<PAGE>
As Filed With the Securities and Exchange Commission on February 14, 2000
Registration No. 333-
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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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HANOVER COMPRESSOR COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0625124
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
12001 North Houston Rosslyn
Houston, Texas 77086
(281) 447-8787
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
HANOVER COMPRESSOR CAPITAL TRUST
(Exact Name of Registrant as Specified in its Charter)
Delaware Applied For
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
12001 North Houston Rosslyn
Houston, Texas 77086
(281) 447-8787
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Michael J. McGhan
President and Chief Executive Officer
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
(281) 447-8787
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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COPY TO:
Richard S. Meller, Esq.
Latham & Watkins
233 South Wacker Drive
Suite 5800
Chicago, Illinois 60606
(312) 876-7700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
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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. [_]
Calculation of Registration Fee
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<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Security Offering Price Fee (1)
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<S> <C> <C> <C> <C>
7 1/4% Convertible
Preferred Securities... 1,725,000 $50.00(1)(2) $86,250,000(1)(2) $22,770
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Convertible Junior
Subordinated Debentures
due 2029 of Hanover
Compressor Company..... (3) -- -- --
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Common Stock, par value
$.001 per share, of
Hanover Compressor
Company................ 2,412,585(4) -- -- --
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Preferred Securities
Guarantee(5)........... -- -- -- --
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Total................. 1,725,000 100% $86,250,000 $22,770
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</TABLE>
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(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) of the Securities Act, as amended, based upon
the average of the high and low prices on February 10, 2000.
(2) Exclusive of accrued interest and distributions, if any.
(3) $86,250,000 in aggregate principal amount of Convertible Junior
Subordinated Debentures due 2029 (the "debentures") of Hanover Compressor
Company (the "Company") were issued and sold to Hanover Compressor Company
Capital Trust (the "Trust") in connection with the issuance by the Trust
of 1,725,000 of its 7 1/4% Convertible Preferred Securities (the
"preferred securities"). The debentures may be distributed, under certain
circumstances, to the holders of the preferred securities for no
additional consideration.
(4) Such number of shares of Common Stock, par value $.001 per share, of the
Company (the "common stock") as are initially issuable upon conversion of
the preferred securities or the debentures registered hereunder. This
Registration Statement also covers such shares of common stock as may be
issuable pursuant to anti-dilution adjustments.
(5) Includes the rights of holders of the preferred securities under the
preferred securities guarantee agreement between Hanover Compressor
Company and Wilmington Trust Company, as guarantee trustee (the
"guarantee"). No separate consideration will be received for the
guarantee.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. The +
+selling holders may not sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This prospectus is not an offer to sell these securities, and it is not +
+soliciting an offer to buy these securities, in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000
PROSPECTUS
1,725,000 Convertible Preferred Securities
Hanover Compressor Capital Trust
7 1/4% Convertible Preferred Securities
(liquidation amount $50 per Convertible Preferred Security)
guaranteed by, and convertible into Common Stock of,
[LOGO OF HANOVER COMPRESSOR COMPANY APPEARS HERE]
Hanover Compressor Company
-----------
The Selling Holders may offer, from time to time:
. 7 1/4% Convertible Preferred Securities of Hanover Compressor Capital
Trust
. Convertible Junior Subordinated Debentures due 2029 of Hanover Compressor
Company
. shares of common stock of Hanover Compressor Company
Hanover Compressor Capital Trust is a Delaware business trust. The 7 1/4%
convertible preferred securities represent undivided beneficial ownership
interests in the assets of Hanover Compressor Capital Trust.
The Selling Holders may sell these securities from time to time directly to
purchasers or through agents, underwriters or dealers. If required, the names
of any other Selling Holders, agents or underwriters involved in the sale of
these securities and the applicable agent's commission, dealer's purchase price
or underwriter's discount, if any, will be set forth in a supplement to this
prospectus.
YOU SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER THE CAPTION "RISK
FACTORS" BEGINNING ON PAGE 3.
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 date of this Prospectus is , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
About This Prospectus.................. i
Where You Can Find More Information.... ii
Cautionary Statement About Forward-
Looking Statements.................... ii
The Company............................ 1
Risk Factors........................... 3
Use of Proceeds........................ 9
Accounting Treatment................... 9
Ratio of Earnings to Fixed Charges and
Earnings to Fixed Charges Plus
Dividends............................. 9
Hanover Compressor Capital Trust....... 10
Description of Preferred Securities.... 11
Description of Debentures.............. 28
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Description of Guarantee....................................................... 37
Relationship Among the Preferred Securities, the Debentures and the Guarantee.. 40
Description of Hanover Capital Stock........................................... 42
Federal Income Tax Consequences................................................ 44
Certain ERISA Considerations................................................... 49
Registration Rights............................................................ 51
Selling Holders................................................................ 52
Plan of Distribution........................................................... 54
Legal Matters.................................................................. 55
Experts........................................................................ 55
</TABLE>
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As used in this prospectus, (a) the "indenture" means the Indenture between
Hanover Compressor Company and Wilmington Trust Company, as trustee (the
"debenture trustee") relating to the debentures, (b) the "declaration" means
the Amended and Restated Declaration of Trust relating to the trust among
Hanover Compressor Company, as depositor (the "depositor"), Wilmington Trust
Company, as property trustee (the "property trustee"), Wilmington Trust
Company, as Delaware trustee (the "Delaware trustee"), the individuals named as
administrative trustees therein (the "administrative trustees" and collectively
with the property trustee and the Delaware trustee, the "trustees") and the
holders from time to time of undivided beneficial interests in the assets of
the trust, (c) the "guarantee" means the Preferred Securities Guarantee
Agreement between Hanover Compressor Company and Wilmington Trust Company, as
guarantee trustee (the "guarantee trustee"), (d) the "preferred secuities"
means the 7 1/4% Convertible Preferred Securities issued by Hanover Compressor
Capital Trust, (e) the "common securities" means the common securities issued
by the trust, (f) the "trust securities" means the Preferred Securities and the
common securities, (g) the "common stock" means the common stock of Hanover
Compressor Company, par value $.001 per share, and (h) the "debentures" means
the Convertible Junior Subordinated Debentures due 2029 issued by Hanover
Compressor Company.
ABOUT THIS PROSPECTUS
This prospectus contains summaries, believed to be accurate in all material
respects, of terms of certain agreements. These summaries are qualified in
their entirety by reference to the actual agreements, copies of which will be
made available to you upon request to us. While any preferred securities,
debentures or common stock issued upon conversion of such securities remain
outstanding, we will make available, upon request, to any holder and any
prospective purchaser of such securities the information required pursuant to
Rule 144A(d)(4) under the Securities Act during any period in which we are not
subject to Section 13 or 15(d) of the Exchange Act.
No separate financial statements of the trust have been included herein. We
do not consider such financial statements material to the holders of preferred
securities because:
. we own, directly or indirectly, all of the voting securities of the
trust, and we are subject to the reporting requirements under the
Exchange Act;
i
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. the trust has no independent operations but exists for the sole purpose
of issuing securities representing undivided beneficial interests in the
assets of the trust and investing the proceeds thereof in debentures
issued by us; and
. the obligations of the trust under the trust securities are fully and
unconditionally guaranteed by us to the extent that the trust has funds
available to meet such obligations.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. These filings include
previous filings made by our predecessor, which was also called "Hanover
Compressor Company." You may also read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the SEC located at 7 World Trade Center, Suite
1300, New York, New York 10048 and at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You may obtain information on the operation of the
SEC's public reference room in Washington, D.C. by calling the SEC at 1-800-
SEC-0330. We also file information with The New York Stock Exchange. These
reports, proxy statements and other information may be read and copied at 20
Broad Street, New York, New York 10005.
In this prospectus we have incorporated by reference certain reports and
other information we and our predecessor have filed, or will file, with the
SEC. The information incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede this information. We incorporate by reference the
documents listed below and any further filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until all of the
securities are sold or this offering is terminated:
. Our predecessor's Amended Annual Report on Form 10-K/A for the year ended
December 31, 1998;
. Our predecessor's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999;
. Our predecessor's Current Reports on Form 8-K dated December 3, 1999; and
. our Current Report on Form 8-K dated December 17, 1999.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
(281) 447-8787
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date
on the front of those documents.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Certain matters discussed in this prospectus are "forward-looking
statements" intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements can generally be identified as such because the
context of the statement will include words such as "believes", "anticipates",
"expects", "estimates" or words of similar import. Similarly, statements that
describe our future plans, objectives or goals are also forward-looking
statements. Such forward-looking statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from those
anticipated as of the date of this prospectus. The risks and uncertainties
include:
ii
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. the loss of market share through competition;
. the introduction of competing technologies by other companies;
. a prolonged substantial reduction in oil and gas prices which would cause
a decline in the demand for our compression and oil and gas production
equipment;
. new governmental safety, health and environmental regulations which could
require us to make significant capital expenditures; and
. changes in economic or political conditions in the countries in which we
operate.
The forward-looking statements included herein are only made as of the date
of this prospectus and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
iii
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THE COMPANY
The information provided in this prospectus gives effect to a restructuring
of Hanover Compressor Company that was effected on December 9, 1999 (the
"Restructuring"). The sole purpose of the Restructuring was to create a holding
company, and the Restructuring will have no effect on our business. As a result
of the Restructuring, "old" Hanover Compressor Company was renamed Hanover
Compression Inc. ("HCI") and became a wholly-owned subsidiary of a newly
created holding company called Hanover Compressor Company. Each share of HCI
was exchanged for one share of "new" Hanover Compressor Company, which replaced
"old" Hanover Compressor Company as the publicly held company whose stock is
traded on the New York Stock Exchange. Financial and other information
discussed in this prospectus for periods prior to the Restructuring relates to
HCI and its subsidiaries. Except as described in the previous sentence and
unless the context requires otherwise, "Hanover," "we," "us," "our" or similar
terms in this prospectus refer to "new" Hanover Compressor Company and its
subsidiaries and not the trust.
We are a leading provider of a broad array of natural gas compression
services in the United States and select international markets. We operate the
largest compressor rental fleet, in terms of horsepower, in the gas compression
industry and provide our services on a rental, contract compression,
maintenance and acquisition leaseback basis. Our customers include independent
and major producers and distributors of natural gas throughout the Western
Hemisphere. Our products and services are essential to the production,
transportation, processing and storage of natural gas. Founded in 1990 and
publicly held since 1997, we are the largest public company whose primary focus
is in the natural gas compression business. Our compression services are
complemented by our compressor and oil and gas production equipment fabrication
operations, which broaden our customer relationships both domestically and
internationally.
Through internal growth and a series of strategic acquisitions, we have
become the largest operator of rental compression horsepower capacity in the
United States, serving an estimated 28% of the domestic rental market. We began
international operations in 1995 and have become one of the largest providers
of compression services in the rapidly growing Latin American and Canadian
markets. As of September 30, 1999, our compression rental fleet included the
following:
<TABLE>
<CAPTION>
Units Horsepower
----- ----------
<S> <C> <C>
U.S. .................................................... 3,467 1,104,000
International............................................ 249 241,000
----- ---------
Total Fleet............................................ 3,716 1,345,000
</TABLE>
In addition to our business of providing natural gas compression services,
we also fabricate gas compressors for sale to third parties and for inclusion
in our rental fleet. We were the second largest fabricator of natural gas
compressors (by horsepower) in North America in 1998.
Complementing our gas compression businesses is our oil and gas production
equipment fabrication business. Oil and gas production equipment is typically
installed at the wellhead immediately before beginning large-scale production
and remains at the site for the life of the well. We fabricate equipment used
by oil and gas producers to separate and treat oil and gas immediately after it
is produced in order to facilitate further processing, transportation and sale.
Industry Overview
We compete primarily in the transportable natural gas compression market for
units of up to 4,400 horsepower. We believe that aggregate domestic natural gas
compression horsepower grew from approximately 8.8 million horsepower at the
end of 1992 to approximately 13.5 million horsepower at the end of 1998,
reflecting a compound annual growth rate of 9%. We believe that the domestic
gas compression market will continue to grow due to increasing consumption of
natural gas, continued aging of the natural gas reserve base and the attendant
decline of wellhead pressures and the discovery of new reserves.
1
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We believe that the rental portion of the domestic gas compression market
grew from approximately 1.8 million horsepower at the end of 1992 to
approximately 3.5 million horsepower at the end of 1998, reflecting a compound
annual growth rate of 14%. We believe that the growth in rental compression
capacity in the U.S. has been driven primarily by an increasing trend toward
outsourcing by energy producers and processors. Internationally, we believe
that similar growth opportunities for compressor rental and sales exist due to
anticipated increases in energy consumption worldwide, new international
environmental and conservation laws and increased outsourcing by energy
producers and processors. As worldwide gas consumption continues to grow, we
believe that there will also be a continued demand for the purchase and sale of
gas compression units.
The oil and gas production equipment industry is more sensitive than the gas
compression industry to the volatility of oil and natural gas prices,
indicating that the growth of this industry will more closely track the growth
of oil and gas production.
Growth Strategy
Our business strategy is to continue building on our reputation as the
premier operating company in natural gas compression and to grow the rental
fleet in accordance with a proven growth strategy. Our aggressive growth
strategy has generated the following results:
. aggregate horsepower capacity of our compressor rental fleet grew from
117,000 horsepower in 1992 to 1,067,000 horsepower in 1998;
. we maintained average horsepower utilization of approximately 94% from
1992 to 1998, compared to the average industry utilization which we
estimate to be approximately 83%;
. revenues increased from $33.1 million in 1992 to $282.0 million in 1998;
. earnings before interest, leasing expense, taxes, and depreciation and
amortization ("EBITDA") increased from $7.3 million in 1992 to $104.7
million in 1998; and
. net income grew from $1.0 million in 1992 to $30.4 million in 1998.
We intend to build on our results to date by continuing to pursue our growth
strategy, which includes the following key elements:
. delivering a comprehensive range of compression products and services;
. focusing on higher horsepower compression units;
. expanding our international operations;
. broadening our customer base by acquiring compressors from, and leasing
them back to, our customers;
. participating in the consolidation of the compression industry;
. acquiring other companies having assets or businesses which complement
ours;
. capitalizing on our decentralized management and operating structure to
provide superior customer service; and
. using equity incentives to attract and retain an experienced,
entrepreneurial, highly motivated management team.
We believe the successful execution of our growth strategy, combined with
our focus on and leadership position in the compression industry, will enable
us to continue to generate and realize significant growth opportunities.
Our principal executive office is located at 12001 North Houston Rosslyn,
Houston, Texas 77086, telephone (281) 447-8787.
2
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RISK FACTORS
An investment in the preferred securities involves risks. You should
carefully consider and evaluate all of the information in this prospectus,
including the following risk factors, before investing.
Risks Relating to Hanover
Industry Conditions--A prolonged, substantial reduction in oil or gas prices
could adversely affect our business.
Our operations depend upon the levels of activity in natural gas
development, production, processing and transportation. In recent years, oil
and gas prices and the level of drilling and exploration activity have been
extremely volatile. For example, from mid-1998 to mid-1999, oil and gas
exploration and development activity and the number of well completions
declined due to a significant reduction in oil and gas prices. As a result, the
demand for our gas compression and oil and gas production equipment was
adversely affected. Any future significant, prolonged decline in oil and gas
prices could have a material adverse effect on our business, results of
operations and financial condition.
Short Lease Terms--Our compressor leases have short initial terms, and we
cannot be sure that the compressors will stay out on location after the end
of the initial lease term.
The length of our leases varies based on operating conditions and customer
needs. In most cases, under currently prevailing lease rates, the initial lease
terms are not long enough to enable us to fully recoup the average cost of
acquiring or manufacturing the compressors. We cannot assure you that a
substantial number of our lessees will continue to renew their leases or that
we will be able to re-lease the compressors to new customers or that any
renewals or re-leases will be at comparable lease rates. An inability to renew
or re-lease a substantial portion of our compressor rental fleet would have a
material adverse effect upon our business, results of operations and financial
condition.
Substantial Capital Requirements--We require a substantial amount of capital
to expand our compressor rental fleet and our complementary businesses.
We will continue to make substantial capital investments to expand our
compressor rental fleet and our complementary businesses. We had invested
approximately $201 million in capital expenditures as of September 30, 1999,
and we estimate that our capital expenditures in the fourth quarter of 1999
totaled approximately $89 million. We expect to invest approximately $250
million in capital expenditures in 2000. The amount of these expenditures may
vary depending on the rate of return we expect to earn from these investments,
conditions in the natural gas industry and whether we make any significant
acquisitions. Historically, we have funded these investments through internally
generated funds, debt and sale and leaseback transactions and equity financing.
While we believe that cash flow from our operations and borrowings under HCI's
existing $200 million bank credit facility will provide us with sufficient cash
to fund these investments, we cannot assure you that these sources will be
sufficient. HCI would need the consent of the lenders under its bank credit
facility and the lessors under its sale and leaseback transactions to complete
any new financing. Failure to generate sufficient cash flow, together with the
absence of alternative sources of capital, could have a material adverse effect
on our growth, results of operations and financial condition.
International Operations--There are many risks associated with conducting
operations in international markets.
We operate in many different geographic markets, some of which are outside
the United States. Changes in local economic or political conditions,
particularly in Latin America or Canada, could have a material adverse effect
on our business, financial condition and results of operations. Additional
risks inherent in our international business activities include the following:
. difficulties in managing international operations;
3
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. unexpected changes in regulatory requirements;
. tariffs and other trade barriers which may restrict our ability to enter
into new markets;
. potentially adverse tax consequences;
. restrictions on repatriation of earnings;
. the burden of complying with foreign laws; and
. fluctuations in currency exchange rates and the value of the U.S. dollar.
Acquisition Strategy--We may not be able to find suitable acquisition
candidates or successfully integrate acquired companies into our business.
As part of our business strategy, we will continue to pursue the acquisition
of other companies, assets and product lines that either complement or expand
our business. Each acquisition involves potential risks, such as the diversion
of management's attention away from current operations, problems in integrating
acquired businesses and possible short-term adverse effects on our operations
as a result of that process. We routinely conduct preliminary discussions with
other companies, which have operations or assets that may be suitable for us to
acquire. Given our selective approach to acquisitions, we are unable to predict
whether or when we will find suitable acquisition candidates or whether we will
be able to complete a material acquisition. We may seek to finance acquisitions
with cash or through the issuance of new debt and/or equity securities. A
relatively large acquisition in which cash is the primary form of consideration
would utilize a substantial portion of our existing financial resources. As the
compression industry continues to consolidate, the size of the companies we may
consider acquiring may become larger and, as a result, the general risks
inherent in acquisitions described above may become more significant.
Competition--We operate in a highly competitive industry and compete against
many larger companies with greater financial resources.
We compete with several large national and multinational companies which
provide compression services to third parties, many of which have greater
financial and other resources than we do. If our competitors were to
substantially increase the resources they devote to the development and
marketing of competitive products and services, we cannot assure you that we
will have sufficient resources to respond accordingly.
Concentrated Ownership--A significant amount of our stock is owned by one
stockholder.
Our largest stockholder, GKH Partners, L.P. ("GKH"), controlled
approximately 40% of our voting power as of December 31, 1999. GKH is in a
position to exert substantial influence over the outcome of most corporate
actions requiring stockholder approval, including the election of directors,
the future issuance by Hanover of common stock or other securities, and the
approval of transactions involving a change of control. The interests of GKH
could conflict with the interests of our other stockholders.
Anti-Takeover Provisions--Our certificate of incorporation and by-laws
contain certain provisions that could make a takeover more difficult.
Certain provisions of our certificate of incorporation and by-laws could
make it more difficult for a third party to acquire control of Hanover, even if
such a change in control would benefit our stockholders. Our certificate of
incorporation allows us to issue preferred stock without stockholder approval
and our by-laws limit who may call special stockholder meetings. These
provisions could make it more difficult for a third party to acquire us and may
discourage acquisition bids or limit the price that investors might be willing
to pay in the future for shares of our common stock. The ownership of a
substantial number of our shares of common stock by GKH and our officers,
directors, employees and their affiliates also could discourage acquisition
bids. There are also provisions of Delaware law that could delay or make
difficult a merger, tender offer or proxy contest. Please read the "Description
of Hanover Capital Stock" section of this prospectus.
4
<PAGE>
Potential Liability and Insurance--Natural gas operations entail inherent
risks that may result in substantial liability to Hanover.
Natural gas operations entail inherent risks, including equipment defects,
malfunctions, failures and natural disasters which could result in
uncontrollable flows of gas or well fluids, fires and explosions. These risks
may expose us to liability for personal injury, wrongful death, property
damage, pollution and other environmental damage. We have obtained insurance
against liability for personal injury, wrongful death and property damage, but
we cannot assure you that the insurance will be adequate to cover our
liability. Similarly, we cannot assure you that we will be able to obtain
insurance in the future at a reasonable cost or at all. Our business, results
of operations and financial condition could be adversely affected if we incur
substantial liability and the damages are not covered by insurance or are in
excess of policy limits.
Governmental Regulation--Our business is subject to a variety of governmental
regulations relating to environmental, health and safety.
Our business is subject to a variety of federal, state and local laws and
regulations relating to safety, health and the environment. These laws and
regulations are complex, change frequently and have tended to become more
stringent over time. Failure to comply with these laws and regulations may
result in a variety of civil and criminal enforcement measures, including
assessment of monetary penalties, imposition of remedial requirements, and
issuance of injunctions as to future compliance. As part of the regular overall
evaluation of our current operations, we are updating certain facility permits
with respect to stormwater discharges and air emissions but do not believe such
updates will have a material adverse effect on our operations as a result of
any enforcement measures or capital costs. Based on our experience to date, we
believe that the future cost of compliance with existing laws and regulations
and the future cost of necessary investigation or remediation of contamination
will not have a material adverse effect on our business, financial condition
and results of operations. However, future events, such as discovery of unknown
contamination, any third party claims made with respect to previously owned or
leased properties, compliance with more stringent laws and regulations or more
vigorous enforcement policies by regulatory agencies or stricter or different
interpretations of existing laws and regulations could require us to make
material expenditures.
We have conducted preliminary environmental site assessments with respect to
certain properties currently owned or leased by us. Some of these assessments
have revealed that soils and/or groundwater at some of our facilities are
contaminated with hydrocarbons and various other regulated substances. We do
not believe that our operations caused any such contamination and are not
currently under any orders or directives to undertake any remedial activity. In
addition, we have previously owned or leased certain properties that had in the
past experienced soil contamination. We have since conducted remedial
operations at certain of these previously held properties as we believed
necessary and either sold the owned properties to third parties or returned the
leased properties to the lessors. We are not currently aware of any further
remedial obligations at such previously held properties. We cannot be certain,
however, that we will not be required to undertake any remedial activities
involving any substantial costs on any of these properties in the future.
Shares Eligible for Future Sale--The market price of our common stock could
be depressed by future sales.
Future sales of our common stock, or the perception that these sales could
occur, could adversely affect the market price of our common stock. We cannot
assure you as to when, and how many of, the shares of our common stock will be
sold and the effect those sales may have on the market price of our common
stock. Westar Capital, Inc., which we believe holds approximately 2.9 million
shares of our common stock, has publicly announced this it is reviewing
alternatives to monetize or liquidate these shares. In addition, we may issue
additional shares of common stock in connection with future acquisitions or
other transactions. Although those securities may be subject to regulatory or
contractual resale restrictions, as these restrictions lapse or if these shares
are registered for sale to the public, they may be sold to the public. In the
event we issue a substantial number of shares of our common stock, which
subsequently become available for unrestricted resale, there could be a
material adverse effect on the prevailing market price for our common stock.
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Risks Relating to the Preferred Securities
Subordination--Our obligations under the guarantee and debentures are
subordinated.
Because of the subordinated nature of the guarantee and the debentures, we:
. will not be permitted to make any payments of principal, including
redemption payments, or interest on the debentures if we default on our
senior debt, as described under the "Description of Debentures--
Subordination" section of this prospectus;
. will not be permitted to make payments on the guarantee if we default on
any of our senior debt; and
. must pay all of our senior debt before we make payment on the guarantee
or the debentures if we become bankrupt, liquidate or dissolve.
The preferred securities, the guarantee, and the debentures do not limit our
ability or the ability of our subsidiaries to incur additional indebtedness,
including indebtedness that ranks senior to the debentures and the guarantee.
As of October 31, 1999 after giving effect to the Restructuring, Hanover had no
senior debt but had guaranteed approximately $122 million of HCI's indebtedness
under its bank credit agreement. In addition, Hanover has guaranteed the
residual value of the equipment under HCI's sale and lease back transactions of
approximately $332 million, which guarantee ranks senior to the debentures.
Structural Subordination--The preferred securities and the debentures will be
effectively subordinated to the obligations of our subsidiaries.
We are a holding company and we conduct our operations entirely through our
subsidiaries. We have few assets of significance other than the capital stock
of HCI and our other subsidiaries. Consequently, we are dependent upon
dividends or other intercompany transfers of funds from our direct and indirect
subsidiaries to meet our debt service obligations, including those related to
the debentures, the guarantee and the preferred securities. Our subsidiaries
are separate legal entities that have no obligation to pay any amounts due
under the preferred securities, the debentures or the guarantee. Our
subsidiaries do not guarantee the payment of the preferred securities or the
debentures. Furthermore, our subsidiaries are not obligated to make funds
available to us, and creditors of our subsidiaries will have a superior claim
to our subsidiaries' assets. As a result, your right to receive payment on the
debentures and the preferred securities is effectively junior to our
subsidiaries' existing indebtedness and possibly to all of their future
borrowings. In addition, our subsidiaries' ability to make any payments to us
will depend on their earnings, the terms of their indebtedness, business and
tax considerations and legal restrictions.
Our subsidiaries are permitted to enter into various debt agreements that
restrict their ability to pay dividends, make advances or otherwise distribute
funds to us. We cannot assure you that HCI or any of our other subsidiaries
will be able to pay dividends or otherwise distribute funds to us in an amount
sufficient to pay the principal of or interest on the debentures. At October
31, 1999, after giving effect to the Restructuring, our subsidiaries had
approximately $146 million of debt.
Tax Consequences of Our Right to Defer Payments--Our right to defer interest
payments on the debentures has tax consequences for you.
We can, on one or more occasions, defer interest payments on the debentures
for up to 20 consecutive quarterly periods unless an event of default under the
indenture has occurred and is continuing. We cannot, however, defer interest
payments beyond the earlier of the maturity date of the debentures, which is
December 15, 2029, or the date on which the debentures are redeemed. If we
defer interest payments on the debentures, the trust will also defer
distributions on the preferred securities and the common securities. During a
deferral period, distributions will continue to accumulate on the preferred
securities.
If we defer payment of interest on the debentures, you will be required to
accrue interest income, as original issue discount, for the deferred interest
allocable to your share of preferred securities for United States
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federal income tax purposes. As a result, you will include that income in gross
income for United States federal income tax purposes prior to your receipt of
any cash distributions. In addition, you will not receive cash from the trust
related to that income if you sell your preferred securities prior to the
record date on which those distributions are made. You should consult with your
own tax advisor regarding the tax consequences of an investment in the
preferred securities.
Market Price Consequences of Our Right to Defer Payments--Our right to defer
interest payments on the debentures may affect the market price of the
preferred securities.
If we defer interest payments on the debentures in the future, the market
price of the preferred securities may not fully reflect the value of accrued
but unpaid interest on the debentures. If you sell preferred securities during
a deferral period, you may not receive the same return on investment as someone
who continues to hold preferred securities. In addition, our right to defer
interest payments on the debentures may mean that the market price for the
preferred securities will be more volatile than other securities that are not
subject to these rights.
The Guarantee is a Limited Guarantee--The guarantee only guarantees payments
on the preferred securities if the trust has cash available.
Our guarantee only applies to the extent that the trust has sufficient funds
to make the payments. If we fail to make payments on the debentures, the trust
will not be able to make the related distribution, redemption or liquidation
payments on the preferred securities. In those circumstances, you will not be
able to rely upon the guarantee for payments of those amounts.
Instead, if we are in default under the debentures you may:
. rely on the property trustee of the trust to enforce the trust's rights
under the debentures; or
. directly sue us or seek other remedies to collect your pro rata share of
payments owed.
Optional Redemption--We may cause the preferred securities to be redeemed on
or after December 20, 2002 without your consent.
At our option, we may redeem all or some of the debentures at any time on or
after December 20, 2002. The redemption price you would receive in such an
event may vary, but will not be less than 100% of the principal amount to be
redeemed plus any accrued and unpaid interest. Please read the "Description of
Debentures--Redemption--Optional Redemption" section of this prospectus. You
should assume that we will exercise our redemption option if we are able to
refinance the debentures at a lower interest rate or if it is otherwise in our
interest to redeem the debentures. If a redemption occurs, the trust will use
the cash it receives from the redemption of the debentures to redeem an
equivalent amount of preferred securities and common securities on a pro rata
basis.
Redemption Upon the Occurrence of a Tax Event--The trust may redeem the
preferred securities without your consent if specified tax changes occur.
If specified tax changes occur relating to the non-deductibility of interest
payments on the debentures and certain other conditions are met as are more
fully described under the "Description of Preferred Securities--Tax Event or
Investment Company Event Redemption or Distribution" section of this
prospectus, we may redeem all, but not less than all, of the debentures for the
principal amount of the debentures plus any accrued and unpaid interest on the
debentures. If this happens, the trust will use the cash it receives from the
redemption of the debentures to redeem the preferred securities and the common
securities.
Distribution of the Debentures--We may, at any time, dissolve the trust and
distribute the debentures to you which may have adverse tax and other
consequences for you.
We may dissolve the trust at any time. If we do so, the trust will, after
satisfaction of liabilities to creditors of the trust as required by applicable
law, redeem the preferred securities and the common securities by distributing
the debentures to you and to us, as holder of the common securities, on a pro
rata basis.
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Under current United States federal income tax laws, a distribution of
debentures on the dissolution of the trust would not be a taxable event to you.
Nevertheless, if the trust is classified for United States federal income tax
purposes as a corporation at the time it is dissolved, the distribution of the
debentures would be a taxable event to you. In addition, if there is a change
in law, a distribution of debentures on the dissolution of the trust could also
be a taxable event to you.
We have no current intention of dissolving the trust and causing the
distribution of the debentures. However, there are no restrictions on our
ability to do so. We anticipate that we would consider exercising this right if
expenses associated with maintaining the trust were substantially greater than
we currently expect.
We cannot predict the market prices for the debentures that may be
distributed. Accordingly, the debentures you receive on a distribution, or the
preferred securities you hold pending that distribution, may trade at a
discount to the price you paid to purchase the preferred securities.
Because you may receive debentures, you should make an investment decision
about the debentures in addition to the preferred securities. You should
carefully review all the information regarding the debentures contained in this
prospectus.
Lack of an Active Trading Market--We cannot assure you that an active trading
market for the preferred securities will develop.
There is no existing market for the preferred securities (or the debentures)
and there can be no assurance as to the liquidity of any markets that may
develop for the preferred securities (or the debentures), the ability of the
holders to sell their preferred securities (or debentures) or at what price
holders of the preferred securities (or the debentures) will be able to sell
such securities. Future trading prices of the preferred securities (and the
debentures) will depend on many factors including:
. prevailing interest rates;
. our common stock price;
. the Company's operating results; and
. the markets for similar securities.
The initial purchasers of the preferred securities, Credit Suisse First
Boston Corporation, Goldman Sachs & Co., Salomon Smith Barney, Inc. and Dain
Rauscher Incorporated, currently make a market for the preferred securities
offered hereby; however, the initial purchasers are not obligated to do so and
such market making activity is subject to the limits imposed by applicable law
and may be discontinued at any time without notice.
Limited Voting Rights--You will have limited voting rights as a holder of
preferred securities.
As a holder of preferred securities, you will have limited voting rights
relating only to the modification of the preferred securities and, in specified
circumstances, the exercise of the trust's rights as holder of the debentures
and the guarantee and the appointment of a special trustee. Except as described
in the preceding sentence, only we can replace or remove any of the trustees or
increase or decrease the number of trustees.
Payment of Dividends--We may not be able to pay dividends on the common stock
into which your preferred securities may be converted.
We have no obligation to pay dividends on the common stock into which your
preferred securities may be converted. The declaration and payment of dividends
on our common stock is subject to, and will depend upon, among other things:
. our future earnings and financial condition, liquidity and capital
requirements,
. our ability and the ability of HCI to pay dividends under HCI's bank
credit agreement,
. the general economic and regulatory climate and
. other factors deemed relevant by our board of directors.
Our guarantee of HCI's senior debt restricts our ability to pay cash
dividends on our common stock.
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USE OF PROCEEDS
The Selling Holders will receive all of the proceeds from the sale of the
securities offered by this prospectus. Neither the Company nor the Trust will
receive any of the proceeds from the sale of the securities offered by this
prospectus.
ACCOUNTING TREATMENT
For financial reporting purposes, we will treat the trust as a subsidiary
of Hanover, and accordingly, we will include the accounts of the trust in our
consolidated financial statements. We will present the Preferred Securities in
our consolidated balance sheet as a separate line item entitled "company-
obligated mandatorily redeemable convertible preferred securities." We will
also include appropriate disclosures about the Preferred Securities, the
guarantee and the debentures in the notes to our consolidated financial
statements. For financial reporting purposes, we will record distributions
payable on the Preferred Securities as a financing charge to earnings in our
consolidated statement of income.
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED DIVIDENDS
The following table contains our consolidated ratios of earnings to fixed
charges for the periods indicated
<TABLE>
<CAPTION>
Nine Months Nine Months
Year Ended December 31, Ended Ended
------------------------ September 30, September 30,
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges.................. 4.34 2.96 3.56 3.75 3.76 3.90 2.92
Ratio of earnings to
combined fixed charges
and preferred dividends.. 4.34 2.02 1.31 3.75 3.76 3.90 2.92
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and
earnings to fixed charges plus dividends: (i) earnings consist of income
before income taxes plus fixed charges and (ii) "fixed charges" consist of
interest expense (including amortization of debt discount and expense),
leasing expense and the estimated interest factor attributable to rentals.
There was no preferred stock outstanding during 1994, 1997, 1998 or the nine-
month period ended September 30, 1999.
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HANOVER COMPRESSOR CAPITAL TRUST
Hanover Compressor Capital Trust is a statutory business trust that was
formed under Delaware law on December 1, 1999. The trust's original declaration
of trust was amended and restated in its entirety as of December 15, 1999.
We own all of the trust's common securities. The common securities represent
common undivided beneficial interests in the assets of the trust with an
aggregate liquidation amount equal to at least 3% of the total capital of the
trust.
The trust exists for the exclusive purposes of:
. issuing the preferred securities;
. issuing the common securities to us;
. investing the gross proceeds of the sale of the preferred securities and
the common securities in the debentures;
. distributing payments received on the debentures to holders of the
preferred securities and the common securities; and
. engaging in only those other activities necessary or incidental to such
purposes.
The trust currently has five trustees. Three of those trustees, referred to
as administrative trustees, are our employees or officers. Wilmington Trust
Company serves as the trust's property trustee and as the trust's Delaware
trustee. In some circumstances, the holders of a majority of the preferred
securities will be entitled to appoint one additional trustee, referred to as a
special trustee, who does not need to be affiliated with us, who will have the
same rights, powers and privileges as the administrative trustees.
The property trustee, among other things:
. holds title to the debentures for the benefit of the holders of the
preferred securities and the common securities;
. has the power to exercise all rights, powers and privileges under the
indenture as the holder of the debentures; and
. maintains exclusive control of a segregated non-interest bearing bank
account, called the property account, to hold all payments made in
respect of the debentures for the benefit of the holders of the preferred
securities and the common securities.
Subject to the right of the holders of the preferred securities to appoint a
special trustee, we, as holder of all the common securities, have the right to
appoint, remove or replace any of the trustees and to increase or decrease the
number of trustees. However, the number of trustees is required to be at least
three, a majority of which will be administrative trustees.
We pay all fees and expenses related to the trust.
The rights of the holders of the preferred securities, including economic
rights, rights to information and voting rights, are as set forth in the
declaration and the Delaware Business Trust Act, as amended (the "Trust Act").
See "Description of Preferred Securities." The declaration, the indenture and
the guarantee also incorporate by reference the terms of the Trust Indenture
Act. It is expected that, at the time this registration statement becomes
effective, the declaration, the indenture and the guarantee will be qualified
under the Trust Indenture Act.
The address of the principal office of the trust is c/o Hanover Compressor
Company, 12001 N. Houston Rosslyn, Houston, Texas 77086, and its telephone
number is (281) 447-8787.
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DESCRIPTION OF PREFERRED SECURITIES
The trust issued the preferred securities pursuant to the terms of the
declaration of trust. The declaration of trust will be qualified under the
Trust Indenture Act and incorporates selected provisions of the Trust Indenture
Act. We have summarized selected provisions of the declaration of trust and the
preferred securities below. This summary is not complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of the
declaration of trust. A copy of the declaration of trust is available upon
request. Unless the context requires otherwise, "Hanover," "we," "us," "our"
and similar terms in this section refer solely to Hanover Compressor Company
after giving effect to the Restructuring and not the trust or any of our other
consolidated subsidiaries.
General
The declaration of trust authorizes the trust to issue the Preferred
Securities and the common securities. The preferred securities represent
preferred undivided beneficial ownership interests in the assets of the trust.
The common securities represent common undivided beneficial ownership interests
in the assets of the trust. Payments on the preferred securities will be made
pro rata with payments on the common securities, except as described under "--
Subordination of Common Securities." Under a guarantee agreement we guarantee,
on a subordinated basis, any payments required to be made by the trust to the
holders of the preferred securities but only to the extent that the trust has
funds on hand available to make the payments. Please read the "Description of
Guarantee" section of this prospectus.
Distributions
If you purchase preferred securities you will be entitled to receive cash
distributions at an annual rate of 7 1/4% of the $50 stated liquidation amount
per each preferred securities. Distributions are cumulative and will begin to
accumulate on the date of original issuance of the preferred securities.
Distributions will be payable quarterly in arrears March 15, June 15, September
15 and December 15, of each year beginning March 15, 2000, to the person in
whose name each of the preferred securities is registered, subject to certain
exceptions, at the close of business on the first day of the month of the
applicable distribution date.
The amount of distributions payable for any period will be computed on the
basis of the number of days elapsed in a 360-day year consisting of twelve 30-
day months. If a distribution date is not a business day, the trust will make
the distributions on the next day that is a business day, without any
additional distributions or other payments due to the delay.
Accrued distributions that are not paid on the applicable distribution date
will accrue additional distributions compounded quarterly from the relevant
distribution date. For the purpose of this prospectus, a "distribution" will
include quarterly distributions, additional distributions on quarterly
distributions not paid on the applicable distribution date, special
distributions (as described in the "Registration Rights" section of this
prospectus) and additional sums (as described in the "Description of
Debentures--Additional Sums" section of this prospectus), as applicable. A
"business day" is any day other than a Saturday or a Sunday, or a day on which
banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law or executive order to remain closed, or a day on
which the corporate trust office of the property trustee or the debenture
trustee is closed for business.
Option to Defer Distributions
We can, on one or more occasions, defer interest payments on the debentures
for up to 20 consecutive quarterly periods unless an event of default under the
indenture has occurred and is continuing. Interest payments will not be due and
payable on the debentures during a deferral period. We cannot, however, defer
interest payments beyond the earlier of the maturity date of the debentures,
which is December 15, 2029, or the date the debentures are redeemed.
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If we defer interest payments on the debentures, the trust will defer
distribution payments on the preferred securities and the common securities.
Distributions will continue to accumulate on the preferred securities and the
common securities during a deferral period. Also, additional cash
distributions will accumulate on any deferred distributions at the annual rate
of 7 1/4%, compounded quarterly.
We do not currently intend to defer interest payments on the debentures.
We may extend a deferral period prior to the period's termination. However,
we may not extend a deferral period, including all previous and further
extensions of the period, beyond 20 consecutive quarterly interest periods or
the maturity date of the debentures. Once a deferral period ends and we make
all payments due on the debentures, we can commence a new deferral period.
Consequently, there could be multiple deferral periods of varying lengths
throughout the term of the debentures. Please read the "Federal Income Tax
Consequences--Interest Income and Original Issue Discount" section of this
prospectus.
Payment of Distributions
The trust must pay distributions on the preferred securities on the
distribution payment dates to the extent that the property trustee has cash on
hand to make distributions. The property trustee will maintain that cash in
the property account. The only funds the property trustee will have to
distribute to the holders of the preferred securities will be from payments
received on the debentures. If we do not make interest payments on the
debentures, the property trustee will not have funds available to make
distributions on the preferred securities. If and to the extent we make
interest payments on the debentures, the property trustee will be obligated to
make distributions on the preferred securities and the common securities on a
pro rata basis. We guarantee the payment of distributions and other payments
on the preferred securities on a subordinated basis, but only if, and to the
extent, we have made corresponding payments to the trust on the debentures
and, as a result, the property trustee has funds available to make
distributions on the preferred securities. Please read the "Description of the
Guarantee" section in this prospectus.
Conversion Rights
General
Holders of preferred securities may convert them into our common stock at
any time before the earlier of:
. the close of business on the business day immediately prior to the
maturity date of the debentures; or
. in the case of preferred securities called for redemption, the close of
business on the business day immediately prior to the redemption date.
Initially, each of the preferred securities is convertible, at the option
of the holder, into 1.3986 shares of our common stock. This conversion rate is
equivalent to a conversion price of $35.75 per share of our common stock. The
conversion rate and conversion price will be subject to adjustment as
described under the "--Conversion Price Adjustments" section of this
prospectus.
If you wish to exercise your conversion right, you must deliver an
irrevocable conversion notice, together, if the preferred securities are in
certificated form, with the certificated security, to the conversion agent who
will, on your behalf, exchange the preferred securities for a like amount of
debentures and immediately convert the debentures into shares of our common
stock. You may obtain copies of the required form of the conversion notice
from the conversion agent.
At the close of business on a distribution record date, you will be
entitled to receive the distribution payable on your preferred securities on
the corresponding distribution date even if you convert your preferred
securities after the distribution record date but prior to the distribution
date. Except as provided in the immediately preceding sentence, neither we nor
the trust will make, or be required to make, any payment, allowance or
adjustment for accrued and unpaid distributions, whether or not in arrears, on
converted preferred
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<PAGE>
securities, even if you convert you preferred securities during a deferral
period. We will make no payment or allowance for distributions on our shares of
common stock issued upon conversion, except to the extent that those shares of
common stock are held of record on the record date for any distributions. We
will deem each conversion to have been effected immediately prior to the close
of business on the day on which the trust received the related conversion
notice.
We will not issue any fractional shares of our common stock as a result of a
conversion of preferred securities. We will pay cash in lieu of a fractional
share of common stock.
Conversion Price Adjustments--General.
The conversion price will be subject to adjustment for some events,
including:
. the payment of dividends or distributions payable in our common stock on
our common stock;
. the issuance of rights or warrants to all holders of our common stock;
. subdivisions and combinations of our common stock;
. the payment of dividends or distributions to all holders of our common
stock consisting of our indebtedness, securities or capital stock, cash
or assets, excluding any rights, warrants, dividends or distributions
referred to in the first two bullet points and dividends and
distributions paid exclusively in cash;
. the payment of dividends or other distributions on our common stock
exclusively in cash, excluding:
. cash dividends that do not exceed the per share amount of the
smallest of the four immediately preceding quarterly cash dividends
as adjusted to reflect any of the events referred to in the
proceeding bullet points; and
. cash dividends, if the annualized per share amount of the cash
dividends does not exceed 12.5% of the market price of our common
stock on the trading day immediately prior to the date of declaration
of the dividend; and
. payment to holders of our common stock in respect of a tender or exchange
offer, other than an odd-lot offer by us or any subsidiary of ours, for
our common stock at a price in excess of 110% of the market price of our
common stock as of the trading day next succeeding the last date tenders
or exchanges may be made in the tender or exchange offer.
We may, at our option, make other reductions in the conversion price that
our board of directors determines are advisable to avoid or diminish any income
tax to holders of our common stock resulting from any dividend or distribution
of stock or rights to acquire stock or from any event treated as such for
income tax purposes. Please read the "Federal Income Tax Consequences--
Adjustment of Conversion Price" section of this prospectus.
The conversion price will not be adjusted for the issuance of our common
stock (or securities convertible into or exchangeable for our common stock),
except as described above. For example, the conversion price will not be
adjusted upon the issuance of shares of our common stock
. under any present or future plan providing for the reinvestment of
dividends or interest payable on our securities;
. in connection with the investment of additional optional amounts in
shares of our common stock under any plan described in the preceding
bullet point;
. under any present or future employee benefit plan or program of ours; or
. pursuant to any option, warrant, right, or exercisable, exchangeable or
convertible security outstanding as of the date the preferred securities
were first issued.
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If any action would require adjustment of the conversion price under more
than one of the provisions described above, only one adjustment will be made
and that adjustment will be the amount of adjustment that has the highest
absolute value to holders of the preferred securities. An adjustment in the
conversion price will not be required unless the adjustment would require a
change of at least 1% in the conversion price then in effect.
However, any adjustment that would otherwise be required to be made will be
carried forward and taken into account in any subsequent adjustment.
Conversion Price Adjustments--Merger, Consolidation or Sale of Assets
If we are a party to any transaction, including a merger, consolidation,
sale of all or substantially all of our assets, recapitalization or
reclassification of our common stock or any compulsory share exchange, that
results in shares of our common stock being converted into the right to receive
other securities, cash or other property, then lawful provision will be made as
part of the terms of the transaction so that the holders of the preferred
securities will have the right to convert each Preferred Securities into:
. in the case of any transaction other than a transaction involving a
Common Stock Fundamental Change (as defined below), the kind and amount
of securities, cash or other property receivable upon the consummation of
the transaction by a holder of that number of shares of our common stock
into which a preferred securities was convertible immediately prior to
the transaction; or
. in the case of a transaction involving a Common Stock Fundamental Change,
common stock of the kind received by holders of our common stock.
In each case described in the foregoing bullet points, the conversion will
be made after giving effect to any adjustment discussed below relating to a
Fundamental Change if the transaction constitutes a Fundamental Change. The
holders of preferred securities will have no voting rights with respect to any
transaction described in this section.
If a Fundamental Change occurs, the conversion price in effect immediately
before the Fundamental Change will be adjusted as described below.
In the case of a Non-Stock Fundamental Change, the conversion price of the
preferred securities will be adjusted to become the lower of:
. the conversion price in effect immediately prior to the Non-Stock
Fundamental Change, but after giving effect to any other adjustments that
may be made pursuant to the first paragraph under the "--Conversion Price
Adjustments--General" section of this prospectus; and
. the result obtained by multiplying the greater of the Relevant Price (as
defined below) or the then applicable Reference Market Price (as defined
below) by the Optional Redemption Ratio (as defined below) (such product
shall be referred to as the "Adjusted Relevant Price" or the "Adjusted
Reference Market Price," as the case may be).
In the case of a Common Stock Fundamental Change, the conversion price of
the preferred securities in effect immediately before the Common Stock
Fundamental Change, but after giving effect to any other prior adjustments,
will thereupon be adjusted by multiplying the conversion price by a fraction of
which the numerator will be the Purchaser Stock Price (as defined below) and
the denominator will be the Relevant Price; provided, however, that in the
event of a Common Stock Fundamental Change in which:
. 100% of the value of the consideration received by a holder of our common
stock is common stock of the successor, acquiror or other third party
(and cash, if any, is paid only with respect to any fractional interests
in that common stock resulting from such Common Stock Fundamental
Change); and
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<PAGE>
. all of our common stock will have been exchanged for, converted into, or
acquired for common stock (and cash with respect to fractional interests)
of the successor, acquiror or other third party,
the conversion price of the preferred securities in effect immediately before
the Common Stock Fundamental Change will be adjusted by multiplying the
conversion price by a fraction of which the numerator will be one and the
denominator will be the number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one share of our common
stock as a result of the Common Stock Fundamental Change.
In the absence of the adjustments to the conversion price after a
Fundamental Change, in the case of a transaction mentioned above, each
preferred securities would become convertible into the securities, cash, or
other property receivable by a holder of the number of shares of our common
stock into which each preferred securities was convertible immediately prior to
the transaction. As a result, in the absence of the Fundamental Change
provisions, a transaction could substantially lessen or eliminate the value of
the conversion privilege associated with the preferred securities. For example,
if we are acquired in a cash merger, each preferred securities would become
convertible solely into cash and would no longer be convertible into securities
whose value would vary depending on our future prospects and other factors.
In Non-Stock Fundamental Change transactions, the foregoing conversion price
adjustments are designed to increase the securities, cash or other property
into which each preferred securities is convertible. In a Non-Stock Fundamental
Change transaction where the initial value received per share of our common
stock (measured as described in the definition of Relevant Price) is lower than
the conversion price of the preferred securities but greater than or equal to
the Reference Market Price, the conversion price will be adjusted as described
above with the effect that each preferred securities will be convertible into
securities, cash or other property of the same type received by the holders of
our common stock in the transaction with the conversion price adjusted as
though the initial value had been the Adjusted Relevant Price.
In a Non-Stock Fundamental Change transaction where the initial value
received per share of our common stock (measured as described in the definition
of Relevant Price) is lower than both the conversion price of each preferred
securities in effect immediately before any adjustment described above and the
Reference Market Price, the conversion price will be adjusted as described
above but calculated as though the initial value had been the Adjusted
Reference Market Price.
In Common Stock Fundamental Change transactions, the adjustments described
above are designed to provide in effect that:
. where our common stock is converted partly into common stock and partly
into other securities, cash or property, each preferred securities will
be convertible solely into a number of shares of common stock determined
so that the initial value of those shares (measured as described in the
definition of Purchaser Stock Price below) equals the value of the shares
of our common stock into which the preferred securities was convertible
immediately before the transaction (measured as described above) and
. where our common stock is converted solely into common stock, each
preferred securities will be convertible into the same number of shares
of common stock receivable by a holder of the number of shares of our
common stock into which the preferred securities was convertible
immediately before the transaction.
"Closing Price" of any security on any day means the last reported sale
price of that security on that day, or if no sale takes place on that day, the
average of the closing bid and asked prices in each case on the principal
national securities exchange on which the securities are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the National Market System of the Nasdaq Stock Market or any
successor national automated interdealer quotation system (the "Nasdaq Stock
Market") or, if such securities are not listed or admitted to trading on any
national securities exchange or quoted on the
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Nasdaq Stock Market, the average of the closing bid and asked prices of that
security in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected by us for that purpose.
"Common Stock Fundamental Change" means any Fundamental Change in which more
than 50% of the value, as determined in good faith by our board of directors,
of the consideration received by holders of our common stock consists of common
stock that for each of the ten consecutive trading days immediately prior to
and including the Entitlement Date has been admitted for listing or admitted
for listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq Stock Market; provided, however, that a Fundamental Change
will not be a Common Stock Fundamental Change unless either:
. we continue to exist after the occurrence of the Fundamental Change and
the outstanding preferred securities continue to exist as outstanding
Preferred Securities; or
. not later than the occurrence of such Fundamental Change, the outstanding
debentures are converted into or exchanged for debentures of a
corporation succeeding to the business of our company, which debentures
have terms substantially similar to those of the debentures.
"Entitlement Date" means the record date for determination of the holders of
our common stock entitled to receive securities, cash or other property in
connection with a Non-Stock Fundamental Change or a Common Stock Fundamental
Change or, if there is no record date, the date on which holders of our common
stock will have the right to receive such securities, cash or other property.
"Fundamental Change" means the occurrence of any transaction or event in
connection with a plan under which all or substantially all of our common stock
will be exchanged for, converted into, acquired for or constitute solely the
right to receive securities, cash or other property (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided that, in the case of
a plan involving more than one of these transactions or events, for purposes of
adjustment of the conversion price, the Fundamental Change will be deemed to
have occurred when substantially all of our common stock will be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property, but the adjustment will be based upon the
highest weighted average per share consideration that a holder of our common
stock could have received in that transaction or event as a result of which
more than 50% of our common stock will have been exchanged for, converted into,
or acquired for or constitute solely the right to receive securities, cash or
other property.
"Non-Stock Fundamental Change" means any Fundamental Change other than a
Common Stock Fundamental Change.
"Optional Redemption Ratio" means a fraction of which the numerator will be
$50 and the denominator will be the then current redemption price or, prior to
December 20, 2002, an amount per preferred securities determined by us in our
sole discretion, after consultation with an investment banking firm, to be the
equivalent of the hypothetical redemption price that would have been applicable
if the preferred securities had been redeemable during such period.
"Purchaser Stock Price" means, with respect to any Common Stock Fundamental
Change, the average of the Closing Prices for the common stock received in the
Common Stock Fundamental Change for the ten consecutive trading days prior to
and including the Entitlement Date, as adjusted in good faith by us to
appropriately reflect any of the events referred to in the first paragraph
under the "--Conversion Price Adjustments--General" section of this prospectus.
"Reference Market Price" initially means $20.17 (which is an amount equal to
66 2/3% of the last reported sale price for our common stock on the New York
Stock Exchange Composite Transactions Tape on December 9, 1999), and, in the
event of any adjustment to the conversion price, other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price will also be adjusted
so that the ratio of the Reference Market Price to the conversion price after
giving effect to the adjustment will always be the same as the ratio of $20.17
to the initial conversion price of the preferred securities.
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"Relevant Price" means (a) in the case of a Non-Stock Fundamental Change in
which the holder of our common stock receives only cash, the amount of cash
received by the holder of one share of our common stock; and (b) in the event
of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the daily Closing Prices for our common stock during the
ten consecutive trading days prior to and including the Entitlement Date, in
each case as adjusted in good faith by us to appropriately reflect any of the
events referred to in the first paragraph under the "--Conversion Price
Adjustments--General" section of this prospectus.
Mandatory Redemption
When the debentures are repaid in full at their stated maturity or the
debentures are redeemed in whole or in part (other than following any
distribution of the debentures to the holders of the preferred securities and
common securities), the proceeds from the repayment or redemption of the
debentures will be applied to redeem, on a pro rata basis, an equivalent
liquidation amount of preferred securities and common securities. The
redemption price for each preferred securities on any such redemption will be
equal to:
. the liquidation amount of each preferred securities plus any accrued and
unpaid distributions on the preferred securities in the case of (a) the
repayment of the debentures at their stated maturity or (b) the
redemption of the debentures in some limited circumstances upon the
occurrence of a tax event; or
. the redemption price described under the "Description of Debentures--
Redemption--Optional Redemption" section of this prospectus in the case
of an optional redemption of the debentures on or after December 20,
2002.
Redemption Procedures
If the trust gives a redemption notice for the preferred securities, then,
by 12:00 noon, New York City time, on the redemption date and provided that we
have paid to the property trustee a sufficient amount of cash for the
redemption, and the preferred securities are held in global form, the property
trustee will:
. deposit with DTC funds sufficient to pay the applicable redemption price;
and
. give DTC irrevocable instructions and authority to pay the applicable
redemption price to the holders of the preferred securities.
For preferred securities held in certificated form, the property trustee
will:
. deposit with the paying agent for the preferred securities funds
sufficient to pay the applicable redemption price; and
. give the paying agent irrevocable instructions and authority to pay the
redemption price to the holders of the preferred securities upon
surrender of their certificates evidencing the preferred securities.
Distributions payable on or prior to the applicable redemption date will be
payable to the holders of the preferred securities on the relevant record dates
for the related distribution dates. If notice of redemption has been given and
funds have been deposited as required, then upon the date of the deposit, all
rights of the holders of the preferred securities will cease, except the right
of the holders of the preferred securities to receive the applicable redemption
price, but without interest on such redemption price, and the preferred
securities will cease to be outstanding.
