 1994, between the
Company and Bank of America, Illinois, as trustee, (4) in the Indenture
and the Supplemental Indenture No. 1 dated as of February 28, 1996,
between the Company and First Trust of Illinois, National Association,
as trustee, (5) in the Credit Agreement dated October 5, 1994, as
amended, among Coldwell Banker and Citicorp North America, Inc., as
agent and lender, and the other lenders named therein, and (6) in the
Amended and Restated Pooling and Servicing Agreement dated as of
October 5, 1994, as amended, among Coldwell Banker Funding Corporation,
Coldwell Banker Relocation Services, Inc., Citicorp North America, Inc.
and Bankers Trust Company, the Amended and Restated Purchase Agreement
dated as of October 5, 1994, as amended, between Coldwell Banker
Relocation Services, Inc. and Coldwell Banker Funding Corporation and
the Amended and Restated Investor Funding Agreement dated as of October
5, 1994, as amended, among Coldwell Banker Funding Corporation, Bankers
Trust Company, Citicorp North America, Inc., as agent, Bank of America
Illinois, as co-agent, and the investors named therein, (B) are leases
of real property in which the Company or its Subsidiaries have good
title and that would be marketable but for the requirement that the
landlord consent to an
<PAGE>
8
assignment of the lease or (C) are neither material in amount nor
materially significant in relation to the business of the Company and
its Subsidiaries, considered as one enterprise; all of the leases and
subleases material to the business of the Company and the Subsidiaries,
considered as one enterprise, and under which the Company or any
Subsidiary holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any Subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of such corporation to the continued possession or use of
the leased or subleased properties under any such lease or sublease.
(xviii) (a) The Company and each Subsidiary own, possess or
have obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations
necessary to own or lease, as the case may be, and to operate its or
their properties and to carry on its or their business as presently
conducted; (b) neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates, consents,
orders, approvals or authorizations which could result in a material
adverse change of the condition (financial or otherwise), earnings or
financial affairs of the Company and its Subsidiaries, considered as
one enterprise; and (c) the Company and each Subsidiary are in all
respects complying with each license, permit, certificate, consent,
order, approval and other authorization, except where the failure to do
so would not have a material adverse effect on the condition (financial
or otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise.
(xix) Subject to each of the franchise and license agreements
entered into by the Company or any of its Subsidiaries, the Company and
each of the Subsidiaries own or have the unrestricted right to use such
patents, patent licenses, trademarks, trademark licenses, service
marks, service mark licenses and trade names and registrations thereof
as are necessary to carry on their respective businesses as described
in the Prospectus and as currently conducted, except where the failure
to own or possess any of the Marks or the Ramada Marks would not have a
material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise. Neither of the Company nor any of its
Subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the Marks or the
Ramada Marks, or any applications therefor or registrations thereof,
that in the aggregate would materially and adversely affect the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise. In addition
to, and not in limitation of, anything else contained in this paragraph
(xviii), the Company or a Subsidiary (y) is the exclusive owner of all
rights, title and
<PAGE>
9
interest (subject to all existing franchise and license agreements
referred to above) in and to the Marks within the United States and
outside the United States is the owner of the registrations and
applications as are necessary to carry on its business as described in
the Prospectus and as currently conducted, except where the failure to
be such owner would not have a material adverse effect on the condition
(financial or otherwise), earnings or business affairs of the Company
and its Subsidiaries, considered as one enterprise and (z) is the
exclusive licensee in the United States of the Ramada Marks. Such
intellectual property with respect to the Company's Century 21,
Coldwell Banker and ERA, Days Inns of America, Inc. ("Days Inn"), Super
8 Motels, Inc. ("Super 8"), the Villager Lodge Franchise Systems, Inc.
("Villager Lodge"), the Knights Franchise Systems, Inc. ("Knights
Inn"), Howard Johnson and Travelodge Hotels, Inc. ("Travelodge")
businesses (each as described in the Prospectus and as currently
conducted) is referred to herein as the "Marks" and such
intellectual property with respect to the Company's Ramada
business (as described in the Prospectus and as currently conducted) is
hereinafter referred to as the "Ramada Marks".
(xx) To the best knowledge of the Company, no labor problem
exists with its employees, with employees of any Subsidiary or, to the
best knowledge of the Company without having made any inquiry or
independent investigation, with the employees of any party which
licenses a franchise, directly or indirectly, from a Subsidiary (a
"Franchisee") or is imminent that could reasonably be expected to
materially adversely affect the Company and its Subsidiaries,
considered as one enterprise.
(xxi) To the best knowledge of the Company, no dispute exists
or is imminent with any Franchisee or with the Franchisees that could
reasonably be expected to materially adversely affect the Company and
the Subsidiaries, considered as one enterprise.
(xxii) Neither the Company nor any of its Subsidiaries has
taken or will take, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Common Stock.
(xxiii) The Company and each Subsidiary are in material
compliance with all applicable existing federal, state and local laws
and regulations relating to protection of human health or the
environment and have no liability or alleged liability under any such
law which is required to be disclosed in the Registration Statement
that is not so disclosed.
(xxiv) All United States federal income tax returns of the
Company and each Subsidiary required by law to be filed have been filed
and all taxes shown on such
<PAGE>
10
returns or otherwise assessed which are due and payable have been paid,
except tax assessments being contested in good faith and as to which
adequate reserves have been provided. All other tax returns of the
Company and each Subsidiary required to be filed pursuant to applicable
foreign, state, local or other law have been filed, except insofar as
the failure to file such returns would not have a material adverse
effect on the condition (financial or otherwise), earnings or business
affairs of the Company and its Subsidiaries, considered as one
enterprise, and all taxes shown on such returns or otherwise assessed
which are due and payable have been paid, except for such taxes, if
any, as are being contested in good faith and as to which adequate
reserves have been provided. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of any income and
corporate franchise tax liability for any years not finally determined
are believed to be adequate to meet any assessments or reassessments
for additional income or corporate franchise tax for any years not
finally determined, except to the extent of any inadequacy that would
not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries considered as one enterprise.
(xxv) Each Franchisee is such by virtue of being a party to a
franchise contract with either the Company or a Subsidiary and assuming
each such contract has been duly authorized, executed and delivered by
the parties thereto, other than the Company or a Subsidiary, each such
contract constitutes a valid, legal and binding obligation of each
party thereto, enforceable against the Company or a Subsidiary in
accordance with its terms, except (A) for any one or more of such
franchise contracts as would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise, and (B) to
the extent that enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(xxvi) The Company and each Subsidiary have complied and are
currently complying in all material respects with the rules and
regulations of the United States Federal Trade Commission and the
comparable laws, rules and regulations of each state or state agency
applicable to the franchising business of the Company and such
Subsidiary in each state in which the Company or such Subsidiary is
doing business. The Company and each Subsidiary have complied and are
currently complying in all material respects with the Federal Real
Estate Settlement Procedures Act and the real estate brokerage laws,
rules and regulations of each state or state agency applicable to the
real estate franchising business of the Company and such Subsidiary in
each state in which the Company or such Subsidiary is doing business.
<PAGE>
11
(xxvii) The Shares will, upon notice of issuance, be listed on
the New York Stock Exchange (the "NYSE").
(xxviii) The Company is not an "investment company" or an
entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
(b) Any certificate signed by any officer of the Company or
any Subsidiary and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company or by a Subsidiary, as
applicable, to each Underwriter as to the matters covered thereby.
Section 2. Purchase and Sale. (a) On the basis of the
representations and warranties herein contained (except as may be otherwise
specified in Schedule II hereto) and subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at the purchase
price per share for the Firm Shares set forth in Schedule II hereto, the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto.
(b) In addition, on the basis of the representations and
warranties herein contained, and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional [ ] of Additional Shares as set
forth in Schedule II hereto at the same purchase price as shall be applicable to
the Firm Shares. The option hereby granted will expire 30 days after the date
hereof, and may be exercised, in whole or from time to time in part (but not
more than twice), only for the purpose of covering over-allotments that may be
made in connection with the offering and distribution of the Firm Shares upon
notice by you to the Company setting forth the number of Additional Shares as to
which the several U.S. Underwriters are exercising this option, and the time and
date of payment and delivery thereof. Such time and date of delivery (each, a
"Delivery Date") shall be determined by you but shall not be later than seven
full business days after the exercise of such option, nor in any event prior to
the Closing Time. If the option is exercised as to all or any portion of the
Additional Shares, each of the Underwriters, acting severally and not jointly,
will purchase from the Company that portion of the aggregate number of
Additional Shares being purchased which the number of Firm Shares set forth
opposite the name of such Underwriter bears to the total number of Firm Shares
(such proportion is hereinafter referred to as such Underwriter's "underwriting
obligation proportion").
(c) Payment of the purchase price for, and delivery of, the
Firm Shares shall be made at the date, time and location specified in Schedule
II hereto, or at such other date, time or location as shall be agreed upon by
the Company and you, or as shall otherwise
<PAGE>
12
be provided in Section 11 (such date and time of payment and delivery being
herein called the "Closing Time"). Unless otherwise specified in Schedule II,
payment shall be made to the Company by you by wire or bank transfer of same day
funds payable to the account of the Company, against delivery to you for the
respective accounts of the several Underwriters of the Firm Shares. Certificates
for the Firm Shares shall be in such authorized denominations and registered in
such names as you may request in writing at least two full business days before
the Closing Time. Certificates for the Firm Shares will be made available in New
York City for examination and packaging by you not later than 10:00 A.M. on the
business day prior to the Closing Time. In addition, in the event that any or
all of the Additional Shares are purchased by the Underwriters, payment of the
purchase price for, and delivery of, such Additional Shares shall be made at the
same location as set forth above, or at such other place as the Company and you
shall determine, on each Delivery Date as specified in the notice from you to
the Company. Payment for the Additional Shares shall be made by wire or bank
transfer of same day funds.
(d) If specified in Schedule II, the Underwriters may solicit
offers to purchase Shares from the Company pursuant to Delayed Delivery
Contracts substantially in the form of Schedule IV with such changes therein as
the Company may approve. Any Delayed Delivery Contracts are to be with
institutional investors of the types set forth in the Prospectus. If Delayed
Delivery Contracts are specified in Schedule II, at the Closing Time, the
Company will enter into Delayed Delivery Contracts (for the minimum principal
amount of Shares per Delayed Delivery Contract specified in Schedule II) with
all purchasers proposed by the Underwriters and previously approved by the
Company as provided below, but not for an aggregate principal amount of Shares
less than or greater than the minimum and maximum aggregate principal amounts
specified in Schedule II. The Underwriters will not have any responsibility for
the validity or performance of Delayed Delivery Contracts.
(e) You are to submit to the Company, at least three business
days prior to the Closing Time, the names of any institutional investors with
which it is proposed that the Company enter into Delayed Delivery Contracts, the
number of Shares to be purchased by each of them and the date of delivery
thereof, and the Company will advise you, at least two business days prior to
the Closing Time, of the names of the institutions with which the making of
Delayed Delivery Contracts is approved by the Company and the number of Shares
to be covered by each such Delayed Delivery Contract.
(f) As compensation for arranging Delayed Delivery Contracts,
the Company will pay (by wire or bank transfer of same day funds) to you at the
Closing Time, for the accounts of the Underwriters, a fee equal to that
percentage of the gross proceeds from the sale of the Shares for which Delayed
Delivery Contracts are made at the Closing Time as is specified in Schedule II
or the amount of such fee may be deducted from the payment delivered pursuant to
Section 2(b).
<PAGE>
13
(g) The number of Shares agreed to be purchased by each
Underwriter shall be reduced by the number of Shares covered by Delayed Delivery
Contracts as to such Underwriter, as set forth in a notice delivered by you to
the Company; provided, however, that the total number of Shares to be purchased
by all Underwriters shall be the number of Shares covered by this Agreement,
less the number of Shares covered by all Delayed Delivery Contracts.
It is understood that each Underwriter has authorized you, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Shares that it has agreed to purchase. You, individually
and not as Representatives, may (but shall not be obligated to) make payment of
the purchase price for the Firm Shares to be purchased by any Underwriter whose
payments shall not have been received by the Closing Time or each Delivery Date,
if any, as the case may be.
Section 3. Certain Covenants of the Company. The Company
covenants with each Underwriter as follows:
(a) If reasonably requested by you in connection with the
offering of the Shares, the Company will prepare a preliminary
prospectus supplement containing such information as you and the
Company deem appropriate and, immediately following the execution of
this Agreement, the Company will prepare a Prospectus Supplement that
complies with the 1933 Act and the 1933 Act Regulations and that sets
forth the number of Shares and their terms, the name of each
Underwriter participating in the offering and the number of Shares that
each severally has agreed to purchase, the name of each Underwriter, if
any, acting as representative of the Underwriters in connection with
the offering, the price at which the Shares are to be purchased by the
Underwriters from the Company, any initial public offering price, any
selling concession and reallowance and [any delayed delivery
arrangements, and] such other information as you and the Company deem
appropriate in connection with the offering of the Shares. The Company
will promptly transmit copies of the Prospectus Supplement to the
Commission for filing pursuant to Rule 424 under the 1933 Act and will
furnish to the Underwriters as many copies of any preliminary
prospectus supplement and the Prospectus as you shall reasonably
request.
(b) If at any time when the Prospectus is required by the 1933
Act to be delivered in connection with sales of the Shares, any event
shall occur or condition exist as a result of which it is necessary, in
the opinion of counsel for the Underwriters or counsel for the Company,
to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the
<PAGE>
14
opinion of either such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(f), such amendment or supplement as
may be necessary to correct such untrue statement or omission or to
make the Registration Statement or the Prospectus comply with such
requirements.
(c) During the period when the Prospectus is required by the
1933 Act to be delivered in connection with sales of the Shares, the
Company will, subject to Section 3(f), file promptly all documents
required to be filed with the Commission pursuant to Section 13,
Section 14 or Section 15(d) of the 1934 Act.
(d) During the period when the Prospectus is required by the
1933 Act to be delivered in connection with sales of the Shares, the
Company will inform you of its intention to file any amendment to the
Registration Statement, any supplement to the Prospectus or any
document that would as a result thereof be incorporated by reference in
the Prospectus; and the Company will furnish you with copies of any
such amendment, supplement or other document at a reasonable time in
advance of filing, except any current report on Form 8-K filed with the
Commission with respect to a press release issued by the Company that
is not reasonably expected to have a material effect on the Company or
the price of the Common Stock; provided, however, that the Company
shall inform you of its intention to file documents pursuant to Section
14(d) of the 1934 Act and shall furnish you with copies of such
documents immediately upon the filing thereof; and provided further
that you or your counsel shall not be entitled to object thereto other
than pursuant to Section 3(b).
(e) During the period when the Prospectus is required by the
1933 Act to be delivered in connection with sales of the Shares, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for
filing of any supplement to the Prospectus or any document that would
as a result thereof be incorporated by reference in the Prospectus,
(iii) of the receipt of any comments from the Commission with respect
to the Registration Statement, the Prospectus or the Prospectus
Supplement, (iv) of any request by the Commission for any amendment to
the Registration Statement or any supplement to the Prospectus or for
additional information relating thereto or to any document incorporated
by reference in the Prospectus and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the institution
or threatening of any proceeding for any of such purposes. The Company
will use every reasonable effort to prevent the issuance of
<PAGE>
15
any such stop order or of any order suspending such qualification and,
if any such order is issued, to obtain the lifting thereof at the
earliest possible moment.
(f) The Company has furnished or will furnish to you one
signed copy of the Registration Statement (as originally filed), of any
Rule 462(b) Registration Statement, and of all amendments thereto,
whether filed before or after the Registration Statement became
effective, copies of all exhibits and documents filed therewith or
incorporated by reference therein (through the end of the period when
the Prospectus is required by the 1933 Act to be delivered in
connection with sales of the Shares) and signed copies of all consents
and certificates of experts, as you may reasonably request, and has
furnished or will furnish to you, for each of the Underwriters, ten
conformed copies of the Registration Statement (as originally filed),
of any Rule 462(b) Registration Statement and of each amendment thereto
(including documents incorporated by reference into the Prospectus but
without exhibits).
(g) The Company will use its best efforts, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions as
you may designate and to maintain such qualifications in effect for a
period of not less than one year from the date hereof; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. The
Company will file such statements and reports as may be required by the
laws of each jurisdiction in which the Shares have been qualified as
above provided. The Company will also supply you with such information
as is necessary for the determination of the legality of the Shares for
investment under the laws of such jurisdictions as you may request.
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 45 days after the
close of the period covered thereby, an earnings statement of the
Company (in form complying with the provisions of Rule 158 of the 1933
Act Regulations), covering (i) a period of 12 months beginning after
the effective date of the Registration Statement (or, if applicable,
any Rule 462(b) Registration Statement) and covering a period of 12
months beginning after the effective date of any post-effective
amendment to the Registration Statement but not later than the first
day of the Company's fiscal quarter next following such respective
effective dates and (ii) a period of 12 months beginning after the date
of this Agreement but not later than the first day of the Company's
fiscal quarter next following the date of this Agreement.
<PAGE>
16
(i) If and to the extent specified in Schedule II hereto, the
Company will use its best efforts to cause the Shares to be duly
authorized for listing on the New York Stock Exchange.
(j) For a period of two years after the Closing Time, the
Company will furnish to you and, upon request, to each Underwriter,
copies of all annual reports, quarterly reports and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other
similar forms as may be designated by the Commission, and such other
documents, reports and information as shall be furnished by the Company
to its stockholders or security holders generally.
(k) The Company agrees, for a period of 90 days from the date
of the Prospectus Supplement, they will not, without the prior written
consent of [____________] in any transaction settled by delivery of
Common Stock or other securities, in cash or otherwise, (i) register,
offer, pledge, sell, contract to sell, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common
Stock of the Company or any securities convertible into, or exercisable
or exchangeable for, Common Stock of the Company (provided, however,
that the Company may file a shelf registration statement covering its
equity securities during such 90 day period) or (ii) enter into any
swap or similar agreement that transfers, in whole or in part, the
economic risk of ownership of such Common Stock (except for (y) Common
Stock (A) issued as part of the offering of the Shares, (B) issued upon
conversion of the 4 1/2% Convertible Senior Notes due 1999 or the
Company's 4 3/4% Convertible Senior Notes due 2003, (C) issued pursuant
to the Company's stock option or employee benefit plans, (D) issued by
the Company in connection with strategic acquisitions, (E) issued or
sold pursuant to employee benefit plans of the Company existing at the
Closing Time, and (F) sold in connection with an employee's decision to
direct that 401(k) contributions be invested in Common Stock; provided
that any shares issued pursuant to clause (D) above in excess of 5% of
the then outstanding shares of Common Stock shall remain subject to the
foregoing restriction) or exercise any right to have securities of the
Company registered by the Company under the 1933 Act.
(l) The Company has complied and will comply with all the
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida statutes, and all regulations promulgated thereunder relating
to issuers doing business in Cuba.
Section 4. Payment of Expenses. The Company will pay and bear
all costs and expenses incident to the performance of its obligations under this
Agreement, including, without limitation, (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, any
<PAGE>
17
preliminary prospectus supplements and the Prospectus and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters, (b) the preparation, printing and distribution of this Agreement,
[any Delayed Delivery Contracts,] the Shares, the Blue Sky Survey, (c) the
delivery of the Shares to the Underwriters, (d) the fees and disbursements of
the Company's counsel and accountants and the fees and disbursements of the
Company's counsel (including, without limitation, local counsel upon whom such
counsel may rely in rendering their opinion required by Section 5 and 6 hereof),
(e) the qualification of the Shares under the applicable securities laws, (f)
the reasonable fees and disbursements of counsel in connection with the Blue Sky
Survey, and (g) any applicable fees for listing the Shares on an exchange.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or Section 10(a)(i), the Company shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters, incurred by
them in connection with the public offering of the Shares.
Section 5. Conditions of the Underwriters' Obligations. Except
as otherwise provided in Schedule II hereto, the obligations of the several
Underwriters to purchase and pay for the Shares that they have respectively
agreed to purchase hereunder, including any Additional Shares as to which the
option granted in Section 2 has been exercised and the Delivery Date determined
by you is the same as the Closing Time, are subject to (i) the accuracy of the
representations and warranties of the Company contained herein or in
certificates of the Company's officers delivered pursuant to the provisions
hereof, (ii) the performance by the Company of its obligations hereunder, (iii)
the delivery to the Underwriters at the Closing Time by the Company of all of
the Firm Shares, and (iv) the following further conditions:
(a) The Registration Statement shall have become effective
prior to the date hereof or, with your consent, at a later time and
date no later, however, than the first business day following the date
hereof, or at such later date as you may agree to in writing with the
approval of a majority in interest of the several underwriters; and at
the Closing Time, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act and no
proceedings for that purpose shall have been instituted or shall be
pending or, to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel for the Underwriters.
(b) At the Closing Time, you shall have received a signed
opinion of Skadden, Arps, Slate, Meagher & Flom, in New York, in its
capacity as special counsel for the Company, dated as of the Closing
Time, together with signed or
<PAGE>
18
reproduced copies of such opinion for each of the other Underwriters,
in form and substance reasonably satisfactory to Counsel for the
Underwriters to the effect as attached hereto as Exhibit 1.
(c) At the Closing Time, you shall have received signed
opinions of James Buckman, Esq., General Counsel for the Company, and
Siegal, Barnett & Schutz, special South Dakota counsel for the Company,
dated as of the Closing Time, together with signed or reproduced copies
of such opinions for each of the other Underwriters, in form and
substance reasonably satisfactory to counsel for the Underwriters to
the effect, with respect to the opinion of James Buckman, Esq., as
attached hereto as Exhibit 2.
(d) At the Closing Time, you shall have received a signed
opinion of Schaefer, Rosenwein & Fleming, special trademark counsel for
the Company with respect to the Coldwell Banker franchise system, dated
as of the Closing Time, together with signed or reproduced copies of
such opinion for each of the other Underwriters, in form and substance
reasonably satisfactory to counsel for the Underwriters.
The opinions referred to above in clauses (b), (c)
and (d) shall be to such further effect with respect to other legal
matters relating to this Agreement and the sale of the Shares pursuant
to this Agreement as counsel for the Underwriters may reasonably
request. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company, as the case may
be, and certificates of public officials; provided that such
certificates have been delivered to the Underwriters.
In giving the opinions referred to above in clause
(b), (c) and (d), such counsel may rely, as to all matters governed by
the laws of jurisdictions other than those in which they are expert,
upon opinions of other counsel who shall be counsel reasonably
satisfactory to counsel for the Underwriters, in which case the opinion
shall state that they believe you and they are justified and entitled
to so rely.
(e) At the Closing Time, you shall have received the favorable
opinion of [ ], counsel for the Underwriters, dated as of
the Closing Time, together with signed or reproduced copies of such
opinion for each of the other Underwriters.
(f) At the Closing Time, (i) the Registration Statement and
the Prospectus, as they may then be amended or supplemented, shall
contain all statements that are required to be stated therein under the
1933 Act and the 1933 Act Regulations and in all material respects
shall conform to the requirements of the 1933 Act and the
<PAGE>
19
1933 Act Regulations, and the 1934 Act and the 1934 Act Regulations,
the Company shall have complied in all material respects with Rule 430A
(if it shall have elected to rely thereon) and (A) the Registration
Statement, as it may then be amended or supplemented, shall not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (B) the Prospectus, as it may be amended or
supplemented, will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, (ii) there shall not have been, since the
respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (iii) no action, suit
or proceeding shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary that would be required
to be set forth in the Prospectus other than as set forth therein and
no proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary before or by any
federal, state or other commission, board or administrative agency
wherein an unfavorable decision, ruling or finding would materially
adversely affect the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, other than as set forth in
the Prospectus, (iv) the Company shall have complied in all material
respects with all agreements and satisfied in all material respects all
conditions included herein on its part to be performed and satisfied at
or prior to the Closing Time and (v) the other representations and
warranties of the Company set forth in Section 1(a) shall be accurate
as though expressly made at and as of the Closing Time. At the Closing
Time, you shall have received a certificate of the Chairman of the
Board or the President and the Chief Financial Officer of the Company,
dated as of the Closing Time, to such effect, it being understood that
such certificate shall not constitute personal representations and
warranties of the signing individual.
(g) You shall have received a letter or letters at the date
hereof substantially in the form attached hereto as Schedule VI hereto,
and a letter or letters to be delivered at the Closing Time reaffirming
the statements made in each such letter or letters, except that the
inquiries and procedures specified therein shall have been carried out
to a specified date not more than five days prior to the Closing Time.
(h) The Company shall have complied with the provisions of
Section 3(a) hereof with respect to the furnishing of Prospectuses and
Supplemental Prospectuses
<PAGE>
20
on the business day next succeeding the date of this Agreement, in such
quantities as you reasonably request.
(i) At the Closing Time, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions
as they may reasonably request for the purpose of enabling them to pass
upon the issuance and sale of the Shares as herein contemplated and the
matters referred to in Section 5(c) and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company, the performance of any of the covenants of
the Company, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company at or prior to the
Closing Time in connection with the authorization, issuance and sale of
the Shares as herein contemplated shall be reasonably satisfactory in
form and substance to you and to counsel for the Underwriters.
(j) The Shares have been duly authorized for listing by the
New York Stock Exchange subject to notice of issuance thereof and
notice of a satisfactory distribution of the Shares.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section 4 herein.
Notwithstanding any such termination, the provisions of Sections 7, 8 and 9
shall remain in effect.
Section 6. Conditions to Purchase of Additional Shares. In the
event that the Underwriters exercise their option granted in Section 2 to
purchase all or any of the Additional Shares, and each Delivery Date determined
by you pursuant to Section 2 is later than the Closing Time, the obligations of
the several Underwriters to purchase and pay for the Additional Shares that they
shall have respectively agreed to purchase pursuant to this Agreement
(collectively, the "purchased Additional Shares") are subject to the accuracy of
the representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, the delivery to the
Underwriters at the Delivery Date by the Company of such Additional Shares and
to the following further conditions:
(a) The Registration Statement shall remain effective at each
Delivery Date, and, at each Delivery Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending, or, to your knowledge or the knowledge
of the Company, shall be threatened by the Commission, and any request
on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel for the
Underwriters.
<PAGE>
21
(b) At each Delivery Date, the provisions of Sections 5(f)(i)
through 5(f)(v) shall have been complied with at and as of each
Delivery Date and, at each Delivery Date, you shall have received a
certificate of the Chairman of the Board or the President and the Chief
Financial Officer of the Company, dated as of such Delivery Date, to
such effect, it being understood that such certificate shall not
constitute personal representations and warranties of the signing
individual.
(c) At each Delivery Date, you shall have received the
favorable opinion of Skadden, Arps, Slate, Meagher & Flom in New York,
in its role as special counsel for the Company, James Buckman, Esq.,
General Counsel for the Company, together with signed or reproduced
copies of such opinions for each of the other Underwriters,
respectively, dated as of each Delivery Date, relating to the purchased
Additional Shares and otherwise to the same effect required by Sections
5(b) and 5(c), as the case may be, and each such counsel shall have
been furnished with all such documents, certificates and opinions as
such counsel may reasonably request for the purpose of enabling such
counsel to deliver such opinion or opinions.
The opinions referred to above shall be to such
further effect with respect to other legal matters relating to this
Agreement and the sale of the Shares pursuant to this Agreement as
counsel for the Underwriters may reasonably request. Such counsel may
also state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of
officers of the Company, and certificates of public officials; provided
that such certificates have been delivered to the Underwriters.
In giving the opinions referred to above, each such
counsel may rely, as to all matters governed by the laws of
jurisdictions other than those in which they are expert, upon opinions
of other counsel who shall be counsel reasonably satisfactory to
counsel for the Underwriters, in which case the opinion shall state
that they believe you and they are justified and entitled to so rely.
(d) At each Delivery Date, you shall have received the
favorable opinion of [ ], counsel for the Underwriters,
dated as of such Delivery Date, relating to the purchased Additional
Shares and otherwise to the same effect as the opinion required by
Section 5(e).
(e) At each Delivery Date, you shall have received a separate
letter from Deloitte & Touche, in form and substance satisfactory to
you and dated as of such Delivery Date, to the effect that they
reaffirm the statements made in their respective letter furnished
pursuant to Section 5(f), except that the specified date referred to
shall be a date not more than five days prior to such Delivery Date.
<PAGE>
22
(f) At each Delivery Date, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions
as they may reasonably request for the purpose of enabling them to pass
upon the issuance and sale of the purchased Additional Shares as
contemplated in the Underwriting Agreement and the matters referred to
in Section 6(d) and in order to evidence the accuracy and completeness
of any of the representations, warranties or statements of the Company,
the performance of any of the covenants of the Company, or the
fulfillment of any of the conditions herein contained; and all
proceedings taken by the Company at or prior to each Delivery Date in
connection with the authorization, issuance and sale of the purchased
Additional Shares as contemplated in the Underwriting Agreement shall
be reasonably satisfactory in form and substance to you and to counsel
for the Underwriters.
Section 7. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter, as the case may be, within the meaning of
Section 15 of the 1933 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of an untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus supplement or the Prospectus (or
any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred,
including fees and disbursements of counsel chosen by you, reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
<PAGE>
23
statement or omission, to the extent that any such expense is
not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus supplement or the Prospectus
(or any amendment or supplement thereto); and provided, further, however, that
the foregoing indemnification with respect to any preliminary prospectus
supplement shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages or liabilities purchased any of the Shares if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Shares to such person and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act and of Section 20 of the 1934 Act,
from and against any and all loss, liability, claim, damage and expense
described in the indemnity agreement in Section 7(a), as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or any
preliminary prospectus supplement or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Underwriter expressly for use
in the Registration Statement (or any amendment thereto) or such preliminary
prospectus supplement or the Prospectus (or any amendment or supplement
thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to any of the two preceding paragraphs, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the
<PAGE>
24
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Underwriters
and such control persons of Underwriters, such firm shall be designated in
writing by. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
Section 8. Contribution. If the indemnification provided for
in Sections 7(a) and 7(b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, then each
indemnifying party under such paragraph (it being understood that an
indemnifying party is one who would have had an obligation to provide
indemnification pursuant to Section 7 had such indemnification been
enforceable), in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect (A) the relative benefits received by the Underwriters,
and (B) that the Company is responsible for the balance or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the allocation referred to
in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses) received by
the Company and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the
<PAGE>
25
cover of the Prospectus Supplement, bear to the aggregate public offering price
of the Shares. The relative fault of the Company on the one hand and of the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
Section 9. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements and
other statements of the Company or its officers set forth in or made pursuant to
this Agreement will remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of Section
15 of the 1933 Act and will survive delivery of and payment for the Shares.
Section 10. Termination of Agreement. (a) You may terminate
this Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one
<PAGE>
26
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or any outbreak of hostilities or escalation thereof or other
calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in your judgment, impracticable to market the
Shares or enforce contracts for the sale of the Shares or (iii) if trading in
any securities of the Company has been suspended by the Commission, the New York
Stock Exchange or any other exchange or quotation system on which securities of
the Company are listed, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange or in the over-the-counter market has
been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such exchange or
by order of the Commission or any other governmental authority or (iv) if a
banking moratorium has been declared by either federal, New Jersey or New York
authorities.
(b) If this Agreement is terminated pursuant to this Section
10, such termination shall be without liability of any party to any other party,
except to the extent provided in Section 4 herein. Notwithstanding any such
termination, the provisions of Sections 7, 8 and 9 shall remain in effect.
Section 11. Default by One or More of the Underwriters. If one
or more of the Underwriters shall fail at the Closing Time to purchase the Firm
Shares that it or they are obligated to purchase (the "Defaulted Shares"), you
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Shares in such amounts as
may be agreed upon and upon the terms herein set forth; if, however, you have
not completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Shares does not exceed 10% of
the total number of the Shares to be purchased pursuant to this
Agreement, the non-defaulting Underwriters shall be obligated to
purchase the full amount thereof in the proportions that their
respective underwriting obligation proportions (as defined below) bear
to the underwriting obligation proportions of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Shares exceeds 10% of the total
number of the Shares to be purchased pursuant to this Agreement, this
Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Time or
<PAGE>
27
the Delivery Date, as applicable for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 11. As
used herein, the term "underwriting obligation proportion" means the proportion
that the number of Firm Shares set forth opposite the name of each Underwriter
in Schedule I hereto bears to the total number of Firm Shares.
Section 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed as set forth in Schedule I.
Notices to the Company shall be directed to it at 339 Jefferson Road,
Parsippany, New Jersey 07054, attention of James Buckman, Esq., General Counsel.
Section 13. Parties. This Agreement is made solely for the
benefit of the several Underwriters, the Company and, to the extent expressed,
any person who controls the Company or any of the Underwriters within the
meaning of Section 15 of the 1933 Act, and the directors of the Company, its
officers who have signed the Registration Statement, and their respective
executors, administrators, successors and assigns and, subject to the provisions
of Section 11, no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include
any purchaser, as such purchaser, from any Underwriter of the Shares. If there
are two or more Underwriters, all of their obligations hereunder are several and
not joint.
Section 14. Governing Law and Time. This Agreement shall be
governed by the laws of the State of New York. Specified times of the day refer
to New York City time.
Section 15. Counterparts. This Agreement may be executed in
one or more counterparts and when a counterpart has been executed by each party,
all such counterparts taken together shall constitute one and the same
agreement.
Section 16. Headings. All headings of the sections and
subparts thereof of this Agreement are for convenience of reference only and
shall not be deemed a part of this Agreement.
<PAGE>
28
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and each
Underwriter in accordance with its terms.
Very truly yours,
HFS INCORPORATED
By:_____________________________
Name:
Title:
Confirmed and Accepted, as of the date first above written:
[UNDERWRITERS]
By:
By: ____________________________
Name:
Title:
<PAGE>
SCHEDULE I
to Underwriting
Agreement dated
[_____________]
HFS INCORPORATED
Common Stock
Number of Initial
Shares
Underwriter to be Purchased
- ----------- ---------------
Total............................................. ________________
<PAGE>
SCHEDULE II
to Underwriting
Agreement
dated [_________]
HFS Incorporated
Common Stock
Number of Firm Shares to be issued: [________]
Number of Additional Shares to be issued: [________]
Initial public offering price: $_______
Purchase price: $_______
Closing date, time and location:
Delayed delivery contracts:
Listing requirement:
Other terms and conditions:
<PAGE>
SCHEDULE III
to
Underwriting Agreement
dated [______________]
SUBSIDIARIES OF THE COMPANY
C21 Holding Corp.
Century 21 Real Estate Corporation
Central Credit, Inc.
CTM Holding Corp.
Days Inns of America, Inc.
General Franchise Systems, Inc.
HFS Gaming Corp.
Howard Johnson International, Inc.
Knights Franchise Systems, Inc.
Park Inns International, Inc.
Ramada Franchise Systems, Inc.
Super 8 Motels, Inc.
TM Acquisition Corp.
Travelodge Hotels, Inc.
Villager Franchise Systems, Inc.
Western Relocation Management, Inc.
CBC Acquisition Corp.
ERA Franchise Systems, Inc.
ERA Home Protection Plans, Inc.
Home Protection Plans, Inc.
HFS Canada, Ltd.
Coldwell Banker Corporation
Berry Referral Network, Inc. (a Missouri corporation)
Coldwell Banker Affiliates (a Delaware corporation)
Coldwell Banker Canada Partners, Inc. (a Delaware corporation)
Coldwell Banker Commercial Affiliates, Inc. (a Delaware corporation)
Coldwell Banker Escrow Services, Inc. (a California corporation)
Coldwell Banker Funding Corporation (a Delaware corporation)
Coldwell Banker Ira E. Berry, Inc. (a Missouri corporation)
Coldwell Banker Mortgage Partners, Inc. (a Delaware corporation)
Coldwell Banker Moving Services, Inc. (a California corporation)
Coldwell Banker Real Estate, Inc. (a Pennsylvania corporation)
Coldwell Banker Real Estate Services, Inc. (a New Jersey corporation)
Coldwell Banker Real Property Services Corporation (a Delaware corporation)
Coldwell Banker Relocation Services, Inc. (a New York corporation)
Coldwell Banker Residential Affiliates, Inc. (a California corporation)
<PAGE>
2
Coldwell Banker Residential Brokerage Company (a California corporation)
Coldwell Banker Residential Real Estate (a California corporation)
Coldwell Banker Residential Real Estate Services Of Wisconsin, Inc. (a
Wisconsin corporation)
Coldwell Banker Residential Referral Network (a California corporation)
Coldwell Banker Residential Referral Network, Inc. (a Pennsylvania
corporation)
Coldwell Banker Settlement And Title Services, Inc. (a Virginia
corporation)
Coldwell Banker Settlement And Title Services Of Maryland, Inc. (a
Virginia corporation)
Executrans Canada Limited (a Canadian corporation)
Executrans, Inc. (a New York corporation)
Forest E. Olson, Inc. (a California corporation)
Fox Realty Corporation (a California corporation)
Gray City Graphics, Inc. (an Illinois corporation)
Guardian Title Company (a California corporation)
Holiday Homes International Corp. (a Delaware corporation)
Neighborhood Brokerage Office Corporation (a California corporation)
Previews Incorporated (a New York corporation)
Referral Network, Inc. (a Florida corporation)
Referral Network, Inc. (a Texas corporation)
Relocation 1, Inc. (a Delaware corporation)
Valley of California, Inc. (a California corporation)
Orange County Shipper's Association (a California corporation)
Coldwell Banker Affiliates of Canada (an Ontario general partnership)
THMN, Inc. (a Delaware corporation)
The Home Mortgage Network (a Delaware limited partnership)
<PAGE>
SCHEDULE IV
to Underwriting Agreement
dated [______________]
HFS Incorporated
Common Stock
DELAYED DELIVERY CONTRACT
HFS Incorporated
339 Jefferson Road
Parsippany, New Jersey 07054
Dear Sirs:
The undersigned hereby agrees to purchase from HFS
Incorporated, a Delaware corporation (the "Company"), and the Company agrees to
sell to the undersigned on , 19 (the "Delivery Date"),
[ ] Shares of the Company's Common Stock, par value $.01 per share (the
"Shares"), offered by the Company's Prospectus dated ________ , 1996, as
supplemented by its Prospectus Supplement dated , 19 , receipt of
which is hereby acknowledged, at a purchase price of $____ per share, and on the
further terms and conditions set forth in this contract.
Payment for the Shares shall be made to the Company or its
order by certified or official bank check in New York Clearing House funds, at
the offices of _____________, _____________, New York, New York, at A.M., New
York City time, on the Delivery Date (or in such other funds and/or at such
other place as the Company and the undersigned may agree upon in writing), upon
delivery of the Shares to the undersigned, in such authorized denominations and
registered in such names as the undersigned may request in writing addressed to
the Company not less than five business days prior to the Delivery Date.
The obligation of the undersigned to take delivery of and make
payment for the Shares on the Delivery Date shall be subject only to the
conditions that (1) the purchase of the Shares by the undersigned shall not, on
the Delivery Date, be prohibited under the laws of any jurisdiction to which the
undersigned is subject and that govern such investment, and (2) the Company, on
or before , 19 , shall have sold to the Underwriters of the Shares (the
"Underwriters") such number of Shares as is to be sold to them pursuant to
<PAGE>
2
the Underwriting Agreement dated the date hereof between the Company and the
Underwriters. The obligation of the undersigned to take delivery of and make
payment for the Shares shall not be affected by the failure of any Underwriter
or other purchaser to take delivery of and make payment for the Shares pursuant
to other contracts similar to this contract.
Promptly after completion of the sale to the Underwriters, the
Company will mail or deliver to the undersigned, at its address set forth below,
a notice to such effect, accompanied by a copy of the opinion of counsel for the
Company delivered to the Underwriters in connection therewith.
By the execution hereof, the undersigned represents and
warrants to the Company that (1) its investment in the Shares is not, as of the
date hereof, prohibited under the laws of any jurisdiction to which the
undersigned is subject and that govern such investment, (2) all necessary
corporate action for the due execution and delivery of this contract and the
payment for and purchase of the Shares has been taken by it and no further
authorization or approval of any governmental or other regulatory authority is
required for such execution, delivery, payment or purchase and (3) upon the
acceptance by the Company and the mailing or delivery of a copy as provided
below, this contract will constitute a valid and binding agreement of the
undersigned in accordance with its terms.
This contract will inure to the benefit of and be binding upon
the parties hereto and their respective successors, but will not be assignable
by either party hereto without the written consent of the other.
It is understood that the Company will not accept Delayed
Delivery Contracts for a number of Shares, the aggregate proceeds of which are
in excess of $______ and that the acceptance of any Delayed Delivery Contract is
in the Company's sole discretion and, without limiting the foregoing, need not
be on a first-come, first-served basis. If this contract is acceptable to the
Company, it is requested that the Company sign the form of acceptance on a copy
hereof and mail or deliver a signed copy to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such copy is so mailed or delivered.
<PAGE>
This contract shall be governed by the laws of the State of New York.
Yours very truly,
______________________________
(Name of Purchaser)
By:___________________________
Title:
______________________________
______________________________
(Address)
Accepted as of the date first above written:
HFS Incorporated
By:___________________________
Name:
Title:
PURCHASER - PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed is as
follows: (Please print.)
Telephone No.
Name (including Area Code)
- ---- ---------------------
<PAGE>
SCHEDULE V
to Underwriting Agreement
dated [______________]
MATTERS TO BE COVERED BY LETTER OR LETTERS
OF INDEPENDENT PUBLIC ACCOUNTANTS
To the extent that a report or opinion of Deloitte & Touche,
LLP, on the Consolidated Financial Statements of HFS Incorporated is included or
incorporated by reference in the Registration Statement or any exhibit thereto,
the Prospectus or any Prospectus Supplement, such firm, to the extent
applicable, shall have furnished to you the following letter or letters (in each
case in form and substance satisfactory to you):
(1) At the date hereof, a letter (the "Comfort Letter"), to
the effect that:
(a) They are independent accountants with respect to
the Company and its subsidiaries within the meaning of the
1933 Act and the applicable published 1933 Act Regulations.
(b) In their opinion, the audited consolidated
financial statements and the related financial statement
schedules of the Company reported on by them included or
incorporated by reference in such annual report on Form 10-K
comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published 1933
Act Regulations with respect to Registration Statements on
Form S-3 and the 1934 Act and the published 1934 Act
Regulations with respect to annual reports on Form 10-K.
(c) Such letter shall further state that they have
performed such other procedures, specified by you, not
constituting an audit, as they have agreed to perform and
report on with respect to certain amounts, percentages,
numerical data and other financial information in the Form
10-K identified by you and have compared certain of such
amounts, percentages, numerical data and financial information
with, and have found such items to be in agreement with or
derived from, the detailed accounting records of the Company
and its subsidiaries.
(d) On the basis of procedures (but not an
examination in accordance with generally accepted auditing
standards) consisting of:
(i) a reading of minutes of all meetings of the
Company's shareholders, Board of Directors (including
the audit, executive and
<PAGE>
2
compensation committees) from the date of the latest
audited consolidated financial statements of the
Company and its subsidiaries;
(ii) a reading of the unaudited condensed
consolidated financial statements of the Company and
its subsidiaries included or incorporated by
reference in the quarterly report on Form 10-Q for
each Form 10-Q filed 1996; and
(iii) inquiries of certain officials of the
Company who have responsibility for financial and
accounting matters as to (A) whether the unaudited
condensed consolidated financial statements referred
to in (ii) above comply as to form in all material
respects with the applicable accounting requirements
of the 1934 Act and the published 1934 Act
Regulations with respect to Form 10-Q and (B) whether
such unaudited condensed consolidated financial
statements are in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the audited
consolidated financial statements referred to above;
nothing came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements included or incorporated by
reference in such quarterly report on Form 10-Q do not comply as to form in all
material respects with the applicable accounting requirements of the 1934 Act
and the published 1934 Act Regulations with respect to Form 10-Q, or that such
unaudited condensed consolidated financial statements are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of audited consolidated financial statements referred to
above, except as disclosed in the notes to such unaudited condensed consolidated
financial statements.
(e) Such letter shall further state that they have
performed such other procedures, specified by you, not
constituting an audit, as they have agreed to perform and
report on with respect to certain amounts, percentages,
numerical data and other financial information in the Form
10-Qs identified by you and have compared certain of such
amounts, percentages, numerical data and financial information
with, and have found such items to be in agreement with or
derived from, the detailed accounting records of the Company
and its subsidiaries.
(f) On the basis of the inquiries and procedures
referred to in Section 1(d) of Schedule III (but carried out
to the specified date referred to in Section 2(a) of Schedule
III), nothing came to their attention that caused them to
believe that, from the date of the latest balance sheet of the
Company and
<PAGE>
3
its subsidiaries included or incorporated by reference in the
Prospectus to such specified date, there was:
(i) any change in the capital stock of the
Company, as compared with the amount shown in such
latest balance sheet;
(ii) any decrease in stockholders' equity of the
Company and its subsidiaries, as compared with the
amounts shown in such latest balance sheet;
(iii) any increase in long-term debt of the
Company and its subsidiaries, as compared with the
corresponding total amount of such debt outstanding
at the date of such latest balance sheet; or
(iv) any decrease from the date of such latest
balance sheet to such specified date in consolidated
net revenue of the Company and its subsidiaries or
in the total amount or per share amount (on a
primary and fully diluted basis) of consolidated net
income of the Company and its subsidiaries, as
compared with the corresponding period of the
preceding year, except in all instances for changes
or decreases that the Prospectus discloses have
occurred or may occur or that are described in the
Closing Letter.
(g) Such letter shall further state that they have
performed such other procedures, specified by you, not
constituting an audit, as they have agreed to perform and
report on with respect to certain amounts, percentages,
numerical data and other financial information in the
Registration Statement, the Prospectus and the exhibits to the
Registration Statement or in the documents incorporated by
reference in the Prospectus identified by you, and have
compared certain of such amounts, percentages, numerical data
and financial information with, and have found such items to
be in agreement with or derived from, the detailed accounting
records of the Company and its subsidiaries.
(2) At the Closing Time, a letter dated the Closing Time (the
"Closing Letter"), to the effect that they reaffirm as of the date of
the Closing Letter (and as though made on the date of the Closing
Letter) all statements made in the comfort letter, if any, except that
the inquiries and procedures specified therein shall have been carried
out to a specified date not more than five days prior to the date of
the Closing Letter.
<PAGE>
EXHIBIT 1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM OPINION
Based upon and subject to the limitations, qualifications,
exceptions and assumptions set forth above, we are of the opinion that:
(1) the authorized capital stock of the Company conform in all
material respects as to legal matters to the description thereof contained in
the Prospectus;
(2) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(3) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting Agreement
will not (i) contravene any provision of the Amended and Restated Certificate of
Incorporation of the Company as currently in effect or the Amended and Restated
By-Laws of the Company as currently in effect, (ii) contravene any agreement or
other instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to (a) the Registration Statement or (b) the Company's
Annual Report on Form 10-K for the fiscal year ending December 31, ____, as
amended, or (iii) violate any present statute, rule or regulation (collectively,
"Requirements of Law") or any order, judgment or decree of any court or
governmental agency or body (collectively, "Orders") having jurisdiction over
the Company or any of its properties or assets. The opinion expressed in clause
(iii) of this paragraph (3) is based on our review of those Requirements of Law
which are ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without making any special investigation concerning
any other Requirements of Law, and those Orders specifically identified to us by
the Company as being Orders to which it is subject (no such Orders have been so
identified to such counsel). In addition, we express no opinion in this
paragraph (3) with respect to (i) any state securities or Blue Sky laws, rules
or regulations or (ii) the information contained in, or the accuracy,
completeness or correctness of, the Prospectus or the Registration Statement or
the compliance thereof as to form with the Securities Act of 1933 (the "Act")
and the General Rules and Regulations thereunder, which matters are dealt with
in paragraphs (1) above and (5) below and the second paragraph following
paragraph (7) below;
(4) based upon our review of those Requirements of Law which
are ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without having made any special investigation
concerning any other Requirements of Law, no consent, approval, authorization or
Order of, or filing or registration with, any court or governmental agency or
body having jurisdiction over the Company and its
<PAGE>
2
Subsidiaries or any of their respective properties or assets is required for the
execution, delivery and performance of the Underwriting Agreement by the Company
or the consummation by the Company of the transactions contemplated thereby
except for (i) such as have been obtained under the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or (ii) such as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the shares by you, as to which we express no opinion;
(5) the statements made in the Prospectus under the caption
"Description of Capital stock," to the extent such statements constitute
summaries of legal matters and documents or legal conclusions, have been
reviewed by us and fairly present the information disclosed therein in all
material respects;
(6) (i) each document filed pursuant to the Exchange Act, and
incorporated by reference in the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information included
in or omitted from such document as to which we need express no opinion), when
filed, appeared on its face to be responsive as to form in all material respects
with the requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder and (ii) each of the Registration
Statement and the Prospectus (other than the financial statements, notes and
schedules thereto and other financial information included in or omitted from
the Registration Statement or Prospectus, as to which we express no opinion), as
of their respective effective or issue dates, appeared on their face to be
responsive as to form in all material respects with the requirements of the Act
and the applicable rules and regulations thereunder; and such counsel does not
have actual knowledge of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement which are not
filed as required; and
(7) the Company is not required to be registered or regulated
as an "investment company" as such term is defined under the Investment Company
Act of 1940, as amended.
We have been orally advised by the Commission that the
Registration statement was declared effective under the 1933 Act at ___ on
__________ and, we have been advised by the Commission that no stop order
suspending the effectiveness of the Registration Statement under the 1933 Act
has been issued and, to the best of our knowledge, no proceedings for that
purpose have been initiated or are pending or threatened by the Commission.
In addition, we have participated in conferences with officers
and representatives of the Company, representatives of the independent
accountants of the Company, and you and your counsel at which the contents of
the Registration Statement and the Prospectus and related matters were discussed
and, although we are not passing upon and
<PAGE>
3
do not assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus and we
have made no independent check or verification thereof, except as set forth in
numbered paragraph 5 hereof, on the basis of the foregoing, no facts have come
to our attention that have led us to believe that the Registration Statement, on
the original effective date of the Registration Statement, on the effective date
of the most recent post-effective amendment thereto, if any, on the date of the
filing of any annual report on Form 10-K after the filing of the Registration
Statement, on the date of the Underwriting Agreement, or at the Closing Time,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, or any amendment or supplement
thereto, at the time the Prospectus Supplement was issued at the time any such
amended or supplemented Prospectus was issued or at the Closing Time, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that we
express no opinion or belief with respect to the financial statements, schedules
and other financial data included therein or excluded therefrom.