If a date fixed for redemption is not a business day, then payment of the
redemption price payable on that date will be made on the next day that is a
business day, and without any interest or other payment because of the delay.
However, if the next business day falls in the next calendar year, the payment
will be made on the immediately preceding business day. Payment made in either
of these cases will have the same effect as if made on the date fixed for
redemption. If payment of the redemption price is improperly withheld or
refused and not paid either by the property trustee or by us pursuant to the
guarantee, distributions on the preferred
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securities will continue to accrue from the original redemption date of the
preferred securities to the date the redemption price is actually paid. In that
case, the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price and accrued interest.
Subject to applicable law, we or our subsidiaries may at any time purchase
outstanding preferred securities by tender, in the open market or by private
agreement.
If we desire to consummate an optional redemption we must send a notice to
each holder of preferred securities at its registered address in accordance
with the notice procedures set forth under the "Description of Debentures--
Redemption--Optional Redemption" section of this prospectus. Notice of a
redemption due to a tax event must be mailed at least 20 days but not more than
60 days before the redemption date to each holder of preferred securities.
Notice of repayment at the stated maturity of the debentures is not required.
Tax Event or Investment Company Event Redemption or Distribution
Tax Event
If a tax event occurs, we will cause the trustees to dissolve the trust and,
after satisfaction of liabilities to creditors of the trust as required by
applicable law, distribute the debentures to the holders of the preferred
securities within 90 days following the occurrence of the tax event. However,
such a liquidation and distribution will be conditioned on:
. the trustees' receipt of an opinion of nationally recognized independent
tax counsel experienced in such matters that the holders of the preferred
securities will not recognize any income, gain or loss for United States
federal income tax purposes as a result of distribution of the
debentures; and
. our being unable to avoid the tax event within the 90-day period by
taking some ministerial action or pursuing some other reasonable measure
that, in our sole judgment, will have no adverse effect on the trust, us
or the holders of the preferred securities and will involve no material
cost.
Furthermore, if a tax event occurs and:
. we receive an opinion of nationally recognized independent tax counsel
experienced in such matters that, as a result of a tax event, there is
more than an insubstantial risk that we would be precluded from deducting
the interest on the debentures for United States federal income tax
purposes, even after the debentures were distributed to the holders of
the preferred securities upon liquidation of the trust as described
above; or
. the trustees are informed by such tax counsel that it cannot deliver the
opinion contemplated by the immediately preceding paragraph,
then we will have the right, upon not less than 20 nor more than 60 days'
notice and within 90 days following the occurrence and continuation of the tax
event, to redeem the debentures, in whole, but not in part, for cash, for the
principal amount of the debentures plus accrued and unpaid interest on the
debentures and, following the redemption, all the preferred securities will be
redeemed by the trust at their aggregate liquidation amount plus accrued and
unpaid distributions on the preferred securities. However, if at the time there
is available to us or the trust the opportunity to eliminate, within a 90-day
period, the tax event by taking some ministerial action or pursuing some other
reasonable measure that, in our sole judgment, will have no adverse effect on
us, the trust or the holders of the preferred securities and will involve no
material cost, either we or the trust will pursue such measure in lieu of
redemption. In lieu of the foregoing options, we will also have the option of
causing the preferred securities to remain outstanding and pay additional sums
on the debentures as described below in the "Description of Debentures--
Additional Sums" section of this prospectus.
A tax event will occur upon the receipt by the property trustee of an
opinion of a nationally recognized independent tax counsel experienced in such
matters to the effect that, on or after the date of original issuance of the
preferred securities, as a result of:
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. any amendment to or change, including any announced prospective change
(provided that a tax event will not occur more than 90 days before the
effective date of any such prospective change), in the laws of the United
States or any political subdivision or taxing authority thereof or
therein;
. any judicial decision or official administrative pronouncement, ruling,
regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations; or
. any amendment to or change in the administrative position or
interpretation of any judicial decision or official administrative
pronouncement, ruling, regulatory procedure, notice or announcement, or
judicial decision that differs from the previously generally accepted
position, in each case, by any legislative body, court, governmental
agency or regulatory body, irrespective of the manner in which such
amendment or change is made known, which amendment or change is effective
or such amendment or change is announced
there is more than an insubstantial risk that:
. if the debentures are held by the property trustee, (a) the trust is,
or will be within 90 days of the date of the opinion, subject to
United States federal income tax with respect to interest accrued or
received on the debentures or subject to more than a de minimis amount
of other taxes, duties or other governmental charges or (b) any
portion of interest payable by us to the trust on the debentures is
not, or within 90 days of the date of the opinion will not be,
deductible by us in whole or in part for United States federal income
tax purposes; or
. with respect to debentures that are no longer held by the property
trustee, any portion of interest payable by us on the debentures is
not, or within 90 days of the date of the opinion will not be,
deductible by us in whole or in part for United States federal income
tax purposes.
Investment Company Event
If an investment company event occurs and is continuing, we will cause the
trustees to dissolve the trust and, after satisfaction of liabilities to
creditors of the trust as required by applicable law, cause the debentures to
be distributed to the holders of the preferred securities in liquidation of the
trust within 90 days following the occurrence of the investment company event.
An investment company event will occur upon the receipt by the property
trustee of an opinion of nationally recognized independent securities counsel
to the effect that on or after the date of original issuance of the preferred
securities, as a result of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, the trust is or will be
considered an investment company that is required to be registered under the
Investment Company Act of 1940, as amended.
The distribution by us of the debentures will effectively result in the
cancellation of the preferred securities.
Liquidation of the Trust and Distribution of the Debentures
We will have the right at any time to dissolve the trust and, after
satisfaction of liabilities to creditors of the trust as required by applicable
law, cause an equivalent principal amount of the debentures to be distributed
to the holders of the preferred securities in liquidation of the trust.
In addition, the trust will automatically dissolve upon the first to occur
of:
. specified events of bankruptcy, dissolution or liquidation of Hanover;
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. upon our election to distribute all of the debentures to the holders of
the preferred securities and the common securities in exchange for all of
the preferred securities and common securities in accordance with the
terms of the preferred securities and common securities;
. redemption of all the preferred securities and common securities as
described under "--Mandatory Redemption" above;
. conversion of all outstanding preferred securities and the trust's common
securities as described under "--Conversion Rights" above;
. December 1, 2049, the expiration of the trust's term; and
. upon a decree of judicial dissolution.
If an early dissolution occurs as described in the first, second or sixth
bullet points above, the trustees will liquidate the trust as expeditiously as
possible by distributing, after satisfaction of liabilities to the trust's
creditors as required by applicable law, to the holders of the preferred
securities and common securities an equivalent principal amount of debentures.
However, if the distribution of debentures is not practical, the holders of
preferred securities will be entitled to receive out of the assets of the trust
available for distribution to holders of preferred securities, an amount equal
to the aggregate liquidation amount of the preferred securities plus accrued
and unpaid distributions of the preferred securities to the date of payment. If
this amount can be paid only in part because the trust has insufficient assets
available to pay the full amount, then the amounts payable directly by the
trust on the preferred securities will be paid on a pro rata basis. We, as
holder of the common securities, will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the preferred securities.
However, if an event of default under the indenture or declaration of trust has
occurred and is continuing, the preferred securities will have a priority over
the common securities with respect to any distributions.
On and after the liquidation date fixed for any distribution of debentures
to holders of the preferred securities and common securities:
. the preferred securities will no longer be deemed to be outstanding;
. DTC or its nominee, as the record holder of the preferred securities,
will receive a registered global certificate or certificates representing
the debentures to be delivered upon such distribution with respect to
preferred securities held by DTC or its nominee; and
. any certificates representing preferred securities not held by DTC or its
nominee will be deemed to represent debentures having a principal amount
equal to the liquidation amount of such preferred securities and bearing
accrued and unpaid interest in an amount equal to the accumulated and
unpaid distributions on such preferred securities until certificates are
presented to the administrative trustees or their agent for cancellation,
whereupon we will issue to such holder, and the debenture trustee will
authenticate, a certificate representing the debentures.
Subordination of Common Securities
Payment on the preferred securities will be made pro rata with payments on
the common securities based on the liquidation amount of the securities.
However, if on a distribution date or redemption date, as the case may be, an
event of default under the indenture or declaration of trust has occurred and
is continuing, no payment may be made on the common securities.
In the case of any event of default under the declaration of trust resulting
from an event of default under the indenture, we, as holder of the common
securities, will be deemed to have waived any right to act with respect to any
such event of default under the declaration of trust until the effect of all
such events of default have been cured, waived or otherwise eliminated. Until
all of the events of default under the declaration of trust have been cured,
waived or otherwise eliminated, the property trustee will act solely on behalf
of the holders of
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the preferred securities and not on our behalf, and only the holders of the
preferred securities will have the right to direct the property trustee to act
on their behalf.
Events of Default; Notice
Any one of the following events constitutes an event of default under the
declaration of trust:
. the occurrence of an event of default under the indenture;
. default by the trust in the payment of any distribution when it becomes
due and payable, and continuation of such default for a period of 30 days
(subject to the deferral of any due date in the case of a deferral
period);
. default by the trust in the payment of any redemption price of any
preferred securities when it becomes due and payable;
. default in the performance, or breach, in any material respect, of any
other covenant or warranty of the trustees in the declaration of trust,
and continuation of such default or breach for a period of 60 days after
there has been given written notice of the breach by the holders of at
least 25% in aggregate liquidation amount of the outstanding preferred
securities; or
. the occurrence of certain events of bankruptcy or insolvency with respect
to the property trustee and our failure to appoint a successor property
trustee within 60 days thereof.
We and the administrative trustees are required to file annually with the
property trustee a certificate as to whether or not we are in compliance with
all the conditions and covenants applicable to us under the declaration of
trust.
Removal of Trustees
Unless an event of default under the indenture occurs and is continuing, we
may remove any trustee at any time. If an event of default under the indenture
has occurred and is continuing, the property trustee and the Delaware trustee
may be removed at that time only by the holders of a majority in liquidation
amount of the outstanding preferred securities. The holders of the preferred
securities do not have the right to appoint, remove or replace the
administrative trustees. We have the exclusive right, as the holder of the
common securities, to appoint, remove or replace the administrative trustees. A
resignation or removal of the Delaware trustee or the property trustee and an
appointment of a successor trustee will not be effective until the acceptance
of appointment by the successor trustee in accordance with the provisions of
the declaration of trust.
Co-trustees and Separate Property Trustee
Unless an event of default under the indenture has occurred and is
continuing, at any time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the trust's
property may at the time be located, we, as the holder of the common
securities, and the administrative trustees may appoint one or more persons
either to act as a co-trustee, jointly with the property trustee, of all or any
part of the trust's property, or to act as separate trustee of any of the
trust's property. If an event of default under the indenture has occurred and
is continuing, the property trustee alone will have the power to make the
appointment.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The trust may not merge with or into, consolidate, amalgamate or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other person, except as described below or as
otherwise set forth in the declaration of trust. The trust may, with the
consent of the administrative trustees and without the consent of the holders
of the preferred securities, the property trustee or
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the Delaware trustee, merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, a trust organized under the laws of any state
of the United States or the District of Columbia if:
. the trust is not the surviving entity, the successor entity either (a)
expressly assumes all of the obligations of the trust with respect to the
preferred securities or (b) substitutes for the preferred securities
other securities having substantially the same terms as the preferred
securities so long as the successor securities rank the same as the
preferred securities;
. a trustee of the successor entity possessing the same powers and duties
as the property trustee as the holder of the debentures is appointed;
. the preferred securities or any successor securities are listed, or any
successor securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the preferred
securities are then listed or quoted, if any;
. the transaction does not cause the preferred securities (including any
successor securities) to be downgraded by any nationally recognized
statistical rating agency then rating the preferred securities;
. the transaction does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities (including any
successor securities) in any material respect;
. the successor entity has a purpose substantially identical to that of the
trust;
. prior to the transaction, we receive an opinion from independent counsel
experienced in such matters to the effect that (a) the successor entity
will be treated as a grantor trust for United States federal income tax
purposes, (b) following the transaction, neither the trust nor the
successor entity will be required to register as an investment company
under the 1940 Act, and (c) the transaction will not adversely affect the
limited liability of the holders of the trust securities (including any
successor securities);
. we or any permitted successor or assignee will own all of the common
securities of the successor entity and will guarantee the obligations of
the successor entity under the successor securities at least to the
extent provided by the guarantee; and
. the transaction is not a taxable event for holders of the preferred
securities.
Notwithstanding the foregoing, the trust will not, except with the consent
of holders of 100% in liquidation amount of the preferred securities and common
securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if the transaction would cause
the trust or the successor entity to be classified as an association taxable as
a corporation, or substantially increase the likelihood that the trust or the
successor entity would not be classified as a grantor trust for United States
federal income tax purposes.
Voting Rights; Amendment of the Declaration
Except as provided below and under the "Description of Guarantee--Amendments
and Assignment" section of this prospectus and as otherwise required by law and
the declaration of trust, the holders of the preferred securities will have no
voting rights.
In addition to the rights of the holders of preferred securities to enforce
payment to the trust of the principal or interest on the debentures described
in the "Description of Debentures--Enforcement of Certain Rights by Holders of
Preferred Securities" section of this prospectus, if an event of default under
the indenture occurs and is continuing or we default under the guarantee with
respect to the preferred securities, then the holders of the preferred
securities will be entitled by the majority vote of the holders to appoint a
special trustee. Any holder of preferred securities other than us and our
affiliates will be entitled to nominate a special trustee. Not later than 30
days after the right to appoint a special trustee arises, the trustees will
convene a
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meeting of the holders of the preferred securities for the purpose of
appointing a special trustee. If the trustees fail to convene the meeting
within the 30-day period, the holders of not less than 10% of the aggregate
liquidation amount of the outstanding preferred securities will be entitled to
convene the meeting. Any appointed special trustee will cease to be a special
trustee if the event that caused the appointment is cured. Regardless of the
appointment of a special trustee, we will retain all rights under the
indenture.
The declaration of trust may be amended by us, the property trustee and the
administrative trustees without the consent of the holders of the preferred
securities:
. to cure any ambiguity, correct or supplement any provision in the
declaration of trust that may be inconsistent with any other provision of
the declaration of trust, or to make provisions with respect to
ministerial matters or questions arising under the declaration of trust,
which are not inconsistent with the other provisions of the declaration
of trust; or
. to modify, eliminate or add to any provisions of the declaration of trust
to the extent as is necessary to ensure that (a) the trust will not be
taxable as a corporation and will continue to be classified for United
States federal income tax purposes as a grantor trust at all times that
any preferred securities or common securities are outstanding or (b) the
trust will not be required to register as an "investment company" under
the 1940 Act.
However, in the case described in the first bullet point above, the action
must not adversely affect in any material respect the interests of any holder
of preferred securities.
For amendments not described above, the declaration of trust may only be
amended by us and the trustees if:
. we obtain the consent of holders representing not less than a majority of
the aggregate liquidation amount of preferred securities outstanding; and
. the trustees receive an opinion of counsel that the amendment will not
affect the trust's status as a grantor trust for United States federal
income tax purposes or the trust's exemption from being an "investment
company" under the 1940 Act.
In addition, the declaration of trust may not be amended without the consent
of each holder of preferred securities to:
. change or adversely affect the amount or timing of any distribution on
the preferred securities; or
. restrict the right of a holder of preferred securities to sue to enforce
the payment of a distribution.
So long as any debentures are held by the trust, the trustees will not:
. direct the time, method and place of conducting any proceeding for any
remedy available to the debenture trustee, or executing any trust or
power conferred on the property trustee with respect to the debentures;
. waive any past default that is waivable under the indenture;
. exercise any right to rescind or annul a declaration of acceleration of
the maturity of the principal of the debentures; or
. consent to any amendment, modification or termination of the indenture or
the debentures, where the consent is required,
without, in each case, obtaining the prior approval of the holders of a
majority in aggregate liquidation amount of all outstanding preferred
securities.
However, where a consent under the indenture would require the consent of
each holder of debentures affected by the consent, no consent may be given by
the property trustee without the prior consent of each holder of the preferred
securities. The trustees will not revoke any action previously authorized or
approved by
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a vote of the holders of the preferred securities except by subsequent vote of
the holders. The property trustee will notify each holder of preferred
securities of any notice of default with respect to the debentures. In addition
to obtaining the foregoing approvals of the holders of the preferred
securities, prior to taking any of the foregoing actions, the trustees will
obtain an opinion of counsel experienced in these matters that the action will
not affect the trust's status as a grantor trust for United States federal
income tax purposes on account of the action.
Any required approval of holders of preferred securities may be given at a
meeting of the holders of preferred securities convened for that purpose or by
a written consent. Notice of any meeting at which holders of preferred
securities are entitled to vote will be given to each holder of record of
preferred securities in the manner set forth in the declaration of trust.
No vote or consent of the holders of preferred securities will be required
for the trust to redeem and cancel the preferred securities in accordance with
the declaration of trust.
Even though holders of the preferred securities may be entitled to vote or
consent under any of the circumstances described above, any of the preferred
securities that are owned by Hanover, the trustees or any affiliate of Hanover
or any trustee, will, for purposes of any vote or consent, be treated as if
they were not outstanding.
Expenses and Taxes
In the indenture, we have agreed to pay all present and future costs,
expenses, debts and other obligations, including taxes, other than withholding
taxes, of the trust. However, these costs, expenses, debts and obligations do
not include payment obligations of the trust to the holders of the preferred
securities.
Form, Book-Entry Procedures and Transfer
Preferred securities originally sold to "qualified institutional buyers" as
defined in Rule 144A under the Securities Act were issued in the form of a
fully registered global certificate except as described below. The global
certificate was deposited on the date of original issuance of the preferred
securities with DTC and registered in the name of Cede & Co., as nominee of
DTC. Except as set forth below, the global certificate may be transferred, in
whole and not in part, only to DTC or another nominee of the DTC. Investors may
hold their beneficial interests in the global certificate directly through DTC
if they have an account with DTC or indirectly through organizations that have
accounts with DTC.
DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of institutions that have accounts with DTC ("participants") and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. DTC's participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, whether directly or
indirectly.
Upon the issuance of the global certificate, DTC credited, on its book-entry
registration and transfer system, the principal amount of the global
certificate to the accounts of participants. The accounts credited were
designated by the initial purchasers. Ownership of beneficial interests in the
global certificate is shown on, and the transfer of those ownership interests
will be effected only through, records maintained by DTC (with respect to its
participants) and such participants (with respect to owners of beneficial
interests in the global
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certificate other than participants). The laws of some jurisdictions may
require that certain purchasers of securities take physical delivery of
securities in definitive form. These limits and laws may impair a person's
ability to transfer or pledge beneficial interests in the global certificate.
So long as DTC or its nominee is the registered holder and owner of the
global certificate, DTC or its nominee, as the case may be, will be considered
the sole legal owner and holder of the preferred securities represented by the
certificate for all purposes of the declaration of trust, the guarantee and the
indenture. Except as described below, owners of beneficial interests in the
global certificate will not be entitled to have the preferred securities
represented by the global certificate registered in their names, will not
receive or be entitled to receive physical delivery of certificated preferred
securities in definitive form and will not be considered to be the owners or
holders of any preferred securities under the declaration of trust, the
guarantee or the indenture. We understand that under existing industry
practice, in the event an owner of a beneficial interest in the global
certificate desires to take any action that DTC, as the holder of the global
certificate, is entitled to take, DTC would authorize the participants to take
such action, and that the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of amounts with respect to the preferred securities represented by
the global certificate registered in the name of and held by DTC or its nominee
will be made to DTC or its nominee, as the case may be, as the registered owner
and holder of the global certificate.
We expect that DTC or its nominee, upon receipt of payment of amounts with
respect to the global certificate, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the liquidation amount of the global certificate as shown on the records of DTC
or its nominee. We also expect that payments by participants to owners of
beneficial interests in the global certificate held through such participants
will be governed by standing instructions and customary practices and will be
the responsibility of such participants. Neither the trust, the initial
purchasers nor we will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in the global certificate or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for
any other aspect of the relationship between or the relationship between such
participants and the owners of beneficial interests in DTC and its participants
or the relationship between such participants and the owners of beneficial
interests in the global certificate owning through such participants.
Unless and to the extent they are exchanged in whole or in part for
certificated preferred securities in definitive form, the global certificate
may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global certificate among participants of DTC, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the trust, the initial
purchasers nor we will have any responsibility for the performance by DTC or
its participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
Neither the trust, the initial purchasers, nor we will be liable for any
delay by DTC or any participant or indirect participant in identifying the
beneficial owners of the preferred securities, and we, the trust and the
initial purchasers may conclusively rely on, and will be protected in relying
on, instructions from DTC for all purposes (including with respect to the
registration and delivery, and their respective liquidation amounts, of the
preferred securities to be issued).
The information in this prospectus concerning DTC and DTC's book-entry
system has been obtained from sources that we believe to be reliable. Neither
the trust, the initial purchasers nor we will have any responsibility for the
performance by DTC or its participants of their respective obligations as
described in this prospectus or under the rules and procedures governing their
respective operations.
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Certificated Preferred Securities
The preferred securities represented by the global certificate are
exchangeable for certificated preferred securities in definitive form only if:
. DTC notifies us or the trust that it is unwilling or unable to continue
as depositary for the global certificate or if at any time DTC ceases to
be a clearing agency registered under the Exchange Act;
. we, or the trust, in our discretion at any time determine not to have all
of the preferred securities evidenced by the global certificate; or
. a default entitling the holders of the preferred securities to accelerate
the maturity of the preferred securities has occurred and is continuing.
Payment and Paying Agency
Payments in respect of the global certificate will be made to DTC. DTC will
credit the relevant accounts at DTC on the applicable distribution dates. For
any preferred securities that are not held by DTC, payment will be made by
check mailed to the address of the holder entitled to payment as the address
appears on the register. The paying agent will initially be the property
trustee. The paying agent will be permitted to resign upon 30 days' written
notice to the property trustee, the administrative trustees and us. In the
event that the property trustee is no longer willing to be the paying agent,
the administrative trustees will appoint a successor, which will be a bank or
trust company acceptable to the administrative trustees and to us, to act as
paying agent.
The property trustee has informed the trust that so long as it serves as
paying agent for the preferred securities, it anticipates that information
regarding distributions on the preferred securities, including payment date,
record date and redemption information, will be made available through
Wilmington Trust Company.
Registrar, Conversion Agent, and Transfer Agent
The property trustee acts as registrar and conversion agent for the
preferred securities. The property trustee acts as initial transfer agent for
certificated preferred securities and may designate additional or substitute
transfer agents at any time. Registration of transfers of certificated
preferred securities will be effected without charge by or on behalf of the
trust upon payment of any tax or other government charges that may be imposed
in relation to the transfer. The trust will not be required to register the
transfer of or exchange certificated preferred securities during the period
beginning at the opening of business 15 days before any selection of
certificated preferred securities to be redeemed and ending at the close of
business on the day of that selection or any certificated preferred securities
called for redemption.
Information Concerning the Property Trustee
The property trustee, other than during the occurrence and continuance of an
event of default, undertakes to perform only the duties that are specifically
described in the declaration of trust. During the existence of an event of
default under the declaration of trust, the property trustee must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the property
trustee is under no obligation to exercise any of the powers vested in it by
the declaration of trust at the request of any holder of preferred securities
unless it is offered reasonable indemnity against any costs, expenses and
liabilities that might be incurred by the property trustee. If no event of
default has occurred and is continuing and the property trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the declaration of trust or is unsure of the application of any provision of
the declaration of trust, and the matter is not one on which holders of the
preferred securities or the common securities are entitled under the
declaration of trust to vote, then the property trustee will take such action
as is directed by us. If we do not direct the property trustee to take action,
the property trustee will take the action that it deems advisable and in the
best interests of the holders of the preferred securities and common securities
and will have no liability except for its own bad faith, negligence or willful
misconduct.
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Miscellaneous
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
. the trust will not be deemed to be an "investment company" required to be
registered under the 1940 Act;
. the trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes or in a way
that would substantially increase the risk that the trust would be
classified as other than a grantor trust for United States federal income
tax purposes; and
. the debentures will be treated as our indebtedness for United States
federal income tax purposes.
In this connection, we and the administrative trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
or the declaration of trust, that we and the administrative trustees determine
in our discretion to be necessary or desirable for these purposes, as long as
the action does not materially adversely affect the interests of the holders of
the preferred securities and common securities. Holders of the preferred
securities and common securities have no preemptive or similar rights. The
trust may not borrow money or issue debt or mortgage or pledge any of its
assets.
Governing Law
The declaration of trust and the preferred securities are governed by and
construed in accordance with the laws of the State of Delaware.
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DESCRIPTION OF DEBENTURES
We issued the debentures under an indenture between us and Wilmington Trust
Company, as trustee. The indenture will be qualified under the Trust Indenture
Act and incorporates selected provisions of the Trust Indenture Act. We have
summarized selected provisions of the indenture and the debentures. This
summary is not complete, and is subject to and is qualified in its entirety by
reference to all of the provisions of the indenture. A copy of indenture is
available upon request. Unless the context requires otherwise, "Hanover," "we,"
"us," "our" and similar terms in this section refer solely to Hanover
Compressor Company after giving effect to the Restructuring and not the trust
or any of our other consolidated subsidiaries.
General
Concurrently with the issuance of the preferred securities and common
securities, the trust invested the proceeds in debentures issued by us. The
debentures bear interest at the rate of 7 1/4% per annum from December 15,
1999. Interest is payable quarterly in arrears on March 15, June 15, September
15 and December 15 of each year, beginning March 15, 2000, to the person in
whose name each debenture is registered, subject to certain exceptions, at the
close of business on the 1st day of the month of the applicable interest
payment date. It is anticipated that, until the liquidation of the trust, each
debenture will be registered in the name of the trust and held by the property
trustee for the benefit of the holders of the Preferred Securities and common
securities.
The amount of interest payable for any period will be computed on the basis
of the number of days elapsed in a 360-day year consisting of twelve 30-day
months. If an interest payment date is not a business day, then we will make
the payment of the interest on the next day that is a business day, without any
additional interest or other payment due to the delay.
Accrued interest that is not paid on the applicable interest payment date
will bear additional interest compounded quarterly from the relevant interest
payment date. The term "interest" as used in this prospectus includes quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable interest payment date, special interest (as described in the
"Registration Rights" section of this prospectus) and additional sums (as
described in "--Additional Sums"), as applicable.
Unless previously redeemed or repurchased in accordance with the indenture,
the debentures will mature on December 15, 2029.
The debentures are unsecured and rank junior and are subordinate in right of
payment to all of our senior debt and effectively subordinated to all existing
and future liabilities of our subsidiaries, including HCI's bank credit
facility. The indenture does not limit the incurrence or issuance of other
secured or unsecured debt by us or any of our subsidiaries, including senior
debt.
Option to Extend Interest Payment Date
We can, on one or more occasions, defer interest payments on the debentures
for up to 20 consecutive quarterly periods unless an event of default under the
indenture has occurred and is continuing. Thus, we will not be obligated to pay
interest on the debentures during a deferral period. We do not currently intend
to defer interest payments on the debentures.
We may extend a deferral period prior to the period's termination. However,
we may not extend a deferral period, including all previous and further
extensions of the period, beyond 20 consecutive quarterly interest periods or
the maturity date of the debentures. On the interest payment date occurring at
the end of each deferral period, we will pay to the holders of debentures all
accrued and unpaid interest on the debentures, together with interest on that
interest at the stated annual rate, compounded quarterly, to the extent
permitted by applicable law. Once we make all interest payments due on the
debentures, we can commence a new deferral
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period, subject to the same limitations. Consequently, there could be multiple
deferral periods of varying lengths throughout the term of the debentures.
During a deferral period, interest will continue to accrue and holders of the
debentures (and holders of the preferred securities while the preferred
securities are outstanding) will be required to recognize interest income for
United States federal income tax purposes. Please read the "Federal Income Tax
Consequences--Interest Income and Original Issue Discount" section of this
prospectus.
We will be subject to restrictions during a deferral period on our ability
to pay dividends on our capital stock or to make payments on other debt
securities that are on a parity with or junior to the debentures. Please read
the "--Restrictions on Payments" section of this prospectus.
We must give the property trustee, the administrative trustees and the
debenture trustee notice of our election to begin a deferral period at least 10
days before the record date for the distributions on the preferred securities
that would have been payable except for the election to begin or extend the
deferral period. The debenture trustee will give notice of our election to
begin or extend a new deferral period to the holders of the preferred
securities.
Redemption
Repayment at Maturity; Redemption of Debentures
The debentures must be repaid at their stated maturity, unless earlier
redeemed. The circumstances in which we may redeem the debentures prior to
their stated maturity are described below. Upon the repayment in full at
maturity or redemption (other than following the distribution of the debentures
to the holders of the preferred securities and common securities), the trust
will apply the proceeds from the repayment or redemption to redeem, at the
applicable redemption price, an equivalent liquidation amount of preferred
securities and common securities.
Optional Redemption
We have the right to redeem the debentures in whole or in part, at any time
on or after December 20, 2002, upon not less than 20 nor more than 60 days'
notice, at a redemption price equal to the following prices per $50 principal
amount of debentures, plus accrued and unpaid interest thereon, if redeemed
during the 12-month period ending December 19:
<TABLE>
<CAPTION>
Price Per $50
Year Principal Amount
---- ----------------
<S> <C>
2003..................................................... $51.81
2004..................................................... $51.21
2005..................................................... $50.60
2006 and thereafter...................................... $50.00
</TABLE>
In the event of any redemption in part, we will not be required:
. to issue, register the transfer of or exchange any debenture during a
period beginning at the opening of business 15 days before any selection
of debentures for redemption and ending at the close of business on the
earliest date on which the notice of redemption is deemed to have been
given to all holders of debentures to be redeemed; and
. to register the transfer of or exchange any debentures selected for
redemption, in whole or in part, except the unredeemed portion of any
debenture being redeemed in part.
In no event will we optionally redeem the debentures during a deferral
period. Accordingly, prior to optionally redeeming the debentures, all interest
accrued and unpaid (together, in the case of a deferral period,
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with interest thereon, to the extent permitted by law) to the interest payment
date immediately preceding the optional redemption date will be paid in full.
Tax Event Redemption
We may also, under limited circumstances within 90 days of the occurrence
and continuation of a tax event, redeem the debentures in whole, but not in
part, at the aggregate principal amount of the debentures plus accrued and
unpaid interest on the debentures to the date of redemption. Please read the
"Description of Preferred Securities--Tax Event or Investment Company Event
Redemption or Distribution" section of this prospectus.
If we are permitted to consummate the tax event redemption described above
and desire to do so, we must mail notice to holders of Preferred Securities at
least 20 days but not more than 60 days before the redemption date.
Additional Sums
If the property trustee is the sole holder of all debentures and the trust
is required to pay any additional taxes, duties, assessments or other
governmental charges as a result of a tax event or otherwise, we will pay as
additional amounts on the debentures, referred to in this prospectus as
"additional sums", such amounts as are required so that the distributions
payable by the trust to holders of Preferred Securities and common securities
will not be reduced as a result of the additional taxes, duties, assessments or
other governmental changes.
Restrictions on Payments
If any of the following occur:
. an event of default under the indenture;
. we are in default in our payment obligations under the guarantee; or
. we have given notice of our election of a deferral period as provided in
the indenture and have not rescinded the notice, or a deferral period is
continuing,
then, we covenant that we will not:
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock other than stock dividends paid by us which consist of stock of the
same class as that on which the dividend is being paid;
. make any payment of principal, interest or premium, if any, on or repay
or repurchase or redeem any of our debt securities that rank pari passu
with or junior in interest to the debentures; or
. make any guarantee payments with respect to any guarantee by us of the
debt securities of any of our subsidiaries if the guarantee ranks pari
passu with or junior in interest to the debentures.
However, we may:
. declare or pay dividends or distributions in our common stock;
. declare a dividend in connection with the implementation of a
stockholders' rights plan, or issue stock under the plan in the future,
or redeem or repurchase the rights pursuant to the plan;
. make payments under the guarantee;
. purchase shares of our common stock in connection with the satisfaction
by us of our obligations under any employee benefit plan or any other of
our contractual obligations so long as they do not rank pari passu with
or junior in interest to the debentures;
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. do any of the foregoing if it is a result of a reclassification of our
capital stock or the exchange or conversion of one class or series of our
capital stock for another class or series of our capital stock; or
. purchase fractional interests in shares of our capital stock pursuant to
the conversion or exchange provisions of that capital stock or the
security being converted or exchanged.
Modification of Indenture
From time to time we and the debenture trustee may, without the consent of
the holders of debentures, amend, waive or supplement the indenture for
specified purposes, including, among other things:
. curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders
of debentures or the holders of the preferred securities so long as they
remain outstanding); and
. qualifying, or maintaining the qualification of, the indenture under the
Trust Indenture Act.
In addition, we and the debenture trustee, with the consent of the holders
of not less than a majority in principal amount of the outstanding debentures,
can modify the indenture in a manner affecting the rights of the holders of
debentures. However, without the consent of the holder of each affected
debenture, we may not:
. change the stated maturity of the debentures;
. reduce the principal amount of the debentures;
. reduce the rate or extend the time of payment of interest on the
debentures; or
. reduce the percentage of principal amount of debentures the consent of
whose holders is required to amend, waive or supplement the indenture, or
have certain other effects as set forth in the indenture.
notwithstanding the provisions described above or in the "--Events of
Default" section of this prospectus, so long as any of the preferred securities
remain outstanding, (a) no modification may be made that adversely affects the
holders of the preferred securities in any material respect, and no termination
of the indenture may occur, and no waiver of any event of default under the
indenture or compliance with any covenant under the indenture may be effective,
without the prior consent of the holders of at least a majority in aggregate
liquidation preference of preferred securities then outstanding unless and
until the principal of and any premium on the debentures and all accrued and
unpaid interest thereon has been paid in full and (b) where a consent under the
indenture would require the consent of each holder of debentures, no consent
will be given by the property trustee without the prior consent of each holder
of the preferred securities.
Events of Default
The indenture provides that any one or more of the following described
events with respect to the debentures that has occurred and is continuing
constitutes an event of default under the indenture:
. failure for 30 days to pay any interest on the debentures when due
(subject to the deferral of any due date in the case of a deferral
period);
. failure to pay any principal or premium, if any, on the debentures when
due, whether at maturity, upon redemption, by declaration of acceleration
or otherwise;
. failure to observe or perform certain other covenants contained in the
indenture for 60 days after written notice to us from the debenture
trustee or the holders of at least 25% in aggregate outstanding principal
amount of the debentures;
. our failure to issue and deliver shares of our common stock upon an
election by a holder of preferred securities to convert such preferred
securities;
. certain events of bankruptcy, insolvency or reorganization of Hanover; or
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. the voluntary or involuntary dissolution, winding-up or termination of
the trust, except in connection with the distribution of the debentures
to the holders of preferred securities or common securities in
liquidation of the trust, the redemption of all of the preferred
securities and common securities of the trust, or certain mergers,
consolidations or amalgamations, each as permitted by the declaration of
trust.
The holders of a majority in aggregate outstanding principal amount of the
debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the debenture trustee. The debenture
trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the debentures may declare the principal due and payable immediately
upon an event of default under the indenture and, should the debenture trustee
or the holders of debentures fail to make such declaration, the holders of at
least 25% in aggregate liquidation amount of the preferred securities will have
such right. The holders of a majority in aggregate outstanding principal amount
of the debentures may annul the declaration and waive the default if the
default (other than the non-payment of the principal of the debentures which
has become due solely by such acceleration) has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the debenture trustee. Should the holders
of debentures fail to annul the declaration and waive the default, the holders
of a majority in aggregate liquidation amount of the preferred securities will
have the right.
The holders of a majority in aggregate outstanding principal amount of the
debentures affected thereby may, on behalf of the holders of all the
debentures, waive any past default, except a default in the payment of
principal of (or premium, if any) or interest (unless the default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
debenture trustee) or a default in respect of a covenant or provision which
under the indenture cannot be modified or amended without the consent of the
holder of each outstanding debenture. Should the holders of such debentures
fail to annul the declaration and waive such default, the holders of a majority
in aggregate liquidation amount of the preferred securities will have the
right. We are required to file annually with the debenture trustee a
certificate as to whether or not we are in compliance with all the conditions
and covenants applicable to us under the indenture.
If an event of default under the indenture has occurred and is continuing,
the property trustee will have the right to declare the principal of and the
interest on the debentures, and any other amounts payable under the indenture,
to be due and payable and to enforce its other rights as a creditor with
respect to the debentures.
Enforcement of Certain Rights by Holders of Preferred Securities
If an event of default under the indenture has occurred and is continuing
and is attributable to our failure to pay interest or principal on the
debentures on the date such interest or principal is otherwise payable, a
holder of preferred securities may institute a direct action against us. We may
not amend the indenture to remove the right to bring a direct action against us
without the prior written consent of the holders of all of the preferred
securities. Notwithstanding any payments made to a holder of preferred
securities by us in connection with a direct action against us, we will remain
obligated to pay the principal of and interest on the debentures, and will be
subrogated to the rights of the preferred securities holders with respect to
payments on the preferred securities to the extent of any payments made by us
to such holder in any direct action against us.
The holders of the preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the debentures unless there is an event of default
under the declaration of trust.
Consolidation, Merger, Sale of Assets and Other Transactions
The indenture provides that we may not consolidate with or merge with or
into any other person or convey, transfer or lease our properties and assets
substantially as an entirety to any person, and no person may consolidate with
or merge with or into us or convey, transfer or lease its properties and assets
substantially as an entirety to us, unless:
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. in case we consolidate with or merge with or into another person or
convey or transfer our properties and assets substantially as an entirety
to any person, the successor person is organized under the laws of the
United States or any state of the United States or the District of
Columbia, and the successor person expressly assumes our obligations on
the debentures and provides for conversion rights in accordance with the
terms of the indenture;
. immediately after giving effect to the transaction, no event of default
under the indenture, and no event which, after notice or lapse of time or
both, would become an event of default under the indenture, will have
occurred and be continuing;
. if at the time any preferred securities are outstanding, the transaction
is permitted under the declaration of trust and the guarantee and does
not give rise to any breach or violation of the declaration of trust or
the guarantee; and
. other conditions as specified in the indenture are met.
The general provisions of the indenture do not afford holders of the
debentures protection in the event of a highly leveraged or other transaction
involving us that may adversely affect holders of the debentures.
Subordination
In the indenture, we have covenanted and agreed that the debentures will be
subordinate and junior in right of payment to all our senior debt to the extent
provided in the indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any
bankruptcy, insolvency, debt restructuring or similar proceedings in connection
with any insolvency or bankruptcy proceeding of us, the holders of our senior
debt will first be entitled to receive payment in full before the holders of
debentures will be entitled to receive or retain any payment.
If the maturity of the debentures is accelerated, the holders of all our
senior debt outstanding at the time of the acceleration will be entitled to
receive payment in full of all amounts due on the senior debt, including any
amounts due upon acceleration, before the holders of the debentures will be
entitled to receive or retain any payment of the principal of, and premium and
interest, if any, on, the debentures.
In the event that we default in the payment of any principal of, or premium
or interest on, any of our senior debt, and such default continues beyond the
period of grace, if any, specified in the instrument evidencing the senior
debt, then, unless and until the default is cured or waived or ceases to exist
or all senior debt is paid, no direct or indirect payment may be made or agreed
to be made for principal of, and premium and interest, if any, on, the
debentures, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the debentures.
The term "senior debt" as used in this prospectus means:
. the principal of, and premium and interest, if any, on all of our
indebtedness for money borrowed, whether outstanding on the date of
execution of the indenture or thereafter created, assumed or incurred;
. all obligations to make payment pursuant to the terms of financial
instruments, such as (1) securities contracts and foreign currency
exchange contracts, (2) derivative instruments, such as swap agreements
(including interest rate and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange agreements, options, commodity futures
contracts and commodity options contracts, and (3) similar financial
instruments; except, in the case of both the immediately preceding bullet
point and this bullet point, the indebtedness and obligations that are
expressly stated to rank junior in right of payment to, or pari passu in
right of payment with, the debentures;
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. indebtedness or obligations of others of the kind described in the two
immediately preceding bullet points above for the payment of which we are
responsible or liable as guarantor or otherwise; and
. any deferrals, renewals or extensions of such senior debt.
However, senior debt does not include:
. any of our debt which, when incurred and without respect to any election
under Section 1111(b) of the United States Bankruptcy Code of 1978, was
without recourse to us;
. trade accounts payable and accrued liabilities arising in the ordinary
course of business;
. any of our debt to any of our subsidiaries;
. debt to any of our employees; and
. debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of such debt by the holders of
the debentures as a result of the subordination provisions of the
indenture would be greater than such payments otherwise would have been
as a result of any obligation of such holders of such debt to pay amounts
over to the obligees on such trade accounts payable or accrued
liabilities arising in the ordinary course of business as a result of
subordination provisions to which such debt is subject.
The term "debt" as used in this prospectus means:
. the principal of, and premium and interest, if any, on, indebtedness for
money borrowed;
. purchase money and similar obligations;
. obligations under capital leases;
. guarantees, assumptions or purchase commitments relating to, or other
transactions as a result of which we are responsible for the payment of
such indebtedness of others;
. renewals, extensions and refunding of any such indebtedness;
. interest or obligations in respect of any such indebtedness accruing
after the commencement of any insolvency or bankruptcy proceedings; and
. obligations associated with derivative products such as interest rate and
currency exchange contracts, foreign exchange contracts, commodity
contracts and similar arrangements.
The indenture places no limitation on the amount of senior debt that we or
our subsidiaries may incur. At October 31, 1999 after giving effect to the
restructuring, we had no senior debt but had guaranteed approximately $122
million of HCI's indebtedness under its bank credit agreement. In addition, we
had guaranteed the residual value of the equipment under HCI's sale and lease
back transactions of approximately $332 million, which guarantee ranks senior
to the debentures.
Structural Subordination
The debentures are effectively junior in right of payment to all of our
subsidiaries' existing or future indebtedness and other liabilities. As of
October 31, 1999 after giving effect to the Restructuring, our subsidiaries had
$146 million of indebtedness. The indenture permits our subsidiaries to incur
indebtedness and other liabilities without restriction. Any indebtedness of our
subsidiaries will effectively rank senior to the debentures with respect to
such subsidiary's assets. Accordingly, there might only be a limited amount of
assets available to satisfy Hanover's obligations under the debentures and, as
a result, the trust's obligations to holders of the preferred securities.
The debentures and the guarantee are obligations exclusively of Hanover.
Since the operations of Hanover are conducted through its subsidiaries, the
cash flow and the consequent ability to service debt, including the
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debentures and the guarantee, of Hanover, are dependent upon the earnings of
its subsidiaries and the distribution of those earnings to, or upon loans or
other payments of funds by those subsidiaries to, Hanover.
The payment of dividends and the making of loans and advances to Hanover by
its subsidiaries may be subject to statutory or contractual restrictions, are
dependent upon the earnings of those subsidiaries and are subject to various
business considerations.
Any right of Hanover to receive assets of any of its subsidiaries upon their
liquidation or reorganization (and the consequent right of the holders of the
debentures to participate in those assets) will be effectively subordinated to
the claims of that subsidiary's creditors (including trade creditors), except
to the extent that Hanover is itself recognized as a creditor of such
subsidiary, in which case the claims of Hanover would still be subordinate to
any security interests in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that held by Hanover.
Registration and Transfer
The debentures will be represented by one or more global certificates
registered in the name of Cede & Co. as the nominee of DTC if, and only if,
distributed to the holders of the preferred securities and the trust's common
securities. Until that time, the debentures will remain registered in the name
of and held by the property trustee. Should the debentures be distributed to
holders of the preferred securities and the trust's common securities,
beneficial interests in the debentures will be shown on, and transfers of
debentures will be effected only through, records maintained by participants in
DTC. Except as described below, debentures in certificated form will not be
issued in exchange for the global certificates.
A global security will be exchangeable for debentures in certificated form
registered in the names of persons other than Cede & Co. only if:
. DTC notifies us that it is unwilling or unable to continue as a
depositary for the global security or if at any time DTC ceases to be a
clearing agency registered under the Exchange Act;
. we in our sole discretion determine that the global security will be
exchangeable; or
. there shall have occurred and be continuing an event of default under the
indenture.
Payments on debentures held in global form will be made to DTC. For
debentures issued in certificated form, principal and interest will be payable,
the transfer of the debentures will be registrable, and debentures will be
exchangeable for debentures of other denominations of a like aggregate
principal amount, at the corporate office of the debenture trustee in New York,
New York, or at the offices of any paying agent or transfer agent appointed by
us, provided that payment of interest may be made at our option by check mailed
to the address of the persons entitled to payment or by wire transfer.
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, please read the "Description of Preferred Securities--Form,
Book-Entry Procedures and Transfer" section of this prospectus. If the
debentures are distributed to the holders of the Preferred Securities and
common securities upon the termination of the trust, the form, book-entry and
transfer procedures with respect to the Preferred Securities as described under
the "Description of Preferred Securities--Form, Book-Entry Procedures and
Transfer" section of this prospectus will apply to the debentures.
Payment and Paying Agents
Payment of the principal of, and premium and interest, if any, on, the
debentures will be made at the office or agency of us maintained for that
purpose in New York, New York, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. However, at our option, payment of interest may be made (except
in the case of debentures that are held in global form)
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by check mailed to each registered holder or by wire transfer. Payment of any
interest on any debenture will be made to the person in whose name the
debenture is registered at the close of business on the record date for such
interest, except in the case of defaulted interest.
Governing Law
The indenture and the debentures are governed by and construed in accordance
with the laws of the State of New York.
Information Concerning the Debenture Trustee
The debenture trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the debenture trustee is under no
obligation to exercise any of the powers vested in it by the indenture at the
request of any holder of debentures, unless offered reasonable indemnity by the
holder against the costs, expenses and liabilities that might be incurred by
the debenture trustee. The debenture trustee is not required to expend or risk
its own funds or otherwise incur personal financial liability in the
performance of its duties if the debenture trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
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DESCRIPTION OF GUARANTEE
The guarantee was executed and delivered by us concurrently with the
issuance by the trust of the preferred securities for the benefit of holders of
preferred securities. Wilmington Trust Company acts as trustee under the
guarantee agreement. The guarantee agreement will be qualified under the Trust
Indenture Act. We have summarized selected provisions of the guarantee
agreement. This summary is not complete and is subject to, and qualified in its
entirety by reference to, all of the provisions of the guarantee agreement. The
guarantee trustee will hold the guarantee for the benefit of the holders of the
preferred securities. A copy of the guarantee agreement is available upon
request. Unless the context requires otherwise, "Hanover," "we," "us," "our"
and similar terms in this section refer solely to Hanover Compressor Company
after giving effect to the Restructuring and not the trust or any of our other
consolidated subsidiaries.
General
Under the guarantee agreement, we irrevocably agree to pay in full on a
subordinated basis, to the extent described below, the guarantee payments
described below to the holders of the preferred securities regardless of any
defense, right of set-off or counterclaim that the trust may have or assert
other than the defense of payment. The following payments, called the guarantee
payments, with respect to the preferred securities, to the extent not paid by
or on behalf of the trust, will be subject to the guarantee:
. any accrued and unpaid distributions required to be paid on the preferred
securities, to the extent that the trust has funds on hand available for
payment at such time;
. the applicable redemption price with respect to preferred securities
called for redemption, to the extent that the trust has funds on hand
available for payment at such time; and
. upon a voluntary or involuntary dissolution, winding up or liquidation of
the trust, other than in connection with the distribution of debentures
to the holders of the preferred securities or the redemption of all of
the preferred securities, the lesser of:
.the liquidation distribution, to the extent the trust has funds
available therefor; and
. the amount of assets of the trust remaining available for distribution
to holders of the preferred securities upon liquidation of the trust
after satisfaction of liabilities to creditors of the trust as
required by applicable law.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by us to the holders of the preferred
securities or by causing the trust to pay the amounts to the holders.
The guarantee is an irrevocable guarantee on a subordinated basis of the
trust's obligations under the preferred securities. However, the guarantee will
apply only to the extent that the trust has funds sufficient to make such
payments, and is not a guarantee of collection. If we do not make interest
payments on the debentures held by the trust, the trust will not be able to pay
distributions on the preferred securities and will not have funds legally
available for the distributions.
The guarantee ranks subordinate and junior in right of payment to all senior
debt. In addition, our obligations under the guarantee are effectively
subordinated to all existing and future liabilities of our subsidiaries. The
guarantee does not limit the incurrence or issuance of other secured or
unsecured debt by us or by our subsidiaries, including senior debt.
Taken together, our obligations under the guarantee agreement, the
declaration of trust, the debentures and the indenture, including our
obligation to pay the costs, expenses and other liabilities of the trust other
than the trust's obligations to the holders of the preferred securities and
common securities, provide, in the aggregate, a full, irrevocable and
unconditional guarantee of all of the trust's obligations under the preferred
securities. No single document standing alone or operating in conjunction with
fewer than all the other documents constitutes
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such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
trust's obligations under the preferred securities.
Status of the Guarantee
The guarantee is a guarantee of payment and not of collection, meaning the
guaranteed party may institute a legal proceeding directly against us to
enforce its rights under the guarantee without first instituting a legal
proceeding against any other person or entity. The guarantee will be held for
the benefit of the holders of the preferred securities. The guarantee will not
be discharged except by payment of the guarantee payments in full to the extent
not paid by the trust or upon distribution to the holders of the preferred
securities of the debentures.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the preferred securities (in which case no vote will
be required), the guarantee may not be amended without the prior approval of
the holders of not less than a majority of the aggregate liquidation amount of
the outstanding preferred securities. The manner of obtaining any such approval
will be as set forth under the "Description of preferred securities--Voting
Rights; Amendment of the Declaration" section of this prospectus. All
guarantees and agreements contained in the guarantee will bind the successors,
assigns, receivers, trustees and our representatives and will inure to the
benefit of the holders of the preferred securities then outstanding.
Events of Default
An event of default under the guarantee will occur upon our failure to
perform any of our payment or other obligations under the guarantee agreement.
However, except for a failure to make a guarantee payment, we are entitled to
receive notice of the default and cure the default within 60 days after receipt
of the notice. The holders of a majority in aggregate liquidation amount of the
preferred securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee in
respect of the guarantee or to direct the exercise of any trust or power
conferred upon the guarantee trustee under the guarantee.
Any holder of the preferred securities may institute a legal proceeding
directly against us to enforce its rights under the guarantee without first
instituting a legal proceeding against the trust, the guarantee trustee or any
other person or entity.
We, as guarantor, are required to file annually with the guarantee trustee a
certificate as to whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance of a
default by us in performance of the guarantee, undertakes to perform only the
duties that are specifically described in the guarantee. After a default under
the guarantee agreement, the guarantee trustee must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the guarantee trustee is under
no obligation to exercise any of the powers vested in it by the guarantee at
the request of any holder of the preferred securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred.
Termination of the Guarantee
The guarantee will terminate as to each holder of preferred securities upon:
. full payment of the redemption price and accrued and unpaid distributions
with respect to all preferred securities;
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. distribution of the debentures held by the trust to the holders of the
preferred securities;
. liquidation of the trust; or
. distribution of our common stock to such holder in respect of the
conversion of such holder's preferred securities into common stock.
In addition, the guarantee will terminate completely upon full payment of
the amounts payable in accordance with the declaration of trust. The guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder must restore payment of any sums paid under the preferred
securities or the guarantee.
Governing Law
The guarantee agreement is governed by and construed in accordance with the
laws of the State of New York.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of distributions and other amounts due on the preferred securities
(to the extent the trust has funds available for the payment of such
distributions) are irrevocably guaranteed by us to the extent set forth under
the "Description of Guarantee" section of this prospectus. Taken together, our
obligations under the debentures, the indenture, the declaration of trust and
the guarantee agreement provide a full, irrevocable and unconditional guarantee
of payments of distributions and other amounts due on the preferred securities.
No single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the trust's obligations under the
preferred securities. If and to the extent that we do not make payments on the
debentures, the trust will not pay distributions or other amounts due on the
preferred securities. The guarantee does not cover payment of distributions
when the trust does not have sufficient funds to pay such distributions. In
such event, the remedy of a holder of preferred securities is to institute a
direct action against us under the debentures. Our obligations under the
guarantee are subordinate and junior in right of payment to all our senior
debt. Unless the context requires otherwise, "Hanover," "we," "us," "our" and
similar terms in this section refer solely to Hanover Compressor Company after
giving effect to the Restructuring and not the trust or any of our other
consolidated subsidiaries.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
debentures, the payments will be sufficient to cover distributions and other
payments due on the preferred securities, primarily because:
. the aggregate principal amount or applicable redemption price of the
debentures will be equal to the sum of the aggregate liquidation amount
or applicable redemption price, as applicable, of the preferred
securities and common securities;
. the interest rate payable on the debentures and interest and other
payment dates on the debentures will match the distribution rate and
distribution and other payment dates for the preferred securities;
. we will pay for all costs, expenses and liabilities of the trust except
the trust's obligations to holders of preferred securities and common
securities; and
. the declaration of trust further provides that the trust will not engage
in any activity that is not consistent with its limited purposes.
Notwithstanding anything to the contrary in the indenture, we have the right
to set off any payment we are otherwise required to make under the indenture to
the extent we have made, or are concurrently on the date of such payment
making, any payment under the guarantee used to satisfy the related payment of
indebtedness under the indenture.
Enforcement Rights of Holders of Preferred Securities
Any holder of preferred securities may institute a legal proceeding directly
against us to enforce its rights under the guarantee without first instituting
a legal proceeding against the guarantee trustee, the trust or any other person
or entity and may, under certain circumstances, also institute a legal
proceeding directly against us to recover unpaid amounts under the debentures.
A default or event of default under any of our senior debt would not
constitute a default or event of default under the declaration of trust.
However, in the event of payment defaults under, or acceleration of, our senior
debt, the subordination provisions of the indenture provide that no payments
may be made in respect of the debentures until the senior debt has been paid in
full or any payment default thereunder has been cured or waived. Failure to
make required payments on debentures would constitute an event of default under
the declaration of trust.
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Limited Purpose of the Trust
The preferred securities evidence a beneficial interest in the trust, and
the trust exists for the sole purpose of issuing the preferred securities and
common securities and investing the proceeds of the preferred securities and
common securities in debentures.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the trust involving the liquidation of the debentures, after satisfaction of
the liabilities of creditors of the trust as required by applicable law, the
holders of the preferred securities and common securities will be entitled to
receive, out of assets held by the trust, the liquidation distribution in cash.
Upon any voluntary or involuntary liquidation or our bankruptcy, the property
trustee, as holder of the debentures, would be a subordinated creditor of us,
subordinated in right of payment to all senior debt as set forth in the
indenture, but entitled to receive payment in full of principal and interest,
before any of our stockholders receive payments or distributions. Since we are
the guarantor under the guarantee and have agreed to pay for all costs,
expenses and liabilities of the trust, other than the trust's obligations to
the holders of the preferred securities and common securities, the positions of
a holder of preferred securities and a holder of debentures relative to other
creditors and to our stockholders in the event of liquidation or our bankruptcy
are expected to be substantially the same.
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DESCRIPTION OF HANOVER CAPITAL STOCK
Our authorized capital stock currently consists of 100,000,000 shares of
common stock and 3,000,000 shares of preferred stock, $.01 par value per share.
The following summary description relating to the capital stock does not
purport to be complete. For a detailed description, reference is made to our
certificate of incorporation.
Common Stock
As of November 30, 1999, 28,674,267 shares of common stock were issued and
held of record by approximately 236 stockholders. The holders of common stock
are entitled to one vote for each share held of record on all matters submitted
to a vote of the stockholders. Subject to preferential rights with respect to
our preferred stock, holders of common stock are entitled to receive ratably
any dividends declared by our board of directors out of legally available
funds. On liquidation, dissolution, sale or winding up of Hanover, holders of
common stock are entitled to share ratably in all assets remaining after
payment of liabilities and satisfaction of preferential rights. Holders of
common stock have no preemptive or subscription rights. The outstanding shares
of common stock are, and the shares of common stock to be issued upon
conversion of the preferred securities will be, fully paid and nonassessable.
We have never declared a dividend on the common stock, and our bank credit
agreement prohibits the payment of dividends on common stock without the
lenders' prior written consent. The payment of any such dividends also will be
subject to, and may be limited by, the terms of any preferred stock we may
issue in the future.
Transfer Agent And Registrar
The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services.
Preferred Stock
We are authorized to issue 3,000,000 shares of preferred stock. Our board of
directors may establish, without stockholder approval, one or more classes or
series of preferred stock having the number of shares, designations, relative
voting rights, dividend rates, liquidation and other rights, preferences and
limitations that the board of directors may designate. We believe that this
power to issue preferred stock provides flexibility in connection with possible
corporate transactions. The issuance of preferred stock, however, could
adversely affect the voting power of holders of common stock and restrict their
rights to receive payments upon liquidation of Hanover. It could also have the
effect of delaying, deferring or preventing a change in control of Hanover.
Special Provisions Of The Certificate Of Incorporation And Delaware Law
Section 102(b)(7) of the Delaware General Corporation Law authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breach of
directors' fiduciary duty of care. Although Section 102(b) does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. Our certificate of
incorporation limits the liability of directors to us or our stockholders (in
their capacity as directors but not in their capacity as officers) to the
fullest extent permitted by Section 102(b). Specifically, our directors will
not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to Hanover or our stockholders (b) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law or (d) for any transaction from which the director
derived an improper personal benefit.
To the maximum extent permitted by law, our certificate of incorporation and
bylaws provide for mandatory indemnification of directors and officers and
permit indemnification of our officers, employees and
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agents against all expense, liability and loss to which they may become subject
or which they may incur as a result of being or having been a director,
officer, employee or agent of Hanover or its subsidiaries. In addition, we must
advance or reimburse directors, and may advance or reimburse officers,
employees and agents for expenses incurred by them in connection with
indemnifiable claims.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, Section 203 prohibits a public Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless (a) before that
person became an interested stockholder, the corporation's board of directors
approved the transaction in which the interested stockholder became an
interested stockholder or approved the business combination; (b) upon
completion of the transaction that resulted in the interested stockholder's
becoming an interested stockholder, the interested stockholder owns at least
85% of the voting stock outstanding at the time the transaction commenced
(excluding stock held by directors who are also officers of the corporation and
by employee stock plans that do not provide employees with the right to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer); or (c) following the transaction in
which that person became an interested stockholder, the business combination is
approved by the corporation's board of directors and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least two-thirds of
the outstanding voting stock not owned by the interested stockholder. Under
Section 203, these restrictions also do not apply to certain business
combinations proposed by an interested stockholder following the announcement
or notification of one of certain extraordinary transactions involving the
corporation and a person who was not an interested stockholder during the
previous three years or who became an interested stockholder with the approval
of a majority of the corporation's directors, if that extraordinary transaction
is approved or not opposed by a majority of the directors who were directors
before any person became an interested stockholder in the previous three years
or who were recommended for election or elected to succeed such directors by a
majority of such directors then in office. "Business combination" includes
mergers, assets sales and other transactions resulting in a financial benefit
to the stockholder. "Interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock.
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FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Latham & Watkins, counsel to Hanover, the following are
the material United States federal income tax consequences to beneficial owners
resulting from their ownership and disposition of the preferred securities.
Unless otherwise stated, this summary considers only preferred securities and
common stock held as capital assets (generally, property held for investment).
The tax treatment of a holder may vary depending on its particular situation.
This summary does not consider all aspects of taxation that may be relevant to
a holder in light of its particular circumstances or to classes of holders who
are subject to special treatment under the federal income tax laws, including,
without limitation:
. banks, thrifts, and other financial institutions;
. real estate investment trusts and regulated investment companies;
. insurance companies;
. tax exempt organizations;
. broker-dealers;
. persons holding preferred securities or common stock as part of a
straddle or as part of a hedging or conversion transaction or other
integrated investment;
. foreign persons; and
. persons whose functional currency is not the United States dollar.
In addition, this summary does not include any discussion of the alternative
minimum tax consequences or the tax laws of any state, local or foreign
jurisdictions that may be applicable to the preferred securities and the common
stock.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations thereunder and administrative and judicial
interpretations thereof as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this summary
is based are subject to various interpretations, and it is therefore possible
that the federal income tax treatment of the ownership and disposition of
preferred securities and the common stock may differ from the treatment
described below. Neither the trust nor Hanover has sought, nor will either
seek, a ruling from the Internal Revenue Service (the "IRS") on the federal tax
consequences described in this summary, and it is possible that the IRS could
take a position contrary to the interpretations herein.
Investors are advised to consult their own tax advisors as to the tax
consequences of the ownership and disposition of the preferred securities and
the common stock, in light of their particular circumstances, under the federal
income tax laws and any applicable state, local, foreign and other tax laws,
including the effects of possible future changes in such laws.
Classification of the Trust
Assuming full compliance with the terms of the declaration of trust, the
indenture and certain other documents, the trust will be classified for federal
income tax purposes as a grantor trust and not as a corporation or a publicly
traded partnership taxable as a corporation. Accordingly, each holder of
preferred securities will be considered to be the owner of an undivided
interest in the debentures held by the trust and will be required to include in
gross income its pro rata share of interest income on the debentures, including
original issue discount (if any), whether or not cash is actually distributed
to the holder.
Classification of the Debentures
Hanover intends to take the position that the debentures will be classified
for federal income tax purposes as indebtedness. By acceptance of the preferred
securities, each holder covenants to treat the debentures as
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indebtedness and the preferred securities as evidence of an indirect beneficial
ownership interest in the debentures. No assurance can be given, however, that
the classification of the debentures as indebtedness will not be challenged by
the IRS or, if challenged, that such a challenge will not be successful. The
remainder of this summary assumes that the debentures will be classified for
federal income tax purposes as indebtedness of Hanover.
Interest Income and Original Issue Discount
Unless the original issue discount ("OID") rules apply to the debentures, as
discussed below, stated interest on the preferred securities generally will be
taxable to a holder as ordinary income when paid or accrued in accordance with
the holder's method of accounting for federal income tax purposes. While the
existence of an issuer's option to defer the payment of interest on debt
instruments generally results in the application of the OID rules, debt
instruments like the debentures are not considered issued with OID if there is
only a "remote" likelihood of the issuer exercising its option of deferral.
Hanover believes that, as of the issue date of the preferred securities, the
likelihood of Hanover deferring payments of interest under the terms of the
debentures was "remote" within the meaning of the applicable Treasury
Regulations. Therefore, the debentures should not be treated as subject to the
OID rules at the time of their original issuance by reason of Hanover's
deferral option.
If the likelihood of Hanover exercising its option to defer any payment of
interest was determined not to be "remote" or if Hanover does exercise its
option to defer payments of interest, the debentures would be treated as
subject to the OID rules at the time of their original issuance or at the time
of such exercise, as the case may be, for the entire remaining term of the
debentures. Under these rules, all of the stated interest on the debentures
would be treated as OID and such OID would accrue, and be includible in income,
on a daily basis under a constant yield method, including during any interest
deferral period, regardless of the holder's method of accounting for federal
income tax purposes. Consequently, holders of the preferred securities would be
required to include OID in gross income even if Hanover did not make any actual
distributions during a deferral period. Actual distributions of stated interest
on the debentures generally would not be separately taxable. A holder that
disposes of its preferred securities prior to the record date for payment of
distributions on the debentures will be subject to tax on OID accrued through
the date of disposition and not previously included in income, but will not
receive cash from the trust with respect to such OID. If Hanover exercises its
deferral option, investors should consult their own tax advisors regarding
their specific tax consequences of such deferral.
The income underlying the preferred securities should be treated as interest
and will not be characterized as dividends for federal income tax purposes.
Consequently, corporate holders of the preferred securities should not be
entitled to a dividends-received deduction for any income recognized with
respect to the preferred securities.
Market Discount
The market discount rules generally provide that, subject to a statutorily-
defined de minimis exception, if an investor acquires a preferred security at a
market discount (i.e., at a price below its stated redemption price at maturity
or its revised issue price if it is subject to the OID rules) and thereafter
recognizes gain upon a disposition of the preferred security (or disposes of it
in certain non-recognition transactions such as a gift), the lesser of (i) such
gain (or appreciation, in the case of an applicable non-recognition
transaction) or (ii) the portion of the market discount that accrued while the
preferred security was held by such holder will be treated as ordinary interest
income at the time of the disposition. A holder of a preferred security who
acquired the preferred security at a market discount would be required to treat
as ordinary interest income the portion of any principal payment (including a
payment on maturity) attributable to accrued market discount on such preferred
security. In addition, a holder of a preferred security who acquires a
preferred security at a market discount
45
<PAGE>
may be required to defer a portion of any interest expense that otherwise may
be deductible on any indebtedness incurred or maintained to purchase or carry
the preferred security until such holder disposes of the preferred security in
a taxable transaction.
A holder of a preferred security who acquired a preferred security at a
market discount may elect to include market discount in income as the discount
accrues, either on a ratable basis or, if elected, on a constant interest rate
basis. The current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may only be revoked with the consent of
the IRS. If a holder makes a current inclusion election, the foregoing rules
with respect to the recognition of ordinary income on sales, principal payments
and certain other dispositions of the preferred securities and the deferral of
interest deductions on indebtedness related to the preferred securities would
not apply.
Amortizable Bond Premium
Generally, if the price or tax basis of a preferred security exceeds the sum
of all amounts payable on the preferred security after the acquisition date
(other than payments of qualified stated interest), such excess may constitute
amortizable bond premium that a holder may elect to amortize under the constant
interest rate method over the period from the holder's acquisition date to the
maturity date of the preferred security. Amortizable bond premium generally
will be treated as an offset to interest income on a preferred security, rather
than as a separate interest deduction item subject to the investment interest
limitations of the Code. A holder of a preferred security that elects to
amortize bond premium must generally reduce the tax basis in the preferred
security by the amount of bond premium used to offset interest income. If a
preferred security purchased at a premium is redeemed in full prior to its
maturity, a holder of a preferred security who has elected to amortize bond
premium may be entitled to a deduction for any remaining unamortized bond
premium in the taxable year of redemption.
Sale of Preferred Securities
A holder who sells preferred securities will be considered to have disposed
of all or part of its pro rata share of the debentures and will recognize gain
or loss equal to the difference between the amount realized on the sale of the
preferred securities and the holder's adjusted tax basis in such preferred
securities. A holder's adjusted tax basis in the preferred securities generally
will be its initial purchase price. If, however, the OID rules apply to the
debentures, a holder's adjusted tax basis in the preferred securities will be
its initial purchase price, increased by any OID or market discount previously
includible in such holder's income to the date of sale and decreased by
distributions or other payments received on the preferred securities from and
including the day that the debentures became subject to the OID rules and by
the amount of amortizable bond premium that offset interest income. Any gain or
loss recognized on the sale of the preferred securities generally will be
capital gain or loss except to the extent of any accrued interest with respect
to such holder's pro rata share of the debentures required to be included in
income as ordinary income. Such capital gain or loss will be long-term capital
gain or loss if the preferred securities have been held by the holder for more
than one year.
If the debentures are subject to the OID rules, a holder who disposes of its
preferred securities between record dates for payments of distributions thereon
will be required to include OID on the debentures through the date of
disposition in income as ordinary income, and to add such amount to its
adjusted tax basis in the preferred securities. To the extent the amount
realized on the sale is less than the holder's adjusted tax basis, which basis
will include all accrued but unpaid OID, a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied
to offset ordinary income for federal income tax purposes.
Receipt of Debentures or Cash Upon Liquidation of the Trust
Under certain circumstances, the debentures may be distributed to holders in
exchange for the preferred securities and in liquidation of the trust. Such a
distribution would be a nontaxable event to each holder, and each holder would
receive an aggregate tax basis in the debentures equal to such holder's
aggregate tax basis in
46
<PAGE>
the preferred securities. A holder's holding period in the debentures so
received would include the period during which the preferred securities were
held by such holder.
Under certain circumstances, the debentures also may be redeemed for cash
and the proceeds of such redemption distributed to holders in redemption of
their preferred securities. Such a redemption would constitute a taxable
disposition of the redeemed preferred securities, and a holder would recognize
gain or loss as if it sold the redeemed preferred securities for cash. Please
read the "--Sale of Preferred Securities" section of this prospectus.
If, however, the liquidation of the trust were to occur because of an event
which results in the trust being subject to federal income tax with respect to
income accrued or received on the debentures, the distribution of the
debentures to a holder of preferred securities would be a taxable event to the
trust and to each holder of preferred securities. In this case, each holder of
preferred securities would recognize gain or loss as if the holder had
exchanged its preferred securities for the debentures upon liquidation of the
trust.
Conversion of Preferred Securities into Common Stock
Except to the extent attributable to accrued but unpaid interest on the
debentures, a holder of preferred securities generally will not recognize
income, gain or loss upon the conversion of preferred securities into Hanover
common stock. A holder will, however, recognize gain or loss upon the receipt
of cash in lieu of a fractional share of common stock equal to the amount of
cash so received less the holder's adjusted tax basis in the fractional share.
A holder's tax basis in the common stock received upon conversion generally
will be equal to the holder's adjusted tax basis in the preferred securities
delivered to the conversion agent for exchange, less the basis allocated to any
fractional share for which cash is received. A holder's holding period in the
common stock received upon conversion generally will include the holding period
of the preferred securities delivered to the conversion agent for exchange.
Adjustment of Conversion Price
Treasury Regulations promulgated under Section 305 of the Code may treat
holders of preferred securities as having received a constructive distribution
from Hanover in certain events in which the conversion ratio of the debentures
into common stock is adjusted. Accordingly, under certain circumstances, a
reduction in the conversion price for the debentures may result in deemed
dividend income to holders of preferred securities to the extent of current and
accumulated earnings and profits of Hanover. In this case, holders of preferred
securities would be required to include their allocable share of such deemed
dividend income in gross income but would not receive any cash related thereto,
and holders would increase their tax basis in their preferred securities by the
amount includible in income. Holders are advised to consult their own tax
advisors as to the federal income tax consequences of adjustments in the
conversion ratio of the debentures.
Distributions on Common Stock
The amount of any distribution on the common stock will be equal to the
amount of cash and the fair market value of any property distributed.
Generally, distributions will be treated as dividends, subject to tax as
ordinary income, to the extent of Hanover's current and accumulated earnings
and profits as determined for federal income tax purposes, then as a tax-free
return of capital to the extent of a holder's tax basis in the common stock and
thereafter as gain from the sale or exchange of the stock. In general, a
corporate recipient of a dividend distribution will qualify for a dividends
received deduction the amount of which varies, depending upon the level of the
holder's stock ownership, and which is subject to certain holding period,
taxable income and other limitations.
47
<PAGE>
Sale of Common Stock
Upon the sale or taxable exchange of common stock, a holder generally will
recognize gain or loss equal to the difference between the amount of cash and
the fair market value of any property received and such holder's adjusted tax
basis in the common stock. Any such gain or loss generally will be capital gain
or loss and will be long-term capital gain or loss if such holder's holding
period for the common stock exceeds one year. The determination of a holder's
basis and holding period in common stock received upon conversion of preferred
securities are discussed above under the "--Conversion of Preferred Securities
into Common Stock" section of this prospectus. A holder that purchases common
stock generally will have a basis in the common stock equal to the amount of
cash paid plus the fair market value of any property exchanged for the stock.
Information Reporting
The trust will report the interest paid or accrued, including OID (if any),
during the year with respect to the debentures, and any gross proceeds received
by the trust from the retirement or redemption of the debentures, annually to
the holders of record of the preferred securities and to the IRS. The trust
currently intends to deliver such reports to holders of record not later than
January 31 following each calendar year. It is anticipated that persons who
hold preferred securities as nominees for beneficial owners will report the
required tax information to beneficial owners on Form 1099.
Backup Withholding
Payments made on, and proceeds from the sale of, preferred securities, any
debentures distributed by the trust or any common stock received on conversion
may be subject to 31% backup withholding unless the holder complies with
certain identification requirements or otherwise qualifies for an exemption
from backup withholding. Backup withholding is not an additional tax. Any
withheld amounts generally will be refunded or credited against the holder's
federal income tax liability, provided the required information is timely filed
with the IRS.
Possible Tax Law Changes
Holders of preferred securities should be aware that legislation has been
proposed by the Clinton Administration in the past that, if enacted, would have
denied an interest expense deduction to issuers of instruments such as the
preferred securities. While legislation of this kind is not currently pending,
it is possible that similar legislation ultimately could be enacted into law,
or that other developments may occur on or after the date of this prospectus
that would adversely affect the tax treatment of the preferred securities or
the trust. Changes of this kind could, among other things, result in the
redemption of the preferred securities for cash or the dissolution of the trust
and the distribution of the debentures to holders of the preferred securities.
48
<PAGE>
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") should consider the fiduciary standards of ERISA in the context of
the plan's particular circumstances before authorizing an investment in the
Preferred Securities. Accordingly, among other factors, the fiduciary should
consider whether the investment would satisfy the prudence and diversification
requirements of ERISA, whether the investment could result in an improper
delegation of fiduciary authority and whether the investment would be
consistent with the documents and instruments governing the plan.
Section 406 of ERISA and Section 4975 of the Code prohibit plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975 of the
Code, from engaging in certain transactions involving "plan assets" with
persons who are "parties in interest" under ERISA or "disqualified persons"
under the Code with respect to such plans. A violation of these "prohibited
transaction" rules may result in an excise tax or other liabilities under ERISA
and/or Section 4975 of the Code for such persons, unless exemptive relief is
available under an applicable statutory or administrative exemption. Employee
benefit plans that are governmental plans (as defined in Section 3(32) of
ERISA), certain church plans (as defined in Section 3(33) of ERISA) and foreign
plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
Under a regulation issued by the United States Department of Labor (the
"DOL"), the assets of the trust would be deemed to be "plan assets" of a plan
for purposes of ERISA and Section 4975 of the Code if "plan assets" of the plan
were used to acquire an equity interest in the trust and no exception were
applicable under the plan assets regulation. An "equity interest" is defined
under the plan assets regulation as any interest in an entity other than an
instrument that is treated as indebtedness under applicable local law and that
has no substantial equity features and specifically includes a beneficial
interest in a trust.
Pursuant to an exception contained in the plan assets regulation, the assets
of the trust would not be deemed to be "plan assets" of investing plans if,
immediately after the most recent acquisition of any equity interest in the
trust, less than 25% of the value of each class of equity interests in the
trust were held by plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be "plan assets" of any plan. We cannot
assure you that the value of the preferred securities held by benefit plan
investors will be less than 25% of the total value of such preferred securities
at the completion of the initial offering or otherwise.
Certain transactions involving the trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a plan if the preferred securities were acquired with
"plan assets" of such plan and assets of the trust were deemed to be "plan
assets" of plans investing in the trust. For example, if we are a party in
interest with respect to an investing plan (either directly or by reason of its
ownership of its subsidiaries), extensions of credit between the trust and us
(as represented by the debentures and the guarantee) would likely be prohibited
by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code, unless
exemptive relief were available under an applicable administrative exemption
(see below). Because the assets of the trust may be considered "plan assets"
for ERISA purposes as a result of a plan's acquisition and holding of preferred
securities, a plan fiduciary should consider (a) whether powers which
potentially may be exercised by any person or entity with respect to the trust
or its assets would result in such person or entity being potentially deemed to
be a fiduciary and, therefore, a party in interest with respect to a plan
acquiring or holding preferred securities and (b) if so, whether such
acquisition and holding could result in a delegation of fiduciary authority
which is impermissible under the plan's governing instruments or any investment
management agreement with the plan. In making such determination, a plan
fiduciary should note that prior to a default, the trustees will have only
limited custodial and ministerial authority with respect to the assets of the
trust.
The DOL has issued five prohibited transaction class exemptions that may
provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the preferred securities,
49
<PAGE>
assuming that assets of the trust were deemed to be "plan assets" of plans
investing in the trust (see above). Those class exemptions are PTCE 96-23 (for
certain transactions determined by in-house asset managers), PTCE 95-60 (for
certain transactions involving insurance company general accounts), PTCE 91-38
(for certain transactions involving bank collective investment funds), PTCE 90-
1 (for certain transactions involving insurance company separate accounts) and
PTCE 84-14 (for certain transactions determined by qualified professional asset
managers).
Because the preferred securities may be deemed to be equity interests in the
trust for purposes of applying ERISA and Section 4975 of Code, the preferred
securities may not be purchased or held by any plan, any entity whose
underlying assets include "plan assets" by reason of any plan's investment in
an entity (a "plan asset entity") or any person investing "plan assets" of any
plan, unless the purchaser or holder is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. Any purchaser or
holder of the preferred securities or any interest therein will be deemed to
have represented by its purchase and holding that it either (a) is not a plan
or a plan asset entity and is not purchasing such securities on behalf of or
with "plan assets" of any plan or (b) is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. See "Transfer
Restrictions." Further, the fiduciaries of any plan or plan asset entity which
may purchase or hold preferred securities will be deemed as a result of such
acquisition or holding to have (a) directed the trust to invest in the
debentures, (b) authorized and directed any of the actions taken or which may
be taken with respect to the trust, the debentures and the preferred securities
by any of the trustees, the debenture trustee, the guarantee trustee, or us as
contemplated by the indenture, the debentures or the guarantee and (c) to have
appointed the trustees.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the
preferred securities on behalf of or with "plan assets" of any plan consult
with their counsel regarding the potential consequences if the assets of the
trust were deemed to be "plan assets" and the availability of exemptive relief
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
50
<PAGE>
REGISTRATION RIGHTS
We and the trust entered into a registration agreement with the initial
purchasers of the preferred securities for the benefit of the holders of the
preferred securities wherein we and the trust agreed, at our sole expense, to
. file as soon as practicable, but in no event more than 60 days after the
original issuance of the preferred securities, a shelf registration
covering resales of the preferred securities, the guarantee, the
debentures and the related common stock issuable upon conversion of the
preferred securities;
. use our best efforts to cause the shelf registration statement to be
declared effective under the Securities Act within 150 days after the
original issuance of the preferred securities; and
. use our best efforts to keep effective the shelf registration statement
for two years or such other period as required under Rule 144(k) of the
Securities Act or any successor rule thereto or, if earlier, such time as
all of the applicable securities have been sold thereunder.
We will provide to each holder for whom the shelf registration statement was
filed copies of the prospectus that is a part of the shelf registration
statement, notify each such holder when the shelf registration statement for
the securities has become effective and take certain other actions as are
required to permit unrestricted resales of the securities. A holder that sells
securities pursuant to the shelf registration statement will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the registration agreement that are applicable to
such a holder (including certain indemnification rights and obligations).
If (1) within 150 days of the original issuance of the preferred securities
the shelf registration statement has not been declared effective by the
Commission, or (2) if a shelf registration statement is declared effective by
the Commission and we or the trust fail to keep the shelf registration
statement continuously effective and usable (subject to some exceptions) for
the period required by the registration agreement, then additional interest,
referred to in this prospectus as special interest, will accrue on the
debentures, and corresponding special distributions will accrue on the
preferred securities and common securities, in each case from and including the
day following the registration default to but excluding the day on which the
registration default has been cured or has been deemed to have been cured.
Special interest and special distributions will be paid in cash quarterly in
arrears on each interest payment date commencing with the first interest
payment date following the applicable registration default and will accrue at a
rate so that the interest rate or distribution rate, as the case may, will be
increased 0.50% per annum of the principal amount or liquidation amount, as
applicable. Following the cure of a registration default, special interest and
special distributions will cease to accrue with respect to the applicable
registration default.
Each security will contain a legend to the effect that the holder of the
security, by its acceptance of the security, will be deemed to have agreed to
be bound by the provisions of the registration agreement.
The registration agreement is governed by, and construed in accordance with,
the laws of the State of New York. This summary of the registration agreement
is not complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the registration agreement. A form of the
registration agreement is available upon request.
51
<PAGE>
SELLING HOLDERS
The preferred securities were originally issued by the trust and sold by
Credit Suisse First Boston Corporation, Goldman Sachs & Co., Salomon Smith
Barney Inc. and Dain Rauscher Incorporated (the "initial purchasers") in a
transaction exempt from the registration requirements of the Securities Act, to
persons reasonably believed by such initial purchasers to be "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act). The
holders named below and their transferees, pledgees, donees or successors
(collectively, the "Selling Holders") may from time to time offer and sell
pursuant to this prospectus any or all of the Preferred Securities, any
debentures and common stock issued upon conversion of the preferred securities.
The following table sets forth information with respect to the Selling
Holders of the preferred securities and the respective number of preferred
securities beneficially owned by each Selling Holder that may be offered
pursuant to this prospectus.
<TABLE>
<CAPTION>
Principal Amount of
Preferred Number of Shares
Securities of Common Stock Number of Shares of
Beneficially Owned Owned Prior to Common Stock
Selling Holder and Offered Hereby the Offering(1) Offered Hereby(1)(2)
-------------- ------------------- ---------------- --------------------
<S> <C> <C> <C>
Alpine Associates....... $ 3,620,000 101,258 101,258
BBT Ford, L.P........... $ 5,000,000 139,860 139,860
Bear, Stearns & Co.,
Inc.................... $ 375,000 10,489 10,489
White River Securities,
LLC.................... $ 375,000 10,489 10,489
Goldman Sachs & Co. .... $ 425,000 11,888 11,888
Lipper Convertibles,
L.P.................... $ 4,000,000 111,888 111,888
Subtotal.............. $13,795,000 385,872 385,872
Unnamed holders of
preferred securities or
any future transferees,
pledgees, donees or
successors of or from
any such named holder
(3) (4)................ $72,455,000 2,026,713 2,026,713
Total................. $86,250,000 2,412,585 2,412,585
</TABLE>
- --------
(1) Comprises the shares of common stock into which the preferred securities
held by such Selling Holder are convertible at the initial conversion
price. The conversion price and the number of shares of common stock
issuable upon conversion of the preferred securities are subject to
adjustment under certain circumstances. Accordingly, the number of shares
of common stock issuable upon conversion of the Preferred Securities may
increase or decrease from time to time. Fractional shares will not be
issued upon conversion of the preferred securities; rather, cash will be
paid in lieu of fractional shares, if any.
(2) Assumes the offering of such shares by such Selling Holder pursuant to the
registration statement of which this prospectus forms a part.
(3) No such holder may offer preferred securities or common stock pursuant to
the registration statement of which this prospectus from a part until such
holder is included as a Selling Holder in a supplement to this prospectus.
(4) Assumes that the unnamed holders of preferred securities or common stock or
any future transferees, pledgees, donees or successors of or from any such
named holder do not beneficially own any common stock other than the common
stock issuable upon conversion of the preferred securities at the initial
conversion price.
None of the Selling Holders has, or within the past three years has had, any
position, office or other material relationship with the trust or Hanover
Compressor Company or any of their predecessors or affiliates.
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<PAGE>
Because the Selling Holders may, pursuant to this prospectus, offer all or
some portion of the preferred securities or common stock they presently hold,
no estimate can be given as to the amount of the preferred securities or shares
of common stock that will be held by the Selling Holders upon termination of
any such sales. In addition, the Selling Holders identified above may have
sold, transferred or otherwise disposed of all or a portion of their preferred
securities or common stock since the date on which they provided the
information regarding their preferred securities or common stock, in
transaction exempt from the registration requirements of the Securities Act.
Only Selling Holders identified above who beneficially own the preferred
securities or common stock set forth opposite each such Selling Holder's name
in the foregoing table on the effective date of the registration statement of
which this prospectus forms a part may sell such preferred securities or common
stock pursuant to the registration statement. We may from time to time include
additional Selling Holders in supplements to this prospectus.
We will pay the expenses of registering the preferred securities and common
stock being sold hereunder.
53
<PAGE>
PLAN OF DISTRIBUTION
The securities offered hereby (the "offered securities") may be sold from
time to time to purchasers directly by the Selling Holders. Alternatively, the
Selling Holders may from time to time offer the offered securities to or
through underwriters, broker/dealers or agents, who may receive compensation in
the form of underwriting discounts, concessions or commissions from the Selling
Holders or the purchasers of such offered securities for whom they may act as
agents. The Selling Holders and any underwriters, broker/dealers or agents that
participate in the distribution of offered securities may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit on the
sale of such securities by them and any underwriter, broker/dealer or agent may
be deemed to be underwriting discounts and commissions under the Securities
Act.
The offered securities may be sold by the Selling Holders from time to time,
in one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. Such prices will be determined by the Selling Holders. The sale of the
offered securities may be effected in transactions (which may involve crosses
or block transactions) (i) on any national securities exchange or quotation
service on which the offered securities may be listed or quoted at the time of
sale, (ii) in the over-the-counter market, (iii) otherwise than on such
exchanges or in the over-the-counter market or (iv) through the writing of
options. At the time a particular offering of the offered securities is made,
if required, a prospectus supplement will be distributed which will set forth
the names of the Selling Holders, the aggregate amount and type of offered
securities being offered, and, to the extent required, the terms of the
offering, including the name or names of any underwriters, broker/dealers or
agents, any discounts, commissions and other terms constituting compensation
from the Selling Holders and any discounts, commissions or concessions allowed
or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the offered securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the offered securities may not be offered or sold unless they
have been registered or qualified for sale in such jurisdictions or any
exemption from registration or qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the offered securities may be limited in its
ability to engage in market activities with respect to such securities. In
addition and without limiting the foregoing, each Selling Holder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, which provisions may limit the timing of purchases and
sales of any of the offered securities by the Selling Holders. All of the
foregoing may affect the marketability of the offered securities.
Pursuant to the registration rights agreement, all expenses of the
registration of the offered securities will be paid by the Company, including,
without limitation, Commission filing fees and expenses of compliance with
state securities or "blue sky" laws. The Selling Holders will pay any
underwriting discounts and selling commissions. The Selling Holders will be
indemnified by us and the trust, jointly and severally, against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith. We and the trust will be
indemnified by the Selling Holders severally against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
Pursuant to the registration rights agreement, we are required to use our
best efforts to keep the registration statement continuously effective for a
period of two years from its effective date or such shorter period that will
terminate upon the earlier of the date on which the offered securities shall
have been sold pursuant to the Registration Statement or the date on which the
offered Securities are permitted to be freely sold or distributed to the public
pursuant to any exemption from the registration requirements of the Securities
Act (including in reliance on Rule 144(k) but excluding in reliance on Rule
144A under the Securities Act). Notwithstanding these obligations, we may,
under certain circumstances, postpone or suspend the filing or the
effectiveness of the registration statement (or any amendments or supplements
thereto) or the sale of offered securities under the registration statement.
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<PAGE>
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the preferred
securities will be passed upon for the trust by Morris, Nichols, Arsht &
Tunnell, Wilmington, Delaware, special Delaware counsel to the trust and
Hanover. The validity of the debentures and the guarantee will be passed upon
by Latham & Watkins, Chicago, Illinois. Certain matters relating to United
States federal income tax considerations will be passed upon for Hanover by
Latham & Watkins, Chicago, Illinois.
EXPERTS
The consolidated financial statements of our predecessor, HCI, and its
subsidiaries as of December 31, 1998 and 1997 and for each of the years in the
three-year period ended December 31, 1998, incorporated by reference to our
Amended Annual Report on Form 10-K/A for the year ended December 31, 1998, have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
55
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with the
distribution of the securities covered by this Registration Statement. All of
the expenses will be borne by the Company except as otherwise indicated.
<TABLE>
<S> <C>
Registration fee................................................. $22,770
Fees and expenses of accountants................................. *
Fees and expenses of legal counsel............................... *
Fees and expenses of Trustee and counsel......................... *
Printing and engraving expenses.................................. *
Miscellaneous.................................................... *
-------
Total........................................................ $ *
=======
</TABLE>
- --------
* To be filed by amendment.
Item 15. Indemnification of Directors and Officers.
The Company
The Company is empowered by Section 145 of the Delaware General Corporation
Law (the "DGCL"), subject to the procedures and limitations stated therein, to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding by reason of
the fact that such person is or was a director, officer, employee or agent of
the company, or is or was serving at the request of the company as a director,
officer, employee or agent of another corporation or other enterprise, against
reasonable expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually incurred by him in connection with such action,
suit or proceeding, if such director, officer, employee or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
Company is required by Section 145 to indemnify any person against reasonable
expenses (including attorneys' fees) actually incurred by him in connection
with an action, suit or proceeding in which he is a party because he is or was
a director, officer, employee or agent of the company or is or was serving at
the request of the company as a director, officer, employee or agent of another
corporation or other enterprise, if he has been successful, on the merits or
otherwise, in the defense of the action, suit or proceeding. Section 145 also
allows a corporation to purchase and maintain insurance or on behalf of any
such person against any liability asserted against him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under the provisions of
Section 145. In addition, Section 145 provides that indemnification pursuant to
its provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise.
Article Eighth of the Company's charter provides that the Company shall
indemnify and hold harmless all officers and directors of the Company, and
advance expenses reasonably incurred by such officers and directors in
defending any civil, criminal, administrative or investigative action, suit or
proceeding, in accordance with and to the fullest extent permitted by Section
145 of the DGCL.
The Trust
The Declaration of Trust (the "Declaration") provides that no Trustee,
affiliate of any Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives or agents of any Trustee, or any employee
or agent of the Trust or its affiliates (each an "Indemnified Person") shall be
liable, responsible or
II-1
<PAGE>
accountable in damages or otherwise to any officer, director, shareholder,
partner, member, representative or agent of the Trust, any affiliate of the
Trust or any holder of Trust Securities for any loss, damage or claim incurred
by reason of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on
such Indemnified Person by the Declaration, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of gross negligence (or, in the
case of the Property Trustee, negligence) or willful misconduct with respect to
such acts or omissions. The directors and officers of the Company and the
Regular Trustees are covered by insurance policies indemnifying them against
certain liabilities, including certain liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), which might be incurred by them
in such capacities and against which they cannot be indemnified by the Company
or the Trust. The Selling Holders will be indemnified by the Company and the
Trust, jointly and severally, against certain civil liabilities, including
certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith. The Company and the Trust will be
indemnified by the Selling Holders severally against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
Item 16. Exhibits.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated herein by reference to a prior
filing of the Company under the Securities Act or the Exchange Act as indicated
in parenthesis:
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
4.1 Certificate of Incorporation of Hanover Compressor Holding Co.*
4.2 Certificate of Amendment to Certificate of Incorporation of Hanover
Compressor Holding Co. dated December 9, 1999.*
4.3 Bylaws of Hanover Compressor Company.*
4.4 Certificate of Trust of Hanover Compressor Capital Trust.
4.5 Amended and Restated Declaration of Trust of Hanover Compressor
Capital Trust, dated as of December 15, 1999, among Hanover
Compressor Company, as sponsor, Wilmington Trust Company, as property
trustee, and Richard S. Meller, William S. Goldberg and Curtis A.
Bedrich, as administrative trustees.
4.6 Indenture for the Convertible Junior Subordinated Debentures due
2029, dated as of December 15, 1999 among Hanover Compressor Company,
as issuer, and Wilmington Trust Company, as trustee.
4.7 Form of Hanover Compressor Company Common Stock certificate
(incorporated by reference to Exhibit 4.11 to the Company's
Registration Statement on Form S-1 (File No. 333-27953), as amended).
4.8 Form of Hanover Compressor Capital Trust 7 1/4% Convertible Preferred
Securities (included in Exhibit 4.5).
4.9 Form of Hanover Compressor Company Convertible Subordinated Junior
Debentures due 2029 (included in Exhibit 4.6).
4.10 Preferred Securities Guarantee dated as of December 15, 1999, between
Hanover Compressor Company, as guarantor, and Wilmington Trust
Company, as guarantee trustee.
4.11 Common Securities Guarantee dated as of December 15, 1999, by Hanover
Compressor Company, as guarantor.
5.1 Opinion of Latham & Watkins as to the validity of the debentures and
the guarantee.*
5.2 Opinion of Morris, Nichols, Arsht & Tunnell as to certain matters of
Delaware law.*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
8.1 Opinion of Latham & Watkins as to certain tax matters.*
10.1 Registration Rights Agreement dated as of December 15, 1999, by and
among Hanover Compressor Capital Trust, Hanover Compressor Company and
Credit Suisse First Boston Corporation.
12.1 Statement Regarding Computation of Ratios.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Latham & Watkins (included in the opinions filed as
Exhibits 5.1 and 8.1).*
24.1 Powers of Attorney (included on the signature page of the initial
filing of this Registration Statement).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company, as indenture trustee
under the Indenture relating to the Convertible Junior Subordinated
Debentures due 2029 of Hanover Compressor Company.*
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company, as property trustee
under the Amended and Restated Declaration of Trust of Hanover
Compressor Capital Trust.*
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company, as preferred guarantee
trustee under the Preferred Securities Guarantee.*
</TABLE>
- --------
* To be filed by amendment.
Item 17. Undertakings
(a) The registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) 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;
provided, however, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a post-
effective amendment by those clauses is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission by the Company
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference 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.
II-3
<PAGE>
(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 registrant hereby undertakes that:
(1) That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of a registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(2) That, for purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 (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 hat time shall be deemed to be the
initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the provisions set forth in Item 15, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a
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, subject 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.
(e) The registrant hereby undertakes to file an application for the purpose
of determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act ("Act") in accordance with the rules and
regulations prescribed by the Commission under Section 305(6)(2) of the Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Hanover Compressor Company 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 Houston, State of Texas,
on February 10, 2000.
HANOVER COMPRESSOR COMPANY
/s/ Michael J. McGhan
By: _________________________________
MICHAEL J. MCGHAN
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William S. Goldberg and Curtis Bedrich or either
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 10th day of February, 2000.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ Michael J. McGhan President and Chief Executive Officer
______________________________________ (Principal Executive Officer and Director)
Michael J. McGhan
/s/ Curtis Bedrich Chief Financial Officer and Treasurer
______________________________________ (Principal Financial and Accounting
Curtis Bedrich Officer)
/s/ Ted Collins, Jr. Director
______________________________________
Ted Collins, Jr.
/s/ Robert R. Furgason Director
______________________________________
Robert R. Furgason
/s/ William S. Goldberg Director
______________________________________
William S. Goldberg
/s/ Melvyn N. Klein Director
______________________________________
Melvyn N. Klein
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ Michael A. O'Connor Director
______________________________________
Michael A. O'Connor
/s/ Alvin V. Shoemaker Director
______________________________________
Alvin V. Shoemaker
</TABLE>
Pursuant to the Securities Act of 1933, as amended, Hanover Compressor
Capital Trust has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on February 10, 2000.
HANOVER COMPRESSOR COMPANY
/s/ William S. Goldberg
By: _________________________________
WILLIAM S. GOLDBERG
AS ADMINISTRATIVE TRUSTEE
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 10, 2000.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ William S. Goldberg Administrative Trustee
______________________________________
William S. Goldberg
/s/ Richard S. Meller Administrative Trustee
______________________________________
Richard S. Meller
/s/ Curtis Bedrich Administrative Trustee
______________________________________
Curtis Bedrich
</TABLE>
II-6
<PAGE>
EXHIBIT 4.4
CERTIFICATE OF TRUST
OF
HANOVER COMPRESSOR CAPITAL TRUST
This Certificate of Trust is being executed as of December 1, 1999 for
the purpose of creating a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C. (SS) 3801 et seq. (the "Act").
The undersigned hereby certify as follows:
1. Name. The name of the business trust is Hanover Compressor Capital
Trust (the "Trust").
2. Delaware Trustee. The name and business address of the Delaware
resident trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3. Effective. This Certificate of Trust shall be effective
immediately upon filing in the Office of the Secretary of State of the State of
Delaware.
4. Counterparts. This Certificate of Trust may be executed in one or
more counterparts.
-1-
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year first
above written.
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ James P. Lawler
---------------------------
Name: James P. Lawler
Title: Vice President
/s/ Curtis A. Bedrich
-------------------------------
Name: Curtis A. Bedrich
Trustee
/s/ Wiliam S. Goldberg
-------------------------------
Name: William S. Goldberg
Trustee
/s/ Richard S. Meller
-------------------------------
Name: Richard S. Meller
Trustee
-2-
<PAGE>
EXHIBIT 4.5
================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
HANOVER COMPRESSOR CAPITAL TRUST
Dated as of December 15, 1999
===============================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Interpretation and Definitions
Section 1.01 Definitions.......................................... 1
ARTICLE II
Trust Indenture Act
Section 2.01 Trust Indenture Act; Application..................... 9
Section 2.02 Lists of Holders of Securities....................... 9
Section 2.03 Reports by the Property Trustee...................... 9
Section 2.04 Periodic Reports to Property Trustee................. 10
Section 2.05 Evidence of Compliance with Conditions Precedent..... 10
Section 2.06 Events of Default; Waiver............................ 10
Section 2.07 Event of Default; Notice............................. 12
ARTICLE III
Organization
Section 3.01 Name................................................. 12
Section 3.02 Office............................................... 12
Section 3.03 Purpose.............................................. 13
Section 3.04 Authority............................................ 13
Section 3.05 Title to Property of the Trust....................... 13
Section 3.06 Powers and Duties of the Administrative Trustees..... 13
Section 3.07 Prohibition of Actions by the Trust
and the Trustees................................... 16
Section 3.08 Powers and Duties of the Property Trustee............ 17
Section 3.09 Certain Duties and Responsibilities of
the Property Trustee............................... 19
Section 3.10 Certain Rights of Property Trustee................... 20
Section 3.11 Delaware Trustee..................................... 22
Section 3.12 Execution of Documents............................... 23
Section 3.13 Not Responsible for Recitals or
Issuance of Securities............................. 23
Section 3.14 Duration of Trust.................................... 23
Section 3.15 Mergers.............................................. 23
i
<PAGE>
ARTICLE IV
Sponsor
Section 4.01 Sponsor's Purchase of Common Securities.............. 25
Section 4.02 Responsibilities of the Sponsor...................... 25
Section 4.03 Guarantee of Payment of Trust Obligations............ 25
ARTICLE V
Trustees
Section 5.01 Number of Trustees................................... 26
Section 5.02 Delaware Trustee..................................... 26
Section 5.03 Property Trustee; Eligibility........................ 27
Section 5.04 Qualifications of Administrative Trustees
and Delaware Trustee Generally.................... 27
Section 5.05 Initial Trustees..................................... 27
Section 5.06 Appointment, Removal and Resignation of Trustees..... 28
Section 5.07 Vacancies among Trustees............................. 31
Section 5.08 Effect of Vacancies.................................. 31
Section 5.09 Meetings............................................. 31
Section 5.10 Delegation of Power.................................. 32
Section 5.11 Merger, Conversion, Consolidation
or Succession to Business.......................... 32
ARTICLE VI
Distributions
Section 6.01 Distributions........................................ 32
ARTICLE VII
Issuance of Securities
Section 7.01 General Provisions Regarding Securities.............. 33
Section 7.02 Execution and Authentication......................... 33
Section 7.03 Form and Dating...................................... 34
Section 7.04 Registrar, Paying Agent and Conversion Agent......... 36
Section 7.05 Paying Agent to Hold Money in Trust.................. 36
Section 7.06 Replacement Securities............................... 37
Section 7.07 Outstanding Preferred Securities..................... 37
Section 7.08 Preferred Securities in Treasury..................... 37
Section 7.09 Temporary Securities................................. 38
Section 7.10 Cancellation......................................... 38
ii
<PAGE>
ARTICLE VIII
Dissolution and Termination of Trust
Section 8.01 Termination of Trust................................. 38
ARTICLE IX
Transfer and Exchange
Section 9.01 General.............................................. 39
Section 9.02 Transfer Procedures and Restrictions................. 40
Section 9.03 Deemed Security Holders.............................. 45
Section 9.04 [Reserved]........................................... 45
Section 9.05 Notices to Clearing Agency........................... 45
Section 9.06 Appointment of Successor Clearing Agency............. 45
ARTICLE X
Limitation of Liability of Holders of Securities, Trustees or
Others
Section 10.01 Liability............................................ 46
Section 10.02 Exculpation.......................................... 46
Section 10.03 Fiduciary Duty....................................... 47
Section 10.04 Indemnification...................................... 47
Section 10.05 Outside Businesses................................... 48
ARTICLE XI
Accounting
Section 11.01 Fiscal Year.......................................... 48
Section 11.02 Certain Accounting Matters........................... 49
Section 11.03 Banking.............................................. 49
Section 11.04 Withholding.......................................... 49
ARTICLE XII
Amendments and Meetings
Section 12.01 Amendments........................................... 50
Section 12.02 Meetings of the Holders of Securities; Action
by Written Consent.................................. 51
iii
<PAGE>
ARTICLE XIII
Representations of Property Trustee and Delaware Trustee
Section 13.01 Representations and Warranties of Property Trustee... 52
Section 13.02 Representations and Warranties of Delaware Trustee... 53
ARTICLE XIV
Registration Rights
Section 14.01 Registration Rights.................................. 54
ARTICLE XV
Miscellaneous
Section 15.01 Notices.............................................. 54
Section 15.02 Governing Law........................................ 55
Section 15.03 Intention of the Parties............................. 56
Section 15.04 Headings............................................. 56
Section 15.05 Successors and Assigns............................... 56
Section 15.06 Partial Enforceability............................... 56
Section 15.07 Counterparts......................................... 56
ANNEX I Terms of 7 1/4% Convertible Preferred Securities and
7 1/4% Convertible Common Securities...................... I-1
Exhibit A-1 Form of Preferred Security............................. A-1-1
Exhibit A-2 Form of Common Security................................ A-2-1
iv
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310 (a)............................................... 5.03(a)
310 (c)............................................... Inapplicable
311 (c)............................................... Inapplicable
312 (a)............................................... 2.02(a)
312 (b)............................................... 2.02(b)
313 ............................................... 2.03
314 (a)............................................... 2.04
314 (b)............................................... Inapplicable
314 (c)............................................... 2.05
314 (d)............................................... Inapplicable
314 (f)............................................... Inapplicable
315 (a)............................................... 3.09(a), 3.09(b)
315 (c)............................................... 3.09(a)
315 (d)............................................... 3.09(b)
316 (a)............................................... Annex I
316 (c)............................................... 3.06(e)
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
OF
HANOVER COMPRESSOR CAPITAL TRUST
December 15, 1999
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of December 15, 1999, by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Hanover
Compressor Company, a Delaware corporation, as trust sponsor (the "Sponsor"),
and by the holders, from time to time, of undivided beneficial interests in the
assets of the Trust (as defined below) issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established Hanover
Compressor Capital Trust (the "Trust") under the Business Trust Act (as
hereinafter defined) pursuant to a Declaration of Trust dated as of December 1,
1999 (the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on December 1, 1999, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as herein after defined);
and
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
Interpretation and Definitions
Section 1.01 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the preamble
above have the respective meanings assigned to them in this Declaration,
and any capitalized term not defined in this Declaration shall have the
meaning assigned thereto in the Indenture;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
1
<PAGE>
(c) all references to "the Declaration" or "this Declaration" are to this
Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections, Annexes and
Exhibits are to Articles and Sections of and Annexes and Exhibits to this
Declaration unless otherwise specified;
(e) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(f) a term defined in the Trust Indenture Act has the same meaning when used in
this Declaration unless otherwise defined in this Declaration or unless the
context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Administrative Action" has the meaning set forth in the definition of "Tax
Event".
"Administrative Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.
"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;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or co-registrar.
"Appointment Event" means an event defined in the terms of the Preferred
Securities, as set forth in Annex I, which entitles the Holders of a Majority in
liquidation amount of the Preferred Securities to appoint a Special Trustee.
"Authorized Officer" of a Person means any Person that is authorized to bind
such Person.
"Beneficiaries" has the meaning set forth in Section 4.03(a).
"Book Entry Interest" means a beneficial interest in a global certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Depositary as described in Section 7.03.
"Business Day" means any day other than a Saturday or a Sunday, a day on
which banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law or executive order to remain closed, or a day on
which the corporate trust office of the Property Trustee or the Debenture
Trustee is closed for business.
2
<PAGE>
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Section 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Certificate" means a certificate in global or definitive form representing
a Common Security or a Preferred Security.
"Closing Date" means December 15, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
legislation.
"Commission" means the Securities and Exchange Commission as from time to
time constituted, created, or, if at any time after execution of this instrument
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.
"Common Securities" has the meaning specified in Section 7.01(a).
"Common Securities Guarantee" means the guarantee agreement to be dated as
of December 15, 1999 of the Sponsor in respect of the Common Securities.
"Conversion Agent" has the meaning set forth in Section 7.04.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Debenture Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Debenture Issuer" means the Sponsor in its capacity as issuer of the
Debentures.
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by the Debenture
Issuer under the Indenture to be held by the Property Trustee, in the form
attached to the Indenture as Exhibit A.
"Delaware Trustee" has the meaning set forth in Section 5.02.
"Deferral Period" has the meaning set forth in the Indenture.
"Definitive Preferred Securities" means any Preferred Securities in
definitive form issued by the Trust.
3
<PAGE>
"Depositary" means The Depository Trust Company, the initial clearing
agency, until a successor shall be appointed pursuant to Section 9.06, and
thereafter means such successor Depositary.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.01.
"Event of Default" means:
(i) a Debenture Event of Default; or
(ii) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a
period of 30 days (subject to the deferral of any due date in the
case of a Deferral Period); or
(iii) default by the Trust in the payment of any Redemption Price of any
Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Declaration (other
than a covenant or warranty, a default in the performance of which
or the breach of which is addressed in clause (ii) or (iii)
above), and continuation of such default or breach for a period of
60 days after there has been given, by registered or certified
mail, to the defaulting Trustee or Trustees by the holders of at
least 25% in aggregate liquidation amount of the outstanding
Preferred Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the Declaration; or
(v) the failure of the Sponsor to appoint a successor Property Trustee
in the manner required by Section 5.06(c).
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.
"Global Preferred Securities" means Rule 144A Global Preferred Securities
and/or Unrestricted Global Preferred Securities, as the context requires.
"Holder" means a Person in whose name a Certificate representing a Security
is registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of December 15, 1999, between the
Debenture Issuer and the Debenture Trustee, as it may be amended from time to
time.
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"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.06(g).
"Like Amount" means (i) with respect to a redemption of Preferred
Securities, Preferred Securities having an aggregate liquidation amount equal to
that portion of the principal amount of Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Preferred Securities based upon the relative liquidation amounts of
such classes and the proceeds of which will be used to pay the applicable
Redemption Price of the Preferred Securities and (ii) with respect to a
distribution of Debentures to holders of Preferred Securities in connection with
a dissolution or liquidation of the Trust, Debentures having a principal amount
equal to the aggregate liquidation amount of the Securities of the Holder to
whom such Debentures are distributed.
"List of Holders" has the meaning set forth in Section 2.02(a).
"Majority in liquidation amount of the Securities" means, except as provided
in the terms of the Preferred Securities and by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise of all
outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Obligations" means any costs, expenses or liabilities of the Trust, other
than obligations of the Trust to pay to Holders of any Securities or other
similar interests in the Trust the amounts due such Holders pursuant to the
terms of the Securities or such other similar interests, as the case may be.
"Offering Circular" means the confidential offering circular, dated as of
December 9, 1999, relating to the issuance by the Trust of Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(i) a statement that each officer signing the Certificate has read the
covenant or condition and the definition relating thereto;
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(ii) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the
Certificate;
(iii) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Optional Closing Date" has the meaning assigned to such term in the
Purchase Agreement.
"Participants" has the meaning set forth in Section 7.03(b).
"Paying Agent" has the meaning specified in Section 7.04.
"Person" means a legal person, including any individual, corporation,
estate, company, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities" has the meaning specified in Section 7.01(a).
"Preferred Securities Guarantee" means the guarantee agreement to be dated
as of December 15, 1999, of the Sponsor in respect of the Preferred Securities.
"Preferred Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Depositary, or on the books of a Person
maintaining an account with such Depositary (directly as a Participant or as an
indirect participant, in each case in accordance with the rules of such
Depositary).
"Property Trustee" means the Trustee meeting the eligibility requirements
set forth in Section 5.03.
"Property Trustee Account" has the meaning set forth in Section 3.08(c).
"Purchase Agreement" has the meaning set forth in Section 7.03.
"Quorum" means a majority of the Administrative Trustees or, if there are
only two Administrative Trustees, both of them.
"Redemption Price" has the meaning set forth in Annex I.
"Registrar" has the meaning set forth in Section 7.04.
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"Registration Rights Agreement" means the Registration Rights Agreement,
dated December 15, 1999, among the Sponsor, the Trust, and the Purchasers named
in the Purchase Agreement.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any vice-
president, any assistant vice-president, the treasurer, any assistant treasurer,
any trust officer or assistant trust officer or any other officer in the
Corporate Trust Department of the Property 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 that officer's knowledge of
and familiarity with the particular subject.
"Restricted Preferred Securities" shall include the Rule 144A Global
Preferred Securities.
"Restricted Securities Legend" has the meaning specified in Section 9.02(j).
"Rule 144A Global Preferred Security" has the meaning specified in Section
7.03(a).
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Securities Custodian" means the custodian with respect to the Rule 144A
Global Preferred Security and any other Preferred Security in global form.
"Securities Guarantees" means the Preferred Securities Guarantee and the
Common Securities Guarantee.
"Special Trustee" means a trustee appointed by the Holders of a Majority in
liquidation amount of the Preferred Securities in accordance with Section
5.06(a)(ii)(B).
"Sponsor" means Hanover Compressor Company, a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section 5.06.
"Successor Property Trustee" has the meaning set forth in Section 5.06.
"Super Majority" has the meaning set forth in Section 2.06(a)(ii).
"Tax Event" means the Property Trustee shall have received an opinion of
nationally recognized independent tax counsel to the Sponsor (reasonably
acceptable to the Trustees)
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experienced in such matters (a "Dissolution Tax Opinion") to the effect that, as
a result of (i) any amendment to or change (including any announced prospective
change (which shall not include a proposed change), provided that a Tax Event
shall not occur more than 90 days before the effective date of any such
prospective change) in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (ii)
any judicial decision or official administrative pronouncement, ruling,
regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations (an
"Administrative Action") or (iii) any amendment to or change in the
administrative position or interpretation of any Administrative Action or
judicial decision that differs from the theretofore generally accepted position,
in each case, by any legislative body, court, governmental agency or regulatory
body, irrespective of the manner in which such amendment or change is made
known, which amendment or change is effective or such Administrative Action or
decision is announced, in each case, on or after the date of original issuance
of the Debentures or the issue date of the Preferred Securities issued by the
Trust, there is more than an insubstantial risk that (a) if the Debentures are
held by the Property Trustee, (I) the Trust is, or will be within 90 days of the
date of such opinion, subject to United States Federal income tax with respect
to interest accrued or received on the Debentures or subject to more than a de
minimis amount of other taxes, duties or other governmental charges as
determined by such counsel, or (II) any portion of interest payable by the
Sponsor to the Trust on the Debentures is not, or within 90 days of the date of
such opinion will not be, deductible by the Sponsor in whole or in part for
United States Federal income tax purposes or (b) with respect to Debentures
which are no longer held by the Property Trustee, any portion of interest
payable by the Sponsor on the Debentures is not, or within 90 days of the date
of such opinion will not be, deductible by the Sponsor in whole or in part for
United States Federal income tax purposes.