Very truly yours,
<PAGE>
EXHIBIT 2
JAMES BUCKMAN OPINION
Based upon and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, I am of the opinion that:
1. the Company has been duly organized and is subsisting in
good standing as a corporation under the laws of the State of Delaware with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the Prospectus;
2. the Company is qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would make
such qualification necessary except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the Company
and its subsidiaries, considered as one enterprise;
3. each of the subsidiaries that is incorporated in Delaware
(a "Delaware Subsidiary") has been duly organized and is subsisting and in good
standing as a corporation under the laws of Delaware with corporate power and
corporate authority under such laws to own, lease and operate its properties and
conduct its business;
4. each subsidiary is qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would make
such qualification necessary except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the Company
and its subsidiaries, considered as one enterprise;
5. all of the outstanding shares of capital stock of the
Company have been duly authorized by all requisite corporate action on the part
of the Company and have been validly issued and are fully paid and
nonassessable; no holder thereof is or will be subject to personal liability by
reason of being such a holder; and none of the outstanding shares of capital
stock of the Company were issued in violation of the preemptive rights of any
stockholder of the Company;
6. the Shares have been duly authorized and validly reserved
for issuance by the Company and, when issued and paid for in accordance with the
terms of the Underwriting Agreement, will be validly issued, fully paid and
nonassessable; all corporate action required to be taken for the authorization,
issuance and delivery of such Shares has been validly taken; the issuance of the
Shares is not subject to any preemptive rights of any stockholder of the
Company;
<PAGE>
5
7. the authorized, issued and outstanding capital stock of the
Company is as described in the Prospectus under the caption "Description of
Capital Stock";
8. all of the outstanding shares of capital stock of each
Delaware Subsidiary have been duly authorized by all requisite corporate action
on the part of the relevant Delaware Subsidiary and have been validly issued and
are fully paid and nonassessable; except with respect to the ownership of 12.5%
of the common stock of Century 21 Holding Corp. by certain managers, all of the
shares of capital stock of each of the Company Subsidiaries are owned by the
Company free and clear of any pledge, lien, security interest, charge, claim,
encumbrance or equity (each a "Lien") except for such Liens as are not,
individually or in the aggregate, material to the Company and its subsidiaries,
considered as one enterprise;
9. there are no statutes or regulations, or any pending or, to
my knowledge, threatened legal or governmental proceedings against the Company
or any subsidiary, required to be described in the Prospectus that are not
described as required, nor are there any contracts or documents required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; furthermore, no default exists in the due performance or observance by
the Company, or any subsidiary, or, to my knowledge, any other party thereto, of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, loan agreement, note, lease or other agreement or
instrument that is described in the Registration Statement or the Prospectus or
filed as an exhibit to the Registration Statement, except such defaults that do
not have a material adverse effect on the Company and its subsidiaries,
considered as one enterprise;
10. the provisions of the contracts and agreements that are
summarized in the Prospectus or in the Company's Proxy Statement dated [ ]
(the "Proxy") under the heading "Certain Relationships and Related
Transactions" and "Executive Compensation" conform in all material
respects to the description thereof contained in the Prospectus or Proxy and
such description fairly presents the information disclosed;
11. the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
12. the execution and delivery of the Underwriting Agreement
by the Company and compliance by the Company with the terms of the Underwriting
Agreement (a) do not and will not constitute or result in a breach of or a
default under any of the terms or provisions of, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary under (i) any indenture, mortgage or loan agreement,
or any other agreement, including without limitation the Credit Agreement (as
defined in the Prospectus) or instrument to which the Company or any subsidiary
is a party or by which it may be bound or to which any of its properties may be
subject, (ii) any judgment, order or decree applicable to the Company or any
subsidiary of
<PAGE>
6
any government, governmental instrumentality or court, domestic, or foreign,
having jurisdiction over the Company or any subsidiary or any of their
properties, and (B) do not and will not result in a violation of any applicable
law, rule or regulation (except for the federal securities laws, and the
securities or blue sky laws of the various states, as to which I express no
opinion) except, in each case, for such breaches, defaults or violations that
would not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its subsidiaries,
considered as one enterprise;
13. except as previously disclosed to you in writing, (i) the
Company or its subsidiaries are the beneficial owners of the U.S. trademarks and
service marks set forth in the Prospectus, with the exception of the Ramada
mark; (ii) there is no claim, suit, action or proceeding pending or, to the best
of my knowledge, threatened against the Company or any subsidiary that involves
a claim of infringement of any trademark or service marks which infringement (if
the subject of any unfavorable decision) would have a material adverse effect on
the Company and its subsidiaries, considered as one enterprise; and (iii) the
current use of the trademarks and service marks by the Company or any of its
subsidiaries does not, to the best of my knowledge, infringe upon any right of
any third party which infringement (if the subject of any unfavorable decision)
would reasonably be expected to have a material adverse effect on the Company
and its subsidiaries, considered as one enterprise;
14. all corporate action required to be taken for consummation
of the Merger has been validly taken.
In addition, I have participated in conferences with other
officers and representatives of the Company, representatives of the independent
accountants of the Company, and you and your counsel at which the contents of
the Registration Statement and the Prospectus and related matters were discussed
and, although I am not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and I have made no independent check or
verification thereof, except as otherwise specifically referred to in paragraph
12 of this opinion, on the basis of the foregoing, no facts have come to my
attention that have led me to believe that the Registration Statement, on the
original effective date of the Registration Statement, on the effective date of
the most recent post-effective amendment thereto, if any, on the date of the
filing of any annual report on Form 10-K after the filing of the Registration
Statement, on the date of the Underwriting Agreement, or at the Closing Time,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, or any amendment or supplement
thereto, at the time the Prospectus Supplement was issued, at the time any such
amended or supplemented Prospectus was issued or at the Closing Time, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that I
<PAGE>
7
express no opinion or belief with respect to the financial statements, schedules
and other financial data included therein or excluded therefrom.
Very truly yours,
James E. Buckman
- --------------------------------------------------------------------------------
HFS INCORPORATED
TO
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,
Trustee
-------------------------------
Indenture
Dated as of__________
________________
CONVERTIBLE AND NON-CONVERTIBLE
SENIOR DEBT SECURITIES
- --------------------------------------------------------------------------------
<PAGE>
HFS INCORPORATED
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of ,
---------------------------------------------------------------
Trust Indenture Indenture
Act Section
- --------------- ------
ss. 310(a)(1) .................................. 607(a)
(a)(2) .................................. 607(a)
(b) .................................. 608
ss. 312(c) .................................. 701
ss. 314(a) .................................. 703
(a)(4) .................................. 1004
(c)(1) .................................. 102
(c)(2) .................................. 102
(e) .................................. 102
ss. 315(b) .................................. 601
ss. 316(a)(last
sentence) .................................. 101 ("Outstanding")
(a)(1)(A) .................................. 502, 512
(a)(1)(B) .................................. 513
(b) .................................. 508
(c) .................................. 104(e)
ss. 317(a)(1) .................................. 503
(a)(2) .................................. 504
(b) .................................. 1003
ss. 318(a) .................................. 111
- ---------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
Table of Contents1
Page
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PARTIES ............................................ 1
RECITALS OF THE COMPANY.............................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.................... 1
-----------
Act......................................... 2
Additional Amounts.......................... 2
Affiliate................................... 2
Asset Sale.................................. 2
Attributable Debt........................... 2
Authenticating Agent........................ 2
Authorized Newspaper........................ 3
Bearer Security............................. 3
Beneficial Owner............................ 3
Board of Directors.......................... 4
Board Resolution............................ 4
Business Day................................ 4
Capital Lease Obligation.................... 4
Capital Stock............................... 4
CEDEL S.A................................... 4
Commission.................................. 5
Common Depositary........................... 5
Company..................................... 5
Company Request or Company Order............ 5
Consolidated Net Tangible Assets............ 5
Corporate Trust Office...................... 5
corporation................................. 5
coupon...................................... 5
Credit Agreement............................ 5
Currency.................................... 6
Currency Conversion Date.................... 6
Currency Conversion Event................... 6
Debt........................................ 6
Default..................................... 6
- --------
1 Note: This table of contents shall not, for any
purpose, be deemed to be a part of the Indenture.
<PAGE>
ii
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Defaulted Interest........................................ 6
Dollar or $............................................... 6
Dollar Equivalent of the Currency Unit.................... 6
Dollar Equivalent of the Foreign Currency................. 6
ECU....................................................... 6
Election Date............................................. 6
Euroclear................................................. 6
European Communities...................................... 7
European Monetary System.................................. 7
Event of Default.......................................... 7
Exchange Date............................................. 7
Exchange Rate Agent....................................... 7
Exchange Rate Officer's Certificate....................... 7
Fair Market Value......................................... 7
Federal Bankruptcy Code................................... 7
Foreign Currency.......................................... 7
Franchise Contract........................................ 7
Franchise Fee Revenues.................................... 7
Gaming Authority.......................................... 8
Gaming Laws............................................... 8
Gaming License............................................ 8
Government Obligations.................................... 8
Holder.................................................... 8
Indenture................................................. 8
Indexed Security.......................................... 9
interest.................................................. 9
Interest Payment Date..................................... 9
Issue Date................................................ 9
Lien...................................................... 9
Market Exchange Rate...................................... 9
Maturity.................................................. 10
Officers' Certificate..................................... 10
Opinion of Counsel........................................ 10
Optional Reset Date....................................... 10
Original Issue Discount Security.......................... 10
Outstanding............................................... 10
Paying Agent.............................................. 12
Person.................................................... 12
Place of Payment.......................................... 12
Predecessor Security...................................... 12
Principal Franchise Assets................................ 12
Principal Property........................................ 12
Pro Forma Consolidated Net Tangible Assets................ 13
Redemption Date........................................... 13
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Redemption Price................................................ 13
Registered Security............................................. 13
Regular Record Date............................................. 13
Repayment Date.................................................. 13
Repayment Price................................................. 13
Responsible Officer............................................. 13
Restricted Subsidiary........................................... 13
sale and leaseback transaction.................................. 14
Securities...................................................... 14
Security Register............................................... 14
Special Record Date............................................. 14
Stated Maturity................................................. 14
Subordinated Indenture.......................................... 14
Subsidiary...................................................... 14
Total Assets.................................................... 14
Trust Indenture Act............................................. 15
Trustee......................................................... 15
United States................................................... 15
United States person............................................ 15
Valuation Date.................................................. 15
Vice President.................................................. 15
Voting Stock.................................................... 15
Yield to Maturity............................................... 15
SECTION 102. Compliance Certificates and Opinions....................... 16
SECTION 103. Form of Documents Delivered to Trustee..................... 16
SECTION 104. Acts of Holders............................................ 17
SECTION 105. Notices, etc. to Trustee and Company....................... 19
SECTION 106. Notice to Holders; Waiver.................................. 19
SECTION 107. Effect of Headings and Table of Contents................... 20
SECTION 108. Successors and Assigns..................................... 21
SECTION 109. Separability Clause........................................ 21
SECTION 110. Benefits of Indenture...................................... 21
SECTION 111. Governing Law.............................................. 21
SECTION 112. Legal Holidays............................................. 21
SECTION 113. Trust Indenture Act........................................ 22
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally............................................ 22
SECTION 202. Form of Trustee's Certificate of Authentication............ 23
SECTION 203. Securities Issuable in Global Form......................... 23
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<TABLE>
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ARTICLE THREE
THE SECURITIES
<S> <C> <C>
SECTION 301. Amount; Issuable in Series........................................... 24
SECTION 302. Denominations........................................................ 28
SECTION 303. Execution, Authentication, Delivery and Dating....................... 28
SECTION 304. Temporary Securities................................................. 31
SECTION 305. Registration, Registration of Transfer and Exchange.................. 34
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities..................... 37
SECTION 307. Payment of Interest; Interest Rights Preserved; Optional
Interest Reset....................................................... 38
SECTION 308. Optional Extension of Stated Maturity................................ 41
SECTION 309. Persons Deemed Owners................................................ 41
SECTION 310. Cancellation......................................................... 43
SECTION 311. Computation of Interest.............................................. 43
SECTION 312. Currency and Manner of Payments in Respect of Securities............. 43
SECTION 313. Appointment and Resignation of Successor Exchange Rate Agent......... 47
SECTION 314. Designation as Senior Indebtedness................................... 48
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.............................. 48
SECTION 402. Application of Trust Money........................................... 50
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.................................................... 50
SECTION 502. Acceleration of Maturity; Rescission and Annulment................... 52
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee...... 53
SECTION 504. Trustee May File Proofs of Claim..................................... 54
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.......... 54
SECTION 506. Application of Money Collected....................................... 55
SECTION 507. Limitation on Suits.................................................. 56
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest........................................................ 57
SECTION 509. Restoration of Rights and Remedies................................... 57
SECTION 510. Rights and Remedies Cumulative....................................... 57
SECTION 511. Delay or Omission Not Waiver......................................... 58
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SECTION 512. Control by Holders........................................................................................ 58
SECTION 513. Waiver of Past Defaults................................................................................... 58
SECTION 514. Waiver of Stay or Extension Laws.......................................................................... 59
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults........................................................................................ 59
SECTION 602. Certain Rights of Trustee................................................................................. 60
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities............................................ 61
SECTION 604. May Hold Securities....................................................................................... 61
SECTION 605. Money Held in Trust....................................................................................... 62
SECTION 606. Compensation and Reimbursement............................................................................ 62
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests............................................ 62
SECTION 608. Resignation and Removal; Appointment of Successor......................................................... 63
SECTION 609. Acceptance of Appointment by Successor.................................................................... 64
SECTION 610. Merger, Conversion, Consolidation or Succession to Business............................................... 66
SECTION 611. Appointment of Authenticating Agent....................................................................... 66
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.............................................................. 68
SECTION 702. Reports by Trustee........................................................................................ 68
SECTION 703. Reports by Company........................................................................................ 68
ARTICLE EIGHT
MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms...................................................... 69
SECTION 802. Successor Person Substituted.............................................................................. 70
SECTION 803. Securities to Be Secured in Certain Events................................................................ 70
<PAGE>
vi
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders........................................................ 71
SECTION 902. Supplemental Indentures with Consent of Holders........................................................... 73
SECTION 903. Execution of Supplemental Indentures...................................................................... 74
SECTION 904. Effect of Supplemental Indentures......................................................................... 74
SECTION 905. Conformity with Trust Indenture Act....................................................................... 74
SECTION 906. Reference in Securities to Supplemental Indentures........................................................ 74
SECTION 907. Notice of Supplemental Indentures......................................................................... 75
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest....................................................... 75
SECTION 1002. Maintenance of Office or Agency........................................................................... 75
SECTION 1003. Money for Securities Payments to Be Held in Trust......................................................... 77
SECTION 1004. Statement as to Compliance................................................................................ 78
SECTION 1005. Additional Amounts........................................................................................ 79
SECTION 1006. Payment of Taxes and Other Claims......................................................................... 80
SECTION 1007. Maintenance of Properties................................................................................. 80
SECTION 1008. Corporate Existence....................................................................................... 80
SECTION 1009. Limitation on Liens....................................................................................... 81
SECTION 1010. Limitation on Sale and Leaseback Transactions............................................................. 82
SECTION 1011. Limitation on Debt of Restricted Subsidiaries............................................................. 84
SECTION 1012. Limitation on Transfers of Principal Franchise Assets..................................................... 84
SECTION 1013. Limitation on Restrictions on Subsidiary Dividends and Other Distributions................................ 84
SECTION 1014. Waiver of Certain Covenants............................................................................... 85
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.................................................................................. 85
SECTION 1102. Election to Redeem; Notice to Trustee..................................................................... 85
SECTION 1103. Selection by Trustee of Securities to Be Redeemed......................................................... 86
SECTION 1104. Notice of Redemption...................................................................................... 86
SECTION 1105. Deposit of Redemption Price............................................................................... 87
SECTION 1106. Securities Payable on Redemption Date..................................................................... 88
SECTION 1107. Securities Redeemed in Part............................................................................... 89
<PAGE>
vii
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SECTION 1108. Redemption Pursuant to Gaming Laws........................................................................ 89
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.................................................................................. 90
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..................................................... 90
SECTION 1203. Redemption of Securities for Sinking Fund................................................................. 91
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.................................................................................. 92
SECTION 1302. Repayment of Securities................................................................................... 92
SECTION 1303. Exercise of Option........................................................................................ 93
SECTION 1304. When Securities Presented for Repayment Become
Due and Payable........................................................................................... 93
SECTION 1305. Securities Repaid in Part................................................................................. 94
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance................................................................................................ 95
SECTION 1402. Defeasance and Discharge.................................................................................. 95
SECTION 1403. Covenant Defeasance....................................................................................... 96
SECTION 1404. Conditions to Defeasance or Covenant Defeasance........................................................... 96
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions............................................................. 98
SECTION 1406. Reinstatement............................................................................................. 99
<PAGE>
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ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called................................................................. 99
SECTION 1502. Call, Notice and Place of Meetings........................................................................ 99
SECTION 1503. Persons Entitled to Vote at Meetings......................................................................100
SECTION 1504. Quorum; Action............................................................................................100
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings...................................................................................101
SECTION 1506. Counting Votes and Recording Action of Meetings...........................................................102
TESTIMONIUM
SIGNATURES AND SEALS
EXHIBIT A FORMS OF CERTIFICATION
EXHIBIT A-1 FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO
RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST PAYABLE
PRIOR TO THE EXCHANGE DATE
EXHIBIT A-2 FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND CEDEL
S.A. IN CONNECTION WITH THE EXCHANGE OF A PORTION OF A
TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST PAYABLE
PRIOR TO THE EXCHANGE DATE
</TABLE>
<PAGE>
PARTIES
INDENTURE, dated as of ____________, between HFS INCORPORATED,
a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at 339
Jefferson Road, Parsippany, New Jersey 07054, and THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK, a New York banking corporation duly organized and existing
under the laws of the State of New York, Trustee (herein called the "Trustee")
having its principal office at One Liberty Plaza, 23rd Floor, New York, New York
10006.
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
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), which may or may not be convertible into or exchangeable for any
securities of any Person (including the Company), to be issued in one or more
series as provided in this Indenture.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with 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 ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
<PAGE>
2
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) 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, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under
the Trust Indenture Act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of
such computation; and
(4) 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.
Certain terms, used principally in Article Three, are defined
in that Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Amounts" has the meaning specified in Section
1005.
"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.
"Asset Sale" has the meaning specified in Section 1012.
"Attributable Debt" means, as to any particular lease that is
the subject of a sale-leaseback transaction which has a remaining term of more
than 12 months, at any date as of which the amount thereof is to be determined,
the principal amount of outstanding Capital Lease Obligation.
<PAGE>
3
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper, in the English
language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Where
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different newspapers in
the same city meeting the foregoing requirements and in each case on any
Business Day.
"Bearer Security" means any Security except a Registered
Security.
"Beneficial Owner" of shares of Capital Stock means, with
respect to any Person, any such shares:
(a) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the sole or shared right to
vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act or pursuant
to any successor provision), including, but not limited to, pursuant to
any agreement, arrangement or understanding, whether or not in writing;
provided, that a Person shall not be deemed the "Beneficial Owner" of,
or to "Beneficially Own", any security under this subparagraph as a
result of an agreement, arrangement or understanding to vote such
security that both (y) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the rules and
regulations promulgated under the Exchange Act and (z) is not
reportable by such person on Schedule 13D promulgated under the
Exchange Act (or any comparable or successor report) without giving
effect to any applicable waiting period, or Exchange Act (or any
comparable or successor report) without giving effect to any applicable
waiting period; or
(b) which are Beneficially Owned, directly or indirectly, by
any other person (or any Affiliate or Associate thereof) with which
such person (or any of such person's Affiliates or Associates) has any
agreement, arrangement or understanding, whether or not in writing,
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (a) above)
or disposing of any Capital Stock;
provided, that (i) no director or officer of the Corporation (nor any
Affiliate or Associate of any such director or officer) shall, solely
by reason of any or all of such directors or officers acting in their
capacities as such, be deemed the "Beneficial
<PAGE>
4
Owner" of or to "Beneficially Own" any shares of Capital Stock that are
Beneficially Owned by any other such director or officer, and (ii) no
person shall be deemed the "Beneficial Owner" of or to "Beneficially
Own" any shares of Capital Stock held in any voting trust, any employee
stock ownership plan or any similar plan or trust if such person does
not possess the right to vote, to direct the voting of or to be
consulted with respect to the voting of such shares.
For the purposes of this definition, the terms "Affiliate" and
"Associate" shall have the respective meanings ascribed to such terms
in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended as in effect on June 14, 1994 (the term "registrant" in said
Rule 12b-2 meaning in this case the Company).
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"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 a committee of the Board of Directors empowered to
exercise all of the powers of the Board of Directors) and to be in full force
and effect on the date of such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York or in the city in which the Corporate Trust Office is located are
authorized or obligated by law or executive order to close.
"Capital Lease Obligation" means any obligation that, in
accordance with generally accepted accounting principles, is required to be
classified and accounted for as a capital lease, and the principal amount of
Debt represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with such principles; provided, however,
Capital Lease Obligation shall not include any operation lease of the Company or
any of its Subsidiaries in existence prior to the Issue Date which has been or
is recharacterized as a capital lease in accordance with generally accepted
accounting principles after the Issue Date. The stated maturity of any Capital
Lease Obligation shall be the last payment of rent or any other amount due under
such lease.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock of the Company or any Restricted Subsidiary.
"CEDEL S.A." means Cedel, S.A., or its successor.
<PAGE>
5
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this Indenture 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 Depositary" has the meaning specified in Section 304.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman, its President, any
Vice President, its Treasurer or an Assistant Treasurer, and deliver to the
Trustee.
"Consolidated Net Tangible Assets" as of any date of
determination, means the total amount of assets, including, without limitation,
franchise agreements, which would appear on the most currently available
consolidated balance sheet of the Company determined in accordance with
generally accepted accounting principles, after deducting therefrom, to the
extent otherwise included, goodwill.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office on the date of execution of this
Indenture is located at The Bank of Nova Scotia Trust Company of New York, One
Liberty Plaza, 23rd Floor, New York, New York 10006, except that with respect to
presentation of Securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted.
"corporation" includes corporations, associations, companies
and business trusts.
"coupon" means any interest coupon appertaining to a Bearer
Security.
"Credit Agreement" means the Credit Agreement among the
Company, Chemical Bank, as agent, and the banks signatories thereto, dated as of
December 16, 1993, as the same may be amended from time to time, be further
supplemented or amended, or the terms thereof waived or modified, to the extent
permitted by, and in accordance with, the terms thereof or any credit agreement
entered into in replacement of or refinancing of the existing credit agreement.
<PAGE>
6
"Currency" means any currency or currencies, composite
currency or currency unit or currency units, including, without limitation, the
ECU, issued by the government of one or more countries or by any recognized
confederation or association of such governments.
"Currency Conversion Date" has the meaning specified in
Section 312(d).
"Currency Conversion Event" means the cessation of use of (i)
a Foreign Currency both by the government of the country which issued such
Currency and by a central bank or other public institution of or within the
international banking community for the settlement of transactions, (ii) the ECU
both within the European Monetary System and for the settlement of transactions
by public institutions of or within the European Communities or (iii) any
currency unit (or composite currency) other than the ECU for the purposes for
which it was established.
"Debt" means notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States of America as at the time shall be
legal tender for the payment of public and private debts.
"Dollar Equivalent of the Currency Unit" has the meaning
specified in Section 312(g).
"Dollar Equivalent of the Foreign Currency" has the meaning
specified in Section 312(f).
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
"Election Date" has the meaning specified in Section 312(h).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear System.
<PAGE>
7
"European Communities" means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Date" has the meaning specified in Section 304.
"Exchange Rate Agent" means, with respect to Securities of or
within any series, unless otherwise specified with respect to any Securities
pursuant to Section 301, a New York Clearing House bank, designated pursuant to
Section 301 or Section 313.
"Exchange Rate Officer's Certificate" means a tested telex or
a certificate setting forth (i) the applicable Market Exchange Rate and (ii) the
Dollar or Foreign Currency amounts of principal (and premium, if any) and
interest, if any (on an aggregate basis and on the basis of a Security having
the lowest denomination principal amount determined in accordance with Section
302 in the relevant Currency), payable with respect to a Security of any series
on the basis of such Market Exchange Rate, sent (in the case of a telex) or
signed (in the case of a certificate) by the Treasurer, any Vice President or
any Assistant Treasurer of the Company.
"Fair Market Value" means the fair market value of the item in
question as determined by the Board of Directors acting in good faith and in
exercise of its fiduciary duties.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11
of the United States Code, as amended from time to time.
"Foreign Currency" means any Currency other than Currency of
the United States.
"Franchise Contract" means any contract between the Company
and any of its subsidiaries for the franchise of a Days Inn(R), Ramada(R),
Howard Johnson(R), Super 8(R), Villager Lodge(R) or Park Inn International(R)
hotel.
"Franchise Fee Revenues" means the total amount of revenues
derived from franchise fees as set forth on the most recent year-end income
statement of the Company and its consolidated subsidiaries and computed in
accordance with generally accepted accounting principles.
<PAGE>
8
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal or foreign government, any state, province or any city
or other political subdivision or otherwise and whether now or hereafter in
existence (including, without limitation, the National Indian Gaming Commission
or any other tribal authority), or any officer or official thereof with
authority to regulate any gaming operation (or proposed gaming operation) owned,
managed, or operated by the Company or any of its Subsidiaries.
"Gaming Laws" means each gaming law of any applicable Gaming
Authority, as amended from time to time, and the regulations promulgated and
rulings issued thereunder applicable to the Company or any of its Subsidiaries
or shareholders.
"Gaming License" means all licenses and other regulatory
approvals necessary for the lawful operation of any gaming or related business.
"Government Obligations" means, unless otherwise specified
with respect to any series of Securities pursuant to Section 301, securities
which are (i) direct obligations of the government which issued the Currency in
which the Securities of a particular series are payable or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the government which issued the Currency in which the Securities of such series
are payable, the payment of which is unconditionally guaranteed by such
government, which, in either case, are full faith and credit obligations of such
government payable in such Currency and are not callable or redeemable at the
option of the issuer thereof and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of any such
Government Obligation held by such custodian for the account of the holder of a
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Obligation or the specific payment of interest or principal of
the Government Obligation evidenced by such depository receipt.
"Holder" means, in the case of a Registered Security, the
Person in whose name a Security is registered in the Security Register and, in
the case of a Bearer Security, the bearer thereof and, when used with respect to
any coupon, shall mean the bearer thereof.
"Indenture" means this instrument as originally executed and
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,
and shall include the terms of any particular series of Securities established
as contemplated by Section 301; provided, however, that, if at any time more
than one Person is acting as Trustee under this instrument, "Indenture" shall
mean, with respect to any one or more series of Securities for which such
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9
Person is Trustee, 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 and shall include the
terms of particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is not Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person had
become such Trustee but to which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after Maturity, means
interest payable after Maturity at the rate prescribed in such Original Issue
Discount Security.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"Issue Date" means the date of first issuance of the Notes
under the Indenture.
"Lien" means any pledge, mortgage, lien, charge, encumbrance
or security interest except that a Lien shall not mean any license or right to
use intellectual property of the Company or a Subsidiary granted by the Company
or a Subsidiary.
"Market Exchange Rate" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, (i) for any conversion
involving a currency unit on the one hand and Dollars or any Foreign Currency on
the other, the exchange rate between the relevant currency unit and Dollars or
such Foreign Currency calculated by the method specified pursuant to Section 301
for the Securities of the relevant series, (ii) for any conversion of Dollars
into any Foreign Currency, the noon (New York City time) buying rate for such
Foreign Currency for cable transfers quoted in New York City as certified for
customs purposes by the Federal Reserve Bank of New York and (iii) for any
conversion of one Foreign Currency into Dollars or another Foreign Currency, the
spot rate at noon local time in the relevant market at which, in accordance with
normal banking procedures, the Dollars or Foreign Currency into which conversion
is being made could be purchased with the Foreign Currency from which conversion
is being made from major banks located in either New York City, London or any
other principal market for Dollars or such purchased Foreign Currency, in each
case determined by the Exchange Rate Agent. Unless otherwise specified with
respect to any Securities pursuant to Section 301, in the event of the
<PAGE>
10
unavailability of any of the exchange rates provided for in the foregoing
clauses (i), (ii) and (iii), the Exchange Rate Agent shall use, in its sole
discretion and without liability on its part, such quotation of the Federal
Reserve Bank of New York as of the most recent available date, or quotations
from one or more major banks in New York City, London or another principal
market for the Currency in question, or such other quotations as the Exchange
Rate Agent shall deem appropriate. Unless otherwise specified by the Exchange
Rate Agent, if there is more than one market for dealing in any Currency by
reason of foreign exchange regulations or otherwise, the market to be used in
respect of such Currency shall be that upon which a non-resident issuer of
securities designated in such Currency would purchase such Currency in order to
make payments in respect of such securities.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, including an employee of the Company, and who
shall be acceptable to the Trustee.
"Optional Reset Date" has the meaning specified in Section
307(b).
"Original Issue 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 502.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities and any coupons
<PAGE>
11
appertaining thereto; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Fourteen;
and
(iv) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined as of the date such Security is originally
issued by the Company as set forth in an Exchange Rate Officer's Certificate
delivered to the Trustee, of the principal amount (or, in the case of an
Original Issue Discount Security, the Dollar equivalent as of such date of
original issuance of the amount determined as provided in clause (i) above), of
such Security, (iii) the principal amount of any Indexed Security that may be
counted in making such determination or calculation and that shall be deemed
outstanding for such purpose shall be equal to the principal face amount of such
Indexed Security at original issuance, unless otherwise provided with respect to
such Security pursuant to Section 301, and (iv) Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or 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
<PAGE>
12
that the pledgee is not the Company or any other obligor upon the Securities or
any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person (including the Company acting
as Paying Agent) authorized by the Company to pay the principal of (or premium,
if any, on) or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment" means, when used with respect to the
Securities of or within any series, the place or places where the principal of
(and premium, if any, on) and interest on such Securities are payable as
specified as contemplated by Sections 301 and 1002.
"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 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupons
appertains, as the case may be.
"Principal Franchise Assets" means (i) any intellectual
property rights that are associated with Days Inn(R), Ramada(R), Howard
Johnson(R) and Super 8(R), including, without limitation, service marks,
trademarks, trade names and licenses to use the same but excluding service marks
and trademarks which do not incorporate Days Inn, Ramada, Howard Johnson or
Super 8 Motel names or marks and (ii) Franchise Contracts from which the Company
derived during the preceding 12 full calendar months an aggregate revenue on the
date as of which the determination of such revenue is being made and determined
in accordance with generally accepted accounting principles in excess of 10% of
Franchise Fee Revenues.
"Principal Property" means any reservation centers,
leaseholds, telecommunications contracts, computerized systems contracts,
intellectual property rights, or Franchise Contracts, owned by the Company or
any Restricted Subsidiary and located in the United States, the gross book value
(without deduction of any reserve for depreciation) of which on the date as of
which the determination is being made is an amount which exceeds 5% of Total
Assets, other than any such property which, in the opinion of the Board of
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13
Directors, is not of material importance to the total business conducted by the
Company and its Subsidiaries, taken as a whole.
"Pro Forma Consolidated Net Tangible Assets" means, in
connection with the acquisition of a Restricted Subsidiary, Consolidated Net
Tangible Assets after giving effect to such acquisition on a pro forma basis.
"Redemption Date", when used with respect to any Security to
be redeemed, in whole or in part, 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.
"Registered Security" means any Security registered in the
Security Register.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301.
"Repayment Date" means, when used with respect to any Security
to be repaid at the option of the Holder, the date fixed for such repayment
pursuant to this Indenture.
"Repayment Price" means, when used with respect to any
Security to be repaid at the option of the Holder, the price at which it is to
be repaid pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary (other than Park
Inn International and Villager Lodge) of which, at the time of determination,
all of the outstanding capital stock (other than directors' qualifying shares)
is owned by the Company directly and/or indirectly and which, at the time of
determination, is primarily engaged in
<PAGE>
14
franchising, developing, financing and providing marketing services for hotel
systems and casino gaming facilities. In the event that there shall at any time
be a question as to whether a Subsidiary is primarily engaged in franchising,
developing, financing, and providing marketing services for hotel systems and
casino gaming facilities, or a combination thereof, such matter shall be
determined for all purposes of this Indenture by a Board Resolution.
"sale and leaseback transaction" has the meaning specified in
Section 1010.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture; provided, however, that if at any time there is
more than one Person acting as Trustee under this Indenture, "Securities" with
respect to the Indenture as to which such Person is Trustee shall have the
meaning stated in the first recital of this Indenture and shall more
particularly mean Securities authenticated and delivered under this Indenture,
exclusive, however, of Securities of any series as to which such Person is not
Trustee.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted
Interest on the Registered Securities of or within any series means a date fixed
by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified in such Security or a coupon representing such installment of interest
as the fixed date on which the principal of such Security or such installment of
principal or interest is due and payable, as such date may be extended pursuant
to the provisions of Section 308.
"Subordinated Indenture" means the indenture to be entered
into between the Company and The Bank of Nova Scotia Trust Company of New York
in connection with the August 1996 shelf registration of the Company.
"Subsidiary" means any corporation of which at the time of
determination the Company, directly and/or indirectly through one or more
Subsidiaries, owns more than 50% of the shares of Voting Stock.
"Total Assets" means the total amount of assets (less
applicable reserves and other properly deductible items), as set forth on the
most recent balance sheet of the Company and its consolidated Subsidiaries and
computed in accordance with generally accepted accounting principles.
<PAGE>
15
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force at the date as of which this Indenture was executed, except
as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture 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;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
"United States" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source.
"Valuation Date" has the meaning specified in Section 312(c).
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation (irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
"Yield to Maturity" means the yield to maturity, computed at
the time of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such Security) and as set forth in such Security
in accordance with generally accepted United States bond yield computation
principles.
<PAGE>
16
SECTION 102. Compliance Certificates 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, if any, provided for in this Indenture (including any covenant
compliance with which constitutes a condition precedent) 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, 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, including,
without limitation, the certificate of authentication provided pursuant to
Section 303, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture (other than pursuant to
Section 1004) shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) 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;
(3) 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
(4) a statement as to whether, in the opinion of each such
individual, such covenant or condition has been complied with.
SECTION 103. Form 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.
<PAGE>
17
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 the 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 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders of the Outstanding Securities of all series or one or more series, as
the case may be, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. If Securities of a series are issuable as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of such series may, alternatively, be embodied in and evidenced by the
record of Holders of Securities of such series voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of Holders of
Securities of such series duly called and held in accordance with the provisions
of Article Fifteen, or a combination of such instruments and any such record.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both are delivered to
the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments and any such record (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments or so voting at any such meeting.
Proof of execution of any such instrument or of a writing appointing any such
agent, or of the holding by any Person of a Security, shall be sufficient for
any purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
(b) 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
<PAGE>
18
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 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 the
Trustee deems sufficient.
(c) The principal amount and serial numbers of Registered
Securities held by any Person, and the date of holding the same, shall be proved
by the Security Register.
(d) The principal amount and serial numbers of Bearer
Securities held by any Person, and the date of holding the same, may be proved
by the production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee to be satisfactory,
showing that at the date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein described; or such
facts may be proved by the certificate or affidavit of the Person holding such
Bearer Securities, if such certificate or affidavit is deemed by the Trustee to
be satisfactory. The Trustee and the Company may assume that such ownership of
any Bearer Security continues until (1) another certificate or affidavit bearing
a later date issued in respect of the same Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee by some other Person, or (3)
such Bearer Security is surrendered in exchange for a Registered Security, or
(4) such Bearer Security is no longer Outstanding. The principal amount and
serial numbers of Bearer Securities held by any Person, and the date of holding
the same, may also be proved in any other manner which the Trustee deems
sufficient.
(e) If the Company shall solicit from the Holders of
Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its option, by or pursuant to
Board Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA Section 316(c), such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
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19
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than eleven months after the
record date.
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every 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 Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
SECTION 105. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other documents provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by 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
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) 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 Indenture or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to
Holders of Registered Securities by the Company or the Trustee, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each such Holder affected by
such event, at his address as it appears in the Security Register within the
time prescribed for the giving of such notice. In any case where notice to
Holders of Registered Securities 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 of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided. Any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice.
In case, by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be impractical to
mail notice of any event to Holders
<PAGE>
20
of Registered Securities when such notice is required to be given pursuant to
any provision of this Indenture, then any manner of giving such notice as shall
be satisfactory to the Trustee shall be deemed to be sufficient giving of such
notice for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise
specified with respect to any Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of Bearer Securities of any event, such
notice shall be sufficiently given to Holders of Bearer Securities if published
in an Authorized Newspaper in The City of New York and in such other city or
cities as may be specified in such Securities on a Business Day at least twice,
the first such publication to be not earlier than the earliest date, and not
later than the latest date, prescribed for the giving of such notice. Any such
notice shall be deemed to have been given on the date of the first such
publication.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause it
shall be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of such notice with
respect to other Holders of Bearer Securities or the sufficiency of any notice
to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
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 107. 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.
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SECTION 108. 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 109. Separability Clause.
In case any provision in this Indenture or in any Security or
coupon 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities or coupons,
express or implied, shall give to any Person, other than the parties hereto, any
Authenticating Agent, any Paying Agent, any Securities Registrar and their
successors hereunder and the Holders of Securities or coupons, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
THIS INDENTURE IS SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939,
AS AMENDED, THAT ARE REQUIRED TO BE PART OF THIS INDENTURE AND SHALL, TO THE
EXTENT APPLICABLE, BE GOVERNED BY SUCH PROVISIONS.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
sinking fund payment date or Stated Maturity or Maturity of any Security shall
not be a Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of any Security or coupon other than a provision
in the Securities of any series which specifically states that such provision
shall apply in lieu of this Section) payment of interest or principal (and
premium, if any) need not be made at such Place of Payment on such date, but may
be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment Date or Redemption Date
or sinking fund payment date, or at the Stated Maturity or Maturity; provided
that no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date, sinking fund payment date, Stated Maturity or
Maturity, as the case may be.
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SECTION 113. Trust Indenture Act.
This Indenture is subject to the provisions of the Trust
Indenture Act that are required to be part of this Indenture and shall, to the
extent applicable, be governed by such provisions.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, of each series and the
Bearer Securities, if any, of each series and related coupons shall be in
substantially the 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 the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Securities or coupons, as evidenced by their execution of the Securities or
coupons. If the forms of Securities or coupons of any 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 Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities or coupons. Any portion of the text of any Security may be set forth
on the reverse thereof, with an appropriate reference thereto on the face of the
Security.
Unless otherwise specified as contemplated by Section 301,
Securities in bearer form shall have interest coupons attached.
The Trustee's certificate of authentication on all Securities
shall be in substantially the form set forth in this Article.
The definitive Securities and coupons shall be printed,
lithographed or engraved on steel-engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing such
Securities, as evidenced by their execution of such Securities or coupons.
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23
SECTION 202. Form of Trustee's Certificate of Authentication.
Subject to Section 611, the Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NOVA SCOTIA
TRUST COMPANY OF NEW YORK,
as Trustee
By________________________
Authorized Officer
SECTION 203. Securities Issuable in Global Form.
If Securities of or within a series are issuable in global
form, as specified as contemplated by Section 301, then, notwithstanding clause
(8) of Section 301, any such Security shall represent such of the Outstanding
Securities of such series as shall be specified therein and may provide that it
shall represent the aggregate amount of Outstanding Securities of such series
from time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a Security in global form
to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or Section 304. Subject to the provisions of Section 303 and, if applicable,
Section 304, the Trustee shall deliver and redeliver any Security in permanent
global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or Section 304 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 102 and need not be accompanied by an Opinion of
Counsel.
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The provisions of the last sentence of Section 303 shall apply
to any Security represented by a Security in global form if such Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
Notwithstanding the provisions of Section 307, unless
otherwise specified as contemplated by Section 301, payment of principal of and
any premium and interest on any Security in permanent global form shall be made
to the Person or Persons specified therein.
Notwithstanding the provisions of Section 309 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent of
the Company and the Trustee shall treat as the Holder of such principal amount
of Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount; Issuable in Series.
The aggregate gross proceeds of Securities which may be
authenticated and delivered under this Indenture and the Subordinated Indenture
shall not exceed, in the aggregate, $1,000,000,000.
The Securities may be issued in one or more series. There
shall be established in one or more Board Resolutions or pursuant to authority
granted by one or more Board Resolutions and, subject to Section 303, set forth
in, or determined in the manner provided in, an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (17) below), if
so provided, may be determined from time to time by the Company with respect to
unissued Securities of the series and set forth in such Securities of the series
when issued from time to time):
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25
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other series of
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series that 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 304, 305, 306, 906, 1107
or 1305);
(3) the date or dates, or the method by which such date or
dates will be determined or extended, on which the principal of the
Securities of the series is payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue, or the method by which such date or dates shall be determined,
the Interest Payment Dates on which such interest shall be payable and
the Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the method by
which such date or dates shall be determined, and the basis upon which
interest shall be calculated if other than on the basis of a 360-day
year of twelve 30-day months;
(5) the place or places, if any, other than or in addition to
the Borough of Manhattan, The City of New York, where the principal of
(and premium, if any, on) and any interest on Securities of the series
shall be payable, any Registered Securities of the series may be
surrendered for registration of transfer, Securities of the series may
be surrendered for exchange and, if different than the location
specified in Section 106, the place or places where notices or demands
to or upon the Company in respect of the Securities of the series and
this Indenture may be served;
(6) the period or periods within which, the price or prices at
which, the Currency in which, and other terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at the
option of the Company, if the Company is to have that option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the
period or periods within which, the price or prices at which, the
Currency in which, and 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;
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26
(8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Registered Securities
of the series shall be issuable and, if other than the denomination of
$5,000, the denomination or denominations in which any Bearer
Securities of the series shall be issuable;
(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(10) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series that shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or the method by which such portion shall be
determined;
(11) if other than Dollars, the Currency in which payment of
the principal of (and premium, if any, on) or interest, if any, on the
Securities of the series shall be payable or in which the Securities of
the series shall be denominated and the particular provisions
applicable thereto in accordance with, in addition to or in lieu of any
of the provisions of Section 312;
(12) whether the amount of payments of principal of (and
premium, if any, on) or interest on the Securities of the series may be
determined with reference to an index, formula or other method (which
index, formula or method may be based, without limitation, on one or
more Currencies, commodities, equity indices or other indices), and the
manner in which such amounts shall be determined;
(13) whether the principal of (and premium, if any, on) and
interest, if any, on the Securities of the series are to be payable, at
the election of the Company or a Holder thereof, in a Currency other
than that in which such Securities are denominated or stated to be
payable, the period or periods within which (including the Election
Date), and the terms and conditions upon which, such election may be
made, and the time and manner of determining the exchange rate between
the Currency in which such Securities are denominated or stated to be
payable and the Currency in which such Securities are to be so payable,
in each case in accordance with, in addition to or in lieu of any of
the provisions of Section 312;
(14) the designation of the initial Exchange Rate Agent, if
any;
(15) any provisions in modification of, in addition to or in
lieu of the provisions of Article Fourteen that shall be applicable to
the Securities of the series;
(16) provisions, if any, granting special rights to the
Holders of Securities of the series upon the occurrence of such events
as may be specified;
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27
(17) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to
Securities of the series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set
forth herein;
(18) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both, any restrictions applicable to the offer, sale or delivery of
Bearer Securities, whether any Securities of the series are to be
issuable initially in temporary global form and whether any Securities
of the series are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests in
any such permanent global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 305, whether
Registered Securities of the series may be exchanged for Bearer
Securities of the series (if permitted by applicable laws and
regulations), whether Bearer Securities of the series may be exchanged
for Registered Securities of the series, and the circumstances under
which and the place or places where such exchanges may be made and if
Securities of the series are to be issuable in global form, the
identity of any initial depository therefor;
(19) the date as of which any Bearer Securities of the series
and any temporary global Security representing Outstanding Securities
of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;
(20) the Person to whom any interest on any Registered
Security of the series shall be payable, if other than 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, the manner in which, or the Person to whom, any interest on
any Bearer Security of the series shall be payable, if otherwise than
upon presentation and surrender of the coupons appertaining thereto as
they severally mature, and the extent to which, or the manner in which,
any interest payable on a temporary global Security on an Interest
Payment Date will be paid if other than in the manner provided in
Section 304;
(21) if Securities of the series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
the form and/or terms of such certificates, documents or conditions;
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28
(22) if the Securities of the series are to be issued upon the
exercise of warrants or upon the conversion or exchange of other
securities, the time, manner and place for such Securities to be
authenticated and delivered;
(23) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1005 on the Securities of
the series to any Holder who is not a United States person (including
any modification to the definition of such term) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will
have the option to redeem such Securities rather than pay such
Additional Amounts (and the terms of any such option);
(24) if the Securities of the series are to be convertible
into or exchangeable for any securities of any Person (including the
Company), the terms and conditions upon which such Securities will be
so convertible or exchangeable;
(25) any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) relating to the series
(which terms shall not be inconsistent with the requirements of the
Trust Indenture Act or the provisions of this Indenture).
All Securities of any one series and the coupons appertaining
to any Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. Not all Securities of any one series need be
issued at the same time, and, unless otherwise provided, a series may be
reopened for issuances of additional Securities of such series.
If any of the terms of the series are established by action
taken pursuant to one or more Board Resolutions, such Board Resolutions shall be
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. Denominations.
All Securities shall be issuable in such denominations as
shall be specified as contemplated by Section 301. With respect to Securities of
any series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such Series, other than the Bearer Securities issued in global
form (which may be of any denomination), shall be issuable in a denomination of
$5,000.
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29
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities and any coupons appertaining thereto shall be
executed on behalf of the Company by its Chairman, its President or a Vice
President, under its corporate seal reproduced thereon attested by its Secretary
or an Assistant Secretary. The signature of any of these officers on the
Securities or coupons may be the manual or facsimile signatures of the present
or any future such authorized officer and may be imprinted or otherwise
reproduced on the Securities.
Securities or coupons 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
or coupons.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
together with any coupon appertaining thereto, 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 such Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided further
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 301, a Bearer Security may be delivered in connection with
its original issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate in the form set forth in Exhibit A-1
to this Indenture, dated no earlier than 15 days prior to the earlier of the
date on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture. If any
Security shall be represented by a permanent global Bearer Security, then, for
purposes of this Section and Section 304, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon exchange of a
portion of a temporary global Security shall be deemed to be delivered in
connection with its original issuance of such beneficial owner's interest in
such permanent global Security. Except as permitted by Section 306, the Trustee
shall not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and cancelled. If not all
the Securities of any series are to be issued at one time and if the Board
Resolution or supplemental indenture establishing such series shall so permit,
such Company Order may set forth procedures acceptable to the Trustee for the
issuance of such Securities and determining terms of particular Securities of
such series such as interest rate, maturity date, date of issuance and date from
which interest shall accrue.
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30
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 TIA Sections 315(a)
through 315(d)) shall be fully protected in relying upon, an Opinion of Counsel
stating:
(a) that the form or forms of such Securities and any coupons
have been established in conformity with the provisions of this
Indenture;
(b) that the terms of such Securities and any coupons have
been established in conformity with the provisions of this Indenture;
(c) that such Securities, together with any coupons
appertaining thereto, when completed by appropriate insertions and
executed and delivered by the Company to the Trustee for authentication
in accordance with this Indenture, authenticated and delivered by the
Trustee in accordance with this Indenture and issued by the Company in
the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute the legal, valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting the enforcement
of creditors' rights, to general equitable principles and to such other
qualifications as such counsel shall conclude do not materially affect
the rights of Holders of such Securities and any coupons;
(d) that all laws and requirements in respect of the execution
and delivery by the Company of such Securities, any coupons and of the
supplemental indentures, if any, have been complied with (except for
the federal securities laws, the Trust Indenture Act of 1939, as
amended, and the securities or blue sky laws of the various states, as
to which no opinion need be expressed) and that authentication and
delivery of such Securities and any coupons and the execution and
delivery of the supplemental indenture, if any, by the Trustee will not
violate the terms of the Indenture;
(e) that the Company has the corporate power to issue such
Securities and any coupons, and has duly taken all necessary corporate
action with respect to such issuance; and
(f) that the issuance of such Securities and any coupons will
not contravene the articles of incorporation or by-laws of the Company
or result in any violation of any of the terms or provisions of any law
or regulation or of any indenture, mortgage or other agreement known to
such Counsel by which the Company is bound.
Notwithstanding the provisions of Section 301 and of the
preceding two paragraphs, if less than all the Securities of any series are to
be issued at one time, it shall
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31
not be necessary to deliver the Officers' Certificate otherwise required
pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise
required pursuant to the preceding two paragraphs prior to or at the time of
issuance of each Security, but such documents shall be delivered prior to or at
the time of issuance of the first Security of such series.
The Trustee shall not be required to authenticate and deliver
any 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.
Each Registered Security shall be dated the date of its
authentication; and each Bearer Security shall be dated as of the date specified
as contemplated by Section 301.
No Security or coupon 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 duly executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
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 310 together with a written statement (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, 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 304. 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 authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more coupon or without coupons, and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities. In
the case of Securities of any series, such temporary Securities may be in global
form.
Except in the case of temporary Securities in global form
(which shall be exchanged in accordance with the provisions of the following
paragraphs), if temporary
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32
Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series, upon
surrender of the temporary Securities of such series at the office or agency of
the Company in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series (accompanied by any unmatured coupons appertaining thereto), the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of the same series of
authorized denominations; provided, however, that no definitive Bearer Security
shall be delivered in exchange for a temporary Registered Security; and provided
further that a definitive Bearer Security shall be delivered in exchange for a
temporary Bearer Security only in compliance with the conditions set forth in
Section 303. 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.
If temporary Securities of any series are issued in global
form, any such temporary global Security shall, unless otherwise provided
therein, be delivered to the London office of a depositary or common depositary
(the "Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for
credit to the respective accounts of the beneficial owners of such Securities
(or to such other accounts as they may direct).
Without unnecessary delay, but in any event not later than the
date specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary global Security shall be in bearer form, registered form, permanent
global bearer form or permanent global registered form, or any combination
thereof, as specified as contemplated by Section 301, and, if any combination
thereof is so specified, as requested by the beneficial owner thereof; provided,
however, that, unless otherwise specified in such temporary global Security,
upon such presentation by the Common Depositary, such temporary global Security
is accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary global Security held for
its account then to be exchanged and a certificate dated the Exchange Date or a
subsequent date and signed by CEDEL S.A. as to the portion of such
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33
temporary global Security held for its account then to be exchanged, each in the
form set forth in Exhibit A-2 to this Indenture (or in such other form as may be
established pursuant to Section 301); and provided further that definitive
Bearer Securities shall be delivered in exchange for a portion of a temporary
global Security only in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security,
the interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same series
and of like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL S.A., as the case may be, to request such exchange on his
behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant to Section 301), dated no earlier than
15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and CEDEL S.A., the Trustee, any
Authenticating Agent appointed for such series of Securities and each Paying
Agent. Unless otherwise specified in such temporary global Security, any such
exchange shall be made free of charge to the beneficial owners of such temporary
global Security, except that a Person receiving definitive Securities must bear
the cost of insurance, postage, transportation and the like in the event that
such Person does not take delivery of such definitive Securities in person at
the offices of Euroclear or CEDEL S.A. Definitive Securities in bearer form to
be delivered in exchange for any portion of a temporary global Security shall be
delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL
S.A. on such Interest Payment Date upon delivery by Euroclear and CEDEL S.A. to
the Trustee of a certificate or certificates in the form set forth in Exhibit
A-2 to this Indenture (or in such other form as may be established pursuant to
Section 301), for credit without further interest on or after such Interest
Payment Date to the respective accounts of the Persons who are the beneficial
owners of such temporary global Security on such Interest Payment Date and who
have each delivered to Euroclear or CEDEL S.A., as the case may be, a
certificate dated no earlier than 15 days prior to the Interest Payment Date
occurring prior to such Exchange Date in the form set forth in Exhibit A-1 to
this Indenture (or in such other form as may be established pursuant to Section
301). Notwithstanding anything to the contrary herein contained, the
certifications made pursuant to this paragraph shall satisfy the certification
requirements of the preceding two paragraphs of this Section and of the third
paragraph of Section 303 of this Indenture and the interests of the Persons who
are the beneficial owners of the temporary global Security with respect to which
such certification
<PAGE>
34
was made will be exchanged for definitive Securities of the same series and of
like tenor on the Exchange Date or the date of certification if such date occurs
after the Exchange Date, without further act or deed by such beneficial owners.
Except as otherwise provided in this paragraph, no payments of principal or
interest owing with respect to a beneficial interest in a temporary global
Security will be made unless and until such interest in such temporary global
Security shall have been exchanged for an interest in a definitive Security. Any
interest so received by Euroclear and CEDEL S.A. and not paid as herein provided
shall be returned to the Trustee immediately prior to the expiration of two
years after such Interest Payment Date in order to be repaid to the Company in
accordance with Section 1003.
SECTION 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register for each series of Securities (the registers
maintained in the Corporate Trust Office of the Trustee and in any other office
or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. At all reasonable
times, the Security Register shall be open to inspection by the Trustee. The
Trustee is hereby initially appointed as security registrar (the "Security
Registrar") for the purpose of registering Registered Securities and transfers
of Registered Securities as herein provided.
Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee, one or more new Registered
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor.
At the option of the Holder, Registered Securities of any
series may be exchanged for other Registered Securities of the same series, of
any authorized denomination and of a like aggregate principal amount, upon
surrender of the Registered Securities to be exchanged at such office or agency.
Whenever any Registered Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Registered
Securities which the Holder making the exchange is entitled to receive. Unless
otherwise specified with respect to any series of Securities as contemplated by
Section 301, Bearer Securities may not be issued in exchange for Registered
Securities.