"10% in liquidation amount of the Securities" means, except as provided in
the terms of the Preferred Securities or by the Trust Indenture Act, Holders of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Preferred Securities or Holders of outstanding
Common Securities, voting separately as a class, representing 10% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise) of all outstanding Securities of the
relevant class.
"Treasury Regulations" means the income tax regulations, including temporary
and proposed regulations, promulgated under the Code by the United States
Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from
time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this Declaration as
a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
"Unrestricted Global Preferred Security" has the meaning set forth in
Section 9.02(b).
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ARTICLE II
Trust Indenture Act
Section 2.01 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust Indenture Act
that are required to be part of this Declaration, which are incorporated by
reference in and made part of this Declaration and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee for the
purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall not
affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 2.02 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees on behalf of the Trust
shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the Holders
of the Securities ("List of Holders") as of such record date, provided that
neither the Sponsor nor the Administrative Trustees on behalf of the Trust
shall be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Property Trustee by the Sponsor and the Administrative Trustees on behalf
of the Trust, and (ii) at any other time, within 30 days of receipt by the
Trust of a written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Property Trustee. The
Property Trustee shall preserve, in as current a form as is reasonably
practicable, all information contained in Lists of Holders given to it or
which it receives in its capacity as Paying Agent (if acting in such
capacity), provided that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.
Section 2.03 Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 15, 2000, the
Property Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust
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Indenture Act. The Property Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
Section 2.04 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
Section 2.05 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
Section 2.06 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities,
waive any past Event of Default in respect of the Preferred Securities and
its consequences, provided that, if the Event of Default:
(i) is caused by a Debenture Event of Default that is not waivable under
the Indenture, the Event of Default under the Declaration shall also
not be waivable;
(ii) is caused by a Debenture Event of Default that requires the consent
or vote of greater than a majority in principal amount of the
holders of the Debentures (a "Super Majority") to be waived under
the Indenture, the Event of Default under the Declaration may only
be waived by the vote of the Holders of at least the proportion in
liquidation amount of the Preferred Securities that the relevant
Super Majority represents of the aggregate principal amount of the
Debentures outstanding;
(iii) is the result of a default by the Trust in the payment of any
Distribution when it becomes due and payable, which default has
continued for 30 days (subject to the deferral of any due date in
the case of a Default Period), the Event of Default shall not be
waivable; or
(iv) is the result of a default by the Trust in the payment of any
Redemption Price of any Preferred Security when it becomes due and
payable, the Event of Default shall not be waivable.
The foregoing provisions of this Section 2.06(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
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Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or an Event of Default
with respect to the Preferred Securities or impair any right consequent thereon.
Any waiver by the Holders of the Preferred Securities of an Event of Default
with respect to the Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common Securities
may, by vote, on behalf of the Holders of all of the Common Securities,
waive any past Event of Default with respect to the Common Securities and
its consequences, provided that, if the Event of Default is caused by a
Debenture Event of Default that:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section
2.06(b), the Event of Default under the Declaration shall also not
be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as provided
below in this Section 2.06(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at
least the proportion in liquidation amount of the Common Securities
that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until the effects of all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.06(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of
the Trust Indenture Act and such Section 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.06(b), upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property Trustee
at the direction of the Holders of the Preferred Securities, constitutes a
waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.06(c) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust
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Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
Section 2.07 Event of Default; Notice.
(a) The Property Trustee shall, within ten business days after the occurrence
of an Event of Default actually known to the Property Trustee, (i) transmit
by mail, first-class postage prepaid, to the Holders of the Securities, and
(ii) transmit by any means provided for in this Declaration to the
Administrative Trustees and the Sponsor, notices of all defaults actually
known to the Property Trustee, unless such defaults have been cured before
the giving of such notice (the term "defaults" for the purposes of this
Section 2.07(a) being hereby defined to be an Event of Default, not
including any periods of grace and irrespective of the giving of any
notice); provided that, except for a default in the payment of principal of
(or premium, if any) or interest on any of the Debentures or in the payment
of any sinking fund installment established for the Debentures, the
Property 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 Property Trustee
in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any default
except:
(i) a default under Sections 5.01(1) and 5.01(2) of the Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice.
ARTICLE III
Organization
Section 3.01 Name.
The Trust is named "Hanover Compressor Capital Trust," as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the
Administrative Trustees.
Section 3.02 Office.
The address of the principal office of the Trust is c/o Hanover Compressor
Company, 12001 North Houston Rosslyn, Houston, Texas 77086, Attention: Chief
Financial Officer. On ten Business Days written notice to the Holders of
Securities, the Administrative Trustees may designate another principal office.
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Section 3.03 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Securities and use the proceeds from such sale to acquire the Debentures, (b)
distributing payments received on the Debentures to the Holders of the
Securities and (c) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States Federal income
tax purposes as a grantor trust.
Section 3.04 Authority.
(a) Subject to the limitations provided in this Declaration and to the specific
duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken
by the Property Trustee in accordance with its powers shall constitute the
act of and serve to bind the Trust. In dealing with the Trustees acting on
behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
(b) Except as expressly set forth in this Declaration and except if a meeting
of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any
one such Administrative Trustee.
(c) An Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to
execute pursuant to Section 3.06.
Section 3.05 Title to Property of the Trust.
Except as provided in Section 3.08 with respect to the Debentures and the
Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
Section 3.06 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have, together (except in the case of
paragraphs (a), (b) and (c) of this Section 3.06) with any Special Trustee
holding office pursuant to Section 5.06, if any, the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
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(a) to issue and sell the Preferred Securities and the Common Securities in
accordance with this Declaration; provided, however, that the Trust may
issue no more than one series of Preferred Securities and no more than one
series of Common Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities, and the issuance of
Securities shall be limited to simultaneous issuances of both Preferred
Securities and Common Securities on the Closing Date and any Optional
Closing Date;
(b) in connection with the issue and sale of the Preferred Securities, at the
direction of the Sponsor, to:
(i) assist in the preparation of the Offering Circular and a
preliminary offering circular, in each case prepared by the
Sponsor, in relation to the offering and sale of Preferred
Securities to qualified institutional buyers in reliance on Rule
144A under the Securities Act and to execute and file with the
Commission, at such time as determined by the Sponsor, a
registration statement filed on Form S-3 prepared by the Sponsor,
including any amendments thereto, in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by the Sponsor, or take any
acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Preferred Securities in any
State or foreign jurisdiction in which the Sponsor has determined
to qualify or register such Preferred Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to the
Private Offerings, Resale and Trading through Automated Linkages
("PORTAL") Market and, at such time, if any, as determined by the
Sponsor, to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing or
quotation of the Preferred Securities;
(iv) to execute and deliver letters, documents, or instruments with The
Depository Trust Company relating the Preferred Securities;
(v) execute and file with the Commission, at such time as determined by
the Sponsor, a registration statement on Form 8-A, including any
amendments thereto, prepared by the Sponsor relating to the
registration of the Preferred Securities under Section 12 of the
Exchange Act; and
(vi) execute and enter into the Purchase Agreement, Registration Rights
Agreement and other related agreements providing for the sale of
the Preferred Securities and to provide any certificates or other
documents in connection with such agreements;
(c) to acquire the Debentures with the proceeds of the sale of the Preferred
Securities and the Common Securities; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to be
held of record in the name of the Property Trustee for the benefit of the
Holders of the Preferred Securities and the Holders of Common Securities;
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(d) to give the Sponsor and the Property Trustee prompt written notice of the
occurrence of a Tax Event; provided that the Administrative Trustees (and
Special Trustee, if any) shall consult with the Sponsor and the Property
Trustee before taking or refraining from taking any Ministerial Action in
relation to a Tax Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Preferred Securities and Holders of
Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of the
Administrative Trustees pursuant to the terms of the Securities and this
Declaration;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal
action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.08(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be designated
as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the Trust
Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by
any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out any of the
purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and transfer
agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of any
notice received from the Debenture Issuer of its election to defer payments
of interest on the Debentures by extending the interest payment period
under the Indenture;
(n) to execute all documents or instruments, perform all duties and powers, and
do all things for and on behalf of the Trust in all matters necessary or
incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect the purposes for
which the Trust was created;
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(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.06, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income
tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes,
provided that such action does not materially adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable tax returns and tax
information reports that are required to be filed with respect to the Trust
to be duly prepared and filed by the Administrative Trustees, on behalf of
the Trust.
The Administrative Trustees must exercise the powers set forth in this
Section 3.06 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.03, and the Administrative Trustees shall not
take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.03.
Subject to this Section 3.06, the Administrative Trustees shall have none
of the powers or the authority of the Property Trustee set forth in Section
3.08.
Any expenses incurred by the Administrative Trustee (or the Special
Trustee, if any) pursuant to this Section 3.06 shall be reimbursed by the
Debenture Issuer.
Section 3.07 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property Trustee) on
behalf of the Trust shall not, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall
not and the Trustees (including the Property Trustee) shall cause the Trust
not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
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(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of,
or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in the Declaration or Annex I hereto, (A)
direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under
Section 5.13 of the Indenture, (C) exercise any right to rescind
or annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures
where such consent shall be required unless, in the case of each
action described in clause (A), (B), (C) or (D), the Trust shall
have received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial risk that
for United States federal income tax purposes the Trust will not
be classified as a grantor trust.
Section 3.08 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of record in
the name of the Property Trustee in trust for the benefit of the Holders of
the Securities. The right, title and interest of the Property Trustee to
the Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.06. Such vesting
and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and interest in
the Debentures to the Administrative Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the
Holders of the Securities and, upon the receipt of payments of funds
made in respect of the Debentures held by the Property Trustee,
deposit such funds into the Property Trustee Account and make
payments to the Holders of the Preferred Securities and Holders of
the Common Securities from the Property Trustee Account in
accordance with Section 6.01. Funds in the Property Trustee Account
shall be held uninvested until disbursed in accordance with this
Declaration;
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(ii) engage in such ministerial activities as so directed and as shall
be necessary or appropriate to effect the redemption of the
Preferred Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Administrative
Trustees in accordance with the terms of the Securities, engage in
such ministerial activities as so directed as shall be necessary
or appropriate to effect the distribution of the Debentures to
Holders of Securities upon the occurrence of certain special
events (as may be defined in the terms of the Securities) arising
from a change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such duties as may
be specifically required of the Property Trustee pursuant to the terms of
the Securities.
(e) The Property Trustee shall take any Legal Action which arises out of or in
connection with an Event of Default or the Property Trustee's duties and
obligations under this Declaration or the Trust Indenture Act; provided,
however, that if a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the Sponsor to
pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may institute a
legal proceeding directly for enforcement of payment to such Holder of the
principal of or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such
Holder (a "Direct Action") on or after the respective due date specified in
the Securities. In connection with such Direct Action, the Debenture Issuer
shall be subrogated to the rights of such Holder of Preferred Securities
with respect to payments on the Preferred Securities to the extent of any
payment made by the Sponsor to such Holder of Preferred Securities in such
Direct Action. In addition, if the Property Trustee fails to enforce its
rights under the Debentures (other than rights arising from an Event of
Default described in the immediately preceding sentence) after any Holder
of Preferred Securities shall have made a written request to the Property
Trustee to enforce such rights, such Holder of Preferred Securities may, to
the fullest extent permitted by law, institute a Direct Action to enforce
such rights. Except as provided in the preceding sentences, the Holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 5.06.
(g) The Property Trustee shall have the legal power to exercise all of the
rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default occurs and is continuing, the Property Trustee
shall, for the benefit of Holders of the Securities,
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enforce its rights as holder of the Debentures subject to the rights of the
Holders pursuant to the terms of such Securities.
(h) The Property Trustee will act as Paying Agent and Registrar in Wilmington,
Delaware to pay Distributions, redemption payments or liquidation payments
on behalf of the Trust with respect to all securities and any such Paying
Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any
time by the Property Trustee.
(i) Subject to this Section 3.08, the Property Trustee shall have none of the
duties, liabilities, powers or the authority of the Administrative Trustees
set forth in Section 3.06.
(j) The Property Trustee must exercise the powers set forth in this Section
3.08 in a manner that is consistent with the purposes and functions of the
Trust set out in Section 3.03, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust
set out in Section 3.03.
Section 3.09 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.06), the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in its exercise, as
a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the Property
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the curing
or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into this
Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this
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Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Property Trustee, the
Property Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements
of this Declaration;
(ii) the Property Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property Trustee
to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers;
(v) the Property Trustee's sole duty with respect to the custody, safe
keeping and physical preservation of the Debentures and the
Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or with
respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the
Sponsor. Money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Property
Trustee Account maintained by the Property Trustee pursuant to
Section 3.08(c)(i) and except to the extent otherwise required by
law; and
(viii) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Property Trustee be liable for the default or misconduct of the
Administrative Trustees or the Sponsor.
Section 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.09:
(i) the Property Trustee may rely conclusively and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument,
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opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative Trustees
contemplated by this Declaration shall be sufficiently evidenced by
an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its
part, request and rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the
Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing
or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its choice or
other experts and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise 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 accordance with such advice or
opinion. Such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee security satisfactory to the
Property Trustee, against the costs, expenses (including its
attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested in writing
by the Property Trustee, provided, that, nothing contained in this
Section 3.10(a)(vi) shall be taken to relieve the Property Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, security, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Property Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of its powers hereunder or
perform any of its duties hereunder either directly or by or
through agents or attorneys and
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the Property 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;
(ix) any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third
party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder the Property Trustee (i) may request instructions from
the Holders of the Securities which instructions may only be given
by the Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Property Trustee
under the terms of the Securities in respect of such remedy, right
or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and
(iii) shall be protected in acting in accordance with such
instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property
Trustee shall be construed to be a duty.
Section 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than Section
5.02, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Administrative Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.02, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
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Section 3.12 Execution of Documents.
Except as otherwise required by the Business Trust Act, any Administrative
Trustee is authorized to execute on behalf of the Trust any documents that the
Administrative Trustees have the power and authority to execute pursuant to
Section 3.06; provided that, the registration statement referred to in Section
3.06(b)(i), including any amendments thereto, shall be signed by a majority of
the Administrative Trustees.
Section 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
Section 3.14 Duration of Trust.
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall exist until December 1, 2049.
Section 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c) of this Declaration and Section 3 and 4 of the terms of the
Securities as set forth in Annex I attached hereto.
(b) The Trust may, with the consent of a majority of the Administrative
Trustees and without the consent of the Holders of the Securities, the
Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge
with or into, or be replaced by a trust organized as such under the laws of
any State or the District of Columbia; provided that:
(i) if the Trust is not the surviving entity, the successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under the
Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Preferred Securities (the
"Successor Securities") as long as the Successor Securities
rank, with respect to participation in the profits and
distributions and payments upon liquidation, redemption and
otherwise at least as high as the Preferred Securities rank with
respect to participation in the profits and dividends and
payments upon liquidation redemption and otherwise;
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(ii) the Debenture Issuer appoints a Trustee of such Successor Entity
possessing the same powers and duties of the Property Trustee as
the Holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities are listed,
or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with any other
organization on which the Preferred Securities are then listed or
quoted;
(iv) such merger, consolidation, amalgamation, or replacement does not
cause the Preferred Securities (including any Successor Securities)
to be downgraded by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation, replacement or does not
adversely affect the powers, preferences and other special rights
of the Holders of the Preferred Securities (including any Successor
Securities) in any material respect;
(vi) such Successor Entity has a purpose substantially identical to that
of the Trust;
(vii) prior to such merger, consolidation, amalgamation, or replacement
, the Sponsor has received an opinion of a nationally recognized
independent counsel (reasonably acceptable to the Property
Trustee) to the Trust experienced in such matters to the effect
that:
(A) the Successor Entity will be treated as a grantor trust for
United States federal income tax purposes;
(B) following such merger, consolidation, amalgamation or
replacement, neither the Sponsor nor the Successor Entity will
be required to register as an Investment Company; and
(C) such merger, consolidation, amalgamation or replacement will
not adversely affect the limited liability of the Holders of
the Securities (including any Successor Securities); and
(viii) the Sponsor provides a guarantee to the Holders of the Successor
Securities with respect to the Successor Entity having
substantially the same terms as the Preferred Securities
Guarantee; and
(ix) such merger, consolidation, amalgamation, replacement or lease is
not a taxable event for holders of the Preferred Securities.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other
entity or permit any other entity to consolidate, amalgamate,
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merge with or into, or replace it if such consolidation, amalgamation,
merger or replacement would cause the Trust or Successor Entity to be
classified as other than a grantor trust for United States federal income
tax purposes.
ARTICLE IV
Sponsor
Section 4.01 Sponsor's Purchase of Common Securities.
On the Closing Date and any Optional Closing Date the Sponsor will purchase
an amount of Common Securities issued by the Trust such that the aggregate
liquidation amount of such Common Securities purchased by the Sponsor shall at
such date equal at least 3% of the total capital of the Trust.
Section 4.02 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Circular and to prepare for filing by the Trust
with the Commission the Shelf Registration Statement, including any
amendments thereto;
(b) to determine the States and foreign jurisdictions in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be executed and
filed by the Trust, as the Sponsor deems necessary or advisable in order to
comply with the applicable laws of any such States and foreign
jurisdictions;
(c) if deemed necessary or advisable by the Sponsor, to prepare for filing by
the Trust an application to PORTAL and to the New York Stock Exchange or
any other national stock exchange or the Nasdaq National Market for listing
or quotation of the Preferred Securities;
(d) if deemed necessary or advisable by the Sponsor, to prepare for filing by
the Trust with the Commission a registration statement on Form 8-A relating
to the registration of the Preferred Securities under Section 12 of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement, Registration Rights
Agreement and other related agreements providing for the sale of the
Preferred Securities.
Section 4.03 Guarantee of Payment of Trust Obligations.
(a) Subject to the terms and conditions of this Section 4.03, the Sponsor
hereby irrevocably and unconditionally guarantees to each Person to whom
the Trust is now or hereafter
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becomes indebted or liable (the "Beneficiaries") the full payment, when and
as due, of any and all Obligations to such Beneficiaries.
(b) The agreement of the Sponsor in Section 4.03(a) is intended to be for the
benefit of, and to be enforceable by, all such Beneficiaries, whether or
not such Beneficiaries have received notice hereof.
(c) The agreement of the Sponsor set forth in Section 4.03(a) shall terminate
and be of no further force and effect upon the later of (a) the date on
which full payment has been made of all amounts payable to all Holders of
all the Preferred Securities (whether upon redemption, liquidation,
exchange or otherwise) and (b) the date on which there are no Beneficiaries
remaining; provided, however, that such agreement shall continue to be
effective or shall be reinstated, as the case may be, if at any time any
Holder of Preferred Securities or any Beneficiary must restore payment of
any sums paid under the Preferred Securities, under any Obligation, under
the Preferred Securities Guarantee or under this Agreement for any reason
whatsoever. Such agreement is continuing, irrevocable, unconditional and
absolute.
ARTICLE V
Trustees
Section 5.01 Number of Trustees.
Subject to Section 5.02, the number of Trustees shall initially be five
(5), and:
(a) at any time before the issuance of any Securities, the Sponsor may, by
written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities:
(i) the number of Trustees may be increased or decreased, except as
provided in Sections 5.01(b)(ii) and 5.06(a)(ii)(B) with respect to
the Special Trustee, by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities; and
(ii) the number of Trustees shall be increased automatically by one (1)
if an Appointment Event has occurred and is continuing and the
Holders of a Majority in liquidation amount of the Preferred
Securities appoint a Special Trustee in accordance with Section
5.06(a)(ii).
Section 5.02 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware Trustee")
shall either be (i) a natural person who is at least 21 years of age and a
resident of the State of Delaware, or (ii) an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law, provided that, if the Property Trustee has its principal
place of
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business in the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
Section 5.03 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as Property Trustee
which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of the
United States of America or any State or Territory thereof or of
the District of Columbia, or a corporation or Person permitted by
the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the
purposes of this Section 5.03(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to so act
under Section 5.03(a), the Property Trustee shall immediately resign in the
manner and with the effect set forth in Section 5.06(e).
(c) If the Property Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first
provision contained in Section 310(b) of the Trust Indenture Act.
Section 5.04 Qualifications of Administrative Trustees and Delaware Trustee
Generally.
Each Administrative Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
Section 5.05 Initial Trustees.
The initial Administrative Trustees shall be:
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Curtis A. Bedrich
c/o Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
William S. Goldberg
c/o Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Richard S. Meller
c/o Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware
19890-0001
Attention: Corporate Trust Administration
The initial Property Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware
19890-0001
Attention: Corporate Trust Administration
Section 5.06 Appointment, Removal and Resignation of Trustees.
(a) Except as provided otherwise in this Section 5.06(b) and 5.06(d), Trustees
may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument executed
by the Sponsor; and
(ii) after the issuance of any Securities:
(A) other than in respect to a Special Trustee, by vote of the
Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the
Common Securities or by written consent,
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unless a Debenture Event of Default shall have occurred and be
continuing, in which event the Property Trustee and the
Delaware Trustee may only be removed by the Holders of a
Majority in liquidation amount of the Preferred Securities,
voting as a class at a meeting of the Holders of the Preferred
Securities or by written consent; and
(B) if an Appointment Event has occurred and is continuing, one (1)
additional trustee (the "Special Trustee"), who shall have the
same rights, powers and privileges as an Administrative
Trustee, may be appointed by vote of the Holders of a Majority
in liquidation amount of the Preferred Securities, voting as a
class at a meeting of the Holders of the Preferred Securities,
and such Special Trustee may only be removed (otherwise than by
the operation of Section 5.06(e)), by vote of the Holders of a
Majority in liquidation amount of the Preferred Securities
voting as a class at a meeting of the Holders of the Preferred
Securities.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.06(a) until a successor Property Trustee meeting
the requirements of Section 5.03 (a "Successor Property Trustee") has been
appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Administrative
Trustees and the Sponsor.
(c) The Holders of a Majority in liquidation amount of the Common Securities
shall remove the Property Trustee by written instrument upon:
(i) the entry or a decree or order by a court having jurisdiction in the
premises adjudging the Property Trustee as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Property Trustee under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Property Trustee 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 60 consecutive days; or
(ii) the institution by the Property Trustee of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Property Trustee or
of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become
due and its willingness to be adjudicated a bankrupt, or the taking
of corporate action by the Property Trustee in furtherance of any
such action.
The Sponsor shall appoint a Successor Property Trustee within 60 days of such an
event.
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(d) The Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 5.06(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.02 and 5.04 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Trustees and the Sponsor.
(e) A Trustee appointed to office shall hold office until his successor shall
have been appointed or until his death, removal or resignation, provided
that a Special Trustee shall only hold office while an Appointment Event is
continuing and shall cease to hold office immediately after the Appointment
Event pursuant to which the Special Trustee was appointed and all other
Appointment Events cease to be continuing. Any Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument
in writing signed by the Trustee and delivered to the Sponsor and the
Trust, which resignation shall take effect upon such delivery or upon such
later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the
Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the holders of the
Securities;
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee; and
(iii) no such resignation of a Special Trustee shall be effective until
the 60th day following delivery of the instrument of resignation
of the Special Trustee to the Sponsor and the Trust or such later
date specified in such instrument during which period the Holders
of the Preferred Securities shall have the right to appoint a
successor Special Trustee as provided in this Section 5.06.
(f) The Holders of the Common Securities shall use their best efforts to
promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this
Section 5.06.
(g) If no Successor Property Trustee or Successor Delaware Trustee shall have
been appointed and accepted appointment as provided in this Section 5.06
within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation or removal, at the cost of the Sponsor the resigning
Property Trustee or Delaware Trustee, resigning or being removed as
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applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper and prescribe, appoint a Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
(h) No Property Trustee or Delaware Trustee shall be liable for the acts or
omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
Section 5.07 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.01, or if the number of Trustees
is increased pursuant to Section 5.01, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Administrative
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.06.
Section 5.08 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul, dissolve or terminate the Trust.
Whenever a vacancy in the number of Administrative Trustees shall occur,
until such vacancy is filled by the appointment of a Administrative Trustee in
accordance with Section 5.06, the Administrative Trustees in office, regardless
of their number, shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Declaration.
Section 5.09 Meetings.
Meetings of the Administrative Trustees shall be held from time to time
upon the call of any Administrative Trustee. Regular meetings of the
Administrative Trustees may be held at a time and place fixed by resolution of
the Administrative Trustees. Notice of any meetings of the Administrative
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile or overnight courier) not less than 24 hours before such meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Administrative Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Administrative Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Administrative Trustees may be taken at a
meeting by vote of a majority of the Administrative Trustees present (whether in
person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting and without prior notice
by the unanimous written consent of the Administrative Trustees.
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In the event there is only one Administrative Trustee, any and all action
of such Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee. In the event a Special Trustee is holding office
pursuant to Section 5.06, such Special Trustee shall have the same rights as an
Administrative Trustee with respect to participation in a meeting of the
Administrative Trustees.
Section 5.10 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in
Section 3.06, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation
is not prohibited by applicable law or contrary to the provisions of the
Trust, as set forth herein.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of the Property Trustee or the Delaware Trustee, as
the case may be, shall be the successor of the Property Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such Person 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.
ARTICLE VI
Distributions
Section 6.01 Distributions.
Holders shall receive Distributions (as defined herein) in accordance with
the applicable terms of the relevant Holder's Securities. Distributions shall be
made on the Preferred Securities and the Common Securities in accordance with
the preferences set forth in their respective terms. If and to the extent that
the Debenture Issuer makes a payment of interest (including Compounded Interest
(as defined in the Indenture) and Additional Sums (as defined in the Indenture))
premium and principal on the Debentures held by the Property Trustee (the amount
of any such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
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ARTICLE VII
Issuance of Securities
Section 7.01 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the Trust issue one class of
convertible preferred securities, designated as 7 1/4% Convertible
Preferred Securities, Term Income Deferrable Equity Securities (TIDES)(SM),
representing undivided beneficial interests in the assets of the Trust (the
"Preferred Securities"), having such terms as are set forth in Annex I and
one class of convertible common securities, liquidation amount $50,
representing undivided beneficial interests in the assets of the Trust (the
"Common Securities"), having such terms as are set forth in Annex I. The
Trust shall have no securities or other interests in the assets of the
Trust other than the Preferred Securities and the Common Securities. The
Trust shall issue no Securities in bearer form.
(b) The consideration received by the Trust for the issuance of the Securities
shall constitute a contribution to the capital of the Trust and shall not
constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable, subject to Section 10.01 with respect to the Common
Securities.
(d) Every Person, by virtue of having become a Holder or a Preferred Security
Beneficial Owner in accordance with the terms of this Declaration, shall be
deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
(e) Every Person, by virtue of having become a Holder or a Preferred Securities
Beneficial Owner in accordance with the terms of this Declaration, shall be
deemed to have covenanted to treat the Debentures as indebtedness and the
Securities as evidence of an indirect beneficial ownership interest in the
Debentures.
Section 7.02 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust by one Administrative
Trustee. In case any Administrative Trustee of the Trust who shall have
signed any of the Securities shall cease to be such Administrative Trustee
before the Securities so signed shall be delivered by the Trust, such
Securities nevertheless may be delivered as though the person who signed
such Securities had not ceased to be such Administrative Trustee; and any
Securities may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Administrative
Trustees of the Trust, although at the date of delivery of the Declaration
any such person was not such a Administrative Trustee.
(b) One Administrative Trustee shall sign the Preferred Securities and the
Common Securities for the Trust by manual or facsimile signature.
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A Preferred Security shall not be valid until authenticated by the manual
or facsimile signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Preferred Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative Trustee, the
Property Trustee shall authenticate the Preferred Securities for original issue
by executing the Property Trustee's certificate of authentication contained in
the form of Preferred Securities attached hereto as Exhibit A-1. The aggregate
number of Preferred Securities outstanding at any time shall not exceed the
number set forth in the terms in Annex I hereto except as provided in Section
7.06.
The Property Trustee may appoint an authenticating agent acceptable to the
Trust to authenticate Preferred Securities. An authenticating agent may
authenticate Preferred Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Company or an Affiliate.
Section 7.03 Form and Dating.
The Preferred Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates may be printed, lithographed or engraved or may be produced in any
other manner as is reasonably acceptable to the Administrative Trustees, as
evidenced by their execution thereof. The Securities may have letters, numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the Trust
is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Trust). The Trust at the direction of
the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the
Property Trustee in writing. Each Preferred Security shall be dated the date of
its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the Property
Trustee and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
The Preferred Securities are being offered and sold by the Trust pursuant
to a Purchase Agreement relating to the Preferred Securities, dated December 9,
1999, among the Trust, the Sponsor and the Purchasers named therein (the
"Purchase Agreement").
(a) Global Securities. Preferred Securities offered and sold to Qualified
Institutional Buyers ("QIBs") in reliance on Rule 144A under the Securities
Act ("Rule 144A") as provided in the Purchase Agreement, shall be issued in
the form of one or more permanent global Securities in definitive, fully
registered form without distribution coupons with the appropriate global
legends, ERISA legend and Restricted Securities Legend set forth in Exhibit
A-1 hereto (each, a "Rule 144A Global Preferred Security"), which shall be
deposited on behalf of the purchasers of the Preferred Securities
represented thereby with the Property Trustee, at its Wilmington, Delaware
office, as custodian for the Depositary, and registered in the name of the
Depositary or a nominee
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of the Depositary, duly executed by an Administrative Trustee on behalf of
the Trust and authenticated by the Property Trustee as provided herein. The
number of Preferred Securities represented by the Rule 144A Global
Preferred Security may from time to time be increased or decreased by
adjustments made on the records of the Property Trustee and the Depositary
or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.03(b) shall apply only to the Rule
144A Global Preferred Securities and such other Preferred Securities in
global form as may be authorized by the Trust to be deposited with or on
behalf of the Depositary.
An Administrative Trustee on behalf of the Trust shall execute and the
Property Trustee shall, in accordance with this Section 7.03, authenticate and
deliver initially one or more Rule 144A Global Preferred Securities that (a)
shall be registered in the name of Cede & Co. or other nominee of such
Depositary and (b) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's written instructions or held by the Trustee as
custodian for the Depositary.
Members of, or participants in, the Depositary ("Participants") shall have
no rights under this Declaration with respect to any Rule 144A Global Preferred
Security held on their behalf by the Depositary or by the Property Trustee as
the custodian of the Depositary or under such Rule 144A Global Preferred
Security, and the Depositary may be treated by the Trust, the Property Trustee
and any agent of the Trust or the Property Trustee as the absolute owner of such
Rule 144A Global Preferred Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trust, the Property Trustee or
any agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Participants, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Rule 144A Global Preferred Security.
(c) Certificated Securities. Except as provided in Section 7.03(d), owners of
beneficial interests in the Rule 144A Global Preferred Security will not be
entitled to receive physical delivery of certificated Preferred Securities.
(d) A Global Preferred Security deposited with the Depositary or with the
Property Trustee as custodian for the Depositary pursuant to this Section
7.03 shall be transferred to the beneficial owners thereof in the form of
certificated Preferred Securities only if such transfer complies with
Section 9.02 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Preferred
Security or if at any time such Depositary ceases to be a "clearing agency"
registered under the Exchange Act, at a time when the Depositary is
required to be so registered to act as such depositary, (ii) the Sponsor on
behalf of the Trust in its sole discretion determines that such Global
Preferred Security shall be so exchangeable, or (iii) an Event of Default
has occurred and is continuing.
(e) Any Global Preferred Security that is transferable to the beneficial owners
thereof in the form of certificated Preferred Securities pursuant to this
Section 7.03 shall be surrendered by the Depositary to the Property Trustee
located in Wilmington, Delaware, to be so transferred, in whole or from
time to time in part, without charge, and the Property Trustee shall
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authenticate and deliver, upon such transfer of each portion of such Global
Preferred Security, an equal aggregate liquidation amount of Preferred
Securities of authorized denominations in the form of certificated
Preferred Securities. Any portion of a Global Preferred Security
transferred pursuant to this Section shall be registered in such names as
the Depositary shall direct. Any Preferred Security in the form of
certificated Preferred Securities delivered in exchange for an interest in
the Rule 144A Global Preferred Security shall, except as otherwise provided
by Section 9.01, bear the Restricted Securities Legend set forth in Exhibit
A hereto.
(f) Subject to the provisions of Section 7.03(e), the registered holder of a
Global Preferred Security may grant proxies and otherwise authorize any
person, including Participants and persons that may hold interests through
Participants, to take any action which a holder is entitled to take under
this Declaration or the Securities.
(g) In the event of the occurrence of any of the events specified in Section
7.03(d), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Securities in definitive, fully
registered form without distribution coupons.
Section 7.04 Registrar, Paying Agent and Conversion Agent.
The Trust shall maintain in Wilmington, Delaware (i) an office or agency
where Preferred Securities may be presented for registration of transfer or for
exchange ("Registrar"), (ii) an office or agency where Preferred Securities may
be presented for payment ("Paying Agent") and (iii) an office or agency where
Securities may be presented for conversion ("Conversion Agent"). The Registrar
shall keep a register of the Preferred Securities and of their transfer and
exchange. The Trust may appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any additional
conversion agent. The Trust may change any Paying Agent, Registrar, co-registrar
or Conversion Agent without prior notice to any Holder. The Trust shall notify
the Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Conversion Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Conversion Agent. The Trust shall act as Paying Agent, Registrar, co-registrar,
and Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent, and Conversion Agent for the Preferred Securities.
Section 7.05 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Property Trustee all money held by the Paying Agent for the
payment of principal or distribution on the Securities, and will notify the
Property Trustee if there are insufficient funds. While any such insufficiency
continues, the Property Trustee may require a Paying Agent to pay all money held
by it to the Property Trustee. The Trust at any time may require a Paying Agent
to pay all money held by it to the Property Trustee
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and to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
Section 7.06 Replacement Securities.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, an Administrative Trustee on behalf of the Trust shall issue
and, with respect to the Preferred Securities, the Property Trustee shall
authenticate a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. If required by the Property Trustee
or the Trust, an indemnity bond must be sufficient in the judgment of both to
protect the Trustees, the Sponsor or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. The Sponsor may charge
for its expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased by the
Sponsor pursuant to Article III hereof, the Sponsor in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
Section 7.07 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the Preferred
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Preferred Security is replaced, paid or purchased pursuant to Section
7.06 hereof, it ceases to be outstanding unless the Property Trustee receives
proof satisfactory to it that the replaced, paid or purchased Preferred Security
is held by a protected purchaser.
If Preferred Securities are considered paid in accordance with the terms of
this Declaration, they cease to be outstanding and Distributions on them cease
to accumulate.
A Preferred Security does not cease to be outstanding because one of the
Trustees, the Trust, the Sponsor or an Affiliate of the Sponsor or Trustees
holds the Security.
Section 7.08 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Preferred Securities owned
by the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be,
shall be disregarded and deemed not to be outstanding, except that for the
purposes of determining whether the Property Trustee shall be fully protected in
relying
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on any such direction, waiver or consent, only Securities which the Property
Trustee actually knows are so owned shall be so disregarded.
Section 7.09 Temporary Securities.
Until definitive Securities are ready for delivery, an Administrative
Trustee may prepare and, in the case of the Preferred Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
an Administrative Trustee considers appropriate for temporary Securities.
Without unreasonable delay, an Administrative Trustee shall prepare and deliver
to the Property Trustee Preferred Securities in certificated form (other than in
the case of Preferred Securities in global form) and thereupon any or all
temporary Preferred Securities (other than any such Preferred Securities in
global form) may be surrendered in exchange therefor, at the office of the
Registrar, and the Property Trustee shall authenticate and deliver an equal
aggregate liquidation amount of definitive Preferred Securities in certificated
form in exchange for temporary Preferred Securities (other than any such
Preferred Securities in global form).
Section 7.10 Cancellation.
The Trust at any time may deliver Preferred Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent shall
forward to the Property Trustee any Preferred Securities surrendered to them for
registration of transfer, redemption, conversion, exchange or payment. The
Property Trustee shall promptly cancel all Preferred Securities, surrendered for
registration of transfer, redemption, conversion, exchange, payment, replacement
or cancellation and shall return such canceled Preferred Securities to the
Administrative Trustees. The Trust may not issue new Preferred Securities to
replace Preferred Securities that it has paid or that have been delivered to the
Property Trustee for cancellation or that any holder has converted.
ARTICLE VII
Dissolution and Termination of Trust
Section 8.01 Termination of Trust.
(a) The Trust shall dissolve upon the earliest to occur of the following:
(i) the bankruptcy of the Holder of the Common Securities or the
Sponsor;
(ii) the filing of a certificate of dissolution or its equivalent with
respect to the Holder of the Common Securities or the Sponsor; the
revocation of the charter of the Holder of the Common Securities or
the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
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(iii) the written direction of the Sponsor, as the Holder of the
outstanding Common Securities, to the Property Trustee to dissolve
the Trust and distribute a Like Amount of Debentures to Holders of
the Securities in accordance with the terms of the Securities;
(iv) all of the Securities shall have been called for redemption and the
amounts necessary for redemption thereof shall have been paid to
the Holders in accordance with the terms of the Securities;
(v) the entry of a decree of judicial dissolution of the Holder of the
Common Securities, the Sponsor or the Trust;
(vi) upon the distribution of the Common Stock (as defined in the
Indenture) of the Sponsor to Holders of all outstanding Securities
upon conversion of all such Securities;
(vii) the expiration of the term of the Trust as set forth in Section
3.14 hereof; or
(viii) before the issuance of any Securities, with the consent of all
the Administrative Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred to in
Section 8.01(a) and after satisfaction of liabilities of creditors of the
Trust as provided by applicable law, any one of the Trustees (each of whom
is hereby authorized to take such action) shall file a certificate of
cancellation with the Secretary of State of the State of Delaware
terminating the Trust and, upon such filing, the respective obligations and
responsibilities of the Trustees and the Trust created and continued
hereby, shall terminate.
(c) The provisions of Sections 3.09, 4.03, 10.01(b), 10.04, the last sentence
of Section 3.06 and Article X shall survive the termination of the Trust.
ARTICLE IX
Transfer and Exchange
Section 9.01 General.
(a) Where Preferred Securities are presented to the Registrar or a co-registrar
with a request to register a transfer or to exchange them for an equal
number of Preferred Securities represented by different certificates, the
Registrar shall register the transfer or make the exchange if its
requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Administrative Trustee in accordance with this
Declaration shall execute and deliver and the Property Trustee shall
authenticate Preferred Securities at the Registrar's request.
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(b) Securities may only be transferred, in whole or in part, in accordance with
the terms and conditions set forth in this Declaration and in the terms of
the Securities. To the fullest extent permitted by law, any transfer or
purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
Subject to this Article IX, the Sponsor and any Related Party may only
transfer Common Securities to the Sponsor or a Related Party of the Sponsor or
as otherwise permitted by Article VIII of the Indenture; provided that, any such
transfer is subject to the condition precedent that the transferor obtain the
written opinion of nationally recognized independent counsel experienced in such
matters that such transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States federal income
tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee would
become an Investment Company.
(c) The Administrative Trustees shall provide for the registration of
Securities and of transfers of Securities, which will be effected without
charge but only upon payment (with such indemnity as the Administrative
Trustees or Property Trustee may require) in respect of any tax or other
governmental charges that may be imposed in relation to it. Upon surrender
for registration of transfer of any Securities, the Administrative Trustees
shall cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Administrative Trustees duly executed
by the Holder or such Holder's attorney duly authorized in writing. Each
Security surrendered for registration of transfer shall be canceled in
accordance with Section 7.10. A transferee of a Security shall be entitled
to the rights and subject to the obligations of a Holder hereunder upon the
receipt by such transferee of a Security. By acceptance of a Security, each
transferee shall be deemed to have agreed to be bound by this Declaration.
(d) The Trust shall not be required (i) to issue, register the transfer of, or
exchange, Preferred Securities during a period beginning at the opening of
business 15 days before the day of any selection of Preferred Securities
for redemption set forth in the terms of the Securities as set forth in
Annex I hereto and ending at the close of business on the day of selection,
or (ii) to register the transfer or exchange of any Preferred Security so
selected for redemption in whole or in part, except the unredeemed portion
of any Preferred Security being redeemed in part.
(e) All Preferred Securities issued upon any transfer or exchange pursuant to
the terms of this Declaration shall evidence the same security and shall be
entitled to the same benefits under this Declaration as the Preferred
Securities surrendered upon such transfer or exchange.
Section 9.02 Transfer Procedures and Restrictions.
(a) General. Subject to Sections 9.02(b) and 9.02(j)(ii), if Preferred
Securities are issued upon the transfer, exchange or replacement of
Preferred Securities bearing the Restricted Securities Legend set forth in
Exhibit A-1 hereto, or if a request is made to remove such Restricted
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Securities Legend on Preferred Securities, the Preferred Securities so
issued shall bear the Restricted Securities Legend, or the Restricted
Securities Legend shall not be removed, as the case may be, unless there is
delivered to the Trust and the Property Trustee such satisfactory evidence,
which may include an opinion of counsel, as may be reasonably required by
the Company, that (i) neither the legend nor the restrictions on transfer
set forth therein are required to ensure that transfers thereof comply with
the provisions of Rule 144A or Rule 144 under the Securities Act or (ii)
that such Securities are not "restricted" within the meaning of Rule 144
under the Securities Act. Upon provision of such satisfactory evidence, the
Property Trustee, at the written direction of an Administrative Trustee on
behalf of the Trust, shall authenticate and deliver Preferred Securities
that do not bear the Restricted Securities Legend.
(b) Transfers After Effectiveness of Shelf Registration Statement. After the
effectiveness of a Shelf Registration Statement for any Preferred
Securities, all requirements pertaining to Restricted Securities Legends on
any Preferred Security included within such Shelf Registration Statement
will cease to apply, and beneficial interests in a Preferred Security in
global form without Restricted Securities Legends will be available to
transferees of such Preferred Securities, upon directions to transfer such
Holder's beneficial interest in the Rule 144A Global Preferred Security.
After the effectiveness of the Shelf Registration Statement, the
Administrative Trustees shall execute and deliver and the Property Trustee
shall authenticate a Preferred Security in global form without the
Restricted Securities Legend (the "Unrestricted Global Preferred Security")
to deposit with the Depositary to evidence transfers of beneficial
interests from the Rule 144A Global Preferred Security.
(c) [Reserved]
(d) Transfer and Exchange of Definitive Preferred Securities. When Definitive
Preferred Securities are presented to the Registrar or co-Registrar
(x) to register the transfer of such Definitive Preferred Securities; or
(y) to exchange such Definitive Preferred Securities for an equal number
of Definitive Preferred Securities of another denomination.
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Preferred Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to an Administrative
Trustee on behalf of the Trust and the Registrar or co-registrar,
duly executed by the Holder thereof or his attorney duly authorized
in writing; and
(ii) in the case of Definitive Preferred Securities that are Restricted
Preferred Securities, and are being transferred or exchanged (x)
pursuant to an effective registration statement under the
Securities Act or (y) pursuant to, and in compliance with, clause
(A) or (B) below:
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(A) if such Restricted Preferred Securities are being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, such Holder shall deliver a
certification to that effect (in the form set forth on the
reverse of the Preferred Security); or
(B) if such Restricted Preferred Securities are being
transferred pursuant to an exemption from registration in
accordance with Rule 144A or Rule 144 under the Securities
Act such Holder shall deliver: (i) a certification to that
effect (in the form set forth on the reverse of the
Preferred Security) and (ii) if the Trust or Registrar so
requests, evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the Restricted
Securities Legend.
Definitive Preferred Securities that are transferred to QIBs in accordance
with Rule 144A under the Securities Act must take delivery of their interests in
the Preferred Securities in the form of a beneficial interest in the Rule 144A
Global Preferred Security in accordance with Section 9.02(e).
(e) Restrictions on Transfer of a Definitive Preferred Security for a
Beneficial Interest in a Global Preferred Security. A Definitive Preferred
Security may not be exchanged for a beneficial interest in a Global
Preferred Security except upon satisfaction of the requirements set forth
below. Upon receipt by the Property Trustee of a Definitive Preferred
Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Property Trustee, together with
written instructions directing the Property Trustee to make, or to direct
the Depositary to make, an adjustment on its books and records with respect
to such Global Preferred Security to reflect an increase in the number of
the Preferred Securities represented by the Global Preferred Security, then
the Property Trustee shall cancel such Definitive Preferred Security and
cause, or direct the Depositary to cause, the aggregate number of Preferred
Securities represented by the Global Preferred Security to be increased
accordingly. If no Global Preferred Securities are then outstanding, the
Administrative Trustee shall execute and deliver and the Property Trustee
shall authenticate, upon written order of any Administrative Trustee, an
appropriate number of Preferred Securities in global form.
(f) Transfer and Exchange of Global Preferred Securities. The transfer and
exchange of Global Preferred Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this
Declaration (including applicable restrictions on transfer set forth
herein, if any) and the procedures of the Depositary therefor.
(g) Transfer of a Beneficial Interest in a Global Preferred Security for a
Definitive Preferred Security.
(i) The transfer of a beneficial interest in a Rule 144A Global
Preferred Security in exchange for a Definitive Preferred Security
will require the delivery by the transferee of a transfer
certificate in the form set forth in Exhibit A-1.
(ii) Definitive Preferred Securities issued in exchange for a beneficial
interest in a Global Preferred Security pursuant to this Section
9.02(g) shall be registered in
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such names and in such authorized denominations as the Depositary,
pursuant to instructions from its Participants or indirect
participants or otherwise, shall instruct the Property Trustee. The
Property Trustee shall deliver such Preferred Securities to the
Persons in whose names such Preferred Securities are so registered
in accordance with the instructions of the Depositary.
(h) Restrictions on Transfer and Exchange of Global Preferred Securities.
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in Section 7.03), a Global Preferred Security may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
(i) [Reserved].
(j) Legend.
(i) Except as permitted by the following paragraph (ii), each Preferred
Security certificate evidencing the Global Preferred Securities and the
Definitive Preferred Securities (and all Preferred Securities issued in
exchange therefor or substitution thereof) shall bear a legend in
substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES ISSUED UPON EXCHANGE FOR THIS
SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER AND THE
COMPANY THAT (A) THIS SECURITY AND ANY CONVERTIBLE JUNIOR SUBORDINATED
DEBENTURES ISSUABLE UPON EXCHANGE THEREFORE AND COMMON STOCK ISSUABLE
UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (i) INSIDE THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
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BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i)
THROUGH (iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED
TO IN (A) ABOVE."
(ii) Upon any sale or transfer of a Restricted Preferred Security
(including any Restricted Preferred Security represented by a
Global Preferred Security) pursuant to Rule 144 under the
Securities Act or an effective registration statement under the
Securities Act the Registrar shall permit the holder thereof to
exchange such Restricted Preferred Security for an interest in the
Unrestricted Global Preferred Security.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS
SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR
SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
IS EXEMPT FROM ANY SUCH PROHIBITION.]
[Include on Preferred Security, unless otherwise determined by the
Sponsor in accordance with applicable law --
(iii) Each Preferred Security certificate evidencing the Global
Preferred Securities and the Definitive Preferred Securities (and
all Preferred Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form, unless otherwise determined by the Sponsor in
accordance with applicable law.
(k) Cancellation or Adjustment of Global Preferred Security. At such time as
all beneficial interests in a Global Preferred Security have either been
exchanged for Definitive Preferred Securities to the extent permitted by
the Declaration or redeemed, repurchased or cancelled in accordance with
the terms of this Declaration, such Global Preferred Security shall be
returned to the Depositary for cancellation or retained and cancelled by
the Property Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Preferred Security is exchanged for
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Definitive Preferred Securities, Preferred Securities represented by such
Global Preferred Security shall be reduced and an adjustment shall be made
on the books and records of the Property Trustee (if it is then the
Securities Custodian for such Global Preferred Security) with respect to
such Global Preferred Security, by the Property Trustee or the Securities
Custodian, to reflect such reduction.
(l) [Reserved]
(m) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Preferred Security, a Participant
in the Depositary or other Person with respect to the accuracy of
the records of the Depositary or its nominee or of any Participant
thereof, with respect to any ownership interest in the Preferred
Securities or with respect to the delivery to any Participant,
beneficial owner or other Person (other than the Depositary) of any
notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Preferred Securities. All
notices and communications to be given to the Holders and all
payments to be made to Holders under the Preferred Securities shall
be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case
of a Global Preferred Security). The rights of beneficial owners in
any Global Preferred Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the
Depositary. The Property Trustee may conclusively rely and shall be
fully protected in relying upon information furnished by the
Depositary or agent thereof with respect to its Participants and
any beneficial owners.
(ii) The Property Trustee and Registrar shall have no obligation or
duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Declaration or under
applicable law with respect to any transfer of any interest in any
Preferred Security (including any transfers between or among
Depositary Participants or beneficial owners in any Global
Preferred Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the
terms of this Declaration, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
Section 9.03 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust, the Trustees,
the Registrar or a co-registrar shall have actual or other notice thereof.
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Section 9.04 [Reserved].
Section 9.05 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security Holders
is required under this Declaration, the Trustees shall, in the case of any
Global Preferred Security, give all such notices and communications specified
herein to be given to the Preferred Security Holders to the Depositary, and
shall have no notice obligations to the Preferred Security Beneficial Owners.
Section 9.06 Appointment of Successor Clearing Agency.
If the Depository elects to discontinue its services as securities
depositary with respect to the Preferred Securities, the Administrative Trustees
may, in their sole discretion, appoint a successor Clearing Agency with respect
to such Preferred Securities.
ARTICLE X
Limitation of Liability of Holders of Securities, Trustees or Others
Section 10.01 Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the debts
and obligations of the Trust (other than with respect to the Securities) to
the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of the
Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
Section 10.02 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of
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the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by
this Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's gross negligence (or, in the case of the Property
Trustee, negligence) or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount
of assets from which Distributions to Holders of Securities might properly
be paid.
Section 10.03 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has duties
(including fiduciary duties) and liabilities relating thereto to the Trust
or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties
and liabilities of an Indemnified Person otherwise existing at law or in
equity (other than the duties imposed on the Property Trustee under the
Trust Indenture Act), are agreed by the parties hereto to replace such
other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in
a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities ,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or required
to make a decision
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(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
Section 10.04 Indemnification.
(a) To the fullest extent permitted by applicable law, the Debenture Issuer
shall indemnify and hold harmless each Indemnified Person from and against
any loss, damage, liability, tax, penalty, expense or claim of any kind or
nature whatsoever incurred by such Indemnified Person by reason of the
creation, operation or termination of the Trust or any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of
the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence (or, in the case of the
Property Trustee, negligence) or willful misconduct with respect to such
acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses (including
legal fees and expenses) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Debenture Issuer prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Debenture
Issuer of an undertaking by or on behalf of the Indemnified Person to repay
such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 10.4(a). The
indemnification shall survive the termination of this Declaration or the
resignation or removal of the Property Trustee or the Delaware Trustee, as
the case may be.
Section 10.05 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee (subject to Section 5.03(c)) may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived therefrom and
the pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. None of the Sponsor, any
Covered Person, the Delaware Trustee, or the Property Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial or
other transaction with the Sponsor or any
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Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
Accounting
Section 11.01 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or
such other year as is required by the Code.
Section 11.02 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Administrative Trustees
shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted
accounting principles, consistently applied. The Trust shall use the
accrual method of accounting for United States federal income tax purposes.
The books of account and the records of the Trust shall be examined by and
reported upon as of the end of each Fiscal Year by a firm of independent
certified public accountants selected by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year,
and the related statements of income or loss.
(c) The Administrative Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any
right under the Code to deliver any such statement at a later date, the
Administrative Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Administrative Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to
be filed by the Administrative Trustees on behalf of the Trust with any
state or local taxing authority.
Section 11.03 Banking.
The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the
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Trust shall be deposited in the Property Trustee Account. The sole signatories
for such accounts shall be designated by the Administrative Trustees; provided,
however, that the Property Trustee shall designate the signatories for the
Property Trustee Account.
Section 11.04 Withholding.
The Administrative Trustees on behalf of the Trust shall comply with all
withholding requirements under United States federal, state and local law. The
Administrative Trustees on behalf of the Trust shall request, and the Holders
shall provide to the Trust, such forms or certificates as are necessary to
establish an exemption from withholding with respect to each Holder, and any
representations and forms as shall reasonably be requested by the Administrative
Trustees on behalf of the Trust to assist it in determining the extent of, and
in fulfilling, its withholding obligations. The Administrative Trustees shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld shall
be deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust (at the
written direction of one of the Administrative Trustees of the Trust) may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
Amendments and Meetings
Section 12.01 Amendments.
(a) This Declaration may be amended from time to time by the Sponsor, the
Property Trustee and the Administrative Trustees, without the consent of
the Holders of the Securities, (i) to cure any ambiguity, correct or
supplement any provision in the Declaration that may be inconsistent with
any other provision, or to make any other provisions with respect to
ministerial matters or questions arising under the Declaration, which shall
not be inconsistent with the other provisions of the Declaration, or (ii)
to modify, eliminate or add to any provisions of the Declaration to such
extent as shall be necessary to ensure that the Trust will not be taxable
as a corporation or will be classified for United States federal income tax
purposes as a grantor trust at all times that any Securities are
outstanding or to ensure that the Trust will not be required to register as
an "investment company" under the Investment Company Act; provided,
however, that in the case of clause (i), such action shall not adversely
affect in any material respect the interests of any Holder of Securities,
and any such amendments of the Declaration shall become effective when
notice thereof is given to the Holders of the Securities.
(b) Except as provided in (c) below, this Declaration may be amended by the
Trustees and the Sponsor with (i) the consent of Holders representing not
less than a Majority in liquidation amount of the outstanding Preferred
Securities, and (ii) receipt by the Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
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Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust for United States federal income tax purposes or
the Trust's exemption from status as an "investment company" under the
Investment Company Act.
(c) Without the consent of each holder of Securities, the Declaration may not
be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Securities of a specified date or
(ii) restrict the right of a Holder of Securities to institute suit for the
enforcement of any such payment on or after such date.
Section 12.02 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called at any
time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange
on which the Preferred Securities are listed or admitted for trading. The
Administrative Trustees shall call a meeting of the Holders of such class
if directed to do so by the Holders of at least 25% in liquidation amount
of such class of Securities. Such direction shall be given by delivering to
the Administrative Trustees one or more requests in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any
Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call
a meeting and only those Securities represented by the Certificates so
specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities, the
following provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange
on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting
of the Holders of Securities. Any action that may be taken at a
meeting of the Holders of Securities may be taken without a meeting
and without prior notice if a consent in writing setting forth the
action so taken is signed by the Holders of Securities owning not
less than the minimum aggregate liquidation amount of Securities
that would be necessary to authorize or take such action at a
meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot
submitted to the Holders for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Administrative Trustees;
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(ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting,
or voting or participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Holder of Securities executing it. Except as
otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders of the Securities were
stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted
by the Administrative Trustees or by such other Person that the
Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Preferred Securities are then listed
or trading, provide otherwise, the Administrative Trustees, in
their sole discretion, shall establish all other provisions
relating to meetings of Holders of Securities, including notice of
the time, place or purpose of any meeting at which any matter is
to be voted on by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the establishment of
a record date, quorum requirements, voting in person or by proxy
or any other matter with respect to the exercise of any such right
to vote.