If (but only if) expressly permitted in or pursuant to the
applicable Board Resolution and (subject to Section 303) set forth in the
applicable Officers' Certificate, or in any indenture supplemental hereto,
delivered as contemplated by Section 301, at the option
<PAGE>
35
of the Holder, Bearer Securities of any series may be exchanged for Registered
Securities of the same series of any authorized denomination and of a like
aggregate principal amount and tenor, upon surrender of the Bearer Securities to
be exchanged at any such office or agency, with all unmatured coupons and all
matured coupons in default thereto appertaining. If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, any such permitted exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
in an amount equal to the face amount of such missing coupon or coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security shall surrender to any Paying Agent any such missing
coupon in respect of which such a payment shall have been made, such Holder
shall be entitled to receive the amount of such payment; provided, however,
that, except as otherwise provided in Section 1002, interest represented by
coupons shall be payable only upon presentation and surrender of those coupons
at an office or agency located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered at any such
office or agency in a permitted exchange for a Registered Security of the same
series and like tenor after the close of business at such office or agency on
(i) any Regular Record Date and before the opening of business at such office or
agency on the relevant Interest Payment Date, or (ii) any Special Record Date
and before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such Interest Payment Date or
proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the provisions of this
Indenture.
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.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If any beneficial owner of an
interest in a permanent global Security is entitled to exchange such interest
for Securities of such series and of like tenor and principal amount of another
authorized form and denomination, as specified as contemplated by Section 301
and provided that any applicable notice provided in the permanent global
Security shall have been given, then without unnecessary delay but in any event
not later than the earliest date on which such interest may be so exchanged, the
Company shall deliver to the Trustee definitive Securities in aggregate
principal amount equal to the principal amount of such beneficial owner's
interest in such permanent global Security, executed by the Company. On or after
<PAGE>
36
the earliest date on which such interests may be so exchanged, such permanent
global Security shall be surrendered by the Common Depositary or such other
depositary as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in whole
or from time to time in part, for definitive Securities without charge, and the
Trustee shall authenticate and deliver, in exchange for each portion of such
permanent global Security, an equal aggregate principal amount of definitive
Securities of the same series of authorized denominations and of like tenor as
the portion of such permanent global Security to be exchanged which, unless the
Securities of the series are not issuable both as Bearer Securities and as
Registered Securities, as specified as contemplated by Section 301, shall be in
the form of Bearer Securities or Registered Securities, or any combination
thereof, as shall be specified by the beneficial owner thereof; provided,
however, that no such exchanges may occur during a period beginning at the
opening of business 15 days before any selection of Securities to be redeemed
and ending on the relevant Redemption Date if the Security for which exchange is
requested may be among those selected for redemption; and provided further that
no Bearer Security delivered in exchange for a portion of a permanent global
Security shall be mailed or otherwise delivered to any location in the United
States. If a Registered Security is issued in exchange for any portion of a
permanent global Security after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and the opening of business at such office or
agency on the related proposed date for payment of interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of such Registered
Security, but will be payable on such Interest Payment Date or proposed date for
payment, as the case may be, only to the Person to whom interest in respect of
such portion of such permanent global Security is payable in accordance with the
provisions of this Indenture.
All Securities issued upon any registration of 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 registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company or
the Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer, in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made for any registration of
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 registration of
<PAGE>
37
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 906, 1107 or 1305 not involving any transfer.
The Company shall not be required (i) to issue, to register
the transfer of or to exchange Securities of any series during a period
beginning at the opening of business 15 days before the day of the selection for
redemption of Securities of that series under Section 1103 or 1203 and ending at
the close of business on (A) if Securities of the series are issuable only as
Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor; provided that
such Registered Security shall be simultaneously surrendered for redemption, or
(iv) to issue, to register the transfer of or to exchange any Security which has
been surrendered for repayment at the option of the Holder, except the portion,
if any, of such Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated
coupon appertaining to it is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding, with coupons corresponding
to the coupons, if any, appertaining to the surrendered Security, or, in case
any such mutilated Security or coupon has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a new Security,
with coupons corresponding to the coupons, if any, appertaining to the
surrendered Security, pay such Security or coupon.
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 or coupon and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security or coupon has
been acquired by a bona fide purchaser, the Company shall execute and upon
Company Order the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security or in exchange for the Security for which a
destroyed, lost or stolen coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Security of the same series and of like tenor
and principal amount and bearing a number not contemporaneously outstanding,
with coupons corresponding to the coupons, if
<PAGE>
38
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains, or, in case any such
destroyed, lost or stolen Security or coupon has become or is about to become
due and payable, the Company in its discretion may, instead of issuing a new
Security, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains, pay such Security or coupon.
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 of any series with its coupons, if any,
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and its coupons, if any, or the destroyed, lost or stolen coupon 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 of that
series and their coupons, if any, duly issued hereunder.
The provisions of this Section 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 or
coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved;
Optional Interest Reset.
(a) Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities, interest on any Registered Security
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 such Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose pursuant to Section 1002; provided, however, that
each installment of interest on any Registered Security may at the Company's
option be paid by (i) mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Section 309, to the
address of such Person as it appears on the Security Register or (ii) transfer
to an account maintained by the payee located in the United States.
Unless otherwise provided as contemplated by Section 301 with
respect to the Securities of any series, payment of interest may be made, in the
case of a Bearer Security,
<PAGE>
39
by transfer to an account maintained by the payee with a bank located outside
the United States.
Unless otherwise provided as contemplated by Section 301,
every permanent global Security will provide that interest, if any, payable on
any Interest Payment Date will be paid to each of Euroclear and CEDEL S.A. with
respect to that portion of such permanent global Security held for its account
by the Common Depositary, for the purpose of permitting each of Euroclear and
CEDEL S.A. to credit the interest received by it in respect of such permanent
global Security to the accounts of the beneficial owners thereof.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such defaulted
interest and, if applicable, interest on such defaulted interest (to the extent
lawful) at the rate specified in the Securities of such series (such defaulted
interest and, if applicable, interest thereon herein collectively called
"Defaulted Interest") may be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series (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 Registered Security of
such series and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money in the
Currency in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such
series and except, if applicable, as provided in Sections 312(b),
312(d) and 312(e)) 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 on or 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 given in the manner provided in Section 106, not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special
<PAGE>
40
Record Date therefor having been so given, such Defaulted Interest
shall be paid to the Persons in whose name the Registered Securities of
such series (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
(b) The provisions of this Section 307(b) may be made
applicable to any series of Securities pursuant to Section 301 (with such
modifications, additions or substitutions as may be specified pursuant to such
Section 301). The interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable) on any Security of such series may
be reset by the Company on the date or dates specified on the face of such
Security (each an "Optional Reset Date"). The Company may exercise such option
with respect to such Security by notifying the Trustee of such exercise at least
50 but not more than 60 days prior to an Optional Reset Date for such Note. Not
later than 40 days prior to each Optional Reset Date, the Trustee shall
transmit, in the manner provided for in Section 106, to the Holder of any such
Security a notice (the "Reset Notice") indicating whether the Company has
elected to reset the interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable), and if so (i) such new interest
rate (or such new spread or spread multiplier, if applicable) and (ii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or if there is no such next Optional Reset
Date, to the Stated Maturity Date of such Security (each such period a
"Subsequent Interest Period"), including the date or dates on which or the
period or periods during which and the price or prices at which such redemption
may occur during the Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the interest
rate (or the spread or spread multiplier used to calculate such interest rate,
if applicable) provided for in the Reset Notice and establish an interest rate
(or a spread or spread multiplier used to calculate such interest rate, if
applicable) that is higher than the interest rate (or the spread or spread
multiplier, if applicable) provided for in the Reset Notice, for the Subsequent
Interest Period by causing the Trustee to transmit, in the manner provided for
in Section 106, notice of such higher interest rate (or such higher spread or
spread multiplier, if applicable) to the Holder of such Security. Such notice
shall be irrevocable. All Securities with respect to which the interest rate (or
the spread or spread multiplier used to calculate such interest rate, if
applicable) is reset on an Optional Reset Date, and with respect to which the
Holders of such Securities
<PAGE>
41
have not tendered such Securities for repayment (or have validly revoked any
such tender) pursuant to the next succeeding paragraph, will bear such higher
interest rate (or such higher spread or spread multiplier, if applicable).
The Holder of any such Security will have the option to elect
repayment by the Company of the principal of such Security on each Optional
Reset Date at a price equal to the principal amount thereof plus interest
accrued to such Optional Reset Date. In order to obtain repayment on an Optional
Reset Date, the Holder must follow the procedures set forth in Article Thirteen
for repayment at the option of Holders except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date and except that, if the Holder has tendered any
Security for repayment pursuant to the Reset Notice, the Holder may, by written
notice to the Trustee, revoke such tender or repayment until the close of
business on the tenth day before such Optional Reset Date.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
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.
SECTION 308. Optional Extension of Stated Maturity.
The provisions of this Section 308 may be made applicable to
any series of Securities pursuant to Section 301 (with such modifications,
additions or substitutions as may be specified pursuant to such Section 301).
The Stated Maturity of any Security of such series may be extended at the option
of the Company for the period or periods specified on the face of such Security
(each an "Extension Period") up to but not beyond the date (the "Final
Maturity") set forth on the face of such Security. The Company may exercise such
option with respect to any Security by notifying the Trustee of such exercise at
least 50 but not more than 60 days prior to the Stated Maturity of such Security
in effect prior to the exercise of such option (the "Original Stated Maturity").
If the Company exercises such option, the Trustee shall transmit, in the manner
provided for in Section 106, to the Holder of such Security not later than 40
days prior to the Original Stated Maturity a notice (the "Extension Notice")
indicating (i) the election of the Company to extend the Stated Maturity, (ii)
the new Stated Maturity, (iii) the interest rate applicable to the Extension
Period and (iv) the provisions, if any, for redemption during such Extension
Period. Upon the Trustee's transmittal of the Extension Notice, the Stated
Maturity of such Security shall be extended automatically and, except as
modified by the Extension Notice and as described in the next paragraph, such
Security will have the same terms as prior to the transmittal of such Extension
Notice.
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42
Notwithstanding the foregoing, not later than 20 days before
the Original Stated Maturity of such Security, the Company may, at its option,
revoke the interest rate provided for in the Extension Notice and establish a
higher interest rate for the Extension Period by causing the Trustee to
transmit, in the manner provided for in Section 106, notice of such higher
interest rate to the Holder of such Security. Such notice shall be irrevocable.
All Securities with respect to which the Stated Maturity is extended will bear
such higher interest rate.
If the Company extends the Maturity of any Security, the
Holder will have the option to elect repayment of such Security by the Company
on the Original Stated Maturity at a price equal to the principal amount
thereof, plus interest accrued to such date. In order to obtain repayment on the
Original Stated Maturity once the Company has extended the Maturity thereof, the
Holder must follow the procedures set forth in Article Thirteen for repayment at
the option of Holders, except that the period for delivery or notification to
the Trustee shall be at least 25 but not more than 35 days prior to the Original
Stated Maturity and except that, if the Holder has tendered any Security for
repayment pursuant to an Extension Notice, the Holder may by written notice to
the Trustee revoke such tender for repayment until the close of business on the
tenth day before the Original Stated Maturity.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Registered 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 such Registered Security is
registered as the owner of such Registered Security for the purpose of receiving
payment of principal of (and premium, if any, on) and (subject to Sections 305
and 307) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and none of the Company, the Trustee or
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
Title to any Bearer Security and any coupons appertaining
thereto shall pass by delivery. The Company, the Trustee and any agent of the
Company or the Trustee may treat the bearer of any Bearer Security and the
bearer of any coupon as the absolute owner of such Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or coupons be overdue, and
none of the Company, the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
<PAGE>
43
Notwithstanding the foregoing, with respect to any global
Security, nothing herein shall prevent the Company, the Trustee, or any agent of
the Company or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by any depositary, as a Holder, with
respect to such global Security or impair, as between such depositary and owners
of beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.
SECTION 310. Cancellation.
All Securities and coupons surrendered for payment,
redemption, repayment at the option of the Holder, registration of transfer or
exchange or for credit against any current or future sinking fund payment shall,
if surrendered to any Person other than the Trustee, be delivered to the
Trustee. All Securities and coupons so delivered to the Trustee shall be
promptly cancelled 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 may deliver to
the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
cancelled by the Trustee. If the Company shall so acquire any of the Securities,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with its customary procedures and certification of their disposal delivered to
the Company unless by Company Order the Company shall direct that cancelled
Securities be returned to it.
SECTION 311. Computation of Interest.
Except as otherwise specified as contemplated by Section 301
with respect to any Securities, interest on the Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 312. Currency and Manner of Payments in Respect of
Securities.
(a) Unless otherwise specified with respect to any Securities
pursuant to Section 301, with respect to Registered Securities of any series not
permitting the election provided for in paragraph (b) below or the Holders of
which have not made the election provided for in paragraph (b) below, and with
respect to Bearer Securities of any series, except as provided in paragraph (d)
below, payment of the principal of (and premium, if any,
<PAGE>
44
on) and interest, if any, on any Registered or Bearer Security of such series
will be made in the Currency in which such Registered Security or Bearer
Security, as the case may be, is payable. The provisions of this Section 312 may
be modified or superseded with respect to any Securities pursuant to Section
301.
(b) It may be provided pursuant to Section 301 with respect to
Registered Securities of any series that Holders shall have the option, subject
to paragraphs (d) and (e) below, to receive payments of principal of (and
premium, if any, on) or interest, if any, on such Registered Securities in any
of the Currencies which may be designated for such election by delivering to the
Trustee a written election with signature guarantees and in the applicable form
established pursuant to Section 301, not later than the close of business on the
Election Date immediately preceding the applicable payment date. If a Holder so
elects to receive such payments in any such Currency, such election will remain
in effect for such Holder or any transferee of such Holder until changed by such
Holder or such transferee by written notice to the Trustee (but any such change
must be made not later than the close of business on the Election Date
immediately preceding the next payment date to be effective for the payment to
be made on such payment date and no such change of election may be made with
respect to payments to be made on any Registered Security of such series with
respect to which an Event of Default has occurred or with respect to which the
Company has deposited funds pursuant to Article Four or with respect to which a
notice of redemption has been given by the Company or a notice of option to
elect repayment has been sent by such Holder or such transferee). Any Holder of
any such Registered Security who shall not have delivered any such election to
the Trustee not later than the close of business on the applicable Election Date
will be paid the amount due on the applicable payment date in the relevant
Currency as provided in Section 312(a). The Trustee shall notify the Exchange
Rate Agent as soon as practicable after the Election Date of the aggregate
principal amount of Registered Securities for which Holders have made such
written election.
(c) Unless otherwise specified pursuant to Section 301, if the
election referred to in paragraph (b) above has been provided for pursuant to
Section 301, then, unless otherwise specified pursuant to Section 301, not later
than the fourth Business Day after the Election Date for each payment date for
Registered Securities of any series, the Exchange Rate Agent will deliver to the
Company a written notice specifying, in the Currency in which Registered
Securities of such series are payable, the respective aggregate amounts of
principal of (and premium, if any, on) and interest, if any, on the Registered
Securities to be paid on such payment date, specifying the amounts in such
Currency so payable in respect of the Registered Securities as to which the
Holders of Registered Securities of such series shall have elected to be paid in
another Currency as provided in paragraph (b) above. If the election referred to
in paragraph (b) above has been provided for pursuant to Section 301 and if at
least one Holder has made such election, then, unless otherwise specified
pursuant to Section 301, on the second Business Day preceding such payment date
the Company will deliver to the Trustee for such series of Registered Securities
<PAGE>
45
an Exchange Rate Officer's Certificate in respect of the Dollar or Foreign
Currency payments to be made on such payment date. Unless otherwise specified
pursuant to Section 301, the Dollar or Foreign Currency amount receivable by
Holders of Registered Securities who have elected payment in a Currency as
provided in paragraph (b) above shall be determined by the Company on the basis
of the applicable Market Exchange Rate in effect on the third Business Day (the
"Valuation Date") immediately preceding each payment date, and such
determination shall be conclusive and binding for all purposes, absent manifest
error.
(d) If a Currency Conversion Event occurs with respect to a
Foreign Currency in which any of the Securities are denominated or payable other
than pursuant to an election provided for pursuant to paragraph (b) above, then
with respect to each date for the payment of principal of (and premium, if any,
on) and interest, if any, on the applicable Securities denominated or payable in
such Foreign Currency occurring after the last date on which such Foreign
Currency was used (the "Currency Conversion Date"), the Dollar shall be the
Currency of payment for use on each such payment date. Unless otherwise
specified pursuant to Section 301, the Dollar amount to be paid by the Company
to the Trustee and by the Trustee or any Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in the case of a Foreign
Currency other than a currency unit, the Dollar Equivalent of the Foreign
Currency or, in the case of a currency unit, the Dollar Equivalent of the
Currency Unit, in each case as determined by the Exchange Rate Agent in the
manner provided in paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 301, if the
Holder of a Registered Security denominated in any Currency shall have elected
to be paid in another Currency as provided in paragraph (b) above, and a
Currency Conversion Event occurs with respect to such elected Currency, such
Holder shall receive payment in the Currency in which payment would have been
made in the absence of such election; and if a Currency Conversion Event occurs
with respect to the Currency in which payment would have been made in the
absence of such election, such Holder shall receive payment in Dollars as
provided in paragraph (d) above.
(f) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into Dollars at the
Market Exchange Rate on the Currency Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall be
determined by the Exchange Rate Agent and subject to the provisions of paragraph
(h) below shall be the sum of each amount obtained by converting the Specified
Amount of each Component Currency into Dollars at the Market Exchange Rate for
such Component Currency on the Valuation Date with respect to each payment.
<PAGE>
46
(h) For purposes of this Section 312 the following terms shall
have the following meanings:
A "Component Currency" shall mean any Currency which, on the
Currency Conversion Date, was a component currency of the relevant
currency unit, including, but not limited to, the ECU.
A "Specified Amount" of a Component Currency shall mean the
number of units of such Component Currency or fractions thereof which
were represented in the relevant currency unit, including, but not
limited to, the ECU, on the Currency Conversion Date. If after the
Currency Conversion Date the official unit of any Component Currency is
altered by way of combination or subdivision, the Specified Amount of
such Component Currency shall be divided or multiplied in the same
proportion. If after the Currency Conversion Date two or more Component
Currencies are consolidated into a single currency, the respective
Specified Amounts of such Component Currencies shall be replaced by an
amount in such single Currency equal to the sum of the respective
Specified Amounts of such consolidated Component Currencies expressed
in such single Currency, and such amount shall thereafter be a
Specified Amount and such single Currency shall thereafter be a
Component Currency. If after the Currency Conversion Date any Component
Currency shall be divided into two or more currencies, the Specified
Amount of such Component Currency shall be replaced by amounts of such
two or more currencies, having an aggregate Dollar Equivalent value at
the Market Exchange Rate on the date of such replacement equal to the
Dollar Equivalent value of the Specified Amount of such former
Component Currency at the Market Exchange Rate immediately before such
division and such amounts shall thereafter be Specified Amounts and
such currencies shall thereafter be Component Currencies. If, after the
Currency Conversion Date of the relevant currency unit, including, but
not limited to, the ECU, a Currency Conversion Event (other than any
event referred to above in this definition of "Specified Amount")
occurs with respect to any Component Currency of such currency unit and
is continuing on the applicable Valuation Date, the Specified Amount of
such Component Currency shall, for purposes of calculating the Dollar
Equivalent of the Currency Unit, be converted into Dollars at the
Market Exchange Rate in effect on the Currency Conversion Date of such
Component Currency.
"Election Date" shall mean the date for any series of
Registered Securities as specified pursuant to clause (13) of Section
301 by which the written election referred to in paragraph (b) above
may be made.
All decisions and determinations of the Exchange Rate Agent
regarding the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent
of the Currency Unit, the Market Exchange Rate and changes in the Specified
Amounts as specified above shall be in
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47
its sole discretion and shall, in the absence of manifest error, be conclusive
for all purposes and irrevocably binding upon the Company, the Trustee and all
Holders of such Securities denominated or payable in the relevant Currency. The
Exchange Rate Agent shall promptly give written notice to the Company and the
Trustee of any such decision or determination.
In the event that the Company determines in good faith that a
Currency Conversion Event has occurred with respect to a Foreign Currency, the
Company will immediately give written notice thereof to the Trustee and to the
Exchange Rate Agent (and the Trustee will promptly thereafter give notice in the
manner provided for in Section 106 to the affected Holders) specifying the
Currency Conversion Date. In the event the Company so determines that a Currency
Conversion Event has occurred with respect to the ECU or any other currency unit
in which Securities are denominated or payable, the Company will immediately
give written notice thereof to the Trustee and to the Exchange Rate Agent (and
the Trustee will promptly thereafter give notice in the manner provided for in
Section 106 to the affected Holders) specifying the Currency Conversion Date and
the Specified Amount of each Component Currency on the Currency Conversion Date.
In the event the Company determines in good faith that any subsequent change in
any Component Currency as set forth in the definition of Specified Amount above
has occurred, the Company will similarly give written notice to the Trustee and
the Exchange Rate Agent.
The Trustee shall be fully justified and protected in relying
and acting upon information received by it from the Company and the Exchange
Rate Agent and shall not otherwise have any duty or obligation to determine the
accuracy or validity of such information independent of the Company or the
Exchange Rate Agent.
SECTION 313. Appointment and Resignation of Successor
Exchange Rate Agent.
(a) Unless otherwise specified pursuant to Section 301, if and
so long as the Securities of any series (i) are denominated in a Currency other
than Dollars or (ii) may be payable in a Currency other than Dollars, or so long
as it is required under any other provision of this Indenture, then the Company
will maintain with respect to each such series of Securities, or as so required,
at least one Exchange Rate Agent. The Company will cause the Exchange Rate Agent
to make the necessary foreign exchange determinations at the time and in the
manner specified pursuant to Section 301 for the purpose of determining the
applicable rate of exchange and, if applicable, for the purpose of converting
the issued Currency into the applicable payment Currency for the payment of
principal (and premium, if any) and interest, if any, pursuant to Section 312.
(b) No resignation of the Exchange Rate Agent and no
appointment of a successor Exchange Rate Agent pursuant to this Section shall
become effective until the
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48
acceptance of appointment by the successor Exchange Rate Agent as evidenced by a
written instrument delivered to the Company and the Trustee.
(c) If the Exchange Rate Agent shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Exchange Rate Agent for any cause with respect to the Securities of one or more
series, the Company, by or pursuant to a Board Resolution, shall promptly
appoint a successor Exchange Rate Agent or Exchange Rate Agents with respect to
the Securities of that or those series (it being understood that any such
successor Exchange Rate Agent may be appointed with respect to the Securities of
one or more or all of such series and that, unless otherwise specified pursuant
to Section 301, at any time there shall only be one Exchange Rate Agent with
respect to the Securities of any particular series that are originally issued by
the Company on the same date and that are initially denominated and/or payable
in the same Currency).
SECTION 314. Designation as Senior Indebtedness.
The Company hereby confirms the designation of the Securities
as "Senior Indebtedness" for the purposes of any securities of the Company that
may be issued pursuant to the Subordinated Indenture.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect with respect to any series of Securities (except as to any
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for and the obligation of the Company to pay
any Additional Amounts as contemplated by Section 1005) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when
(1) either
(A) all Securities of such series theretofore
authenticated and delivered and all coupons, if any,
appertaining thereto (other than (i) coupons appertaining to
Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange, whose surrender
is not required or has been waived as provided in Section 305,
(ii) Securities and coupons of
<PAGE>
49
such series which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306,
(iii) coupons appertaining to Securities called for redemption
and maturing after the relevant Redemption Date, whose
surrender has been waived as provided in Section 1106, and
(iv) Securities and coupons of such series for whose payment
money has theretofore been deposited in trust with the Trustee
or any Paying Agent or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in
Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all Securities of such series and, in the case of
(i) or (ii) below, any coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year, or
(iii) if redeemable at the option of the
Company, 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 (i), (ii) or (iii)
above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust
for the purpose an amount, in the Currency 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 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;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) 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 as to such series have been complied with.
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50
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 606, the
obligations of the Trustee to any Authenticating Agent under Section 611 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 402 and
the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the Securities,
the coupons 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 whose payment such money has been deposited
with the Trustee, but such money need not be segregated from other funds except
to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to
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):
(1) default in the payment of any interest on any Security of
that series, or any related coupon, when such interest or coupon
becomes due and payable, and continuance of such default for a period
of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of the Securities of that series and Article
Twelve; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a default in the
performance, or breach of a
<PAGE>
51
covenant or warranty which is specifically dealt with elsewhere in this
Section, and continuance of such default or breach for a period of 60
days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of all Outstanding
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
(5) 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 the Federal Bankruptcy Code or any other
applicable federal or state 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
(6) 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 the Federal Bankruptcy Code or any other applicable
federal or state 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 of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due;
or
(7) (A) there shall have occurred one or more defaults by the
Company or any Restricted Subsidiary in the payment of the principal of
or premium, if any, on Debt aggregating $10 million or more, when the
same becomes due and payable at the stated maturity thereof, and such
default or defaults shall have continued after any applicable grace
period and shall not have been cured or waived or (B) Debt of the
Company or any Restricted Subsidiary aggregating $10 million or more
shall have been accelerated or otherwise declared due and payable, or
required to be prepaid or repurchased (other than by regularly
scheduled required prepayment), prior to the stated maturity thereof;
or
(8) any other Event of Default provided with respect to
Securities of that series.
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52
SECTION 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default described in clause (1), (2), (3), (4),
(7) or (8) of Section 501 with respect to Securities of any series at the time
Outstanding occurs and is continuing, then 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 Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all of 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), and
upon any such declaration such principal amount (or specified portion thereof)
shall become immediately due and payable. If an Event of Default described in
clause (5) or (6) of Section 501 occurs and is continuing, then the principal
amount of all the Debt Securities shall ipso facto become and be immediately due
and payable without declaration or other act on the part of the Trustee or any
Holder.
At any time after a declaration of acceleration with respect
to Securities of any series (or of all series, as the case may be) 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 (or of
all series, as the case may be), by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the Currency in which the Securities of such
series are payable (except as otherwise specified pursuant to Section
301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)),
(A) all overdue interest on all Outstanding
Securities of that series (or of all series, as the case may
be) and any related coupons,
(B) all unpaid principal of (and premium, if any, on)
any Outstanding Securities of that series (or of all series,
as the case may be) which has become due otherwise than by
such declaration of acceleration, and interest on such unpaid
principal at the rate or rates prescribed therefor in such
Securities,
(C) to the extent that payment of such interest is
lawful, interest on overdue interest at the rate or rates
prescribed therefor in such Securities, and
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53
(D) 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
(2) all Events of Default with respect to Securities of that
series (or of all series, as the case may be), other than the
non-payment of amounts of principal of (or premium, if any, on) or
interest on Securities of that series (or of all series, as the case
may be) which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event of a
declaration of acceleration in respect of the Securities because of an Event of
Default specified in Section 501(7) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30-day period which has not been
cured or waived during such period.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of
interest on any Security and any related coupon when such interest
becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities and coupons, the whole amount then due
and payable on such Securities and coupons for principal (and premium, if any)
and interest, and interest on any overdue principal (and premium, if any) and to
the extent that payment of such interest is lawful on any overdue interest, at
the rate or rates prescribed therefor in such Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
<PAGE>
54
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such 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 such
Securities, wherever situated.
If an Event of Default with respect to Securities of any
series (or of all series, as the case may be) 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 (or of all series, as the
case may be) 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 504. 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, the Trustee (irrespective of whether the principal of the Securities
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, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any), or such portion of the principal
amount of any series of Original Issue Discount Securities or Indexed
Securities as may be specified in the terms of such series, and
interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
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55
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 Trustee 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 it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.
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.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities or coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or coupons 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 the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities and
coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee 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 on account of principal
(or premium, if any) or interest, upon presentation of the Securities or
coupons, or both, as the case may be, 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 under
Section 606;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the Securities
and coupons 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 Securities and
coupons for principal (and premium, if any) and interest, respectively;
and
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56
Third: The balance, if any, to the Person or Persons entitled
thereto including, without limitation, the Company.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series or any related coupons
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities
of that series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series in the case of any Event of
Default described in clause (1), (2), (3), (4), (7) or (8) of Section
501, or, in the case of any Event of Default described in clause (5) or
(6) of Section 501, the Holders of not less than 25% in principal
amount of all Outstanding Securities, 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;
(3) 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;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
at least a majority or more in principal amount of the Outstanding
Securities of that series in the case of any Event of Default described
in clause (1), (2), (3), (4), (7) or (8) of Section 501, or, in the
case of any Event of Default described in clause (5) or (6) of Section
501, by the Holders of a majority or more in principal amount of all
Outstanding Securities;
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 of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Securities of the same series, in the case of any Event of Default
described in clause (1), (2), (3), (4), (7) or (8) of Section 501, or of Holders
of all Securities in the case of any Event of Default described in clause (5) or
(6) of Section 501, 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 Holders of Securities of the same
<PAGE>
57
series, in the case of any Event of Default described in clause (1), (2), (3),
(4), (7) or (8) of Section 501, or of Holders of all Securities in the case of
any Event of Default described in clause (5) or (6) of Section 501.
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment, as provided herein (including, if applicable,
Article Fourteen) and in such Security, of the principal of (and premium, if
any, on) and (subject to Section 307) interest on, such Security or payment of
such coupon on the respective Stated Maturities expressed in such Security or
coupon (or, in the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder 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 or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
Securities and coupons shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities or coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders of Securities or coupons is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security or coupon 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 may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 512. Control by Holders.
With respect to the Securities of any series, the Holders of
not less than a majority in principal amount of the Outstanding Securities of
such 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, relating to or arising under clause
(1), (2), (3), (4), (7) or (8) of Section 501, and, with respect to all
Securities, the Holders of not less than a majority in principal amount of all
Outstanding Securities 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, not relating to or
arising under clause (1), (2), (3), (4), (7) or (8) of Section 501, provided
that in each case
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve
it in personal liability or be unjustly prejudicial to the Holders of
Securities of such series not consenting.
SECTION 513. Waiver of Past Defaults.
Subject to Section 502, the Holders of not less than a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default described in clause (1), (2), (3), (4), (7) or (8) of Section 501 (or,
in the case of a default described in clause (5) or (6) of Section 501, the
Holders of not less than a majority in principal amount of all Outstanding
Securities may waive any such past default), and its consequences, except a
default
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(1) in respect of the payment of the principal of (or premium,
if any, on) or interest on any Security or any related coupon, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, any 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 Event of Default or impair any right consequent
thereon.
SECTION 514. Waiver of 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 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.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder
with respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such default
hereunder known to the Trustee, 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, on) or interest on any Security of such
series or in the payment of any sinking fund installment with respect to
Securities 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 determine that the withholding of such notice is in the interest of the
Holders of Securities of such series and any related coupons; and provided
further that in the case of any Default of the character specified in
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Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof.
SECTION 602. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through
315(d):
(1) 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, note, other evidence of indebtedness or other
paper or document reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(2) 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;
(3) 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;
(4) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) 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 of Securities of any series or any
coupons appertaining thereto 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;
(6) 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, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be
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entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) 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; and
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture.
The Trustee shall not be required to expend or risk its own
funds 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 it
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.
SECTION 603. Trustee Not Responsible for Recitals or
Issuance of Securities.
The recitals contained herein and in the Securities, except
for the Trustee's certificates of authentication, and in any coupons 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 or coupons, except that the Trustee represents
that it is duly authorized to execute and deliver this Indenture, authenticate
the Securities and perform its obligations hereunder and that the statements
made by it in a Statement of Eligibility and Qualification on Form T-1 supplied
to the Company are true and accurate, subject to the qualifications set forth
therein. Neither the Trustee nor any Authenticating Agent shall be accountable
for the use or application by the Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and coupons and, subject to TIA Sections 310(b) and 311, may otherwise deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
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SECTION 605. 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 606. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, 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
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts 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.
The obligations of the Company under this Section to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (and premium, if any,
on) or interest on particular Securities or any coupons.
SECTION 607. Corporate Trustee Required; Eligibility;
Conflicting Interests.
(a) There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually,
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pursuant to law or to the requirements of federal, state, territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section, 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, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
(b) The following indentures shall be deemed to be
specifically described herein for the purposes of clause (i) of the first
proviso contained in TIA Section 310(b): (1) the Indenture dated December 16,
1993 entered into between the Company and Continental Bank, N.A, trustee and (2)
the Indenture dated as of February 28, 1996 between the Company and First Trust
of Illinois, N.A., as trustee as supplemented by a Supplemental Indenture, dated
as of February 28, 1996 between the Company and First Trust of Illinois, N.A..
SECTION 608. 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 shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 609.
(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 the instrument of acceptance by a successor Trustee required by
Section 609 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less than 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:
(1) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) 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
(2) the Trustee shall cease to be eligible under Section
607(a) and shall fail to resign 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
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(3) 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, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to TIA Section 315(e),
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 or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular 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 to that extent 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 of such series 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 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
to the Holders of Securities of such series in the manner provided for in
Section 106. 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 609. 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,
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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 to 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. Whenever there is a successor Trustee with
respect to one or more (but less than all) series of securities issued pursuant
to this Indenture, the terms "Indenture" and "Securities" shall have the
meanings specified in the provisos to the respective definitions of those terms
in Section 101 which contemplate such situation.
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(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, 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.
SECTION 610. 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 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, 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 with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the certificate of
the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 611. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding, 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 and the Trustee shall give
written notice of such appointment to all Holders of Securities of the series
with respect to which such Authenticating Agent will serve, in the manner
provided for in Section 106. 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. Any such appointment
shall be evidenced by an instrument in writing signed by a Responsible Officer
of the Trustee, and a copy of such instrument shall be promptly furnished to the
Company. Wherever reference is made in this Indenture to the
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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
and a certificate of authentication executed 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, any state thereof 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 corporation
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, 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 an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect specified in this Section.
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 the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, 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, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice of
such appointment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided for in
Section 106. 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 provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 606.
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If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK,
as Trustee
By___________________________
as Authenticating Agent
By___________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities or coupons, by receiving and holding
the same, agrees with the Company and the Trustee that none of the Company or
the Trustee or any agent of either of them shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Holders in accordance with TIA Section 312, regardless of the source from which
such information was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made under TIA Section
312(b).
SECTION 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the
first May 15 after the first issuance of Securities pursuant to this Indenture,
the Trustee shall transmit to the Holders of Securities, in the manner and to
the extent provided in TIA Section 313(c), a brief report dated as of such May
15 if required by TIA Section 313(a).
SECTION 703. Reports by Company.
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The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934; or, if the Company is not
required to file information, documents or reports pursuant to either of
such Sections, then it shall file with the Trustee and the Commission,
in accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of
the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit to all Holders, in the manner and to the extent
provided in TIA Section 313(c), within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1)
and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE EIGHT
MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, unless:
(1) 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 (A) shall be a
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corporation, partnership or trust organized and validly existing under
the laws of the United States of America, any state thereof or the
District of Columbia and (B) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the Company's obligation for the due and
punctual payment of the principal of (and premium, if any, on) and
interest on all the Securities and the performance and observance of
every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
(3) the Company or such Person shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
This Section shall only apply to a merger or consolidation in
which the Company is not the surviving corporation and to conveyances, leases
and transfers by the Company as transferor or lessor.
SECTION 802. Successor Person Substituted.
Upon any consolidation by the Company with or merger by the
Company into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety to any Person
in accordance with Section 801, the successor Person 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 or transfer, the Company (which term
shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this Indenture
and the Securities and the coupons and may be dissolved and liquidated.
SECTION 803. Securities to Be Secured in Certain Events.
If, upon any such consolidation of the Company with or merger of
the Company into any other corporation, or upon any conveyance, lease or
transfer of the property of the Company as an entirety or substantially as an
entirety to any other Person, any Principal Property of the Company or of any
Restricted Subsidiary, would thereupon become subject
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to any Lien, then unless such Lien could be created pursuant to Section 1009
without equally and ratably securing the Securities, the Company, prior to or
simultaneously with such consolidation, merger, conveyance, lease or transfer,
will, as to such Principal Property, secure the Securities Outstanding hereunder
(together with, if the Company shall so determine, any other Debt of the Company
now existing or hereafter created which is not subordinate to the Securities)
equally and ratably with (or prior to) the Debt which upon such consolidation,
merger, conveyance, lease or transfer is to become secured as to such Principal
Property by such Lien, or will cause such Securities to be so secured; provided
that, for the purpose of providing such equal and ratable security, the
principal amount of Original Issue Discount Securities and Indexed Securities
shall mean that amount which would at the time of making such effective
provision be due and payable pursuant to Section 502 and the terms of such
Original Issue Discount Securities and Indexed Securities upon a declaration of
acceleration of the Maturity thereof, and the extent of such equal and ratable
security shall be adjusted, to the extent permitted by law, as and when said
amount changes over time pursuant to the terms of such Original Issue Discount
Securities and Indexed Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holders, the Company, when authorized
by or pursuant to 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, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the
Company contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities and any related coupons
(and if such covenants are to be for the benefit of less than all series
of Securities, stating that such covenants are being included solely for
the benefit of such series) or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default (and if such Events
of Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are being included
solely for the benefit of such series); or
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(4) to add to or change any of the provisions of this Indenture
to provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of or
any premium or interest on Bearer Securities, to permit Bearer
Securities to be issued in exchange for Registered Securities, to permit
Bearer Securities to be issued in exchange for Bearer Securities of
other authorized denominations or to permit or facilitate the issuance
of Securities in uncertificated form; provided that any such action
shall not adversely affect the interests of the Holders of Securities of
any series or any related coupons in any material respect; or
(5) 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
(6) to secure the Securities pursuant to the requirements of
Section 803 or 1009 or otherwise; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 201 and 301; or
(8) 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 609(b); or
(9) to close this Indenture with respect to the authentication
and delivery of additional series of Securities, to cure any ambiguity,
to 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 Indenture; provided
that such action shall not adversely affect the interests of the Holders
of Securities of any series and any related coupons in any material
respect;
(10) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the defeasance
and discharge of any series of Securities pursuant to Sections 401, 1402
and 1403; provided that any such action shall not adversely affect the
interests of the Holders of Securities of such series and any related
coupons or any other series of Securities in any material respect; or
(11) to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
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SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of all Outstanding Securities of any series, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by or pursuant to 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 which affect such series of Securities or of modifying in any
manner the rights of the Holders of Securities under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change any obligation of the Company to pay
Additional Amounts contemplated by Section 1005 (except as contemplated
by Section 801(1) and permitted by Section 901(1)), or reduce the amount
of the principal of an Original Issue Discount Security that would be
due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 502 or the amount thereof provable in
bankruptcy pursuant to Section 504, or adversely affect any right of
repayment at the option of any Holder of any Security, or change any
Place of Payment where, or the Currency in which, any Security or any
premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption or repayment at
the option of the Holder, on or after the Redemption Date or Repayment
Date, as the case may be), or adversely affect any right to convert or
manage any Security as may be provided pursuant to Section 301 herein,
or
(2) reduce the percent in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for
any such supplemental indenture, for any waiver of compliance with
certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture, or reduce the
requirements of Section 1504 for quorum or voting.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of 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 of any other series. Any such
supplemental indenture adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture, or modifying in any manner
the rights of the Holders
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of Securities of such series, shall not affect the rights under this Indenture
of the Holders of 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 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. 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 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, 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 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental
Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
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SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of Section 902, the
Company shall give notice thereof to the Holders of each Outstanding Security
affected, in the manner provided for in Section 106, setting forth in general
terms the substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and
Interest.
The Company covenants and agrees for the benefit of the Holders
of each series of Securities and any related coupons that it will duly and
punctually pay the principal of (and premium, if any, on) and interest on the
Securities of that series in accordance with the terms of the Securities, any
coupons appertaining thereto and this Indenture. Unless otherwise specified as
contemplated by Section 301 with respect to any series of Securities, any
interest installments due on Bearer Securities on or before Maturity shall be
payable only upon presentation and surrender of the several coupons for such
interest installments as are evidenced thereby as they severally mature.
SECTION 1002. Maintenance of Office or Agency.
If the Securities of a series are issuable only as Registered
Securities, 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, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities of that series that
are convertible may be surrendered for conversion, if applicable, and where
notices and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served.
If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in The City of New York, an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for
exchange, where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served and where Bearer
Securities of that series and related coupons may be presented or surrendered
for payment in the circumstances described in the following paragraph (and not
otherwise); (B) subject to
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any laws or regulations applicable thereto, in a Place of Payment for that
series which is located outside the United States, an office or agency where
Securities of that series and related coupons may be presented and surrendered
for payment; provided, however, that, if the Securities of that series are
listed on any stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent for the
Securities of that series in any required city located outside the United States
so long as the Securities of that series are listed on such exchange, and (C)
subject to any laws or regulations applicable thereto, in a Place of Payment for
that series located outside the United States an office or agency where any
Registered Securities of that series may be surrendered for registration of
transfer, where Securities of that series may be surrendered for 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 will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required 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, except that Bearer Securities of any
series and the related coupons may be presented and surrendered for payment at
the offices specified in the Security, in London, and the Company hereby
appoints the same as its agents to receive such respective presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, no payment of principal, premium or interest on Bearer
Securities shall be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
however, that, if the Securities of a series are payable in Dollars, payment of
principal of (and premium, if any, on) and interest on any Bearer Security shall
be made at the office of the Company's Paying Agent in The City of New York, if
(but only if) payment in Dollars of the full amount of such principal, premium
or interest, as the case may be, at all offices or agencies outside the United
States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; 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 accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. Unless otherwise specified with
respect to any Securities
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as contemplated by Section 301 with respect to a series of Securities, the
Company hereby designates as a Place of Payment for each series of Securities
the office or agency of the Trustee in the Borough of Manhattan, The City of New
York, and initially appoints the Trustee c/o Mellon Securities Transfer
Services, 120 Broadway, 33rd Floor, New York, New York 10271, as Paying Agent in
such city as its agent to receive all such presentations, surrenders, notices
and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any series (i) are
denominated in a Currency other than Dollars or (ii) may be payable in a
Currency other than Dollars, or so long as it is required under any other
provision of the Indenture, then the Company will maintain with respect to each
such series of Securities, or as so required, at least one Exchange Rate Agent.
SECTION 1003. Money for Securities 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 and any related coupons, it will, on or
before each due date of the principal of (and premium, if any, on) or interest
on any of the Securities of that series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) 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 action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities and any related coupons, it will, prior to or on each
due date of the principal of (and premium, if any, on) or interest on any
Securities of that series, deposit with a Paying Agent a sum (in the Currency
described in the preceding paragraph) 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, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent (other than the
Trustee) for any series of Securities 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, that such Paying Agent will:
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(1) hold all sums held by it for the payment of the principal of
(and premium, if any, on) and interest on Securities of such series 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;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of such series) in the making of
any payment of principal of (or premium, if any, on) or interest on the
Securities of such series; and
(3) 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.
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 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
sums.
Except as provided in the Securities of any series, 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, on) or interest
on any Security of any series, or any coupon appertaining thereto, and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security or coupon 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 an
Authorized Newspaper, 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.
SECTION 1004. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer as to his
or her knowledge of the Company's compliance with
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all conditions and covenants under this Indenture. For purposes of this Section
1004, such compliance shall be determined without regard to any period of grace
or requirement of notice under this Indenture.
SECTION 1005. Additional Amounts.
If any Securities of a series provide for the payment of
additional amounts to any Holder who is not a United States person in respect of
any tax, assessment or governmental charge ("Additional Amounts"), the Company
will pay to the Holder of any Security of such series or any coupon appertaining
thereto such Additional Amounts as may be specified as contemplated by Section
301. Whenever in this Indenture there is mentioned, in any context, the payment
of the principal (or premium, if any, on) or interest on, or in respect of, any
Security of a series or payment of any related coupon or the net proceeds
received on the sale or exchange of any Security of a series, such mention shall
be deemed to include mention of the payment of Additional Amounts provided for
by the terms of such series established pursuant to Section 301 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to such terms and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
Except as otherwise specified as contemplated by Section 301, if
the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to that
series of Securities (or if the Securities of that series will not bear interest
prior to Maturity, the first day on which a payment of principal (and premium,
if any) is made), and at least 10 days prior to each date of payment of
principal (and premium, if any) or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers' Certificate,
the Company will furnish the Trustee and the Company's principal Paying Agent or
Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of (and premium, if any, on) or interest on the Securities
of that series shall be made to Holders of Securities of that series or any
related coupons who are not United States persons without withholding for or on
account of any tax, assessment or other governmental charge described in the
Securities of the series. If any such withholding shall be required, then such
Officers' Certificate shall specify by country the amount, if any, required to
be withheld on such payments to such Holders of Securities of that series or
related coupons and the Company will pay to the Trustee or such Paying Agent the
Additional Amounts required by the terms of such Securities. In the event that
the Trustee or any Paying Agent, as the case may be, shall not so receive the
above-mentioned certificate, then the Trustee or such Paying Agent shall be
entitled to (i) assume that no such withholding or deduction is required with
respect to any payment of principal (and premium, if any) or interest with
respect to any Securities of a series or related coupons
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until it shall have received a certificate advising otherwise and (ii) to make
all payments of principal (and premium, if any) and interest with respect to the
Securities of a series or related coupons without withholding or deductions
until otherwise advised. The Company covenants to indemnify the Trustee and any
Paying Agent for, and to hold them harmless against, any loss, liability or
expense reasonably incurred without negligence or bad faith on their part
arising out of or in connection with actions taken or omitted by any of them in
reliance on any Officers' Certificate furnished pursuant to this Section.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Restricted Subsidiary or upon the income, profits or property of the Company or
any Restricted Subsidiary, and (2) all material lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon any
Principal Property of the Company or any Restricted Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1007. Maintenance of Properties.
The Company will cause all assets owned by the Company or any
Restricted Subsidiary used or useful in the conduct of the Company's business or
the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order. In particular, the Company will, and will
cause each Restricted Subsidiary, to take all steps reasonably necessary to
maintain the integrity, value, quality and ownership of all intellectual
property constituting Principal Franchise Assets. Notwithstanding the foregoing
sentence, nothing in this Section shall prevent the Company from discontinuing
the operation or maintenance of any of such assets if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Restricted Subsidiary and not disadvantageous in any material
respect to the Holders, including without limitation, the termination or
non-renewal of any Franchise Contracts constituting Principal Franchise Assets.
SECTION 1008. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the rights (charter and statutory) and franchises of the
Company and any Restricted Subsidiary; provided, however, that the Company shall
not be required to preserve any such right or franchise if the Company shall
determine that the preservation thereof is no longer desirable
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in the conduct of the business of the Company and its Subsidiaries as a whole
and provided further that the foregoing does not prohibit any mergers or
consolidations between Subsidiaries or between the Company and one or more
Subsidiaries so long as any such merger or consolidation complies with Article
Eight.
SECTION 1009. Limitation on Liens.
(1) Subject to Paragraph (2) of this Section 1009, neither the
Company nor any Restricted Subsidiary shall create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by it, except:
(A) Liens existing on the Issue Date, or arising after
the Issue Date pursuant to contracts existing on the Issue Date
and any extensions or renewals thereof not in excess of the
amount of the original Lien;
(B) Liens for taxes or assessments and similar charges
either (x) not delinquent or (y) contested in good faith by
appropriate proceedings;
(C) Liens incurred or pledges and deposits in
connection with workmen's compensation, unemployment insurance
and other social security benefits, or securing the performance
of bids, tenders, leases, contracts (other than for the
repayment of borrowed money), statutory obligations, progress
payments, surety and appeal bonds and other obligations of like
nature, incurred in the ordinary course of business;
(D) Liens imposed by law, such as mechanics',
carriers', warehousemen's, landlords', materialmen's and
vendors' liens, incurred in good faith in the ordinary course of
business;
(E) purchase money Liens granted to the vendor or
Person financing the acquisition of property, plant or equipment
if (i) limited to the specific assets acquired; (ii) the debt
secured by the Lien is the unpaid balance of the acquisition
cost of the specific assets on which the Lien is granted; and
(iii) the total amount of all such purchase money Liens does not
exceed $30 million at any one time on a consolidated basis;
(F) Liens upon real and/or personal property (whether
tangible or intangible), which property was acquired after the
Issue Date (by purchase, construction or otherwise) by the
Company or any Subsidiary, each of which Lien existed on such
property before the time of its acquisition and was not created
in anticipation thereof; provided, however, that no such Lien
shall
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extend to or cover any property of the Company or such
Subsidiary other than the respective property so acquired and
improvements thereon;
(G) Liens arising under or in connection with sale and
leaseback transactions permitted under Section 1010;
(H) Liens arising by reason of any attachment,
judgment, decree or order of any court, so long as any
appropriate legal proceedings which may have been initiated
shall not have been finally terminated or so long as the period
within which such proceedings may be initiated shall not have
expired, any deposit or pledge with any surety company or clerk
of any court, or in escrow, as collateral in connection with, or
in lieu of, any bond on appeal from any judgment or decree
against the Company or any Restricted Subsidiary, or in
connection with other proceedings or actions at law or in equity
by or against the Company, provided that such deposits, pledges,
or bonds in the aggregate shall not exceed $10 million at any
one time;
(I) Liens other than those enumerated in paragraphs
(A)-(H) above arising in connection with Debt of the Company and
of any one or more Restricted Subsidiaries in an aggregate
amount not exceeding at any one time 10% of Consolidated Net
Tangible Assets; and
(J) any extension, renewal, substitution or replacement
(or successive extensions, renewals, substitutions or
replacements), as a whole or in part, of any of the Liens
referred to in subparagraphs (A) through (I) above or the Debt
secured thereby; provided that (1) such extension, renewal,
substitution or replacement Lien shall be limited to all or any
part of the same Principal Property that secured the Lien
extended, renewed, substituted or replaced (plus improvements on
such property, and plus any other property or assets not then
constituting a Principal Property) and (2) in the case of
paragraphs (A) and (F) above, the Debt secured by such Lien at
such time is not increased.
(2) The Company or any Restricted Subsidiary may create or
assume any Lien not permitted by Clause (1) of this Section 1009 upon any of its
property or assets, whether now owned or hereafter acquired if (i) prior written
consent to the creation or assumption thereof shall have been obtained from the
Trustee (with the consent of the Holders of a majority in principal amount of
the then Outstanding Securities) or (ii) the Company will make or cause to be
made effective a provision whereby the Securities and all coupons appertaining
thereto will be secured by such Lien equally and ratably with any and all other
Debt so secured.
SECTION 1010. Limitation on Sale and Leaseback Transactions.
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The Company will not itself, and will not permit any Restricted
Subsidiary to, enter into any arrangement after the date of the first issuance
by the Company of Securities issued pursuant to this Indenture with any bank,
insurance company or other lender or investor (other than the Company or another
Restricted Subsidiary) providing for the leasing by the Company or any such
Restricted Subsidiary of any Principal Property (except a lease for a temporary
period not to exceed three years by the end of which it is intended that the use
of such Principal Property by the lessee will be discontinued), which was or is
owned or leased by the Company or a Restricted Subsidiary and which has been or
is to be sold or transferred, more than 120 days after the completion of
construction and commencement of full operation thereof by the Company or such
Restricted Subsidiary, to such lender or investor or to any Person to whom funds
have been or are to be advanced by such lender or investor on the security of
such Principal Property (herein referred to as a "sale and leaseback
transaction") unless, either:
(a) the Attributable Debt of the Company and its Restricted
Subsidiaries in respect of such sale and leaseback transaction and all
other sale and leaseback transactions entered into after the date of the
first issuance by the Company of Securities issued pursuant to this
Indenture (other than such sale and leaseback transactions as are
permitted by paragraph (b) below), plus the aggregate principal amount
of Debt secured by Liens on Principal Properties (excluding any such
Debt secured by Liens covered in paragraphs (A) through (H) of Section
1009) without equally and ratably securing the Securities, would not
exceed 10% of Consolidated Net Tangible Assets, or
(b) the Company, within 120 days after the sale or transfer,
applies or causes a Restricted Subsidiary to apply an amount equal to
the greater of the net proceeds of such sale or transfer or fair market
value of the Principal Property so sold and leased back at the time of
entering into such sale and leaseback transaction (in either case as
determined by any two of the following: the Chairman, the President, any
Vice President, the Treasurer and the Controller of the Company) to the
retirement of Securities of any series or other Debt of the Company
(other than Debt subordinated to the Securities) or Debt of a Restricted
Subsidiary, having a stated maturity more than 12 months from the date
of such application or which is extendible at the option of the obligor
thereon to a date more than 12 months from the date of such application
and, unless otherwise expressly provided with respect to any one or more
series of Securities, any redemption of Securities pursuant to this
provision shall not be deemed to constitute a refunding operation or
anticipated refunding operation for the purposes of any provision
limiting the Company's right to redeem Securities of any one or more
such series when such redemption involves a refunding operation or
anticipated refunding operation; provided that the amount to be so
applied shall be reduced by (i) the principal amount of Securities
delivered within 120 days after such sale or transfer to the Trustee for
retirement and cancellation, and (ii) the principal amount of any such
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Debt of the Company or a Restricted Subsidiary, other than Securities,
voluntarily retired by the Company or a Restricted Subsidiary within 120
days after such sale or transfer. Notwithstanding the foregoing, no
retirement referred to in this paragraph (b) may be effected by payment
at maturity or pursuant to any mandatory sinking fund payment or any
mandatory prepayment provision.
Notwithstanding the foregoing, where the Company or any
Restricted Subsidiary is the lessee in any sale and leaseback transaction,
Attributable Debt shall not include any Debt resulting from the guarantee by the
Company or any other Restricted Subsidiary of the lessee's obligation
thereunder.
SECTION 1011. Limitation on Debt of Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary to create,
incur, assume or directly or indirectly guarantee or in any manner become
directly liable for the payment of, any Debt other than (i) trade debt incurred
in the ordinary course of business; (ii) Debt owing by any Restricted Subsidiary
to the Company or any other Restricted Subsidiary arising in the ordinary course
of business for normal business purposes; (iii) Debt in existence on the Issue
Date or required to be incurred pursuant to a contractual obligation in
existence on the Issue Date; or (iv) other Debt not in excess of 10% of Pro
Forma Consolidated Net Tangible Assets.
SECTION 1012. Limitation on Transfers of Principal Franchise
Assets.
Except as permitted under Article 8, neither the Company nor any
of its Restricted Subsidiaries shall in one or a series of related transactions
convey, sell, lease, transfer, assign or otherwise dispose of, directly or
indirectly, any of its Principal Franchise Assets (an "Asset Sale") other than
in the ordinary course of business (which shall be any transaction or series of
related transactions having a dollar amount of less than $3 million), unless the
consideration received is at least equal to the Fair Market Value of the assets
sold or otherwise disposed of.
SECTION 1013. Limitation on Restrictions on Subsidiary
Dividends and Other Distributions.
The Company shall not permit any Restricted Subsidiary to suffer
to exist any encumbrance or restriction (other than pursuant to law, regulation
or order or in accordance with the terms of the Credit Agreement or agreements
entered into in connection with the Credit Agreement) on the ability of any
Restricted Subsidiary (i) to pay, directly or indirectly, dividends or make any
other distributions in respect of its Capital Stock or pay any Debt or other
obligation owed to the Company or any other Restricted Subsidiary; (ii) to make
loans or advances to the Company or any Restricted Subsidiary; or (iii) to
transfer any
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of its property or assets to the Company or any Restricted Subsidiary, except
any encumbrance or restriction (a) pursuant to any agreement in effect on the
Issue Date, including, without limitation, the Credit Agreement, (b) pursuant to
an agreement entered into by such Restricted Subsidiary prior to the date on
which such Restricted Subsidiary was acquired by the Company and not entered
into in anticipation of becoming a Restricted Subsidiary, (c) permitted under
Section 1011 herein, (d) pursuant to customary non- assignment provisions of any
lease governing a leasehold interest, a security agreement, mortgage or deed of
trust issued in connection with liens permitted by Section 1008 or any other
agreement which does not relate to Debt, provided that any such non-assignment
provision would not have a material adverse effect on the Company and its
Restricted Subsidiaries taken as a whole (as determined in good faith by the
Board of Directors of the Company), or (e) pursuant to an agreement effecting a
renewal, extension, refinancing or refunding of Debt incurred pursuant to an
agreement referred to in clause (a) or (b) above, provided, however, that the
provisions contained in such renewal, extension, refinancing or refunding
agreement relating to such encumbrance or restriction are no more restrictive in
any material respect than the provisions contained in the agreement the subject
thereof.
SECTION 1014. Waiver of Certain Covenants.
The Company may, with respect to any series of Securities, omit
in any particular instance to comply with any term, provision or condition which
affects such series set forth in Section 803 or Sections 1006 to 1013,
inclusive, if before the time for such compliance the Holders of at least a
majority in principal amount of all Outstanding Securities of any series, by Act
of such Holders, waive such compliance in such instance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with the terms of such
Securities and (except as otherwise specified as contemplated by Section 301 for
Securities of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
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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, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed and shall
deliver to the Trustee such documentation and records as shall enable the
Trustee to select the Securities to be redeemed pursuant to Section 1103. 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 or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities of any series are to be
redeemed, 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 portions of the principal of Securities of such
series; provided, however, that no such partial redemption shall reduce the
portion of the principal amount of a Security not redeemed to less than the
minimum authorized denomination for Securities of such series established
pursuant to Section 301.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, 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.
SECTION 1104. Notice of Redemption.
Except as otherwise specified as contemplated by Section 301,
notice of redemption shall be given in the manner provided for in Section 106
not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case
of partial redemption, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price
(together with accrued interest, if any, to the Redemption Date
payable as provided in Section 1106) will become due and payable
upon each such Security, or the portion thereof, to be redeemed
and, if applicable, that interest thereon will cease to accrue
on and after said date,
(5) the place or places where such Securities, together
in the case of Bearer Securities with all coupons appertaining
thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such
is the case,
(7) that, unless otherwise specified in such notice,
Bearer Securities of any series, if any, surrendered for
redemption must be accompanied by all coupons maturing
subsequent to the Redemption Date or the amount of any such
missing coupon or coupons will be deducted from the Redemption
Price unless security or indemnity satisfactory to the Company,
the Trustee and any Paying Agent is furnished, and
(8) if Bearer Securities of any series are to be
redeemed and any Registered Securities of such series are not to
be redeemed, and if such Bearer Securities may be exchanged for
Registered Securities not subject to redemption on such
Redemption Date pursuant to Section 305 or otherwise, the last
date, as determined by the Company, on which such exchanges may
be made.
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.
SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in the Currency in which the Securities of such series are payable (except
as otherwise specified pursuant to Section 301
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for the Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)) sufficient to pay the Redemption Price of,
and accrued interest on, all the Securities which are to be redeemed on that
date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) (together with accrued interest,
if any, to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall, if the same were interest-bearing, cease to
bear interest and the coupons for such interest appertaining to any Bearer
Securities so to be redeemed, except to the extent provided below, shall be
void. Upon surrender of any such Security for redemption in accordance with said
notice, together with all coupons, if any, appertaining thereto maturing after
the Redemption Date, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest on Bearer Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable
only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender of coupons for
such interest, and provided further that installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Redemption Date shall 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 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
however, that interest represented by coupons shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section 301,
only upon presentation and surrender of those coupons.
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If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part (pursuant to
the provisions of this Article or of Article Twelve) shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
SECTION 1108. Redemption Pursuant to Gaming Laws.
(a) If a Holder of Securities (1) is required by any Gaming
Authority to be qualified with respect to any Gaming License and has neither
been qualified by nor obtained a waiver of qualification from each Gaming
Authority requiring qualification with respect to any Gaming License in a timely
manner or is found to be disqualified or unsuitable with respect to any Gaming
License, which finding has not been reversed, vacated or superseded in any
subsequent proceeding prior to the date of written notice form the Company (each
a "Disqualified Holder") or (2) Beneficially Owns five percent (5%) or more of
the outstanding Capital Stock of the Company and has not fully complied with
investigations or inquiries by the Company or any Gaming Authority in connection
with any Gaming License (including, without limitation, requests for such
Holder's financial statements), then (except as otherwise approved by the Board
of Directors) (i) such Disqualified Holder or Beneficial Owner shall, upon the
written request of the Company, sell its Securities within 10 days after receipt
of such request either directly to any Person then qualified or previously
qualified (and not subsequently disqualified) or through a bona fide brokerage
transaction, conducted at arm's-length, to a Person not an Affiliate of the
Disqualified Holder or Beneficial Owner, or (ii) the Company may, at its option,
within 15 days after the end of such 10 day period, redeem such Holder's or
Beneficial Owner's Securities at the lowest of (x) the market value thereof, (y)
the principal amount thereof or (z) the amount which such Holder or Beneficial
Owner paid for the Securities, together with accrued and unpaid interest, if
any, to the date of the determination of disqualification at a time and place as
designated by the Company. The Company shall promptly provide to the Trustee a
copy of each written request served to such Disqualified Holder or Beneficial
Owner.
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(b) Any Holder of Securities required to apply for a finding of
suitability under any applicable Gaming Law shall pay all investigative fees and
costs, if any, of any Gaming Authority in connection with such application.
Immediately upon a determination of unsuitability, if any, such Holder shall
have no further right to exercise, directly or through any trustee or nominee,
any right conferred by such Holder's Securities and no further right to receive
any dividends, interest or other distributions or payments with respect thereto;
provided, however, that after any such disqualification, interest on such
Securities shall continue to accrue for the benefit of any subsequent Holder
thereof.
(c) If any Disqualified Holder fails to dispose of such Holder's
Securities in accordance with the provisions of clause (a) above, such
Disqualified Holder shall indemnify the Company and any Subsidiary of the
Company for any costs, including, without limitation, attorneys' fees, incurred
by the Company and any Subsidiary of the Company as a result of such
Disqualified Holder's continued ownership, or failure to divest itself, of such
Securities.
(d) The provisions of this Section 1108 shall be construed in
accordance with the applicable provisions of any applicable Gaming Laws.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
Retirements of Securities of any series pursuant to any sinking
fund shall be made in accordance with the terms of such Securities and (except
as otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities of
any series, the cash amount of any mandatory sinking fund payment may be subject
to reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities.
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Subject to Section 1203, in lieu of making all or any part of
any mandatory sinking fund payment with respect to any Securities of a series in
cash, the Company may at its option (1) deliver to the Trustee Outstanding
Securities of a series (other than any previously called for redemption)
theretofore purchased or otherwise acquired by the Company together in the case
of any Bearer Securities of such series with all unmatured coupons appertaining
thereto, and/or (2) receive credit for the principal amount of Securities of
such series which have been previously delivered to the Trustee by the Company
or for Securities of such series which have been redeemed either at the election
of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Securities, in each case in satisfaction of all or any part of any
mandatory sinking fund payment with respect to the Securities of the same series
required to be made pursuant to the terms of such Securities as provided for by
the terms of such series; provided, however, that such Securities have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. 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 that series pursuant to the terms of that series, 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 otherwise specified
pursuant to Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e)) and the portion
thereof, if any, which is to be satisfied by delivering or crediting Securities
of that series pursuant to Section 1202 (which Securities will, if not
previously delivered, accompany such certificate) and whether the Company
intends to exercise its right to make a permitted optional sinking fund payment
with respect to such series. Such 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 next succeeding sinking fund
payment date. In the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding sinking fund
payment date for that series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of such Securities subject to a
mandatory sinking fund payment without the option to deliver or credit
Securities as provided in Section 1202 and without the right to make any
optional sinking fund payment, if any, with respect to such series.
Not more than 60 days before each such sinking fund payment date
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner
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specified in Section 1103 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 1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
1106 and 1107.
Prior to any sinking fund payment date, the Company shall pay to
the Trustee or a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) in cash a sum
equal to any interest that will accrue to the date fixed for redemption of
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section 1203.
Notwithstanding the foregoing, with respect to a sinking fund
for any series of Securities, if at any time the amount of cash to be paid into
such sinking fund on the next succeeding sinking fund payment date, together
with any unused balance of any preceding sinking fund payment or payments for
such series, does not exceed in the aggregate $100,000, the Trustee, unless
requested by the Company, shall not give the next succeeding notice of the
redemption of Securities of such series through the operation of the sinking
fund. Any such unused balance of moneys deposited in such sinking fund shall be
added to the sinking fund payment for such series to be made in cash on the next
succeeding sinking fund payment date or, at the request of the Company, shall be
applied at any time or from time to time to the purchase of Securities of such
series, by public or private purchase, in the open market or otherwise, at a
purchase price for such Securities (excluding accrued interest and brokerage
commissions, for which the Trustee or any Paying Agent will be reimbursed by the
Company) not in excess of the principal amount thereof.
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.
Repayment of Securities of any series before their Stated
Maturity at the option of Holders thereof shall be made in accordance with the
terms of such Securities and (except as otherwise specified as contemplated by
Section 301 for Securities of any series) in accordance with this Article.
SECTION 1302. Repayment of Securities.
Securities of any series subject to repayment in whole or in
part at the option of the Holders thereof will, unless otherwise provided in the
terms of such Securities, be repaid at a price equal to the principal amount
thereof, together with interest, if any, thereon
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accrued to the Repayment Date specified in or pursuant to the terms of such
Securities. The Company covenants that on or before the Repayment Date it will
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money in the Currency in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series and except, if applicable, as provided in Sections
312(b), 312(d) and 312(e)) sufficient to pay the principal (or, if so provided
by the terms of the Securities of any series, a percentage of the principal) of,
and (except if the Repayment Date shall be an Interest Payment Date) accrued
interest on, all the Securities or portions thereof, as the case may be, to be
repaid on such date.
SECTION 1303. Exercise of Option.
Securities of any series subject to repayment at the option of
the Holders thereof will contain an "Option to Elect Repayment" form on the
reverse of such Securities. To be repaid at the option of the Holder, any
Security so providing for such repayment, with the "Option to Elect Repayment"
form on the reverse of such Security duly completed by the Holder (or by the
Holder's attorney duly authorized in writing), must be received by the Company
at the Place of Payment therefor specified in the terms of such Security (or at
such other place or places of which the Company shall from time to time notify
the Holders of such Securities) not earlier than 45 days nor later than 30 days
prior to the Repayment Date. If less than the entire principal amount of such
Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, and the denomination or
denominations of the Security or Securities to be issued to the Holder for the
portion of the principal amount of such Security surrendered that is not to be
repaid, must be specified. The principal amount of any Security providing for
repayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of the series of
which such Security to be repaid is a part. Except as otherwise may be provided
by the terms of any Security providing for repayment at the option of the Holder
thereof, exercise of the repayment option by the Holder shall be irrevocable
unless waived by the Company.
SECTION 1304. When Securities Presented for Repayment Become
Due and Payable.
If Securities of any series providing for repayment at the
option of the Holders thereof shall have been surrendered as provided in this
Article and as provided by or pursuant to the terms of such Securities, such
Securities or the portions thereof, as the case may be, to be repaid shall
become due and payable and shall be paid by the Company on the Repayment Date
therein specified, and on and after such Repayment Date (unless the
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Company shall default in the payment of such Securities on such Repayment Date)
such Securities shall, if the same were interest-bearing, cease to bear interest
and the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repayment
Date, the principal amount of such Security so to be repaid shall be paid by the
Company, together with accrued interest, if any, to the Repayment Date;
provided, however, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons, and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall 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 307.
If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of all such missing
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or any
Paying Agent any such missing coupon in respect of which a deduction shall have
been made as provided in the preceding sentence, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest represented
by coupons shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and
surrender of those coupons.
If the principal amount of any Security surrendered for
repayment shall not be so repaid upon surrender thereof, such principal amount
(together with interest, if any, thereon accrued to such Repayment Date) shall,
until paid, bear interest from the Repayment Date at the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in such Security.
SECTION 1305. Securities Repaid in Part.
Upon surrender of any Registered Security which is to be repaid
in part only, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge and at the
expense of the Company, a new Registered Security or Securities of the same
series, of any authorized denomination specified by the
<PAGE>
95
Holder, in an aggregate principal amount equal to and in exchange for the
portion of the principal of such Security so surrendered which is not to be
repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, the provisions of this Article Fourteen shall apply to
each series of Securities, and the Company may, at its option, effect defeasance
of the Securities of or within a series under Section 1402, or covenant
defeasance of or within a series under Section 1403 in accordance with the terms
of such Securities and in accordance with this Article.
SECTION 1402. Defeasance and Discharge.
Upon the Company's exercise of the above option applicable to
this Section with respect to any Securities of or within a series, the Company
shall be deemed to have been discharged from its obligations with respect to
such Outstanding Securities and any related coupons on the date the conditions
set forth in Section 1404 are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Outstanding Securities
and any related coupons, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section 1405 and the other Sections of this Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Securities and any related coupons and this Indenture
insofar as such Securities and any related coupons are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Outstanding Securities and any related coupons (i) to receive, solely from the
trust fund described in Section 1404 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any, on) and
interest on such Securities and any related coupons when such payments are due,
and (ii) to receive shares of common stock or other Securities from the Company
upon the conversion of any convertible securities issued hereunder, (B) the
Company's obligations with respect to such Securities under Sections 304, 305,
306, 1002 and 1003 and with respect to the payment of Additional Amounts, if
any, on such Securities as contemplated by Section 1005, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this Article
Fourteen. Subject to compliance with this Article Fourteen, the Company may
exercise its option under this Section 1402 notwithstanding the
<PAGE>
96
prior exercise of its option under Section 1403 with respect to such Securities
and any related coupons.
SECTION 1403. Covenant Defeasance.
Upon the Company's exercise of the above option applicable to
this Section with respect to any Securities of or within a series, the Company
shall be released from its obligations under Section 803 and Sections 1006
through 1010, and, if specified pursuant to Section 301, its obligations under
any other covenant, with respect to such Outstanding Securities and any related
coupons on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such Securities and any
related coupons shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent or declaration or Act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Outstanding
Securities and any related coupons, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of reference in any
such covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 501(4) or Section 501(8) or otherwise, as the case may be, but, except
as specified above, the remainder of this Indenture and such Securities and any
related coupons shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1402 or Section 1403 to any Outstanding Securities of or within a series
and any related coupons:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 607 who shall agree to comply with the
provisions of this Article Fourteen applicable to it) in trust for the
purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
such Securities and any related coupons, (A) money in an amount (in such
Currency in which such Securities and any related coupons are then
specified as payable at Stated Maturity), or (B) Government Obligations
applicable to such Securities (determined on the basis of the Currency
in which such Securities are then specified as payable at Stated
Maturity) which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment of principal
(including any premium) and interest, if any, under such Securities and
any related coupons, money in an amount, or (C) a combination thereof,
<PAGE>
97
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall
be applied by the Trustee (or other qualifying trustee) to pay and
discharge, (i) the principal of (and premium, if any, on) and interest
on such Outstanding Securities and any related coupons on the Stated
Maturity (or Redemption Date, if applicable) of such principal (and
premium, if any) or installment or interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to such
Outstanding Securities and any related coupons on the day on which such
payments are due and payable in accordance with the terms of this
Indenture and of such Securities and any related coupons; provided that
the Trustee shall have been irrevocably instructed to apply such money
or the proceeds of such Government Obligations to said payments with
respect to such Securities and any related coupons. Before such a
deposit, the Company may give to the Trustee, in accordance with Section
1102 hereof, a notice of its election to redeem all or any portion of
such Outstanding Securities at a future date in accordance with the
terms of the Securities of such series and Article Eleven hereof, which
notice shall be irrevocable. Such irrevocable redemption notice, if
given, shall be given effect in applying the foregoing.
(2) No Default or Event of Default with respect to such
Securities or any related coupons shall have occurred and be continuing
on the date of such deposit or, insofar as paragraphs (5) and (6) of
Section 501 are concerned, at any time during the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(3) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a
party or by which it is bound.
(4) In the case of an election under Section 1402, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of execution of
this Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of such Outstanding Securities
and any related coupons will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance had
not occurred.
(5) In the case of an election under Section 1403, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Outstanding Securities and any related coupons
will not recognize income, gain or loss
<PAGE>
98
for federal income tax purposes as a result of such covenant defeasance
and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred.
(6) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with
any additional or substitute terms, conditions or limitations in
connection therewith pursuant to Section 301.
(7) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
1402 or the covenant defeasance under Section 1403 (as the case may be)
have been complied with.
SECTION 1405. Deposited Money and Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003,
all money and Government Obligations (or other property as may be provided
pursuant to Section 301) (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee-- collectively for purposes of this Section
1405, the "Trustee") pursuant to Section 1404 in respect of such Outstanding
Securities and any related coupons shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and any related
coupons 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 Holders of such Securities and any related coupons
of all sums due and to become due thereon in respect of principal (and premium,
if any) and interest, but such money need not be segregated from other funds
except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant
to Section 301, if, after a deposit referred to in Section 1404(1) has been
made, (a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 312(b) or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 1404(1) has been made in respect of such Security, or (b) a
Conversion Event occurs as contemplated in Section 312(d) or 312(e) or by the
terms of any Security in respect of which the deposit pursuant to Section
1404(1) has been made, the indebtedness represented by such Security and any
related coupons shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (premium, if any, on), and
interest, if any, on such Security as they become due out of the proceeds
yielded by converting (from time to time as specified below in the case of any
such election) the amount or other property deposited in respect of such
Security into the Currency in which such Security becomes payable as a result of
such election or Conversion Event based on the applicable Market Exchange Rate
for such Currency in effect on the third
<PAGE>
99
Business Day prior to each payment date, except, with respect to a Conversion
Event, for such Currency in effect (as nearly as feasible) at the time of the
Conversion Event.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of such Outstanding Securities and any related
coupons.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money or Government Obligations (or other property
and any proceeds therefrom) held by it as provided in Section 1404 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1406. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money
in accordance with Section 1405 by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and such
Securities and any related coupons shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1405; provided, however, that if the Company makes any
payment of principal of (or premium, if any, on) or interest on any such
Security or any related coupon following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
and any related coupons to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called.
If Securities of a series are issuable as Bearer Securities, a
meeting of Holders of Securities of such series may be called at any time and
from time to time pursuant to
<PAGE>
100
this Article to make, give or take any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be made, given or taken by Holders of Securities of such series.
SECTION 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in The City of New York or in London as the
Trustee shall determine. Notice of every meeting of Holders of Securities of any
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided for in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of such series in
the amount above specified, as the case may be, may determine the time and the
place in The City of New York or in London for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in paragraph (a)
of this Section.
SECTION 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities
of any series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such series, or (2) a Person appointed by an instrument in writing
as proxy for a Holder or Holders of one or more Outstanding Securities of such
series by such Holder or Holders. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any series shall
be the Person entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of
the Outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that, if any action
is to be taken at such meeting with respect to a
<PAGE>
101
consent or waiver which this Indenture expressly provides may be given by the
Holders of not less than a specified percentage in principal amount of the
Outstanding Securities of a series, the Persons entitled to vote such specified
percentage in principal amount of the Outstanding Securities of such series
shall constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series, be dissolved. In any other case
the meeting may be adjourned for a period of not less than 10 days as determined
by the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided in
Section 1502(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of any adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding
Securities of such series which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for lack of a quorum the Persons entitled to vote 25% in principal
amount of the Outstanding Securities at the time shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of
not less than a majority in principal amount of the Outstanding Securities of
that series; provided, however, that, except as limited by the proviso to
Section 902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of not less than such specified percentage in
principal amount of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504,
if any action is to be taken at a meeting of Holders of Securities of any series
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture
<PAGE>
102
expressly provides may be made, given or taken by the Holders of a specified
percentage in principal amount of all Outstanding Securities affected thereby,
or of the Holders of such series and one or more additional series:
(i) there shall be no minimum quorum requirement for such
meeting; and
(ii) the principal amount of the Outstanding Securities of such
series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into
account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given
or taken under this Indenture.
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(a) Notwithstanding any provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of a series in regard to proof of the holding
of Securities of such series and of the appointment of proxies and in regard to
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as its shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section 104
and the appointment of any proxy shall be proved in the manner specified in
Section 104 or by having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 104 to certify to the holding of Bearer Securities. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 104 or
other proof.
(b) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders of Securities as provided in Section 1502(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of
Outstanding Securities of such series held or represented by him (determined as
specified in the definition of "Outstanding" in Section 101); provided, however,
that no vote shall be cast or counted at any meeting in
<PAGE>
103
respect of any Security challenged as not Outstanding and ruled by the chairman
of the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 1502 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 1506. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders
of Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the Secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
This Indenture 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 Indenture.
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.
HFS INCORPORATED
<PAGE>
104
By:____________________________________
Name:
Title:
[Seal]
Attest:
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK,
Trustee
By:_____________________________________
Name:
Title:
[Seal]
Attest:
<PAGE>
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
OR TO OBTAIN INTEREST PAYABLE PRIOR
TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States persons(s)"), (ii) are owned by United States person(s) that are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing
for their own account or for resale, or (b) United States person(s) who acquired
the Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise [Name of Issuer] or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such financial institution
has not acquired the Securities for purposes of resale directly or indirectly to
a United States person or to a person within the United States or its
possessions.
As used herein, "United States" means the United States of America
(including the states and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
above-captioned Securities held by you for our account in accordance with your
Operating Procedures if any applicable statement
<PAGE>
A-1-2
herein is not correct on such date, and in the absence of any such notification
it may be assumed that this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$]________ of such
interest in the above-captioned Securities in respect of which we are not able
to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii)
the relevant Interest Payment Date occurring prior to the Exchange Date, as
applicable]
[Name of Person Making
Certification]
__________________________________
(Authorized Signatory)
Name:
Title:
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN
CONNECTION WITH THE EXCHANGE OF A PORTION OF A
TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that based solely on written certifications
that we have received in writing, by tested telex or by electronic transmission
from each of the persons appearing in our records as persons entitled to a
portion of the principal amount set forth below (our "Member Organizations")
substantially in the form attached hereto, as of the date hereof, [U.S.$]_______
principal amount of the above-captioned Securities (i) is owned by person(s)
that are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States person(s) that are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) are herein
referred to as "financial institutions") purchasing for their own account or for
resale, or (b) United States person(s) who acquired the Securities through
foreign branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date hereof
(and in either case (a) or (b), each such financial institution has agreed, on
its own behalf or through its agent, that we may advise [Name of Issuer] or its
agent that such financial institution will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) is owned by United States or
foreign financial institution(s) for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)) and, to the further effect, that financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
As used herein, "United States" means the United States of
America (including the states and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
<PAGE>
A-2-2
We further certify that (i) we are not making available
herewith for exchange (or, if relevant, collection of any interest) any portion
of the temporary global Security representing the above-captioned Securities
excepted in the above-referenced certificates of Member Organizations and (ii)
as of the date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the Exchange Date or the relevant Interest Payment
Date occurring prior to the Exchange Date, as applicable]
[MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, BRUSSELS OFFICE, as Operator of the
Euroclear System]
[CEDEL S.A.]
By____________________________________________
================================================================================
HFS INCORPORATED
TO
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,
Trustee
_____________
Indenture
Dated as of __________
_____________
=================
CONVERTIBLE AND NON-CONVERTIBLE
SUBORDINATED DEBT SECURITIES
================================================================================
<PAGE>
HFS INCORPORATED
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
--------------- ---------
<S> <C>
ss. 310(a)(1).......................................................... 607(a)
(a)(2).......................................................... 607(a)
(b)............................................................. 607(b), 608
ss. 312(c)............................................................. 701
ss. 314(a)............................................................. 703
(a)(4).......................................................... 1004
(c)(1).......................................................... 102
(c)(2).......................................................... 102
(e)............................................................. 102
ss. 315(b)............................................................. 601
ss. 316(a)(last sentence).............................................. 101 ("Outstanding")
(a)(1)(A)....................................................... 502, 512
(a)(1)(B)....................................................... 513
(b)............................................................. 508
(c)............................................................. 104(e)
ss. 317(a)(1).......................................................... 503
(a)(2).......................................................... 504
(b)............................................................. 1003
ss. 318(a)............................................................. 111
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES........................................................................................................ 1
RECITALS OF THE COMPANY........................................................................................ 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions................................................................................. 1
Act ..................................................................................................... 2
Additional Amounts ...................................................................................... 2
Affiliate ............................................................................................... 2
Asset Sale .............................................................................................. 2
Attributable Debt ....................................................................................... 2
Authenticating Agent .................................................................................... 3
Authorized Newspaper .................................................................................... 3
Bearer Security ......................................................................................... 3
Beneficial Owner ........................................................................................ 3
Board of Directors ...................................................................................... 4
Board Resolution ........................................................................................ 4
Business Day ............................................................................................ 4
Capital Lease Obligation ................................................................................ 4
Capital Stock ........................................................................................... 4
CEDEL S.A. .............................................................................................. 4
Commission .............................................................................................. 5
Common Depositary ....................................................................................... 5
Company ................................................................................................. 5
Company Request; Company Order .......................................................................... 5
Consolidated Net Tangible Assets......................................................................... 5
Corporate Trust Office .................................................................................. 5
corporation ............................................................................................. 5
coupon .................................................................................................. 5
Credit Agreement ........................................................................................ 5
Currency ................................................................................................ 6
Currency Conversion Date ................................................................................ 6
Currency Conversion Event ............................................................................... 6
Debt .................................................................................................... 6
Default ................................................................................................. 6
Defaulted Interest ...................................................................................... 6
Dollar; $................................................................................................ 6
<PAGE>
ii
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Dollar Equivalent of the Currency Unit....................................................................... 6
Dollar Equivalent of the Foreign Currency.................................................................... 6
ECU ......................................................................................................... 6
Election Date ............................................................................................... 6
Euroclear ................................................................................................... 6
European Communities ........................................................................................ 7
European Monetary System .................................................................................... 7
Event of Default ............................................................................................ 7
Exchange Date ............................................................................................... 7
Exchange Rate Agent ......................................................................................... 7
Exchange Rate Officer's Certificate.......................................................................... 7
Fair Market Value ........................................................................................... 7
Federal Bankruptcy Code ..................................................................................... 7
Foreign Currency ............................................................................................ 7
Franchise Contract .......................................................................................... 7
Franchise Fee Revenues ...................................................................................... 7
Gaming Authority ............................................................................................ 8
Gaming Laws ................................................................................................. 8
Gaming License .............................................................................................. 8
Government Obligations ...................................................................................... 8
Holder ...................................................................................................... 8
Indenture ................................................................................................... 8
Indexed Security ............................................................................................ 9
interest .................................................................................................... 9
Interest Payment Date ....................................................................................... 9
Issue Date .................................................................................................. 9
Lien ........................................................................................................ 9
Market Exchange Rate ........................................................................................ 9
Maturity .................................................................................................... 10
Officers' Certificate ....................................................................................... 10
Opinion of Counsel .......................................................................................... 10
Optional Reset Date ......................................................................................... 10
Original Issue Discount Security............................................................................. 10
Outstanding ................................................................................................. 10
Paying Agent ................................................................................................ 12
Person ...................................................................................................... 12
Place of Payment ............................................................................................ 12
Predecessor Security ........................................................................................ 12
Principal Franchise Assets .................................................................................. 12
Principal Property .......................................................................................... 12
Pro Forma Consolidated Net Tangible Assets................................................................... 13
Redemption Date ............................................................................................. 13
Redemption Price ............................................................................................ 13
Registered Security ......................................................................................... 13
Regular Record Date ......................................................................................... 13
Repayment Date .............................................................................................. 13
<PAGE>
iii
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Repayment Price ............................................................................................ 13
Responsible Officer ........................................................................................ 13
Restricted Subsidiary ...................................................................................... 13
sale and leaseback transaction ............................................................................. 14
Securities ................................................................................................. 14
Security Register; Security Registrar....................................................................... 14
Senior Indebtedness ........................................................................................ 14
Senior Indenture ........................................................................................... 14
Special Record Date ........................................................................................ 14
Stated Maturity ............................................................................................ 14
Subsidiary ................................................................................................. 15
Total Assets ............................................................................................... 15
Trust Indenture Act; TIA ................................................................................... 15
Trustee .................................................................................................... 15
United States .............................................................................................. 15
United States person ....................................................................................... 15
Valuation Date ............................................................................................. 15
Vice President ............................................................................................. 15
Voting Stock ............................................................................................... 15
Yield to Maturity .......................................................................................... 16
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 102. Compliance Certificates and Opinions................................................... 16
SECTION 103. Form of Documents Delivered to Trustee................................................. 16
SECTION 104. Acts of Holders........................................................................ 17
SECTION 105. Notices, etc. to Trustee and Company................................................... 19
SECTION 106. Notice to Holders; Waiver.............................................................. 19
SECTION 107. Effect of Headings and Table of Contents............................................... 21
SECTION 108. Successors and Assigns................................................................. 21
SECTION 109. Separability Clause.................................................................... 21
SECTION 110. Benefits of Indenture.................................................................. 21
SECTION 111. Governing Law.......................................................................... 21
SECTION 112. Legal Holidays......................................................................... 21
SECTION 113. Trust Indenture Act.................................................................... 22
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally........................................................................ 22
SECTION 202. Form of Trustee's Certificate of Authentication........................................ 23
SECTION 203. Securities Issuable in Global Form..................................................... 23
<PAGE>
iv
Page
ARTICLE THREE ----
THE SECURITIES
SECTION 301. Amount; Issuable in Series............................................................ 24
SECTION 302. Denominations......................................................................... 28
SECTION 303. Execution, Authentication, Delivery and Dating........................................ 29
SECTION 304. Temporary Securities.................................................................. 31
SECTION 305. Registration, Registration of Transfer and Exchange................................... 34
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...................................... 37
SECTION 307. Payment of Interest; Interest Rights Preserved; Optional Interest
Reset................................................................................. 38
SECTION 308. Optional Extension of Stated Maturity................................................. 41
SECTION 309. Persons Deemed Owners................................................................. 42
SECTION 310. Cancellation.......................................................................... 43
SECTION 311. Computation of Interest............................................................... 43
SECTION 312. Currency and Manner of Payments in Respect of Securities.............................. 44
SECTION 313. Appointment and Resignation of Successor Exchange Rate Agent.......................... 47
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture............................................... 48
SECTION 402. Application of Trust Money............................................................ 50
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default..................................................................... 50
SECTION 502. Acceleration of Maturity; Rescission and Annulment.................................... 52
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee....................... 53
SECTION 504. Trustee May File Proofs of Claim...................................................... 54
SECTION 505. Trustee May Enforce Claims Without Possession of Securities........................... 55
SECTION 506. Application of Money Collected........................................................ 55
SECTION 507. Limitation on Suits................................................................... 56
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.............................................................................. 57
SECTION 509. Restoration of Rights and Remedies.................................................... 57
SECTION 510. Rights and Remedies Cumulative........................................................ 57
<PAGE>
v
Page
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SECTION 511. Delay or Omission Not Waiver............................................................... 58
SECTION 512. Control by Holders......................................................................... 58
SECTION 513. Waiver of Past Defaults.................................................................... 58
SECTION 514. Waiver of Stay or Extension Laws........................................................... 59
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults......................................................................... 59
SECTION 602. Certain Rights of Trustee.................................................................. 60
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities............................. 61
SECTION 604. May Hold Securities........................................................................ 61
SECTION 605. Money Held in Trust........................................................................ 62
SECTION 606. Compensation and Reimbursement............................................................. 62
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests............................. 62
SECTION 608. Resignation and Removal; Appointment of Successor.......................................... 63
SECTION 609. Acceptance of Appointment by Successor..................................................... 65
SECTION 610. Merger, Conversion, Consolidation or Succession to Business................................ 66
SECTION 611. Appointment of Authenticating Agent........................................................ 66
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders............................................... 69
SECTION 702. Reports by Trustee......................................................................... 69
SECTION 703. Reports by Company......................................................................... 69
ARTICLE EIGHT
MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 801. Company May Consolidate, etc., Only on Certain Terms....................................... 70
SECTION 802. Successor Person Substituted............................................................... 71
SECTION 803. Securities to Be Secured in Certain Events................................................. 71
<PAGE>
vi
Page
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders......................................... 72
SECTION 902. Supplemental Indentures with Consent of Holders............................................ 74
SECTION 903. Execution of Supplemental Indentures....................................................... 74
SECTION 904. Effect of Supplemental Indentures.......................................................... 74
SECTION 905. Conformity with Trust Indenture Act........................................................ 74
SECTION 906. Reference in Securities to Supplemental Indentures......................................... 74
SECTION 907. Notice of Supplemental Indentures.......................................................... 76
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest........................................ 76
SECTION 1002. Maintenance of Office or Agency............................................................ 76
SECTION 1003. Money for Securities Payments to Be Held in Trust.......................................... 78
SECTION 1004. Statement as to Compliance................................................................. 79
SECTION 1005. Additional Amounts......................................................................... 80
SECTION 1006. Payment of Taxes and Other Claims.......................................................... 81
SECTION 1007. Maintenance of Properties.................................................................. 81
SECTION 1008. Corporate Existence........................................................................ 81
SECTION 1009. Limitation on Liens........................................................................ 82
SECTION 1010. Limitation on Sale and Leaseback Transactions.............................................. 82
SECTION 1011. Limitation on Debt of Restricted Subsidiaries.............................................. 85
SECTION 1012. Limitation on Transfers of Principal Franchise Assets...................................... 85
SECTION 1013. Limitation on Restrictions on Subsidiary Dividends and Other
Distributions.............................................................................. 85
SECTION 1014. Waiver of Certain Covenants................................................................ 86
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article................................................................... 86
SECTION 1102. Election to Redeem; Notice to Trustee...................................................... 87
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.......................................... 87
SECTION 1104. Notice of Redemption....................................................................... 87
SECTION 1105. Deposit of Redemption Price................................................................ 89
<PAGE>
vii
Page
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SECTION 1106. Securities Payable on Redemption Date..................................................... 89
SECTION 1107. Securities Redeemed in Part............................................................... 90
SECTION 1108. Redemption Pursuant to Gaming Laws........................................................ 90
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.................................................................. 91
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..................................... 92
SECTION 1203. Redemption of Securities for Sinking Fund................................................. 92
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.................................................................. 93
SECTION 1302. Repayment of Securities................................................................... 94
SECTION 1303. Exercise of Option........................................................................ 94
SECTION 1304. When Securities Presented for Repayment Become Due and Payable............................ 95
SECTION 1305. Securities Repaid in Part................................................................. 96
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance.............................. 96
SECTION 1402. Defeasance and Discharge.................................................................. 96
SECTION 1403. Covenant Defeasance....................................................................... 97
SECTION 1404. Conditions to Defeasance or Covenant Defeasance........................................... 97
SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions............................................................ 99
SECTION 1406. Reinstatement.............................................................................. 100
<PAGE>
viii
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ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called................................................. 101
SECTION 1502. Call, Notice and Place of Meetings........................................................ 101
SECTION 1503. Persons Entitled to Vote at Meetings...................................................... 101
SECTION 1504. Quorum; Action............................................................................ 102
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of
Meetings.................................................................................. 103
SECTION 1506. Counting Votes and Recording Action of Meetings........................................... 104
ARTICLE SIXTEEN
SUBORDINATION OF SECURITIES
SECTION 1601. Securities Subordinate to Senior Indebtedness............................................ 105
SECTION 1602. Payment over of Proceeds upon Dissolution, etc........................................... 105
SECTION 1603. No Payment When Senior Indebtedness in Default........................................... 106
SECTION 1604. Payment Permitted if No Default.......................................................... 106
SECTION 1605. Subrogation to Rights of Holders of Senior Indebtedness.................................. 107
SECTION 1606. Provisions Solely to Define Relative Rights.............................................. 107
SECTION 1607. Trustee to Effectuate Subordination...................................................... 107
SECTION 1608. No Waiver of Subordination Provisions.................................................... 108
SECTION 1609. Notice to Trustee........................................................................ 108
SECTION 1610. Reliance on Judicial Order or Certificate of Liquidation Agent........................... 109
SECTION 1611. Rights of Trustee As a Holder of Senior Indebtedness; Preservation
of Trustee's Rights............................................................. 109
SECTION 1612. Article Applicable to Paying Agents.......................................................109
SECTION 1613. No Suspension of Remedies................................................................ 110
SECTION 1614. Trust Moneys Not Subordinated............................................................ 110
EXHIBIT A FORMS OF CERTIFICATION
EXHIBIT A-1 FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO
RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR
TO THE EXCHANGE DATE
EXHIBIT A-2 FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND CEDEL S.A.
IN CONNECTION WITH THE EXCHANGE OF A PORTION OF A
TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST PAYABLE
PRIOR TO THE EXCHANGE DATE
</TABLE>
<PAGE>
INDENTURE, dated as of __________, between HFS INCORPORATED, a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 339 Jefferson
Road, Parsippany, New Jersey 07054, and THE BANK OF NOVA SCOTIA TRUST COMPANY OF
NEW YORK, a New York Banking Corporation, duly organized and existing under the
laws of the State of New York, Trustee (herein called the "Trustee"), having its
principal office at One Liberty Plaza, 23rd Floor, New York, New York 10006.
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
and subordinated debentures, notes or other evidences of indebtedness (herein
called the "Securities"), which may or may not be convertible into or
exchangeable for any securities of any Person (including the Company) and which
will be subordinated to the Senior Indebtedness of the Company to the extent and
in the manner set forth in Article Sixteen (as such article may be revised
pursuant to Section 301(25)), to be issued in one or more series as provided in
this Indenture.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with 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 ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
<PAGE>
2
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) 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, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under
the Trust Indenture Act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of
such computation; and
(4) 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.
Certain terms, used principally in Article Three, are defined
in that Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Amounts" has the meaning specified in Section
1005.
"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.
"Asset Sale" has the meaning specified in Section 1012.
"Attributable Debt" means, as to any particular lease that is
the subject of a sale-leaseback transaction which has a remaining term of more
than 12 months, at any date as of which the amount thereof is to be determined,
the principal amount of outstanding Capital Lease Obligation.
<PAGE>
3
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper, in the English
language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Where
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different newspapers in
the same city meeting the foregoing requirements and in each case on any
Business Day.
"Bearer Security" means any Security except a Registered
Security.
"Beneficial Owner" of shares of Capital Stock means, with
respect to any Person, any such shares:
(a) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the sole or shared right to
vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act or pursuant
to any successor provision), including, but not limited to, pursuant to
any agreement, arrangement or understanding, whether or not in writing;
provided, that a Person shall not be deemed the "Beneficial Owner" of,
or to "Beneficially Own", any security under this subparagraph as a
result of an agreement, arrangement or understanding to vote such
security that both (y) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the rules and
regulations promulgated under the Exchange Act and (z) is not
reportable by such person on Schedule 13D promulgated under the
Exchange Act (or any comparable or successor report) without giving
effect to any applicable waiting period, or Exchange Act (or any
comparable or successor report) without giving effect to any applicable
waiting period; or
(b) which are Beneficially Owned, directly or indirectly, by
any other person (or any Affiliate or Associate thereof) with which
such person (or any of such person's Affiliates or Associates) has any
agreement, arrangement or understanding, whether or not in writing, for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (a) above)
or disposing of any Capital Stock;
provided, that (i) no director or officer of the corporation (nor any Affiliate
or Associate of any such director or officer) shall, solely by reason of any or
all of such directors or officers acting in their capacities as such, be deemed
the "Beneficial Owner" of or to "Beneficially
<PAGE>
4
Own" any shares of Capital Stock that are Beneficially Owned by any other such
director or officer, and (ii) no person shall be deemed the "Beneficial Owner"
of or to "Beneficially Own" any shares of Capital Stock held in any voting
trust, any employee stock ownership plan or any similar plan or trust if such
person does not posses the right to vote, to direct the voting of or to be
consulted with respect to the voting of such shares.
For the purposes of this definition, the terms "Affiliate" and
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 promulgated under the Securities Exchange Act of 1934, as amended as in
effect on June 14, 1994 (the term "registrant" in said Rule 12b-2 meaning in
this case the Company).
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"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 a committee of the Board of Directors empowered to
exercise all of the powers of Board of Directors) and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York or in the city in which the Corporate Trust Office is located are
authorized or obligated by law or executive order to close.
"Capital Lease Obligation" means any obligation that, in
accordance with generally accepted accounting principles, is required to be
classified and accounted for as a capital lease, and the principal amount of
Debt represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with such principles; provided, however,
Capital Lease Obligation shall not include any operation lease of the Company or
any of its Subsidiaries in existence prior to the Issue Date which has been or
is recharacterized as a capital lease in accordance with generally accepted
accounting principles after the Issue Date. The stated maturity of any Capital
Lease Obligation shall be the last payment of rent or any other amount due under
such lease.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock of the Company or any Restricted Subsidiary.
"CEDEL S.A." means Cedel, S.A., or its successor.
<PAGE>
5
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this Indenture 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 Depositary" has the meaning specified in Section 304.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman, its President, any
Vice President, its Treasurer or an Assistant Treasurer, and deliver to the
Trustee.
"Consolidated Net Tangible Assets," as of any date of
determination, means the total amount of assets, including, without limitation,
franchise agreements, which would appear on the most currently available
consolidated balance sheet of the Company determined in accordance with
generally accepted accounting principles, after deducting therefrom, to the
extent otherwise included, goodwill.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office on the date of execution of this
Indenture is located at The Bank of Nova Scotia Trust Company of New York, One
Liberty Plaza, 23rd Floor, New York, New York 10006, except that with respect to
presentation of Securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted.
"corporation" includes corporations, associations, companies
and business
trusts.
"coupon" means any interest coupon appertaining to a Bearer
Security.
"Credit Agreement" means the Credit Agreement among the
Company, Chemical Bank, as agent, and the banks signatories thereto, dated as of
December 16, 1993, as the same may be amended from time to time, be further
supplemented or amended, or the terms thereof waived or modified, to the extent
permitted by, and in accordance with, the terms thereof or any credit agreement
entered into in replacement of or refinancing of the existing credit agreement.
<PAGE>
6
"Currency" means any currency or currencies, composite
currency or currency unit or currency units, including, without limitation, the
ECU, issued by the government of one or more countries or by any recognized
confederation or association of such governments.
"Currency Conversion Date" has the meaning specified in
Section 312(d).
"Currency Conversion Event" means the cessation of use of (i)
a Foreign Currency both by the government of the country which issued such
Currency and by a central bank or other public institution of or within the
international banking community for the settlement of transactions, (ii) the ECU
both within the European Monetary System and for the settlement of transactions
by public institutions of or within the European Communities or (iii) any
currency unit (or composite currency) other than the ECU for the purposes for
which it was established.
"Debt" means notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States of America as at the time shall be
legal tender for the payment of public and private debts.
"Dollar Equivalent of the Currency Unit" has the meaning
specified in Section 312(g).
"Dollar Equivalent of the Foreign Currency" has the meaning
specified in Section 312(f).
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
"Election Date" has the meaning specified in Section 312(h).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear System.
<PAGE>
7
"European Communities" means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Date" has the meaning specified in Section 304.
"Exchange Rate Agent" means, with respect to Securities of or
within any series, unless otherwise specified with respect to any Securities
pursuant to Section 301, a New York Clearing House bank, designated pursuant to
Section 301 or Section 313.
"Exchange Rate Officer's Certificate" means a tested telex or
a certificate setting forth (i) the applicable Market Exchange Rate and (ii) the
Dollar or Foreign Currency amounts of principal (and premium, if any) and
interest, if any (on an aggregate basis and on the basis of a Security having
the lowest denomination principal amount determined in accordance with Section
302 in the relevant Currency), payable with respect to a Security of any series
on the basis of such Market Exchange Rate, sent (in the case of a telex) or
signed (in the case of a certificate) by the Treasurer, any Vice President or
any Assistant Treasurer of the Company.
"Fair Market Value" means the fair market value of the item in
question as determined by the Board of Directors acting in good faith and in
exercise of its fiduciary duties.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11
of the United States Code, as amended from time to time.
"Foreign Currency" means any Currency other than Currency of
the United States.
"Franchise Contract" means any contract between the Company
and any of its subsidiaries for the franchise of a Days Inn(R), Ramada Inn(R),
Howard Johnson(R), Super 8(R), Villager Lodge(R) or Park Inn International(R)
hotel.
"Franchise Fee Revenues" means the total amount of revenues
derived from franchise fees as set forth on the most recent year-end income
statement of the Company and its consolidated subsidiaries and computed in
accordance with generally accepted accounting principles.
<PAGE>
8
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal or foreign government, any state, province or any city
or other political subdivision or otherwise and whether now or hereafter in
existence (including, without limitation, the National Indian Gaming Commission
or any other tribal authority), or any officer or official thereof with
authority to regulate any gaming operation (or proposed gaming operation) owned,
managed, or operated by the Company or any of its Subsidiaries.
"Gaming Laws" means each gaming law of any applicable Gaming
Authority, as amended from time to time, and the regulations promulgated and
rulings issued thereunder applicable to the Company or any of its Subsidiaries
or shareholders.
"Gaming License" means all licenses and other regulatory
approvals necessary for the lawful operation of any gaming or related business.
"Government Obligations" means, unless otherwise specified
with respect to any series of Securities pursuant to Section 301, securities
which are (i) direct obligations of the government which issued the Currency in
which the Securities of a particular series are payable or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the government which issued the Currency in which the Securities of such series
are payable, the payment of which is unconditionally guaranteed by such
government, which, in either case, are full faith and credit obligations of such
government payable in such Currency and are not callable or redeemable at the
option of the issuer thereof and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of any such
Government Obligation held by such custodian for the account of the holder of a
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Obligation or the specific payment of interest or principal of
the Government Obligation evidenced by such depository receipt.
"Holder" means, in the case of a Registered Security, the
Person in whose name a Security is registered in the Security Register and, in
the case of a Bearer Security, the bearer thereof and, when used with respect to
any coupon, shall mean the bearer thereof.
"Indenture" means this instrument as originally executed and
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,
and shall include the terms of any particular series of Securities established
as contemplated by Section 301; provided, however, that, if at any time more
than one Person is acting as Trustee under this instrument, "Indenture" shall
mean, with respect to any one or more series of Securities for which such
<PAGE>
9
Person is Trustee, 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 and shall include the
terms of particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is not Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person had
become such Trustee but to which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after Maturity, means
interest payable after Maturity at the rate prescribed in such Original Issue
Discount Security.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"Issue Date" means the date of first issuance of the Notes
under the Indenture.
"Lien" means any pledge, mortgage, lien, charge, encumbrance
or security interest except that a Lien shall not mean any license or right to
use intellectual property of the Company or a Subsidiary granted by the Company
or a Subsidiary.
"Market Exchange Rate" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, (i) for any conversion
involving a currency unit on the one hand and Dollars or any Foreign Currency on
the other, the exchange rate between the relevant currency unit and Dollars or
such Foreign Currency calculated by the method specified pursuant to Section 301
for the Securities of the relevant series, (ii) for any conversion of Dollars
into any Foreign Currency, the noon (New York City time) buying rate for such
Foreign Currency for cable transfers quoted in New York City as certified for
customs purposes by the Federal Reserve Bank of New York and (iii) for any
conversion of one Foreign Currency into Dollars or another Foreign Currency, the
spot rate at noon local time in the relevant market at which, in accordance with
normal banking procedures, the Dollars or Foreign Currency into which conversion
is being made could be purchased with the Foreign Currency from which conversion
is being made from major banks located in either New York City, London or any
other principal market for Dollars or such purchased Foreign Currency, in each
case determined by the Exchange Rate Agent. Unless otherwise specified with
respect to any Securities pursuant to Section 301, in the event of the
<PAGE>
10
unavailability of any of the exchange rates provided for in the foregoing
clauses (i), (ii) and (iii), the Exchange Rate Agent shall use, in its sole
discretion and without liability on its part, such quotation of the Federal
Reserve Bank of New York as of the most recent available date, or quotations
from one or more major banks in New York City, London or another principal
market for the Currency in question, or such other quotations as the Exchange
Rate Agent shall deem appropriate. Unless otherwise specified by the Exchange
Rate Agent, if there is more than one market for dealing in any Currency by
reason of foreign exchange regulations or otherwise, the market to be used in
respect of such Currency shall be that upon which a non-resident issuer of
securities designated in such Currency would purchase such Currency in order to
make payments in respect of such securities.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, including an employee of the Company, and who
shall be acceptable to the Trustee.
"Optional Reset Date" has the meaning specified in Section
307(b).
"Original Issue 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 502.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities and any coupons
<PAGE>
11
appertaining thereto; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Fourteen;
and
(iv) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined as of the date such Security is originally
issued by the Company as set forth in an Exchange Rate Officer's Certificate
delivered to the Trustee, of the principal amount (or, in the case of an
Original Issue Discount Security, the Dollar equivalent as of such date of
original issuance of the amount determined as provided in clause (i) above), of
such Security, (iii) the principal amount of any Indexed Security that may be
counted in making such determination or calculation and that shall be deemed
outstanding for such purpose shall be equal to the principal face amount of such
Indexed Security at original issuance, unless otherwise provided with respect to
such Security pursuant to Section 301, and (iv) Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or 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
<PAGE>
12
that the pledgee is not the Company or any other obligor upon the Securities or
any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person (including the Company acting
as Paying Agent) authorized by the Company to pay the principal of (or premium,
if any, on) or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment" means, when used with respect to the
Securities of or within any series, the place or places where the principal of
(and premium, if any, on) and interest on such Securities are payable as
specified as contemplated by Sections 301 and 1002.
"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 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupons
appertains, as the case may be.