ARTICLE XII
Representations of Property Trustee and Delaware Trustee
Section 13.01 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, at the Closing
Date and at each Optional Closing Date, if any, and each Successor Property
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Property Trustee's acceptance of its appointment as Property Trustee
that:
(a) The Property Trustee is a banking corporation with trust powers, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with corporate power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, the Declaration.
(b) The execution, delivery and performance by the Property Trustee of the
Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. The Declaration has been duly executed
and delivered by the Property Trustee, and constitutes a legal, valid and
binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
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discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by the Property
Trustee does not conflict with or constitute a breach of the certificate of
incorporation or by-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with or notice
to, any Delaware or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the
Declaration.
(e) The Property Trustee, pursuant to this Declaration, shall hold legal title
to, and an ownership interest on behalf of the Holders of the Securities,
in the Debentures and agrees that, except as expressly provided or
contemplated by this Declaration, it will not create, incur or assume, or
suffer to exist any mortgage, pledge, hypothecation, encumbrance, lien or
other charge or security interest upon the Debentures.
Section 13.02 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, at the Closing
Date and at each Optional Closing Date, if any, and each Successor Delaware
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Property Trustee's acceptance of its appointment as Delaware Trustee
that:
(a) The Delaware Trustee is a banking corporation with trust powers, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with corporate power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, the Declaration.
(b) The execution, delivery and performance by the Delaware Trustee of the
Declaration has been duly authorized by all necessary corporate action on
the part of the Delaware Trustee. The Declaration has been duly executed
and delivered by the Delaware Trustee, and constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by the Delaware
Trustee does not conflict with or constitute a breach of the certificate of
incorporation or by-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or registration with or notice
to, any Delaware or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the
Declaration.
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(e) The Delaware Trustee is an entity which has its principal place of business
in the State of Delaware.
ARTICLE XIV
Registration Rights
Section 14.01 Registration Rights.
The Holders of the Preferred Securities, the Debentures, the Preferred
Securities Guarantee and the shares of Common Stock of the Sponsor issuable upon
conversion of the Securities are entitled to the benefits of a Registration
Rights Agreement as set forth in the Purchase Agreement and the Indenture.
ARTICLE XV
Miscellaneous
Section 15.01 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Administrative Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
c/o Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Chief Financial Officer
(b) if given to the Property Trustee, at the mailing address set forth below
(or such other address as the Property Trustee may give notice of to the
Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware
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19890-0001
Attention: Corporate Trust Administration
(c) (c) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware
19890-0001
Attention: Corporate Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing address of
the Sponsor set forth below (or such other address as the Holder of the
Common Securities may give notice to the Trust):
c/o Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set forth on the books and
records of the Trust or the Registrar, as applicable.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 15.02 Governing Law.
THIS DECLARATION AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND ALL
RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY JURISDICTION
OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT THERE SHALL NOT BE
APPLICABLE TO THE PARTIES HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE
LAWS (STATUTORY OR COMMON) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT
RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF (A) THE
FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR
SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST
BONDS FOR TRUSTEES, OFFICERS, AGENTS
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OR EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER
GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL
OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS,
AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES
TO INCOME OR PRINCIPAL, (F) RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE
NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO
THE TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G)
THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR
LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE
LIMITATIONS OR LIABILITIES OR AUTHORITIES AND POWERS OF THE TRUSTEES HEREUNDER
AS SET FORTH OR REFERENCED IN THIS DECLARATION. SECTION 3540 OF TITLE 12 OF THE
DELAWARE CODE SHALL NOT APPLY TO THE TRUST.
Section 15.03 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
Section 15.04 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
Section 15.05 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.
Section 15.06 Partial Enforceability.
If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
Section 15.07 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and
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they shall have the same force and effect as though all of the signers had
signed a single signature page.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
------------------------------------
as Administrative Trustee
------------------------------------
as Administrative Trustee
------------------------------------
as Administrative Trustee
WILMINGTON TRUST COMPANY, as Delaware Trustee
By:
--------------------------
Name:
-----------------------
Title:
---------------------
WILMINGTON TRUST COMPANY, as Property Trustee
By:
--------------------------
Name:
-----------------------
Title:
---------------------
HANOVER COMPRESSOR COMPANY, as Sponsor and
Debenture Issuer
By:
--------------------------
Name: Curtis A. Bedrich
Title: Chief Financial Officer and Treasurer
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ANNEX I
TERMS OF 7 1/4% CONVERTIBLE PREFERRED SECURITIES
TERM INCOME DEFERABLE EQUITY SECURITIES (TIDES)(SM)
7 1/4% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of Trust,
dated as of December 15, 1999 (as amended from time to time, the "Declaration"),
the designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or the Indenture (as defined in the Declaration) or, if
not defined in the Declaration or Indenture, as defined in the Offering Circular
(as defined in the Declaration):
1. Designation and Number.
(a) "Preferred Securities." 1,725,000 Preferred Securities of the Trust
with an aggregate liquidation preference with respect to the assets of the Trust
of Eighty-Six Million Two Hundred Fifty Thousand Dollars ($86,250,000), and a
liquidation amount with respect to the assets of the Trust of $50 per Preferred
Security, are hereby designated for the purposes of identification only as
"7 1/4% Convertible Preferred Securities, Term Income Deferrable Equity
Securities (TIDES)(SM)" (the "Preferred Securities"). The Preferred Security
Certificates evidencing the Preferred Securities shall be substantially in the
form attached hereto as Exhibit A-1, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange or other organization on which the
Preferred Securities are listed.
(b) "Common Securities." 53,351 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Two
Million Six Hundred Sixty-Seven Thousand Five Hundred Fifty Dollars ($2,667,550)
and a liquidation amount with respect to the assets of the Trust of $50 per
Common Security, are hereby designated for the purposes of identification only
as "7 1/4% Convertible Common Securities" (the "Common Securities"). The Common
Security Certificates evidencing the Common Securities shall be substantially in
the form attached hereto as Exhibit A-2, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of 7 1/4% (the "Coupon Rate") of the stated liquidation amount of $50 per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one quarter
will bear interest thereon compounded quarterly at the Coupon Rate (to the
extent permitted by applicable law), subject to adjustment in the event of a
Registration Default, as described in the Declaration. The term "Distributions"
as used herein includes such quarterly distributions, additional distributions
on quarterly distributions not paid on the applicable Distribution Date, Special
Distributions and Additional Sums, as applicable. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of
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Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative, will accrue from
the date of their original issuance and will be payable quarterly in arrears, on
the following dates, which dates correspond to the interest payment dates on the
Debentures: March 15, June 15, September 15 and December 15 of each year,
commencing on March 15, 2000, except as otherwise described below. The Sponsor
has the right under the Indenture to defer payments of interest by extending the
interest payment period from time to time on the Debentures for a period not
exceeding 20 consecutive quarters (each a "Deferral Period") and, as a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, quarterly Distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at the Coupon Rate compounded
quarterly during any such Deferral Period. Prior to three Business Days before a
Regular Record Date fixed for a Payment Resumption Date (as defined in the
Indenture), the Sponsor may further extend such Deferral Period; provided that
such Deferral Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the maturity
(whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise) of the Debentures under the Indenture. Payments of
accrued Distributions will be payable to Holders as they appear on the books and
records of the Trust on the Regular Record Date for the relevant Payment
Resumption Date. Upon the termination of any Deferral Period and the payment of
all amounts then due, the Sponsor may commence a new Deferral Period, subject to
the above requirements.
(c) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust at the close of business on
the relevant record dates. The relevant record dates shall be on the 1st day of
the month of the relevant payment dates, except as otherwise described in this
Annex I to the Declaration. Subject to any applicable laws and regulations and
the provisions of the Declaration, each such payment in respect of Preferred
Securities being held in book-entry form through The Depository Trust Company
(the "Depositary") will be made as described under the heading "Description of
TIDES -- Form, Book-Entry Procedures and Transfer" in the Offering Circular. The
relevant record dates for the Common Securities shall be the same record dates
as for the Preferred Securities. Distributions payable on any Securities that
are not punctually paid on any Distribution payment date, as a result of the
Sponsor having failed to make a payment under the Debentures, will cease to be
payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, with respect to any Redemption Date,
if such Business Day is in the next succeeding calendar year, such Redemption
Date shall be the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
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(d) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as forth in this Annex I to the Declaration, no payment, allowance or
adjustment shall be made with respect to accumulated and unpaid Distributions on
such Securities, or be required to be made; provided that Holders of Securities
at the close of business on any record date for the payment of Distributions
will be entitled to receive the Distributions payable on such Securities on the
corresponding payment date notwithstanding the conversion of such Securities
into Common Stock following such record date.
(e) In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution of the Trust, the
Trust shall be liquidated by the Trustees as expeditiously as the Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law (including, without
limitation, by paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act), to the Holders of the Securities a Like Amount of Debentures, unless
such distribution would not be practical as determined by the Administrative
Trustees, in which event such Holders will be entitled to receive out of the
assets of the Trust available for distribution to holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law (including,
without limitation, by paying or making reasonable provision to pay all claims
and obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act), an amount equal to, in the case of Holders of Preferred Securities,
the aggregate liquidation amount thereof plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Preferred Securities shall be paid on a Pro Rata (as defined below) basis in
accordance with paragraph 9. The Holder of the Common Securities will be
entitled to receive distributions upon any such liquidation Pro Rata with the
Holders of the Preferred Securities, except as provided in paragraph 10.
4. Redemption and Distribution.
(a) Upon the repayment or payment of the Debentures in whole or in part,
whether at maturity or upon redemption or otherwise (other than following any
distribution of the Debentures to the Holders), the proceeds from such repayment
or redemption shall be simultaneously applied to redeem, on a Pro Rata basis, a
Like Amount of Securities, on the redemption date, in an amount per Security
equal to the applicable redemption price, which redemption price will be equal
to (i) the liquidation amount of each of the Securities plus any accrued and
unpaid Distributions thereon (A) in the case of the repayment of the Debentures
at stated maturity, or (B) in the case of a redemption of the Debentures in
certain limited circumstances set forth in the Indenture upon the occurrence of
a Tax Event or (ii) in the case of an Optional Redemption on or after December
20, 2002, the Optional Redemption Price (as defined in the Indenture), payable
in cash (as applicable, the "Redemption Price"). Holders will be given not less
than 20 nor more than 60 days' notice of such
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redemption. Upon the repayment of the Debentures at maturity or upon any
acceleration, earlier redemption or otherwise, the proceeds from such repayment
will be applied to redeem the Securities, in whole, upon not less than 30 nor
more than 60 days' notice.
(b) If fewer than all the outstanding Securities are to be so redeemed, the
Common Securities and the Preferred Securities will be redeemed Pro Rata and the
Preferred Securities to be redeemed will be as described in Paragraph 4(f)(ii)
below.
(c) The Sponsor, as the Holder of the outstanding Common Securities, shall
have the right at any time (including, without limitation, upon the occurrence
of a Tax Event or Investment Company Act Event) to dissolve the Trust and, after
satisfaction of the creditors of the Trust, cause a Like Amount of the
Debentures to be distributed to the Holders of the Securities upon liquidation
of the Trust, provided that the Administrative Trustees shall have received a No
Recognition Opinion (as defined below) prior to the dissolution of the Trust.
(d) If, at any time, a Tax Event shall occur and be continuing the Sponsor
shall cause the Administrative Trustees to dissolve the Trust and, after
satisfaction of creditors of the Trust (including, without limitation, by paying
or making reasonable provision to pay all claims and obligations of the Trust in
accordance with Section 3808(e) of the Business Trust Act), cause Debentures to
be distributed to the Holders of the Securities in liquidation of the Trust
within 90 days following the occurrence of such Tax Event (the "90 Day Period");
provided, however, that such dissolution and distribution shall be conditioned
on (i) the Trustees' receipt of an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the Trustees) experienced in
such matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
of the Securities will not recognize any income, gain or loss for United States
federal income tax purposes as a result of such liquidation and distribution of
Debentures, and (ii) the Sponsor being unable to avoid such Tax Event within the
90 day period by taking some ministerial action or pursuing some other
reasonable measure that, in the sole judgment of the Sponsor, will have no
adverse effect on the Trust, the Sponsor or the Holders of the Securities and
will involve no material cost ("Ministerial Action").
If (i) the Sponsor has received an opinion (a "Redemption Tax Opinion") of
a nationally recognized independent tax counsel (reasonably acceptable to the
Trustees) experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that the Sponsor would be precluded from
deducting the interest on the Debentures for United States federal income tax
purposes, even after the Debentures were distributed to the Holders of
Securities upon liquidation of the Trust as described in this paragraph 4(d), or
(ii) the Trustees shall have been informed by such tax counsel that it cannot
deliver a No Recognition Opinion, the Sponsor shall have the right, upon not
less than 20 nor more than 60 days' notice, and within 90 days following the
occurrence of such Tax Event, to redeem the Debentures in whole (but not in
part) for cash, for the principal amount plus accrued and unpaid interest
thereon and, following such redemption, all the Securities will be redeemed by
the Trust at the liquidation amount of $50 per Security plus accrued and unpaid
Distributions thereon; provided, however, that, if at the time there is
available to the Sponsor or the Trust the opportunity to eliminate, within the
90 Day Period, the Tax Event by taking some Ministerial Action, the Trust or the
Sponsor will pursue such Ministerial Action in lieu of redemption.
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In lieu of the foregoing options, the Company shall also have the option of
causing the Securities to remain outstanding and pay Additional Sums on the
Debentures.
"Tax Event" means that the Property Trustee shall have received an opinion
of a nationally recognized independent tax counsel to the Sponsor (reasonably
acceptable to the Trustees) experienced in such matters (a "Dissolution Tax
Opinion") to the effect that, as a result of (i) any amendment to, or change
(including any announced prospective change (which shall not include a proposed
change), provided that a Tax Event shall not occur more than 90 days before the
effective date of any such prospective change) in the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority therefor or therein, (ii) any judicial decision or official
administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (iii) any amendment to
or change in the administrative position or interpretation of any Administrative
Action or judicial decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such amendment or change is
made known, which amendment or change is effective or such Administrative Action
or decision is announced, in each case, on or after the date of original
issuance of the Debentures or the issue date of the Preferred Securities issued
by the Trust, there is more than an insubstantial risk that (a) if the
Debentures are held by the Property Trustee, (I) the Trust is, or will be within
90 days of the date of such opinion, subject to United States federal income tax
with respect to interest accrued or received on the Debentures or subject to
more than a de minimis amount of other taxes, duties or other governmental
charges as determined by such counsel, or (II) any portion of interest payable
by the Sponsor to the Trust on the Debentures is not, or within 90 days of the
date of such opinion will not be, deductible by the Sponsor in whole or in part
for United States federal income tax purposes or (b) with respect to Debentures
which are no longer held by the Property Trustee, any portion of interest
payable by the Sponsor on the Debentures is not, or within 90 days of the date
of such opinion will not be, deductible by the Sponsor in whole or in part for
United States federal income tax purposes.
If an Investment Company Event (as hereinafter defined) shall occur and be
continuing, the Sponsor shall cause the Trustees to dissolve the Trust and,
after satisfaction of liabilities of the creditors of the Trust as provided by
applicable law (including, without limitation, by paying or making reasonable
provision to pay all claims and obligations of the Trust in accordance with
Section 3808(e) of the Business Trust Act), cause the Debentures to be
distributed to the Holders of the Securities in liquidation of the Trust within
90 days following the occurrence of such Investment Company Event.
"Investment Company Event" means the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), to the effect that the Trust is or will
be considered an Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after the date of the Offering Circular.
After the date fixed for any distribution of Debentures: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Depositary or its nominee
(or any successor Depositary or its
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nominee), as record Holder of Preferred Securities represented by global
certificates, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing Securities, except for certificates representing
Preferred Securities held by the Depositary or its nominee (or any successor
Depositary or its nominee), will be deemed to represent Debentures having an
aggregate principal amount equal to the aggregate stated liquidation amount of
such Securities, with accrued and unpaid interest equal to accrued and unpaid
Distributions on such Securities until such certificates are presented to the
Sponsor or its agent for transfer or reissuance.
(e) The Securities will not be redeemed unless all accrued and unpaid
Distributions have been paid on all Securities for all quarterly Distribution
periods terminating on or before the date of redemption.
(f) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution
Notice") will be given any an Administrative Trustee on behalf of the Trust
by mail to each Holder of Securities to be redeemed or exchanged not fewer
than 20 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed
for redemption of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given
pursuant to this paragraph 4(f)(i), a Redemption/Distribution Notice shall
be deemed to be given on the day such notice is first mailed by first-class
mail, postage prepaid, to Holders of Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding Securities are to
be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from
each Holder of Preferred Securities, it being understood that, in respect
of Preferred Securities registered in the name of and held of record by the
Depositary (or any successor Depositary) or any nominee, the distribution
of the proceeds of such redemption will be made to each Participant (or
Person on whose behalf such nominee holds such securities) in accordance
with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and an Administrative Trustee on
behalf of the Trust gives a Redemption/Distribution Notice, which notice
may only be issued if the Debentures are redeemed as set out in this
paragraph 4 (which notice will be irrevocable), then (A) with respect to
Preferred Securities held in book-entry form, by 12:00 noon, New York City
time, on the redemption date, to the extent funds are available, with
respect to Preferred Securities held in global form, the Property Trustee
will deposit irrevocably with the Depositary (or successor Depositary)
funds sufficient to pay the amount payable on redemption with respect to
such Preferred Securities and will give the Depositary
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irrevocable instructions and authority to pay the amount payable on
redemption to the Holders of such Preferred Securities, and (B) with
respect to Preferred Securities issued in certificated form and Common
Securities, to the extent funds are available, the Property Trustee will
irrevocably deposit with the Paying Agent funds sufficient to pay the
amount payable on redemption to the Holders of such Securities and will
give the Paying Agent irrevocable instructions and authority to pay the
amount payable on redemption to the Holders thereof upon surrender of their
certificates. If a Redemption/Distribution Notice shall have been given and
funds deposited as required, then on the date of such deposit, all rights
of Holders of such Securities so called for redemption will cease, except
the right of the Holders of such Securities to receive the redemption
price, but without interest on such redemption price, and such Securities
will cease to be outstanding. Neither the Administrative Trustees nor the
Property Trustee shall be required to register or cause to be registered
the transfer of any Securities that have been so called for redemption. If
any date fixed for redemption of Securities is not a Business Day, then
payment of the amount payable on such date will be made on the next
succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date fixed for redemption. If payment of the
redemption price in respect of any Securities is improperly withheld or
refused and not paid either by the Trust or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accrue at the then applicable rate, from the
original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes
of calculating the amount payable upon redemption (other than for purposes
of calculating any premium).
(iv) Redemption/Distribution Notices shall be sent by the
Administrative Trustees on behalf of the Trust to (A) in the case of
Preferred Securities held in book-entry form, the Depositary and, in the
case of Securities held in certificated form, the Holders of such
certificates and (B) in respect of the Common Securities, the Holder
thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor or any of
its subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. Conversion Rights.
The Holders of Securities shall have the right at any time prior to 5:00
p.m. New York City Time on the Business Day immediately preceding the earlier of
December 15, 2029 and the date fixed for redemption of the Securities, at their
option, to cause the Conversion Agent to convert Securities, on behalf of the
converting Holders, into shares of Common Stock, par value $.001 per share, of
the Sponsor (the "Common Stock") in the manner described herein on and subject
to the following terms and conditions:
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(a) The Securities will be convertible at the office of the Conversion
Agent into fully paid and nonassessable shares of Common Stock pursuant to the
Holder's direction to the Conversion Agent to exchange such Securities for a
portion of the Debentures theretofore held by the Trust on the basis of one
Security per $50 principal amount of Debentures, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Common Stock at
an initial rate of 1.3986 shares of Common Stock per $50 principal amount of
Debentures (which is equivalent to a conversion price of $35.75 per share of
Common Stock, subject to certain adjustments set forth in the Indenture).
(b) In order to convert Securities into Common Stock the Holder shall
submit to the Conversion Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder (the "Conversion
Request"), together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Trust of the Holder's election to exchange
Securities for a portion of the Debentures held by the Trust and the Trust
shall, upon receipt of such notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in accordance with this
Section. The Conversion Agent shall thereupon notify the Sponsor of the Holder's
election to convert such Debentures into shares of Common Stock. Holders of
Securities at the close of business on a Distribution record date will be
entitled to receive the Distribution payable on such Securities on the
corresponding Distribution payment date notwithstanding the conversion of such
Securities following such record date but prior to such distribution payment
date. Except as provided above, neither the Trust nor the Sponsor will make, or
be required to make, any payment, allowance or adjustment upon any conversion on
account of any accumulated and unpaid Distributions accrued on the Securities,
whether or not in arrears, (including any Additional Amounts accrued thereon)
surrendered for conversion, or on account of any accumulated and unpaid
dividends on the shares of Common Stock issued upon such conversion, except to
the extent that such shares are held of record on the record date for any such
distributions. Securities shall be deemed to have been converted immediately
prior to the close of business on the day on which a Notice of Conversion
relating to such Securities is received by the Trust in accordance with the
foregoing provision (the "Conversion Date"). The Person or Persons entitled to
receive the Common Stock issuable upon conversion of the Debentures shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the Conversion Date, the
Sponsor shall issue and deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same, unless otherwise directed by the Holder in the notice of conversion and
the Conversion Agent shall distribute such certificate or certificates to such
Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints Wilmington
Trust Company "Conversion Agent" for the purpose of effecting the conversion of
Securities in accordance with this Section. In effecting the conversion and
transactions described in this Section,
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the Conversion Agent shall be acting as agent of the Holders of Securities
directing it to effect such conversion transactions. The Conversion Agent is
hereby authorized (i) to exchange Securities from time to time for Debentures
held by the Trust in connection with the conversion of such Securities in
accordance with this Section and (ii) to convert all or a portion of the
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Section and to deliver to the
Trust a new Debenture or Debentures for any resulting unconverted principal
amount.
(d) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Sponsor to the Trust, which in turn will make such payment to the Holder
or Holders of Securities so converted.
(e) The Sponsor shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion of
the Debentures, free from any preemptive or other similar rights, such number of
shares of Common Stock as shall from time to time be issuable upon the
conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, the Sponsor shall be entitled to deliver upon conversion of
Debentures, shares of Common Stock reacquired and held in the treasury of the
Sponsor (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any shares of Common Stock issued
upon conversion of the Debentures shall be duly authorized, validly issued and
fully paid and nonassessable. The Trust shall deliver the shares of Common Stock
received upon conversion of the Debentures to the converting Holder free and
clear of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. Each of the Sponsor and the Trust shall prepare
and shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
the Common Stock (and all requirements to list the Common Stock issuable upon
conversion of Debentures that are at the time applicable), in order to enable
the Sponsor to lawfully issue Common Stock upon conversion of the Debentures
and to lawfully deliver the Common Stock to each Holder upon conversion of the
Securities.
(f) The Sponsor will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Debentures
and the delivery of the shares of Common Stock upon conversion of the
Securities. The Sponsor shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the Securities so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Sponsor the amount of
any such tax, or has established to the satisfaction of the Sponsor that such
tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Securities set forth in
this Annex I to the Declaration or in the Declaration itself or otherwise
require the Property Trustee or the Trust to pay any amounts on account of such
withholdings.
6. Voting Rights--Preferred Securities.
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(a) Except as provided under paragraphs 6(b) and 8, in the Business Trust
Act and as otherwise required by law, the Declaration and the Indenture, the
Holders of the Preferred Securities will have no voting rights.
(b) In addition to the rights of the Holders of the Preferred Securities
with respect to the enforcement of payment of principal and interest on the
Debentures set forth herein, in the Declaration or in the Indenture, if (i) a
Debenture Event of Default occurs and is continuing or (ii) the Company defaults
under the Guarantee (each of (i) and (ii) being an "Appointment Event"), then
the Holders of the Preferred Securities, acting as a single class, will be
entitled by the vote of a Majority in liquidation amount of the Preferred
Securities to appoint a Special Trustee in accordance with Section
5.06(a)(ii)(B) of the Declaration. Any Holder of Preferred Securities (other
than the Sponsor, or any entity directly or indirectly controlling or controlled
by or under direct or indirect common control with the Sponsor) will be entitled
to nominate any Person to be appointed as Special Trustee. Not later than 30
days after such right to appoint a Special Trustee arises, the Trustees will
convene a meeting for the purpose of appointing a Special Trustee. If the
Trustees fail to convene such meeting within such 30-day period, the Holders of
not less than 10% in aggregate liquidation amount of the Preferred Securities
will be entitled to convene such meeting in accordance with Section 12.02 of the
Declaration. The record date for such meeting will be the close of business on
the Business Day that is one Business Day before the day on which notice of the
meeting is sent to the Holders. The provisions of the Declaration relating to
the convening and conduct of the meetings of the Holders will apply with respect
to any such meeting.
Any Special Trustee so appointed shall cease to be a Special Trustee if the
Appointment Event pursuant to which the Special Trustee was appointed and all
other Appointment Events cease to be continuing. A Special Trustee may be
removed without cause at any time by vote of the Holders of a Majority in
liquidation amount of the Preferred Securities at a meeting of the Holders of
the Preferred Securities or by written consent in accordance with Section
5.06(a)(ii)(B) of the Declaration. The Holders of 10% in liquidation amount of
the Preferred Securities will be entitled to convene such a meeting in
accordance with Section 12.02 of the Declaration. The record date for such
meeting will be the close of business on the Business Day which is one Business
Day before the day on which the notice of meeting is sent to Holders.
Notwithstanding the appointment of a Special Trustee, the Sponsor shall retain
all rights under the Indenture, including the right to defer payments of
interest by extending the interest payment period on the Debentures.
Subject to the requirements set forth in this paragraph, the Holders of a
majority in liquidation amount of the Preferred Securities, voting separately as
a class may, and the Trustees shall not, without obtaining the prior approval of
the Holders of a Majority in aggregate liquidation amount of all outstanding
Preferred Securities (i) direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee under the Indenture, or
executing any trust or power conferred upon the Property Trustee with respect to
the Debentures, (ii) waive any past default and its consequences that is
waivable under Section 5.13 of the Indenture or otherwise, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Debentures
shall be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such consent shall be
required, provided, however, that, where a consent under the Indenture would
require the consent or act of the Holders of greater than a majority of the
Holders in principal amount of Debentures affected thereby (a "Super Majority"),
the Property
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Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation preference of
the Preferred Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. The Property Trustee
shall not, and none of the other Trustees shall in any event, revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities, except by a subsequent vote of the Holders of the Preferred
Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee or the Debenture Trustee
as set forth above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Preferred Securities under this
paragraph unless the Property Trustee has obtained an opinion of tax counsel to
the effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for United States federal income tax purposes.
If a Declaration Event of Default has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption on the redemption date), then a Holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder (a "Direct Action") of the principal of or interest on
the Debentures having a principal amount equal to the aggregate liquidation
amount of the Preferred Securities of such Holder on or after the respective due
date specified in the Debentures. Except as provided in the preceding sentence,
the Holders of Preferred Securities will not be able to exercise directly any
other remedy available to the Holders of the Debentures. In connection with any
Direct Action, the Debenture Issuer will be subrogated to the rights of such
Holder of Preferred Securities under the Declaration to the extent of any
payment made by the Debenture Issuer to such Holder of Preferred Securities in
such Direct Action.
Any approval or direction of Holders of Preferred Securities may be given
at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
without notice pursuant to written consent. The Administrative Trustees will
cause a notice of any meeting at which Holders of Preferred Securities are
entitled to vote, to be mailed to each Holder of record of Preferred Securities.
Each such notice will include a statement setting forth the following
information (i) the date of such meeting, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
and (iii) instructions for the delivery of proxies.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
7. Voting Rights--Common Securities.
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(a) Except as provided under paragraphs 7(b), (c) and 8, in the Business
Trust Act and as otherwise required by law and the Declaration, the Holders of
the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with
Article V of the Declaration, to vote to appoint, remove or replace any Trustee,
subject to the exclusive right of the Holders of the Preferred Securities to
appoint, remove or replace a Special Trustee.
(c) Subject to Section 2.06 of the Declaration and only after the Event of
Default with respect to the Preferred Securities has been cured, waived, or
otherwise eliminated and subject to the requirements of the second to last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the Property
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with respect
to the Debentures, (ii) waive any past default and its consequences that is
waivable under Section 5.13 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and payable, provided that, where a consent or action under the Indenture
would require the consent or act of the Holders of greater than a majority in
principal amount of Debentures affected thereby (a "Super Majority"), the
Property Trustee may only give such consent or take such action at the direction
of the Holders of at least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. Pursuant to this paragraph 7(c),
the Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities, except by a
subsequent vote of the Holders of the Preferred Securities. Other than with
respect to directing the time, method and place of conducting any remedy
available to the Property Trustee or the Debenture Trustee as set forth above,
the Property Trustee shall not take any action in accordance with the directions
of the Holders of the Common Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action the Trust will not fail to be classified as a grantor trust for
United States federal income tax purposes. If the Property Trustee fails to
enforce its rights, as holder of the Debentures, under the Indenture, any Holder
of Common Securities may, to the fullest extent permitted by law and after a
period of 30 days has elapsed from such Holder's written request to the Property
Trustee to enforce such rights, institute a legal proceeding directly against
the Sponsor, to enforce the Property Trustee's rights, as holder of the
Debentures, under the Indenture, without first instituting any legal proceeding
against the Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust or without notice
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which Holders of Common Securities are entitled to vote, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies.
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No vote or consent of the Holders of the Common Securities will be required
for the Trust to redeem and cancel Common Securities or to distribute the
Debentures in accordance with the Declaration and the terms of the Securities.
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.01 of the Declaration,
if any proposed amendment to the Declaration provides for, or the Administrative
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or rights of the Securities, whether by way of amendment
to the Declaration or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.01 of the
Declaration, then the Holders of outstanding Securities will be entitled to vote
on such amendment or proposal (but not on any other amendment or proposal) and
such amendment or proposal shall not be effective except with the approval of
the Holders of at least a Majority in liquidation amount of the Securities,
voting together as a single class, provided, however, that, the rights of
Holders of Preferred Securities under Article V of the Declaration to appoint,
remove or replace a Special Trustee shall not be amended without the consent of
each Holder of Preferred Securities; and provided further that if any amendment
or proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or only the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of at least a Majority
in liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of the
Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the direction of the Holders of the Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by at least
the same proportion in aggregate stated liquidation preference of the
Securities; provided, however, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this paragraph 8(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
9. Pro Rata.
A reference in these terms of the Securities to any payment, Distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder of
Securities according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, on any Distribution Date or redemption date an
Event of Default under the Declaration has occurred and is continuing, in which
case no payment of any Distribution on, or amount payable upon redemption of,
any Common Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all
outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the amount payable upon redemption
of the Preferred Securities, the full amount of such amount in respect of all
outstanding Preferred Securities shall have been made or provided
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for, and all funds available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions on, or the amount payable upon
redemption of Preferred Securities then due and payable.
10. Ranking.
The Preferred Securities rank pari passu and payment thereon shall be made
Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Debentures held
by the Property Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Preferred Securities.
11. Acceptance of Securities Guarantees and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture which
are incorporated by reference herein and which include, among other things,
provisions relating to certain rights of the Holders of the Preferred Securities
all as set forth therein.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive or similar rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
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EXHIBIT A-1
FORM OF PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
[Include the following Restricted Securities Legend on all Restricted
Preferred Securities, including Rule 144A Global Preferred Securities, unless
otherwise determined by the Sponsor in accordance with applicable law--
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES ISSUED UPON EXCHANGE FOR THIS
SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER IS
HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER AND THE
COMPANY THAT (A) THIS SECURITY AND ANY CONVERTIBLE JUNIOR SUBORDINATED
DEBENTURES ISSUABLE UPON EXCHANGE THEREFORE AND COMMON STOCK ISSUABLE
UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (i) INSIDE THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iii) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
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PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED
TO IN (A) ABOVE.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS
SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR
SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
IS EXEMPT FROM ANY SUCH PROHIBITION.]
[Include on Preferred Security, unless otherwise determined by the
Sponsor in accordance with applicable law --
[Include if Preferred Security is in global form and the Depository Trust
Company is the Depository--
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK,
NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
[Include if Preferred Security is in global form--
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW.]
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Certificate Number P-1
Number of Preferred Securities _____________
CUSIP NO. 41076M203
Preferred Securities of
Hanover Compressor Capital Trust
7 1/4% Convertible Preferred Securities
Term Income Deferrable Equity Securities (TIDES)/SM/*
(liquidation amount $50 per Convertible Preferred Security)
Hanover Compressor Capital Trust, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
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(the "Holder")
is the registered owner of preferred securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the 7 1/4%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
(TIDES/SM/)* (liquidation amount $50 per Convertible Preferred Security) (the
"Preferred Securities"). Subject to the terms of the Declaration (as defined
below), the Preferred Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of December 15, 1999, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Reference is hereby made to select provisions of the Preferred Securities
set forth on the reverse hereof, which select provisions shall for all purposes
have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Preferred Securities as
evidence of indirect beneficial ownership in the Debentures.
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/*/ The terms Term Income Deferrable Equity Securities (TIDES)(SM) and TIDES(SM)
are registered servicemarks of Credit Suisse First Boston Corporation.
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Unless the Property Trustee's Certificate of Authentication hereon has been
properly executed, these Preferred Securities shall not be entitled to any
benefit under the Declaration or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Trust has executed this certificate this
_____________day of _________________.
Hanover Compressor Capital Trust
By:
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Name:
Title:
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PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-mentioned
Declaration.
Dated:
Wilmington Trust Company,
as Property Trustee
By:
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Authorized Signature
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[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a rate
per annum of 7 1/4% (the "Coupon Rate") of the stated liquidation amount of $50
per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such quarterly distributions, additional distributions on
quarterly distributions not paid on the applicable Distribution Date, Special
Distributions and Additional Sums, as applicable. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Preferred
Securities will be cumulative, will accrue from the date of their original
issuance and will be payable quarterly in arrears, on March 15, June 15,
September 15 and December 15 of each year, commencing on March 15, 2000, to
Holders of record at the close of business on the 1st day of the month of the
applicable payment date, which payment dates shall correspond to the interest
payment dates (each an "Interest Payment Date") on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each a "Deferral Period") and, as
a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Deferral Period. Prior to the termination
of any such Deferral Period, the Debenture Issuer may further extend such
Deferral Period; provided that such Deferral Period together with all such
previous and further deferrals thereof may not exceed 20 consecutive quarters or
extend beyond the maturity (whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise) of the Debentures under the
Indenture. Payments of accrued Distributions will be payable on an Interest
Payment Date elected by the Company to Holders as they appear on the books and
records of the Trust on the record date fixed for such Interest Payment Date.
Upon the termination of any Deferral Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Deferral Period, subject to the
above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
The Preferred Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Preferred Securities for a portion of the Debentures
and (ii) the immediate conversion of such Debentures into Common Stock, in the
manner and according to the terms set forth in the Declaration.
6
<PAGE>
CONVERSION REQUEST
To: Wilmington Trust Company
as Property Trustee of
Hanover Compressor Capital Trust
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into Common Stock of Hanover Compressor Company (the "Common Stock")
in accordance with the terms of the Amended and Restated Declaration of Trust
(the "Declaration"), dated as of December 15, 1999, by Curtis A. Bedrich,
William S. Goldberg and Richard S. Meller, as Administrative Trustees,
Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as
Property Trustee, Hanover Compressor Company, as Sponsor, and by the Holders,
from time to time, of undivided beneficial interests in the Trust to be issued
pursuant to the Declaration. Pursuant to the aforementioned exercise of the
option to convert these Preferred Securities, the undersigned hereby directs the
Conversion Agent (as that term is defined in the Declaration) to (i) exchange
such Preferred Securities for a portion of the Debentures (as that term is
defined in the Declaration) held by the Trust (at the rate of exchange specified
in the terms of the Preferred Securities set forth as Annex I to the
Declaration) and (ii) immediately convert such Debentures on behalf of the
undersigned, into Common Stock (at the conversion rate specified in the terms of
the Preferred Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in accordance with
the terms of the Declaration and the Preferred Securities, agrees to be bound by
the terms of the Registration Rights Agreement relating to the Common Stock
issuable upon conversion of the Preferred Securities.
Date:
in whole [ ] in part [ ]
Number of Preferred Securities to be converted: ___________________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Common Stock are to be issued,
along with the address or addresses of such person or persons:
7
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Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number:
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Signature Guarantee:*
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/*/ (Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
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(Insert assignee's social security or tax identification number)
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(Insert address and zip code of assignee)
and irrevocably appoints
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agent to transfer this Preferred Security on the books of the Trust. The agent
may substitute another to act for him or her.
Date:
Signature:
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(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature Guarantee:/*/
-----
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/*/ (Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
9
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF RESTRICTED
PREFERRED SECURITIES
This certificate relates to _____________ Preferred Securities held in (check
applicable space) ____ book-entry or ____ definitive form by the undersigned.
(A) The undersigned (check one box below):
[ ] has requested the Property Trustee by written order to deliver in exchange
for its beneficial interest in the Rule 144A Global Preferred Security held
by the Depositary a Preferred Security or Preferred Securities in
definitive, registered form in such number equal to its beneficial interest
in such Rule 144A Global Preferred Security (or the number thereof
indicated above); or
[ ] has requested the Property Trustee by written order to exchange its
Preferred Security in definitive registered form for an interest in the
Rule 144A Global Preferred Security held by the Depositary in such number
equal to number of Preferred Securities in definitive registered form so
held; or
[ ] has requested the Property Trustee by written order to exchange or register
the transfer of a Preferred Security or Preferred Securities.
(B) The undersigned confirms that such Securities are being (check one box
below):
(1) [ ] acquired for the undersigned's own account, without transfer (in
satisfaction of Section 9.02(d)(ii)(A) of the Declaration); or
(2) [ ] transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) [ ] transferred pursuant to Rule 144 of the Securities Act of 1933; or
(4) [ ] transferred pursuant to an effective registration statement under the
Securities Act.
Unless one of the boxes in (B) above is checked, the Property Trustee will
refuse to register any of the Preferred Securities evidenced by this certificate
in the name of any person other than the registered Holder thereof; provided,
however, that if box (3) or (4) is checked, the Property Trustee may require,
prior to registering any such transfer of the Preferred Securities such legal
opinions, certifications and other information as the Trust has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, such as the exemption provided by Rule 144 under such
Act.
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Signature
10
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Signature Guarantee:/*/
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Signature must be guaranteed Signature
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Signature
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing these Preferred
Securities for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Trust as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
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NOTICE: To be executed by an executive officer
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/*/ (Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
11
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EXHIBIT A-2
FORM OF COMMON SECURITY
[FORM OF FACE OF SECURITY]
[THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE REGISTRATION
STATEMENT.]
[OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS SECURITY
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A RELATED
PARTY (AS DEFINED IN THE DECLARATION) OF HANOVER COMPRESSOR CAPITAL TRUST.]
Certificate Number C-1
Number of Common Securities ______________
Common Securities
of
Hanover Compressor Capital Trust
7 1/4% Convertible Common Securities
(liquidation amount $50 per Convertible Common Security)
Hanover Compressor Capital Trust, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that
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(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 7 1/4% Convertible Common Securities (liquidation amount $50 per
Convertible Common Security) (the "Common Securities"). Subject to the terms of
the Declaration (as defined below), the Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of December 15, 1999, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Common Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
1
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Reference is hereby made to select provisions of the Common Securities set
forth on the reverse hereof, which select provisions shall for all purposes have
the same effect as if set forth at this place.
Upon receipt of this certificate, the Sponsor is bound by the Declaration and
is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United States federal income tax
purposes the Debentures as indebtedness and the Common Securities as evidence of
indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _______ day
of ______________.
Hanover Compressor Capital Trust
By:
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Name:
Title:
2
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[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate per
annum of 7 1/4% (the "Coupon Rate") of the stated liquidation amount of $50 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions" as used herein
includes quarterly distributions, additional distributions on quarterly
distributions not paid on the applicable Distribution Date, Special
Distributions and Additional Sums, as applicable. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Common Securities
will be cumulative, will accrue from the date of their original issuance and
will be payable quarterly in arrears, on March 15, June 15, September 15 and
December 15 of each year, commencing on March 15, 2000, to Holders of record one
(1) day prior to such payment dates, which payment dates shall correspond to the
interest payment dates (each, an "Interest Payment Date") on the Debentures. The
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period from time to time on the Debentures for
a period not exceeding 20 consecutive quarters (each a "Deferral Period") and,
as a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Deferral Period. Prior to the termination
of any such Deferral Period, the Debenture Issuer may further extend such
Deferral Period; provided that such Deferral Period together with all such
previous and further deferrals thereof may not exceed 20 consecutive quarters or
extend beyond the maturity (whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise) of the Debentures under the
Indenture. Payments of accrued Distributions will be payable on an Interest
Payment Date elected by the Company to Holders as they appear on the books and
records of the Trust on the record date fixed for such Interest Payment Date.
Upon the termination of any Deferral Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Deferral Period, subject to the
above requirements.
The Common Securities shall be redeemable as provided in the Declaration.
The Common Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Common Securities for a portion of the Debentures
and (ii) the immediate conversion of such Debentures into Common Stock, in the
manner and according to the terms set forth in the Declaration.
3
<PAGE>
CONVERSION REQUEST
To: Wilmington Trust Company,
as Property Trustee of
Hanover Compressor Capital Trust
The undersigned owner of these Common Securities hereby irrevocably exercises
the option to convert these Common Securities, or the portion below designated,
into Common Stock of HANOVER COMPRESSOR COMPANY (the "Common Stock") in
accordance with the terms of the Amended and Restated Declaration of Trust (the
"Declaration"), dated as of December 15, 1999, by Curtis A. Bedrich, William S.
Goldberg and Richard S. Meller, as Administrative Trustees, Wilmington Trust
Company, as Delaware Trustee, Wilmington Trust Company, as Property Trustee,
Hanover Compressor Company, as Sponsor, and by the Holders, from time to time,
of undivided beneficial interests in the Trust to be issued pursuant to the
Declaration. Pursuant to the aforementioned exercise of the option to convert
these Common Securities, the undersigned hereby directs the Conversion Agent (as
that term is defined in the Declaration) to (i) exchange such Common Securities
for a portion of the Debentures (as that term is defined in the Declaration)
held by the Trust (at the rate of exchange specified in the terms of the Common
Securities set forth as Annex I to the Declaration) and (ii) immediately convert
such Debentures on behalf of the undersigned, into Common Stock (at the
conversion rate specified in the terms of the Common Securities set forth as
Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the shares
issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Declaration and the Common Securities, agrees to be bound by the
terms of the Registration Rights Agreement relating to the Common Stock issuable
upon conversion of the Common Securities.
Date:
in whole _________ in part_________
Number of Common Securities to be converted: _____________________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Common Stock are to be issued,
along with the address or addresses of such person or persons
4
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Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number
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Signature Guarantee:/*/
---------
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- --------------------------------
/*/ (Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
5
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
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(Insert assignee's social security or tax identification number)
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(Insert address and zip code of assignee)
and irrevocably appoints
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agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
Signature:
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(Sign exactly as your name appears on the
other side of this Common Security
Certificate)
Signature Guarantee:/*/
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/*/ (Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
6
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Exhibit 4.6
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HANOVER COMPRESSOR COMPANY
TO
WILMINGTON TRUST COMPANY
Trustee
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INDENTURE
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Dated as of December 15, 1999
Convertible Junior Subordinated
Debentures Due 2029
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<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<TABLE>
<S> <C> <C>
Section 1.01 Definitions............................................................ 2
Section 1.02 Compliance Certificates and Opinions...................................10
Section 1.03 Form of Documents Delivered to Trustee.................................11
Section 1.04 Acts of Holders; Record Dates..........................................11
Section 1.05 Notices, Etc., to Trustee and the Company..............................13
Section 1.06 Notice to Holders; Waiver..............................................13
Section 1.07 Conflict with Trust Indenture Act......................................14
Section 1.08 Effect of Headings and Table of Contents...............................14
Section 1.09 Successors and Assigns.................................................14
Section 1.10 Separability Clause....................................................14
Section 1.11 Benefits of Indenture..................................................14
Section 1.12 Governing Law..........................................................14
Section 1.13 Legal Holidays.........................................................15
<CAPTION>
ARTICLE II
SECURITY FORMS
<S> <C> <C>
Section 2.01 Forms Generally........................................................15
Section 2.02 Initial Issuance to Property Trustee...................................15
Section 2.03 Additional Provisions Required in Global Security......................16
Section 2.04 Issuance of Global Securities to Holders...............................17
<CAPTION>
ARTICLE III
THE SECURITIES
<S> <C> <C>
Section 3.01 Title and Terms........................................................17
Section 3.02 Denominations..........................................................19
Section 3.03 Execution, Authentication, Delivery and Dating.........................19
Section 3.04 Temporary Securities...................................................19
Section 3.05 Global Securities......................................................20
Section 3.06 Registration, Transfer and Exchange Generally; Certain Transfers
and Exchanges..........................................................21
Section 3.07 Mutilated, Destroyed, Lost and Stolen Securities.......................23
Section 3.08 Payment of Interest; Interest Rights Preserved.........................24
Section 3.09 Persons Deemed Owners..................................................25
Section 3.10 Cancellation...........................................................26
Section 3.11 Right of Set Off.......................................................26
</TABLE>
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<TABLE>
<S> <C> <C>
Section 3.12 CUSIP Numbers..........................................................26
Section 3.13 Extension of Interest Payment Period; Notice of Extension..............26
Section 3.14 Paying Agent, Security Registrar and Conversion Agent..................27
<CAPTION>
ARTICLE IV
SATISFACTION AND DISCHARGE
<S> <C> <C>
Section 4.01 Satisfaction and Discharge of Indenture................................28
Section 4.02 Application of Trust Money.............................................29
<CAPTION>
ARTICLE V
REMEDIES
<S> <C> <C>
Section 5.01 Events of Default......................................................29
Section 5.02 Acceleration of Maturity; Rescission and Annulment.....................30
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee........31
Section 5.04 Trustee May File Proofs of Claim.......................................32
Section 5.05 Trustee May Enforce Claims Without Possession of Securities............32
Section 5.06 Application of Money Collected.........................................32
Section 5.07 Limitation on Suits....................................................33
Section 5.08 Unconditional Right of Holders to Receive Principal and Interest and
to Convert.............................................................33
Section 5.09 Restoration of Rights and Remedies.....................................34
Section 5.10 Rights and Remedies Cumulative.........................................34
Section 5.11 Delay or Omission Not Waiver...........................................34
Section 5.12 Control by Holders.....................................................34
Section 5.13 Waiver of Past Defaults................................................35
Section 5.14 Undertaking for Costs..................................................35
Section 5.15 Waiver of Stay or Extension Laws.......................................35
Section 5.16 Enforcement by Holders of Preferred Securities.........................36
<CAPTION>
ARTICLE VI
THE TRUSTEE
<S> <C> <C>
Section 6.01 Certain Duties and Responsibilities....................................36
Section 6.02 Notice of Defaults.....................................................37
Section 6.03 Certain Rights of Trustee..............................................37
Section 6.04 Not Responsible for Recitals or Issuance of Securities.................38
Section 6.05 May Hold Securities....................................................38
Section 6.06 Money Held in Trust....................................................38
Section 6.07 Compensation and Reimbursement.........................................38
Section 6.08 Disqualification; Conflicting Interests................................39
Section 6.09 Corporate Trustee Required; Eligibility................................39
</TABLE>
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<TABLE>
<S> <C> <C>
Section 6.10 Resignation and Removal; Appointment of Successor......................39
Section 6.11 Acceptance of Appointment by Successor.................................40
Section 6.12 Merger, Conversion, Consolidation or Succession to Business............41
Section 6.13 Preferential Collection of Claims Against Company......................41
Section 6.14 Co-trustees and Separate Trustees......................................41
<CAPTION>
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
<S> <C> <C>
Section 7.01 Company to Furnish Trustee Names and Addresses of Holders..............42
Section 7.02 Preservation of Information; Communications to Holders.................43
Section 7.03 Reports by Trustee.....................................................43
Section 7.04 Reports by Company.....................................................43
Section 7.05 Tax Reporting..........................................................44
<CAPTION>
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
<S> <C> <C>
Section 8.01 Company May Consolidate, Etc. Only on Certain Terms....................44
Section 8.02 Successor Substituted..................................................45
<CAPTION>
ARTICLE IX
SUPPLEMENTAL INDENTURES
<S> <C> <C>
Section 9.01 Supplemental Indentures Without Consent of Holders.....................45
Section 9.02 Supplemental Indentures with Consent of Holders........................46
Section 9.03 Execution of Supplemental Indentures...................................47
Section 9.04 Effect of Supplemental Indentures......................................47
Section 9.05 Conformity with Trust Indenture Act....................................48
Section 9.06 Reference in Securities to Supplemental Indentures.....................48
<CAPTION>
ARTICLE X
COVENANTS; REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
Section 10.01 Payment of Principal and Interest......................................48
Section 10.02 Maintenance of Office or Agency........................................48
Section 10.03 Money for Security Payments to Be Held in Trust........................49
Section 10.04 Statement by Officers as to Default....................................49
Section 10.05 Limitation on Dividends; Transactions with Affiliates; Covenants as
to the Trust...........................................................50
Section 10.06 Payment of Expenses of the Trust.......................................51
Section 10.07 Registration Rights....................................................51
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 10.08 Offering Document Amendment or Supplement..............................52
<CAPTION>
ARTICLE XI
REDEMPTION OF SECURITIES
<S> <C> <C>
Section 11.01 Optional Redemption....................................................52
Section 11.02 Tax Event Redemption...................................................52
Section 11.03 Selection by Trustee of Securities to Be Redeemed......................53
Section 11.04 Notice of Redemption...................................................54
Section 11.05 Deposit of Redemption Price............................................54
Section 11.06 Securities Payable on Redemption Date..................................54
Section 11.07 Securities Redeemed in Part............................................55
<CAPTION>
ARTICLE XII
SUBORDINATION OF SECURITIES
<S> <C> <C>
Section 12.01 Agreement to Subordinate...............................................55
Section 12.02 Default on Senior Debt.................................................56
Section 12.03 Liquidation; Dissolution; Bankruptcy...................................56
Section 12.04 Subrogation............................................................57
Section 12.05 Trustee to Effectuate Subordination....................................58
Section 12.06 Notice by the Company..................................................58
Section 12.07 Rights of the Trustee; Holders of Senior Debt..........................59
Section 12.08 Subordination May Not Be Impaired......................................59
<CAPTION>
ARTICLE XIII
CONVERSION OF SECURITIES
<S> <C> <C>
Section 13.01 Conversion Rights......................................................60
Section 13.02 Conversion Procedures..................................................60
Section 13.03 Conversion Price Adjustments...........................................62
Section 13.04 Reclassification, Consolidation, Merger or Sale of Assets..............66
Section 13.05 Notice of Adjustments of Conversion Price..............................67
Section 13.06 Prior Notice of Certain Events.........................................67
Section 13.07 Adjustments in Case of Fundamental Changes.............................68
Section 13.08 Dividend or Interest Reinvestment Plans................................71
Section 13.09 Certain Additional Rights..............................................71
Section 13.10 Restrictions on Common Stock Issuable Upon Conversion..................72
Section 13.11 Trustee Not Responsible for Determining Conversion Price or
Adjustments............................................................72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
<S> <C> <C>
Section 14.01 No Recourse............................................................72
</TABLE>
EXHIBIT A Form of Security
<PAGE>
Certain Sections of this Indenture relating to Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Act Indenture
Section Section
- ------------------- ---------
<S> <C> <C>
Section 310 (a) (1)........................................ 6.09
(a) (2)........................................ 6.09
(a) (3)........................................ Not Applicable
(a) (4)........................................ Not Applicable
(b)............................................ 6.08, 6.10
Section 311 (a)............................................ 6.13
(b)............................................ 6.13
Section 312 (a)............................................ 7.01
7.02(a)
(b)............................................ 7.02(b)
(c)............................................ 7.02(c)
Section 313 (a)............................................ 7.03(a)
(a) (4)........................................ 7.03(a)
(b)............................................ 7.03(a)
(c)............................................ 7.03(a)
(d)............................................ 7.03(b)
Section 314 (a)............................................ 7.04
(b)............................................ Not Applicable
(c) (1)........................................ 1.02
(c) (2)........................................ 1.02
(c) (3)........................................ Not Applicable
(d)............................................ Not Applicable
(e)............................................ 1.02
Section 315 (a)............................................ 6.01
6.03
(b)............................................ 6.02
(c)............................................ 6.01
(d)............................................ 6.01
(e)............................................ 5.14
Section 316 (a) (1) (A).................................... 5.02
5.12
(a) (1) (B).................................... 5.13
(a) (2)........................................ Not Applicable
(b)............................................ 5.08
(c)............................................ 1.04(c)
Section 317 (a) (1)........................................ 5.03
(a) (2)........................................ 5.04
(b)............................................ 1.003
Section 318 (a)............................................ 1.07
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
This INDENTURE, dated as of December 15, 1999, between Hanover Compressor
Company, a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Company"), and Wilmington Trust Company, a
Delaware banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS Hanover Compressor Capital Trust, a Delaware business trust (the
"Trust"), formed under the Amended and Restated Declaration of Trust among the
Company, as Sponsor, Wilmington Trust Company, as property trustee (the
"Property Trustee"), and Wilmington Trust Company, as Delaware trustee (the
"Delaware Trustee"), and Curtis A. Bedrich, William S. Goldberg and Richard S.
Meller, as trustees (together with the Property Trustee and the Delaware
Trustee, the "Issuer Trustees"), dated as of December 15, 1999, (the
"Declaration"), pursuant to the Purchase Agreement (the "Purchase Agreement")
dated December 9, 1999, among the Company, the Trust and the Initial Purchasers
named therein, will issue and sell up to 1,500,000 of its 7 1/4% Convertible
Preferred Securities, Term Income Deferrable Equity Securities (TIDES)(SM)
("Preferred Securities") (or up to 1,725,000 of its Preferred Securities to the
extent the over-allotment option is exercised in full) with a liquidation amount
of $50 per Preferred Security, having an aggregate liquidation amount with
respect to the assets of the Trust of up to $75,000,000 (or up to $86,250,000 to
the extent the over-allotment option is exercised in full);
WHEREAS the trustees of the Trust, on behalf of the Trust, will execute and
deliver to the Company Common Securities evidencing an ownership interest in the
Trust, registered in the name of the Company, in an aggregate amount equal to
three percent of the capitalization of the Trust, equivalent to up to 46,392 7
1/4% Common Securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") (or up to 53,351 Common Securities to the
extent the over-allotment option is exercised in full), with a liquidation
amount of $50 per Common Security, having an aggregate liquidation amount with
respect to the assets of the Trust of up to $2,319,600 (or up to $2,667,550 to
the extent the over-allotment option is exercised in full);
WHEREAS the Trust will use the proceeds from the sale of the Preferred
Securities and the Common Securities to purchase from the Company the
Convertible Junior Subordinated Debentures Due 2029 (the "Securities") in an
aggregate principal amount of up to $77,319,600 (or up to $88,917,550 to the
extent the over-allotment option is exercised in full);
WHEREAS the Company is guaranteeing the payment of distributions on the
Trust Securities and payment of the Redemption Price (as defined herein) and
payments on liquidation with respect to the Trust Securities, to the extent
provided in the Common Securities Guarantee Agreement, dated December 15, 1999,
between the Company and the Trust, and the Preferred Securities Guarantee
Agreement, dated December 15, 1999, between the Company and Wilmington Trust
Company, as Guarantee Trustee, for the benefit of the holders of the Trust
Securities from time to time (together, the "Guarantee");
WHEREAS the Company has duly authorized the creation of an issue of the
Securities of substantially the tenor and amount hereinafter set forth and to
provide therefor the Company has duly authorized the execution and delivery of
this Indenture;
<PAGE>
WHEREAS, so long as the Trust is a Holder of Securities and any Preferred
Securities are outstanding, the Declaration provides that the holders of
Preferred Securities may cause the Conversion Agent (as defined herein) to (i)
exchange such Preferred Securities for Securities held by the Trust and (ii)
immediately convert such Securities into Common Stock (as defined herein); and
WHEREAS all things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with their and its terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders (as defined herein) thereof, it is mutually agreed, for the equal
and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(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;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
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.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.04.
"Additional Payments" means Compounded Interest and Additional Sums, if
any.
"Additional Sums" has the meaning specified in Section 3.01.
-2-
<PAGE>
"Adjusted Reference Market Price" has the meaning specified in Section
13.07(a)(i).
"Adjusted Relevant Price" has the meaning specified in Section 13.07(a)(i).
"Administrative Action" has the meaning specified in the definition of Tax
Event in this Section 1.01.
"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;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or co-
registrar.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Conversion Price" has the meaning specified in Section 13.01.
"Applicable Conversion Ratio" has the meaning specified in Section 13.01.
"Applicable Rate" means the rate at which the Securities accrue interest
and the corresponding Trust Securities accrue distributions, which in the
absence of a Registration Default shall mean 7 1/4%. In the event of a
Registration Default, the Applicable Rate shall be increased in accordance with
the provisions of Section 10.07 hereof.
"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 and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday or a Sunday, or a day on
which banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law or executive order to remain closed, or a day on
which the corporate trust office of the Property Trustee or the Trustee is
closed for business.
"Closing Price" has the meaning specified in Section 13.07(b).
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
-3-
<PAGE>
"Common Securities" has the meaning specified in the Second Recital to this
instrument.
"Common Stock" means common stock, par value $.001 per share, of the
Company.
"Common Stock Fundamental Change" has the meaning specified in Section
13.07(b).
"Company" means the Person named as the "Company" in the first paragraph of
this instrument 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 of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Company Transaction" has the meaning specified in Section 13.04.
"Compounded Interest" has the meaning specified in Section 3.13.
"Conversion Agent" means the Person appointed to act on behalf of the
holders of Preferred Securities in effecting the conversion of Preferred
Securities as and in the manner set forth in the Declaration and Section 13.02
hereof.
"Conversion Date" has the meaning specified in Section 13.02.
"Corporate Trust Office" means the principal office of the Trustee in
Wilmington, Delaware, at which at any particular time its corporate trust
business shall be administered and which at the date of this Indenture is 100
North Market Street, Wilmington, Delaware, 19890-0001.
"Declaration" has the meaning specified in the Recitals to this instrument.
"Debt" means (i) the principal of and premium and interest, if any, on
indebtedness for money borrowed, (ii) purchase money and similar obligations,
(iii) obligations under capital leases, (iv) guarantees, assumptions or purchase
commitments relating to, or other transactions as a result of which the Company
is responsible for the payment of, such indebtedness of others, (v) renewals,
extensions and refunding of any such indebtedness, (vi) interest or obligations
in respect of any such indebtedness accruing after the commencement of any
insolvency or bankruptcy proceedings and (vii) obligations associated with
derivative products such as interest rate and currency exchange contracts,
foreign exchange contracts, commodity contracts and similar arrangements.
"Defaulted Interest" has the meaning specified in Section 3.08.
"Deferral Period" has the meaning specified in Section 3.13.
"Deferral Notice" has the meaning specified in Section 3.13.
-4-
<PAGE>
"Delaware Trustee" has the meaning given it in the first recital of this
instrument.
"Depositary" means The Depository Trust Company, or any successor thereto.
"Dissolution Tax Opinion" has the meaning specified in the definition of
Tax Event in this Section 1.01.
"Entitlement Date" has the meaning specified in Section 13.07(b).
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.
"Expiration Date" has the meaning specified in Section 1.04(d).
"Expiration Time" has the meaning specified in Section 13.03(vi).
"Fundamental Change" has the meaning specified in Section 13.07(b).
"Global Security" means a Security issued in the form prescribed in Section
2.03, issued to the Depositary or its nominee, and registered in the name of the
Depositary or its nominee.
"Guarantee" has the meaning specified in the Fourth Recital to this
instrument.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"Initial Conversion Price" has the meaning specified in Section 13.01.
"Initial Conversion Ratio" has the meaning specified in Section 13.01.
"Initial Purchasers", with respect to the Preferred Securities, means
Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Salomon Smith
Barney Inc. and Dain Rauscher Incorporated.
"Interest Payment Date" has the meaning specified in Section 3.01.
"Issuer Trustees" has the meaning specified in the First Recital of this
Indenture.
-5-
<PAGE>
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"90 Day Period" has the meaning specified in Section 11.02.
"NNM" means the National Market System of the National Association of
Securities Dealers, Inc., or any successor national automated interdealer
quotation system.
"Non-Stock Fundamental Change" has the meaning specified in Section
13.07(b).
"No Recognition Opinion" means an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the Issuer Trustees)
experienced in such matters, which opinion may rely on published revenue rulings
of the Internal Revenue Service, to the effect that the Holders of the
Securities will not recognize any income, gain or loss for United States Federal
income tax purposes as a result of the liquidation of the Trust and the
distribution of the Securities to the holders of the Preferred Securities.
"Notice of Conversion" means the notice to be given by a Holder of
Preferred Securities to the Conversion Agent directing the Conversion Agent to
exchange such Preferred Securities for Securities and to convert such Securities
into Common Stock on behalf of such holder.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, 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. One of the officers signing an
Officers' Certificate given pursuant to Section 10.04 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be reasonably acceptable to the Trustee.
"Optional Redemption" has the meaning specified in Section 11.01.
"Optional Redemption Price" has the meaning specified in Section 11.01.
"Optional Redemption Ratio" has the meaning specified in Section 13.07(b).
"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 canceled by the Trustee or
delivered to the Trustee for cancellation; (ii) Securities for whose payment or
redemption 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; 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; and
(iii) Securities which have been paid pursuant to Section 3.08, converted into
Common Stock
-6-
<PAGE>
pursuant to Section 13.01, 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.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"Payment Resumption Date" has the meaning set forth in Section 3.13.
"Person" means a legal person, including any individual, corporation,
estate, company, partnership, joint venture, association, joint-stock company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof or any other entity of whatever
nature.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.07 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the first recital to
this instrument.
"Property Trustee" has the meaning specified in the Recitals to this
instrument.
"Purchase Agreement" has the meaning specified in the Recitals to this
instrument.
"Purchased Shares" has the meaning specified in Section 13.03(vi).
"Purchaser Stock Price" has the meaning specified in Section 13.07(b).
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Redemption Tax Opinion" means an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the Issuer Trustees)
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Securities for United States Federal income tax purposes, even
after the Trust was liquidated and the Securities were distributed to the
holders of the Preferred Securities.
"Reference Date" has the meaning specified in Section 13.03(iv).
"Reference Market Price" has the meaning specified in Section 13.07(b).
-7-
<PAGE>
"Registration Default" has the meaning specified in Section 10.07.
"Registration Rights Agreement" has the meaning specified in Section 10.07.
"Regular Record Date" has the meaning specified in Section 3.01.
"Relevant Price" has the meaning specified in Section 13.07(b).
"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, any assistant vice
president, the treasurer, any assistant treasurer, 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 Preferred Securities" means each Preferred Security required to
bear the restricted securities legend required by Section 9.02(j) of the
Declaration.
"Restricted Securities" means each Security required to bear a Restricted
Securities Legend pursuant to Section 2.02 hereof.
"Restricted Securities Legend" has the meaning specified in Section 2.02.
"Securities" has the meaning specified in the Third Recital to this
instrument.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.06.
"Senior Debt" means (i) the principal of, premium, if any, and interest,
on all obligations of every nature of the Company for money borrowed, whether
outstanding on the date of execution of the Indenture or thereafter created,
assumed or incurred, together with all fees, indemnities and expenses payable
under such obligations, (ii) all obligations to make payment pursuant to the
terms of financial instruments, such as (a) securities contracts and foreign
currency exchange contracts, (b) derivative instruments, such as swap agreements
(including interest rate and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and commodity
options contracts, and (c) similar financial instruments; except, in the case of
both (i) and (ii) above, such indebtedness and obligations that are expressly
stated to rank junior in right of payment to, or pari passu in right of payment
with, the Securities, (iii) indebtedness or obligations of others of the kind
described in both (i) and (ii) above for the payment of which the Company is
responsible or liable as guarantor or otherwise, and (iv) deferrals, renewals or
extensions of any such Senior Debt;
-8-
<PAGE>
provided, however, that Senior Debt shall not be deemed to include (a) any Debt
of the Company which, when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, was without
recourse to the Company, (b) trade accounts payable and accrued liabilities
arising in the ordinary course of business, (c) any Debt of the Company to any
of its subsidiaries, (d) Debt to any employee of the Company and (e) Debt which
by its terms is subordinated to trade accounts payable or accrued liabilities
arising in the ordinary course of business to the extent that payments made to
the holders of such Debt by the Holders of the Securities as a result of the
subordination provisions of the Indenture would be greater than such payments
otherwise would have been as a result of any obligation of such holders of such
Debt to pay amounts over to the obligees on such trade accounts payable or
accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject.
"Shelf Registration Statement" has the meaning specified in Section 10.07.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.08.
"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 as the fixed date on which the principal, together with any
accrued and unpaid interest (including Compounded Interest), of such Security or
such installment of interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Tax Event" means the receipt by the Property Trustee of an opinion of a
nationally recognized independent tax counsel to the Company experienced in such
matters (a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to or change (including any announced prospective change (which shall
not include a proposed change), provided that a Tax Event shall not occur more
than 90 days before the effective date of any such prospective change) in the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any judicial decision or
official administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (c) any amendment to
or change in the administrative position or interpretation of any Administrative
Action or judicial decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such amendment or change is
made known, which amendment or change is effective or such Administrative Action
or decision is announced, in each case, on or after the date of original
issuance of the Securities or the issue date of the Preferred Securities issued
by the Trust, there is more than an insubstantial risk that (x) if the
Securities are held by the Property Trustee, (i) the Trust is, or will be within
90 days of the date of such opinion, subject to United States Federal income tax
with respect to interest accrued or
-9-
<PAGE>
received on the Securities or subject to more than a de minimis amount of other
taxes, duties or other governmental charges as determined by such counsel, or
(ii) any portion of interest payable by the Company to the Trust on the
Securities is not, or within 90 days of the date of such opinion will not be,
deductible by the Company in whole or in part for United States Federal income
tax purposes or (y) with respect to Securities which are no longer held by the
Property Trustee, any portion of interest payable by the Company on the
Securities is not, or within 90 days of the date of such opinion will not be,
deductible by the Company in whole or in part for United States Federal income
tax purposes.
"Trading Day" has the meaning specified in Section 13.07(b).
"Trust" has the meaning specified in the first recital to this instrument.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Securities" has the meaning specified in the second recital to this
instrument.
"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" of any Person means capital stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
Section 1.02 Section 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 such certificates and opinions as may be required under the Trust
Indenture Act or reasonably requested by the Trustee in connection with such
application or request. Each such certificate or opinion shall be given in the
form of an Officers' Certificate, if to be given by an officer of the Company,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
applicable requirements of the Trust Indenture Act and any other applicable
requirement set forth in this Indenture. Every certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Indenture shall include:
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(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 or
caused to be 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
condition or covenant has been complied with.
Section 1.03 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.
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 1.04 Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given to or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments is or are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or
instruments (and the
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action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(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 his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee or the Company, as the case may be, deems
sufficient.
(c) The Company may, in the circumstances permitted by the Trust Indenture Act,
fix any day as the record date for the purpose of determining the Holders of
Outstanding Securities entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders. If not set
by the Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 7.01) prior to such first solicitation or vote, as the case
may be. With regard to any record date, only the Holders on such date (or their
duly designated proxies) shall be entitled to give or take, or vote on, the
relevant action.
(d) The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to join in the giving or making
of (i) any notice of default, (ii) any declaration of acceleration referred to
in Section 5.02, (iii) any request to institute proceedings referred to in
Section 5.07(2) or (iv) any direction referred to in Section 5.12. If any record
date is set pursuant to this paragraph, the Holders of Outstanding Securities on
such record date, and no other Holders, shall be entitled to join in such
notice, declaration, request or direction, whether or not such Holders remain
Holders after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the date set by the Trustee by which any
such determination shall be made (the "Expiration Date") by Holders of the
requisite principal amount of Outstanding Securities on such record date.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Trustee, at the Company's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in Section 1.06.
(e) The ownership of Securities shall be proved by the Security Register.
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(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.
(g) Without limiting the foregoing, a Holder entitled hereunder to give or take
any such action with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which who may do so pursuant to such appointment with
regard to all or any different part of such principal amount.
Section 1.05 Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(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:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(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:
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Chief Financial Officer
Section 1.06 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at such Holder's address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice when mailed
to a Holder in the aforesaid manner shall be conclusively deemed to have been
received by such Holder whether or not actually received by such Holder. 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
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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.
In case, by reason of the suspension of regular mail service or by reason
of any other cause, it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 1.07 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Section 1.08 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.09 Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.10 Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt, the holders of Preferred Securities (to
the extent provided herein) and the Holders of Securities, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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Section 1.13 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or conversion of the Securities need not be made on such date, but may
be made on the next succeeding Business Day (except that, with respect to any
Redemption Date, if such Business Day is in the next succeeding calendar year,
such Redemption Date shall be the immediately preceding Business Day) with the
same force and effect as if made on the Interest Payment Date or Redemption
Date, or at the Stated Maturity or on such last day for conversion, provided
that no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE II
SECURITY FORMS
Section 2.01 Forms Generally.
The Securities and the Trustee's certificates of authentication shall be
substantially in the form of Exhibit A which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). The Company shall
furnish any such legend not contained in Exhibit A to the Trustee in writing.
Each Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Exhibit A are part of the terms of
this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The definitive Securities shall be typewritten or printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
Section 2.02 Initial Issuance to Property Trustee.
The Securities initially issued to the Property Trustee of the Trust shall
be in the form of one or more individual certificates in definitive, fully
registered form without distribution coupons and shall bear the following legend
(the "Restricted Securities Legend") unless the Company determines otherwise in
accordance with applicable law:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND
ANY
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COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER IS HEREBY NOTIFIED
THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER AND
THE COMPANY THAT (A) THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (i) INSIDE THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i)
THROUGH (iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
Section 2.03 Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the provisions
contained in Section 2.02, bear a legend in substantially the following form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE
DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
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WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE
OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO
HANOVER COMPRESSOR COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Section 2.04 Issuance of Global Securities to Holders.
The Securities may be represented by one or more Global Securities
registered in the name of the Depositary or its nominee if, and only if, the
Securities are distributed to the Holders of the Trust Securities. Until such
time, the Securities shall be registered in the name of and held by the Property
Trustee. Securities distributed to Holders of book-entry Trust Securities shall
be distributed in the form of one or more Global Securities registered in the
name of the Depositary or its nominee, and deposited with the Security
Registrar, as custodian for such Depositary, or held by such Depositary for
credit by the Depositary to the respective accounts of the beneficial owners of
the Securities represented thereby (or such other accounts as they may direct).
Securities distributed to Holders of Trust Securities other than book-entry
Trust Securities shall not be issued in the form of a Global Security or any
other form intended to facilitate book-entry trading in beneficial interests in
such Securities.
ARTICLE III
THE SECURITIES
Section 3.01 Title and Terms.
The aggregate principal amount of Securities that may be authenticated and
delivered under this Indenture is limited to the sum of $88,917,550 except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities pursuant to Section 3.04, 3.05,
3.06, 3.07, 9.06, 11.07 or 13.02.
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The Securities shall be known and designated as the "7 1/4% Convertible
Junior Subordinated Debentures Due 2029" of the Company. Their Stated Maturity
shall be December 15, 2029, and they shall bear interest at the Applicable Rate,
from December 15, 1999 or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, as the case may be,
payable quarterly (subject to deferral as set forth herein), in arrears, on
March 15, June 15, September 15 and December 15 (each an "Interest Payment
Date") of each year, commencing March 15, 2000, until the principal thereof is
paid or made available for payment, and they shall be paid to the Person in
whose name the Security is registered at the close of business on the regular
record date for such interest installment, which shall be the close of business
on the first day of the month of the applicable Interest Payment Date (the
"Regular Record Date"). Interest will compound quarterly and will accrue at the
Applicable Rate on any interest installment in arrears for more than one quarter
or during an extension of an interest payment period as set forth in Section
3.13 hereof.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. Except as provided in the following
sentence, the amount of interest payable for any period shorter than a full
quarterly period for which interest is computed, will be computed on the basis
of the actual number of days elapsed in such a 30-day month. In the event that
any date on which interest is payable on the Securities is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on such date.
If at any time (including upon the occurrence of a Tax Event) while the
Property Trustee is the Holder of all the Securities, the Trust or the Property
Trustee is required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any case, the Company will pay
as additional amounts ("Additional Sums") on the Securities held by the Property
Trustee, such additional amounts as shall be required so that the net amounts
received and retained by the Trust and the Property Trustee after paying such
taxes, duties, assessments or other governmental charges will be equal to the
amounts the Trust and the Property Trustee would have received had no such
taxes, duties, assessments or other governmental charges been imposed.
The principal of and interest on the Securities shall be payable at the
office or agency of the Company in New York, New York maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at any time that the Property Trustee is not the sole holder of
the Securities, payment of interest may, at the option of the Company, be made
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or by wire transfer.
The Securities shall be redeemable as provided in Article XI hereof.
The Securities shall be subordinated in right of payment to Senior Debt as
provided in Article XII hereof.
The Securities shall be convertible as provided in Article XIII hereof.
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Section 3.02 Denominations.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and integral multiples thereof.
Section 3.03 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities 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 manually or by facsimile authenticate and make available for
delivery such Securities as in this Indenture provided and not otherwise.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual or facsimile signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
Section 3.04 Temporary Securities.
Pending the preparation of definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and make available for
delivery, 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 and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 10.02, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
make available for delivery in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
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temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
Section 3.05 Global Securities.
(a) Each Global Security issued under this Indenture shall be registered in the
name of the Depositary designated by the Company for such Global Security or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global Security
may be exchanged in whole or in part for Securities registered, and no transfer
of a Global Security in whole or in part may be registered, in the name of any
Person other than the Depositary for such Global Security or a nominee thereof
unless (i) such Depositary advises the Trustee in writing that such Depositary
is no longer willing or able to continue as a Depositary with respect to such
Global Security, and no successor depositary shall have been appointed, or if at
any time the Depositary ceases to be a "clearing agency" registered under the
Exchange Act, at a time when the Depositary is required to be so registered to
act as such depositary, (ii) the Company in its sole discretion determines that
such Global Security shall be so exchangeable or (iii) there shall have occurred
and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or canceled
in whole, it shall be surrendered by or on behalf of the Depositary or its
nominee to the Security Registrar for exchange or cancellation as provided in
this Article III. If any Global Security is to be exchanged for other Securities
or canceled in part, or if another Security is to be exchanged in whole or in
part for a beneficial interest in any Global Security, then either (i) such
Global Security shall be so surrendered for exchange or cancellation as provided
in this Article III or (ii) the principal amount thereof shall be reduced or
increased by an amount equal to the portion thereof to be so exchanged or
canceled, or equal to the principal amount of such other Security to be so
exchanged for a beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Security Registrar, whereupon
the Trustee shall instruct the Depositary or its authorized representative to
make a corresponding adjustment to its records. Upon any such surrender or
adjustment of a Global Security by the Depositary, accompanied by registration
instructions and, to the extent required by Section 3.06, a Restricted
Securities Certificate, the Trustee shall, subject to Section 3.05(b) and as
otherwise provided in this Article III, authenticate and make available for
delivery any Securities issuable in exchange for such Global Security (or any
portion thereof) in accordance with the instructions of the Depositary. The
Trustee shall not be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) The Depositary or its nominee, as registered owner of a Global Security,
shall be the Holder of such Global Security for all purposes under this
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interest pursuant to the rules and procedures of the
Depositary. Accordingly, any such owner's beneficial interests in a Global
Security shall be shown only on, and the transfer of such interest shall be
effected only through, records
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maintained by the Depositary or its nominee or its Agent Members. Neither the
Trustee nor the Security Registrar shall have any liability in respect of any
transfers effected by the Depositary.
(e) The rights of the beneficial interests in a Global Security shall be
exercised only through the Depositary and shall be limited to those established
by law and agreements between such owners and the Depositary and/or its Agent
Members.
Section 3.06 Registration, Transfer and Exchange Generally; Certain Transfers
and Exchanges.
(a) The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 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 Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an office or
agency of the Company designated pursuant to Section 10.02 for such purpose, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
any authorized denominations and of a like aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled to
receive.
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 Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) 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 transfer or exchange of Securities, other than
exchanges pursuant to Section 3.04, 3.05, 9.06, 11.09 or 13.01 not involving any
transfer.
Neither the Company nor the Trustee shall be required (i) in the case of a
partial redemption of the Securities, to issue, register the transfer of or
exchange any Security during a period beginning
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at the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities selected for redemption under Section 11.04 and ending
at the close of business on the day of such mailing or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
(b) Transfer and Exchange Procedures and Restrictions. The Securities may not
be transferred except in compliance with the Restricted Securities Legend unless
otherwise determined by the Company in accordance with applicable law. Upon any
distribution of the Securities to the holders of the Trust Securities in
accordance with the Declaration, the Company and the Trustee shall enter into a
supplemental indenture pursuant to Section 9.01(6) to provide for transfer
procedures and restrictions with respect to the Securities substantially similar
to those contained in the Declaration to the extent applicable in the
circumstances existing at the time of such distribution. Notwithstanding any
other provision of the Indenture, transfers and exchanges of Securities and
beneficial interests in a Global Security of the kinds specified in this Section
3.06(b) shall be made only in accordance with this Section 3.06(b).
(1) Non-Global Security to Global Security. If the Holder of a Security (other
than a Global Security) wishes at any time to transfer all or any portion of
such Security to a Person who wishes to take delivery thereof in the form of a
beneficial interest in a Global Security, such transfer may be effected only in
accordance with the provisions of this clause (b)(1) and subject to the rules
and procedures of the Depositary. Upon receipt by the Security Registrar of (A)
such Security as provided in Section 3.06(a) and instructions satisfactory to
the Security Registrar directing that a beneficial interest in the Global
Security in a specified principal amount not greater than the principal amount
of such Security be credited to a specified Agent Member's account and (B) a
Securities Certificate duly executed by such Holder or such Holder's attorney
duly authorized in writing, then the Security Registrar shall cancel such
Security (and issue a new Security in respect of the untransferred portion
thereof) as provided in Section 3.06(a) and increase the aggregate principal
amount of the Global Security by the specified principal amount as provided in
Section 3.05(c).
(2) Non-Global Security to Non-Global Security. A Security that is not a Global
Security may be transferred, in whole or in part, to a Person who takes delivery
in the form of another Security that is not a Global Security as provided in
Section 3.06(a); provided, that if such Security to be transferred in whole or
in part is a Restricted Security, the Security Registrar shall have received the
assignment form attached to the Security duly executed by the transferor Holder
or such Holder's attorney duly authorized in writing.
(3) Exchanges between Global Security and Non-Global Security. A beneficial
interest in a Global Security may be exchanged for a Security that is not a
Global Security as provided in Section 3.05.
(c) Restricted Securities Legend.
(1) Except as set forth below, all Securities shall bear the Restricted
Securities Legend set forth in Section 2.02.
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(2) Subject to Section 3.06(d) and to the following clauses of this Section
3.06(c), a Security (other than a Global Security) that does not bear a
Restricted Securities Legend may be issued in exchange for or in lieu of a
Restricted Security or any portion thereof that bears such legend if, in the
Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the written direction of the Company in the
form of an Officers' Certificate, shall countersign and deliver such a new
Security.
(3) Notwithstanding the foregoing provisions of this Section 3.06(c), a
successor Security of a Security that does not bear a Restricted Securities
Legend shall not bear such form of legend unless the Company has reasonable
cause to believe that such successor Security is a "restricted security" within
the meaning of Rule 144 under the Securities Act, in which case the Trustee, at
the written direction of the Company in the form of an Officers' Certificate,
shall countersign and deliver a new Security bearing a Restricted Securities
Legend in exchange for such successor Security.
(4) Upon any sale or transfer of a Restricted Security (including any
Restricted Security represented by a Global Security) pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144 under
the Securities Act after such registration ceases to be effective: (A) in the
case of any Restricted Security that is a definitive Security, the Security
Registrar shall permit the Holder thereof to exchange such Restricted Security
for a definitive Security that does not bear the Restricted Securities Legend
and shall rescind any restriction on the transfer of such Restricted Security;
and (B) in the case of any Restricted Security that is represented by a Global
Security, the Security Registrar shall permit the Holder of such Global Security
to exchange such Global Security for another Global Security that does not bear
the Restricted Securities Legend.
(5) If Restricted Securities are being presented or surrendered for transfer or
exchange then there shall be (if so required by the Trustee), (A) if such
Restricted Securities are being delivered to the Security Registrar by a Holder
for registration in the name of such Holder, without transfer, a certification
from such Holder to that effect; or (B) if such Restricted Securities are being
transferred, a certification from the transferor as to the compliance with the
restrictions set forth in the Restricted Securities Legend.
Section 3.07 Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and make available for delivery in
exchange therefor a new Security of like tenor and principal amount and bearing
a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed,
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lost or stolen Security, a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.08 Payment of Interest; Interest Rights Preserved.
Interest on any 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 that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") 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 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 Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date (as
defined below) for the payment of such Defaulted Interest, which shall be fixed
in the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment (which date shall be sufficiently in advance of such
notice to permit the Trustee to timely take the actions contemplated by this
Section 3.08), and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause
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provided. Thereupon the Trustee shall fix a special record date (the "Special
Record Date") for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each Holder at his
address as it appears in the Security Register, 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 mailed, such
Defaulted Interest shall be paid to the Persons in whose names the Securities
(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 in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and, if so listed, upon such notice as may
be required by such exchange (or by the Trustee if the Securities are not
listed), if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee provided that any such payment will be made in coin
or currency of the United States of America which at the time of payment is a
legal tender for payment of public and private debt.
Subject to the foregoing provisions of this Section, 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 interest (including in each such case Compounded
Interest), which were carried by such other Security.
In the case of any Security which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Security whose Maturity is prior to such Interest Payment Date), interest
whose Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security that is converted prior to any Regular Record Date, interest
whose Stated Maturity is after the date of conversion of such Security shall not
be payable, and the Company shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest
(including Additional Payments) on the Securities being converted, which shall
be deemed to be paid in full.
Section 3.09 Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.08) interest on such Security and for all other
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purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary. No holder of any beneficial interest in any
Global Security held on its behalf by a Depositary shall have any rights under
this Indenture with respect to such Global Security, and such Depositary may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company or the
Trustee from giving effect to any written certification, proxy, or other
authorization furnished by a Depositary or impair, as between the Depositary and
such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee) as
Holder of any Security.
Section 3.10 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee shall not be required to destroy the
certificates representing such canceled Securities.
Section 3.11 Right of Set Off.
Notwithstanding anything to the contrary in this Indenture, the Company
shall have the right to set off any payment it is otherwise required to make
hereunder to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
Section 3.12 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
Section 3.13 Extension of Interest Payment Period; Notice of Extension.
(a) So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time during the term of this Security, from time to
time to defer payments of interest by extending for successive periods not
exceeding 20 consecutive quarters for each such period (a "Deferral Period");
provided that no Deferral Period may extend beyond December 15,
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2029. To the extent permitted by applicable law, interest, the payment of which
has been deferred because of the extension of the interest payment period
pursuant to this Section 3.13, will bear interest thereon at the Applicable Rate
compounded quarterly for each quarter of the Deferral Period ("Compounded
Interest"). On the applicable Payment Resumption Date, the Company shall pay all
interest then accrued and unpaid on the Securities, including any Compounded
Interest that shall be payable to the Holders of the Securities in whose names
the Securities are registered in the Security Register on the Regular Record
Date fixed for such Payment Resumption Date. A Deferral Period shall terminate
upon the payment by the Company of all interest then accrued and unpaid on the
Securities (together with interest thereon accrued at an annual rate equal to
the Applicable Rate, compounded quarterly, to the extent permitted by applicable
law). Before the termination of any Deferral Period, the Company may further
extend such period as provided in paragraph (b) of this Section 3.13, provided
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters or extend beyond the Stated Maturity of the
Securities. Upon the termination of any Deferral Period, and subject to the
foregoing requirements, the Company may elect to begin a new Deferral Period. No
interest shall be due and payable during a Deferral Period except on the Payment
Resumption Date as determined pursuant to paragraph (b) of this Section 3.13.
There is no limitation on the number of times that the Company may elect to
begin a Deferral Period.
(b) The Company shall give the Holder of the Security and the Trustee written
notice (a "Deferral Notice") of its selection of a Deferral Period at least ten
days prior to the record date for any distributions that would have been payable
on the Trust Securities except for the decision to begin or extend a Deferral
Period. On or prior to the Regular Record Date immediately preceding the
Interest Payment Date on which the Company elects to pay all interest then
accrued and unpaid on the Securities, including Compound Interest (the "Payment
Resumption Date"), the Company shall give the Holder of the Security and the
Trustee written notice that the Deferral Period will end on such Payment
Resumption Date. Notwithstanding the provision of such notice, the Company may
elect to further extend the Deferral Period, subject to the limitations set
forth in Section 3.13(a), by providing the Holder of the Security and the
Trustee with a new Deferral Notice not less than three Business Days prior to
the Regular Record Date immediately preceding the previously scheduled Payment
Resumption Date. The Company may elect to pay all interest then accrued and
unpaid on the Securities, including Compound Interest, on an Interest Payment
Date prior to its most recently established Payment Resumption Date provided
that the Company gives the Holder of the Security and the Trustee a new Deferral
Notice setting forth the revised Payment Resumption Date at least three Business
Days prior to the Regular Record Date for such revised Payment Resumption Date.
(c) The quarter in which any Deferral Notice is given pursuant to paragraph (b)
hereof shall be counted as one of the 20 quarters permitted in the maximum
Deferral Period permitted under paragraph (a) hereof.
Section 3.14 Paying Agent, Security Registrar and Conversion Agent.
The Trustee will initially act as Paying Agent, Security Registrar and
Conversion Agent. The Company may change any Paying Agent, Security Registrar,
co-registrar or Conversion Agent without prior notice. The Company or any of its
Affiliates may act in any such capacity.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.06 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.03) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
1) have become due and payable, or
2) will become due and payable at their Stated Maturity within one year, or
3) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal and interest (including
Compounded 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 have been
complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.02 and the last
paragraph of Section 10.03 shall survive.
Section 4.02 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03, all money
deposited with the Trustee pursuant to Section 4.01 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee. All moneys
deposited with the Trustee pursuant to Section 4.01 (and held by it or any
Paying Agent) for the payment of Securities subsequently converted shall be
returned to the Company upon Company Request.
ARTICLE V
REMEDIES
Section 5.01 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events that has occurred and is continuing (whatever the reason for such Event
of Default and whether it shall be occasioned by the provisions of Article XI 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 upon any Security, including any
Additional Payments, when it becomes due and payable, and continuance of such
default for a period of 30 days (subject to the deferral of any due date in the
case of a Deferral Period); or
(2) default in the payment of the principal of any Security when due, whether
at its Maturity, upon redemption, by declaration of acceleration or otherwise;
or
(3) default in the observation or performance, in any material respect, of any
covenant of the Company in this Indenture (other than a covenant a default in
the performance of which or the breach of which is elsewhere in this Section
specifically dealt with), and continuance of such default 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 aggregate outstanding principal amount of the Securities a written notice
specifying such default and requiring it to be remedied; or
(4) failure by the Company to issue and deliver Common Stock upon an election
to convert the Securities into Common Stock; or
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(5) the entry or a decree or order by a court having jurisdiction in the
premises adjudging the Company as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 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 any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as they become due and
its willingness to be adjudicated a bankrupt, or the taking of corporate action
by the Company in furtherance of any such action; or
(7) the voluntary or involuntary dissolution, winding up or termination of the
Trust, except in connection with (i) the distribution of Securities to holders
of Preferred Securities in liquidation or redemption of their interests in the
Trust, (ii) the redemption of all of the outstanding Preferred Securities of the
Trust or (iii) certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
Section 5.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Outstanding
Securities and any other amounts payable hereunder (including any Additional
Payments) to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders); provided that, if the Property
Trustee is the sole Holder of the Securities and if upon an Event of Default,
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities fail to declare the principal of all the Securities to be
immediately due and payable, the holders of at least 25% in aggregate
liquidation amount of Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any such
declaration such principal and all accrued interest shall become immediately due
and payable. Upon any such declaration such principal amount (or specified
amount) of and the accrued interest (including any Additional Payments) on all
the Securities shall then become immediately due and payable; provided that the
payment of principal and interest on such Securities (including Additional
Payments) shall remain subordinated to the extent provided in Article XII.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as provided in this Article
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hereinafter, the Holders of a majority in aggregate principal amount of the
Outstanding Securities or of a majority in liquidation amount of Preferred
Securities, 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:
(A) all overdue interest (including any Compounded Interest) on all Securities,
(B) the principal of any Securities which have become due otherwise than by
such declaration of acceleration and interest thereon at the rate borne by the
Securities, and
(C) 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, other than the non-payment of the principal of
Securities which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 5.13.
The Company is required to file annually with the Trustee a certificate as
to whether or not the Company is in compliance with all the conditions and
covenants applicable to it under this Indenture.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest (including any Compounded
Interest) on any Security 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 any Security at the
Stated Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Payments) and,
to the extent that payment thereof shall be legally enforceable, interest on any
overdue principal and on any overdue interest (including any Additional
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Sums), at the rate borne by the Securities, and, in addition thereto,
all amounts owing to the Trustee under Section 6.07.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.04 Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; 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 and any predecessor Trustee under Section
6.07.
No provision of this Indenture 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 5.05 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing to the Trustee and any predecessor
Trustee under Section 6.07, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
Section 5.06 Application of Money Collected.
Subject to Article XII, 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 interest (including any Additional Payments), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
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FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.07;
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Payments) on the
Securities 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 for
principal and interest (including any Compounded Interest),
respectively; and
THIRD: The balance, if any, to the Company.
Section 5.07 Limitation on Suits.
Subject to Section 5.08, no Holder of any Security 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;
(2) the Holders of not less than 25% in aggregate principal amount of the
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 a majority in principal
amount of the Outstanding Securities;
it being understood and intended that no one or more 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,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 5.08 Unconditional Right of Holders to Receive Principal and Interest
and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and (subject
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to Section 3.08) interest (including any Additional Payments) on such Security
on the respective Stated Maturities expressed in such Security (or, in the case
of redemption, on the Redemption Date) and to convert such Security in
accordance with Article XIII and to institute suit for the enforcement of any
such payment and right to convert, and such rights shall not be impaired without
the consent of such Holder. If the Property Trustee is the sole Holder of the
Securities, any holder of the Preferred Securities shall have the right to
institute suit on behalf of the Trust for the enforcement of any such payment
and right to convert.
Section 5.09 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 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 5.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
3.07, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders 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 5.12 Control by Holders.
The Holders of a majority in principal amount of the 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; provided, that
(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.
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(3) subject to Section 6.01, the Trustee need not take any action that might
involve the Trustee in personal liability or be unduly prejudicial to the
Holders not joining therein.
Section 5.13 Waiver of Past Defaults.
Subject to Section 9.02 hereof, the Holders of not less than a majority in
principal amount of the Outstanding Securities may on behalf of the Holders of
all the Securities waive any past default hereunder and its consequences, except
a default
(1) in the payment of the principal of, premium, if any, or interest (including
any Additional Payments) on any Security (unless such default has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which under Article IX cannot
be modified or amended without the consent of the Holder of each Outstanding
Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee or in
any suit for the enforcement of the right to receive the principal of and
interest (including any Additional Payments) on any Security or to convert any
Security in accordance with Article XIII.
Section 5.15 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.
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Section 5.16 Enforcement by Holders of Preferred Securities.
Notwithstanding anything to the contrary contained herein, if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Securities on the
date such interest or principal is otherwise payable, the Company acknowledges
that, in such event, a holder of Preferred Securities may institute a legal
proceeding directly for enforcement of payment to such Holder of the principal
of or interest on the Debentures having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such Holder (a
"Direct Action") on or after the respective due date specified in the
Securities. The Company may not amend this Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of all the
holders of Preferred Securities. Notwithstanding any payment made to such holder
of Preferred Securities by the Company in connection with a Direct Action, the
Company shall remain obligated to pay the principal of and interest on the
Securities (including Additional Payments, if any) held by the Trust or the
Property Trustee and the Company shall be subrogated to the rights of the holder
of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by the Company to such holder in
any Direct Action. The holders of Preferred Securities will not be able to
exercise directly any other remedy available to the Holders of the Securities.
ARTICLE VI
THE TRUSTEE
Section 6.01 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default, the Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee.
(b) In case an Event of Default has occurred and is continuing, and is known to
the Trustee, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(c) Notwithstanding the foregoing, (i) the duties and responsibilities of the
Trustee shall be as provided by the Trust Indenture Act and (ii) no provision of
this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, 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.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
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Section 6.02 Notice of Defaults.
The Trustee shall give the Holders notice of any default hereunder known to
the Trustee as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
5.01(3), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default.
Section 6.03 Certain Rights of Trustee.
Subject to the provisions of Section 6.01:
(a) the Trustee may conclusively 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 believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, 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 entitled to reasonable examination
of the books, records and premises of the Company, personally or by agent or
attorney; the reasonable expense of every such investigation
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shall be paid by the Company or, if paid by the Trustee, shall be repaid by the
Company upon demand, except any such expense as may be attributable to the
Trustee's negligence or bad faith;
(g) the Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys and
the Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(h) the Trustee shall not be liable for any action taken, suffered, or omitted
to be taken by it in good faith, without negligence or willful misconduct, and
reasonably believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture; and
(i) the Trustee shall not be charged with knowledge of any default or Event of
Default hereunder unless a Responsible Officer of the Trustee shall have
knowledge of the default or Event of Default.
Section 6.04 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Securities. The Trustee shall not be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
Section 6.05 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other agent of
the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Paying Agent, Security Registrar, or such other agent.
Section 6.06 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 6.07 Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such reasonable compensation as the
Company and the Trustee shall from time to time agree in writing 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);
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(2) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, fees, 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 and any predecessor 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 this trust, 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.
To secure the Company's payment obligations in this Section 6.07, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such lien
shall survive the satisfaction or discharge of this Indenture.
The provisions of this Section 6.07 shall survive the termination of this
Indenture.
Section 6.08 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 6.09 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000 and has its Corporate Trust
Office in Wilmington, Delaware. If such Person 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 Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the 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.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the
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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.
(c) The Trustee may be removed at any time by Act of the Holders of a majority
in principal amount of the Outstanding Securities, delivered to the Trustee and
to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 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 6.09 and shall fail to
resign after written request therefor by the Company or by any such Holder; or
(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 may remove the Trustee, or (ii) subject
to Section 5.14, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(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, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities 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
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(f) The Company shall give written notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 1.06. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the
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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;
provided, that on 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. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments required to more fully and certainly vest in and confirm to such
successor Trustee all such rights, powers and trusts.
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 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder; provided such Person 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.
Section 6.13 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 6.14 Co-trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal requirements of
any applicable jurisdiction, the Company and the Trustee shall have power to
appoint, and, upon the written request of the Trustee or of the Holders of at
least 25% in principal amount of the Securities then outstanding, the Company
shall for such purpose join with the Trustee in the execution and delivery of
all instruments and agreements necessary or proper to appoint one or more
Persons approved by the Trustee either to act as co-trustee, jointly with the
Trustee, or to act as separate trustee, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Company does not join in such appointment within 15 days after the receipt by it
of a request so to do, or if an Event of Default shall have occurred and be
continuing, the Trustee alone shall have power to make such appointment.
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Should any written instrument or instruments from the Company be required
by any co-trustee or separate trustee so appointed to confirm to such co-trustee
or separate trustee such property, title, right or power, any and all such
instruments shall, on request, be executed, acknowledged and delivered by the
Company.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following conditions:
(a) the Securities shall be authenticated and delivered, and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised solely, by
the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or imposed upon
the Trustee in respect of any property covered by such appointment shall be
conferred or imposed upon and exercised or performed either by the Trustee or by
the Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate trustee,
except to the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee;
(c) the Trustee at any time, by an instrument in writing executed by it, with
the concurrence of the Company, may accept the resignation of or remove any co-
trustee or separate trustee appointed under this Section, and, if an Event of
Default shall have occurred and be continuing, the Trustee shall have power to
accept the resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Company. Upon the written request of the
Trustee, the Company shall join with the Trustee in the execution and delivery
of all instruments and agreements, necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be personally liable by
reason of any act or omission of the Trustee, or any other such trustee
hereunder; and
(e) any notice from the Holders of Securities delivered to the Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01 Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
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(a) semiannually, not later than January 15 and July 15 in each year, a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Holders as of a date not more than 15 days prior to the delivery thereof;
and
(b) at such other times as the Trustee may request in writing, within 30 days
after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 7.02 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and duties of the Trustee, shall be as provided by the Trust Indenture
Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
Section 7.03 Reports by Trustee.
(a) Within 60 days after May 15 of each year, commencing May 15, 2000, the
Trustee shall transmit by first-class mail to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when the Securities are listed on any stock exchange.
Section 7.04 Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided, that any such
information, documents or reports required to be filed with the Commission
pursuant
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to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee
within 15 days after the same is so required to be filed with the Commission.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 7.05 Tax Reporting.
The Company shall provide to the Trustee on a timely basis such information
as the Trustee requires to enable the Trustee to prepare and file any form
required to be submitted by the Company with the Internal Revenue Service and
the Holders relating to original issue discount, including, without limitation,
Form 1099-0ID or any successor form.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.01 Company May Consolidate, Etc. Only on Certain Terms.
The Company shall not consolidate with or merge with or into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and no Person shall consolidate with or merge with or
into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge with or into another
Person or convey, transfer or lease all or substantially all of its properties
and assets on a consolidated basis to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance, transfer or lease, all or substantially all of the properties and
assets of the Company on a consolidated basis shall be a corporation, limited
liability company, partnership or trust, shall be organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the due and punctual payment of the principal of and interest
(including any Additional Payments) on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the Company to be
performed or observed and shall have provided for conversion rights in
accordance with Article XIII;
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of
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such transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing;
(3) if at the time any Preferred Securities are outstanding, such consolidation
or merger or conveyance, transfer or lease of assets of the Company is permitted
under, and does not give rise to any breach or violation of, the Declaration or
the Guarantee; and
(4) the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture, comply with this Article and
that all conditions precedent herein provided for relating to such transaction
have been complied with.
Section 8.02 Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of all or substantially
all the properties and assets of the Company on a consolidated basis in
accordance with Section 8.01, 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 thereafter,
except in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01 Section Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
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 herein and in
the Securities; or
(2) to add to the covenants of the Company for the benefit of the Holders, or
to surrender any right or power herein conferred upon the Company; or
(3) to make provision with respect to the conversion rights of Holders pursuant
to the requirements of Article XIII; or
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(4) 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
which shall not be inconsistent with the provisions of this Indenture; provided,
that such action pursuant to this clause (4) shall not adversely affect the
interests of the Holders of the Securities or, so long as any of the Preferred
Securities shall remain outstanding, the holders of the Preferred Securities;
(5) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act; or
(6) to make provision for transfer procedures, certification, book-entry
provisions, the form of restricted securities legends, if any, to be placed on
Securities, and all other matters required pursuant to Section 3.06(b) or
otherwise necessary, desirable or appropriate in connection with the issuance of
Securities to holders of Preferred Securities in the event of a distribution of
Securities by the Trust if a Tax Event or Investment Company Event (as defined
in the Declaration) occurs and is continuing.
Section 9.02 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) extend the Stated Maturity of the principal of, or any installment of
interest (including any Additional Payments) on, such Security, or reduce the
principal amount thereof, or reduce the rate or extend the time for payment of
interest thereon, or reduce any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which, such
Security or interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date), or adversely
affect the right to convert such Security as provided in Article XIII (except as
permitted by Section 9.01(3)), or modify the provisions of this Indenture with
respect to the subordination of the Securities in a manner adverse to the
Holders,
(2) reduce the percentage in principal amount of the Outstanding Securities,
the consent of whose Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver of compliance with
certain provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture, or
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(3) modify any of the provisions of this Section or Section 5.13, except to
increase any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
Notwithstanding anything to the contrary in this Indenture or the
Declaration, if the Property Trustee is the sole holder of the Securities, so
long as any of the Preferred Securities remains outstanding, no amendment shall
be made that adversely affects the holders of such Preferred Securities, and no
termination of this Indenture shall occur, and no waiver of any Event of Default
or compliance with any covenant under this Indenture shall be effective, without
the prior consent of the holders of the percentage of the aggregate liquidation
amount of such Preferred Securities then outstanding which is at least equal to
the percentage of aggregate stated principal amount of the Outstanding
Securities as shall be required under this Indenture to effect any such
amendment, termination or waiver.
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.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
Section 9.03 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
(subject to Section 6.01) 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 9.04 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. No such supplemental indenture shall directly or
indirectly modify the provisions of Article XII in any manner which might
terminate or impair the rights of the Senior Debt pursuant to such subordination
provisions.
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Section 9.05 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 9.06 Reference in Securities to Supplemental Indentures.
Securities 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 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.
ARTICLE X
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 10.01 Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and interest on
the Securities in accordance with the terms of the Securities and this
Indenture.
Section 10.02 Maintenance of Office or Agency.
The Company will maintain in the United States an office or agency where
Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer, exchange or conversion, and where
notices and demands to or upon the Company in respect of the Securities 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, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other offices
or agencies (in the United States) where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the United States 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.
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Section 10.03 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal 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, it will, prior
to each due date of the principal of or interest on any Securities, deposit with
a Paying Agent a sum sufficient to pay the principal or interest so becoming
due, such sum to be held as provided by the Trust Indenture Act, 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 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 (i) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent and (ii) during the continuance of any default by the
Company (or any other obligor upon the Securities) in the making of any payment
in respect of the Securities, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent as such.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or interest on any
Security and remaining unclaimed for two years after such principal 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 any such Security shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
Section 10.04 Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the
material terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
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Section 10.05 Limitation on Dividends; Transactions with Affiliates; Covenants
as to the Trust.
(a) If at such time (x) there shall have occurred an Event of Default, (y) the
Company shall be in default with respect to its payment of any obligations under
the Guarantee or (z) the Company shall have given notice of its election to
begin a Deferral Period as provided herein and shall not have rescinded such
notice, or such Deferral Period shall be continuing, the Company covenants that
the Company shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Company's capital stock (which includes common and preferred stock) other
than stock dividends which consist of stock of the same class as that on which
the dividends are being paid, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in interest to the Securities or
(iii) make any guarantee payments with respect to any guarantee by the Company
of the debt securities of any subsidiary of the Company if such guarantee ranks
pari passu with or junior in interest to the Securities (in each case, other
than (A) dividends or distributions in Common Stock, (B) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (C) payments under the
Guarantee, (D) purchases or acquisitions of shares of the Common Stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plan or any other contractual obligation of the Company (other
than a contractual obligation ranking pari passu with or junior in interest to
the Securities), (E) as a result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock or (F)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged).
(b) The Company also covenants and agrees (i) for so long as the Preferred
Securities remain outstanding, (a) to maintain directly or indirectly 100%
ownership of the Common Securities, provided that certain successor Persons in
transactions which are permitted by Article VIII may succeed to the Company's
ownership of the Common Securities, (b) not to voluntarily terminate, wind-up or
liquidate the Trust, except in connection with (I) a distribution of the
Securities to the holders of the Trust Securities in liquidation of the Trust,
(II) the redemption of all Trust Securities or (iii) certain mergers,
consolidations or amalgamations permitted by the Declaration, and (c) not to
convert Securities except pursuant to a notice of conversion delivered to the
Conversion Agent by a Holder or by a holder of Common Securities, (ii) to use
its reasonable efforts, consistent with the terms and provisions of the
Declaration, to cause the Trust to remain classified as a grantor trust and not
taxable as a corporation for United States federal income tax purposes, (iii) to
maintain the reservation for issuance of the number of shares of Common Stock
that would be required from time to time upon the conversion of all the
Securities then outstanding, (iv) to deliver shares of Common Stock upon an
election by a Holder to convert such Preferred Securities into or for Common
Stock, and (v) to honor all obligations relating to the conversion or exchange
of Preferred Securities into or for Common Stock or Securities.
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Section 10.06 Payment of Expenses of the Trust.
In connection with the offering, sale and issuance of the Securities to the
Property Trustee in connection with the sale of the Trust Securities by the
Trust, the Company shall:
(a) pay for all costs, fees and expenses relating to the offering, sale and
issuance of the Securities, including commissions to the Initial Purchasers
payable pursuant to the Purchase Agreement and compensation of the Trustee under
the Indenture in accordance with the provisions of Section 6.07 of the
Indenture;
(b) be responsible for and pay for all debts and obligations (other than with
respect to the Trust Securities) of the Trust, pay for all costs and expenses of
the Trust (including, but not limited to, costs and expenses relating to the
organization of the Trust, the offering, sale and issuance of the Trust
Securities (including commissions to the Initial Purchasers in connection
therewith), the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
Section 10.07 Registration Rights.
The holders of the Preferred Securities, the Securities, the Guarantee and
the shares of Common Stock of the Company issuable upon conversion of the
Securities (collectively, the "Registrable Securities") are entitled to the
benefits of a Registration Rights Agreement, dated as of December 15, 1999,
among the Company, the Trust and the Initial Purchasers (the "Registration
Rights Agreement"). Pursuant to the Registration Rights Agreement the Company
and the Trust have agreed for the benefit of the holders of the Registrable
Securities that (i) they will, at the Company's sole expense, prior to February
15, 2000, file a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the Registrable
Securities, (ii) they will use their best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act prior
to May 15, 2000 and (iii) they will use their best efforts to maintain such
Registration Statement continuously effective under the Securities Act (subject
to certain exceptions under the Registration Rights Agreement) until the second
anniversary of the effectiveness of the Shelf Registration Statement or such
other period as shall be required under Rule 144(k) thereunder or any successor
rule or regulation thereto or such earlier date as is provided in the
Registration Rights Agreement. If the Company fails to comply with either of
clauses (ii) or (iii) above, subject to certain exceptions provided in the
Registration Rights Agreement, (a "Registration Default") then, at such time,
the Applicable Rate will increase by 50 basis points (.50%). Such increase will
remain in effect from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration Defaults
have been cured, on which date the interest rate on the Securities will revert
to the interest rate originally borne by the Securities.
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Section 10.08 Offering Document Amendment or Supplement.
The Trust and the Company will advise each Initial Purchaser promptly of
any proposal to amend or supplement the final confidential offering circular
dated December 9, 1999 (the "Offering Document"), and will not effect such
amendment or supplementation without the Initial Purchasers' consent. If, at
any time, any event occurs as a result of which the Offering Document as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any such time to amend or supplement the
Offering Document to comply with any applicable law, the Trust and the Company
promptly will notify each Initial Purchaser of such event and promptly will
prepare, at their own expense, an amendment or supplement which will correct
such statement or omission or effect such compliance. Neither the Initial
Purchasers' consent to nor the Initial Purchasers' delivery to offerees or
investors of, any such amendment or supplement shall constitute a waiver of any
of the conditions set forth in Section 6 of the Purchase Agreement.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.01 Optional Redemption.
The Company shall have the right to redeem the Securities (an "Optional
Redemption") in whole or in part, at any time or from time to time on or after
December 20, 2002, at a Redemption Price (the "Optional Redemption Price") equal
to the prices per $50 principal amount of Securities set forth in the following
table, plus accrued and unpaid interest, including Additional Payments, if any,
to the Redemption Date, if redeemed during the 12-month period ending on
December 19:
<TABLE>
<CAPTION>
Price Per $50
Year Principal Amount
- ---- ----------------
<S> <C>
2003 $51.81
2004 $51.21
2005 $50.60
2006 $50.00
</TABLE>
and thereafter at $50 per $50 principal amount of the Securities plus, in each
case, any accrued and unpaid interest, including Additional Payments, if any, to
the Redemption Date.
11.02 Tax Event Redemption.
If a Tax Event has occurred and is continuing and:
(1) the Company has received a Redemption Tax Opinion; or
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(2) the Issuer Trustees shall have been informed by nationally recognized
independent tax counsel (reasonably acceptable to the Issuer Trustees)
experienced in such matters that a No Recognition Opinion cannot be delivered,
then the Company shall have the right upon not less than 20 days, nor more than
60 days, notice to the Holders of the Securities to redeem the Securities in
whole, but not in part, for cash at $50 per $50 principal amount of the
Securities plus accrued and unpaid interest, including Additional Payments, if
any, to the Redemption Date, within 90 days following the occurrence of such Tax
Event (the "90 Day Period"); provided, however, that if, at the time there is
available to the Company or the Trust the opportunity to eliminate, within the
90 Day Period, the Tax Event by taking some ministerial action, including, but
not limited to, filing a form or making an election, or pursuing some other
similar reasonable measure which, in the sole judgment of the Company, will have
no adverse effect on the Company, the Trust or the Holders of the Preferred
Securities and will involve no material cost, then the Company or the Trust
shall pursue such ministerial action or other measure in lieu of redemption; and
provided further that the Company shall have no right to redeem the Securities
while the Trust is pursuing any ministerial action or other similar measure
pursuant to its obligations under the Declaration.
If the Company opts not to redeem the Securities pursuant to this Section
11.02, the Company shall be required to pay Additional Sums in respect of the
Securities pursuant to Section 3.01 for so long as (i) a Tax Event has occurred
and is continuing and (ii) the Property Trustee is the sole Holder of the
Securities.
Section 11.03 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (unless such redemption
affects only a single Security), the particular Securities to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by the Trustee by
such method as the Trustee shall deem fair and appropriate, from the Outstanding
Securities not previously called for redemption. Such selection method may
provide for the selection for redemption of portions (equal to $50 or any
integral multiple thereof) of the principal amount of the Securities.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect
to any redemption affecting only a single Security, whether such Security is to
be redeemed in whole or in part. In the case of any such redemption in part, the
unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
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 Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
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Section 11.04 Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 20 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at such Holder's address appearing in
the Security Register.
All notices of redemption given pursuant to this Article XI shall identify
the Securities to be redeemed (including, if relevant, CUSIP number) and shall
state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security to be redeemed and that interest thereon will
cease to accrue on and after said date,
(4) the place or places where such Securities are to be surrendered for payment
of the Redemption Price, and
(5) the date on which the right to convert the Securities to be redeemed will
terminate and the places where such Securities may be surrendered for
conversion.
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 11.05 Deposit of Redemption Price.