"Principal Franchise Assets" means (i) any intellectual
property rights that are associated with Days Inn, Ramada, Howard Johnson and
Super 8, including, without limitation, service marks, trademarks, trade names
and licenses to use the same but excluding service marks and trademarks which do
not incorporate Days Inn, Ramada, Howard Johnson or Super 8 Motel names or marks
and, (ii) Franchise Contracts from which the Company derived during the
preceding 12 full calendar months an aggregate revenue on the date as of which
the determination of such revenue is being made and determined in accordance
with generally accepted accounting principles in excess of 10% of Franchise Fee
Revenues.
"Principal Property" means any reservation centers,
leaseholds, telecommunications contracts, computerized systems contracts,
intellectual property rights, or Franchise Contracts, owned by the Company or
any Restricted Subsidiary and located in the United States, the gross book value
(without deduction of any reserve for depreciation) of which on the date as of
which the determination is being made is an amount which exceeds 5% of Total
Assets, other than any such property which, in the opinion of the Board of
<PAGE>
13
Directors, is not of material importance to the total business conducted by the
Company and its Subsidiaries, taken as a whole.
"Pro Forma Consolidated Net Tangible Assets" means, in
connection with the acquisition of a Restricted Subsidiary, Consolidated Net
Tangible Assets after giving effect to such acquisition on a pro forma basis.
"Redemption Date", when used with respect to any Security to
be redeemed, in whole or in part, 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.
"Registered Security" means any Security registered in the
Security Register.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301.
"Repayment Date" means, when used with respect to any Security
to be repaid at the option of the Holder, the date fixed for such repayment
pursuant to this Indenture.
"Repayment Price" means, when used with respect to any
Security to be repaid at the option of the Holder, the price at which it is to
be repaid pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary of which, at the
time of determination, all of the outstanding capital stock (other than
directors' qualifying shares) is owned by the Company directly and/or indirectly
and which, at the time of determination, is primarily engaged in franchising,
developing, financing and providing marketing services for
<PAGE>
14
hotel systems and casino gaming facilities. In the event that there shall at any
time be a question as to whether a Subsidiary is primarily engaged in
franchising, developing, financing, and providing marketing services for hotel
systems and casino gaming facilities, or a combination thereof, such matter
shall be determined for all purposes of this Indenture by a Board Resolution.
"sale and leaseback transaction" has the meaning specified in
Section 1010.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture; provided, however, that if at any time there is
more than one Person acting as Trustee under this Indenture, "Securities" with
respect to the Indenture as to which such Person is Trustee shall have the
meaning stated in the first recital of this Indenture and shall more
particularly mean Securities authenticated and delivered under this Indenture,
exclusive, however, of Securities of any series as to which such Person is not
Trustee.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Indebtedness" of the Company means (a) the principal
(and premium, if any) and interest with respect to all indebtedness for money
borrowed of the Company whether outstanding on the date hereof or thereafter
created, incurred, assumed or guaranteed, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that such indebtedness is not senior or prior in right of
payment to the Securities and (b) amendments, supplements, deferrals, renewals,
extensions, modifications and refundings of any liability of the types referred
to in clause (a) above.
"Senior Indenture" means the indenture entered into between
the Company and The Bank of Nova Scotia Trust Company of New York in connection
with the August, 1996 shelf registration of the Company.
"Special Record Date" for the payment of any Defaulted
Interest on the Registered Securities of or within any series means a date fixed
by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified in such Security or a coupon representing such installment of interest
as the fixed date on which the principal of such Security or such installment of
principal or interest is due and payable, as such date may be extended pursuant
to the provisions of Section 308.
CAPITAL PRINTING SYSTEMS]
<PAGE>
15
"Subsidiary" means any corporation of which at the time of
determination the Company, directly and/or indirectly through one or more
Subsidiaries, owns more than 50% of the shares of Voting Stock.
"Total Assets" means the total amount of assets (less
applicable reserves and other properly deductible items), as set forth on the
most recent balance sheet of the Company and its consolidated Subsidiaries and
computed in accordance with generally accepted accounting principles.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force at the date as of which this Indenture was executed, except
as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture 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;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
"United States" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source.
"Valuation Date" has the meaning specified in Section 312(c).
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation (irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
<PAGE>
16
"Yield to Maturity" means the yield to maturity, computed at
the time of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such Security) and as set forth in such Security
in accordance with generally accepted United States bond yield computation
principles.
SECTION 102. Compliance Certificates 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, if any, provided for in this Indenture (including any covenant
compliance with which constitutes a condition precedent) 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, 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, including,
without limitation, the certificate of authentication provided pursuant to
Section 303, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture (other than pursuant to
Section 1004) shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) 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;
(3) 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
(4) a statement as to whether, in the opinion of each such
individual, such covenant or condition has been complied with.
SECTION 103. Form 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
<PAGE>
17
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 the 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 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders of the Outstanding Securities of all series or one or more series, as
the case may be, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. If Securities of a series are issuable as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of such series may, alternatively, be embodied in and evidenced by the
record of Holders of Securities of such series voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of Holders of
Securities of such series duly called and held in accordance with the provisions
of Article Fifteen, or a combination of such instruments and any such record.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both are delivered to
the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments and any such record (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments or so voting at any such meeting.
Proof of execution of any such instrument or of a writing appointing any such
agent, or of the holding by any Person of a Security, shall be sufficient for
any purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
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18
(b) 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 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 the Trustee deems sufficient.
(c) The principal amount and serial numbers of Registered
Securities held by any Person, and the date of holding the same, shall be proved
by the Security Register.
(d) The principal amount and serial numbers of Bearer
Securities held by any Person, and the date of holding the same, may be proved
by the production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee to be satisfactory,
showing that at the date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein described; or such
facts may be proved by the certificate or affidavit of the Person holding such
Bearer Securities, if such certificate or affidavit is deemed by the Trustee to
be satisfactory. The Trustee and the Company may assume that such ownership of
any Bearer Security continues until (1) another certificate or affidavit bearing
a later date issued in respect of the same Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee by some other Person, or (3)
such Bearer Security is surrendered in exchange for a Registered Security, or
(4) such Bearer Security is no longer Outstanding. The principal amount and
serial numbers of Bearer Securities held by any Person, and the date of holding
the same, may also be proved in any other manner which the Trustee deems
sufficient.
(e) If the Company shall solicit from the Holders of
Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its option, by or pursuant to
Board Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA Section 316(c), such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or
<PAGE>
19
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date; provided that no such authorization, agreement
or consent by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every 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 Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
SECTION 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other documents provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by 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,
Attention: [Corporate Trust Administration Division], or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) 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 Indenture or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to
Holders of Registered Securities by the Company or the Trustee, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each such Holder affected by
such event, at his address as it appears in the Security Register within the
time prescribed for the giving of such notice. In any case where notice to
Holders of Registered Securities 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 of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided. Any notice mailed to a Holder in the
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20
manner herein prescribed shall be conclusively deemed to have been received by
such Holder, whether or not such Holder actually receives such notice.
In case, by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be impractical to
mail notice of any event to Holders of Registered Securities when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be sufficient giving of such notice for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise
specified with respect to any Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of Bearer Securities of any event, such
notice shall be sufficiently given to Holders of Bearer Securities if published
in an Authorized Newspaper in The City of New York and in such other city or
cities as may be specified in such Securities on a Business Day at least twice,
the first such publication to be not earlier than the earliest date, and not
later than the latest date, prescribed for the giving of such notice. Any such
notice shall be deemed to have been given on the date of the first such
publication.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause it
shall be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of such notice with
respect to other Holders of Bearer Securities or the sufficiency of any notice
to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
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.
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SECTION 107. 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 108. 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 109. Separability Clause.
In case any provision in this Indenture or in any Security or
coupon 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities or coupons,
express or implied, shall give to any Person, other than the parties hereto, any
Authenticating Agent, any Paying Agent, any Securities Registrar and their
successors hereunder and the Holders of Securities or coupons, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
THIS INDENTURE IS SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939,
AS AMENDED, THAT ARE REQUIRED TO BE PART OF THIS INDENTURE AND SHALL, TO THE
EXTENT APPLICABLE, BE GOVERNED BY SUCH PROVISIONS.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
sinking fund payment date or Stated Maturity or Maturity of any Security shall
not be a Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of any Security or coupon other than a provision
in the Securities of any series which specifically states that such provision
shall apply in lieu of this Section) payment of interest or principal (and
premium, if any) need not be made at such Place of Payment on such date, but may
be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment Date or Redemption Date
or
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22
sinking fund payment date, or at the Stated Maturity or Maturity; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity,
as the case may be.
SECTION 113. Trust Indenture Act.
This Indenture is subject to the provisions of the Trust
Indenture Act that are required to be part of this Indenture and shall, to the
extent applicable, be governed by such provisions.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, of each series and the
Bearer Securities, if any, of each series and related coupons shall be in
substantially the 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 the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Securities or coupons, as evidenced by their execution of the Securities or
coupons. If the forms of Securities or coupons of any 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 Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities or coupons. Any portion of the text of any Security may be set forth
on the reverse thereof, with an appropriate reference thereto on the face of the
Security.
Unless otherwise specified as contemplated by Section 301,
Securities in bearer form shall have interest coupons attached.
The Trustee's certificate of authentication on all Securities
shall be in substantially the form set forth in this Article.
The definitive Securities and coupons shall be printed,
lithographed or engraved on steel-engraved borders or may be produced in any
other manner, all as
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23
determined by the officers of the Company executing such Securities, as
evidenced by their execution of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
Subject to Section 611, the Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK,
as Trustee
By__________________________________
Authorized Officer
SECTION 203. Securities Issuable in Global Form.
If Securities of or within a series are issuable in global
form, as specified as contemplated by Section 301, then, notwithstanding clause
(8) of Section 301, any such Security shall represent such of the Outstanding
Securities of such series as shall be specified therein and may provide that it
shall represent the aggregate amount of Outstanding Securities of such series
from time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a Security in global form
to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or Section 304. Subject to the provisions of Section 303 and, if applicable,
Section 304, the Trustee shall deliver and redeliver any Security in permanent
global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or Section 304 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 102 and need not be accompanied by an Opinion of
Counsel.
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24
The provisions of the last sentence of Section 303 shall apply
to any Security represented by a Security in global form if such Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
Notwithstanding the provisions of Section 307, unless
otherwise specified as contemplated by Section 301, payment of principal of and
any premium and interest on any Security in permanent global form shall be made
to the Person or Persons specified therein.
Notwithstanding the provisions of Section 309 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent of
the Company and the Trustee shall treat as the Holder of such principal amount
of Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount; Issuable in Series.
The aggregate gross proceeds of Securities which may be
authenticated and delivered under this Indenture and the Senior Indenture shall
not exceed, in the aggregate, $1,000,000,000. The Securities shall be
subordinated in right of payment to the Senior Indebtedness of the Company to
the extent and in the manner set forth in Article Sixteen (as such Article may
be revised pursuant to Section 301(25)).
The Securities may be issued in one or more series. There
shall be established in one or more Board Resolutions or pursuant to authority
granted by one or more Board Resolutions and, subject to Section 303, set forth
in, or determined in the manner provided in, an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (17) below), if
so provided, may be determined from time to time by the Company with respect to
unissued Securities of the series and set forth in such Securities of the series
when issued from time to time):
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25
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other series of
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series that 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 304, 305, 306, 906, 1107
or 1305);
(3) the date or dates, or the method by which such date or
dates will be determined or extended, on which the principal of the
Securities of the series is payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue, or the method by which such date or dates shall be determined,
the Interest Payment Dates on which such interest shall be payable and
the Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the method by
which such date or dates shall be determined, and the basis upon which
interest shall be calculated if other than on the basis of a 360-day
year of twelve 30-day months;
(5) the place or places, if any, other than or in addition to
the Borough of Manhattan, The City of New York, where the principal of
(and premium, if any, on) and any interest on Securities of the series
shall be payable, any Registered Securities of the series may be
surrendered for registration of transfer, Securities of the series may
be surrendered for exchange and, if different than the location
specified in Section 106, the place or places where notices or demands
to or upon the Company in respect of the Securities of the series and
this Indenture may be served;
(6) the period or periods within which, the price or prices at
which, the Currency in which, and other terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at the
option of the Company, if the Company is to have that option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the
period or periods within which, the price or prices at which, the
Currency in which, and 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;
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26
(8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Registered Securities
of the series shall be issuable and, if other than the denomination of
$5,000, the denomination or denominations in which any Bearer
Securities of the series shall be issuable;
(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(10) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series that shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or the method by which such portion shall be
determined;
(11) if other than Dollars, the Currency in which payment of
the principal of (and premium, if any, on) or interest, if any, on the
Securities of the series shall be payable or in which the Securities of
the series shall be denominated and the particular provisions
applicable thereto in accordance with, in addition to or in lieu of any
of the provisions of Section 312;
(12) whether the amount of payments of principal of (and
premium, if any, on) or interest on the Securities of the series may be
determined with reference to an index, formula or other method (which
index, formula or method may be based, without limitation, on one or
more Currencies, commodities, equity indices or other indices), and the
manner in which such amounts shall be determined;
(13) whether the principal of (and premium, if any, on) and
interest, if any, on the Securities of the series are to be payable, at
the election of the Company or a Holder thereof, in a Currency other
than that in which such Securities are denominated or stated to be
payable, the period or periods within which (including the Election
Date), and the terms and conditions upon which, such election may be
made, and the time and manner of determining the exchange rate between
the Currency in which such Securities are denominated or stated to be
payable and the Currency in which such Securities are to be so payable,
in each case in accordance with, in addition to or in lieu of any of
the provisions of Section 312;
(14) the designation of the initial Exchange Rate Agent, if
any;
(15) any provisions in modification of, in addition to or in
lieu of the provisions of Article Fourteen that shall be applicable to
the Securities of the series;
(16) provisions, if any, granting special rights to the
Holders of Securities of the series upon the occurrence of such events
as may be specified;
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27
(17) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to
Securities of the series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set
forth herein;
(18) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both, any restrictions applicable to the offer, sale or delivery of
Bearer Securities, whether any Securities of the series are to be
issuable initially in temporary global form and whether any Securities
of the series are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests in
any such permanent global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 305, whether
Registered Securities of the series may be exchanged for Bearer
Securities of the series (if permitted by applicable laws and
regulations), whether Bearer Securities of the series may be exchanged
for Registered Securities of the series, and the circumstances under
which and the place or places where such exchanges may be made and if
Securities of the series are to be issuable in global form, the
identity of any initial depository therefor;
(19) the date as of which any Bearer Securities of the series
and any temporary global Security representing Outstanding Securities
of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;
(20) the Person to whom any interest on any Registered
Security of the series shall be payable, if other than 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, the manner in which, or the Person to whom, any interest on
any Bearer Security of the series shall be payable, if otherwise than
upon presentation and surrender of the coupons appertaining thereto as
they severally mature, and the extent to which, or the manner in which,
any interest payable on a temporary global Security on an Interest
Payment Date will be paid if other than in the manner provided in
Section 304;
(21) if Securities of the series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
the form and/or terms of such certificates, documents or conditions;
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28
(22) if the Securities of the series are to be issued upon the
exercise of warrants or upon the conversion or exchange of other
securities, the time, manner and place for such Securities to be
authenticated and delivered;
(23) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1005 on the Securities of
the series to any Holder who is not a United States person (including
any modification to the definition of such term) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will
have the option to redeem such Securities rather than pay such
Additional Amounts (and the terms of any such option); and
(24) if the Securities of the series are to be convertible
into or exchangeable for any securities of any Person (including the
Company), the terms and conditions upon which such Securities will be
so convertible or exchangeable.
(25) any provisions in modification of, in addition to or in
lieu of the provisions of Article Sixteen or Section 908 (or the
definition of the term"Senior Indebtedness" contained in Section 101 or
any other term used in such definition or in Article Sixteen or Section
908) that shall be applicable to the Securities of the series.
(26) any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) relating to the series
(which terms shall not be inconsistent with the requirements of the
Trust Indenture Act or the provisions of this Indenture).
All Securities of any one series and the coupons appertaining
to any Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. Not all Securities of any one series need be
issued at the same time, and, unless otherwise provided, a series may be
reopened for issuances of additional Securities of such series.
If any of the terms of the series are established by action
taken pursuant to one or more Board Resolutions, such Board Resolutions shall be
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. Denominations.
All Securities shall be issuable in such denominations as
shall be specified as contemplated by Section 301. With respect to Securities of
any series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other
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29
than Registered Securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Bearer Securities of such Series, other than the Bearer
Securities issued in global form (which may be of any denomination), shall be
issuable in a denomination of $5,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities and any coupons appertaining thereto shall be
executed on behalf of the Company by its Chairman, its President or a Vice
President, under its corporate seal reproduced thereon attested by its Secretary
or an Assistant Secretary. The signature of any of these officers on the
Securities or coupons may be the manual or facsimile signatures of the present
or any future such authorized officer and may be imprinted or otherwise
reproduced on the Securities.
Securities or coupons 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
or coupons.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
together with any coupon appertaining thereto, 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 such Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided, further,
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 301, a Bearer Security may be delivered in connection with
its original issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate in the form set forth in Exhibit A-1
to this Indenture, dated no earlier than 15 days prior to the earlier of the
date on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture. If any
Security shall be represented by a permanent global Bearer Security, then, for
purposes of this Section and Section 304, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon exchange of a
portion of a temporary global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owner's interest in
such permanent global Security. Except as permitted by Section 306, the Trustee
shall not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and cancelled. If not all
the Securities of any series are to be issued at one time and if the Board
Resolution or supplemental indenture establishing such series shall so
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30
permit, such Company Order may set forth procedures acceptable to the Trustee
for the issuance of such Securities and determining terms of particular
Securities of such series such as interest rate, maturity date, date of issuance
and date from which interest shall accrue.
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 TIA Sections 315(a)
through 315(d)) shall be fully protected in relying upon, an Opinion of Counsel
stating:
(a) that the form or forms of such Securities and any coupons
have been established in conformity with the provisions of this
Indenture;
(b) that the terms of such Securities and any coupons have
been established in conformity with the provisions of this Indenture;
(c) that such Securities, together with any coupons
appertaining thereto, when completed by appropriate insertions and
executed and delivered by the Company to the Trustee for authentication
in accordance with this Indenture, authenticated and delivered by the
Trustee in accordance with this Indenture and issued by the Company in
the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute the legal, valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting the enforcement
of creditors' rights, to general equitable principles and to such other
qualifications as such counsel shall conclude do not materially affect
the rights of Holders of such Securities and any coupons;
(d) that all laws and requirements in respect of the execution
and delivery by the Company of such Securities, any coupons and of the
supplemental indentures, if any, have been complied with (except for
federal securities laws, the Trust Indenture Act of 1939, as amended,
and the securities or blue sky laws of the various states, as to which
no opinion need be expressed) and that authentication and delivery of
such Securities and any coupons and the execution and delivery of the
supplemental indenture, if any, by the Trustee will not violate the
terms of the Indenture;
(e) that the Company has the corporate power to issue such
Securities and any coupons, and has duly taken all necessary corporate
action with respect to such issuance; and
(f) that the issuance of such Securities and any coupons will
not contravene the articles of incorporation or by-laws of the Company
or result in any violation of
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31
any of the terms or provisions of any law or regulation or of any
indenture, mortgage or other agreement known to such Counsel by which
the Company is bound.
Notwithstanding the provisions of Section 301 and of the
preceding two paragraphs, if less than all the Securities of any series are to
be issued at one time, it shall not be necessary to deliver the Officers'
Certificate otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to the preceding two paragraphs
prior to or at the time of issuance of each Security, but such documents shall
be delivered prior to or at the time of issuance of the first Security of such
series.
The Trustee shall not be required to authenticate and deliver
any 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.
Each Registered Security shall be dated the date of its
authentication; and each Bearer Security shall be dated as of the date specified
as contemplated by Section 301.
No Security or coupon 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 duly executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
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 310 together with a written statement (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, 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 304. 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 authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more coupon or without coupons, and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
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32
determine, as conclusively evidenced by their execution of such Securities. In
the case of Securities of any series, such temporary Securities may be in global
form.
Except in the case of temporary Securities in global form
(which shall be exchanged in accordance with the provisions of the following
paragraphs), if temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series, upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series (accompanied by any unmatured coupons
appertaining thereto), the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations; provided,
however, that no definitive Bearer Security shall be delivered in exchange for a
temporary Registered Security; and provided, further, that a definitive Bearer
Security shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 303. 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.
If temporary Securities of any series are issued in global
form, any such temporary global Security shall, unless otherwise provided
therein, be delivered to the London office of a depositary or common depositary
(the "Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for
credit to the respective accounts of the beneficial owners of such Securities
(or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the
date specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary global Security shall be in bearer form, registered form, permanent
global bearer form or permanent global registered form, or any combination
thereof, as specified as contemplated by Section 301, and, if any combination
thereof is so specified, as requested by the beneficial owner thereof; provided,
however, that, unless
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33
otherwise specified in such temporary global Security, upon such presentation by
the Common Depositary, such temporary global Security is accompanied by a
certificate dated the Exchange Date or a subsequent date and signed by Euroclear
as to the portion of such temporary global Security held for its account then to
be exchanged and a certificate dated the Exchange Date or a subsequent date and
signed by CEDEL S.A. as to the portion of such temporary global Security held
for its account then to be exchanged, each in the form set forth in Exhibit A-2
to this Indenture (or in such other form as may be established pursuant to
Section 301); and provided, further, that definitive Bearer Securities shall be
delivered in exchange for a portion of a temporary global Security only in
compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security,
the interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same series
and of like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL S.A., as the case may be, to request such exchange on his
behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant to Section 301), dated no earlier than
15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and CEDEL S.A., the Trustee, any
Authenticating Agent appointed for such series of Securities and each Paying
Agent. Unless otherwise specified in such temporary global Security, any such
exchange shall be made free of charge to the beneficial owners of such temporary
global Security, except that a Person receiving definitive Securities must bear
the cost of insurance, postage, transportation and the like in the event that
such Person does not take delivery of such definitive Securities in person at
the offices of Euroclear or CEDEL S.A. Definitive Securities in bearer form to
be delivered in exchange for any portion of a temporary global Security shall be
delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL
S.A. on such Interest Payment Date upon delivery by Euroclear and CEDEL S.A. to
the Trustee of a certificate or certificates in the form set forth in Exhibit
A-2 to this Indenture (or in such other form as may be established pursuant to
Section 301), for credit without further interest on or after such Interest
Payment Date to the respective accounts of the Persons who are the beneficial
owners of such temporary global Security on such Interest Payment Date and who
have each delivered to Euroclear or CEDEL S.A., as the case may be, a
certificate dated no earlier than 15 days prior to the Interest Payment Date
occurring prior to such Exchange Date in the form set forth in Exhibit A-1 to
this Indenture (or in such
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34
other form as may be established pursuant to Section 301). Notwithstanding
anything to the contrary herein contained, the certifications made pursuant to
this paragraph shall satisfy the certification requirements of the preceding two
paragraphs of this Section and of the third paragraph of Section 303 of this
Indenture and the interests of the Persons who are the beneficial owners of the
temporary global Security with respect to which such certification was made will
be exchanged for definitive Securities of the same series and of like tenor on
the Exchange Date or the date of certification if such date occurs after the
Exchange Date, without further act or deed by such beneficial owners. Except as
otherwise provided in this paragraph, no payments of principal or interest owing
with respect to a beneficial interest in a temporary global Security will be
made unless and until such interest in such temporary global Security shall have
been exchanged for an interest in a definitive Security. Any interest so
received by Euroclear and CEDEL S.A. and not paid as herein provided shall be
returned to the Trustee immediately prior to the expiration of two years after
such Interest Payment Date in order to be repaid to the Company in accordance
with Section 1003.
SECTION 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register for each series of Securities (the registers
maintained in the Corporate Trust Office of the Trustee and in any other office
or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. At all reasonable
times, the Security Register shall be open to inspection by the Trustee. The
Trustee is hereby initially appointed as security registrar (the "Security
Registrar") for the purpose of registering Registered Securities and transfers
of Registered Securities as herein provided.
Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee, one or more new Registered
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor.
At the option of the Holder, Registered Securities of any
series may be exchanged for other Registered Securities of the same series, of
any authorized denomination and of a like aggregate principal amount, upon
surrender of the Registered Securities to be exchanged at such office or agency.
Whenever any Registered Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Registered
Securities which the Holder making the exchange is entitled to receive. Unless
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35
otherwise specified with respect to any series of Securities as contemplated by
Section 301, Bearer Securities may not be issued in exchange for Registered
Securities.
If (but only if) expressly permitted in or pursuant to the
applicable Board Resolution and (subject to Section 303) set forth in the
applicable Officers' Certificate, or in any indenture supplemental hereto,
delivered as contemplated by Section 301, at the option of the Holder, Bearer
Securities of any series may be exchanged for Registered Securities of the same
series of any authorized denomination and of a like aggregate principal amount
and tenor, upon surrender of the Bearer Securities to be exchanged at any such
office or agency, with all unmatured coupons and all matured coupons in default
thereto appertaining. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons or matured coupon or coupons in default,
any such permitted exchange may be effected if the Bearer Securities are
accompanied by payment in funds acceptable to the Company in an amount equal to
the face amount of such missing coupon or coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
is furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to any Paying Agent any such missing coupon in respect of which
such a payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as otherwise
provided in Section 1002, interest represented by coupons shall be payable only
upon presentation and surrender of those coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency in a
permitted exchange for a Registered Security of the same series and like tenor
after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and before the opening of
business at such office or agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date for payment, as the case
may be, and interest or Defaulted Interest, as the case may be, will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
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.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If any beneficial owner of an
interest in a permanent global Security is entitled to exchange such interest
for Securities of such series and of like tenor and principal amount of
<PAGE>
36
another authorized form and denomination, as specified as contemplated by
Section 301 and provided that any applicable notice provided in the permanent
global Security shall have been given, then without unnecessary delay but in any
event not later than the earliest date on which such interest may be so
exchanged, the Company shall deliver to the Trustee definitive Securities in
aggregate principal amount equal to the principal amount of such beneficial
owner's interest in such permanent global Security, executed by the Company. On
or after the earliest date on which such interests may be so exchanged, such
permanent global Security shall be surrendered by the Common Depositary or such
other depositary as shall be specified in the Company Order with respect thereto
to the Trustee, as the Company's agent for such purpose, to be exchanged, in
whole or from time to time in part, for definitive Securities without charge,
and the Trustee shall authenticate and deliver, in exchange for each portion of
such permanent global Security, an equal aggregate principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor as the portion of such permanent global Security to be exchanged which,
unless the Securities of the series are not issuable both as Bearer Securities
and as Registered Securities, as specified as contemplated by Section 301, shall
be in the form of Bearer Securities or Registered Securities, or any combination
thereof, as shall be specified by the beneficial owner thereof; provided,
however, that no such exchanges may occur during a period beginning at the
opening of business 15 days before any selection of Securities to be redeemed
and ending on the relevant Redemption Date if the Security for which exchange is
requested may be among those selected for redemption; and provided, further,
that no Bearer Security delivered in exchange for a portion of a permanent
global Security shall be mailed or otherwise delivered to any location in the
United States. If a Registered Security is issued in exchange for any portion of
a permanent global Security after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, interest
or Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Registered Security, but will be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such permanent global Security is payable
in accordance with the provisions of this Indenture.
All Securities issued upon any registration of 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 registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company or
the Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer, in form satisfactory to the
<PAGE>
37
Company and the Security Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of
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 registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any
transfer.
The Company shall not be required (i) to issue, to register
the transfer of or to exchange Securities of any series during a period
beginning at the opening of business 15 days before the day of the selection for
redemption of Securities of that series under Section 1103 or 1203 and ending at
the close of business on (A) if Securities of the series are issuable only as
Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor; provided that
such Registered Security shall be simultaneously surrendered for redemption, or
(iv) to issue, to register the transfer of or to exchange any Security which has
been surrendered for repayment at the option of the Holder, except the portion,
if any, of such Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If any mutilated Security or a Security with a mutilated
coupon appertaining to it is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding, with coupons corresponding
to the coupons, if any, appertaining to the surrendered Security, or, in case
any such mutilated Security or coupon has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a new Security,
with coupons corresponding to the coupons, if any, appertaining to the
surrendered Security, pay such Security or coupon.
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 or coupon and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that
<PAGE>
38
such Security or coupon has been acquired by a bona fide purchaser, the Company
shall execute and upon Company Order the Trustee shall authenticate and deliver,
in lieu of any such destroyed, lost or stolen Security or in exchange for the
Security for which a destroyed, lost or stolen coupon appertains (with all
appurtenant coupons not destroyed, lost or stolen), a new Security of the same
series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains, or, in case any such
destroyed, lost or stolen Security or coupon has become or is about to become
due and payable, the Company in its discretion may, instead of issuing a new
Security, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains, pay such Security or coupon.
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 of any series with its coupons, if any,
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and its coupons, if any, or the destroyed, lost or stolen coupon 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 of that
series and their coupons, if any, duly issued hereunder.
The provisions of this Section 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 or
coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved;
Optional Interest Reset.
(a) Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities, interest on any Registered Security
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 such Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose pursuant to Section 1002; provided, however, that
each installment of interest on any Registered Security may at the Company's
option be paid by (i) mailing a check for such interest, payable to or upon the
written order of the Person
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39
entitled thereto pursuant to Section 309, to the address of such Person as it
appears on the Security Register or (ii) transfer to an account maintained by
the payee located in the United States.
Unless otherwise provided as contemplated by Section 301 with
respect to the Securities of any series, payment of interest may be made, in the
case of a Bearer Security, by transfer to an account maintained by the payee
with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301,
every permanent global Security will provide that interest, if any, payable on
any Interest Payment Date will be paid to each of Euroclear and CEDEL S.A. with
respect to that portion of such permanent global Security held for its account
by the Common Depositary, for the purpose of permitting each of Euroclear and
CEDEL S.A. to credit the interest received by it in respect of such permanent
global Security to the accounts of the beneficial owners thereof.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such defaulted
interest and, if applicable, interest on such defaulted interest (to the extent
lawful) at the rate specified in the Securities of such series (such defaulted
interest and, if applicable, interest thereon herein collectively called
"Defaulted Interest") may be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series (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 Registered Security of
such series and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money in the
Currency in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such
series and except, if applicable, as provided in Sections 312(b),
312(d) and 312(e)) 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 on or 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
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40
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 given in the manner provided in
Section 106, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so given, such Defaulted
Interest shall be paid to the Persons in whose name the Registered
Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
(b) The provisions of this Section 307(b) may be made
applicable to any series of Securities pursuant to Section 301 (with such
modifications, additions or substitutions as may be specified pursuant to such
Section 301). The interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable) on any Security of such series may
be reset by the Company on the date or dates specified on the face of such
Security (each an "Optional Reset Date"). The Company may exercise such option
with respect to such Security by notifying the Trustee of such exercise at least
50 but not more than 60 days prior to an Optional Reset Date for such Note. Not
later than 40 days prior to each Optional Reset Date, the Trustee shall
transmit, in the manner provided for in Section 106, to the Holder of any such
Security a notice (the "Reset Notice") indicating whether the Company has
elected to reset the interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable), and if so (i) such new interest
rate (or such new spread or spread multiplier, if applicable) and (ii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or if there is no such next Optional Reset
Date, to the Stated Maturity Date of such Security (each such period a
"Subsequent Interest Period"), including the date or dates on which or the
period or periods during which and the price or prices at which such redemption
may occur during the Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the interest
rate (or the spread or spread multiplier used to calculate such interest rate,
if applicable) provided for in the Reset Notice and establish an interest rate
(or a spread or spread multiplier used to calculate such interest rate, if
applicable) that is higher than the interest rate (or the spread or spread
multiplier, if
<PAGE>
41
applicable) provided for in the Reset Notice, for the Subsequent Interest Period
by causing the Trustee to transmit, in the manner provided for in Section 106,
notice of such higher interest rate (or such higher spread or spread multiplier,
if applicable) to the Holder of such Security. Such notice shall be irrevocable.
All Securities with respect to which the interest rate (or the spread or spread
multiplier used to calculate such interest rate, if applicable) is reset on an
Optional Reset Date, and with respect to which the Holders of such Securities
have not tendered such Securities for repayment (or have validly revoked any
such tender) pursuant to the next succeeding paragraph, will bear such higher
interest rate (or such higher spread or spread multiplier, if applicable).
The Holder of any such Security will have the option to elect
repayment by the Company of the principal of such Security on each Optional
Reset Date at a price equal to the principal amount thereof plus interest
accrued to such Optional Reset Date. In order to obtain repayment on an Optional
Reset Date, the Holder must follow the procedures set forth in Article Thirteen
for repayment at the option of Holders except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date and except that, if the Holder has tendered any
Security for repayment pursuant to the Reset Notice, the Holder may, by written
notice to the Trustee, revoke such tender or repayment until the close of
business on the tenth day before such Optional Reset Date.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
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.
SECTION 308. Optional Extension of Stated Maturity.
The provisions of this Section 308 may be made applicable to
any series of Securities pursuant to Section 301 (with such modifications,
additions or substitutions as may be specified pursuant to such Section 301).
The Stated Maturity of any Security of such series may be extended at the option
of the Company for the period or periods specified on the face of such Security
(each an "Extension Period") up to but not beyond the date (the "Final
Maturity") set forth on the face of such Security. The Company may exercise such
option with respect to any Security by notifying the Trustee of such exercise at
least 50 but not more than 60 days prior to the Stated Maturity of such Security
in effect prior to the exercise of such option (the "Original Stated Maturity").
If the Company exercises such option, the Trustee shall transmit, in the manner
provided for in Section 106, to the Holder of such Security not later than 40
days prior to the Original Stated Maturity a notice (the "Extension Notice")
indicating (i) the election of the Company to extend the Stated Maturity, (ii)
the new Stated Maturity, (iii) the interest rate applicable to the Extension
Period and (iv) the provisions, if any, for redemption during such Extension
Period. Upon the Trustee's
<PAGE>
42
transmittal of the Extension Notice, the Stated Maturity of such Security shall
be extended automatically and, except as modified by the Extension Notice and as
described in the next paragraph, such Security will have the same terms as prior
to the transmittal of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days before
the Original Stated Maturity of such Security, the Company may, at its option,
revoke the interest rate provided for in the Extension Notice and establish a
higher interest rate for the Extension Period by causing the Trustee to
transmit, in the manner provided for in Section 106, notice of such higher
interest rate to the Holder of such Security. Such notice shall be irrevocable.
All Securities with respect to which the Stated Maturity is extended will bear
such higher interest rate.
If the Company extends the Maturity of any Security, the
Holder will have the option to elect repayment of such Security by the Company
on the Original Stated Maturity at a price equal to the principal amount
thereof, plus interest accrued to such date. In order to obtain repayment on the
Original Stated Maturity once the Company has extended the Maturity thereof, the
Holder must follow the procedures set forth in Article Thirteen for repayment at
the option of Holders, except that the period for delivery or notification to
the Trustee shall be at least 25 but not more than 35 days prior to the Original
Stated Maturity and except that, if the Holder has tendered any Security for
repayment pursuant to an Extension Notice, the Holder may by written notice to
the Trustee revoke such tender for repayment until the close of business on the
tenth day before the Original Stated Maturity.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Registered 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 such Registered Security is
registered as the owner of such Registered Security for the purpose of receiving
payment of principal of (and premium, if any, on) and (subject to Sections 305
and 307) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and none of the Company, the Trustee or
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
Title to any Bearer Security and any coupons appertaining
thereto shall pass by delivery. The Company, the Trustee and any agent of the
Company or the Trustee may treat the bearer of any Bearer Security and the
bearer of any coupon as the absolute owner of such Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or coupons be overdue, and
none of the Company, the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
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43
None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global
Security, nothing herein shall prevent the Company, the Trustee, or any agent of
the Company or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by any depositary, as a Holder, with
respect to such global Security or impair, as between such depositary and owners
of beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.
SECTION 310. Cancellation.
All Securities and coupons surrendered for payment,
redemption, repayment at the option of the Holder, registration of transfer or
exchange or for credit against any current or future sinking fund payment shall,
if surrendered to any Person other than the Trustee, be delivered to the
Trustee. All Securities and coupons so delivered to the Trustee shall be
promptly cancelled 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 may deliver to
the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
cancelled by the Trustee. If the Company shall so acquire any of the Securities,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with its customary procedures and certification of their disposal delivered to
the Company unless by Company Order the Company shall direct that cancelled
Securities be returned to it.
SECTION 311. Computation of Interest.
Except as otherwise specified as contemplated by Section 301
with respect to any Securities, interest on the Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
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SECTION 312. Currency and Manner of Payments in Respect of
Securities.
(a) Unless otherwise specified with respect to any Securities
pursuant to Section 301, with respect to Registered Securities of any series not
permitting the election provided for in paragraph (b) below or the Holders of
which have not made the election provided for in paragraph (b) below, and with
respect to Bearer Securities of any series, except as provided in paragraph (d)
below, payment of the principal of (and premium, if any, on) and interest, if
any, on any Registered or Bearer Security of such series will be made in the
Currency in which such Registered Security or Bearer Security, as the case may
be, is payable. The provisions of this Section 312 may be modified or superseded
with respect to any Securities pursuant to Section 301.
(b) It may be provided pursuant to Section 301 with respect to
Registered Securities of any series that Holders shall have the option, subject
to paragraphs (d) and (e) below, to receive payments of principal of (and
premium, if any, on) or interest, if any, on such Registered Securities in any
of the Currencies which may be designated for such election by delivering to the
Trustee a written election with signature guarantees and in the applicable form
established pursuant to Section 301, not later than the close of business on the
Election Date immediately preceding the applicable payment date. If a Holder so
elects to receive such payments in any such Currency, such election will remain
in effect for such Holder or any transferee of such Holder until changed by such
Holder or such transferee by written notice to the Trustee (but any such change
must be made not later than the close of business on the Election Date
immediately preceding the next payment date to be effective for the payment to
be made on such payment date and no such change of election may be made with
respect to payments to be made on any Registered Security of such series with
respect to which an Event of Default has occurred or with respect to which the
Company has deposited funds pursuant to Articles Four or with respect to which a
notice of redemption has been given by the Company or a notice of option to
elect repayment has been sent by such Holder or such transferee). Any Holder of
any such Registered Security who shall not have delivered any such election to
the Trustee not later than the close of business on the applicable Election Date
will be paid the amount due on the applicable payment date in the relevant
Currency as provided in Section 312(a). The Trustee shall notify the Exchange
Rate Agent as soon as practicable after the Election Date of the aggregate
principal amount of Registered Securities for which Holders have made such
written election.
(c) Unless otherwise specified pursuant to Section 301, if the
election referred to in paragraph (b) above has been provided for pursuant to
Section 301, then, unless otherwise specified pursuant to Section 301, not later
than the fourth Business Day after the Election Date for each payment date for
Registered Securities of any series, the Exchange Rate Agent will deliver to the
Company a written notice specifying, in the Currency in which Registered
Securities of such series are payable, the respective aggregate amounts of
principal of (and premium, if any, on) and interest, if any, on the Registered
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45
Securities to be paid on such payment date, specifying the amounts in such
Currency so payable in respect of the Registered Securities as to which the
Holders of Registered Securities of such series shall have elected to be paid in
another Currency as provided in paragraph (b) above. If the election referred to
in paragraph (b) above has been provided for pursuant to Section 301 and if at
least one Holder has made such election, then, unless otherwise specified
pursuant to Section 301, on the second Business Day preceding such payment date
the Company will deliver to the Trustee for such series of Registered Securities
an Exchange Rate Officer's Certificate in respect of the Dollar or Foreign
Currency payments to be made on such payment date. Unless otherwise specified
pursuant to Section 301, the Dollar or Foreign Currency amount receivable by
Holders of Registered Securities who have elected payment in a Currency as
provided in paragraph (b) above shall be determined by the Company on the basis
of the applicable Market Exchange Rate in effect on the third Business Day (the
"Valuation Date") immediately preceding each payment date, and such
determination shall be conclusive and binding for all purposes, absent manifest
error.
(d) If a Currency Conversion Event occurs with respect to a
Foreign Currency in which any of the Securities are denominated or payable other
than pursuant to an election provided for pursuant to paragraph (b) above, then
with respect to each date for the payment of principal of (and premium, if any,
on) and interest, if any, on the applicable Securities denominated or payable in
such Foreign Currency occurring after the last date on which such Foreign
Currency was used (the "Currency Conversion Date"), the Dollar shall be the
Currency of payment for use on each such payment date. Unless otherwise
specified pursuant to Section 301, the Dollar amount to be paid by the Company
to the Trustee and by the Trustee or any Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in the case of a Foreign
Currency other than a currency unit, the Dollar Equivalent of the Foreign
Currency or, in the case of a currency unit, the Dollar Equivalent of the
Currency Unit, in each case as determined by the Exchange Rate Agent in the
manner provided in paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 301, if the
Holder of a Registered Security denominated in any Currency shall have elected
to be paid in another Currency as provided in paragraph (b) above, and a
Currency Conversion Event occurs with respect to such elected Currency, such
Holder shall receive payment in the Currency in which payment would have been
made in the absence of such election; and if a Currency Conversion Event occurs
with respect to the Currency in which payment would have been made in the
absence of such election, such Holder shall receive payment in Dollars as
provided in paragraph (d) above.
(f) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into Dollars at the
Market Exchange Rate on the Currency Conversion Date.
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46
(g) The "Dollar Equivalent of the Currency Unit" shall be
determined by the Exchange Rate Agent and subject to the provisions of paragraph
(h) below shall be the sum of each amount obtained by converting the Specified
Amount of each Component Currency into Dollars at the Market Exchange Rate for
such Component Currency on the Valuation Date with respect to each payment.
(h) For purposes of this Section 312 the following terms shall
have the following meanings:
A "Component Currency" shall mean any Currency which, on the
Currency Conversion Date, was a component currency of the relevant
currency unit, including, but not limited to, the ECU.
A "Specified Amount" of a Component Currency shall mean the
number of units of such Component Currency or fractions thereof which
were represented in the relevant currency unit, including, but not
limited to, the ECU, on the Currency Conversion Date. If after the
Currency Conversion Date the official unit of any Component Currency is
altered by way of combination or subdivision, the Specified Amount of
such Component Currency shall be divided or multiplied in the same
proportion. If after the Currency Conversion Date two or more Component
Currencies are consolidated into a single currency, the respective
Specified Amounts of such Component Currencies shall be replaced by an
amount in such single Currency equal to the sum of the respective
Specified Amounts of such consolidated Component Currencies expressed
in such single Currency, and such amount shall thereafter be a
Specified Amount and such single Currency shall thereafter be a
Component Currency. If after the Currency Conversion Date any Component
Currency shall be divided into two or more currencies, the Specified
Amount of such Component Currency shall be replaced by amounts of such
two or more currencies, having an aggregate Dollar Equivalent value at
the Market Exchange Rate on the date of such replacement equal to the
Dollar Equivalent value of the Specified Amount of such former
Component Currency at the Market Exchange Rate immediately before such
division and such amounts shall thereafter be Specified Amounts and
such currencies shall thereafter be Component Currencies. If, after the
Currency Conversion Date of the relevant currency unit, including, but
not limited to, the ECU, a Currency Conversion Event (other than any
event referred to above in this definition of "Specified Amount")
occurs with respect to any Component Currency of such currency unit and
is continuing on the applicable Valuation Date, the Specified Amount of
such Component Currency shall, for purposes of calculating the Dollar
Equivalent of the Currency Unit, be converted into Dollars at the
Market Exchange Rate in effect on the Currency Conversion Date of such
Component Currency.
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47
"Election Date" shall mean the date for any series of
Registered Securities as specified pursuant to clause (13) of Section
301 by which the written election referred to in paragraph (b) above
may be made.
All decisions and determinations of the Exchange Rate Agent
regarding the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent
of the Currency Unit, the Market Exchange Rate and changes in the Specified
Amounts as specified above shall be in its sole discretion and shall, in the
absence of manifest error, be conclusive for all purposes and irrevocably
binding upon the Company, the Trustee and all Holders of such Securities
denominated or payable in the relevant Currency. The Exchange Rate Agent shall
promptly give written notice to the Company and the Trustee of any such decision
or determination.
In the event that the Company determines in good faith that a
Currency Conversion Event has occurred with respect to a Foreign Currency, the
Company will immediately give written notice thereof to the Trustee and to the
Exchange Rate Agent (and the Trustee will promptly thereafter give notice in the
manner provided for in Section 106 to the affected Holders) specifying the
Currency Conversion Date. In the event the Company so determines that a Currency
Conversion Event has occurred with respect to the ECU or any other currency unit
in which Securities are denominated or payable, the Company will immediately
give written notice thereof to the Trustee and to the Exchange Rate Agent (and
the Trustee will promptly thereafter give notice in the manner provided for in
Section 106 to the affected Holders) specifying the Currency Conversion Date and
the Specified Amount of each Component Currency on the Currency Conversion Date.
In the event the Company determines in good faith that any subsequent change in
any Component Currency as set forth in the definition of Specified Amount above
has occurred, the Company will similarly give written notice to the Trustee and
the Exchange Rate Agent.
The Trustee shall be fully justified and protected in relying
and acting upon information received by it from the Company and the Exchange
Rate Agent and shall not otherwise have any duty or obligation to determine the
accuracy or validity of such information independent of the Company or the
Exchange Rate Agent.
SECTION 313. Appointment and Resignation of Successor Exchange
Rate Agent.
(a) Unless otherwise specified pursuant to Section 301, if and
so long as the Securities of any series (i) are denominated in a Currency other
than Dollars or (ii) may be payable in a Currency other than Dollars, or so long
as it is required under any other provision of this Indenture, then the Company
will maintain with respect to each such series of Securities, or as so required,
at least one Exchange Rate Agent. The Company will cause the Exchange Rate Agent
to make the necessary foreign exchange determinations at the
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48
time and in the manner specified pursuant to Section 301 for the purpose of
determining the applicable rate of exchange and, if applicable, for the purpose
of converting the issued Currency into the applicable payment Currency for the
payment of principal (and premium, if any) and interest, if any, pursuant to
Section 312.
(b) No resignation of the Exchange Rate Agent and no
appointment of a successor Exchange Rate Agent pursuant to this Section shall
become effective until the acceptance of appointment by the successor Exchange
Rate Agent as evidenced by a written instrument delivered to the Company and the
Trustee.
(c) If the Exchange Rate Agent shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Exchange Rate Agent for any cause with respect to the Securities of one or more
series, the Company, by or pursuant to a Board Resolution, shall promptly
appoint a successor Exchange Rate Agent or Exchange Rate Agents with respect to
the Securities of that or those series (it being understood that any such
successor Exchange Rate Agent may be appointed with respect to the Securities of
one or more or all of such series and that, unless otherwise specified pursuant
to Section 301, at any time there shall only be one Exchange Rate Agent with
respect to the Securities of any particular series that are originally issued by
the Company on the same date and that are initially denominated and/or payable
in the same Currency).
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect with respect to any series of Securities (except as to any
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for and the obligation of the Company to pay
any Additional Amounts as contemplated by Section 1005) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when
(1) either
(a) all Securities of such series theretofore
authenticated and delivered and all coupons, if any,
appertaining thereto (other than (i) coupons appertaining to
Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange, whose surrender
is not required or has been waived as provided in Section 305,
(ii) Securities and coupons of
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49
such series which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306,
(iii) coupons appertaining to Securities called for redemption
and maturing after the relevant Redemption Date, whose
surrender has been waived as provided in Section 1106, and
(iv) Securities and coupons of such series for whose payment
money has theretofore been deposited in trust with the Trustee
or any Paying Agent or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in
Section 1003) have been delivered to the Trustee for
cancellation; or
(b) all Securities of such series and, in the case of
(i) or (ii) below, any coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year, or
(iii) if redeemable at the option of the
Company, 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 (i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for the
purpose an amount, in the Currency 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 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;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) 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 as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 606, the
obligations of the Trustee to any
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50
Authenticating Agent under Section 611 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 402 and the last paragraph of Section
1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the Securities,
the coupons 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 whose payment such money has been deposited
with the Trustee, but such money need not be segregated from other funds except
to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be occasioned by the
provisions of Article Sixteen or 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):
(1) default in the payment of any interest on any Security of
that series, or any related coupon, when such interest or coupon
becomes due and payable, and continuance of such default for a period
of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of the Securities of that series and Article
Twelve; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a default in the
performance, or breach of a covenant or warranty which is specifically
dealt with elsewhere in this Section, and continuance of such default
or breach for a period of 60 days after there has been
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51
given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in
principal amount of all Outstanding 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
(5) 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 the Federal Bankruptcy Code or any other
applicable federal or state 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
(6) 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 the Federal Bankruptcy Code or any other applicable
federal or state 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 of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due;
or
(7) there shall have occurred one or more defaults by the
Company or any Restricted Subsidiary in the payment of the principal of
or premium, if any, on Debt aggregating $10 million or more, when the
same becomes due and payable at the stated maturity thereof, and such
default or defaults shall have continued after any applicable grace
period and shall not have been cured or waived or (B) Debt of the
Company or any Restricted Subsidiary aggregating $10 million or more
shall have been accelerated or otherwise declared due and payable, or
required to be prepaid or repurchased (other than by regularly
scheduled required prepayment), prior to the stated maturity thereof;
or
(8) any other Event of Default provided with respect to
Securities of that series.
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52
SECTION 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default described in clause (1), (2), (3), (4),
(7) or (8) of Section 501 with respect to Securities of any series at the time
Outstanding occurs and is continuing, then 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 Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all of 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), and
upon any such declaration such principal amount (or specified portion thereof)
shall become immediately due and payable. If an Event of Default described in
clause (5) or (6) of Section 501 occurs and is continuing, then the principal
amount of all the Debt Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder.
At any time after a declaration of acceleration with respect
to Securities of any series (or of all series, as the case may be) 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 (or of
all series, as the case may be), by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the Currency in which the Securities of such
series are payable (except as otherwise specified pursuant to Section
301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)),
(a) all overdue interest on all Outstanding
Securities of that series (or of all series, as the case may
be) and any related coupons,
(b) all unpaid principal of (and premium, if any, on)
any Outstanding Securities of that series (or of all series,
as the case may be) which has become due otherwise than by
such declaration of acceleration, and interest on such unpaid
principal at the rate or rates prescribed therefor in such
Securities,
(c) to the extent that payment of such interest is
lawful, interest on overdue interest at the rate or rates
prescribed therefor in such Securities, and
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53
(d) 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
(2) all Events of Default with respect to Securities of that
series (or of all series, as the case may be), other than the
non-payment of amounts of principal of (or premium, if any, on) or
interest on Securities of that series (or of all series, as the case
may be) which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event of a
declaration of acceleration in respect of the Securities because of an Event of
Default specified in Section 501(7) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30-day period which has not been
cured or waived during such period.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of
interest on any Security and any related coupon when such interest
becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities and coupons, the whole amount then due
and payable on such Securities and coupons for principal (and premium, if any)
and interest, and interest on any overdue principal (and premium, if any) and,
to the extent that payment of such interest is lawful, on any overdue interest,
at the rate or rates prescribed therefor in such Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
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54
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such 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 such
Securities, wherever situated.
If an Event of Default with respect to Securities of any
series (or of all series, as the case may be) 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 (or of all series, as the
case may be) 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 504. 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, the Trustee (irrespective of whether the principal of the Securities
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, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any), or such portion of the principal
amount of any series of Original Issue Discount Securities or Indexed
Securities as may be specified in the terms of such series, and
interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
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55
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 Trustee 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 it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.
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.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities or coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or coupons 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 the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities and
coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Sixteen, any money collected by the Trustee
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 on
account of principal (or premium, if any) or interest, upon presentation of the
Securities or coupons, or both, as the case may be, 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 under
Section 606;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the Securities
and coupons 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 Securities and
coupons for principal (and premium, if any) and interest, respectively;
and
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56
Third: The balance, if any, to the Person or Persons entitled
thereto including, without limitation, the Company.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series or any related coupons
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities
of that series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series in the case of any Event of
Default described in clause (1), (2), (3), (4), (7) or (8) of Section
501, or, in the case of any Event of Default described in clause (5) or
(6) of Section 501, the Holders of not less than 25% in principal
amount of all Outstanding Securities, 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;
(3) 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;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
at least a majority or more in principal amount of the Outstanding
Securities of that series in the case of any Event of Default described
in clause (1), (2), (3), (4), (7) or (8) of Section 501, or, in the
case of any Event of Default described in clause (5) or (6) of Section
501, by the Holders of a majority or more in principal amount of all
Outstanding Securities;
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 of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Securities of the same series, in the case of any Event of Default
described in clause (1), (2), (3), (4), (7) or (8) of Section 501, or of Holders
of all Securities in the case of any Event of Default described in clause (5) or
(6) of Section 501, 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 Holders of Securities of the same
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series, in the case of any Event of Default described in clause (1), (2), (3),
(4), (7) or (8) of Section 501, or of Holders of all Securities in the case of
any Event of Default described in clause (5) or (6) of Section 501.