Prior to 12:00 noon on 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 10.03) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any Predecessor Security to receive interest as provided in the
last paragraph of Section 3.08) be paid to the Company upon Company Request or,
if then held by the Company, shall be discharged from such trust.
Section 11.06 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, and from and after such date (unless the
Company shall default in the payment of the Redemption Price
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and accrued interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price; provided,
however, that installments of interest 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 the terms and the provisions of Section
3.08.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate borne by the Security.
Section 11.07 Securities Redeemed in Part.
(a) In the event of any redemption in part, the Company shall not be required
(i) to issue, register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the date of the mailing of a
notice of redemption of Securities selected for redemption and ending at the
close of business on the day of such mailing and (ii) to register the transfer
of or exchange any Securities so selected for redemption, in whole or in part,
except for the unredeemed portion of any Securities being redeemed in part.
(b) If a partial redemption of the Securities would result in the delisting of
the Preferred Securities issued by the Trust from any national securities
exchange or other organization on which the Preferred Securities are listed, the
Company shall not be permitted to effect such partial redemption and may only
redeem the Securities in whole.
(c) Any Security which is to be redeemed only in part 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 his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, 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. If a Global Security is surrendered, such new Security will
(subject to Section 3.06) also be a new Global Security.
ARTICLE XII
SUBORDINATION OF SECURITIES
Section 12.01 Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Securities by such
Holder's acceptance thereof likewise covenants and agrees, that all Securities
shall be issued subject to the provisions of this Article XII; and each Holder
of a Security, whether upon original issue or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions. The payment by the
Company of the principal of, premium, if any, and interest (including Additional
Payments) on
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all Securities issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Debt, whether outstanding at the date of
this Indenture or thereafter incurred; provided, however, that no provision of
this Article XII shall prevent the occurrence of any default or Event of Default
hereunder.
Section 12.02 Default on Senior Debt.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Debt continuing beyond the period of grace, if any, specified in the
instrument evidencing such Senior Debt, unless and until such default shall have
been cured or waived or shall have ceased to exist, and in the event that the
maturity of any Senior Debt has been accelerated because of a default, then no
payment shall be made by the Company with respect to the principal of (including
redemption payments), premium, if any, or interest on the Securities.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 12.02, subject to Section 12.06, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Debt or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Debt may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Debt (or their representative or representatives
or a trustee) notify the Trustee in writing within 90 days of such payment of
the amounts then due and owing on the Senior Debt and only the amounts specified
in such notice to the Trustee shall be paid to the holders of Senior Debt.
Section 12.03 Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding up or liquidation or reorganization of the
Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts (including principal, premium, if
any, and interest) due or to become due upon all Senior Debt (including any
interest accruing subsequent to the filing of a petition for bankruptcy
regardless of whether such interest is an allowed claim in the bankruptcy
proceeding) shall first be paid in full in cash, or payment thereof provided for
in money in accordance with and to the extent permitted by the terms of such
Senior Debt, before any payment is made on account of the principal (and
premium, if any) or interest on the Securities; and upon any such dissolution or
winding up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or the Trustee
would be entitled, except for the provisions of this Article XII, shall be paid
by the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders of
the Securities or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Debt (pro rata to such holders on the basis of
the respective amounts of Senior Debt held by such holders, as calculated by the
Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Debt may have been issued, as their respective interests may appear, to
the extent necessary to pay
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such Senior Debt in full, in cash or in money's worth in accordance with and to
the extent permitted by the terms of such Senior Debt, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Debt, before any payment or distribution is made to the Holders of Securities or
to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing shall be received by the
Trustee or the Holders of the Securities before all Senior Debt is paid in full
in cash, or provision is made for such payment in money in accordance and to the
extent permitted by the terms of such Senior Debt subject to Section 12.06, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Debt or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Debt may have been issued, and
their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Debt remaining unpaid to the extent
necessary to pay such Senior Debt in full in cash or in money's worth in
accordance with and to the extent permitted by the terms of such Senior Debt,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Debt.
For purposes of this Article XII, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article XII with respect to
the Securities to the payment of all Senior Debt which may at the time be
outstanding; provided that (i) such Senior Debt is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Debt are not, without the consent
of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company with or into,
another Person or the liquidation or dissolution of the Company following the
conveyance, transfer or lease of all or substantially all its properties and
assets on a consolidated basis to another Person upon the terms and conditions
provided for in Article VIII hereof shall not be deemed a dissolution, winding
up, liquidation or reorganization for the purposes of this Section 12.03 if such
other Person shall, as a part of such consolidation, merger, conveyance,
transfer or lease, comply with the conditions stated in Article VIII hereof.
Nothing in Section 12.02 or in this Section 12.03 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.07 hereof.
Section 12.04 Subrogation.
Subject to the prior payment in full of all Senior Debt in cash or in
money's worth in accordance with and to the extent permitted by the terms of
such Senior Debt, the rights of the Holders of the Securities shall be
subrogated to the rights of the holders of such Senior Debt to receive payments
or distributions of cash, property or securities of the Company, as the case may
be, applicable to such Senior Debt until the principal of (and premium, if any)
and interest on the Securities shall be paid in full; and, for the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Debt of any cash, property or securities to which the Holders of the Securities
or the Trustee would be entitled except for the provisions of this Article XII,
and no payment pursuant to the provisions of this Article XII, to or for the
benefit of the holders
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of such Senior Debt by Holders of the Securities or the Trustee, shall, as
between the Company, its creditors other than holders of Senior Debt, and the
Holders of the Securities, be deemed to be a payment by the Company to or on
account of such Senior Debt. It is understood that the provisions of this
Article XII are and are intended solely for the purposes of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of such Senior Debt on the other hand.
Nothing contained in this Article XII or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Debt, 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)
and interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company, as the
case may be, other than the holders of Senior Debt, nor shall anything herein or
therein 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 XII of the holders
of such Senior Debt in respect of cash, property or securities of the Company,
as the case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article XII, the Trustee, subject to the provisions of Section 6.03, and
the Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution, winding
up, liquidation or reorganization proceedings are pending, or a certificate of
the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Debt and other
indebtedness of the Company, as the case may be, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XII.
Section 12.05 Trustee to Effectuate Subordination.
Each Holder of Securities 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 XII and appoints the Trustee as such Holder's attorney-in-fact for any
and all such purposes.
Section 12.06 Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company which would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities pursuant
to the provisions of this Article XII. Notwithstanding the provisions of this
Article XII or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XII unless and until a
Responsible Officer of the Trustee shall have received written notice thereof at
the Corporate Trust Office of the Trustee from the Company or a holder or
holders of
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Senior Debt or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 6.03 hereof,
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 12.06 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 (and premium, if any) or
interest 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 purposes for which it 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.
The Trustee, subject to the provisions of Section 6.03, shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Debt (or a trustee on behalf of such holder) to
establish that such notice has been given by a holder of such Senior Debt or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Debt to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Debt held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the right of such Person under this Article XII, 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 12.07 Rights of the Trustee; Holders of Senior Debt.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XII in respect of any Senior Debt at any time held by
it, to the same extent as any other holder of Senior Debt, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Debt of the Company, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are set forth in this Article XII, and no implied covenants or obligations
with respect to the holders of such Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of such Senior Debt and, subject to the provisions
of Section 6.03, the Trustee shall not be liable to any holder of such Senior
Debt if it shall pay over or deliver to Holders of Securities, the Company or
any other Person money or assets to which any holder of such Senior Debt shall
be entitled by virtue of this Article XII or otherwise, unless such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
Section 12.08 Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any
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noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt 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 XII or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, such Senior Debt, or
otherwise amend or supplement in any manner such Senior Debt or any instrument
evidencing the same or any agreement under which such Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Debt; (iii) release any
Person liable in any manner for the collection of such Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company and any other
Person.
ARTICLE XIII
CONVERSION OF SECURITIES
Section 13.01 Conversion Rights.
Subject to and upon compliance with the provisions of this Article, the
Securities are convertible, at the option of the Holder, at any time prior to
5:00 p.m. New York City time on the Business Day immediately preceding December
15, 2029 into fully paid and nonassessable shares of Common Stock at an initial
conversion rate of 1.3986 shares of Common Stock for each $50 in aggregate
principal amount of Securities (the "Initial Conversion Ratio") (equal to a
conversion price of $35.75 principal amount of Securities per share of Common
Stock (the "Initial Conversion Price")). The conversion ratio and the equivalent
conversion price in effect at any given time are known as the "Applicable
Conversion Ratio" and the "Applicable Conversion Price", respectively, and are
subject to adjustment as described in this Article XIII. A Holder of Securities
may convert any portion of the principal amount of the Securities into that
number of fully paid and nonassessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) obtained by dividing the
principal amount of the Securities to be converted by the Applicable Conversion
Ratio. In case a Security or portion thereof is called for redemption, such
conversion right in respect of the Security or portion so called shall expire at
the close of the Business Day immediately preceding the corresponding Redemption
Date, unless the Company defaults in making the payment due upon redemption.
Section 13.02 Conversion Procedures.
(a) In order to convert all or a portion of the Securities, the Holder thereof
shall deliver to the Conversion Agent an irrevocable Notice of Conversion
setting forth the principal amount of Securities to be converted, together with
the name or names, if other than the Holder, in which the shares of Common Stock
should be issued upon conversion and, if such Securities are definitive
Securities, surrender to the Conversion Agent the Securities to be converted,
duly endorsed or assigned to the Company or in blank. In addition, a holder of
Preferred Securities may exercise
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its right under the Declaration to convert such Preferred Securities into Common
Stock by delivering to the Conversion Agent an irrevocable Notice of Conversion
setting forth the information called for by the preceding sentence and directing
the Conversion Agent (i) to exchange such Preferred Security for a portion of
the Securities held by the Trust (at an exchange rate of $50 principal amount of
Securities for each Preferred Security) and (ii) to immediately convert such
Securities, on behalf of such holder, into Common Stock of the Company pursuant
to this Article XIII and, if such Preferred Securities are in definitive form,
surrendering such Preferred Securities, duly endorsed or assigned to the Company
or in blank. So long as any Preferred Securities are outstanding, the Trust
shall not convert any Securities except pursuant to a Notice of Conversion duly
executed and delivered to the Conversion Agent by a holder of Preferred
Securities.
If a Notice of Conversion is delivered on or after the Regular Record Date
and prior to the subsequent Interest Payment Date, the Holder will be entitled
to receive the interest payable on the subsequent Interest Payment Date on the
portion of Securities to be converted notwithstanding the conversion thereof
prior to such Interest Payment Date. Except as otherwise provided in the
immediately preceding sentence, in the case of any Security which is converted,
interest whose Stated Maturity is after the date of conversion of such Security
shall not be payable, and the Company shall not make nor be required to make any
other payment, adjustment or allowance with respect to accrued but unpaid
interest on the Securities being converted, which shall be deemed to be paid in
full. Each conversion shall be deemed to have been effected immediately prior to
the close of business on the day on which the Notice of Conversion was received
(the "Conversion Date") by the Conversion Agent from the Holder or from a holder
of the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
as of the Conversion Date. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless otherwise directed by the Holder in the Notice of Conversion, a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same. The Conversion Agent shall deliver such certificate or certificates to
such Person or Persons.
(b) Subject to any right of the Holder of such Security or any Predecessor
Security to receive interest as provided in the last paragraph of Section 3.08
and the second paragraph of clause (a) of Section 13.02, the Company's delivery
upon conversion of the whole number of shares of Common Stock into which the
Securities are convertible (together with the cash payment, if any, in lieu of
fractional shares) shall be deemed to satisfy the Company's obligation to pay
the principal amount at Maturity of the portion of Securities so converted and
any unpaid interest (including Compounded Interest and Additional Sums) accrued
on such Securities at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a
cash adjustment in an amount equal to the same fraction of the Closing Price of
such fractional interest on the date on which the Securities or Preferred
Securities, as the case may be, were duly surrendered to the Conversion Agent
for conversion, or, if such day is not a Trading Day, on the next Trading Day,
and
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the Conversion Agent in turn will make such payment, if any, to the Holder of
the Securities or the holder of the Preferred Securities so converted.
(d) In the event of the conversion of any Security in part only, a new Security
or Securities for the unconverted portion thereof will be issued in the name of
the Holder thereof upon the cancellation thereof in accordance with Section
3.06.
(e) In effecting the conversion transactions described in this Section, the
Conversion Agent is acting as agent of the holders of Preferred Securities (in
the exchange of Preferred Securities for Securities) and as agent of the Holders
of Securities (in the conversion of Securities into Common Stock), as the case
may be, directing it to effect such conversion transactions. The Conversion
Agent is hereby authorized (x) if the Trust exists, (i) to exchange Securities
held by or on behalf of the Trust from time to time for Preferred Securities in
connection with the conversion of such Preferred Securities in accordance with
this Article XIII and (ii) to convert all or a portion of the Securities into
Common Stock and thereupon to deliver such shares of Common Stock in accordance
with the provisions of this Article XIII and to deliver to the Trust a new
Security or Securities for any resulting unconverted to exchange Securities held
by the Holders in connection with the conversion of such Securities in
accordance with this Article XIII and (y) if the Trust has been dissolved and
the Securities have been distributed to the holders of the Preferred Securities,
to convert all or a portion of the Securities into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions of this
Article XIII and to deliver to such Holders a new Security or Securities for any
resulting unconverted principal amount.
(f) All shares of Common Stock delivered upon any conversion of Restricted
Securities shall bear a restrictive legend substantially in the form of the
legend required to be set forth on such Securities and shall be subject to the
restrictions on transfer provided in such legend and in Section 3.06(b) hereof.
Neither the Trustee nor the Conversion Agent shall have any responsibility for
the inclusion or content of any such restrictive legend on such Common Stock;
provided, however, that the Trustee or the Conversion Agent shall have provided
to the Company or to the Company's transfer agent for such Common Stock, prior
to or concurrently with a request to the Company to deliver to such Conversion
Agent certificates for such Common Stock, written notice that the Securities
delivered for conversion are Restricted Securities.
Section 13.03 Conversion Price Adjustments.
The Applicable Conversion Price shall be subject to adjustment (without
duplication) from time to time as follows:
(i) In case the Company shall pay a dividend or make a distribution on the
Common Stock exclusively in Common Stock, the Applicable Conversion Price in
effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Applicable Conversion Price by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction
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to become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of this
subparagraph (i), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company.
In the event that such dividend or distribution is not so paid or made, the
Applicable Conversion Price shall again be adjusted to be the Applicable
Conversion Price which would then be in effect if such dividend or distribution
had not occurred.
(ii) In case the Company shall pay or make a dividend or other distribution on
its Common Stock consisting exclusively of, or shall otherwise issue to all
holders of its Common Stock, rights or warrants, in each case entitling the
holders thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in subparagraph (vii)) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or warrants, the
Applicable Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Applicable Conversion Price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately prior
to the opening of business on the day following the date fixed for such
determination. To the extent that rights are not so issued or shares of Common
Stock are not so delivered after the expiration of such rights or warrants, the
Applicable Conversion Price shall be readjusted to the Applicable Conversion
Price which would then be in effect if such date fixed for the determination of
stockholders entitled to receive such rights or warrants had not been fixed. For
the purposes of this subparagraph (ii), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company.
(iii) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Applicable Conversion Price in
effect at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced and, conversely,
in case outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Applicable Conversion Price in effect at
the opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately prior to the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock
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evidences of its indebtedness, shares of any class or series of capital stock,
cash or assets (including securities, but excluding any rights or warrants
referred to in subparagraph (ii) of this Section 13.03, any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in subparagraph (i) of this Section 13.03), the Applicable Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Applicable Conversion Price in effect immediately prior to the
effectiveness of the Applicable Conversion Price reduction contemplated by this
subparagraph (iv) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subparagraph (vii) of this
Section 13.03) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such distribution (the "Reference Date") less
the fair market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. In the event that such dividend or distribution is not so paid or made,
the Applicable Conversion Price shall again be adjusted to be the Applicable
Conversion Price which would then be in effect if such dividend or distribution
had not occurred. For purposes of this subparagraph (iv), any dividend or
distribution that includes shares of Common Stock or rights or warrants to
subscribe for or purchase shares of Common Stock shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, shares of
capital stock, cash or assets other than such shares of Common Stock or such
rights or warrants (making any Applicable Conversion Price reduction required by
this subparagraph (iv)) immediately followed by (2) a dividend or distribution
of such shares of Common Stock or such rights or warrants (making any further
Applicable Conversion Price reduction required by subparagraph (i) or (ii) of
this Section 13.03), except any shares of Common Stock included in such dividend
or distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of subparagraph (i) of
this Section 13.03.
(v) In case the Company shall pay or make a dividend or other distribution on
its Common Stock exclusively in cash (excluding (x) cash dividends to the extent
that they do not exceed the per share amount of the smallest of the immediately
four preceding quarterly cash dividends (as adjusted to appropriately reflect
any of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and
(vi)), and (y) cash dividends to the extent that the annualized per share amount
thereof does not exceed 12.5% of the current market price per share of the
Common Stock on the Trading Day next preceding the date of declaration of such
dividend, the Applicable Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Applicable Conversion Price
in effect immediately prior to the effectiveness of the Applicable Conversion
Price reduction contemplated by this subparagraph (v) by a fraction of which the
numerator shall be the current market price per share (determined as provided in
subparagraph (vii) of this Section 13.03) of the Common Stock on the date fixed
for the payment of such distribution less the amount of cash so distributed and
not excluded as provided applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such
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reduction to become effective immediately prior to the opening of business on
the day following the date fixed for the payment of such distribution; provided,
however, that in the event the portion of the cash so distributed applicable to
one share of Common Stock is equal to or greater than the current market price
per share (as defined in subparagraph (vii) of this Section 13.03) of the Common
Stock on the record date mentioned above, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder of Securities shall have
the right to receive upon conversion the amount of cash such Holder would have
received had such Holder converted each Security immediately prior to the record
date for the distribution of the cash. In the event that such dividend or
distribution is not so paid or made, the Applicable Conversion Price shall again
be adjusted to be the Applicable Conversion Price which would then be in effect
if such record date had not been fixed.
(vi) In case a tender or exchange offer (other than an odd-lot offer) made by
the Company or any Subsidiary of the Company for all or any portion of the
Company's Common Stock shall expire and such tender or exchange offer shall
involve the payment by the Company or such Subsidiary of consideration per share
of Common Stock having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it shall have been amended) that exceeds 110% of the current market price per
share (determined as provided in subparagraph (vii) of this Section 13.03) of
the Common Stock on the Trading Day next succeeding the Expiration Time, the
Applicable Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Applicable Conversion Price in effect
immediately prior to the effectiveness of the Applicable Conversion Price
reduction contemplated by this subparagraph (vi) by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) at the Expiration Time multiplied by the
current market price per share (determined as provided in subparagraph (vii) of
this Section 13.03) of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the current market price per share
(determined as provided in subparagraph (vii) of this Section 13.03) of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(vii) For the purpose of any computation under subparagraphs (ii), (iv), (v)
and (vi) of this Section 13.03, the current market price per share of Common
Stock on any date in question shall be deemed to be the average of the daily
Closing Prices of the Common Stock for the ten consecutive Trading Days prior to
the earlier of the day in question and, if applicable, the day before the "ex"
date with respect to the issuance or distribution requiring such computation;
provided, however, that if another event occurs that would require an
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adjustment pursuant to subparagraphs (i) through (vi) of this Section 13.03,
inclusive, the Board of Directors may make such adjustments to the Closing
Prices during such five Trading Day period as it deems appropriate to effectuate
the intent of the adjustments in this Section 13.03, in which case any such
determination by the Board of Directors shall be set forth in a Board Resolution
and shall be conclusive. For purposes of this paragraph, the term "ex" date, (1)
when used with respect to any issuance or distribution, means the first date on
which the Common Stock is quoted regular way on the New York Stock Exchange
Composite Tape or on such successor securities exchange on which the Common
Stock may be quoted or listed or in the relevant market from which the Closing
Prices were obtained without the right to receive such issuance or distribution,
and (2) when used with respect to any tender or exchange offer means the first
date on which the Common Stock is quoted regular way on such securities exchange
or in such market after the Expiration Time of such offer.
(viii) The Company may make such reductions in the Applicable Conversion Price,
in addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of this Section 13.03, as it considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
(ix) There shall also be no adjustment of the Applicable Conversion Price in
case of the issuance of any Common Stock (or securities convertible into or
exchangeable for Common Stock), except as specifically described above. If any
action would require adjustment of the Applicable Conversion Price, pursuant to
more than one of the anti-dilution provisions set forth in this Article XIII,
only one adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to Holders. Furthermore, no
adjustment in the Applicable Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Applicable Conversion Price; provided, however, that any adjustments which by
reason of this sentence are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
Section 13.04 Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Company shall be a party to any transaction
(including without limitation (a) any recapitalization or reclassification of
the Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (b) any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another Person into
the Company (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company), (c) any sale or transfer of all or substantially all of the assets
of the Company or (d) any compulsory share exchange) (each of the events in the
preceding clauses (a) through (d) being referred to as a "Company Transaction"),
in each case, as a result of which shares of Common Stock shall be converted
into the right to receive other securities, cash or other property, then lawful
provision shall be made as part of the terms of such Company
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Transaction whereby the Holder of each Security then outstanding shall have the
right thereafter to convert such Security only into (i) in the case of any
Company Transaction other than a Common Stock Fundamental Change, the kind and
amount of securities, cash and other property receivable upon the consummation
of the Company Transaction by a holder of that number of shares of Common Stock
into which such Security was convertible immediately prior to such transaction,
after giving effect to any adjustment in the Applicable Conversion Price
required by the provisions of Section 13.07(a)(i), and (ii) in the case of a
Company Transaction involving a Common Stock Fundamental Change, common stock of
the kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions of Section
13.07(a)(ii). Holders of the Securities shall have no voting rights with respect
to any Company Transaction described in this Section 13.04.
The Company or the Person formed by such consolidation or resulting from
such merger or which acquired such assets or which acquires the Company's
shares, as the case may be, shall make provision in its certificate or articles
of incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide for adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article XIII. The above provisions shall similarly apply to
successive transactions of the foregoing type.
Section 13.05 Notice of Adjustments of Conversion Price.
Whenever the Applicable Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Applicable Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted Applicable Conversion Price
and showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the Trustee, the Conversion
Agent, the Property Trustee and the transfer agent for the Preferred Securities
and the Securities; and
(b) a notice stating the Applicable Conversion Price has been adjusted and
setting forth the adjusted Applicable Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of Preferred
Securities and the Securities at their last addresses as they appear upon the
stock transfer books of the Company and the books and records of the Trust,
respectively.
Section 13.06 Prior Notice of Certain Events.
In case:
(i) the Company shall (1) declare any dividend (or any other distribution) on
its Common Stock, other than (A) a dividend payable in shares of Common Stock or
(B) a dividend payable in cash that would not require an adjustment pursuant to
Section 13.03(iv)
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or (v) or (2) authorize a tender or exchange offer that would
require an adjustment pursuant to Section 13.03(vi);
(ii) the Company shall authorize the granting to all holders of Common Stock of
rights or warrants to subscribe for or purchase any shares of stock of any class
or series or of any other rights or warrants;
(iii) of any reclassification of Common Stock (other than a subdivision or
combination of the outstanding Common Stock, or a change in par value, or from
par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company shall be required, or of the sale or transfer
of all or substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other securities, cash
or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding up of
the Company;
then the Company shall (a) if any Preferred Securities are outstanding, cause to
be filed with the transfer agent for the Preferred Securities, and shall cause
to be mailed to the holders of record of the Preferred Securities, at their last
addresses as they shall appear upon the books and records of the Trust, or (b)
shall cause to be mailed to all Holders at their last addresses as they shall
appear in the Security Register, at least fifteen days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record (if any) is to be taken for the purpose of such dividend,
distribution, rights or warrants or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
Section 13.07 Adjustments in Case of Fundamental Changes.
(a) Notwithstanding any other provision in this Article XIII to the contrary,
in the case of any Company Transaction involving a Fundamental Change, the
Applicable Conversion Price will be adjusted immediately after such Fundamental
Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the Applicable Conversion
Price of the Securities shall thereupon become the lower of (A) the Applicable
Conversion Price in effect immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior adjustments effected pursuant
to this Article XIII, and (B) the result obtained by multiplying the greater of
the Relevant Price or the then applicable Reference Market Price by the Optional
Redemption Ratio (such product shall hereinafter
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be referred to as the "Adjusted Relevant Price" or the "Adjusted Reference
Market Price", as the case may be); and
(ii) in the case of a Common Stock Fundamental Change, the Applicable
Conversion Price of the Securities in effect immediately prior to such Common
Stock Fundamental Change, but after giving effect to any other prior adjustments
effected pursuant to this Article XIII, shall thereupon be adjusted by
multiplying such Applicable Conversion Price by a fraction of which the
numerator shall be the Purchaser Stock Price and the denominator shall be the
Relevant Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% of the value of the consideration received
by a holder of Common Stock is common stock of the successor, acquiror or other
third party (and cash, if any, is paid only with respect to any fractional
interests in such common stock resulting from such Common Stock Fundamental
Change) and (B) all of the Common Stock shall have been exchanged for, converted
into or acquired for common stock (and cash with respect to fractional
interests) of the successor, acquiror or other third party, the Applicable
Conversion Price of the Securities in effect immediately prior to such Common
Stock Fundamental Change shall thereupon be adjusted by multiplying such
Applicable Conversion Price by a fraction of which the numerator shall be one
and the denominator shall be the number of shares of common stock of the
successor, acquiror, or other third party received by a stockholder for one
share of Common Stock as a result of such Common Stock Fundamental Change.
(b) Definitions. The following definitions shall apply to terms used in this
Article XIII:
(1) "Closing Price" of any security on any day shall mean on any day the last
reported sale price of such security on such day, or in case no sale takes place
on such day, the average of the closing bid and asked prices in each case on the
principal national securities exchange on which such securities are listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the NNM or, if such securities are not listed or
admitted to trading on any national securities exchange or quoted on the NNM,
the average of the closing bid and asked prices in the over-the-counter market
as furnished by any New York Stock Exchange member firm selected by the Company
for such purpose.
(2) "Common Stock Fundamental Change" shall mean any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors) of the consideration received by holders of Common Stock consists of
common stock that for each of the ten consecutive Trading Days immediately prior
to the Entitlement Date has been admitted for listing or admitted for listing
subject to notice of issuance on a national securities exchange or quoted on the
NNM; provided, however, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Preferred Securities
continue to exist as outstanding Preferred Securities, or (ii) not later than
the occurrence of such Fundamental Change, the outstanding Securities are
converted into
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or exchanged for debentures of a corporation succeeding to the business of the
Company, which debentures have terms substantially similar to those of the
Securities.
(3) "Entitlement Date" shall mean the record date for determination of the
holders of Common Stock entitled to receive securities, cash or other property
in connection with a Non-Stock Fundamental Change or a Common Stock Fundamental
Change or, if there is no such record date, the date upon which holders of
Common Stock shall have the right to receive such securities, cash or other
property.
(4) "Fundamental Change" shall mean the occurrence of any transaction or event
in connection with a plan pursuant to which all or substantially all of the
Common Stock shall be exchanged for, converted into, acquired for or constitute
solely the right to receive securities, cash or other property (whether by means
of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise); provided,
however, in the case of a plan involving more than one such transaction or
event, for purposes of adjustment of the Applicable Conversion Price, such
Fundamental Change shall be deemed to have occurred when substantially all of
the Common Stock of the Company shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash or other
property, but the adjustment shall be based upon the highest weighted average
per share consideration that a holder of Common Stock could have received in
such transactions or events as a result of which more than 50% of the Common
Stock of the Company shall have been exchanged for, converted into, or acquired
for or constitute solely the right to receive securities, cash or other
property.
(5) "Non-Stock Fundamental Change" shall mean any Fundamental Change other than
a Common Stock Fundamental Change.
(6) "Optional Redemption Ratio" means a fraction of which the numerator shall
be $50 and the denominator will be the then current Optional Redemption Price
or, prior to December 20, 2002, an amount per Security determined by the Company
in its sole discretion, after consultation with an investment banking firm, to
be the equivalent of the hypothetical redemption price that would have been
applicable if the Securities had been redeemable during such period.
(7) "Purchaser Stock Price" shall mean, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Prices of the common stock
received in such Common Stock Fundamental Change for the ten (10) consecutive
Trading Days prior to and including the Entitlement Date, as adjusted in good
faith by the Board of Directors to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section
13.03.
(8) "Reference Market Price" shall initially mean on the date of original
issuance of the Securities, $20.17 (which is an amount equal to 66-2/3% of the
last reported sale price for the Common Stock on the New York Stock Exchange
Composite Tape on December 9, 1999 and, in the event of any adjustment to the
Applicable Conversion Price, other than as a result of a Non-Stock Fundamental
Change, the Reference Market Price shall
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also be adjusted so that the ratio of the Reference Market Price to the
Applicable Conversion Price after giving effect to any such adjustment shall
always be the same as the ratio of $20.17 to the Initial Conversion Price.
(9) "Relevant Price" shall mean (i) in the event of a Non-Stock Fundamental
Change in which the holders of the Common Stock receive only cash, the amount of
cash received by a stockholder for one share of Common Stock and (ii) in the
event of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the daily Closing Prices of the Common Stock for the ten
(10) consecutive Trading Days prior to and including the Entitlement Date, in
each case, as adjusted in good faith by the Company to appropriately reflect any
of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi)
of Section 13.03.
(10) "Trading Day" shall mean a day on which securities are traded on the
national securities exchange or quotation system used to determine the Closing
Price.
Section 13.08 Dividend or Interest Reinvestment Plans.
(a) Notwithstanding the foregoing provisions, the issuance of any shares of
Common Stock pursuant to any present or future plan providing for the
reinvestment of dividends or interest payable on securities of the Company and
the investment of additional optional amounts in shares of Common Stock under
any such plan, and the issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any employee benefit plan or program
of the Company or pursuant to any option issued, shall not be deemed to
constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies.
(b) There shall also be no adjustment of the Applicable Conversion Price in
case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article XIII.
Section 13.09 Certain Additional Rights.
Notwithstanding any other provision of this Article XIII to the contrary,
rights, warrants, evidences of indebtedness, other securities, cash or other
assets (including, without limitation, any rights distributed pursuant to any
stockholder rights plan) shall be deemed not to have been distributed for
purposes of this Article XIII if the Company makes proper provision so that each
Holder who converts a Security (or any portion thereof) after the date fixed for
determination of stockholders entitled to receive such distribution shall be
entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion, the amount and kind of such distributions
that such Holder would have been entitled to receive if such Holder had,
immediately prior to such determination date, converted such Security into
Common Stock.
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Section 13.10 Restrictions on Common Stock Issuable Upon Conversion.
(a) Shares of Common Stock to be issued upon conversion of a Security in
respect of Restricted Preferred Securities (as defined in the Declaration) shall
bear such restrictive legends as the Company may provide in accordance with
applicable law.
(b) If shares of Common Stock to be issued upon conversion of a Security in
respect of Restricted Preferred Securities are to be registered in a name other
than that of the Holder of such Preferred Security, then the Person in whose
name such shares of Common Stock are to be registered must deliver to the
Conversion Agent a certificate satisfactory to the Company and signed by such
Person, as to compliance with the restrictions on transfer applicable to such
Preferred Security. Neither the Trustee nor any Conversion Agent or Registrar
shall be required to register in a name other than that of the Holder shares of
Common Stock or such Preferred Securities issued upon conversion of any such
Security in respect of such Preferred Securities not so accompanied by a
properly completed certificate.
Section 13.11 Trustee Not Responsible for Determining Conversion Price or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be under any
duty or responsibility to any Holder of any Security to determine whether any
facts exist which may require any adjustment of the Applicable Conversion Price,
or with respect to the nature or extent of any such adjustment when made, or
with respect to the method employed, or whether any supplemental indenture needs
to be entered into. Neither the Trustee nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Security; and neither the
Trustee nor any Conversion Agent makes any representation with respect thereto.
Neither the Trustee nor any Conversion Agent shall be responsible for any
failure of the Company to make any cash payment or to issue, transfer or deliver
any shares of Common Stock or stock certificates or other securities or property
upon the surrender of any Security for the purpose of conversion, or, except as
expressly herein provided, to comply with any of the covenants of the Company
contained in Article X or this Article XIII.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.01 No Recourse.
No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Security, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer or
director, past, present or future as such, of the Company or of any predecessor
or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that
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this Indenture and the obligations issued hereunder are solely corporate
obligations, and that no such personal liability whatever shall attach to, or is
or shall be incurred by, the incorporators, stockholders, officers or directors
as such, of the Company or of any predecessor or successor corporation, or any
of them, because of the creation of the indebtedness hereby authorized, or under
or by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Securities or implied therefrom; and that any and all
such personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and claims
against, every such incorporator, stockholder, officer or director as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Securities.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
Dated: December 15, 1999
HANOVER COMPRESSOR COMPANY
By:
------------------------------------
Name: Curtis A. Bedrich
Title: Chief Financial Officer and
Treasurer
WILMINGTON TRUST COMPANY, as Trustee
By:
------------------------------------
Name:
Title:
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EXHIBIT A
FORM OF SECURITY
[FORM OF FACE OF SECURITY]
[Include if a Global Security: THIS SECURITY IS A GLOBAL SECURITY WITHIN
THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE
DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR A SECURITY REGISTERED IN THE NAME
OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND NO TRANSFER OF THIS SECURITY (OTHER
THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO HANOVER
COMPRESSOR COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[Include Restricted Securities Legend if required under Section 2.02:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER AND THE
COMPANY THAT (A) THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES
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IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH
(iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY
FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.]
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HANOVER COMPRESSOR COMPANY
Convertible Junior Subordinated Debenture Due 2029
No. 1 $
----------
CUSIP No. 410768AA3
HANOVER COMPRESSOR COMPANY, a corporation duly organized and existing under
the laws of the State of Delaware (herein called "the Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ____________________, or
registered assigns, the principal sum [indicated on Schedule A hereof]/1/ [of
Dollars]/2/ ($) on December 15, 2029.
Interest Payment Dates: March 15, June 15, September 15, and December 15,
commencing March 15, 2000.
Regular Record Dates: the close of business on the first day of the month
of each Interest Payment Date, commencing March 1, 2000.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
Dated:
HANOVER COMPRESSOR COMPANY
By:
----------------------------------
Name:
Title:
[Seal]
- -------------------
/1/ Applicable to Global Securities only.
/2/ Applicable to certificated Securities only.
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Attest:
- -----------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
indenture.
Dated:
WILMINGTON TRUST COMPANY
as Trustee
By:
-----------------------------------
Authorized Signatory
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[FORM OF REVERSE OF SECURITY]
HANOVER COMPRESSOR COMPANY
Convertible Junior Subordinated Debenture Due 2029/3/
1. Interest. Hanover Compressor Company, a Delaware corporation (the
"Company"), is the issuer of this Convertible Junior Subordinated Debenture Due
2029 (the "Security") limited in aggregate principal amount to $ ,
--------------
issued under the Indenture hereinafter referred to. The Company promises to pay
interest on the Securities in cash from December 15, 1999 or from the most
recent interest payment date to which interest has been paid or duly provided
for, quarterly (subject to deferral for up to 20 consecutive quarters as
described in Section 3 hereof) in arrears on March 15, June 15, September 15,
and December 15 of each year (each such date, an "Interest Payment Date"),
commencing March 15, 2000, at the Applicable Rate, plus Additional Sums, if any,
until the principal hereof shall have become due and payable.
The amount of interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year. To the extent lawful, the Company
shall pay interest on overdue installments of interest (without regard to any
applicable grace period) at the rate borne by the Securities, compounded
quarterly. Any interest paid on this Security shall be increased to the extent
necessary to pay Additional Sums as set forth in this Security.
2. Additional Sums. The Company shall pay to Hanover Compressor Capital
Trust (and its permitted successors or assigns under the Declaration) (the
"Trust") such additional amounts as may be necessary in order that the amount of
dividends or other distributions then due and payable by the Trust on the
Preferred Securities that at any time remain outstanding in accordance with the
terms thereof shall not be reduced as a result of any additional taxes, duties,
assessments and other governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any other taxing authority.
3. Extension of Interest Payment Period. So long as no Event of Default
has occurred and is continuing, the Company shall have the right, at any time
during the term of this Security, from time to time to defer payments of
interest by extending the interest payment period of such Security for up to 20
consecutive quarters (a "Deferral Period"); provided that no Deferral Period may
extend beyond December 15, 2029. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of the
interest payment period pursuant to Section 3.13 of the Indenture, will bear
interest thereon at the Applicable Rate compounded quarterly for each quarter of
the Deferral Period ("Compounded Interest"). On the applicable Payment
Resumption Date, the Company shall pay all interest then accrued and unpaid on
the Securities, including any Compounded Interest that shall be payable to the
Holders of the Securities in whose names the Securities are registered in the
Security Register on the record date fixed for such Payment Resumption Date.
Before the termination of any Deferral Period, the Company may further
- ---------------------
/3/ All terms used in this Security which are defined in the Indenture or in the
Declaration referred to herein shall have the meanings assigned to them in
the Indenture or the Declaration, as the case may be.
-79-
<PAGE>
extend such period as provided in the Indenture, provided that such period
together with all such further extensions thereof shall not exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Security. Upon
the termination of any Deferral Period and upon the payment of all Compounded
Interest and Additional Sums (together, "Additional Payments"), if any, then
due, the Company may commence a new Deferral Period, subject to the foregoing
requirements. No interest shall be due and payable during a Deferral Period
except on the applicable Payment Resumption Date.
The Company shall give the Holder of the Security and the Trustee written
notice (a "Deferral Notice") of its selection of a Deferral Period at least ten
days prior to the record date for any distributions that would have been payable
on the Trust Securities except for the decision to begin or extend such Deferral
Period. The Company may elect to pay all interest then accrued and unpaid on the
Securities, including Compound Interest, on an Interest Payment Date prior to
its most recently established Payment Resumption Date, provided that the Company
gives the Holder of the Security and the Trustee a new Deferral Notice setting
forth the revised Payment Resumption Date at least three Business Days prior to
the Regular Record Date for such revised Payment Resumption Date.
The quarter in which any Deferral Notice is given pursuant to the second
paragraph of this Section 3 shall be counted as one of the 20 quarters permitted
in the maximum Deferral Period permitted under the first paragraph of this
Section 3.
4. Method of Payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the regular record date
for such interest installment, which shall be the close of business on the first
day of the month of each Interest Payment Date (the "Regular Record Date"),
commencing March 1, 2000. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than ten days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture,
provided that any such payment will be made in such coin or currency of the
United States of America which at the time of payment is a legal tender for
payment of public and private debts.
Payment of the principal of and interest on this Security will be made at
the office or agency of the Company maintained for that purpose in New York, New
York, in coin or currency of the United States of America which at the time of
payment is legal tender for payment of public and private debts; provided,
however, that at any time that the Property Trustee is not the sole holder of
the Securities, payment of interest may, at the option of the Company, be made
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or by wire transfer.
-80-
<PAGE>
5. Paying Agent and Security Registrar. The Trustee will act as Paying
Agent, Security Registrar and Conversion Agent. The Company may change any
Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior
notice. The Company or any of its Affiliates may act in any such capacity.
6. Indenture. The Company issued the Securities under an indenture, dated
as of December 15, 1999 (the "Indenture"), between the Company and Wilmington
Trust Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-
77bbbb) ("Trust Indenture Act") as in effect on the date of the Indenture. The
Securities are subject to, and qualified by, all such terms, certain of which
are summarized herein, and holders are referred to the Indenture and the Trust
Indenture Act for a statement of such terms. The Securities are unsecured
general obligations of the Company limited to up to $ and
------------
subordinated in right of payment to all existing and future Senior Debt of the
Company. No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed or to convert this Security as provided in the Indenture.
7. Optional Redemption. The Securities are redeemable at the Company's
option (an "Optional Redemption") in whole or in part, at any time or from time
to time, on or after December 20, 2002, at a Redemption Price equal to the
applicable price per $50 principal amount of Securities set forth in the table
below, plus any accrued and unpaid interest, including Additional Payments, if
any, to the Redemption Date, if redeemed during the 12-month period ending on
December 19:
<TABLE>
<CAPTION>
Price Per $50
Year Principal Amount
- ---- ----------------
<S> <C>
2003 $51.81
2004 $51.21
2005 $50.60
2006 $50.00
</TABLE>
and thereafter at $50 per $50 principal amount of the Securities plus, in each
case, any accrued and unpaid interest, including Additional Payments, if any, to
the Redemption Date.
8. Optional Redemption Upon Tax Event. Subject to the conditions set forth
in the Indenture, the Securities are subject to redemption in whole, but not in
part, if a Tax Event shall occur and be continuing, at any time within 90 days
following the occurrence of such Tax Event, at a Redemption Price equal to $50
per $50 principal amount thereof, plus accrued but unpaid interest, including
Additional Payments, if any, to the Redemption Date.
In lieu of the foregoing, the Company also shall have the option of causing
the Securities to remain outstanding and pay Additional Sums on the Securities.
-81-
<PAGE>
9. Notice of Redemption. Notice of redemption will be mailed by first-
class mail, postage prepaid, at least 20 days, but not more than 60 days before
the Redemption Date to each Holder of the Securities to be redeemed at such
Holder's address appearing in the Security Register.
10. No Sinking Fund. There are no sinking fund payments with respect to
the Securities.
11. Payment to Registered Holders; Cessation of Interest Accrual Upon
Redemption. If this Security is redeemed subsequent to a Regular Record Date
with respect to any Interest Payment Date specified above and on or prior to
such Interest Payment Date, then any accrued interest will be paid to the person
in whose name this Security is registered at the close of business on such
record date. On or after the Redemption Date, interest will cease to accrue on
the Securities, or portion thereof, called for redemption.
12. Subordination. The payment of the principal of, interest on or any
other amounts due on the Securities is subordinated in right of payment to all
existing and future Senior Debt (as defined below) of the Company, as described
in the Indenture. Each Holder, by accepting a Security, agrees to such
subordination and authorizes and directs the Trustee on its behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and appoints the Trustee as its attorney-in-fact for such purpose.
"Senior Debt" means (i) the principal of, premium, if any, and interest,
on all obligations of every nature of the Company for money borrowed, whether
outstanding on the date of execution of the Indenture or thereafter created,
assumed or incurred, together with all fees, indemnities and expenses payable
under such obligations, (ii) all obligations to make payment pursuant to the
terms of financial instruments, such as (a) securities contracts and foreign
currency exchange contracts, (b) derivative instruments, such as swap agreements
(including interest rate and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and commodity
options contracts, and (c) similar financial instruments; except, in the case of
both (i) and (ii) above, such indebtedness and obligations that are expressly
stated to rank junior in right of payment to, or pari passu in right of payment
with, the Securities, (iii) indebtedness or obligations of others of the kind
described in both (i) and (ii) above for the payment of which the Company is
responsible or liable as guarantor or otherwise, and (iv) deferrals, renewals or
extensions of any such Senior Debt; provided, however, that Senior Debt shall
not be deemed to include (a) any Debt of the Company which, when incurred and
without respect to any election under Section 1111(b) of the United States
Bankruptcy Code of 1978, was without recourse to the Company, (b) trade accounts
payable and accrued liabilities arising in the ordinary course of business, (c)
any Debt of the Company to any of its subsidiaries, (d) Debt to any employee of
the Company and (e) Debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of such Debt by the Holders of the
Securities as a result of the subordination provisions of the Indenture would be
greater than such payments otherwise would have been as a result of any
obligation of such holders of such Debt to pay amounts over to the obligees on
such trade accounts payable or accrued liabilities arising in the ordinary
course of business as a result of subordination provisions to which such Debt is
subject.
-82-
<PAGE>
13. Conversion. The Holder of any Security has the right, exercisable at
any time prior to 5:00 p.m., New York City time, on the Business Day immediately
preceding December 15, 2029, to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $50) into shares of Common Stock
at the initial conversation rate of 1.3986 shares of Common Stock for each $50
in aggregate principal amount of Securities (equivalent to a conversion price of
$35.75 per share of Common Stock of the Company). The conversion ratio and
equivalent conversion price in effect at any time are known as the "Applicable
Conversion Price" and the "Applicable Conversion Ratio," respectively, and are
subject to adjustment under certain circumstances. If a Security is called for
redemption, the conversion right will terminate at the close of business on the
Business Day immediately preceding the corresponding Redemption Date, unless the
Company defaults in making the payment due upon redemption.
To convert a Security, a Holder must (1) complete and sign a conversion
notice substantially in the form attached hereto, (2) surrender the Security to
a Conversion Agent, (3) furnish appropriate endorsements or transfer documents
if required by the Security Registrar or Conversion Agent and (4) pay any
transfer or similar tax, if required. Upon conversion, no adjustment or payment
will be made for interest or dividends, but if any Holder surrenders a Security
for conversion after the close of business on the Regular Record Date for the
payment of an installment of interest and prior to the opening of business on
the next Interest Payment Date, then, notwithstanding such conversion, the
interest payable on such Interest Payment Date will be paid to the registered
Holder of such Security on such Regular Record Date. In such event, such
Security, when surrendered for conversion, need not be accompanied by payment of
an amount equal to the interest payable on such Interest Payment Date on the
portion so converted. The number of shares issuable upon conversion of a
Security is determined by dividing the principal amount of the Security
converted by the Applicable Conversion Price in effect on the Conversion Date.
No fractional shares will be issued upon conversion but a cash adjustment will
be made for any fractional interest. The outstanding principal amount of any
Security shall be reduced by the portion of the principal amount thereof
converted into shares of Common Stock.
14. Registration Rights. The holders of the Preferred Securities, the
Securities, the Guarantee Agreement and the shares of Common Stock of the
Company issuable upon conversion of the Securities (collectively, the
"Registrable Securities") are entitled to the benefits of a Registration Rights
Agreement, dated as of December 15, 1999, among the Company, the Trust and the
Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement the Company and the Trust have agreed for the
benefit of the holders of the Registrable Securities that (i) they will, at the
Company's sole expense, prior to February 15, 2000, file a shelf registration
statement (the "Shelf Registration Statement") with the Commission with respect
to resales of the Registrable Securities, (ii) they will use their best efforts
to cause such Shelf Registration Statement to be declared effective under the
Securities Act prior to May 15, 2000, and (iii) they will use their best efforts
to maintain such Shelf Registration Statement continuously effective under the
Securities Act (subject to certain exceptions under the Registration Rights
Agreement) until the second anniversary of the effectiveness of the Shelf
Registration Statement or such other period as shall be required under Rule
144(k) thereunder or any successor rule or regulation thereto or such earlier
date as is provided in the Registration Rights Agreement. If the Company fails
to comply with either of clauses (ii) or (iii) above, subject to certain
exceptions provided in the Registration Rights Agreement, (a "Registration
Default") then, at such time, the
-83-
<PAGE>
Applicable Rate will increase by 50 basis points (.50%). Such increase will
remain in effect from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration Defaults
have been cured, on which date the interest rate on the Securities will revert
to the interest rate originally borne by the Securities.
15. Registration, Transfer, Exchange and Denominations. As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
this Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of the Company in
New York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $50 and integral multiples thereof. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Prior to due presentment of this
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary. In the event of redemption or conversion of
this Security in part only, a new Security or Securities for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
16. Persons Deemed Owners. Except as provided in Section 3 hereof, the
registered Holder of a Security may be treated as its owner for all purposes.
17. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of
Securities entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
18. Events of Default and Remedies. The Securities shall have the Events
of Default as set forth in Section 5.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities by notice to the Company and the
Trustee may declare all amounts payable on the Securities (including any
Additional Payments) to be due and payable immediately; provided that, if the
Property Trustee is the sole Holder of the Security and if upon an Event of
Default, the Trustee or the Holder of not less than 25% in aggregate principal
amount of the then outstanding Securities fail to declare the principal of all
the Securities to be immediately due and payable, the Holders of at least 25% in
aggregate liquidation amount of Preferred Securities then outstanding shall have
such right by a notice in writing to the Company and the Trustee; and upon any
such declaration such principal and all accrued interest shall become
-84-
<PAGE>
immediately due and payable; and provided further that the payment of principal
and interest on such Securities shall remain subordinated to the extent provided
in the Indenture.
In the case of an Event of Default, the holders of a majority in principal
amount of the Outstanding Securities by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.
Holders may not enforce the Indenture or the Securities except as provided
in the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Securities issued under the Indenture
may direct the Trustee in its exercise of any trust or power. The Company must
furnish annually compliance certificates to the Trustee. The above description
of Events of Default and remedies is qualified by reference to, and subject in
its entirety by, the more complete description thereof contained in the
Indenture.
19. Amendments, Supplements and Waivers. The Indenture permits, subject to
the rights of the holders of Preferred Securities set forth therein and in the
Declaration and with certain other exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Company, and
the rights of the Holders of the Securities under the Indenture, at any time, by
the Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, subject to the
rights of the holders of the Preferred Securities set forth therein and in the
Declaration, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security. The above description of amendments, supplements and
waivers is qualified by reference to, and subject in its entirety, by the more
complete description thereof contained in the Indenture.
20. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of the Securities and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not a Trustee, subject to certain limitations provided for
in the Indenture and in the Trust Indenture Act. Any Agent may do the same with
like rights.
21. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder of the Securities by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
-85-
<PAGE>
22. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE SECURITIES.
23. Authentication. The Securities shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee or an
authenticating agent.
24. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
25. The Company will furnish to any Holder of the Securities upon written
request and without charge a copy of the Indenture. Request may be made to:
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Chief Financial Officer
-86-
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------------------------
Date:
Your Signature:
--------------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
SIGNATURE GUARANTEE/4/
- ------------------------------------------------------------------------------
- ---------------------
/4/ (Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
-87-
<PAGE>
[Include the following if the Security bears a Restricted Securities Legend
In connection with any transfer of any of the Securities evidenced by this
certificate, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW
(1) [_] exchanged for the undersigned's own account without transfer; or
(2) [_] transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) [_] transferred pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
(5) [_] transferred pursuant to an effective registration statement under the
Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3) or (4) is
checked, the Trustee may require, prior to registering any such transfer of the
Securities, such legal opinions, certifications and other information as the
Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
------------------------------------------
Signature
-88-
<PAGE>
Signature Guarantee:/5/
------------------------------------------
Signature
Signature must be guaranteed Signature
- --------------------
/5/ (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.)
-89-
<PAGE>
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.]
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
---------------------------
-----------------------------------------
NOTICE: [To be executed by an executive
officer]
-90-
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount of this Global Security shall be $ . The
-------
following increases or decreases in the principal amount of this Global Security
have been made:
<TABLE>
<CAPTION>
Amount of
decrease in
Principal Amount Signature of
of this Global Amount of Principal Amount authorized
Security including increase in of this Global signatory of
increase upon Principal Amount Security following Trustee or
exercise of over- of this Global such decrease (or Securities
Date Made allotment option Security increase) Custodian
- --------------- ------------------ ---------------- ------------------ ------------
<S> <C> <C> <C> <C>
</TABLE>
-91-
<PAGE>
ELECTION TO CONVERT
To: Hanover Compressor Company
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or the portion below designated, into Common
Stock of HANOVER COMPRESSOR COMPANY in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares, be issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in accordance with
the terms of the Indenture and the Security, agrees to be bound by the terms of
the Registration Rights Agreement relating to the Common Stock issuable upon
conversion of the Securities.
Date:
----------------------
in whole
----
Portions of Security to be converted ($50 or integral multiples thereof):
$
-------------------------
Signature (for conversion only)
- --------------------------------
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other
Identifying Number
-----------------------------------------------------------
- ------------------------------------------------------------------------------
Signature Guarantee:/6/
- --------------------------------------
- ------------------------
/6/(Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.)
-92-
<PAGE>
EXHIBIT 4.10
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
BETWEEN
HANOVER COMPRESSOR COMPANY
AND
WILMINGTON TRUST COMPANY
================================================================================
<PAGE>
CROSS-REFERENCE TABLE(1)
SECTION OF SECTION OF
TRUST INDENTURE ACT GUARANTEE AGREEMENT
of 1939, as amended
- ------------------------------------------------------------------
310(a)..................................................4.01(a)
310(b)............................................4.01(c), 2.08
310(c).............................................Inapplicable
311(a)..................................................2.02(b)
311(b)..................................................2.02(b)
311(c).............................................Inapplicable
312(a)..................................................2.02(a)
312(b)..................................................2.02(b)
313........................................................2.03
314(a).....................................................2.04
314(b).............................................Inapplicable
314(c).....................................................2.05
314(d).............................................Inapplicable
314(e).........................................1.01, 2.05, 3.02
314(f)...............................................2.01, 3.02
315(a)..................................................3.01(d)
315(b).....................................................2.07
315(c).....................................................3.01
315(d)..................................................3.01(d)
316(a).........................................1.01, 2.06, 5.04
316(b).....................................................5.03
316(c).....................................................8.02
317(a).............................................Inapplicable
317(b).............................................Inapplicable
318(a)..................................................2.01(b)
318(b).....................................................2.01
318(c)..................................................2.01(a)
____________
(1) This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions and Interpretation
SECTION 1.01 Definitions and Interpretation............................. -1-
ARTICLE II
Trust Indenture Act
SECTION 2.01 Trust Indenture Act; Application....................... -4-
SECTION 2.02 Lists of Holders of Securities......................... -4-
SECTION 2.03 Reports by the Guarantee Trustee....................... -5-
SECTION 2.04 Periodic Reports to Guarantee Trustee.................. -5-
SECTION 2.05 Evidence of Compliance with Conditions Precedent....... -5-
SECTION 2.06 Event of Default; Waiver............................... -5-
SECTION 2.07 Event of Default; Notice............................... -5-
SECTION 2.08 Conflicting Interests.................................. -6-
ARTICLE III
Powers, Duties and Rights of Guarantee Trustee
SECTION 3.01 Powers, Duties and Rights of Guarantee Trustee......... -6-
SECTION 3.02 Certain Rights of Guarantee Trustee.................... -7-
SECTION 3.03 Not Responsible for Recitals or Issuance of Guarantee.. -9-
ARTICLE IV
Guarantee Trustee
SECTION 4.01 Guarantee Trustee; Eligibility............................ -10-
SECTION 4.02 Appointment, Removal and Resignation of Guarantee Trustee. -11-
<PAGE>
ARTICLE V
Guarantee
SECTION 5.01 Guarantee..................................... -11-
SECTION 5.02 Subordination................................. -12-
SECTION 5.03 Waiver of Notice and Demand................... -12-
SECTION 5.04 Obligations Not Affected...................... -12-
SECTION 5.05 Rights of Holders............................. -13-
SECTION 5.06 Guarantee of Payment.......................... -13-
SECTION 5.07 Subrogation................................... -13-
SECTION 5.08 Independent Obligations....................... -14-
SECTION 5.09 Conversion.................................... -14-
ARTICLE VI
Limitation of Transactions; Subordination
SECTION 6.01 Limitation of Transactions.................... -14-
SECTION 6.02 Ranking....................................... -15-
ARTICLE VII
Termination
SECTION 7.01 Termination................................... -15-
ARTICLE VIII
Indemnification
SECTION 8.01 Exculpation................................... -15-
SECTION 8.02 Indemnification............................... -16-
ARTICLE IX
Miscellaneous
SECTION 9.01 Successors and Assigns........................ -16-
SECTION 9.02 Amendments.................................... -16-
<PAGE>
SECTION 9.03 Notices....................................... -16-
SECTION 9.04 Benefit....................................... -17-
SECTION 9.05 Governing Law................................. -18-
<PAGE>
This PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee"), dated as of
December 15, 1999, is executed and delivered by Hanover Compressor Company, a
Delaware corporation (the "Guarantor"), and Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of Hanover Compressor Capital Trust, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of December 15, 1999, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer may issue
up to 1,725,000 preferred securities, having an aggregate stated liquidation
amount of $86,250,000, designated the 7.25% Convertible Preferred Securities
Term Income Deferrable Equity Securities (TIDES) (liquidation amount $50 per
Preferred Security) (the "Preferred Securities");
WHEREAS as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee, to pay on a subordinated basis to the Holders the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein; and
WHEREAS the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Guarantee for the benefit of the holders of the Common Securities (as
defined herein) except that if a Debenture Event of Default or a Declaration
Event of Default (each as defined herein) (or an event that, with passage of
time, would become such a Debenture Event of Default) shall have occurred and be
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights of
Holders to receive Guarantee Payments under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.
ARTICLE I
Definitions and Interpretation
SECTION 1.01 Definitions and Interpretation.
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.01; terms defined in the Declaration as at the date of execution of this
Guarantee have the same meaning when used in this Guarantee unless otherwise
defined in this Guarantee;
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(b) a term defined anywhere in this Guarantee has the same meaning
throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to this
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to Articles and Sections are to
Articles and Sections of this Guarantee unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee unless otherwise defined in this Guarantee or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"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;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the convertible common securities (liquidation
amount $50 per common security) representing common undivided beneficial
interests in the assets of the Issuer.
"Common Stock" means common stock, par value $.001 per share, of the
Guarantor.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debenture Event of Default" means an Event of Default as defined in the
Indenture.
"Debentures" means the series of convertible junior subordinated debt
securities of the Guarantor designated the Convertible Junior Subordinated
Debentures Due 2029 held by the Property Trustee (as defined in the Indenture)
of the Issuer.
"Declaration Event of Default" means an Event of Default as defined in the
Declaration.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee; provided, however, that except with
respect to a default in payment of any Guarantee Payment, the Guarantor shall
have received notice of default and shall not have cured such default within 60
days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on the Preferred
Securities, to the extent that the Issuer shall have funds on hand available
therefor at such time, (ii) the applicable Redemption Price (as defined in the
Indenture) with respect to
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Preferred Securities called for redemption by the Issuer, to the extent that the
Issuer has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Issuer
(other than in connection with the distribution of Debentures to the Holders or
the redemption of all the Preferred Securities), the lesser of (a) the aggregate
liquidation amount thereof plus accrued and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution") to the extent
the Issuer has funds available therefor and (b) the amount of assets of the
Issuer remaining available for distribution to Holders upon liquidation of the
Issuer after satisfaction of liabilities to creditors of the Issuer as required
by applicable law.
"Guarantee Trustee" means Wilmington Trust Company until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer of any outstanding Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage in liquidation
amount of the Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Indenture dated as of December 15, 1999, among the
Guarantor and Wilmington Trust Company, as trustee, and any indenture
supplemental thereto, pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.
"Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, Holder(s), voting separately as a class,
representing more than 50% of the stated aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise) of
all Preferred Securities then outstanding.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant
Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:
(i) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(ii) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
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(iii) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Guarantee 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 that officer's knowledge of and familiarity with
the particular subject.
"Senior Debt" shall have the meaning set forth in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
Trust Indenture Act
SECTION 2.01 Trust Indenture Act; Application.
(a) This Guarantee is subject to the provisions of the Trust Indenture
Act that are required to be part of this Guarantee, which are incorporated by
reference hereto, and shall, to the extent applicable, be governed by such
provisions; and
(b) If and to the extent that any provision of this Guarantee limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.02 Lists of Holders of Securities.
(a) The Guarantor shall provide the Guarantee Trustee (i) within 14
days after May 15 and November 15 of each year, commencing May 15, 2000, a list,
in such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of
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Holders") as of such date; provided that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Guarantee Trustee by the
Guarantor, and (ii) at any other time, within 30 days of receipt by the
Guarantor of a written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Guarantee Trustee. The
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.03 Reports by the Guarantee Trustee.
Within 60 days after May 15 of each year, commencing May 15, 2000, the
Guarantee Trustee shall provide to the Holders of the Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.04 Periodic Reports to Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.05 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee
which relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.06 Event of Default; Waiver.
The Holders of a Majority in liquidation amount of the Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent therefrom.
SECTION 2.07 Event of Default; Notice.
(a) The Guarantee Trustee shall, within 30 days after the occurrence
of an Event of Default actually known to the Guarantee Trustee, transmit by
mail, first-class postage prepaid, to
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the Holders, notices of all Events of Default known to the Guarantee Trustee,
unless such defaults have been cured before the giving of such notice; provided
that, except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default except any Event of Default as to which the Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice.
SECTION 2.08 Conflicting Interests.
The Declaration shall be deemed to be specifically described in this
Guarantee for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE III
Powers, Duties and Rights of Guarantee Trustee
SECTION 3.01 Powers, Duties and Rights of Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.05(d) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee, and no implied covenants shall be read into this Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.06) and is known to the
Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
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(d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee, and the
Guarantee Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Guarantee, and no implied covenants or obligations shall be read into
this Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of
this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Preferred Securities, relating to the time,
method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the Guarantee
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers.
SECTION 3.02 Certain Rights of Guarantee Trustee.
a) Subject to the provisions of Section 3.01:
(i) the Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
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other evidence of indebtedness or other paper or document believed by it to
be genuine and to have been signed, sent or presented by the proper party
or parties;
(ii) any direction or act of the Guarantor contemplated by this
Guarantee shall be sufficiently evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor;
(iv) the Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof);
(v) the Guarantee Trustee may consult with legal counsel of its
selection, and the written advice or opinion of such legal counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken
by it hereunder in good faith and in accordance with such advice or
opinion. Such legal counsel may be legal counsel to the Guarantor or any of
its Affiliates and may include any of the Guarantor's employees. The
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee from any court of competent
jurisdiction;
(vi) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at the
request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee security and indemnity satisfactory to the
Guarantee Trustee against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may
be requested by the Guarantee Trustee; provided that nothing contained in
this Section 3.02(a)(vi) shall be taken to relieve the Guarantee Trustee,
upon the occurrence of an Event of Default known to the Guarantee Trustee,
of its obligation to exercise the rights and powers vested in it by this
Guarantee;
(vii) the Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit; the reasonable expense of every such
investigation shall be paid by the Guarantor or, if paid by the Guarantee
Trustee, shall be repaid by the Guarantor upon request, except any such
expense as may be attributable to the Guarantee Trustee's negligence or
bad faith;
(viii) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or
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attorneys, and the Guarantee 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;
(ix) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to perform
any such action; it being understood that no third party shall be required
to inquire as to the authority of the Guarantee Trustee to so act or as to
its compliance with any of the terms and provisions of this Guarantee, both
of which shall be conclusively evidenced by the Guarantee Trustee's or its
agent's taking such action;
(x) whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request written instructions from
the Holders or, other than with respect to enforcing any remedy or right or
taking any action related thereto, the Guarantor, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
written instructions are received, and (iii) shall be protected in acting
in accordance with such written instructions; and
(xi) the Guarantee Trustee shall not be charged with knowledge of
any default or Event of Default hereunder unless a Responsible Officer of
the Guarantee Trustee shall have knowledge of the default or Event of
Default.
(b) No provision of this Guarantee shall be deemed to impose any duty
or obligation on the Guarantee Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.03 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor, and the Guarantee Trustee does not assume any responsibility
for their correctness. The Guarantee Trustee makes no representations as to the
validity or sufficiency of this Guarantee.
SECTION 3.04 Compensation; Reimbursement; Indemnity.
The Guarantor agrees:
(a) to pay the Guarantee Trustee from time to time such reasonable
compensation as the Guarantor and the Guarantee Trustee shall from time to time
agree in writing 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);
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(b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Guarantee Trustee in accordance with the
provisions of this Guarantee (including the reasonable compensation and expenses
of its agents and counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
As security for the performance of the obligations of the Guarantor under
this Section 3.04, the Guarantee Trustee shall have a lien, prior to the
Preferred Securities, upon all the property and funds held or collected by the
Guarantee Trustee as such, except funds held in trust for the payment of
principal of, and premium (if any) or interest on, particular obligations of the
Guarantor under this Guarantee.
The provisions of this Section 3.04 shall survive the termination of this
Guarantee.
ARTICLE IV
Guarantee Trustee
SECTION 4.01 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.01(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.01(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.02(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 3.10(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 3.10(b) of the Trust Indenture Act.
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SECTION 4.02 Appointment, Removal and Resignation of Guarantee Trustee.
(a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office until
a Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of removal or resignation, the
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions to
act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 4.02, the Guarantor shall pay to
the Guarantee Trustee all amounts accrued to the date of such termination,
removal or resignation.
ARTICLE V
Guarantee
SECTION 5.01 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Issuer), as and when due, in
coin or currency of the United States of America which at the time of payment is
legal tender for payment of public and private debt regardless of any defense,
right of setoff or counterclaim that the Issuer may have or assert other than
the defense of payment. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer to pay such amounts to the Holders.
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SECTION 5.02 Subordination.
If a Debenture Event of Default or a Declaration Event of Default (or an
event that, with passage of time, would become a Debenture Event of Default)
shall have occurred and be continuing, the rights of holders of the Common
Securities to receive Guarantee Payments under the Common Securities Guarantee
are subordinated to the rights of Holders to receive Guarantee Payments under
this Guarantee.
SECTION 5.03 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.04 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, the amount payable upon redemption or the amount
payable upon liquidation of the Issuer or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of Distributions that
results from the extension of any interest payment period on the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the TIDES, or any action on
the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
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(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.04 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or any other Person to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 5.05 Rights of Holders.
The Guarantor expressly acknowledges that:
(a) This Guarantee will be deposited with the Guarantee Trustee to be
held for the benefit of the Holders.
(b) The Guarantee Trustee has the right to enforce this Guarantee on
behalf of the Holders.
(c) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee.
(d) Any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee, without first instituting
a legal proceeding against the Issuer, the Guarantee Trustee or any other
Person.
SECTION 5.06 Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection. This
Guarantee will not be discharged except by payment of the Guarantee Payments in
full (without duplication of amounts theretofore paid by the Issuer) or upon
distribution of Debentures to Holders as provided in the Declaration.
SECTION 5.07 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee and shall have the right to waive payment by the
Issuer pursuant to Section 5.01; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
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SECTION 5.08 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.04 hereof.
SECTION 5.09 Conversion.
The Guarantor acknowledges its obligation to issue and deliver common stock
upon the conversion of the Preferred Securities.
ARTICLE VI
Limitation of Transactions; Subordination
SECTION 6.01 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there shall have
occurred and be continuing a Debenture Event of Default, a Declaration Event of
Default or an event that, with the giving of notice or the lapse of time or
both, would constitute a Debenture Event of Default or a Declaration Event of
Default, or a selection by the Guarantor of a Deferral Period as provided in the
Indenture and such period, or any extension thereof, shall be continuing, then
(a) the Guarantor shall not declare or pay any dividend on, or make any
distribution with respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock (other than stock dividends
paid by the Guarantor which stock dividends consist of the stock of the same
class as that on which the dividend is being paid), (b) the Guarantor shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Guarantor which rank pari
passu with or junior in interest to the Debentures and (c) the Guarantor shall
not make any guarantee payments with respect to any guarantee by the Guarantor
of the debt securities of any subsidiary of the Guarantor if such guarantee
ranks pari passu with or junior in interest to the Debentures (in each case,
other than (A) dividends or distributions in Common Stock, (B) any declaration
of a dividend in connection with the implementation of a stockholders' rights
plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (C) payments under
this Guarantee and the Common Securities Guarantee, (D) purchases or
acquisitions of shares of Common Stock in connection with the satisfaction by
the Guarantor of its obligations under any employee benefit plan or any other
contractual obligation of the Guarantor (other than a contractual obligation
ranking pari passu with or junior in interest to the Debentures), (E) as a
result of a reclassification of the Guarantor's capital stock or the exchange or
conversion of one class or series of the Guarantor's capital stock for another
class or series of the Guarantor's capital stock or (F) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged).
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SECTION 6.02 Ranking.
This Guarantee will constitute an unsecured obligation of the Guarantor and
will rank subordinate to all Senior Debt of the Guarantor to the same extent
that the Debentures are subordinated pursuant to the Indenture.
ARTICLE VII
Termination
SECTION 7.01 Termination.
This Guarantee shall terminate upon (i) full payment of the amount payable
upon redemption of all Preferred Securities, (ii) the distribution of the
Guarantor's common stock to the Holders in respect of the conversion of the
Preferred Securities into the Guarantor's common stock, (iii) the distribution
of the Debentures to the Holders of all of the Preferred Securities or (iv) full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid under the Preferred
Securities or under this Guarantee.
ARTICLE VIII
Indemnification
SECTION 8.01 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee and
in a manner that such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Guarantee or
by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
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SECTION 8.02 Indemnification.
(a) The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any and all loss, liability or
expense including taxes (other than taxes based on the income of such
Indemnified Person) 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 (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 8.02 shall survive the termination of this Guarantee.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees and expenses) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.02(a).
(c) No Indemnified Person shall claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under this Guarantee.
ARTICLE IX
Miscellaneous
SECTION 9.01 Successors and Assigns.
All guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders.
SECTION 9.02 Amendments.
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Guarantee may only be amended with the prior approval of the Holders of a
Majority in liquidation amount of the Preferred Securities then outstanding;
provided, however, that no amendment that affects the rights, powers, duties,
obligations or immunities of the Guarantee Trustee shall be effective unless
approved in writing by the Guarantee Trustee. The provisions of Section 12.02 of
the Declaration with respect to meetings of holders of the Securities (as
defined in the Declaration) apply to the giving of such approval.
SECTION 9.03 Notices.
All notices provided for in this Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by
first-class mail, as follows:
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(a) if given to the Issuer, in care of the Regular Trustees at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice):
Curtis A. Bedrich
William S. Goldberg
Richard S. Meller
Hanover Compressor Capital Trust
c/o Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Corporate Controller
(b) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Administration
(c) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders):
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Corporate Controller
(d) If given to any Holder, at the address set forth on the books and
records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.04 Benefit.
This Guarantee is solely for the benefit of the Holders and, subject to
Section 3.01(a), is not separately transferable from the Preferred Securities.
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SECTION 9.05 Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Remainder of this Page Intentionally Left Blank]
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This GUARANTEE is executed as of the day and year first above written.
HANOVER COMPRESSOR COMPANY
as Guarantor
by _________________________________________
Name: Curtis A. Bedrich
Title: Chief Financial Officer and Treasurer
WILMINGTON TRUST COMPANY
as Guarantee Trustee
by _________________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.11
COMMON SECURITIES GUARANTEE AGREEMENT
DELIVERED BY
HANOVER COMPRESSOR COMPANY
FOR THE BENEFIT OF THE HOLDERS OF COMMON SECURITIES OF
HANOVER COMPRESSOR CAPITAL TRUST
<PAGE>
This COMMON SECURITIES GUARANTEE AGREEMENT (the "Common Securities
Guarantee"), dated as of December 15, 1999, is executed and delivered by Hanover
Compressor Company, a Delaware corporation (the "Guarantor"), for the benefit of
the Holders (as defined herein) from time to time of the Common Securities (as
defined in the Declaration (as defined herein)) of Hanover Compressor Capital
Trust, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of December 15, 1999, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer may issue
up to 1,725,000 Preferred Securities (as defined in the Declaration), having an
aggregate liquidation amount of up to $86,250,000; and
WHEREAS, pursuant to the Declaration, the Issuer may issue up to 53,351
Common Securities, having an aggregate stated liquidation amount of up to
$2,667,550 designated the 7.25% Convertible Common Securities (liquidation
amount $50 per each of the Convertible Common Securities) (the "Common
Securities");
WHEREAS as incentive for the Holders to purchase the Common Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth in this Common Securities Guarantee, to pay on a subordinated basis to the
Holders of the Common Securities the Guarantee Payments (as defined herein) and
to make certain other payments on the terms and conditions set forth herein; and
WHEREAS the Guarantor is also executing and delivering a guarantee
agreement in substantially identical terms to this Common Securities Guarantee
for the benefit of the holders of the Preferred Securities (the "Guarantee")
except that if a Debenture Event of Default or a Declaration Event of Default
(each as defined herein) (or an event that, with passage of time, would become a
Debenture Event of Default) shall have occurred and be continuing, the rights of
Holders of the Common Securities to receive Guarantee Payments under this Common
Securities Guarantee are subordinated to the rights of holders of Preferred
Securities to receive Guarantee Payments under the Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of Common
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Common Securities Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions and Interpretation.
In this Common Securities Guarantee, unless the context otherwise requires,
the terms set forth below shall have the following meanings.
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(a) capitalized terms used in this Common Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.01 or the Guarantee;
(b) terms defined in the Declaration as at the date of execution of this
Common Securities Guarantee have the same meaning when used in this Common
Securities Guarantee unless otherwise defined in this Common Securities
Guarantee or in the Guarantee;
(c) a term defined anywhere in this Common Securities Guarantee has the
same meaning throughout;
(d) all references to "the Common Securities Guarantee" or "this Common
Securities Guarantee" are to this Common Securities Guarantee as modified,
supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to Articles and
Sections are to Articles and Sections of this Common Securities Guarantee unless
otherwise specified; and
(f) a reference to the singular includes the plural and vice versa.
"Common Stock" means common stock, par value $.001 per share, of the
Guarantor.
"Debenture Event of Default" means an Event of Default under the Indenture.
"Declaration Event of Default" means an Event of Default under the
Declaration.
"Guarantee Event of Default" means a default by the Guarantor on any of its
payment or other obligations under the Common Securities Guarantee.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Common Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions
which are required to be paid on such Common Securities, to the extent that the
Issuer shall have funds on hand available therefor at such time, (ii) the
applicable Redemption Price (as defined in the Indenture) with respect to any
Common Securities called for redemption by the Issuer, to the extent that the
Issuer has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Issuer
(other than in connection with the distribution of Debentures to the Holders or
the redemption of all the Common Securities), the lesser of (a) the aggregate
liquidation amount thereof plus accrued and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution") to the extent
the Issuer has funds available therefor and (b) the amount of assets of the
Issuer remaining available for distribution to Holders upon liquidation of the
Issuer after satisfaction of liabilities to creditors of the Issuer as required
by applicable law.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any outstanding Common Securities.
"Senior Debt" shall have the meaning set forth in the Indenture.
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ARTICLE II
GUARANTEE
SECTION 2.01 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Issuer), as and when due, in
coin or currency of the United States of America which at the time of payment is
legal tender for payment of public and private debt regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert other than
the defense of payment. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer to pay such amounts to the Holders.
SECTION 2.02 Subordination.
If a Debenture Event of Default or a Declaration Event of Default (or an
event that, with passage of time, would become a Debenture Event of Default)
shall have occurred and be continuing, the rights of Holders of the Common
Securities to receive Guarantee Payments under this Common Securities Guarantee
are subordinated to the rights of holders of Preferred Securities to receive
Guarantee Payments under the Guarantee.
SECTION 2.03 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Common Securities
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 2.04 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor under
this Common Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Common Securities to be performed or
observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, the amount payable upon redemption, or the amount
payable upon liquidation of the Issuer or any other sums payable under the terms
of the Common Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Common
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Securities (other than an extension of time for payment of Distributions, that
results from the extension of any interest payment period on the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Common Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in the Common Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred;
or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 2.04 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or any other Person to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 2.05 Rights of Holders.
The Guarantor expressly acknowledges that any Holder may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Common Securities Guarantee, without first instituting a legal proceeding
against the Issuer or any other Person.
SECTION 2.06 Guarantee of Payment.
This Common Securities Guarantee creates a guarantee of payment and not of
collection. This Common Securities Guarantee will not be discharged except by
payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer) or upon distribution of Debentures to Holders as
provided in the Declaration.
SECTION 2.07 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Common Securities Guarantee and shall have right to waive
payment by the Issuer pursuant to Section 2.01; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any
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indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Common Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Common Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 2.08 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Common Securities and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Common Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 2.04 hereof.
SECTION 2.09 Conversion.
The Guarantor acknowledges its obligation to issue and deliver common stock
upon the conversion of the Common Securities.
SECTION 2.10 Events of Default; Waiver.
The Holders of a majority in liquidation amount of Common Securities may by
vote, on behalf of the Holders of all of the Common securities, waive any past
Guarantee Event of Default and its consequences. Upon such waiver, any such
Guarantee Event of Default shall cease to exist, and any Guarantee Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Common Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Guarantee Event of Default or impair any right
consequent thereon.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.01 Limitation of Transactions.
So long as any Common Securities remain outstanding, if (i) there shall
have occurred and be continuing a Debenture Event of Default, a Declaration
Event of Default or an event that, with the giving of notice or the lapse of
time or both, would constitute a Debenture Event of Default or a Declaration
Event of Default or (ii) a selection by the Guarantor of a Deferral Period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Guarantor shall not declare or pay any dividend on, or
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than stock
dividends paid by the Guarantor which consist of the stock of the same class as
that on which the dividend is being paid), (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor which rank pari passu with or
junior in interest to the Debentures and (c) shall not make any guarantee
payments with respect to any guarantee by the Guarantor of the debt securities
of any
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subsidiary of the Guarantor if such guarantee ranks pari passu with or junior in
interest to the Debentures (in each case, other than (A) dividends or
distributions in Common Stock, (B) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (C) payments under the Guarantee and the Common
Securities Guarantee, (D) purchases or acquisitions of shares of Common Stock in
connection with the satisfaction by the Guarantor of its obligations under any
employee benefit plan or any other contractual obligation of the Guarantor
(other than a contractual obligation raking pari passu with or junior in
interest to the Debentures), (E) as a result of a reclassification of the
Guarantor=s capital stock or the exchange or conversion of one class or series
of the Guarantor=s capital stock for another class or series of the Guarantor=s
capital stock or (F) the purchase of fractional interests in shares of the
Guarantor=s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged).
SECTION 3.02 Ranking.
This Common Securities Guarantee will constitute an unsecured obligation of
the Guarantor and will rank subordinate to all Senior Debt of the Guarantor to
the same extent that the Debentures (as defined in the Indenture) are
subordinated pursuant to the Indenture.
ARTICLE IV
TERMINATION
SECTION 4.01 Termination.
This Common Securities Guarantee shall terminate upon (i) full payment of
the amount payable upon redemption of the Common Securities, (ii) the
distribution of the Guarantor's common stock to the Holders in respect of the
conversion of the Common Securities into the Guarantor's common stock, (iii) the
distribution of the Debentures to the Holders in exchange for all of the Common
Securities or (iv) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Common Securities Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any Holder of Common Securities must restore
payment of any sums paid under the Common Securities or under this Common
Securities Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Successors and Assigns.
All guarantees and agreements contained in this Common Securities Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders.
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SECTION 5.02 Amendments.
Except with respect to any changes which do not adversely affect the rights
of Holders (in which case no consent of Holders will be required), this Common
Securities Guarantee may only be amended with the prior approval of the Holders
of a majority in liquidation amount of the outstanding Common Securities. The
provisions of Section 12.02 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 5.03 Notices.
All notices provided for in this Common Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Issuer, in care of the Administrative Trustees at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice of to the Holders of the Common Securities):
Curtis A. Bedrich
William S. Goldberg
Richard S. Meller
Hanover Compressor Capital Trust
c/o Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Treasurer
(b) if given to the Guarantor, at the Guarantor's mailing address set forth
be low (or such other address as the Guarantor may give notice of to the Holders
of the Common Securities):
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Treasurer
(c) if given to any Holder of Common Securities, at the address set forth
on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
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SECTION 5.04 Benefit.
This Common Securities Guarantee is solely for the benefit of the Holders
and is not separately transferable from the Common Securities.
SECTION 5.05 Governing Law.
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Remainder of this Page Intentionally Left Blank]
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This COMMON SECURITIES GUARANTEE is executed as of the day and year first
above written.
HANOVER COMPRESSOR COMPANY, as
Guarantor
By:_____________________________
Name: Curtis A. Bedrich
Title: Chief Financial Officer and Treasurer
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EXHIBIT 10.1
HANOVER COMPRESSOR CAPITAL TRUST
7 1/4% CONVERTIBLE PREFERRED SECURITIES
Term Income Deferrable Equity Securities (TIDES)_
(liquidation amount $50 per
each of the TIDES)
guaranteed to the extent set forth
in the Guarantee Agreement by, and
convertible into Common Stock of,
Hanover Compressor Company
REGISTRATION RIGHTS AGREEMENT
-----------------------------
December 15, 1999
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Salomon Smith Barney Inc.
Dain, Rauscher Incorporated
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Dear Sirs:
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Hanover Compressor Capital Trust, a business trust formed under the laws of
the State of Delaware (the "Trust") by Hanover Compressor Company, a Delaware
corporation (the "Company"), proposes to issue and sell to you, as initial
purchasers (the "Purchasers"), upon the terms set forth in a purchase agreement
dated December 9, 1999 (the "Purchase Agreement"), among the Purchasers, the
Company and the Trust up to 1,725,000 7 1/4% Convertible Preferred Securities
Term Income Deferrable Equity Securities ("TIDES") (liquidation amount $50 per
each of the TIDES) (the "Initial Placement"). The proceeds of the sale by the
Trust of the TIDES and the Common Securities, liquidation amount $50 per Common
Security (the "Common Securities"), are to be invested in the Convertible Junior
Subordinated Debentures Due 2029 of the Company (the "Convertible Junior
Subordinated Debentures") having an aggregate principal amount equal to the
aggregate liquidation amount of the TIDES and the Common Securities. The TIDES
are guaranteed by the Company to the extent set forth in the Guarantee Agreement
dated as of December 15, 1999 (the "Guarantee"), between the Company and
Wilmington Trust Company, as trustee, and are convertible into Common Stock, par
value $.001 per share (the "Common Stock") of the Company. As an inducement to
you to enter into the Purchase Agreement and in satisfaction of a condition to
your obligations thereunder, the Trust and the Company agree with you, (i) for
your benefit and (ii) for the benefit of the registered holders from time to
time of the TIDES and the Convertible Junior Subordinated Debentures and the
record holders of the Common Stock of the Company issuable upon conversion of
the TIDES or the Convertible Junior Subordinated Debentures (collectively,
together with the Guarantee by the Company of the TIDES, the "Securities"),
including the Purchasers (each of the foregoing a "Holder" and together the
"Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement or, if not defined therein, in the Confidential Offering Circular
dated December 9, 1999, in respect of the TIDES or, if not defined therein, in
the Amended and Restated Declaration of Trust dated as of December 15, 1999 (the
"Declaration") relating to the Trust. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Act" or "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York or Wilmington,
Delaware are authorized or required by law or executive order to remain closed
or (iii) a day on which the corporate trust office of the Debenture Trustee or
the Property Trustee is closed for business.
"Commission" means the Securities and Exchange Commission.
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"Common Stock" has the meaning set forth in the first paragraph to this
Agreement.
"Company" has the meaning set forth in the first paragraph to this
Agreement.
"Convertible Junior Subordinated Debentures" has the meaning set forth in
the first paragraph to this Agreement.
"Debenture Trustee", "Guarantee Trustee" and "Property Trustee" each means
Wilmington Trust Company, a Delaware banking corporation.
"Electing Holder" has the meaning assigned thereto in Section 2(c)(iii)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Closing Date" has the meaning given such term in the Purchase
Agreement.
"Guarantee" means the guarantee by the Company of the TIDES pursuant to a
Guarantee Agreement dated as of December 15, 1999 between the Company and the
Guarantee Trustee.
"Holder" and "Holders" each has the meaning set forth in the first
paragraph to this Agreement.
"Initial Placement" has the meaning set forth in the first paragraph to
this Agreement.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering, if any,
as set forth in Section 6 hereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement filed pursuant to Rule 415 under the Act, with respect to the terms of
the offering of all or any portion of the Securities covered by such Shelf
Registration Statement, as amended or supplemented by all amendments (including
post-effective amendments) and supplements to the Prospectus.
"Purchase Agreement" has the meaning set forth in the first paragraph to
this Agreement.
"Purchasers" has the meaning set forth in the first paragraph to this
Agreement.
"Registration Default" has the meaning given to such term in Section 7(a)
hereof.
"Securities" means the TIDES, the Convertible Junior Subordinated
Debentures, the Common Stock and the Guarantee, individually and collectively.
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(b)
hereof.
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"Shelf Registration Statement" means a "shelf" registration statement of
the Trust and the Company pursuant to the provisions of Section 2 hereof filed
with the Commission which covers some or all of the Securities, as applicable,
on an appropriate form under Rule 415 under the Act, or any similar rule that
may be adopted by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Special Distributions" has the meaning given such term in Section 7(a)
hereof.
"Special Interest" has the meaning given such term in Section 7(a) hereof.
"TIDES" has the meaning set forth in the first paragraph to this Agreement.
"Trust" has the meaning set forth in the first paragraph to this Agreement.
"Trustee" means the Guarantee Trustee, the Indenture Trustee or the
Property Trustee, as applicable.
"Underwriter" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registration Statement.
2. Shelf Registration. (a)ab The Trust and the Company shall (i) file as
soon as practicable, but in no event more than 60 days after the First Closing
Date, a Shelf Registration covering resales of the TIDES, the Guarantee, the
Convertible Junior Subordinated Debentures and the related Company Common Stock
issuable upon conversion thereof and (ii) use their best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
within 150 days after the First Closing Date, provided, however, that no Holder
shall be entitled to be named as a selling securityholder in the Shelf
Registration Statement or to use the Prospectus forming a part thereof for
resales of Registrable Securities unless such holder is an Electing Holder.
(1) The Trust and the Company shall each use their best efforts (i)
to keep the Shelf Registration Statement continuously effective, subject to
Section 7(b) hereof, in order to permit the Prospectus forming part thereof to
be usable by Holders until resale of the Securities are permitted pursuant to
Rule 144(k) under the Securities Act or any successor rule or regulation thereto
after the date the Shelf Registration Statement is declared effective or such
shorter period that will terminate upon the earliest of the following: (A) two
years from the date of the effectiveness of the Shelf Registration Statement,
(B) when all the TIDES covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement, (C) when all Convertible
Junior Subordinated Debentures issued to Holders in respect of TIDES that had
not been sold pursuant to the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or (D) when all shares of Common
Stock issued upon conversion of any such TIDES or any such Convertible Junior
Subordinated Debentures that had not been sold pursuant to the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf Registration
Period") and (ii) after the effectiveness of the
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Shelf Registration Statement, promptly upon the request of any Holder that is
not then an Electing Holder to take any action reasonably necessary to register
the sale of any Securities of such Holder and to identify such Holder as a
selling securityholder, provided, however, that nothing in this subparagraph
shall relieve such Holder of the obligation to provide the Company and the Trust
with the information required pursuant to Section 2(c) hereof.
(2) (i) No Holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement as of the date on which the
Commission declares the Shelf Registration Statement effective or on which the
Shelf Registration Statement otherwise becomes effective, and no Holder shall be
entitled to use the Prospectus forming a part thereof for resales of Registrable
Securities at any time, unless such holder has provided the Company and the
Trust with such information as they shall reasonably request in order to enable
the Company and the Trust to comply with the applicable requirements of the
Securities Act in connection with offers and sales by such Holder as a selling
securityholder in the Shelf Registration Statement within 30 calendar days from
the date on which any such request is first mailed to such Holder. Each Holder
as to which any Shelf Registration is being effected agrees to furnish promptly
to the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
(ii) After the date on which the Commission declares the Shelf
Registration Statement effective or on which the Shelf Registration Statement
otherwise becomes effective, the Company and the Trust may, upon the request of
any Holder of Registrable Securities that is not then an Electing Holder, take
such action as is necessary to name such Holder as a selling security holder in
the Shelf Registration Statement or to enable such Holder to use the Prospectus
forming a part thereof for resales of Registrable Securities if such Holder
promptly provides the Company and the Trust with such information as they shall
reasonably request in order to enable the Company and the Trust to comply with
the applicable requirements of the Securities Act in connection with offers and
sales by such Holder so as to permit such Holder to be so named. Each Holder as
to which any Shelf Registration is being effected agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
(iii) The term "Electing Holder" shall mean any holder of
Registrable Securities that has complied with the requests of the Company and
the Trust in accordance with Section 2(c)(i) or 2(c)(ii) hereof.
3. Registration Procedures. In connection with any Shelf Registration
Statement, the following provisions shall apply:
(1) The Trust and the Company shall furnish to each Purchaser,
prior to the filing thereof with the Commission, a copy of any Shelf
Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall each use its
best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Purchaser reasonably may propose.
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(2) The Trust and the Company shall take such action as may be
necessary, subject to Section 7(b) hereof, so that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto (and each report or other document
incorporated therein by reference in each case) complies in all material
respects with the Securities Act and the Exchange Act and the respective rules
and regulations thereunder, (ii) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, 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
(iii) any Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not, during the Shelf
Registration Period, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading.
(3) The Company shall advise each Purchaser and each Electing
Holder and, if requested by such Purchaser or any such Electing Holder in
writing, confirm such advice in writing:
(1) when a Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf Registration
Statement or any post-effective amendment thereto has become effective; and
(2) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus included
therein or for additional information.
(2) The Trust and the Company shall advise each Purchaser and each
Electing Holder and, if requested by such Purchaser or any such Electing
Holder in writing, confirm such advice in writing:
(3) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(4) of the receipt by the Trust or the Company of any
notification with respect to the suspension of the qualification of the
securities included therein for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and
(5) of the happening, during the Shelf Registration Period,
of any event (provided that such notice need not specify the nature of such
event) that requires the making of any changes in the Shelf Registration
Statement or the Prospectus so that, as of such date, the Registration Statement
and the Prospectus do not contain an untrue statement of a material fact and do
not omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading (which advice shall be
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accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made).
(3) Written notice pursuant to Section 3(c)(1)(ii) and Section
3(c)(2)(i)-(iii) shall be accompanied by an instruction to suspend the use of
the prospectus until the requisite changes have been made.
(4) The Trust and the Company shall use their reasonable best
efforts to prevent the issuance, and if issued to obtain the withdrawal, of any
order suspending the effectiveness of any Shelf Registration Statement at the
earliest possible time.
(5) The Trust and the Company shall furnish to each Electing Holder
of Securities, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto (including any reports or
other documents incorporated therein by reference), including financial
statements and schedules, and, if the Electing Holder so requests in writing,
all exhibits thereto (including those incorporated by reference).
(6) The Trust and the Company shall, during the Shelf Registration
Period, deliver to each Electing Holder, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Electing
Holder may reasonably request and shall deliver such materials to the New York
Stock Exchange pursuant to Rule 153 under the Act; and each of the Trust and the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of the Electing Holders in connection with the offering and sale
of the Securities covered by the Prospectus or any amendment or supplement
thereto during the Shelf Registration Period.
(7) Prior to any offering of Securities pursuant to any Shelf
Registration Statement, the Trust and the Company shall register or qualify or
cooperate with the Electing Holders and their respective counsel in connection
with the registration or qualification of such Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any such Electing
Holders reasonably request in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of the
Securities covered by such Shelf Registration Statement; provided, however, that
neither the Trust nor the Company will be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(8) Unless the applicable Securities shall be in book-entry only
form, the Trust and the Company shall cooperate with the Electing Holders to
facilitate the timely preparation and delivery of certificates representing
Securities to be sold pursuant to any Shelf Registration Statement free of any
restrictive legends and in such permitted denominations and registered in such
names as Electing Holders may request in connection the sale of Securities
pursuant to such Shelf Registration Statement.
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(9) Upon the occurrence of any event contemplated by Section
3(c)(1)(ii) or 3(c)(2)(i) above, the Trust and the Company shall promptly
prepare, subject to Section 7(b) hereof, as soon as possible a post-effective
amendment to any Shelf Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If the Trust or
the Company notifies the Electing Holders in accordance with Section 3(c)(3)
above to suspend use of the prospectus until the requisite changes to the
Prospectus have been made, then the Electing Holders shall suspend the use of
the Prospectus until the requisite changes to the Prospectus have been made, and
the period of effectiveness of the Shelf Registration Statement provided for in
Section 2(b) above shall each be extended by the number of days from and
including the date of the giving of such notice to and including the date when
the Purchaser and the Electing Holders of the Securities shall have received
such amended or supplemented prospectus pursuant to this Section 3(i).
(10) Not later than the effective date of any Shelf Registration
Statement hereunder, the Trust and the Company shall provide a CUSIP number for
the TIDES and, in the event of and at the time of any distribution thereof to
Holders, the Convertible Junior Subordinated Debentures, registered under such
Shelf Registration Statement, and provide the applicable Trustee with
certificates for such Securities, in a form eligible for deposit with The
Depository Trust Company.
(11) The Trust and the Company shall comply with all applicable
rules and regulations of the Commission and shall make generally available to
their securityholders (or otherwise provide in accordance with Section 11(a) of
the Securities Act) an earnings statement satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company's first quarter commencing after the effective date of the
Registration Statement, which statement shall cover such 12-month period.
(l2) The Trust and the Company shall cause the Indenture, the
Declaration and the Guarantee to be qualified under the Trust Indenture Act in a
timely manner and containing such changes, if any, as shall be necessary for
such qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.
(13) The Trust and the Company may require each Electing Holder to
furnish to the Trust and the Company such information regarding the Electing
Holder and the distribution of such Securities as the Trust and the Company may
from time to time reasonably require for inclusion in such Shelf Registration
Statement, and the Trust and the Company may exclude from such registration the
Securities of any Electing Holder that
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unreasonably fails to furnish such information within a reasonable time after
receiving such request.
(14) The Trust and the Company shall, if requested, promptly
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters reasonably
agree should be included therein and to which the Trust and the Company do not
reasonably object and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after they are
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
obligated to arrange for more than one underwritten offering during the Shelf
Registration Period as set forth in Section 6 hereof .
(15) The Trust and the Company shall enter into such customary
agreements (including underwriting agreements in customary form) to take all
other appropriate actions in order to expedite or facilitate the registration or
the disposition of the Securities, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures substantially identical to those set
forth in Section 5 (or such other provisions and procedures acceptable to the
Managing Underwriters, if any) with respect to all parties to be indemnified
pursuant to Section 5.
(16) The Trust and the Company shall (i) make reasonably available for
inspection by the Electing Holders, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by such Electing Holders or any such
underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Trust and the Company and its subsidiaries as
shall be requested in connection with the discharge of their due diligence
obligations; (ii) cause the Company's officers, directors and employees and any
relevant Trustees to supply at the Company's expense all relevant information
reasonably requested by such Electing Holders or any such underwriter, attorney,
accountant or agent in connection with any such Shelf Registration Statement, in
each case, as shall be reasonably necessary to enable such persons to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
provided, however, that the foregoing inspection and information gathering
shall, to the greatest extent possible, be coordinated on behalf of the Electing
Holders and the other parties entitled thereto by one counsel designated by and
on behalf of such Electing Holders and other parties; (iii) in connection with
an underwritten offering conducted pursuant to Section 6 hereof, make such
representations and warranties to the Electing Holders participating in such
underwritten offering and the underwriters in form, substance and scope as are
customarily made by the issuers to underwriters in primary underwritten
offerings and covering matters as are customarily covered in representations and
warranties requested in primary underwritten offerings including, but not
limited to, those set forth in the Purchase Agreement; (iv) in connection with
an underwritten offering conducted pursuant to Section 6 hereof, obtain opinions
of counsel to the Trust and the
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Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters)
addressed to each Electing Holder participating in such offering and the
underwriters, if any, covering such matters and with such exceptions as are
customarily covered or taken in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Electing Holders and
underwriters (it being agreed that the matters to be covered by such opinion
shall include, without limitation, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, a statement by such counsel regarding the
absence from such Shelf Registration Statement and the prospectus included
therein, as then amended or supplemented, including the documents incorporated
by reference therein, of an untrue statement of a material fact or the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading); (v) in connection with an
underwritten offering conducted pursuant to Section 6 hereof, obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Shelf Registration Statement), addressed to each
Electing Holder participating in such underwritten offering and the
underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings in accordance with Statement of Auditing Standards No.
72; and (vi) in connection with an underwritten offering conducted pursuant to
Section 6 hereof, deliver such documents and certificates as may be reasonably
requested by the Managing Underwriters, if any, including those to evidence
compliance with Section 3(i) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Trust and the
Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 3(p) shall be performed at (A) with respect to clauses (ii) and (v)
only, the execution of an underwriting agreement and (B) each closing under any
underwritten offering to the extent required under any related underwriting or
similar agreement.
(17) The Trust and the Company will use their best efforts to cause
the Common Stock relating to such Shelf Registration Statement to be listed on
each securities exchange, over-the-counter market, or respective counterpart if
any, on which any shares of Common Stock are then listed.
(18) The Trust and the Company shall, in the event that any broker-
dealer registered under the Exchange Act shall underwrite any Securities or
participate as a member of an underwriting syndicate or selling group or "assist
in the distribution" (within the meaning of the Rules of Fair Practice (the
"Rules") and the By-Laws of the National Association of Securities Dealers, Inc.
("NASD")) thereof, whether as a Holder of such Securities or as an underwriter,
a placement or sales agent or a broker or dealer in respect thereof, or
otherwise, assist such broker-dealer in complying with the requirements of such
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Rules and By-Laws, including, without limitation, by (A) if such Rules or By-
Laws, including Schedule E thereto, shall so require, engaging a "qualified
independent underwriter" (as defined in such Schedule) to participate in the
preparation of the Shelf Registration Statement relating to such Securities, to
exercise usual standards of due diligence in respect thereto, (B) indemnifying
any such qualified independent underwriter to the extent of the indemnification
of underwriters provided in Section 5 hereof and (C) providing such information
to such broker-dealer as may be required in order for such broker-dealer to
comply with the requirements of the Rules of Fair Practice of the NASD.
(19) The Company will use its best efforts to (a) if the Securities
have been rated prior to the initial sale of such Securities, confirm such
ratings will apply to the Securities covered by the Shelf Registration
Statement, or (b) if the Securities were not previously rated, cause the
Securities covered by the Shelf Registration Statement to be rated with the
appropriate rating agencies, if so requested by Electing Holders of a majority
in aggregate principal amount of Securities covered by such Shelf Registration
Statement, or by the managing underwriters, if any.
(20) The Trust and the Company shall use their best efforts to take
all other steps necessary to effect the registration, offering and sale of the
Securities covered by the Shelf Registration Statement contemplated hereby.
4. Registration Expenses. Except as otherwise provided in Section 6, the
Company shall bear all fees and expenses incurred in connection with the
performance of the obligations of the Company and the Trust under Sections 2 and
3 hereof and shall bear or reimburse the Purchasers for the reasonable fees and
disbursements of not more than one counsel for the Purchasers, which shall be
Vinson & Elkins, L.L.P. unless another firm shall be chosen by the Holders of a
majority in principal amount of Securities in connection with the filing of the
Shelf Registration Statement.
5. Indemnification and Contribution. (a) In connection with any Shelf
Registration Statement, the Trust and the Company, jointly and severally, agree
to indemnify and hold harmless each Electing Holder and each person who
controls any such Electing Holder within the meaning of either the Securities
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement as originally filed or in any
amendment thereof, or in any preliminary prospectus or Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability
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or action; provided, however, that (i) the Company and the Trust will not be
liable in any case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf any
such Electing Holder specifically for inclusion therein and, provided, further,
that with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Electing Holder or person who controls any such Electing Holder from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Securities concerned, to the extent that a prospectus relating to such
Securities was required to be delivered by such Electing Holder under the Act in
connection with such purchase and any such loss, claim, damage or liability of
such Electing Holder results from the fact that there was not sent or given to
such person, at or prior to the written confirmation of the sale of such
Securities to such person, a copy of the Prospectus if the Company has
previously furnished such quantity of copies thereof to such Electing Holder.
This indemnity agreement will be in addition to any liability which the Company
or the Trust may otherwise have. The Trust and the Company, jointly and
severally, also agree to indemnify or contribute to Losses (as defined below)
of, as provided in Section 5(d), any underwriters of Securities registered under
the Shelf Registration Statement, their officers, directors, employees and
agents and each person who controls such underwriters on substantially the same
basis as that of the indemnification of the Electing Holders provided in this
Section 5(a) and shall, if requested by any Electing Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 3(o)
and Section 6 hereof.
(b) Each Electing Holder, severally and not jointly, agrees as a
consequence of the inclusion of any of such Holder's Registrable Securities in
such Shelf Registration Statement, and each underwriter executing an
underwriting agreement, if any, which facilitates the disposition of Registrable
Securities shall agree, as a consequence of facilitating such disposition of
Registrable Securities, severally and not jointly, to indemnify and hold
harmless (i) the Trust and the Company, (ii) each of the directors of the
Company, (iii) each of its officers and any Administrative Trustee who signs
such Shelf Registration Statement and (iv) each person who controls the Trust or
the Company within the meaning of either the Securities Act or the Exchange Act
to the same extent as the foregoing indemnity from the Trust and the Company,
but only with reference to written information relating to such Electing Holder
or underwriter executing an underwriting agreement furnished to the Company by
or on behalf of such Electing Holder or underwriter executing an underwriting
agreement specifically for inclusion in the documents referred to in the
foregoing indemnity; and shall reimburse, as incurred, the Company and the Trust
for any legal or other expenses reasonably incurred by the Company or the Trust
or any such controlling person in connection with investigating or defending any
loss, claim, damage, liability or action in respect thereof. This indemnity
agreement will be in addition to any
12
<PAGE>
liability which any such Electing Holder or underwriter executing an
underwriting agreement may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
5 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve the indemnifying party from
any liability it may have to any indemnified party otherwise than under
paragraph (a) or (b) above, except to the extent such failure prejudices the
indemnified person. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of such indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action 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 any claims that are the subject matter
of such action, and does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Shelf Registration Statement which resulted in such Losses; provided, however,
that in no case shall the Purchasers or any subsequent Holder of any Securities
be responsible, in the aggregate, for any amount in excess of the amount by
which the net proceeds received by such Holders from the sale of the Securities
pursuant to the Registration Statement exceeds the amount of damages which such
Holders have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. If the allocation provided by
the immediately
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<PAGE>
preceding sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the indemnifying party, on the one
hand, or by the indemnified party, on the other hand. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Securities Act or the Exchange Act shall have the same rights to
contribution as such Holder, and each person who controls the Company or the
Trust within the meaning of either the Securities Act or the Exchange Act, each
officer of the Company who shall have signed the Shelf Registration Statement
and each director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The provisions of this Section 5 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or the Trust or any of the officers, directors, employees, agents or
controlling persons referred to in Section 5 hereof, and will survive the sale
by a Holder of Securities covered by the Shelf Registration Statement. The
obligations of the Trust and the Company under this Section shall be in addition
to any liability which the Trust and the Company may otherwise have.
6. Underwritten Offering. The Holders of Securities covered by the Shelf
Registration Statement who desire to do so may sell such Securities in an
underwritten offering. In any such underwritten offering, the investment banker
or bankers and manager or managers that will administer the offering will be
selected by, and the underwriting arrangements with respect thereto will be
approved by, the Holders of a majority of the Securities to be included in such
offering; provided, however, that (i) such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the Company and the
Trust and (ii) the Company shall not be obligated to arrange for more than one
underwritten offering during the Shelf Registration Period. No Holder may
participate in any underwritten offering contemplated hereby unless such Holder
(a) agrees to sell such
14
<PAGE>
Holder's Securities in accordance with any approved underwriting arrangements,
(b) completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such approved underwriting arrangements, (c) at
least 30% of the outstanding Securities are included in such underwritten
offering, and (d) if such Holder is not then an Electing Holder, such Holder
provides the Company and the Trust with such information as they shall
reasonably request in order to enable the Company and the Trust to comply with
the applicable requirements of the Securities Act in connection with offers and
sales by such Holder as a selling securityholder in the underwritten offering
within a reasonable amount of time before such underwritten offering. The
Holders participating in any underwritten offering shall be responsible for any
expenses customarily borne by selling securityholders, including underwriting
discounts and commissions and fees and expenses of counsel to the selling
securityholders.
7. Special Interest and Special Distributions Under Certain Circumstances.
If (i) within 150 days of the First Closing Date the Shelf Registration
Statement has not been declared effective by the Commission, or (ii) in the
event that a Shelf Registration Statement is declared effective by the
Commission, the Company or the Trust fails to keep such Shelf Registration
Statement continuously effective and usable (except as permitted in paragraph
(b) of this Section 7) prior to the end of the Shelf Registration Period (each
such event referred to in clauses (i) and (ii) a "Registration Default"), then
additional interest ("Special Interest") will accrue on the Convertible Junior
Subordinated Debentures (including in respect of amounts accruing during any
Deferral Period), and corresponding additional distributions (the "Special
Distributions") will accrue on the TIDES and the Common Securities, in each case
from and including the day following such Registration Default to but excluding
the day on which such Registration Default has been cured or has been deemed to
have been cured. Subject to the deferral of interest provisions of the
Convertible Junior Subordinated Debentures and the deferral of distributions
provisions of the TIDES, Special Interest and Special Distributions will be paid
in cash quarterly in arrears on March 15, June 15, September 15 and December 15
commencing with the first such date following the applicable Registration
Default and will accrue at a rate such that the interest rate or distribution
rate, as the case may be, will be increased 0.50% per annum of the principal
amount or liquidation amount, as applicable. Following the cure of a
Registration Default, Special Interest and Special Distributions will cease to
accrue with respect to such Registration Default.
(3) A Registration Default referred to in Section 7(a)(ii) shall be
deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related Prospectus if such Registration Default
has occurred solely as a result of (x) the filing of a post-effective amendment
to such Shelf Registration Statement to incorporate annual audited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related Prospectus or (y) the occurrence of other material events or
developments with
15
<PAGE>
respect to the Trust or the Company that would need to be described in such
Registration Statement or the related Prospectus and either (i) the Company
shall have determined in good faith that such disclosure is not in the best
interests of the Company and its stockholders or (ii) the Trust and the Company
are proceeding promptly and in good faith to amend or supplement such
Registration Statement and related Prospectus to describe such events; provided,
however, that in any case, if such Registration Default occurs for a continuous
period in excess of 45 days, Special Interest and Special Distributions shall be
payable in accordance with the above paragraph from the first day of such 45-day
period until the date on which such Registration Default is cured.
8. Rules 144 and 144A. The Company shall use its best efforts to file the
reports required to be filed by it under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file such
reports, it will, within a reasonable period of time, upon written request of
any Holder of Securities, make publicly available other information so long as
necessary to permit sales of their securities pursuant to Rules 144 and 144A.
The Company covenants that it will take such further action as any Holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)). The Company will provide
a copy of this Agreement to prospective purchasers of Securities identified to
the Company by any Purchaser upon request. Upon the request of any Holder of
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
9. Miscellaneous.
(3) No Inconsistent Agreements. The Trust and the Company have not, as
of the date hereof, entered into, nor shall they on or after the date hereof,
enter into, any agreement with respect to their securities or otherwise that is
inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(4) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Trust and the Company have
obtained the written consent of the Credit Suisse First Boston Corporation.
16
<PAGE>
(5) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 7(c), which
address initially is, with respect to each Holder, the address of such Holder
maintained by the Registrar under the Indenture;
(2) if to the Purchasers, initially at the address set forth in the
Purchase Agreement; and
(3) if to the Trust or the Company, initially at its address set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
The Purchaser or the Trust and the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(6) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties and the
Holders, including, without the need for an express assignment or any consent by
the Trust or the Company thereto, subsequent Holders of Securities. The Trust
and the Company hereby agree to extend the benefits of this Agreement to any
Holder of Securities and any such Holder may specifically enforce the provisions
of this Agreement as if an original party hereto.
(7) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(8) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(9) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.
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<PAGE>
(10) Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(11) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Trust, on the one hand, and the Purchasers, on the other hand, and the Holders
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder.
(12) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
[Remainder of this Page Intentionally Left Blank]
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<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Purchasers, the Trust and the Company in accordance with its terms.
Very truly yours,
HANOVER COMPRESSOR CAPITAL
TRUST
By: _______________________________________________________________
Name: Curtis A. Bedrich
Title: Administrative Trustee
HANOVER COMPRESSOR COMPANY
By:________________________________
Name: Curtis A. Bedrich
Title: Chief Financial Officer and
Treasurer
The foregoing Registration Rights
Agreement is hereby confirmed
and accepted as of the date first above
written.
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY INC.
DAIN RAUSCHER INCORPORATED
By: CREDIT SUISSE FIRST BOSTON CORPORATION
Acting on behalf of itself and as
the representative of the several
Purchasers
By:___________________________________________________________________
Name: Osmar Abib
Title: Managing Director
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<PAGE>
EXHIBIT 12.1
HANOVER COMPRESSOR COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------------------------------------------------
1998 1997 1996 1995 1994 1999 1998
----------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings :
Pretax income from continuing operations...... $49,636 $29,417 $17,225 $9,112 $6,978 $43,665 $34,757
Add:
Interest on indebtedness and
amortization of debt expense and
discount.............................. 17,889 10,728 6,594 4,560 2,027 22,568 12,004
Interest component of rent expense............ 137 113 132 100 60 195 97
Equity in losses of joint ventures............ 137 342 - - - - 344
----------------------------------------------------------------------
Earnings as adjusted.................. 67,799 40,600 23,951 13,772 9,065 66,428 47,202
----------------------------------------------------------------------
Fixed charges:
Interest on indebtedness and
amortization of debt expense
and discount.......................... 17,889 10,728 6,594 4,560 2,027 22,568 12,004
Interest component of rent expense............ 137 113 132 100 60 195 97
----------------------------------------------------------------------
Fixed charges ........................ $18,026 $10,841 $6,726 $4,660 $2,087 $22,763 $12,101
----------------------------------------------------------------------
----------------------------------------------------------------------
Ratio of earnings to fixed charges............ 3.76 3.75 3.56 2.96 4.34 2.92 3.90
======================================================================
</TABLE>
<PAGE>
HANOVER COMPRESSOR COMPANY
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED DIVIDENDS
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------------------------------------------------
1998 1997 1996 1995 1994 1999 1998
----------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings :
Pretax income from continuing operations...... $49,636 $29,417 $17,225 $9,112 $6,978 $43,665 $34,757
Add:
Interest on indebtedness and
amortization of debt expense and
discount.............................. 17,889 10,728 6,594 4,560 2,027 22,568 12,004
Interest component of rent expense............ 137 113 132 100 60 195 97
Equity in losses of joint ventures............ 137 342 - - - - 344
----------------------------------------------------------------------
Earnings as adjusted.................. 67,799 40,600 23,951 13,772 9,065 66,428 47,202
----------------------------------------------------------------------
Fixed charges:
Interest on indebtedness and
amortization of debt expense
and discount.......................... 17,889 10,728 6,594 4,560 2,027 22,568 12,004
Interest component of rent expense............ 137 113 132 100 60 195 97
Preferred dividend requirements............... - - 11,560 2,167 - - -
Fixed charges and ----------------------------------------------------------------------
preferred dividends................... $18,026 $10,841 $18,286 $6,827 $2,087 $22,763 $12,101
----------------------------------------------------------------------
Ratio of earnings to combined fixed charges ----------------------------------------------------------------------
and preferred dividends............... 3.76 3.75 1.31 2.02 4.34 2.92 3.90
======================================================================
</TABLE>
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 25, 1999, relating to the
consolidated financial statements, which appears in Hanover Compressor Company's
Amended Annual Report on Form 10-K/A for the year ended December 31, 1998. We
also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
Houston, Texas
February 14, 2000