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment, as provided herein (including, if applicable,
Article Fourteen) and in such Security, of the principal of (and premium, if
any, on) and (subject to Section 307) interest on, such Security or payment of
such coupon on the respective Stated Maturities expressed in such Security or
coupon (or, in the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder 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 or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
Securities and coupons shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities or coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders of Securities or coupons is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security or coupon 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 may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 512. Control by Holders.
With respect to the Securities of any series, the Holders of
not less than a majority in principal amount of the Outstanding Securities of
such 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, relating to or arising under clause
(1), (2), (3), (4), (7) or (8) of Section 501, and, with respect to all
Securities, the Holders of not less than a majority in principal amount of all
Outstanding Securities 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, not relating to or
arising under clause (1), (2), (3), (4), (7) or (8) of Section 501, provided
that in each case
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve
it in personal liability or be unjustly prejudicial to the Holders of
Securities of such series not consenting.
SECTION 513. Waiver of Past Defaults.
Subject to Section 502, the Holders of not less than a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default described in clause (1), (2), (3), (4), (7) or (8) of Section 501 (or,
in the case of a default described in clause (5) or (6) of Section 501, the
Holders of not less than a majority in principal amount of all Outstanding
Securities may waive any such past default), and its consequences, except a
default
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(1) in respect of the payment of the principal of (or premium,
if any, on) or interest on any Security or any related coupon, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, any 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 Event of Default or impair any right consequent
thereon.
SECTION 514. Waiver of 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 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.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder
with respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such default
hereunder known to the Trustee, 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, on) or interest on any Security of such
series or in the payment of any sinking fund installment with respect to
Securities 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 determine that the withholding of such notice is in the interest of the
Holders of Securities of such series and any related coupons; and provided,
further, that in the case of any Default of the character specified in
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60
Section 501(7) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof.
SECTION 602. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through
315(d):
(1) 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, note, other evidence of indebtedness or other
paper or document reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(2) 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;
(3) 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;
(4) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) 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 of Securities of any series or any
coupons appertaining thereto 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.
(6) 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, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be
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61
entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) 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; and
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture.
The Trustee shall not be required to expend or risk its own
funds 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 it
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.
SECTION 603. Trustee Not Responsible for Recitals or Issuance
of Securities.
The recitals contained herein and in the Securities, except
for the Trustee's certificates of authentication, and in any coupons 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 or coupons, except that the Trustee represents
that it is duly authorized to execute and deliver this Indenture, authenticate
the Securities and perform its obligations hereunder and that the statements
made by it in a Statement of Eligibility and Qualification on Form T-1 supplied
to the Company are true and accurate, subject to the qualifications set forth
therein. Neither the Trustee nor any Authenticating Agent shall be accountable
for the use or application by the Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and coupons and, subject to TIA Sections 310(b) and 311, may otherwise deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
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SECTION 605. 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 606. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, 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
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts 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.
The obligations of the Company under this Section to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (and premium, if any,
on) or interest on particular Securities or any coupons.
SECTION 607. Corporate Trustee Required; Eligibility;
Conflicting Interests.
(a) There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually,
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63
pursuant to law or to the requirements of federal, state, territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section, 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, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
(b) The following indentures shall be deemed to be
specifically described herein for the purposes of clause (i) of the first
proviso contained in TIA Section 310(b): (1) the Indenture dated December 16,
1993 entered into between the Company and Continental Bank, N.A, trustee and (2)
the Indenture dated as of February 28, 1996 between the Company and First Trust
of Illinois, N.A., as trustee as supplemented by a Supplemental Indenture, dated
as of February 28, 1996 between the Company and First Trust of Illinois, N.A..
SECTION 608. 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 shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 609.
(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 the instrument of acceptance by a successor Trustee required by
Section 609 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less than 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:
(1) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) 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
(2) the Trustee shall cease to be eligible under Section
607(a) and shall fail to resign 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
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(3) 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, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to TIA Section 315(e),
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 or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular 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 to that extent 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 of such series 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 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
to the Holders of Securities of such series in the manner provided for in
Section 106. Each notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its Corporate Trust
Office.
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SECTION 609. 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 to 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. Whenever there is a successor Trustee with
respect to one or more (but less than all) series of securities issued pursuant
to this Indenture, the terms "Indenture" and "Securities" shall have the
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66
meanings specified in the provisos to the respective definitions of those terms
in Section 101 which contemplate such situation.
(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, 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.
SECTION 610. 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 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, 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 with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the certificate of
the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 611. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding, 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 and the Trustee shall give
written notice of such appointment to all Holders of Securities of the series
with respect to which such Authenticating Agent will serve, in the manner
provided for in Section 106. Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated
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by the Trustee hereunder. Any such appointment shall be evidenced by an
instrument in writing signed by a Responsible Officer of the Trustee, and a copy
of such instrument shall be promptly furnished to the Company. 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 and a certificate of authentication
executed 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, any state thereof 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 corporation 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, 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 an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect specified in this Section.
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 the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, 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, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice of
such appointment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided for in
Section 106. 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 provisions of this Section.
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The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 606.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
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This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK,
as Trustee
By_______________________________
as Authenticating Agent
By_______________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities or coupons, by receiving and
holding the same, agrees with the Company and the Trustee that none of the
Company or the Trustee or any agent of either of them shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with TIA Section 312, regardless of the
source from which such information was derived, and that the Trustee shall not
be held accountable by reason of mailing any material pursuant to a request made
under TIA Section 312(b).
SECTION 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the
first May 15 after the first issuance of Securities pursuant to this Indenture,
the Trustee shall transmit to the Holders of Securities, in the manner and to
the extent provided in TIA Section 313(c), a brief report dated as of such May
15 if required by TIA Section 313(a).
SECTION 703. Reports by Company.
The Company shall:
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(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of such Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Securities Exchange Act of
1934 in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit to all Holders, in the manner and to the extent
provided in TIA Section 313(c), within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1)
and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE EIGHT
MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 801. Company May Consolidate, etc., Only on Certain
Terms.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, unless:
(1) 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 (A) shall be a corporation, partnership or
trust organized and validly existing under the laws of the United
States of America, any state thereof or the District of Columbia
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and (B) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the Company's obligation for the due and punctual payment of
the principal of (and premium, if any, on) and interest on all the
Securities and the performance and observance of every covenant of this
Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
(3) the Company or such Person shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer or lease
and such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
This Section shall only apply to a merger or consolidation in
which the Company is not the surviving corporation and to conveyances, leases
and transfers by the Company as transferor or lessor.
SECTION 802. Successor Person Substituted.
Upon any consolidation by the Company with or merger by the
Company into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety to any Person
in accordance with Section 801, the successor Person 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 or transfer, the Company (which term
shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this Indenture
and the Securities and the coupons and may be dissolved and liquidated.
SECTION 803. Securities to Be Secured in Certain Events.
If, upon any such consolidation of the Company with or merger
of the Company into any other corporation, or upon any conveyance, lease or
transfer of the property of the Company as an entirety or substantially as an
entirety to any other Person, any Principal Property of the Company or of any
Restricted Subsidiary, would thereupon become subject to any Lien, then unless
such Lien could be created pursuant to Section 1009 without equally and ratably
securing the Securities, the Company, prior to or simultaneously
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with such consolidation, merger, conveyance, lease or transfer, will, as to such
Principal Property, secure the Securities Outstanding hereunder (together with,
if the Company shall so determine, any other Debt of the Company now existing or
hereafter created which is not subordinate to the Securities) equally and
ratably with (or prior to) the Debt which upon such consolidation, merger,
conveyance, lease or transfer is to become secured as to such Principal Property
by such Lien, or will cause such Securities to be so secured; provided that, for
the purpose of providing such equal and ratable security, the principal amount
of Original Issue Discount Securities and Indexed Securities shall mean that
amount which would at the time of making such effective provision be due and
payable pursuant to Section 502 and the terms of such Original Issue Discount
Securities and Indexed Securities upon a declaration of acceleration of the
Maturity thereof, and the extent of such equal and ratable security shall be
adjusted, to the extent permitted by law, as and when said amount changes over
time pursuant to the terms of such Original Issue Discount Securities and
Indexed Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by or pursuant to 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, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities and any related coupons
(and if such covenants are to be for the benefit of less than all
series of Securities, stating that such covenants are being included
solely for the benefit of such series) or to surrender any right or
power herein conferred upon the Company; or
(3) to add any additional Events of Default (and if such
Events of Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are being included
solely for the benefit of such series); or
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(4) to add to or change any of the provisions of this
Indenture to provide that Bearer Securities may be registrable as to
principal, to change or eliminate any restrictions on the payment of
principal of or any premium or interest on Bearer Securities, to permit
Bearer Securities to be issued in exchange for Registered Securities,
to permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit or facilitate
the issuance of Securities in uncertificated form; provided that any
such action shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material
respect; or
(5) 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
(6) to secure the Securities pursuant to the requirements of
Section 803 or 1009 or otherwise; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 201 and 301; or
(8) 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 609(b); or
(9) to close this Indenture with respect to the authentication
and delivery of additional series of Securities, to cure any ambiguity,
to 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 Indenture; provided
that such action shall not adversely affect the interests of the
Holders of Securities of any series and any related coupons in any
material respect;
(10) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Sections 401, 1402 and 1403; provided that any such action shall not
adversely affect the interests of the Holders of Securities of such
series and any related coupons or any other series of Securities in any
material respect; or
(11) to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
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SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of all Outstanding Securities of any series, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by or pursuant to 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 which affect such series of Securities or of modifying in any
manner the rights of the Holders of Securities under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change any obligation of the Company to pay
Additional Amounts contemplated by Section 1005 (except as contemplated
by Section 801(1) and permitted by Section 901(1)), or reduce the
amount of the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502 or the amount thereof provable
in bankruptcy pursuant to Section 504, or adversely affect any right of
repayment at the option of any Holder of any Security, or change any
Place of Payment where, or the Currency in which, any Security or any
premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption or repayment at
the option of the Holder, on or after the Redemption Date or Repayment
Date, as the case may be), or adversely affect any right to convert or
manage any Security as may be provided pursuant to Section 301 herein,
or
(2) reduce the percent in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for
any such supplemental indenture, for any waiver of compliance with
certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture, or reduce the
requirements of Section 1504 for quorum or voting.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of 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 of any other series. Any such
supplemental indenture adding any provisions to or changing in any manner or
eliminating
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any of the provisions of this Indenture, or modifying in any manner the rights
of the Holders of Securities of such series, shall not affect the rights under
this Indenture of the Holders of 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 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. 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 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, 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 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental
Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
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SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of Section 902, the
Company shall give notice thereof to the Holders of each Outstanding Security
affected, in the manner provided for in Section 106, setting forth in general
terms the substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and
Interest.
The Company covenants and agrees for the benefit of the
Holders of each series of Securities and any related coupons that it will duly
and punctually pay the principal of (and premium, if any, on) and interest on
the Securities of that series in accordance with the terms of the Securities,
any coupons appertaining thereto and this Indenture. Unless otherwise specified
as contemplated by Section 301 with respect to any series of Securities, any
interest installments due on Bearer Securities on or before Maturity shall be
payable only upon presentation and surrender of the several coupons for such
interest installments as are evidenced thereby as they severally mature.
SECTION 1002. Maintenance of Office or Agency.
If the Securities of a series are issuable only as Registered
Securities, 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, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities of that series that
are convertible may be surrendered for conversion, if applicable, and where
notices and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served.
If Securities of a series are issuable as Bearer Securities,
the Company will maintain (A) in The City of New York, an office or agency where
any Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for
exchange, where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served and where Bearer
Securities of that series and related coupons may be presented or surrendered
for payment in the circumstances described in the following paragraph (and not
otherwise); (B) subject to
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any laws or regulations applicable thereto, in a Place of Payment for that
series which is located outside the United States, an office or agency where
Securities of that series and related coupons may be presented and surrendered
for payment; provided, however, that, if the Securities of that series are
listed on any stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent for the
Securities of that series in any required city located outside the United States
so long as the Securities of that series are listed on such exchange, and (C)
subject to any laws or regulations applicable thereto, in a Place of Payment for
that series located outside the United States an office or agency where any
Registered Securities of that series may be surrendered for registration of
transfer, where Securities of that series may be surrendered for 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 will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required 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, except that Bearer Securities of any
series and the related coupons may be presented and surrendered for payment at
the offices specified in the Security, in London, and the Company hereby
appoints the same as its agents to receive such respective presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, no payment of principal, premium or interest on Bearer
Securities shall be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
however, that, if the Securities of a series are payable in Dollars, payment of
principal of (and premium, if any, on) and interest on any Bearer Security shall
be made at the office of the Company's Paying Agent in The City of New York, if
(but only if) payment in Dollars of the full amount of such principal, premium
or interest, as the case may be, at all offices or agencies outside the United
States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; 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 accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. Unless otherwise specified with
respect to any Securities
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as contemplated by Section 301 with respect to a series of Securities, the
Company hereby designates as a Place of Payment for each series of Securities
the office or agency of the Company in the Borough of Manhattan, The City of New
York, and initially appoints the Trustee c/o Mellon Securities Transfer
Services, 120 Broadway, 33rd Floor, New York, New York 10271 as Paying Agent in
such city and as its agent to receive all such presentations, surrenders,
notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any series (i) are
denominated in a Currency other than Dollars or (ii) may be payable in a
Currency other than Dollars, or so long as it is required under any other
provision of the Indenture, then the Company will maintain with respect to each
such series of Securities, or as so required, at least one Exchange Rate Agent.
SECTION 1003. Money for Securities 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 and any related coupons, it will, on or
before each due date of the principal of (and premium, if any, on) or interest
on any of the Securities of that series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) 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 action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities and any related coupons, it will, prior to or on each
due date of the principal of (and premium, if any, on) or interest on any
Securities of that series, deposit with a Paying Agent a sum (in the Currency
described in the preceding paragraph) 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, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent (other than the
Trustee) for any series of Securities 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, that such Paying Agent will:
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(1) hold all sums held by it for the payment of the principal
of (and premium, if any, on) and interest on Securities of such series
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;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of such series) in the making of
any payment of principal of (or premium, if any, on) or interest on the
Securities of such series; and
(3) 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.
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 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
sums.
Except as provided in the Securities of any series, 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, on) or interest
on any Security of any series, or any coupon appertaining thereto, and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security or coupon 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 an
Authorized Newspaper, 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.
SECTION 1004. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer as to his
or her knowledge of the Company's
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compliance with all conditions and covenants under this Indenture. For purposes
of this Section 1004, such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
SECTION 1005. Additional Amounts.
If any Securities of a series provide for the payment of
additional amounts to any Holder who is not a United States person in respect of
any tax, assessment or governmental charge ("Additional Amounts"), the Company
will pay to the Holder of any Security of such series or any coupon appertaining
thereto such Additional Amounts as may be specified as contemplated by Section
301. Whenever in this Indenture there is mentioned, in any context, the payment
of the principal (or premium, if any, on) or interest on, or in respect of, any
Security of a series or payment of any related coupon or the net proceeds
received on the sale or exchange of any Security of a series, such mention shall
be deemed to include mention of the payment of Additional Amounts provided for
by the terms of such series established pursuant to Section 301 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to such terms and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
Except as otherwise specified as contemplated by Section 301,
if the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to that
series of Securities (or if the Securities of that series will not bear interest
prior to Maturity, the first day on which a payment of principal (and premium,
if any) is made), and at least 10 days prior to each date of payment of
principal (and premium, if any) or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers' Certificate,
the Company will furnish the Trustee and the Company's principal Paying Agent or
Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of (and premium, if any, on) or interest on the Securities
of that series shall be made to Holders of Securities of that series or any
related coupons who are not United States persons without withholding for or on
account of any tax, assessment or other governmental charge described in the
Securities of the series. If any such withholding shall be required, then such
Officers' Certificate shall specify by country the amount, if any, required to
be withheld on such payments to such Holders of Securities of that series or
related coupons and the Company will pay to the Trustee or such Paying Agent the
Additional Amounts required by the terms of such Securities. In the event that
the Trustee or any Paying Agent, as the case may be, shall not so receive the
above-mentioned certificate, then the Trustee or such Paying Agent shall be
entitled to (i) assume that no such withholding or deduction is required with
respect to any payment of principal (and premium, if any) or interest with
respect to any Securities of a series or related coupons
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until it shall have received a certificate advising otherwise and (ii) to make
all payments of principal (and premium, if any) and interest with respect to the
Securities of a series or related coupons without withholding or deductions
until otherwise advised. The Company covenants to indemnify the Trustee and any
Paying Agent for, and to hold them harmless against, any loss, liability or
expense reasonably incurred without negligence or bad faith on their part
arising out of or in connection with actions taken or omitted by any of them in
reliance on any Officers' Certificate furnished pursuant to this Section.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Restricted Subsidiary or upon the income, profits or property of the Company or
any Restricted Subsidiary, and (2) all material lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon any
Principal Property of the Company or any Restricted Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1007. Maintenance of Properties.
The Company will cause all assets owned by the Company or any
Restricted Subsidiary used or useful in the conduct of the Company's business or
the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order. In particular, the Company will, and will
cause each Restricted Subsidiary, to take all steps reasonably necessary to
maintain the integrity, value, quality and ownership of all intellectual
property constituting Principal Franchise Assets. Notwithstanding the foregoing
sentence, nothing in this Section shall prevent the Company from discontinuing
the operation or maintenance of any of such assets if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Restricted Subsidiary and not disadvantageous in any material
respect to the Holders, including without limitation, the termination or
non-renewal of any Franchise Contracts constituting Principal Franchise Assets.
SECTION 1008. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the rights (charter and statutory) and franchises of the
Company and any Restricted Subsidiary; provided, however, that the Company shall
not be required to preserve any such right or franchise if the Company shall
determine that the preservation thereof is no longer desirable
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in the conduct of the business of the Company and its Subsidiaries as a whole
and provided further that the foregoing does not prohibit any mergers or
consolidations between Subsidiaries or between the Company and one or more
Subsidiaries so long as any such merger or consolidation complies with Article
Eight.
SECTION 1009. Limitation on Liens.
(1) Subject to Paragraph (2) of this Section 1009, neither the
Company nor any Restricted Subsidiary shall create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by it, except:
(A) Liens existing on the Issue Date, or arising
after the Issue Date pursuant to contracts existing on the
Issue Date and any extensions or renewals thereof not in
excess of the amount of the original Lien;
(B) Liens for taxes or assessments and similar
charges either (x) not delinquent or (y) contested in good
faith by appropriate proceedings;
(C) Liens incurred or pledges and deposits in
connection with workmen's compensation, unemployment insurance
and other social security benefits, or securing the
performance of bids, tenders, leases, contracts (other than
for the repayment of borrowed money), statutory obligations,
progress payments, surety and appeal bonds and other
obligations of like nature, incurred in the ordinary course of
business;
(D) Liens imposed by law, such as mechanics',
carriers', warehousemen's, landlords', materialmen's and
vendors' liens, incurred in good faith in the ordinary course
of business;
(E) purchase money Liens granted to the vendor or
Person financing the acquisition of property, plant or
equipment if (i) limited to the specific assets acquired; (ii)
the debt secured by the Lien is the unpaid balance of the
acquisition cost of the specific assets on which the Lien is
granted; and (iii) the total amount of all such purchase money
Liens does not exceed $30 million at any one time on a
consolidated basis;
(F) Liens upon real and/or personal property (whether
tangible or intangible), which property was acquired after the
Issue Date (by purchase, construction or otherwise) by the
Company or any Subsidiary, each of which Lien existed on such
property before the time of its acquisition and was not
created in anticipation thereof; provided, however, that no
such Lien shall
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extend to or cover any property of the Company or
such Subsidiary other than the respective property so acquired
and improvements thereon;
(G) Liens arising under or in connection with sale
and leaseback transactions permitted under Section 1010;
(H) Liens arising by reason of any attachment,
judgment, decree or order of any court, so long as any
appropriate legal proceedings which may have been initiated
shall not have been finally terminated or so long as the
period within which such proceedings may be initiated shall
not have expired, any deposit or pledge with any surety
company or clerk of any court, or in escrow, as collateral in
connection with, or in lieu of, any bond on appeal from any
judgment or decree against the Company or any Restricted
Subsidiary, or in connection with other proceedings or actions
at law or in equity by or against the Company, provided that
such deposits, pledges, or bonds in the aggregate shall not
exceed $10 million at any one time;
(I) Liens other than those enumerated in paragraphs
(A)-(H) above arising in connection with Debt of the Company
and of any one or more Restricted Subsidiaries in an aggregate
amount not exceeding at any one time 10% of Consolidated Net
Tangible Assets; and
(J) any extension, renewal, substitution or
replacement (or successive extensions, renewals, substitutions
or replacements), as a whole or in part, of any of the Liens
referred to in subparagraphs (A) through (I) above or the Debt
secured thereby; provided that (1) such extension, renewal,
substitution or replacement Lien shall be limited to all or
any part of the same Principal Property that secured the Lien
extended, renewed, substituted or replaced (plus improvements
on such property, and plus any other property or assets not
then constituting a Principal Property) and (2) in the case of
paragraphs (A) and (F) above, the Debt secured by such Lien at
such time is not increased.
(2) The Company or any Restricted Subsidiary may create or assume any
Lien not permitted by Clause (1) of this Section 1009 upon any of its property
or assets, whether now owned or hereafter acquired if (i) prior written consent
to the creation or assumption thereof shall have been obtained from the Trustee
(with the consent of the Holders of a majority in principal amount of the then
Outstanding Securities) or (ii) the Company will make or cause to be made
effective a provision whereby the Securities and all coupons appertaining
thereto will be secured by such Lien equally and ratably with any and all other
Debt so secured.
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SECTION 1010. Limitation on Sale and Leaseback Transactions.
The Company will not itself, and will not permit any
Restricted Subsidiary to, enter into any arrangement after the date of the first
issuance by the Company of Securities issued pursuant to this Indenture with any
bank, insurance company or other lender or investor (other than the Company or
another Restricted Subsidiary) providing for the leasing by the Company or any
such Restricted Subsidiary of any Principal Property (except a lease for a
temporary period not to exceed three years by the end of which it is intended
that the use of such Principal Property by the lessee will be discontinued),
which was or is owned or leased by the Company or a Restricted Subsidiary and
which has been or is to be sold or transferred, more than 120 days after the
completion of construction and commencement of full operation thereof by the
Company or such Restricted Subsidiary, to such lender or investor or to any
Person to whom funds have been or are to be advanced by such lender or investor
on the security of such Principal Property (herein referred to as a "sale and
leaseback transaction") unless, either:
(a) the Attributable Debt of the Company and its Restricted
Subsidiaries in respect of such sale and leaseback transaction and all
other sale and leaseback transactions entered into after the date of
the first issuance by the Company of Securities issued pursuant to this
Indenture (other than such sale and leaseback transactions as are
permitted by paragraph (b) below), plus the aggregate principal amount
of Debt secured by Liens on Principal Properties (excluding any such
Debt secured by Liens covered in paragraphs (A) through (H) of Section
1009) without equally and ratably securing the Securities, would not
exceed 10% of Consolidated Net Tangible Assets, or
(b) the Company, within 120 days after the sale or transfer,
applies or causes a Restricted Subsidiary to apply an amount equal to
the greater of the net proceeds of such sale or transfer or fair market
value of the Principal Property so sold and leased back at the time of
entering into such sale and leaseback transaction (in either case as
determined by any two of the following: the Chairman, the President,
any Vice President, the Treasurer and the Controller of the Company) to
the retirement of Securities of any series or other Debt of the Company
(other than Debt subordinated to the Securities) or Debt of a
Restricted Subsidiary, having a stated maturity more than 12 months
from the date of such application or which is extendible at the option
of the obligor thereon to a date more than 12 months from the date of
such application and, unless otherwise expressly provided with respect
to any one or more series of Securities, any redemption of Securities
pursuant to this provision shall not be deemed to constitute a
refunding operation or anticipated refunding operation for the purposes
of any provision limiting the Company's right to redeem Securities of
any one or more such series when such redemption involves a refunding
operation or anticipated refunding operation; provided that the amount
to be
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so applied shall be reduced by (i) the principal amount of Securities
delivered within 120 days after such sale or transfer to the Trustee
for retirement and cancellation, and (ii) the principal amount of any
such Debt of the Company or a Restricted Subsidiary, other than
Securities, voluntarily retired by the Company or a Restricted
Subsidiary within 120 days after such sale or transfer. Notwithstanding
the foregoing, no retirement referred to in this paragraph (b) may be
effected by payment at maturity or pursuant to any mandatory sinking
fund payment or any mandatory prepayment provision.
Notwithstanding the foregoing, where the Company or any
Restricted Subsidiary is the lessee in any sale and leaseback transaction,
Attributable Debt shall not include any Debt resulting from the guarantee by the
Company or any other Restricted Subsidiary of the lessee's obligation
thereunder.
SECTION 1011. Limitation on Debt of Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary to
create, incur, assume or directly or indirectly guarantee or in any manner
become directly liable for the payment of, any Debt other than (i) trade debt
incurred in the ordinary course of business; (ii) Debt owing by any Restricted
Subsidiary to the Company or any other Restricted Subsidiary arising in the
ordinary course of business for normal business purposes; (iii) Debt in
existence on the Issue Date or required to be incurred pursuant to a contractual
obligation in existence on the Issue Date; or (iv) other Debt not in excess of
10% of Pro Forma Consolidated Net Tangible Assets.
SECTION 1012. Limitation on Transfers of Principal Franchise
Assets.
Except as permitted under Article 8, neither the Company nor
any of its Restricted Subsidiaries shall in one or a series of related
transactions convey, sell, lease, transfer, assign or otherwise dispose of,
directly or indirectly, any of its Principal Franchise Assets (an "Asset Sale")
other than in the ordinary course of business (which shall be any transaction or
series of related transactions having a dollar amount of less than $3 million),
unless the consideration received is at least equal to the Fair Market Value of
the assets sold or otherwise disposed of.
SECTION 1013. Limitation on Restrictions on Subsidiary
Dividends and Other Distributions.
The Company shall not permit any Restricted Subsidiary to
suffer to exist any encumbrance or restriction (other than pursuant to law,
regulation or order or in accordance with the terms of the Credit Agreement or
agreements entered into in connection with the Credit Agreement) on the ability
of any Restricted Subsidiary (i) to pay, directly or
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indirectly, dividends or make any other distributions in respect of its Capital
Stock or pay any Debt or other obligation owed to the Company or any other
Restricted Subsidiary; (ii) to make loans or advances to the Company or any
Restricted Subsidiary or (iii) to transfer any of its property or assets to the
Company or any Restricted Subsidiary, except any encumbrance or restriction (a)
pursuant to any agreement in effect on the Issue Date, including, without
limitation, the Credit Agreement, (b) pursuant to an agreement entered into by
such Restricted Subsidiary prior to the date on which such Restricted Subsidiary
was acquired by the Company and not entered into in anticipation of becoming a
Restricted Subsidiary, (c) permitted under Section 1011 herein, (d) pursuant to
customary non-assignment provisions of any lease governing a leasehold interest,
a security agreement, mortgage or deed of trust issued in connection with liens
permitted by Section 1008 or any other agreement which does not relate to Debt,
provided that any such non-assignment provision would not have a material
adverse effect on the Company and its Restricted Subsidiaries taken as a whole
(as determined in good faith by the Board of Directors of the Company), or (e)
pursuant to an agreement effecting a renewal, extension, refinancing or
refunding of Debt incurred pursuant to an agreement referred to in clause (a) or
(b) above, provided, however, that the provisions contained in such renewal,
extension, refinancing or refunding agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof.
SECTION 1014. Waiver of Certain Covenants.
The Company may, with respect to any series of Securities,
omit in any particular instance to comply with any term, provision or condition
which affects such series set forth in Section 803 or Sections 1006 to 1013,
inclusive, if before the time for such compliance the Holders of at least a
majority in principal amount of all Outstanding Securities of any series, by Act
of such Holders, waive such compliance in such instance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with the terms of such
Securities and (except as otherwise
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specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. 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, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed and shall
deliver to the Trustee such documentation and records as shall enable the
Trustee to select the Securities to be redeemed pursuant to Section 1103. 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 or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities of any series are to be
redeemed, 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 portions of the principal of Securities of such
series; provided, however, that no such partial redemption shall reduce the
portion of the principal amount of a Security not redeemed to less than the
minimum authorized denomination for Securities of such series established
pursuant to Section 301.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, 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.
SECTION 1104. Notice of Redemption.
Except as otherwise specified as contemplated by Section 301,
notice of redemption shall be given in the manner provided for in Section 106
not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Securities to be redeemed.
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All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case
of partial redemption, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price
(together with accrued interest, if any, to the Redemption Date
payable as provided in Section 1106) will become due and payable
upon each such Security, or the portion thereof, to be redeemed
and, if applicable, that interest thereon will cease to accrue
on and after said date,
(5) the place or places where such Securities, together
in the case of Bearer Securities with all coupons appertaining
thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such
is the case,
(7) that, unless otherwise specified in such notice,
Bearer Securities of any series, if any, surrendered for
redemption must be accompanied by all coupons maturing
subsequent to the Redemption Date or the amount of any such
missing coupon or coupons will be deducted from the Redemption
Price unless security or indemnity satisfactory to the Company,
the Trustee and any Paying Agent is furnished, and
(8) if Bearer Securities of any series are to be
redeemed and any Registered Securities of such series are not to
be redeemed, and if such Bearer Securities may be exchanged for
Registered Securities not subject to redemption on such
Redemption Date pursuant to Section 305 or otherwise, the last
date, as determined by the Company, on which such exchanges may
be made.
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.
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SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in the Currency in which the Securities of such series are payable (except
as otherwise specified pursuant to Section 301 for the Securities of such series
and except, if applicable, as provided in Sections 312(b), 312(d) and 312(e))
sufficient to pay the Redemption Price of, and accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) (together with accrued interest,
if any, to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall, if the same were interest-bearing, cease to
bear interest and the coupons for such interest appertaining to any Bearer
Securities so to be redeemed, except to the extent provided below, shall be
void. Upon surrender of any such Security for redemption in accordance with said
notice, together with all coupons, if any, appertaining thereto maturing after
the Redemption Date, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest on Bearer Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable
only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender of coupons for
such interest, and provided further that installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Redemption Date shall 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 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such
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Holder shall be entitled to receive the amount so deducted; provided, however,
that interest represented by coupons shall be payable only at an office or
agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section 301,
only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part (pursuant to
the provisions of this Article or of Article Twelve) shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
SECTION 1108. Redemption Pursuant to Gaming Laws.
(a) If a Holder of Securities (1) is required by any Gaming
Authority to be qualified with respect to any Gaming License and has
neither been qualified by nor obtained a waiver of qualification from
each Gaming Authority requiring qualification with respect to any Gaming
License in a timely manner or is found to be disqualified or unsuitable
with respect to any Gaming License, which finding has not been reversed,
vacated or superseded in any subsequent proceeding prior to the date of
written notice form the Company (each a "Disqualified Holder") or (2)
Beneficially Owns five percent (5%) or more of the outstanding Capital
Stock of the Company and has not fully complied with investigations or
inquiries by the Company or any Gaming Authority in connection with any
Gaming License (including, without limitation, requests for such
Holder's financial statements), then (except as otherwise approved by
the Board of Directors) (i) such Disqualified Holder or Beneficial Owner
shall, upon the written request of the Company, sell its Securities
within 10 days after receipt of such request either directly to any
Person then qualified or previously qualified (and not subsequently
disqualified) or through a bona fide brokerage transaction, conducted at
arm's-length, to a Person not an Affiliate of the Disqualified Holder or
Beneficial Owner, or (ii) the Company may, at its option, within 15 days
after the end of such 10 day period, redeem such Holder's or Beneficial
Owner's Securities at the lowest of (x)
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the market value thereof, (y) the principal amount thereof or (z) the
amount which such Holder or Beneficial Owner paid for the Securities,
together with accrued and unpaid interest, if any, to the date of the
determination of disqualification at a time and place as designed by the
Company. The Company shall promptly provide to the Trustee a copy of
each written request served to such Disqualified Holder or Beneficial
Owner.
(b) Any Holder of Securities required to apply for a finding of
suitability under any applicable Gaming Law shall pay all investigative
fees and costs, if any, of any Gaming Authority in connection with such
application. Immediately upon a determination of unsuitability, if any,
such Holder shall have no further right to exercise, directly or through
any trustee or nominee, any right conferred by such Holder's Securities
and no further right to receive any dividends, interest or other
distributions or payments with respect thereto; provided, however, that
after any such disqualification, interest on such Securities shall
continue to accrue for the benefit of any subsequent Holder thereof.
(c) If any Disqualified Holder fails to dispose of such Holder's
Securities in accordance with the provisions of clause (a) above, such
Disqualified Holder shall indemnify the company and any Subsidiary of
the Company for any costs, including, without limitation, attorneys'
fees, incurred by the Company and any Subsidiary of the Company as a
result of such Disqualified Holder's continued ownership, or failure to
divest itself, of such Securities.
(d) The provisions of this Section 1108 shall be construed in
accordance with the applicable provisions of any applicable Gaming Laws.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
Retirements of Securities of any series pursuant to any sinking
fund shall be made in accordance with the terms of such Securities and (except
as otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities of
any series, the cash amount of any mandatory sinking fund payment
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may be subject to reduction as provided in Section 1202. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities.
Subject to Section 1203, in lieu of making all or any part of
any mandatory sinking fund payment with respect to any Securities of a series in
cash, the Company may at its option (1) deliver to the Trustee Outstanding
Securities of a series (other than any previously called for redemption)
theretofore purchased or otherwise acquired by the Company together in the case
of any Bearer Securities of such series with all unmatured coupons appertaining
thereto, and/or (2) receive credit for the principal amount of Securities of
such series which have been previously delivered to the Trustee by the Company
or for Securities of such series which have been redeemed either at the election
of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Securities, in each case in satisfaction of all or any part of any
mandatory sinking fund payment with respect to the Securities of the same series
required to be made pursuant to the terms of such Securities as provided for by
the terms of such series; provided, however, that such Securities have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. 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 that series pursuant to the terms of that series, 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 otherwise specified
pursuant to Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e)) and the portion
thereof, if any, which is to be satisfied by delivering or crediting Securities
of that series pursuant to Section 1202 (which Securities will, if not
previously delivered, accompany such certificate) and whether the Company
intends to exercise its right to make a permitted optional sinking fund payment
with respect to such series. Such 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 next succeeding sinking fund
payment date. In the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding sinking fund
payment date for that series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of such Securities subject to a
mandatory
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sinking fund payment without the option to deliver or credit Securities as
provided in Section 1202 and without the right to make any optional sinking fund
payment, if any, with respect to such series.
Not more than 60 days before each such sinking fund payment date
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 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 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
Prior to any sinking fund payment date, the Company shall pay to
the Trustee or a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) in cash a sum
equal to any interest that will accrue to the date fixed for redemption of
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section 1203.
Notwithstanding the foregoing, with respect to a sinking fund
for any series of Securities, if at any time the amount of cash to be paid into
such sinking fund on the next succeeding sinking fund payment date, together
with any unused balance of any preceding sinking fund payment or payments for
such series, does not exceed in the aggregate $100,000, the Trustee, unless
requested by the Company, shall not give the next succeeding notice of the
redemption of Securities of such series through the operation of the sinking
fund. Any such unused balance of moneys deposited in such sinking fund shall be
added to the sinking fund payment for such series to be made in cash on the next
succeeding sinking fund payment date or, at the request of the Company, shall be
applied at any time or from time to time to the purchase of Securities of such
series, by public or private purchase, in the open market or otherwise, at a
purchase price for such Securities (excluding accrued interest and brokerage
commissions, for which the Trustee or any Paying Agent will be reimbursed by the
Company) not in excess of the principal amount thereof.
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.
Repayment of Securities of any series before their Stated
Maturity at the option of Holders thereof shall be made in accordance with the
terms of such Securities and (except as otherwise specified as contemplated by
Section 301 for Securities of any series) in accordance with this Article.
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SECTION 1302. Repayment of Securities.
Securities of any series subject to repayment in whole or in
part at the option of the Holders thereof will, unless otherwise provided in the
terms of such Securities, be repaid at a price equal to the principal amount
thereof, together with interest, if any, thereon accrued to the Repayment Date
specified in or pursuant to the terms of such Securities. The Company covenants
that on or before the Repayment Date it will deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money in the
Currency in which the Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such series and except,
if applicable, as provided in Sections 312(b), 312(d) and 312(e)) sufficient to
pay the principal (or, if so provided by the terms of the Securities of any
series, a percentage of the principal) of, and (except if the Repayment Date
shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof, as the case may be, to be repaid on such date.
SECTION 1303. Exercise of Option.
Securities of any series subject to repayment at the option of
the Holders thereof will contain an "Option to Elect Repayment" form on the
reverse of such Securities. To be repaid at the option of the Holder, any
Security so providing for such repayment, with the "Option to Elect Repayment"
form on the reverse of such Security duly completed by the Holder (or by the
Holder's attorney duly authorized in writing), must be received by the Company
at the Place of Payment therefor specified in the terms of such Security (or at
such other place or places or which the Company shall from time notify the
Holders of such Securities) not earlier than 45 days nor later than 30 days
prior to the Repayment Date. If less than the entire principal amount of such
Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, and the denomination or
denominations of the Security or Securities to be issued to the Holder for the
portion of the principal amount of such Security surrendered that is not to be
repaid, must be specified. The principal amount of any Security providing for
repayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of the series of
which such Security to be repaid is a part. Except as otherwise may be provided
by the terms of any Security providing for repayment at the option of the Holder
thereof, exercise of the repayment option by the Holder shall be irrevocable
unless waived by the Company.
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SECTION 1304. When Securities Presented for Repayment Become
Due and Payable.
If Securities of any series providing for repayment at the
option of the Holders thereof shall have been surrendered as provided in this
Article and as provided by or pursuant to the terms of such Securities, such
Securities or the portions thereof, as the case may be, to be repaid shall
become due and payable and shall be paid by the Company on the Repayment Date
therein specified, and on and after such Repayment Date (unless the Company
shall default in the payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repayment
Date, the principal amount of such Security so to be repaid shall be paid by the
Company, together with accrued interest, if any, to the Repayment Date;
provided, however, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons, and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall 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 307.
If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of all such missing
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or any
Paying Agent any such missing coupon in respect of which a deduction shall have
been made as provided in the preceding sentence, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest represented
by coupons shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and
surrender of those coupons.
If the principal amount of any Security surrendered for
repayment shall not be so repaid upon surrender thereof, such principal amount
(together with interest, if any, thereon accrued to such Repayment Date) shall,
until paid, bear interest from the Repayment
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Date at the rate of interest or Yield to Maturity (in the case of Original Issue
Discount Securities) set forth in such Security.
SECTION 1305. Securities Repaid in Part.
Upon surrender of any Registered Security which is to be repaid
in part only, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge and at the
expense of the Company, a new Registered Security or Securities of the same
series, of any authorized denomination specified by the Holder, in an aggregate
principal amount equal to and in exchange for the portion of the principal of
such Security so surrendered which is not to be repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, the provisions of this Article Fourteen shall apply to
each series of Securities, and the Company may, at its option, effect defeasance
of the Securities of or within a series under Section 1402, or covenant
defeasance of or within a series under Section 1403 in accordance with the terms
of such Securities and in accordance with this Article.
SECTION 1402. Defeasance and Discharge.
Upon the Company's exercise of the above option applicable to
this Section with respect to any Securities of or within a series, the Company
shall be deemed to have been discharged from its obligations with respect to
such Outstanding Securities and any related coupons on the date the conditions
set forth in Section 1404 are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Outstanding Securities
and any related coupons, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section 1405 and the other Sections of this Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Securities and any related coupons and this Indenture
insofar as such Securities and any related coupons are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Outstanding Securities and any related coupons (i) to receive, solely from the
trust fund described in Section 1404
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97
and as more fully set forth in such Section, payments in respect of the
principal of (and premium, if any, on) and interest on such Securities and any
related coupons when such payments are due, and (ii) to receive shares of common
stock or other Securities from the Company upon the conversion of any
convertible securities issued hereunder, (B) the Company's obligations with
respect to such Securities under Sections 304, 305, 306, 1002 and 1003 and with
respect to the payment of Additional Amounts, if any, on such Securities as
contemplated by Section 1005, (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (D) this Article Fourteen. Subject to
compliance with this Article Fourteen, the Company may exercise its option under
this Section 1402 notwithstanding the prior exercise of its option under Section
1403 with respect to such Securities and any related coupons. As provided in
Section 1614, money and securities held in trust pursuant to this Section 1402
shall not be subject to Article Sixteen.
SECTION 1403. Covenant Defeasance.
Upon the Company's exercise of the above option applicable to
this Section with respect to any Securities of or within a series, the Company
shall be released from its obligations under Section 803 and Sections 1006
through 1010, and, if specified pursuant to Section 301, its obligations under
any other covenant, with respect to such Outstanding Securities and any related
coupons on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such Securities and any
related coupons shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent or declaration or Act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Outstanding
Securities and any related coupons, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of reference in any
such covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 501(4) or Section 501(8) or otherwise, as the case may be, but, except
as specified above, the remainder of this Indenture and such Securities and any
related coupons shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1402 or Section 1403 to any Outstanding Securities of or within a series
and any related coupons:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 607 who
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98
shall agree to comply with the provisions of this Article Fourteen
applicable to it) in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of such Securities and any related coupons,
(A) money in an amount (in such Currency in which such Securities and
any related coupons are then specified as payable at Stated Maturity),
or (B) Government Obligations applicable to such Securities (determined
on the basis of the Currency in which such Securities are then specified
as payable at Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment
of principal (including any premium) and interest, if any, under such
Securities and any related coupons, money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee)
to pay and discharge, (i) the principal of (and premium, if any, on) and
interest on such Outstanding Securities and any related coupons on the
Stated Maturity (or Redemption Date, if applicable) of such principal
(and premium, if any) or installment or interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to such
Outstanding Securities and any related coupons on the day on which such
payments are due and payable in accordance with the terms of this
Indenture and of such Securities and any related coupons; provided that
the Trustee shall have been irrevocably instructed to apply such money
or the proceeds of such Government Obligations to said payments with
respect to such Securities and any related coupons. Before such a
deposit, the Company may give to the Trustee, in accordance with Section
1102 hereof, a notice of its election to redeem all or any portion of
such Outstanding Securities at a future date in accordance with the
terms of the Securities of such series and Article Eleven hereof, which
notice shall be irrevocable. Such irrevocable redemption notice, if
given, shall be given effect in applying the foregoing.
(2) No Default or Event of Default with respect to such
Securities or any related coupons shall have occurred and be continuing
on the date of such deposit or, insofar as paragraphs (5) and (6) of
Section 501 are concerned, at any time during the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(3) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a
party or by which it is bound.
(4) In the case of an election under Section 1402, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling,
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99
or (y) since the date of execution of this Indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the
Holders of such Outstanding Securities and any related coupons will not
recognize income, gain or loss for federal income tax purposes as a
result of such defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred.
(5) In the case of an election under Section 1403, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Outstanding Securities and any related coupons
will not recognize income, gain or loss for federal income tax purposes
as a result of such covenant defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such covenant defeasance had not
occurred.
(6) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with
any additional or substitute terms, conditions or limitations in
connection therewith pursuant to Section 301.
(7) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
1402 or the covenant defeasance under Section 1403 (as the case may be)
have been complied with.
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003,
all money and Government Obligations (or other property as may be provided
pursuant to Section 301) (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee--collectively for purposes of this Section
1405, the "Trustee") pursuant to Section 1404 in respect of such Outstanding
Securities and any related coupons shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and any related
coupons 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 Holders of such Securities and any related coupons
of all sums due and to become due thereon in respect of principal (and premium,
if any) and interest, but such money need not be segregated from other funds
except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant
to Section 301, if, after a deposit referred to in Section 1404(1) has been
made, (a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section
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312(b) or the terms of such Security to receive payment in a Currency other than
that in which the deposit pursuant to Section 1404(1) has been made in respect
of such Security, or (b) a Conversion Event occurs as contemplated in Section
312(d) or 312(e) or by the terms of any Security in respect of which the deposit
pursuant to Section 1404(1) has been made, the indebtedness represented by such
Security and any related coupons shall be deemed to have been, and will be,
fully discharged and satisfied through the payment of the principal of (premium,
if any, on), and interest, if any, on such Security as they become due out of
the proceeds yielded by converting (from time to time as specified below in the
case of any such election) the amount or other property deposited in respect of
such Security into the Currency in which such Security becomes payable as a
result of such election or Conversion Event based on the applicable Market
Exchange Rate for such Currency in effect on the third Business Day prior to
each payment date, except, with respect to a Conversion Event, for such Currency
in effect (as nearly as feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of such Outstanding Securities and any related
coupons.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money or Government Obligations (or other property
and any proceeds therefrom) held by it as provided in Section 1404 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1406. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money
in accordance with Section 1405 by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and such
Securities and any related coupons shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1405; provided, however, that if the Company makes any
payment of principal of (or premium, if any, on) or interest on any such
Security or any related coupon following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
and any related coupons to receive such payment from the money held by the
Trustee or Paying Agent.
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ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called.
If Securities of a series are issuable as Bearer Securities, a
meeting of Holders of Securities of such series may be called at any time and
from time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities
of such series.
SECTION 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in The City of New York or in London as the
Trustee shall determine. Notice of every meeting of Holders of Securities of any
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided for in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of such series in
the amount above specified, as the case may be, may determine the time and the
place in The City of New York or in London for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in paragraph (a)
of this Section.
SECTION 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities
of any series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such series, or (2) a Person appointed by an instrument in writing
as proxy for a Holder or Holders of one or more Outstanding Securities of such
series by such Holder or Holders. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any
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series shall be the Person entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of
the Outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that, if any action
is to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than a
specified percentage in principal amount of the Outstanding Securities of a
series, the Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series shall constitute a quorum.
In the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of Securities
of such series, be dissolved. In any other case the meeting may be adjourned for
a period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the chairman of the meeting prior to
the adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 1502(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of
any adjourned meeting shall state expressly the percentage, as provided above,
of the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for lack of a quorum the Persons entitled to vote 25% in principal
amount of the Outstanding Securities at the time shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of
not less than a majority in principal amount of the Outstanding Securities of
that series; provided, however, that, except as limited by the proviso to
Section 902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of not less than such specified percentage in
principal amount of the Outstanding Securities of that series.
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103
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504,
if any action is to be taken at a meeting of Holders of Securities of any series
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
Outstanding Securities affected thereby, or of the Holders of such series and
one or more additional series:
(i) there shall be no minimum quorum requirement for such
meeting; and
(ii) the principal amount of the Outstanding Securities of such
series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into
account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given
or taken under this Indenture.
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(a) Notwithstanding any provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of a series in regard to proof of the holding
of Securities of such series and of the appointment of proxies and in regard to
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section 104
and the appointment of any proxy shall be proved in the manner specified in
Section 104 or by having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 104 to certify to the holding of Bearer Securities. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 104 or
other proof.
(b) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders of Securities as provided in Section 1502(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like
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manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled to
vote a majority in principal amount of the Outstanding Securities of such series
represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of
Outstanding Securities of such series held or represented by him (determined as
specified in the definition of "Outstanding" in Section 101); provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 1502 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 1506. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders
of Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the Secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE SIXTEEN
SUBORDINATION OF SECURITIES
SECTION 1601. Securities Subordinate to Senior Indebtedness.
Except as otherwise specified pursuant to Section 301 for Securities of any
series, the Company covenants and agrees, and each Holder of a Security, by such
Holder's acceptance thereof, likewise covenants and agrees, for the benefit of
the holders, from time to time, of Senior Indebtedness of the Company,
respectively, that, to the extent and in the manner hereinafter set forth in
this Article, the indebtedness represented by the Securities and the payment of
the principal of (and premium, if any, on) and interest, if any, on each and all
of the Securities are hereby expressly made subordinate and subject in right of
payment as provided in this Article to the prior payment in full of all Senior
Indebtedness of the Company.
SECTION 1602. Payment over of Proceeds upon Dissolution, etc. In
the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets, or (b) any liquidation, dissolution or other winding up of the
Company as the case may be, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company then
and in any such event
(1) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full (or provision is made for payment in
money or money's worth) of the principal thereof (and premium, if
any, thereon) and interest thereon (including, without limitation, all
interest accruing after the commencement of any bankruptcy, insolvency,
receivership or similar proceeding), before the Holders of the
indebtedness evidenced by the Securities are entitled to receive any
payment or distribution of any kind or character on account of principal
(or premium, if any, on) or interest, if any, on such indebtedness; and
(2) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities to which the
Holders or the Trustee would be entitled but for the provisions of this
Article shall be paid by the Company by the liquidating trustee or agent
or other person making such payment or distribution, whether a trustee
in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the representative or representatives of the holders of Senior
Indebtedness, or to the trustee or trustees under any indenture under
which any instrument evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid
on account of the Senior Indebtedness held or represented by each, to
the extent necessary to make payment in full of all Senior Indebtedness
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106
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions
of this Section, 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, before all
Senior Indebtedness of the Company as the case may be, is paid in full
(or provision therefor is made in money or money's worth), such
payment or distribution shall be paid over to the representative or
representatives of the holders of such Senior Indebtedness, or to the
trustee or trustees under any indenture under which any instrument
evidencing any of such Senior Indebtedness may have been issued, ratably
as aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness
in full (or to provide for payment thereof in money or money's
worth), after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness.
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 conveyance or transfer of its properties and assets substantially
as an entirety to another Person upon the terms and conditions set forth in
Article Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of the Company for the purposes of this Section if the Person
formed by such consolidation or into which the Company as the case may be, is
merged or the Person which acquires by conveyance or transfer such properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Article Eight.
SECTION 1603. No Payment When Senior Indebtedness in Default.
(a) No payments on account of the principal of (or premium, if any, on) or
interest, if any, on the Securities shall be made by the Company if, at the time
of such payment or immediately after giving effect thereto, there shall exist
with respect to any Senior Indebtedness of the Company or any agreement pursuant
to which any Senior Indebtedness is issued, any default in the payment of
principal, premium (if any) or interest in respect of such Senior Indebtedness
beyond any applicable grace period with respect thereto.
(b) 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 provision of this Section, then and in such event
such payment shall be paid over and delivered forthwith to the Company.
SECTION 1604. Payment Permitted if No Default. Nothing
contained in this Article or elsewhere in this Indenture or in any of the
Securities shall prevent the Company
<PAGE>
107
at any time except during the pendency of any case, proceeding, liquidation,
dissolution or other winding up, assignment for the benefit of creditors or
other marshalling of assets and liabilities of the Company referred to in
Section 1602 or under the conditions described in Section 1603, from making
payments at any time of principal of (or premium, if any, on) or interest, if
any, on the Securities.
SECTION 1605. Subrogation to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness (or the
making of provision therefor in money or money's worth), the Holders of
the Securities shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any, on) and interest, if any, on the Securities shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness 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 to the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other than holders of
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.
SECTION 1606. Provisions Solely to Define Relative Rights. The
provisions of this Article 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 Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company which is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any, on) and interest, if any, 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 the holders of
Senior Indebtedness; 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, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness.
SECTION 1607. Trustee to Effectuate Subordination. Each Holder
of a Security by such Holder's acceptance thereof authorizes and directs
the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.
<PAGE>
108
SECTION 1608. No Waiver of Subordination Provisions. (a) No
right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided (as the subordination provisions of this
Article Sixteen may be amended or supplemented from time to time in accordance
with the provisions of this Indenture) 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
non-compliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
(b) Without in any way limiting the generality of paragraph (a)
of this Section, the holders of Senior Indebtedness may, at any time and from
time 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 Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (3) release any Person liable in any manner for
the collection of Senior Indebtedness; and (4) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 1609. Notice to Trustee. (a) The Company shall give
prompt written notice to the Trustee of any fact known to it which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any fact that 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
Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to TIA Sections 315(a)
through 315(d), shall be entitled in all respects to assume that no such facts
exist; provided, however, that, if the Trustee shall not have received the
notice provided for in this Section at least five Business Days prior to the
date upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any, on) or interest, if any, on any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purpose for which such money
was received and shall not be affected by any notice to the contrary which may
be received by it within five Business Days prior to such date.
(b) Subject to TIA Sections 315(a) through 315(d), the Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a
<PAGE>
109
holder of Senior Indebtedness (or such holder's representative or a
trustee therefor) to establish that such notice has been given by a holder of
Senior Indebtedness (or such holder's representative 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 Indebtedness 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 Indebtedness
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 1610. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to TIA Sections 315(a) through
315(d), 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
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or 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 Senior Indebtedness 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.
SECTION 1611. Rights of Trustee As a Holder of Senior
Indebtedness; Preservation of Trustee's Rights. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article with respect to any senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness, and nothing
in this Indenture shall deprive the Trustee of any of its rights as such holder.
Notwithstanding anything to the contrary in this Indenture, nothing in this
Article shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 606.
SECTION 1612. 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 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 in addition to or in place of the Trustee; provided, however, that
Section 1611 shall not apply to the Company, the Guarantor or any of their
respective Affiliates if it or such Affiliate acts as Paying Agent.
<PAGE>
110
SECTION 1613. No Suspension of Remedies. Nothing contained in
this Article shall limit the right of the Trustee or the Holders of Securities
to take any action to accelerate the maturity of the Securities pursuant to
Article Five or to pursue any rights or remedies hereunder or under applicable
law.
SECTION 1614. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from cash or the proceeds of
U.S. Government Obligations held in trust under Article Fourteen hereof by the
Trustee (or other qualifying trustee) and which were deposited in accordance
with the terms of this Article and not in violation of Section 1603 hereof for
the payment of principal of (and premium, if any, on) and interest, if any, on
the Securities shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article Thirteen,
and none of the Holders shall be obligated to pay over any such amount to the
Company or any holder of Senior Indebtedness or any other creditor of the
Company.
This Indenture 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 Indenture.
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.
HFS INCORPORATED
By:_________________________
Name:
Title:
[Seal]
Attest:
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK
By:__________________________
Name:
Title:
[Seal]
Attest:
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
OR TO OBTAIN INTEREST PAYABLE PRIOR
TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof, and except as
set forth below, the above-captioned Securities held by you for our account (i)
are owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States federal income taxation regardless of its
source ("United States persons(s)"), (ii) are owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing
for their own account or for resale, or (b) United States person(s) who acquired
the Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise [Name of Issuer] or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such financial institution
has not acquired the Securities for purposes of resale directly or indirectly to
a United States person or to a person within the United States or its
possessions.
As used herein, "United States" means the United States of
America (including the states and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the above-captioned Securities held by you for our account in accordance with
your Operating Procedures if any applicable statement herein is not correct on
such date, and in the absence of any such notification it may be assumed that
this certification applies as of such date.
<PAGE>
A-1-2
This certificate excepts and does not relate to
[U.S.$]__________ of such interest in the above-captioned Securities in respect
of which we are not able to certify and as to which we understand an exchange
for an interest in a Permanent Global Security or an exchange for and delivery
of definitive Securities (or, if relevant, collection of any interest) cannot be
made until we do so certify.
We understand that this certificate may be required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii)
the relevant Interest Payment Date occurring prior to the Exchange Date, as
applicable]
[Name of Person Making
Certification]
____________________________
(Authorized Signatory)
Name:
Title:
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN
CONNECTION WITH THE EXCHANGE OF A PORTION OF A
TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that based solely on written certifications
that we have received in writing, by tested telex or by electronic transmission
from each of the persons appearing in our records as persons entitled to a
portion of the principal amount set forth below (our "Member Organizations")
substantially in the form attached hereto, as of the date hereof, [U.S.$]_______
principal amount of the above-captioned Securities (i) is owned by person(s)
that are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States person(s) that are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) are herein
referred to as "financial institutions") purchasing for their own account or for
resale, or (b) United States person(s) who acquired the Securities through
foreign branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date hereof
(and in either case (a) or (b), each such financial institution has agreed, on
its own behalf or through its agent, that we may advise [Name of Issuer] or its
agent that such financial institution will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) is owned by United States or
foreign financial institution(s) for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)) and, to the further effect, that financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
As used herein, "United States" means the United States of
America (including the states and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We further certify that (i) we are not making available
herewith for exchange (or, if relevant, collection of any interest) any portion
of the temporary global Security representing the above-captioned Securities
excepted in the above-referenced certificates of Member Organizations and (ii)
as of the date hereof we have not received
<PAGE>
A-2-2
any notification from any of our Member Organizations to the effect that the
statements made by such Member Organizations with respect to any portion of the
part submitted herewith for exchange (or, if relevant, collection of any
interest) are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the Exchange Date or the relevant Interest Payment
Date occurring prior to the Exchange Date, as applicable]
[MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, BRUSSELS OFFICE, as Operator
of the Euroclear System]
[CEDEL S.A.]
By__________________________
August 29, 1996
The Board of Directors
HFS Incorporated
339 Jefferson Road
Parsippany, New Jersey 07054
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to HFS Incorporated, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), on Form S-3 of debt
securities (the "Debt Securities") of the Company and shares (the "Shares",
together with the Debt Securities, the "Securities") of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), to be offered and
sold by the Company from time to time, pursuant to Rule 415 of the General
Rules and Regulations promulgated under the Securities Act (the "Rules and
Regulations"), with aggregate gross proceeds of up to $1,000,000,000 or the
equivalent thereof in one or more foreign currencies or composite currencies.
This opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K of the Rules and Regulations.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement on Form S-3 relating to the Securities as filed
with the Securities and Exchange Commission (the "Commission") on the date
hereof (together with all exhibits thereto, the "Registration Statement"); (ii)
the forms of Senior Indenture and Subordinated Indenture
<PAGE>
The Board of Directors
HFS Incorporated
August 29, 1996
Page 2
relating to the Debt Securities to be entered into by and between the Company
and The Bank of Nova Scotia Trust Company of New York (the "Trustee"), as
Trustee (each, an "Indenture"); (iii) the Amended and Restated Certificate of
Incorporation of the Company, as currently in effect (the "Certificate of
Incorporation"); (iv) the By-laws of the Company, as currently in effect (the
"By-Laws"); (v) the form of underwriting agreement relating to the Debt
Securities to be entered into by and between the Company and the underwriters
to be named therein (the "Debt Underwriting Agreement"); (vi) the form of
underwriting agreement relating to the Common Stock to be entered into by and
between the Company and the underwriters to be named therein (the "Common Stock
Underwriting Agreement"); (vii) a specimen of the share certificate used to
evidence the Common Stock; and (viii) resolutions of the Company's Board of
Directors relating to (A) the preparation of the Registration Statement and the
registration of the Securities under the Securities Act and (B) the issuance,
offering and sale from time to time of the Securities. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such records of the Company and such agreements, certificates of public
officials, certificates of officers or other representatives of the Company and
others and such other documents, certificates and records as we have deemed
necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, photostatic, conformed or reproduced
copies and the authenticity of the originals of such latter documents. In
making our examination of documents executed or to be executed by parties other
than the Company, we have assumed that such parties had the power, corporate or
other to enter into and perform all obligations thereunder and have also assumed
the due authorization by all requisite action, corporate or other, and execution
and delivery by such parties of such documents and the validity and binding
effect thereof. As to any facts material to the opinions expressed herein
<PAGE>
The Board of Directors
HFS Incorporated
August 29, 1996
Page 3
which were not independently established or verified, we have relied upon oral
or written statements and representations of officers and other representatives
of the Company and others.
In rendering this opinion, we have also assumed that (i) each Indenture
will be duly authorized, executed and delivered by the Trustee and that any
Debt Security that may be issued will be manually signed by duly authorized
officers of the Trustee; (ii) prior to any offering and sale of Securities, the
Company's Board of Directors (or a special committee thereof authorized to act
on its behalf) will duly authorize the terms of and the prices at which the (A)
Shares are to be issued and sold and (B) the Debt Securities are to be issued
and sold in accordance with the terms of an Indenture (and, if Debt Securities
are convertible into or exchangeable for Common Stock, the issuance of such
Common Stock upon such conversion or exchange and the terms thereof); and (iii)
the denomination of any Debt Security in a currency other than United States
dollars will not contravene the currency exchange control laws of any
jurisdiction.
Members of our Firm are admitted to the Bar in the States of Delaware and
New York, and we express no opinion as to the laws of any other jurisdiction
other than the laws of the United States of America to the extent referred to
specifically herein. The Securities may be issued from time to time on a
delayed or continuous basis, and this opinion is limited to the laws specified
above, including the Rules and Regulations, as in effect on the date hereof.
Based upon and subject to the foregoing, we are of the opinion that:
1. With respect to any offering of any series of Debt Securities (the
"Offered Debt Securities"), when (i) the Registration Statement, as finally
amended (including all necessary post-effective amendments), has become
effective; (ii) an appropriate Prospectus Supplement with respect to the
Offered Debt Securities has been prepared,
<PAGE>
The Board of Directors
HFS Incorporated
August 29, 1996
Page 4
delivered and filed in compliance with the Securities Act and the applicable
Rules and Regulations thereunder; (iii) if the Offered Debt Securities are to
be sold pursuant to (A) a firm commitment underwritten offering, the Debt
Underwriting Agreement with respect to the Offered Debt Securities has been
duly authorized, executed and delivered by the Company and the other parties
thereto or (B) any other purchase agreement, such agreement with respect to the
Offered Debt Securities has been duly authorized, executed and delivered by the
Company and the other parties thereto; (iv) the terms of the Offered Debt
Securities and of their issuance and sale have been duly established in
conformity with the applicable Indenture, if any, so as not to violate any
applicable law, the Certificate of Incorporation or By-laws of the Company or
result in a default under or breach of any agreement or instrument binding upon
the Company and so as to comply with any requirement or restriction imposed by
any court or governmental body having jurisdiction over the Company; (v) the
applicable Indenture has been qualified under the Trust Indenture Act of 1939,
as amended; and (vi) the Offered Debt Securities have been duly executed and
authenticated in accordance with the provisions of the applicable Indenture and
duly delivered to the purchasers thereof upon payment of the agreed upon
consideration therefor; (1) the Offered Debt Securities, when issued and sold
in accordance with the applicable Indenture, if any, and the Debt Underwriting
Agreement or any other duly authorized, executed and delivered applicable valid
and binding purchase agreement will be valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except to the extent that enforcement thereof may be limited by (A)
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity), (C) public
policy considerations which may limit the rights of parties to obtain further
remedies, (D) requirements that a claim with respect to any Offered Debt
Securities denominated other than in
<PAGE>
The Board of Directors
HFS Incorporated
August 29, 1996
Page 5
United States dollars (or a judgment denominated other than in United States
dollars in respect of such claim) be converted into United States dollars at a
rate of exchange prevailing on a date determined pursuant to applicable law,
and (E) governmental authority to limit, delay or prohibit the making of
payments outside the United States or in foreign currencies, currency units or
composite currencies; and (2) if Common Stock is issuable upon conversion or
exchange of any convertible Offered Debt Securities, the Common Stock issuable
upon conversion or exchange will be validly issued, fully paid and
nonassessable, assuming the execution, authentication, issuance and delivery of
the Offered Debt Securities and conversion or exchange of the Offered Debt
Securities in accordance with the terms of the applicable Indenture, if any,
relating thereto and that the consideration therefor is not less than the par
value thereof.
We note that, as of the date of this opinion, a judgment for money in an
action based on an Offered Debt Security denominated in a foreign currency,
currency unit or composite currency in a federal or state court in the United
States ordinarily would be enforced in the United States only in United States
dollars. The date used to determine the rate of conversion of the foreign
currency, currency unit or composite currency in which a particular Offered
Debt Security is denominated into United States dollars will depend upon
various factors, including which court renders the judgment.
2. With respect to any offering of any Shares, when (i) the Registration
Statement, as finally amended (including all necessary post-effective
amendments), has become effective; (ii) an appropriate Prospectus Supplement
with respect to the Shares has been prepared, delivered and filed in compliance
with the Securities Act and the applicable Rules and Regulations thereunder;
(iii) if the Shares are to be sold pursuant to (A) a firm commitment
underwritten offering, the Common Stock Underwriting Agreement with respect to
the Shares has been duly authorized, executed and delivered by the Company and
the other parties thereto or (B) any other purchase agree-
<PAGE>
The Board of Directors
HFS Incorporated
August 29, 1996
Page 6
ment, such agreement with respect to the Shares has been duly authorized,
executed and delivered by the Company and the other parties thereto; (iv) the
Board of Directors, including any appropriate committee appointed thereby, and
appropriate officers of the Company have taken all necessary corporate action
to approve the issuance and terms of the Shares and related matters; (v) the
terms of the Shares and of their issuance and sale have been duly established
in conformity with the Certificate of Incorporation and By-Laws so an not to
violate any applicable law, the Certificate of Incorporation or By-Laws of the
Company or result in a default under or breach of any agreement or instrument
binding upon the Company and so as to comply with any requirement or
restriction imposed by any court or governmental body having jurisdiction over
the Company; and (vi) certificates representing the Shares in the form of the
specimen certificates examined by us are duly executed, countersigned,
registered and delivered upon payment of the agreed upon consideration
therefor, the Shares, when issued and sold in accordance with the Common Stock
Underwriting Agreement or any other duly authorized, executed and delivered
applicable purchase agreement will be duly authorized, validly issued, fully
paid and nonassessable, provided that the consideration therefor is not less
than the par value thereof.
We hereby consent to the use of the name of our firm in the Registration
Statement under the caption "Legal Matters" and to the filing of this opinion
as an Exhibit to the Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission promulgated thereunder.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom
EXHIBIT 12.1
HFS INCORPORATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS
ENDED
DECEMBER
SIX MONTHS ENDED JUNE 30, 31,
--------------------------------- ----------
HISTORICAL PRO FORMA
--------------------- ----------------------
1996 1995 1996 1995
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Income before income taxes
minority interest, and
extraordinary loss $103,308 $54,744 $158,946 $317,134
Plus: Fixed Charges 15,696 11,089 34,319 72,669
Less: Capitalized interest (420) -- (420) (82)
---------- --------- ---------- ----------
Earnings available to cover fixed
charges $118,584 $65,833 $192,845 $389,721
========== ========= ========== ==========
Fixed charges (1):
Interest, including amortization
of deferred loan costs $ 14,574 $10,255 $ 16,186 $ 35,579
Capitalized interest 420 -- 420 82
Interest portion of rental
payments 702 834 17,713 37,008
---------- --------- ---------- ----------
Total fixed charges $ 15,696 $11,089 $ 34,319 $ 72,669
========== ========= ========== ==========
Ratio of earnings to fixed charges 7.55x 5.94x 5.62x 5.36x
========== ========= ========== ==========
Excess (deficiency) or earnings to
fixed charges $102,888 $54,744 $158,526 $317,052
========== ========= ========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
HISTORICAL
---------------------------------
1995 (2) 1994 1993 1992 1991
---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Income before income taxes
minority interest, and
extraordinary loss $134,905 $ 90,643 $60,668 $28,703 ($ 4,909)
Plus: Fixed Charges 23,538 20,182 21,730 26,077 10,805
Less: Capitalized interest (82) (246) (440) -- --
---------- ---------- --------- --------- ----------
Earnings available to cover fixed
charges $158,361 $110,579 $81,958 $54,780 $ 5,896
========== ========== ========= ========= ==========
Fixed charges (1):
Interest, including amortization
of deferred loan costs $ 21,789 $ 18,685 $20,234 $25,117 $10,118
Capitalized interest 82 246 440 -- --
Interest portion of rental
payments 1,667 1,251 1,056 960 687
---------- ---------- --------- --------- ----------
Total fixed charges $ 23,538 $ 20,182 $21,730 $26,077 $10,805
========== ========== ========= ========= ==========
Ratio of earnings to fixed charges 6.73x 5.48x 3.77x 2.10x *
========== ========== ========= ========= ==========
Excess (deficiency) or earnings to
fixed charges $134,823 $ 90,397 $60,228 $28,703 ($4,909)
========== ========== ========= ========= ==========
</TABLE>
(1) Fixed charges consist of interest expense on all indebtedness
(including amortization of deferred financing costs) and the portion
of operating lease rental expense that is representative of the
interest factor (deemed to be one-third of operating lease rentals).
(2) Certain reclassifications have been made to conform to the current
years presentation.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated on Form S-3 of our reports dated February 22, 1996 (February
28, 1996 as to Note 2A) and March 29, 1996 appearing in and incorporated by
reference in the Annual Report on Form 10-K, for the year ended December 31,
1995 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
August 26 1996
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-3 of our report dated February 7,
1995 related to the consolidated balance sheets of Century 21 Real Estate
Corporation (formerly a wholly-owned subsidiary of Metropolitan Life Insurance
Company) and subsidiaries as of December 31, 1994, 1993, and 1992, and the
related consolidated statements of income, stockholder's equity and cash flows
for the years then ended included in the Company's Current Report on Form 8-K/A
dated August 18, 1995 and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Costa Mesa, California
August 26, 1996
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-3 of our report dated February 19,
1996, related to the balance sheet of Century 21 Real Estate of the Mid-Atlantic
States, Inc. as of December 31, 1995 and the related statements of income,
changes in stockholder's equity and cash flow for the year then ended included
in the Company's Current Report on Form 8-K dated April 5, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
August 26, 1996
EXHIBIT 23.4
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the Registration Statement of
HFS Incorporated (the "Company") on Form S-3 of our report dated May 15, 1995,
related to the financial statements of Century 21 Of The Southwest, Inc. as of
and for the years ended March 31, 1995 and 1994, included in the Company's
Current Report on Form 8-K dated February 16, 1996 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Toback CPA's, P.C.
Phoenix, Arizona
August 26, 1996
EXHIBIT 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
HFS Incorporated (the "Company") on Form S-3 of our report dated June 22, 1995
(except for Note 13, as to which the date is October 12, 1995), related to the
financial statements of Century 21 of Eastern Pennsylvania, Inc. as of and for
the years ended April 30, 1995 and 1994, included in the Company's Current
Report on Form 8-K dated February 16, 1996 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ Woolard, Krajnik & Company
WOODLARD, KRAJNIK & COMPANY, LLP
Exton, Pennsylvania
August 26, 1996
EXHIBIT 23.6
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
HFS Incorporated (the Company) on Form S-3 of our report dated May 11, 1995,
related to the financial statements of Century 21 Real Estate of the Mid-
Atlantic States, Inc. as of and for the years ended December 31, 1994 and 1993,
included in the Company's Current Report on Form 8-K dated February 16, 1996 and
to the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
/s/ Beers & Cutler PLLC
Washington, D.C.
August 26, 1996
EXHIBIT 23.7
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-3 of our report dated January 12,
1996, related to the consolidated financial statements of Century 21 Region V,
Inc. and subsidiaries as of and for the year ended July 31, 1995, included in
the Company's Current Report on Form 8-K dated February 16, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ White, Nelson & Co, LLP
Anaheim, California
August 26, 1996
EXHIBIT 23.8
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of HFS Incorporated for
the registration of $1,000,000,000 of debt securities and common stock and to
the incorporation by reference therein of our report dated February 27, 1995,
with respect to the consolidated financial statements of Electronic Realty
Associates, Inc. for the years ended December 31, 1994 and 1993, included in the
Current Report on Form 8-K of HFS Incorporated dated February 16, 1996, filed
with the Securities and Exchange Commission, and our report dated February 21,
1996, with respect to the consolidated financial statements of Electronic Realty
Associates, L.P. for the years ended December 31, 1995 and 1994, included in the
Current Report on Form 8-K of HFS Incorporated dated April 5, 1996, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
- --------------------------
ERNST & YOUNG LLP
Kansas City, Missouri
August 26, 1996
EXHIBIT 23.9
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-3 of our report dated February 27,
1996, related to the consolidated financial statements of Coldwell Banker
Corporation and Subsidiaries as of December 31, 1995 and 1994, and for each of
the two years in the period ended December 31, 1995. We also consent to the
reference to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND LLP
Newport Beach, California
August 26, 1996
EXHIBIT 23.10
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
HFS Incorporated (the "Company") on Form S-3 of our report dated March 11, 1994,
related to the consolidated statements of operations, stockholders' equity and
cash flows for the three months ended December 31, 1993 and the consolidated
statements of operations and cash flows for the nine months ended September 30,
1993 of Coldwell Banker Corporation and subsidiaries (formerly Coldwell Banker
Residential Holding Company and subsidiaries) included in the Company's Current
Report on Form 8-K dated May 8, 1996 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
August 26, 1996
EXHIBIT 23.11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of HFS Incorporated
of our report dated April 25, 1996 relating to the consolidated financial
statements of Avis, Inc., which appears in the Current Report on Form 8-K of HFS
Incorporated. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
/s/ Price Waterhouse LLP
New York, New York
August 23, 1996
==================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF ANY APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
---------------
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5691211
(State of Incorporation (I.R.S. employer
If not a U.S. national bank) Identification number)
One Liberty Plaza
New York, N.Y. 10006
(Address of principal (Zip code)
Executive office)
----------------------------------------
HFS INCORPORATED
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
22-3059335
(I.R.S. employer identification no.)
339 Jefferson Road
Parsippany, N.J. 07054
(Address of principal executive offices)(Postal Code)
----------------------------------------
CONVERTIBLE AND NON-CONVERTIBLE
DEBT SECURITIES
(Title of the indenture securities)
<PAGE>
Item 1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Reserve Bank of New York
33 Liberty Street
New York, N.Y. 10045
State of New York Banking Department
State House, Albany, N.Y.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliation with the Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
The obligor is not an affiliate of the Trustee.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
Exhibit 1 - Organization Certificate of the Trustee,
incorporated herein by reference to Exhibit 1 of Form
T-1, Registration No. 333-3276.
Exhibit 2 - Certificate of Authority of the Trustee to commence
business incorporated herein by reference to Exhibit 2
of Form T-1, Registration No. 333-3276.
Exhibit 3 - None; authorization to exercise corporate trust
powers is contained in the documents identified above
as Exhibit 1 and 2.
Exhibit 4 - By-Laws of the Trustee incorporated herein by
reference to Exhibit 4 of Form T-1, Registration No.
333-3276.
Exhibit 5 - No Indenture referred in Item 4.
Exhibit 6 - The consent of the Trustee required by Section 321(b)
of the Trust Indenture Act of 1939.
Exhibit 7 - Copy of the latest Report of Condition of the Trustee
as of June 30, 1996.
2
<PAGE>
EXHIBIT 6
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, The Bank of Nova Scotia Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York on
the 28 day of August, 1996.
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK
By: /S/ George E. Timmes
--------------------------
George E. Timmes
Secretary
<PAGE>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 1999
Federal Financial Institutions Examination Counsel
- --------------------------------------------------------------------------------
EXHIBIT 7
-----
LOGO Please refer to page i, | 1 |
Table of Contents, for -----
the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic Offices Only and
Total Assets of Less Than $100 Million - FFIEC 034
(960630)
--------
(RCRI 9999)
Report at the close of business June 30, 1996
This report is required by law: 12 U.S.C. ss.324 (State member banks); 12 U.S.C.
ss.1817 (State nonmember banks); and 12 U.S.C. ss.161 (National banks).
This report form is to be filed by banks with domestic offices only. Banks with
branches and consolidated subsidiaries in U.S. territories and possessions,
Edge or Agreement subsidiaries, foreign branches, consolidated foreign
subsidiaries, or International Banking Facilities must file FFIEC 031.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, George E. Timmes, Secretary
- --------------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report of the named bank do
hereby declare that these Reports of Condition and Income (including the
supporting schedules) have been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and are true to the best
of my knowledge and belief.
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
- --------------------------------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
NOTE: These instructions may in some cases differ from generally accepted
accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in confor-mance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Banks: Return the original and one copy to the appropriate Federal
Reserve District Bank.
State Nonmember Banks: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
National Banks: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
STATE OF NEW YORK BANKING
DEPARTMENT
DOMESTIC COMMERCIAL BKS. DIVISION
2 RECTOR STREET, 23RD FLOOR
NEW YORK, NEW YORK 10006
Banks should affix the address label in this space.
The Bank of Nova Scotia Trust Company of New York
- --------------------------------------------------------------------------------
Legal Title of Bank (TEXT 9010)
New York
- --------------------------------------------------------------------------------
City (TEXT 9130)
N.Y. 10006
- --------------------------------------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
FFIEC 034
Page i
-----
| 2 |
-----
Consolidated Reports of Condition and Income for
A Bank With Domestic Offices Only and Total Assets Less Than $100 Million
- -------------------------------------------------------------------------------
Table of Contents
Signature Page Cover
Report of Income
Schedule RI--Income Statement.................RI-1, 2, 3
Schedule RI-A--Changes in Equity Capital............RI-3
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses.........................................RI-4, 5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority..................................RI-5
Schedule RI-E--Explanations......................RI-5, 6
Report of Condition
Schedule RC--Balance Sheet.......................RC-1, 2
Schedule RC-B--Securities........................RC-3, 4
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases......................RC-5, 6
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only)..............................RC-6a, 6b
Schedule RC-E--Deposit Liabilities...............RC-7, 8
Schedule RC-F--Other Assets.........................RC-9
Schedule RC-G--Other Liabilities....................RC-9
Schedule RC-K--Quarterly Averages..................RC-10
Schedule RC-L--Off-Balance Sheet
Items........................................RC-11, 12
Schedule RC-M--Memoranda.......................RC-13, 14
Schedule RC-N--Past Due and Nonaccrual
Loans, Leases, and Other Assets..................RC-15
Schedule RC-O--Other Data for Deposit
Insurance Assessments........................RC-16, 17
Schedule RC-R--Regulatory Capital..............RC-18, 19
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income..........................RC-20
Special Report (to be completed by all banks)
Schedule RC-J--Repricing Opportunities (sent
only to and to be completed only by savings
banks)
Disclosure of Estimated Burden
The estimated average burden associated with this information collection is
32.2 hours per respondent and is estimated to vary from 15 to 230 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the required
form, and completing the information collection, but exclude the time for
compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, national and state nonmember banks should contact
the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C.
20429, toll free on (800) 688-FDIC(3342), Monday through Friday between 8:00
a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE>
Affix the address label in this space. FFIEC 034
Page RI-1
The Bank of Nova Scotia Trust Company of New York 3
Legal Title of Bank
New York
City
N.Y. 10006
State Zip Code
FDIC Certificate Number
Consolidated Report of Income
for the period January 1, 1996-June 30, 1996
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
<TABLE>
<CAPTION>
Schedule RI-Income Statement
I180
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Interest income:
a. Interest and fee income on loans1,2:
(1) Total loans (to be completed only by those
banks with less than $25 million in total
assets) ....................................... RIAD
4010 NONE 1.a.(1)
The following four items are to be completed only
by those banks with $25 million or more in total
assets(1),(2):
(2) Real estate loans ............................. RIAD
4246 NONE 1.a.(2)
(3) Installment loans ............................. RIAD
4247 NONE 1.a.(3)
(4) Credit cards and related plans ................ RIAD
4248 NONE 1.a.(4)
(5) Commercial (time and demand) and all other
loans ......................................... RIAD
4249 NONE 1.a.(5)
b. Income from lease financing receivables ................ RIAD
4065 NONE 1.b.
c. Interest income on balances due from depository
institutions3 .......................................... RIAD
4115 NONE 1.c.
d. Interest and dividend income on securities:
(1) Securities issued by states and political
subdivisions in the U.S.:
(a) Taxable securities ................... RIAD
4506 NONE 1.d.(1)(a)
(b) Tax-exempt securities ................ RIAD
4507 36 1.d.(1)(b)
(2) U.S. Government and other debt securities ..... RIAD
3660 2 1.d.(2)
(3) Equity securities (including investments
in mutual funds) .............................. RIAD
3659 NONE 1.d.(3)
e. Interest income from trading assets .................... RIAD
4069 NONE 1.e.
f. Interest income on federal funds sold(4) and
securities purchased under agreements to resell ........ RIAD
4020 43 1.f.
g. Total interest income (sum of items 1.a through
1.f) ................................................... RIAD
4107 81 1.g.
</TABLE>
1 See instructions for loan classifications used in this schedule.
2 The $25 million asset size test is generally based on the total assets
reported on the June 30, 1995 Report of Condition.
3 Includes interest income on time certificates of deposit not held for
trading.
4 Report interest income on "term federal funds sold" in Schedule RI, item
1.a., "Interest and fee income on loans."
<PAGE>
FFIEC 034
Page RI-2
4
<TABLE>
<CAPTION>
Schedule RI-Continued
Year-to-date
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C> <C>
2. Interest expense:
a. Interest on deposits:
(1) Transaction accounts (NOW accounts, ATS
accounts, and telephone and preauthorized
transfer accounts) ............................... RIAD
4508 NONE 2.a.(1)
(2) Nontransaction accounts:
(a) Money markets deposit accounts (MMDAs) .. RIAD
4509 NONE 2.a.(2)(a)
(b) Other savings deposits .................. RIAD
4511 NONE 2.a.(2)(b)
(c) Time certificates of deposit of
$100,000 or more ........................ RIAD
4174 NONE 2.a.(2)(c)
(d) All other time deposits(1) ** ........... RIAD
4512 12 2.a.(2)(d)
b. Expense of federal funds purchased2 and
securities sold under agreements to repurchase ............ RIAD
4180 1 2.b.
c. Interest on demand notes issued to the U.S.
Treasury, trading liabilities, and other
borrowed money ............................................ RIAD
4185 NONE 2.c.
d. Interest on mortgage indebtedness and
obligations under capitalized leases ...................... RIAD
4072 NONE 2.d.
e. Interest on subordinated notes and debentures ............. RIAD
4200 NONE 2.e.
f. Total interest expense (sum of items 2.a
through 2.e) .............................................. RIAD
4073 13 2.f.
3. Net interest income (item 1.g minus 2.f) ........................... RIAD
4074 68 3.
4. Provisions:
a. Provision for loan and lease losses ....................... RIAD
4230 NONE 4.a.
b. Provision for allocated transfer risk ..................... RIAD
4243 NONE 4.b.
5. Noninterest income:
a. Service charges on deposit accounts ....................... RIAD
4080 NONE 5.a.
b. Other noninterest income:
(1) Other fee income ................................. RIAD
5407 NONE 5.b.(1)
(2) All other noninterest income* .................... RIAD
5408 303 5.b.(2)
c. Total noninterest income (sum of items
5.a and 5.b) .............................................. RIAD
4079 303 5.c.
6. a. Realized gains (losses) on held-to-maturity
securities ................................................ RIAD
3521 NONE 6.a.
b. Realized gains (losses) on available-for-sale
securities ................................................ RIAD
3196 NONE 6.b.
7. Noninterest expense:
a. Salaries and employee benefits ............................ RIAD
4135 137 7.a.
b. Expenses of premises and fixed assets (net of
rental income) (excluding salaries and employee
benefits and mortgage interest) ........................... RIAD
4217 55 7.b.
c. Other noninterest expense* ................................ RIAD
4092 67 7.c.
d. Total noninterest expense (sum of items 7.a
through 7.c) .............................................. RIAD
4093 259
<PAGE>
7.d.Schedule RI-Continued
8. Income (loss) before income taxes and extraordinary
items and other adjustments (item 3 plus or minus
items 4.a, 4.b, 5.c, 6.a, 6.b, and 7.d) .......................... RIAD
4301 4301 112 8.
9. Applicable income taxes (on item 8) .............................. RIAD
4302 4302 45 9.
10. Income (loss) before extraordinary items and other
adjustments (item 8 minus 9) ..................................... RIAD
4300 4300 67 10.
11. Extraordinary items and other adjustments:
a. Extraordinary items and other adjustments,
gross of income taxes* .................................. RIAD
4310 4310 11.a.
b. Applicable income taxes (on item 11.a)* ................. RIAD
4315 4315 11.b
c. Extraordinary items and other adjustments,
net of income taxes (item 11.a minus 11.b) .............. RIAD
4320 4320 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ..................... RIAD
4340 4340 67 12.
</TABLE>
1 Includes interest expense on open-account time deposits of $100,000 or more.
2 Report the expense of "term federal funds purchased" in Schedule RI, item
2.c, "Interest on demand notes issued to the U.S. Treasury, trading
liabilities, and other borrowed money."
* Describe on Schedule RI-E--Explanations.
** INTEREST PAID ON SECURITY DEPOSITS.
<PAGE>
Affix the address label in this space. FFIEC 034
Page RI-3
The Bank of Nova Scotia Trust Company of New York 5
Legal Title of Bank
FDIC Certificate Number
<TABLE>
<CAPTION>
Schedule RI-Continued
I181
Memoranda Year-to-date
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities,
loans, and leases acquired after August 7, 1986, that is
not deductible for federal income tax purposes ............ RIAD
4513 NONE M.1.
2. Income from the sale and servicing of mutual funds and
annuities (included in Schedule RI, item 8) ............... RIAD
8431 NONE M.2.
3. Estimated income on tax-exempt loans and leases to states
and political subdivisions in the U.S. (reportable in
Schedule RC-C, part I, items 7 and 9) included in Schedule
RI, items 1.a and 1.b, above (excludes income on tax-
exempt securities) ........................................ RIAD
4313 NONE M.3.
4. Number of full-time equivalent employees on payroll at Number
end of current period (round to nearest whole number) ..... RIAD
4150 5 M.4.
5. Cash dividends declared during the calendar year to
date (to be reported only with March, June, and September Mil Thou
Reports of Income) ........................................ RIAD
4475 NONE M.5.
6. To be completed by banks with $25 million or more in
total assets and with loans to finance agricultural
production and other loans to farmers (Schedule RC-C,
part I, item 3) exceeding five percent of total loans.2
Interest and fee income on agricultural loans1
(included in item 1.a above) .............................. RIAD
4251 M.6.
7. If the reporting bank has restated its balance sheet as
a result of applying push down accounting this calendar MM DD YY
year, report the date of the bank's acquisition ........... RIAD
9106 M.7.
</TABLE>
- --------------------
1 See instructions for loan classifications used in this schedule.
2 The $25 million asset size test and the five percent of total loans test are
generally based on the June 30, 1995 Report of Condition.
Schedule RI-A--Changes in Equity Capital
Schedule RI-A is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
Indicate decreases and losses in parentheses I183
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Total equity capital originally reported in the December
31, 1995, Reports of Condition and Income ................. RIAD
3215 1.
2. Equity capital adjustments from amended Reports of
Income, net* .............................................. RIAD
3216 2.
3. Amended balance end of previous calendar year (sum
of items 1 and 2) ......................................... RIAD
3217 3.
4. Net income (loss) (must equal Schedule RI, Item 12) ....... RIAD
4340 4.
5. Sale, conversion, acquisition, or retirement of
capital stock, net ........................................ RIAD
4346 5.
6. Changes incident to business combinations, net ............ RIAD
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule RI-Continued
<S> <C> <C> <C>
4356 6.
7. LESS: Cash dividends declared on preferred stock ......... RIAD
4470 7.
8. LESS: Cash dividends declared on common stock ............ RIAD
4460 8.
9. Cumulative effect of changes in accounting principles
from prior years* (see instructions for this schedule) .... RIAD
4411 9.
10. Corrections of material accounting errors from prior
years* (see instructions for this schedule) ............... RIAD
4412 10.
11. Change in net unrealized holding gains (losses) on
available-for-sale securities ............................. RIAD
8433 11.
12. Other transactions with parent holding company* (not
included in items 5, 7, or 8 above) ....................... RIAD
4415 12.
13. Total equity capital end of current period (sum of
items 3 through 12) (must equal Schedule RC, item 28.a) ... RIAD
3210 13.
* Describe on Schedule RI-E--Explanations.
</TABLE>
<PAGE>
FFIEC 034
Page RI-4
6
Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance
for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases (1)
<TABLE>
<CAPTION>
I186
(Column A) (Column B)
Charge-offs Recoveries
Calendar year-to-date
Dollar Amounts in Thousands Mil Thou Mil Thou
<S> <C> <C> <C> <C> <C> <C>
1. Real estate loans ............................. RIAD RAID
4256 4257 1.
2. Installment loans ............................. RIAD RAID
4258 4259 2.
3. Credit cards and related plans ................ RIAD RAID
4262 4263 3.
4. Commercial (time and demand) and all other
loans ......................................... RIAD RIAD
4264 4265 4.
5. Lease financing receivables ................... RIAD RIAD
4266 4267 5.
6. Total (sum of items 1 through 5) .............. RIAD RIAD
4635 NONE RIAD NONE 6.
</TABLE>
<TABLE>
<CAPTION>
Memoranda
Dollar Amounts in Thousands Mil Thou Mil Thou
<S> <C> <C> <C> <C>
1. To be completed by banks with loans to finance
agricultural production and other loans to
farmers (Schedule RC-C, part I, item 3)
exceeding five percent of total loans.
Agricultural loans included in part I,
items 1 through 4, above ...................... RIAD RIAD
4268 4269 M.1.
2.--3. Not applicable
4. Loans to finance commercial real estate,
construction, and land development activities
(not secured by real estate) included in
Schedule RI-B, part I, items 2 through 4,
above ......................................... RIAD RIAD
5443 5444 M.4.
5. Real estate loans (sum of Memorandum items
5.a through 5.e must equal Schedule RI-B,
part I, item 1, above):
a. Construction and land development .... RIAD RIAD
5445 5446 M.5.a.
b. Secured by farmland .................. RIAD RIAD
5447 5448 M.5.b.
c. Secured by 1-4 family residential
properties:
(1) Revolving, open-end loans secured
by 1-4 family residential proper-
ties and extended under lines of
credit ...................... RIAD RIAD
5449 5450 M.5.c.(1)
(2) All other loans secured by 1-4
family residential properties RIAD RIAD
5451 5452 M.5.c.(2)
d. Secured by multifamily (5 or more)
residential properties ............... RIAD RIAD
5453 5454 M.5.d.
e. Secured by nonfarm nonresidential
properties ........................... RIAD RIAD
5455 5456 M.5.e.
</TABLE>
1 See instructions for loan classifications used in this schedule.
<PAGE>
FFIEC 034
The bank of Nova Scotia Trust Company of New York Page RI-5
Legal Title of Bank 7
FDIC Certificate Number
Schedule RI-B--Continued
Part II. Changes in Allowance for Loan and Lease Losses
Part II is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Balance originally reported in the December 31, 1995,
Reports of Condition and Income .......................... RIAD
3124 1.
2. Recoveries (must equal part I, item 6, column B above) .... RIAD
4605 2.
3. LESS: Charge-offs (must equal part I, item 6,
column A above) ........................................... RIAD
4635 3.
4. Provision for loan and lease losses (must equal Schedule
RI, item 4.a) ............................................. RIAD
4230 4.
5. Adjustments* (see instructions for this schedule) ......... RIAD
4815 5.
6. Balance end of current period (sum of items 1 through 5)
(must equal Schedule RC, item 4.b) ........................ RIAD
3123 6.
</TABLE>
* Describe on Schedule RI-E--Explanations
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
I189
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Federal ................................................... RIAD
4780 1.
2. State and local ........................................... RIAD
4790 2.
3. Total (sum of items 1 and 2) (must equal sum of
Schedule RI, items 9 and 11.b) ............................ RIAD
4770 3.
4. Deferred portion of item 3 ................................ RIAD
4772 4.
</TABLE>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI. (See instructions for
details.)
<TABLE>
<CAPTION>
I195
Year-to-date
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.b.(2))
Report amounts that exceed 10% of Schedule RI, item 5.b.(2):
a. Net gains on other real estate owned ................ RIAD
5415 1.a.
b. Net gains on sales of loans ......................... RIAD
5416 1.b.
c. Net gains on sales of premises and fixed assets ..... RIAD
5417 1.c.
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 5.b.(2):
d. TEXT RIAD
4461 MTG. TECH SVC FEES ......................... 4461 97 1.d.
e. TEXT RIAD
4462 AGENCY FEES & COMMISSION ................... 4462 186 1.e.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule RI-E-Continued
<S> <C> <C> <C>
f. TEXT RIAD
4463 ............................................... 4463 1.f.
2. Other noninterest expense (from Schedule RI, item 7.c):
a. Amortization expense of intangible assets ........... RIAD
4531 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c:
b. Net losses on other real estate owned ............... RIAD
5418 2.b.
c. Net losses on sales of loans ........................ RIAD
5419 2.c.
d. Net losses on sales of premises and fixed assets .... RIAD
5420 2.d.
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 7.c:
e. TEXT RIAD
4464 AUDIT EXPENSES ............................. 4464 15 2.e.
f. TEXT RIAD
4467 DIRECTORS FEES & EXPENSES .................. 4467 8 2.f.
g. TEXT RIAD
4468 ............................................ 4468 2.g.
</TABLE>
<PAGE>
FFIEC 034
Page RI-6
8
<TABLE>
<CAPTION>
Schedule RI-E--Continued
Year-to-date
Dollar Amounts in Thousands Mil Thou
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a)
and applicable income tax effect (from Schedule RI, item 11.b) (itemize
and describe all extraordinary items and other adjustments):
<S> <C> <C> <C> <C> <C>
a. (1) TEXT RIAD
4469 ......................................... 4469 3.a.(1)
(2) Applicable income tax effect ..................... RIAD
4486 3.a.(2)
b. (1) TEXT RIAD
4487 ......................................... 4487 3.b.(1)
(2) Applicable income tax effect ..................... RIAD
4488 3.b.(2)
c. (1) TEXT RIAD
4489 ......................................... 4489 3.c.(1)
(2) Applicable income tax effect ..................... RIAD
4491 3.c.(2)
4. Equity capital adjustments from amended Reports of Income
(from Schedule RI-A, item 2) (itemize and describe all
adjustments):
a. TEXT RIAD
4492 .................................................. 4492 4.a.
b. TEXT RIAD
4493 .................................................. 4493 4.b.
5. Cumulative effect of changes in accounting principles
from prior years (from Schedule RI-A, item 9) (itemize
and describe all changes in accounting principles):
a. TEXT RIAD
4494 .................................................. 4494 5.a.
b. TEXT RIAD
4495 .................................................. 4495 5.b.
6. Corrections of material accounting errors from prior
years (from Schedule RI-A, item 10) (itemize and
describe all corrections):
a. TEXT RIAD
4496 .................................................. 4496 6.a.
b. TEXT RIAD
4497 .................................................. 4497 6.b.
7. Other transactions with parent holding company (from
Schedule RI-A, item 12) (itemize and describe all such transactions):
a. TEXT RIAD
4498 .................................................. 4498 7.a.
b. TEXT RIAD
4499 .................................................. 4499 7.b.
8. Adjustments to allowance for loan and lease losses
(from Schedule RI-B, part II, item 5) (itemize and
describe all adjustments):
a. TEXT RIAD
4521 .................................................. 4521 8.a.
b. TEXT RIAD
4522 .................................................. 4522 8.b.
9. Other explanations (the space below is provided for I198 I199
the bank to briefly describe, at its option, any other significant
items affecting the Report of Income):
No comment (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
<PAGE>
Affix the address label in this space. FFIEC 034
Page RI-1
The Bank of Nova Scotia Trust Company of New York 9
Legal Title of Bank
New York
City
N.Y. 10006
State Zip Code
FDIC Certificate Number
Consolidated Report of Condition for Insured Commercial
and State-Charted Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the lst business day of the
quarter.
<TABLE>
<CAPTION>
Schedule RC-Balance Sheet
C100
Dollar Amounts in Thousands Mil Thou
ASSETS
<S> <C> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions:
a. Noninterest-bearing balances and currency
and coin 1,2..................................RCON 85 1.a.
0081
b. Interest-bearing balances 3...................RCON None 1.b.
0071
2. Securities:
a. Held-to-maturity securities (from Schedule
RC-B, column A)...............................RCON 1 863 2.a.
1754
b. Available-for-sale securities (from
Schedule RC-B, column D)......................RCON None 2.b.
1773
3. Federal funds sold and securities purchased
under agreements to resell:
a. Federal funds sold 4..........................RCON None 3.a.
0278
b. Securities purchased under agreements to
resell 5......................................RCON 1 800 3.b.
0277
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C)..........................RCON 4.a.
2122
b. LESS: Allowance for loan and lease losses....RCON 4.b.
3123
c. LESS: Allocated transfer risk reserve........RCON 4.c.
3128
d. Loans and Leases, net of unearned income,
allowance, and reserve (item 4.a
minus 4.b and 4.c)............................RCON None 4.d.
2125
5. Trading assets......................................RCON None 5.
3545
6. Premises and fixed assets (including
capitalized leases).................................RCON 4 6.
2145
7. Other real estate owned (from Schedule RC-M)........RCON None 7.
2150
8. Investments in unconsolidated subsidiaries and
associated companies (From Schedule RC-M)...........RCON None 8.
2130
9. Customers' liability to this bank on acceptance
outstanding.........................................RCON None 9.
2155
10. Intangible assets (from Schedule RC-F)..............RCON None 10.
2143
11. Other assets (from Schedule RC-F)...................RCON 65 11.
2160
12. a. Total assets (sum of items 1 through 11)......RCON 3 817 12.a.
2170
b. Losses deferred pursuant to 12 U.S.C.
1823(j).......................................RCON None 12.b.
0306
c. Total assets and losses deferred pursuant
to 12 U.S.C. 1823(j) (sum of items 12.a and 12.b)...RCON 3 817 12.c.
0307
</TABLE>
1 Includes cash items in process of collection and unposted debits.
2 The amount reported in this item must be greater than or equal to
the sum of Schedule RC-M, items 3.a and 3.b.
3 Includes time certificates of deposit not held for trading.
4 Report "term federal funds sold" in Schedule RC, item 4.a, "Loans and
leases, net of unearned income," and in Schedule RC-C, part 1.
5 Report securities purchased under agreements to resell that involve the
receipt of immediately available funds and mature in one business day
or roll over under a continuing contract in Schedule RC, item 3.a.,
"Federal funds sold."
<PAGE>
FFIEC 034
Page RC-2
10
<TABLE>
<CAPTION>
Schedule RC-Continued
Dollar Amounts in Thousands Mil Thou
LIABILITIES
<S> <C> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of
columns A and C from Schedule RC-E)...........RCON 1 554 13.a.
2200
(1) Noninterest-bearing 1...................RCON 541 13.a.(1)
6631
(2) Interest-bearing........................RCON 1 013 13.a.(2)
6636
b. In foreign offices, Edge and Agreement
subsidiaries, and IBFs........................
(1) Noninterest-bearing 1...................
(2) Interest-bearing........................
14. Federal funds purchased and securities sold under
agreements to repurchase:
a. Federal funds purchased 2.....................RCON None 14.a.
0278
b. Securities sold under agreements to
repurchase 3..................................RCON None 14.b.
0279
15. a. Demand notes issued to the U.S. Treasury......RCON None 15.a.
2840
b. Trading liabilities...........................RCON None 15.b.
3548
16. Other borrowed money:
a. With a remaining maturity of one year or less..RCON None 16.a.
2332
b. With a remaining maturity of more than one
year..........................................RCON None 16.b.
2333
17. Mortgage indebtedness and obligations under
capitalized leases..................................RCON None 17.
2910
18. Bank's liability on acceptances executed and
outstanding.........................................RCON None 18.
2920
19. Subordinated notes and debentures...................RCON None 19.
3200
20. Other liabilities (from Schedule RC-G)..............RCON 30 20.
2930
21. Total liabilities (sum of items 13 through 20)......RCON 1 584 21.
2948
22. Limited-life preferred stock and related surplus....RCON None 22.
3282
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.......RCON None 23.
3838
24. Common Stock........................................RCON 1 000 24.
3230
25. Surplus (exclude all surplus related to
preferred stock)....................................RCON 1 000 25.
3839
26. a. Undivided profits and capital reserves........RCON 223 26.a.
3632
b. Net unrealized holding gains (losses) on
available-for-sale securities ......................RCON None 26.b.
8434
27. Cumulative foreign currency translation
adjustments.........................................
28. a. Total equity capital (sum of items 23
through 27)...................................RCON 2 223 28.a.
3210
b. Loses deferred pursuant to 12. U.S.C.
1823(j).......................................RCON None 28.b.
0306
c. Total equity capital and losses deferred
pursuant to 12 U.S.C. 1823(j) (sum of
items 28.a. and 28.b).........................RCON 2 223 28.c.
3559
29. Total liabilities, limited-life preferred stock,
equity capital, and losses deferred pursuant to
12 U.S.C. 1823(j) (sum of items 21, 22, and 28.c)...RCON 3 807 29.
2257
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
<S> <C> <C> <C> <C>
1. Indicate in the box at the right the number of
the statement below that best described the most comprehensive level of
auditing work performed for the bank by independent external auditors
as of any date during 1995............................. Number
RCON M.1.
6724
</TABLE>
<PAGE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank.
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
1 Includes total demand deposits and noninterest-bearing time and savings
deposits.
2 Report "term federal funds purchased" in Schedule RC, item 16,
"Other borrowed money."
3 Report securities sold under agreements to repurchase that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 14.a., "Federal
funds purchased."
<PAGE>
FFIEC 034
Page RC-3
11
<TABLE>
<CAPTION>
Schedule RC-B-Securities
Exclude assets held for trading.
C110
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value(1)
Dollar Amounts in Thousands Mil Thou Mil Thou Mil Thou Mil Thou
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. U.S. Treasury securities......RCON . 99 RCON 98 RCON RCON
0211 0213 1286 1287
2. U.S. Government agency and
corporation obligations
(exclude mortgage-backed
securities):........... .......
a. Issued by U.S. Government
agencies 2...............RCON NONE RCON RCON RCON
1289 1290 1291 1293
b. issued by U.S. Government-
sponsored agencies(3)....RCON NONE RCON RCON RCON
1294 1295 1297 1298
3. Securities issued by states
and political subdivisions in
the U.S.:
a. General obligations.........RCON 1 264 RCON 1 265 RCON RCON
1676 1677 1678 1679
b. Revenue obligations.........RCON 500 RCON 502 RCON RCON
1681 1686 1690 1691
c. Industrial development and
similar obligations
RCON NONE RCON NONE RCON RCON
1694 1695 1696 1697
4. Mortgage-backed securities
(MBS):
a. Pass-through securities:
(1) Guaranteed by GNMA.. RCON NONE RCON NONE RCON RCON
1698 1699 1701 1702
(2) Issued by FNMA and RCON NONE RCON NONE RCON RCON
FHLMC 1703 1705 1706 1707
(3) Other pass-through
securities........ RCON NONE RCON NONE RCON RCON
1709 1710 1711 1713
b. Other mortgage-backed
securities (include CMOs
REMICs, and stripped MBS):
(1) Issued or guaranteed
by FNMA, FHLMC, or
GNMA.............. RCON NONE RCON NONE RCON RCON
1714 1715 1716 1717
(2) Collateralized by
MBS issued or
guaranteed by FNMA
FHLMC, or GNMA.... RCON NONE RCON NONE RCON RCON
1718 1719 1731 1732
(3) All other mortgage-
backed securities RCON NONE RCON NONE RCON RCON
1733 1734 1735 1736
5. Other debt securities........... RCON NONE RCON NONE RCON RCON
1774 1775 1776 1777
6. Equity securities:
a. Investments in mutual
funds.................. RCON RCON
1747 1748
b. Other equity securities
with readily determin-
able fair values....... RCON RCON
1749 1751
c. All other equity securities(1)
(includes Federal Reserve
stock)................ RCON RCON
1752 1753
7. Total (sum of items 1 through 6)
(total of column A must equal
Schedule RC, item 2.a) (total
of column D must equal Schedule
RC, item 2.b)................ RCON 1 863 RCON 1 865 RCON NONE RCON NONE
1754 1771 1772 1773
</TABLE>
- ------------
1 Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
2 Includes Small Business Administration "Guaranteed Loan Pool Certificates,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.
3 Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
<PAGE>
FFIEC 034
Page RC-4
12
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
Schedule RC-B-Continued
<TABLE>
<CAPTION>
Memoranda C112
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Pledged securities(1)....................................... RCON NONE M.1.
0416
2. Maturity and repricing data for debt securities1,2,3 (excluding
those in nonaccrual status):
a. Fixed rate debt securities with a remaining maturity of:
(1) Three months or less................................ RCON NONE M.2.a.(1)
0343
(2) Over three months through 12 months................. RCON 650 M.2.a.(2)
0344
(3) Over one year through five years.................... RCON 1 213 M.2.a.(3)
0345
(4) Over five years..................................... RCON NONE M.2.a.(4)
0346
(5) Total fixed rate debt securities (sum of Memoran-
dum items 2.a.(1) through 2.a.(4)................... RCON NONE M.2.a.(5)
0347
b. Floating rate debt securities with a repricing
frequency of:
(1) Quarterly or more frequently........................ RCON NONE M.2.b.(1)
4544
(2) Annually or more frequently, but less frequently
than quarterly...................................... RCON NONE M.2.b.(2)
4545
(3) Every five years or more frequently, but less
frequently than annually............................ RCON NONE M.2.b.(3)
4551
(4) Less frequently than every five years............... RCON NONE M.2.b.(4)
4552
(5) Total floating rate debt securities (sum of
Memorandum items 2.b.(1) through 2.b.(4)) RCON NONE M.2.a.(5)
4553
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5
(must equal total debt securities from Schedule RC-B, sum of item
through 5, columns A and D, minus nonaccrual debt securities incl
in Schedule RC-N, item 6,
column C)............................................... RCON 1 863 M.2.c.
0393
3. Not applicable
4. Held-to-maturity debt securities restructured and in
compliance with modified terms (included in Schedule
RC-B, items 3 through 5, column A, above)................... RCON NONE M.4.
5365
5. Not applicable
6. Floating rate debt securities with a remaining maturity
of one year or less(1),(3) (included in Memorandum items 2.b.(1)
through 2.b.(4) above)...................................... RCON NONE M.6.
5519
7. Amortized cost of held-to-maturity securities sold or
transferred to available for sale or trading
securities during the calendar year-to-date (report
the amortized cost at date of sale or transfer)............. RCON NONE M.7
1778
8. High-risk mortgage securities (included in the held-to-
maturity and available-for-sale accounts in Schedule
RC-B, item 4.b):
a. Amortized cost.......................................... RCON NONE M.8.a.
8780
b. Fair value.............................................. RCON NONE M.8.b.
8781
9. Structured notes (included in the held-to-maturity and
available-for-sale accounts in Schedule RC-B, items 2,3,
and 5):
a. Amortized cost.......................................... RCON NONE M.9.a.
8782
b. Fair value.............................................. RCON NONE M.9.b.
8783
</TABLE>
- --------------
1 Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
2 Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
3 Memorandum items 2 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
<PAGE>
FFIEC 034
Page RC-5
13
Schedule RC-C-Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts reported in
this schedule. Report total loans and leases, net of unearned income. Exclude
assets held for trading.
<TABLE>
<CAPTION>
C115
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Loan secured by real estate:
a. Construction and land development......................... RCON 1.a.
b. Secured by farmland (including farm residential and 1415
other improvements)....................................... RCON 1.b.
1420
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4
family residential properties and extended
under lines of credit............................... RCON 1.c.(1)
(2) All other loans secured by 1-4 family residential 1797
properties:
(a) Secured by first liens......................... RCON 1.c.(2)(a)
5367
(b) Secured by junior liens........................ RCON 1.c.(2)(b)
5368
d. Secured by multifamily (5 or more) residential properties RCON 1.d.
1460
e. Secured by nonfarm nonresidential properties............. RCON 1.e.
1480
2. Loans to depository institution............................. RCON 2.
1489
3. Loans to finance agricultural production and other
loans to farmers............................................ RCON 3.
1590
4. Commercial and industrial loans............................. RCON 4.
1766
5. Acceptances of other banks.................................. RCON 5.
1755
6. Loans to individuals for household, family, and other
personal expenditures (i.e., consumer loans) (includes
purchased paper):
a. Credit cards and related plans (includes check credit
and other revolving credit plans)........................ RCON 6.a.
2008
b. Other (includes single payment, installment, and all
student loans)........................................... RCON 6.b.
2011
7. Obligations (other than securities and leases) of states
and political subdivision in the U.S. (includes non-
rated industrial development obligations.................... RCON 7.
2107
8. All other loans (exclude consumer loans).................... RCON 8.
2080
9. Lease financing receivables (net of unearned income)........ RCON 9.
2165
10. LESS: Any unearned income on loans reflected in items
1-8 above................................................ RCON 10.
2123
11. Total loans and leases, net of unearned income (sum of
items 1 through 9 minus item 10) (must equal Schedule RC,
item 4.a)................................................ RCON NONE 11.
2122
</TABLE>
<PAGE>
Affix the address label in this space FFIEC 034
Page RC-6
14
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
New York
City
N.Y. 10006
State Zip Code
FDIC Certificate Number
Schedule RC-C-Continued
Part I. Continued
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Loan(1) and leases restructured and in compliance with
modified terms (included in Schedule RC-C, part I, above
and not reported as past due or nonaccrual in
Schedule RC-N, Memorandum item 1):
a. Real estate loans......................................... RECON M.1.a.
1617
b. All other loans and all lease financing receivables
(exclude loans to individuals for household, family,
and other personal expenditures).......................... RCON M.1.b.
8691
2. Maturity and repricing data for loans and all leases(2)
excluding those in nonaccrual status):
a. Fixed rate loans and leases with a remaining maturity of:
(1) Three months or less................................. RCON M.2.a.(1)
0348
(2) Over three months through 12 months.................. RCON M.2.a.(2)
0349
(3) Over one year through five years..................... RCON M.2.a.(3)
0356
(4) Over five years...................................... RCON M.2.a.(4)
0357
(5) Total fixed rate loans and leases (sum of
Memorandum items 2.a.(1) through 2.a.(4))............ RCON M.2.a.(5)
0358
b. Floating rate loans with a repricing frequency of:
(1) Quarterly or more frequently......................... RCON M.2.b.(1)
4554
(2) Annually or more frequently, but less
frequently than quarterly............................ RCON M.2.b.(2)
4555
(3) Every five years or more frequently, but less
frequently than annually............................. RCON M.2.b.(3)
4561
(4) Less frequently than every five years................ RCON M.2.b.(4)
4564
(5) Total floating rate loans (sum of Memorandum items
2.b.(1) through 2.b.(4).............................. RCON M.2.b.(5)
4567
c. Total loans and leases (sum of Memorandum items 2.a.(5) and 2.b.(5))
(must equal the sum of total loans and lease, net, from Schedule RC-C,
part 1, item 11, plus unearned income from Schedule RC-C, part 1, item
10, minus total nonaccrual loans and leases from Schedule RC-N, sum of
items 1 through 5, column C).............................. RCON M.2.c.
1479
d. Floating rate loans with a remaining maturity of one
year or less (included in Memorandum items 2.b.(1)
through 2.b.(4) above).................................... RCON M.2.d.
A246
3. Reserved
4. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate) included in Schedule
RC-C, part 1, items 4 and 8, page
RC-5(3)...................................................... RCON M.4.
2746
5. Loans and leases held for sale (included in Schedule RC-C,
part 1, above).............................................. RCON M.5.
5369
6. Adjustable rate closed-end loans secured by first liens
on 1-4 family residential properties (included in
Schedule RC-C, part 1, item 1.c.(2)(a), page RC-5).......... RCON NONE M.6.
5370
</TABLE>
- ------------------
1 See instructions for loan classifications used in Memorandum item 1.
2 Memorandum item 2 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
3 Exclude loans secured by real estate that are included in Schedule RC-C,
part 1, items 1.a through 1.e.
<PAGE>
The Bank of Nova Scotia Trust Company of New York FFIEC
Legal Title of Bank Page RC-6a
FDIC Certificate Number 14a
Schedule RC-C -- Continued
Part II. Loans to Small Businesses and Small Farms
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business
loans with "original amounts" of $1,000,000 or less and farm loans with
"original amounts" of $500,000 or less. The following guidelines should be used
to determine the "original amount" of a loan: (1) For loans drawn down under
lines of credit or loan commitments, the "original amount" of the loan is the
size of the line of credit or loan commitment when the line of credit or loan
commitment was most recently approved, extended, or renewed prior to the report
date. However, if the amount currently outstanding as of the report date exceeds
this size, the "original amount" is the amount currently outstanding on the
report date. (2) For loan participations and syndications, the "original amount"
of the loan participation or syndication is the entire amount of the credit
originated by the lead lender. (3) For all other loans, the "original amount" is
the total amount of the loan at origination or the amount currently outstanding
as of the report date, whichever is larger.
<TABLE>
<CAPTION>
Loans to Small Businesses
<S> <C> <C> <C> <C> <C>
1. Indicate in the appropriate box at the right whether all or
substantially all of the dollar volume of your bank's "Loans
secured by nonfarm nonresidential properties" reported in
Schedule RC-C, part I, item 1.e, and all or substantially
all of the dollar volume of your bank's "Commercial and
industrial loans" reported in Schedule RC-C, part I, item 4, C118
have original amounts of $100,000 or less (If your bank has YES NO
no loans outstanding in both of these two loan categories,
place an "X" in the box marked "NO" and go to item 5; other- RECON 1.
wise, see instructions for further information.)...................... 6999
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
If NO and your bank has loans outstanding in either loan category, skip items
2.a and 2.b, complete items 3 and 4 below, and go to item 5.
Number of
Loans
2. Report the total number of loans currently outstanding for
each of the following schedule RC-C, part I, loan catego-
ries:
a. "Loans secured by nonfarm nonresidential proper- RCON NONE 2.a.
ties" reported in Schedule RC-C, part I, item 1.e................. 5562
b. "Commercial and industrial loans" reported in RCON NONE 2.b.
Schedule RC-C, part I, item 4..................................... 5563
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
Schedule RC-C -- Continued
Part II. continued FFIEC 034
Page RC-6b
14b
<TABLE>
<CAPTION>
(Column A) (Column B)
Amount
Number of Currently
Loans Outstanding
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C> <C> <C> <C>
3. Number and amount currently outstanding of "Loans secured by nonfarm
nonresidential properties" reported in Schedule RC-C, part I, item 1.e (sum
of items 3.a through 3.c must be less than or equal to Schedule RC-C, part
I, item 1.e):
RCON RCON
a. With original amounts of $100,000 or less............................. 5564 NONE 5565 NONE 3.a
b. With original amounts of more than $100,000 RCON RCON
through $250,000...................................................... 5566 NONE 5567 NONE 3.b
c. With original amounts of more than $250,000 RCON NONE RCON NONE
through $1,000,000.................................................... 5568 5569 3.c
4. Number and amount currently outstanding of "Commercial
and industrial loans" reported in Schedule RC-C, part I, item 4 (sum of
items 4.a through 4.c must be less than or equal to Schedule RC-C, part I,
item 4):
a. With original amounts of $100,000 or less............................. RCON RCON
5570 NONE 5571 NONE 4.a
b. With original amounts of more than $100,000 RCON RCON
through $250,000...................................................... 5572 NONE 5573 NONE 4.b
c. With original amounts of more than $250,000 RCON RCON
through $1,000,000.................................................... 5574 NONE 5575 NONE 4.c
Agricultural Loans to Small Farms
5. Indicate in the appropriate box at the right whether all or
substantially all of the dollar volume of your bank's "Loans
secured by farmland (including farm residential and other
improvements)" reported in Schedule RC-C, part I, item 1.b.
and all or substantially all of the dollar volume of your
bank's "Loans to finance agricultural production and other
loans to farmers" reported in Schedule RC-C, part I, item 3,
have original amounts of $100,000 or less (If your bank has YES NO
no loans outstanding in both of these two loan categories,
place an "X" in the box marked "NO" and do not complete
items 7 and 8; otherwise, see instructions for further RECON 5.
information.) 6860
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO and your bank has loans outstanding in either loan category, skip items
6.a and 6.b and complete items 7 and 8 below.
Number of
Loans
6. Report the total number of loans currently outstanding for
each of the following schedule RC-C, part I, loan catego-
ries:
a. "Loans secured by farmland (including farm residen-
tial and other improvements)" reported in Schedule RCON
RC-C, part I, item 3....................................................... 5576 NONE 6.a.
b. "Loans to finance agricultural production and other
loans to farmers" reported in Schedule RC-C, part I, RCON
item 3..................................................................... 5577 NONE 6.b.
(Column A) (Column B)
Amount
Number of Currently
Loans Outstanding
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
<TABLE>
<CAPTION>
Schedule RC-C -- Continued
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C> <C> <C>
7. Number and amount currently outstanding of "Loans secured by farmland
(including farm residential and other improvements)" reported in Schedule
RC-C, part I, item 1.b (sum of items 7.a through 7.c must be less than or
equal to Schedule RC-C, part I, item 1.b):
RCON RCON
a. With original amounts of $100,000 or less......................... 5578 NONE 5579 NONE 7.a
b. With original amounts of more than $100,000 RCON RCON
through $250,000.................................................. 5580 NONE 5581 NONE 7.b
c. With original amounts of more than $250,000 RCON RCON
through $500,000.................................................. 5582 NONE 5583 NONE 7.c.
8. Number and amount currently outstanding of "Loans to
finance agricultural production and other loans to farmers" reported in
Schedule RC-C, part I, item 3 (sum of items 8.a through 8.c must be less
than or equal to Schedule RC-C, part I, item 3):
a. With original amounts of $100,000 or less RCON RCON
5584 NONE 5585 NONE 8.a
b. With original amounts of more than $100,000 RCON RCON
through $250,000.................................................. 5586 NONE 5587 NONE 8.b
c. With original amounts of more than $250,000 RCON RCON
through $500,000.................................................. 5588 NONE 5589 NONE 8.c.
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
--------------
Schedule RC-E -- Deposit Liabilities
FFIEC 034
Page RC-7
15
C125
<TABLE>
<CAPTION>
Transaction Accounts Nontransaction
Accounts
(Column A) (Column B) (Column C)
Total transac- Memo: Total Total
tion accounts demand depos- nontransaction
(including its (included accounts (in-
total demand in column A) cluding MMDAs)
deposits)
Dollar Amounts in Thousands Mil Thou Mil Thou Mil Thou
<S> <C> <C> <C> <C> <C> <C> <C>
Deposits of:
1. Individuals, partnerships, and corpora- RCON 1 029 RCON RCON 1.
tions....................................... 2201 2240 2346
2. U.S. Government............................. RCON RCON RCON 2.
2202 2280 2520
3. States and political subdivisions in the RCON RCON RCON 3.
U.S......................................... 2203 2290 2530
4. Commercial banks in the U.S. (including RCON 153 RCON RCON 4.
U.S. branches and agencies of foreign 2206 2310 2550
banks)......................................
5. Other depository institutions in the U.S.... RCON RCON RCON 5.
2207 2312 2349
6. Certified and official checks............... RCON 1 RCON 6.
2330 2330
7. Banks in foreign countries, foreign gov- RCON 371 RCON RCON 7.
ernments, and foreign official institu- 2184 2185 2186
tions.......................................
8. Total (sum of items 1 through 7) (sum of RCON 1 554 RCON RCON 8.
columns A and C must equal Schedule RC, 2215 2210 2385
item 13.a)..................................
</TABLE>
<TABLE>
<CAPTION>
Memoranda
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C> <C> <C>
1. Selected components of total deposits (i.e., sum of item 8,
columns A and C):
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan RCON 6835 NONE M.1.a.
accounts................................................................
b. Total brokered deposits.................................................RCON 2365 NONE M.1.b.
c. Fully insured brokered deposits (included in Memorandum
item 1.b above):
(1) Issued in denominations of less than $100,000...........................RCON 2343 NONE M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denomi- RCON 2344 NONE M.1.c.(2)
nations greater than $100,000 and participated out by
the broker in shares of $100,000 or less................................
d. Maturity data for brokered deposits:
(1) Brokered deposits issued in denominations of less than RCON A243 NONE M.1.d.(1)
$100,000 with a remaining maturity of one year or less
(included in Memorandum item 1.c.(1) above).........................
(2) Brokered deposits issued in denominations of $100,000 or RCON NONE M.1.d.(2)
more with a remaining maturity of one year or less (in- A244
cluded in Memorandum item 1.b. above)...............................
e. Preferred deposits (uninsured deposits of states and poli- RCON NONE M.1.e.
tical subdivisions in the U.S. reported in item 3 above 5590
which are secured or collateralized as required under state
law)....................................................................
2. Components of total nontransaction accounts (sum of Memo-
randum items 2.a through 2.d must equal item 8, column C, above):
a. Savings deposits:
(1) Money market deposit accounts (MMDAs)...............................RCON 6810 NONE M.2.a.(1)
(2) Other savings deposits (excludes MMDAs).............................RCON 0352 NONE M.2.a.(2)
b. Total time deposits of less than $100,000...............................RCON 6648 NONE M.2.b.
c. Time certificates of deposit of $100,000 or more........................RCON 6645 NONE M.2.c.
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
--------------
Schedule RC-E -- Continued
<TABLE>
<CAPTION>
Schedule RC-E -- Continued
<S> <C> <C> <C>
d. Open-account time deposits of $100,000 or more..........................RCON 6646 NONE M.2.d.
3. All NOW accounts (included in column A above)...........................RCON 2398 NONE M.3.
4. Not applicable
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
Schedule RC-E -- Continued
FFIEC 034
Page RC-8
16
<TABLE>
<S> <C> <C> <C> <C>
5. Maturity and repricing data for time deposits of less than
$100,000 (sum of Memorandum items 5.a. (1) through 5.b. (3)
must equal Memorandum item 2.b above):(1)
a. Fixed rate time deposits of less than $100,000 with a
remaining maturity of:
(1) Three months or less...................................................RCON A225 M.5.a.(1)
(2) Over three months through 12 months....................................RCON A226 M.5.a.(2)
(3) Over one year..........................................................RCON A227 M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a
repricing frequency of:
(1) Quarterly or more frequently...........................................RCON A228 M.5.b.(1)
(2) Annually or more frequently, but less frequently than RCON A229 M.5.b.(2)
quarterly..............................................................
(3) Less frequently than annually..........................................RCON A230 M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a
remaining maturity of one year or less (included in Memo-
randum items 5.b.(1) through 5.b.(3) above)................................RCON A231 M.5.c.
6. Maturity and repricing data for time deposits of $100,000
or more (i.e., time certificates of deposit of $100,000 or more and
open-account time deposits of $100,000 or more) (sum of Memorandum items
6.a.(1) through 6.b.(4) must equal the sum of Memorandum items 2.c and 2.d
above):1
a. Fixed rate time deposits of $100,000 or more with a remain-
ing maturity of:
(1) Three months or less...................................................RCON A232 M.6.a.(1)
(2) Over three months through 12 months....................................RCON A233 M.6.a.(2)
(3) Over one year through five years.......................................RCON A234 M.6.a.(3)
(4) Over five years........................................................RCON A235 M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a
repricing frequency of:
(1) Quarterly or more frequently...........................................RCON A236 M.6.b.(1)
(2) Annually or more frequently, but less frequently than RCON A237 M.6.b.(2)
quarterly..............................................................
(3) Every five years or more frequently, but less frequently RCON A238 M.6.b.(3)
than annually..........................................................
(4) Less frequently than every five years..................................RCON A239 M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a
remaining maturity of one year or less (included in Memo-
randum items 6.b.(1) through 6.b.(4) above)................................RCON A240 NONE M.6.c.
</TABLE>
1 Memorandum items 5 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
--------------
Schedule RC-F -- Other Assets
FFIEC 034
Page RC-9
17
<TABLE>
<CAPTION>
C130
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Income earned, not collected on loans1............................... RCON 2164 1.
2. Net deferred tax assets2............................................. RCON 2148 2.
3. Excess residential mortgage servicing fees receivable................ RCON 5371 3.
4. Other (itemize and describe amounts greater than RCON 2168 65 4.
$25,000 that exceed 25% of this item)................................
a. TEXT 3549 ACCRUED INTEREST ON INVESTMENT RCON 3549 29 4.a.
b. TEXT 3550 FORWARDING CHARGES RECOVERABLE RCON 3550 27 4.b.
c. TEXT 3551 RCON 3551 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RCON 2160 65 5.
RC, item 11).........................................................
Memorandum Dollar Amounts in Thousands Mil Thou
1. Deferred tax assets disallowed for regulatory capital RCON M.1.
purposes............................................................. 5610
Schedule RC-G--Other Liabilities
C135
Dollar Amounts in Thousands Mil Thou
1. a. Interest accrued and unpaid on deposits3......................... RCON 3645 1.a.
b. Other expenses accrued and unpaid (includes RCON 3646 1.b.
accrued income taxes payable)....................................
2. Net deferred tax liabilities2........................................ RCON 3049 2.
3. Minority interest in consolidated subsidiaries....................... RCON 3000 3.
4. Other (itemize and describe amounts greater than
$25,000 that exceed 25% of this item)................................ RCON 2938 30 4.
a. TEXT 3552 AUDIT EXPENSES RCON 3552 20 4.a.
b. TEXT 3553 RCON 3553 4.b.
c. TEXT 3554 RCON 3554 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RCON 2930 30 5.
RC, item 20).........................................................
</TABLE>
1 Report income earned, not collected on securities (and on other assets)
in item 4 of Schedule RC-F.
2 See discussion of deferred income taxes in Glossary entry on "income
taxes."
3 For savings banks, include "dividends" accrued and unpaid on deposits.
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
Schedule RC-K -- Quarterly Averages(1)
FFIEC 034
Page RC-10
18
<TABLE>
<CAPTION>
C155
Dollar Amounts in Thousands Mil Thou
ASSETS
<S> <C> <C> <C> <C>
1. Interest-bearing balances due from depository insti-
tutions............................................................... RCON 3381 1.
2. a. U.S. Treasury securities, and U.S. Government
agency and corporation obligations, and other
debt securities(4) (excluding securities issued by
states and political subdivisions in the U.S.).................... RCON 3649 98 2.a.
b. Equity securities(5) (includes investments in mu-
tual funds and Federal Reserve stock)............................. RCON 3648 2.b.
3. Securities issued by states and political subdivi-
sions in the U.S.4.................................................... RCON 3383 1 765 3.
4. Federal funds sold and securities purchased under
agreements to resell.................................................. RCON 3365 1 458 4.
5. Loans(2),(3):
a. Total loans, net of unearned income (to be completed
only by those banks with less than $25 million in
total assets)......................................................... RCON 3360 5.a.
The following four items are to be completed only by
those banks with $25 million or more in total assets.
b. Real estate loans..................................................... RCON 3286 5.b.
c. Installment loans..................................................... RCON 3287 5.c.
d. Credit cards and related plans........................................ RCON 3288 5.d.
e. Commercial (time and demand) and all other loans...................... RCON 3289 5.e.
6. Lease financing receivables (net of unearned income).................. RCON 3484 6.
7. Total assets(6)....................................................... RCON 3368 3 556 7.
LIABILITIES
8. Interest-bearing transaction accounts (NOW accounts,
ATS accounts, and telephone and preauthorized trans-
fer accounts) (exclude demand deposits)............................... RCON 3485 8.
9. Nontransaction accounts:
a. Money market deposit accounts (MMDAs)................................. RCON 3486 9.a.
b. Other savings deposits................................................ RCON 3487 9.b.
c. Time certificates of deposit of $100,000 or more...................... RCON 3345 9.c.
d. All other time deposits (include all time deposits of
less than $100,000 and open-account time deposits of
$100,000 or more)..................................................... RCON 3469 9.d.
10. Federal funds purchased and securities sold under
agreements to repurchase.......................................... RCON 3353 10.
Memorandum
Dollar Amounts in Thousands Mil Thou
1. To be completed by banks with $25 million or more in total assets and with
loans to finance agricultural production and other loans to farmers
(Schedule RC-C, part I, item 3), exceeding five percent of total loans.(3)
Agricultural loans included in items 5.b. through 5.e. RCON 3379 M.1.
above.......................................................................
</TABLE>
1 For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter). In addition, averages of four
month-end figures (the last day of the preceding quarter and of each month
of the currently-reported quarter) are allowed for items 2, 3, 5.a through
5.e, 6, 7, and Memorandum item 1.
2 See instructions for loan classifications used in this schedule.
3 The $25 million asset size test and the five percent of total loans test
are generally based on the total assets and total loans reported on the
June 30, 1995 Report of Condition.
4 Quarterly averages for all debt securities should be based on amortized
cost.
5 Quarterly averages for all equity securities should be based on historical
cost.
<PAGE>
The Bank of Nova Scotia Trust Company of New York
Legal Title of Bank
FDIC Certificate Number
--------------
Schedule RC-K -- Continued
6 The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
<PAGE>
Schedule RC-L Off-Balance Sheet Items FFIEC 034
Page RC-11
19
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
<TABLE>
<CAPTION>
C160
Dollar Amounts in Mil Thou
Thousands
<S> <C> <C> <C> <C>
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential properties, RCON 1.a.
e.g., home equity lines 3814
b. Credit card lines RCON 1.b.
3815
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate RCON 1.c.(1)
3816
(2) Commitments to fund loans not secured by real estate RCON 1.c.(2)
6550
d. Securities underwriting RCON 1.d.
3817
e. Other unused commitments RCON 1.e.
3818
2. Financial standby letters of credit(1) RCON 2.
3819
a. Amount of financial standby letters of credit RCON 2.a.
conveyed to others 3820
3. Performance standby letters of credit(1) RCON 3.
3821
a. Amount of performance standby letters of credit RCON 3.a.
conveyed to others 3822
4. Commercial and similar letters of credit(1) RCON 4.
3411
5. Not applicable
6. Participations in acceptances (as described in the instructions) acquired by RCON 6.
the reporting (nonaccepting) bank 3429
7. Securities borrowed RCON 7.
3432
8. Securities lent (including customers' securities lent where the customer is RCON 8.
indemnified against loss by the reporting bank) 3433
9. Loans transferred (i.e., sold or swapped) with recourse that have been
treated as sold for Call Report purposes:
a. FNA and FHLMC residential mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as of the RCON 9.a.(1)
report date 3650
(2) Amount of recourse exposure on these mortgages as of the report date RCON 9.a.(2)
3651
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan
pools:
(1) Outstanding principal balance of mortgages transferred as of the RCON 9.b.(1)
report date 3652
(2) Amount of recourse exposure on these mortgages as of the report date RCON 9.b.(2)
3653
c. Farmer Mac agricultural mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as of the RCON 9.c.(1)
report date 3654
</TABLE>
--------------------
1 Do not report letters of credit as "contra" items in "Other
assets" (Schedule RC-F) and "Other liabilities" (Schedule RC- G).
<PAGE>
<TABLE>
<S> <C> <C> <C>
(2) Amount of recourse exposure on these mortgages as of the report date RCON 9.c.(2)
3655
d. Small business obligations transferred with recourse under
Section 208 of the Riegle Community Development and Regulatory
Improvement Act of 1994:
(1) Outstanding principal balance of small business obligations trans- RCON 9.d.(1)
ferred as of the report date A249
(2) Amount of retained recourse on these obligations as of the report RCON 9.d.(2)
date A250
10. When-issued securities:
a. Gross commitments to purchase RCON 10.a.
3434
b. Gross commitments to sell RCON 10.b.
3435
11. Spot foreign exchange contracts RCON 11.
8765
12. All other off-balance sheet liabilities (exclude off-balance sheet deriva- RCON 12.
tives) (itemize and describe each component of this item over 25% of 3430
Schedule RC, item 28.a, "Total equity capital")
a. TEXT RCON 12.a
3555 3555
b. TEXT RCON 12.b.
3556 3555
c. TEXT RCON 12.c.
3557 3557
d. TEXT RCON 12.d.
3558 3558
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York FFIEC 034
Legal Title of Bank Page RC-12
20
FDIC Certificate Number _______________
Schedule RC-L-Continued
<TABLE>
<CAPTION>
Dollar Amounts in Mil Thou
Thousands
<S> <C> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet RCO 13.
derivatives) (itemize and describe each component of this N
item over 25% of Schedule RC, item 28.a., "Total equity 559
capital") 1
a. TEXT RCON 13.a
5592 5592
b. TEXT RCON 13.b
5593 5593
c. TEXT RCON 13.c
5594 5594
d. TEXT RCON 13.d
5595 5595
</TABLE>
<TABLE>
<CAPTION>
C16
1
Dollar Amounts in (Column A) (Column B) (Column C) (Column D)
Thousands Interest Foreign Equity Commodity
Rate Exchange Derivative and Other
Contracts Contracts Contracts Contracts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Off-balance Sheet Mi Tho Mi Tho Mi Tho Mi Tho
Derivatives l u l u l u l u
Position Indicators
14. Gross amounts
(e.g., no-
tional
amounts) (for
each column,
sum of items
14.a though
14.e must
equal sum of
items 15,
16.a, and
16.b)
a. Futures RCO RCO RCO RCO 14.a.
con- N N N N
tracts 869 869 869 869
3 4 5 6
b. Forward RCO RCO RCO RCO 14.b.
con- N N N N
tracts 869 869 869 870
7 8 9 0
c. Ex-
change-
traded
option
con-
tracts:
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(1) RCO RCO RCO RCO 14.c.(1
Written N N N N )
options 870 870 870 870
1 2 3 4
(2) RCO RCO RCO RCO 14.c.(2
Purchased N N N N )
options 870 870 870 870
5 6 7 8
d. Over-
the-
counter
option
con-
tracts:
(1) RCO RCO RCO RCO 14.d.(1
Written N N N N )
options 870 871 871 871
9 0 1 2
(2) ECO RCO RCO RCO 14.d.(2
Purchased N N N N )
options 871 871 871 871
3 4 5 6
e. Swaps RCO ECO RCO RCO 14.e.
N N N N
345 382 871 872
0 6 9 0
15. Total gross RCO RCO RCO RCO 15.
notional N N N N
amount of A12 A12 872 872
derivative 6 7 3 4
contracts
held for
trading
16. Total gross
notional
amount of
derivative
contracts
held for pur-
poses other
than trading:
a. Con- RCO RCO RCO RCO
tracts N N N N 16.a.
marked 872 872 872 872
to mar- 5 6 7 8
ket
b. Con- RCO RCO RCO RCO 16.b.
tracts N N N N
not 872 873 873 873
marked 9 0 1 2
to mar-
ket
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Mi Tho
<S> <C> <C> <C> <C>
l u
1.-2. Not applicable
3. Unused commitments with an original maturity exceeding one RCO M.3.
year that are reported in Schedule RC-L, items 1.a through N
1.e, above (report only the unused portions of commitments 383
that are fee paid or otherwise legally binding) 3
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York FFIEC 034
Legal Title of Bank Page RC-13
21
FDIC Certificate Number _______________
Schedule RC-M - Memoranda
<TABLE>
<CAPTION>
C165
Dollars Amounts in Thousands Mil Thou
<S> <C> <C> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers,
directors, principal shareholders, and their related interests as of the
report date:
a. Aggregate amount of all extensions of credit to all executive officers, RCON NONE 1.a.
directors, principal shareholders, and their related interests 6164
b. Number of executive officers, directors, and principal
shareholders to whom the amount of all extensions of
credit by the reporting bank (including extensions of
credit to related interests) equals or exceeds the lesser Number 1.b.
of $500,000 or 5 percent of total capital as defined for
this purpose in agency regulations
RCON
6165
2. Not applicable
3. a. Noninterest-bearing balances due from commercial banks in the U.S. RCON 85 3.a.
(included in Schedule RC, item 1.a) (exclude balances due from Federal 0050
Reserve Banks and cash items in process of collection)
b. Currency and coin (included in Schedule RC, item 1.a) RCON NONE 3.b.
0080
4. Outstanding principal balance of 1-4 family residential mortgage
loans serviced for others (include both retained servicing and
purchased servicing):
a. Mortgages serviced under a GNMA contract RCON NONE 4.a.
5500
b. Mortgages serviced under a FHLMC contract:
(1) Serviced with recourse to servicer RCON NONE 4.b.(1)
5501
(2) Serviced without recourse to servicer RCON NONE 4.b.(2)
5502
c. Mortgages serviced under a FNMA contract
(1) Serviced under a regular option contract RCON NONE 4.c.(1)
5503
(2) Serviced under a special option contract RCON NONE 4.c.(2)
5504
d. Mortgages serviced under other servicing contracts RC NO 4.d
ON NE
55
05
5. Not applicable
6. Intangible assets:
a. Mortgage servicing rights RCON NONE 6.a.
3164
b. Other identifiable intangible assets
(1) Purchased credit card relationships RCON NONE 6.b.(1)
5506
(2) All other identifiable intangible assets RCON NONE 6.b.(2)
5507
c. Goodwill RCON NONE 6.c.
3163
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) RCON NONE 6.d.
2143
e. Amount of intangible assets (included in item 6.b.(2) above) that have RCON NONE 6.e.
been grandfathered or are otherwise qualifying for regulatory capital 6442
purposes
7. Mandatory convertible debt, net of common or perpetual preferred stock RCON NONE 7.
dedicated to redeem the debt 3295
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
8. a. Other real estate owned:
(1) Direct and indirect investments in real estate ven- RCON NONE 8.a.(1)
tures 5372
(2) All other real estate owned:
(a) Construction and land development RCON 8.a.(2)(a
5508 )
(b) Farmland RCON NONE 8.a.(2)(b
5509 )
(c) 1-4 family residential properties RCON NONE 8.a.(2)(c
6510 )
(d) Multifamily (5 or more) residential properties RCON NONE 8.a.(2)(e
5511 )
(e) Nonfarm nonresidential properties RCON NONE 8.a.(2)(e
5512 )
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal RCON NONE 8.a.(3)
Schedule RC, item 7) 2150
b. Investments in unconsolidated subsidiaries and associated companies:
(1) Direct and indirect investments in real estate ven- RCON NONE 8.b.(1)
tures 5374
(2) All other investments in unconsolidated subsidiaries RCON NONE 8.b.(2)
and associated companies 5375
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal RCON NONE 8.b.(3)
Schedule RC, item 8) 2130
c. Total assets of unconsolidated subsidiaries and associated companies RCON NONE 8.c.
5376
9. Noncumulative perpetual preferred stock and related surplus included in RCON 9.
Schedule RC, item 23, "Perpetual preferred stock and related surplus" 3778
10. Mutual fund and annuity sales during the quarter (include proprietary,
private label, and third party products):
a. Money market funds RCON 10.a.
6441
b. Equity securities funds RCON 10.b.
8427
c. Debt securities funds RCON 10.c.
8428
d. Other mutual funds RCON 10.d.
8429
e. Annuities RCON 10.e.
8430
f. Sales of proprietary mutual funds and annuities (included in items 10.a. RCON 10.f.
through 10.e. above) 8784
</TABLE>
<PAGE>
Schedule RC-M - Continued FFIEC 034
Page RC-14
22
<TABLE>
<CAPTION>
Memorandum Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Interbank holdings of capital instruments (to be completed for the December
report only):
a. Reciprocal holdings of banking organizations' capital instruments RCON M.1.a.
3836
b. Nonreciprocal holdings of banking organizations' capital instruments RCON M.1.b.
3837
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York FFIEC 034
Legal Title of Bank Page RC-15
23
FDIC Certificate Number _______________
Schedule RC-N - Past Due and Nonaccrual Loans,(1) Leases, and Other Assets
The FFIEC regards the information reported in all of Memorandum item 1, in items
1 through 7, column A, and in Memorandum items 2 through 4, column A, as
confidential.
<TABLE>
<CAPTION>
C170
(Column A) (Column B) (Column C)
Past due 30 Past due 90 days Nonaccrual
through 89 days or more and
and still accru- still accruing
ing
Dollar Amounts in Thousands Mil Thou Mil Thou Mil Thou
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Real estate loans RCON RCON RCO
1210 1211 N12
12
2. Installment loans RCON RCON RCO
1214 1215 N12
16
3. Credit cards and related plans RCON RCON RCO
1218 1219 N12
20
4. Commercial (time and demand) and all other loans RCON RCON RCO
1222 1223 N12
24
5. Lease financing receivables RCON RCON RCO
1226 1227 N12
28
6. Debt securities and other assets (exclude other real RCON NONE RCON NONE RCO NONE
estate owned and other repossessed assets) 3505 3506 N35
07
</TABLE>
- --------
1 See instructions for loan classifications used in this sched-
ule.
<PAGE>
Amounts reported in items 1 through 5 above include guaranteed and unguaranteed
portions of past due and nonaccrual loans and leases. Report in item 7 below
certain guaranteed loans and leases that have already been included in the
amounts reported in items 1 through 5.
<TABLE>
<CAPTION>
Mil Tho Mil Tho Mil Tho
u u u
<S> <C> <C> <C> <C>
7. Loans and leases reported in items 1 through 5 above RCON RCON RCON
which are wholly or partially guaranteed by the U.S. 5612 5613 56
Government 14
a. Guaranteed portion of loans and leases included in RCON RCON RCON
item 7 above 5615 5616 5617
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands C173
Mil Thou Mil Thou Mil Thou
<S> <C> <C> <C> <C> <C>
1. Restructured loans and leases included in RC RC RCON M.1.
Schedule RC-N, items 1 through 5, above ON ON 1661
(and not reported in Schedule RC-C, part I, 16 16
Memorandum items 1) 58 59
2. To be completed by banks with loans to fi- RC RC RCON M.2.
nance agricultural production and other ON ON 1232
loans to farmers (Schedule RC-C, part 1, 12 12
item 3) exceeding five percent of total 30 31
loans: Agricultural loans included in
Schedule RC-N, items 1 through 4, above
3. Loans to finance commercial real estate, RC RC RCON M.3.
construction, and land development activi- ON ON 5423
ties (not secured by real estate) included 54 54
in Schedule RC-N, items 2 through 4, above 21 22
4. Real estate loans (sum of Memorandum items
4.a through 4.e must equal Schedule RC-N,
item 1, above):
a. Construction and land development RC RC RCON M.4.a.
ON ON 5426
54 54
24 25
b. Secured by farmland RC RC RCON M.4.b.
ON ON 5429
54 54
27 28
c. Secured by 1-4 family residential proper-
ties:
(1) Revolving, open-end loans secured by 1-4 RC RC RCON M.4.c.(1)
family residential properties and extended ON ON 5432
under lines of credit 54 54
30 31
(2) All other loans secured by 1-4 family res- RC RC RCON M.4.c.(2)
idential properties 54 ON 5435
33 54
34
d. Secured by multifamily (5 or more) residen- RC RC RCON M.4.d.
tial properties ON ON 5438
54 54
36 37
e. Secured by nonfarm nonresidential proper- RC RC RCON M.4.e.
ties ON ON 5441
54 54
39 40
</TABLE>
<PAGE>
The Bank of Nova Scotia Trust Company of New York FFIEC 034
Legal Title of Bank Page RC-16
24
FDIC Certificate Number _______________
Schedule RC-O--Other Data for Deposit Insurance Assessments
<TABLE>
<CAPTION>
C175
Dollar Amounts in Mil Thou
Thousands
<S> <C> <C> <C>
1. Unposted debits (see instructions):
a. Actual amount of all unposted debits RCON 1.a.
OR 0030
b. Separate amount of unposted debits: RCON 1.b.(1)
0031
(1) Actual amount of unposted debits to demand deposits
(2) Actual amount of unposted debits to time and savings deposits(1) RCON 1.b.(2)
0032
2. Unposted credits (see instructions):
a. Actual amount of all unposted credits RCON 2.a.
3510
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits RCON 2.b.(1)
3512
(2) Actual amount of unposted credits to time and RCON 2.b.(2)
savings deposits(1) 3514
3. Uninvested trust funds (cash) held in bank's own trust department (not RCON 3.
included in total deposits) 3520
4. Deposits of consolidated subsidiaries (not included
in total deposits):
a. Demand deposits of consolidated subsidiaries RCON 4.a.
2211
b. Time and savings deposits(1) consolidated subsidiaries RCON2351 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries RCON 4.c.
5514
5. Not applicable.
Item 6 is not applicable to state nonmember banks that have not been authorized
by the Federal Reserve to act as pass-through correspondents.
6. Reserve balances actually passed through to the Federal Reserve by
the reporting bank on behalf of its respondent depository
institutions that are also reflected as deposit liabilities of the
reporting bank:
a. Amount reflected in demand deposits (included in Schedule RC-E, item 4 or RCON 6.a.
5, column B) 2314
b. Amount reflected in time and savings deposits1 (included in Schedule RC- RCON 6.b.
E, item 4 or 5, column A or C, but not column B) 2315
7. Unamortized premiums and discounts on time and savings deposit1:
a. Unamortized premiums RCON 7.a.
5516
b. Unamortized discounts RCON 7.b.
5517
8. To be completed by banks with "Oakar deposits."
Total "Adjusted Atributable Deposits" of all institutions acquired under RCON 8.
Section 5(d)(3) of the Federal Deposit Insurance Act (from most recent FDIC 5518
Oakar Transaction Worksheet(s))
</TABLE>
--------------
1 For FDIC insurance assessment purposes, "time and savings
deposits" consists of nontransaction accounts and all
transaction accounts other than demand deposits.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
9. Deposits in lifeline accounts RCON 9.
5596
10. Benefit-responsive "Depository Institution Investment Contracts" (included RCON 10.
in total deposits) 8432
</TABLE>
<PAGE>
FFIEC 034
Page RC-17
The Bank of Nova Scotia Trust Company of New York 25
Legal Title of Bank
FDIC Certificate Number
SCHEDULE RC-O - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C> <C> <C>
11. Adjustments to demand deposits reported in Schedule RC-E for
certain reciprocal demand balances:
a. Amount by which demand deposits would be
reduced if reciprocal demand balances
between the reporting bank and savings
associations were reported on a net basis
rather than a gross basis in Schedule RC-E........... RCON 11.a.
8785
b. Amount by which demand deposits would be
increased if reciprocal demand balances
between the reporting bank and U.S. branches
and agencies of foreign banks were reported
on a gross basis rather than a net basis in
Schedule RC-E........................................ RCON 11.b.
A181
c. Amount by which demand deposits would be
reduced if cash items in process of collection
were included in the calculation of net
reciprocal demand balances between the
reporting bank and the domestic offices of
U.S. banks and savings associations in
Schedule RC-E........................................ RCON 11.c.
A182
Memoranda (to be completed each quarter except as noted)
Dollar Amounts in Thousands Mil Thou
1. Total deposits of the bank (sum of Memorandum items 1.a.(1) and
1.b.(1) must equal Schedule RC, item 13.a):
a. Deposit accounts of $100,000 or less:
(1) Amount of deposit accounts of $100,000
or less........................................ RCON 197 M.1.a.(1)
2702
(2) Number of deposit accounts of $100,000
or less (to be completed for the RCON Number M.1.a.(2)
June report only).................. 3779 18
b. Deposit accounts of more than $100,000:
(1) Amount of deposit accounts of more
than $100,000.................................. RCON 1 357 M.1.b.(1)
2710
(2) Number of deposit accounts of more RCON Number M.1.b.(2)
than $100,000...................... 2722 3
2. Estimated amount of uninsured deposits of the bank:
a. An estimate of your bank's uninsured deposits
can be determined by multiplying the number of deposit
accounts of more than $100,000 reported in Memorandum item
1.b.(2) above by $100,000 and subtracting the result from the
amount of deposit accounts of more than $100,000 reported in
Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether YES NO
your bank has a method or procedure for determining
a better estimate of uninsured deposits than the
estimate described above............................. RCON M.2.a.
6861
b. If the box marked YES has been checked, report the
estimate of uninsured deposits determined by using Mil Thou
your bank's method or procedure...................... RCON M.2.b.
5597
Person to whom questions about the Reports of Condition and Income C177
</TABLE>
<PAGE>
should be directed:
George E. Timmes, Secretary (212) 225-5422
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
<PAGE>
FFIEC 034
Page RC-18
The Bank of Nova Scotia Trust Company of New York 26
Legal Title of Bank
FDIC Certificate Number
SCHEDULE RC-R - REGULATORY CAPITAL
This schedule must be completed by all banks as follows: Banks that reported
total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1995,
must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets
of less than $1 billion must complete items 1 through 3 below or Schedule RC-R
in its entirety, depending on their response to item 1 below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. Test for determining the extent to which Schedule RC-R C180
must be completed. To be completed only by banks with
total assets of less than $1 billion. Indicate in the YES NO
appropriate box at the right whether the bank has total
capital greater than or equal to eight percent of adjusted
total assets.............................................. RCON X 1.
6056
For purposes of this test, adjusted total assets equals total assets
less cash, U.S. Treasuries, U.S. Government agency obligations, and 80
percent of U.S. Government- sponsored agency obligations plus the
allowance for loan and lease losses and selected off-balance sheet
items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to
complete items 2 and 3 below. If the box marked NO has been checked,
the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's
actual risk-based capital ratio is less than eight percent or that the
bank is not in compliance with the risk-based capital guidelines.
NOTE: All banks are required to complete (Column A) (Column B)
items 2 and 3 below. See optional worksheet Subordinated Other
for items 3.a through 3.f. Debt(1) and Limited-
Intermediate Life
Dollar Amounts in Thousands Term Preferred Capital
Stock Instruments
Mil Thou Mil Thou
2. Subordinated debt1 and other limited-life capital instruments (original
weighted average maturity of at least five years) with a remaining
maturity of:
a. One year or less............................... RCON NONE RCON NONE 2.a.
3780 3786
b. Over one year through two years................ RCON NONE RCON NONE 2.b.
3781 3787
c. Over two years through three years............. RCON NONE RCON NONE 2.c.
3782 3788
d. Over three years through four years............ RCON NONE RCON NONE 2.d.
3783 3789
e. Over four years through five years............. RCON NONE RCON NONE 2.e.
3784 3790
f. Over five years................................ RCON NONE RCON NONE 2.f.
3785 3791
3. Amounts used in calculating regulatory capital ratios
(report amounts determined by the bank for its own
internal regulatory capital analyses): Mil Thou
a. Tier 1 capital................................ RCON 2 223 3.a.
8274
b. Tier 2 capital................................ RCON NONE 3.b.
8275
c. Total risk-based capital..................... RCON 2 223 3.c.
3792
d. Excess allowance for loan and lease losses... RCON NONE 3.d.
A222
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
e. Risk-weighted assets......................... RCON NONE 3.e.
A223
f. "Average total assets"....................... RCON 3 556 3.f.
A224
Items 4-9 and Memoranda items 1 and 2 are to be completed (Column A) (Column B)
by banks that answered NO to item 1 above and by banks Assets Credit
with total assets of $1 billion or more. Recorded Equivalent
on the Amount of
Balance Off-Balance
Sheet Sheet
Items(2)
4. Assets and credit equivalent amounts of off-balance Mil Thou Mil Thou
sheet items assigned to the Zero percent risk category:
a. Assets recorded on the balance sheet:
(1) Securities issued by, other claims on, and
claims unconditionally guaranteed by, the
U.S. Government and its agencies and other
OECD central governments............... RCON 4.a.(1)
3794
(2) All other.............................. RCON 4.a.(2)
3795
b. Credit equivalent amount of off-balance sheet
items........................................ RCON 4.b.
3796
</TABLE>
1 Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
2 Do not report in column B the risk-weighted amount of assets reported
in column A.
<PAGE>
FFIEC 034
Page RC-19
27
SCHEDULE RC-R - CONTINUED
<TABLE>
<CAPTION>
(Column A) (Column B)
Assets Credit
Recorded Equivalent
on the Amount of
Balance Off-Balance
Sheet Sheet Items(1)
Dollar Amounts in Thousands Mil Thou Mil Thou
<S> <C> <C> <C> <C>
5. Assets and credit equivalent amounts of
off-balance sheet items assigned to the
20 percent risk category:
a. Assets recorded on the balance sheet:
(1) Claims conditionally guaranteed
by the U.S. Government and its
agencies and other OECD central
governments.................. RCON 5.a.(1)
3798
(2) Claims collateralized by securities
issued by the U.S. Government and
its agencies and other OECD central
governments; by securities issued
by U.S. Government-sponsored agencies;
and by cash on deposit....... RCON 5.a.(2)
3799
(3) All other.................... RCON 5.a.(3)
3800
b. Credit equivalent amount of off-balance
sheet items........................ RCON 5.b.
3801
6. Assets and credit equivalent amounts of
off-balance sheet items assigned to the
50 percent risk category:
a. Assets recorded on the balance
sheet.............................. RCON 6.a.
3802
b. Credit equivalent amount of off-
balance sheet items................ RCON 6.b.
3803
7. Assets and credit equivalent amounts of
off-balance sheet items assigned to the
100 percent risk category:
a. Assets recorded on the balance
sheet.............................. RCON 7.a.
3804
b. Credit equivalent amount of off-
balance sheet items................ RCON 7.b.
3806
8. On-balance sheet asset values excluded
from the calculation of the risk-based
capital ratio(2)................... RCON 8.
3806
9. Total assets recorded on the balance
sheet (sum of items 4.a, 5.a, 6.a,
7.a, and 8, column A) (must equal
Schedule RC, item 12.c plus items
4.b and 4.c)....................... RCON 9.
3807
</TABLE>
<TABLE>
<CAPTION>
Memoranda
Dollar Amounts in Thousands Mil Thou
<S> <C> <C> <C>
1. Current credit exposure across all off-balance sheet
derivative contracts covered by the risk-based
capital standards.......................................... RCON M.1.
8764
With a remaining maturity of
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(Column B)
(Column A) Over one year through five (Column C)
One year or less years Over five years
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2. Notional principal amounts of off-balance sheet Mil Thou Mil Thou Mil Thou
derivative contracts:(3)
a. Interest rate contracts.................. RCON RCON RCON M.2.a
3809 8766 8767
b. Foreign exchange contracts............... RCON RCON RCON M.2.b.
3812 8769 8770
c. Gold contracts........................... RCON RCON RCON M.2.c.
8771 8772 8773
d. Other precious metals contracts.......... RCON RCON RCON M.2.d.
8774 8775 8776
e. Other commodity contracts................ RCON RCON RCON M.2.e.
8777 8788 8779
f. Equity derivative contracts.............. RCON RCON RCON M.2.f.
A000 A001 A002
</TABLE>
1 Do not report in column B the risk-weighted amount of assets reported in
column A.
2 Include the difference between the fair value and the amortized cost of
available-for-sale securities in item 8 and report the amortized cost of
these securities in items 4 through 7 above. Item 8 also includes
on-balance sheet asset values (or portions thereof) of off- balance sheet
interest rate, foreign exchange rate, and commodity contracts and those
contracts (e.g., futures contracts) not subject to risk-based capital.
Exclude from item 8 margin accounts and accrued receivables as well as any
portion of the allowance for loan and lease losses in excess of the amount
that may be included in Tier 2 capital.
3 Exclude foreign exchange contracts with an original maturity of 14 days or
less and all futures contracts.
<PAGE>
FDIC Certificate Number FFIEC 034
Page RC-20
28
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS
REPORTED IN THE REPORTS OF CONDITION AND INCOME
at close of business on June 30, 1996
The Bank of Nova Scotia Trust Company of New York New York, N.Y.
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public. BANKS
CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT
DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK
CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN
SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE
PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing
not to make a statement may check the "No comment" box below and should make no
entries of any kind in the space provided for the narrative statement; i.e., DO
NOT enter in this space such phrases as "No statement," "Not applicable," "N/A"
"No comment," and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement
must not exceed 750 characters, including punctuation, indentation, and
standard spacing between words and sentences. If any submission should exceed
750 characters, as defined, it will be truncated at 750 characters and with no
notice to the submitting bank and the truncated statement will appear as the
bank's statement both on agency computerized records and in comput-er-file
releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
No comment C171 C172
BANK MANAGEMENT STATEMENT (please type or print clearly):
(Text 6980)
Signature of Executive Officer of Bank Date of Signature
<PAGE>
29
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
OMB No. For OCC: 1557-0081
OMB No. For FDIC: 3064-0052
OMB No. for Federal Reserve: 7100-0036
Expiration Date: 3/31/99
THE BANK OF NOVA SCOTIA
TRUST COMPANY OF NEW YORK
ONE LIBERTY PLAZA SPECIAL REPORT
NEW YORK, N.Y. 10006 (Dollar Amounts in Thousands)
CLOSE OF FDIC Certificate Number
BUSINESS DATE C-700
LOANS TO EXECUTIVE OFFICERS (Complete as if each Call Report Date)
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of Condition. With each Report of Condition,
these Laws require all banks to furnish a report of all loans or other
extensions of credit to their executive officers made since the date of the
previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period, insert "none" against submit (a). (Exclude
the first $15,000 of indebtedness of each executive officer under bank credit
card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit," respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
a. Number of loans made to executive officers RCON NONE a.
since the previous Call Report date.................. 3561
b. Total dollar amount of above loans (in RCON NONE b.
thousands of dollars)................................ 3562
c. Range of interest charged on above loans
(example: 9 3/4% = 9.75................ RCON --.-- % to RCON --.-- % c.
7701 7702
</TABLE>
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT DATE
(Month, Day, Year)
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED AREA CODE/PHONE
(Text 8903) NUMBER/EXTENSION
(Text 8904)
George E. Timmes (212) 225-5422
FDIC 8040/53 (6-95)
