<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1998
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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BUDGET GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 7514 59-3227576
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
125 BASIN STREET, SUITE 210, DAYTONA BEACH, FL 32114
TELEPHONE: (904) 238-7035
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
SANFORD MILLER, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
BUDGET GROUP, INC.
125 BASIN STREET, SUITE 210, DAYTONA BEACH, FL 32114
TELEPHONE: (904) 238-7035 FACSIMILE: (904) 226-8380
(Name, address, including zip code, and telephone number, including area code of
agent for service)
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COPIES TO: JEFFREY M. STEIN
KING & SPALDING
191 PEACHTREE STREET, ATLANTA, GEORGIA 30303
TELEPHONE: (404) 572-4600 FACSIMILE: (404) 572-5146
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any 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. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
TITLE OF CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE AGGREGATE PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1)(2) FEE(3)
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<S> <C> <C> <C> <C>
6 1/4% Convertible Preferred Securities,
Remarketable Term Income Deferable Equity
Securities (HIGH TIDES).................... 6,000,000 $50 $300,000,000 $88,500
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HIGH TIDES Debentures Due 2028 of Budget
Group, Inc. ............................... (3) (3) (3) (3)
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Class A Common Stock, $0.01 par value, of
Budget Group, Inc.......................... 9,107,400 (4) (4) (4)
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Guarantee by Budget Group, Inc. of the
above-referenced HIGH TIDES................ (5) (5) (5) (5)
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Total................................ N/A N/A $300,000,000 $88,500
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457.
(2) Exclusive of accrued interest and distributions, if any.
(3) $309,278,400 in aggregate principal amount of 6 1/4% HIGH TIDES Debentures
Due 2028 were issued and sold to Budget Group Capital Trust in connection
with the issuance by Budget Group Capital Trust of its HIGH TIDES. The HIGH
TIDES Debentures Due 2028 may be distributed, under certain circumstances,
to holders of the HIGH TIDES for no additional consideration.
(4) The HIGH TIDES are convertible into Class A Common Stock, par value $.01 per
share, of Budget Group, Inc., at an initial conversion rate of 1.5179 shares
of Class A Common Stock for each HIGH TIDE, subject to adjustment under
certain circumstances. Shares of Class A Common Stock issued upon conversion
of the HIGH TIDES will be issued without the payment of additional
consideration.
(5) No separate consideration will be received for the Guarantee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 13, 1998
PROSPECTUS
6,000,000 HIGH TIDES(SM)
BUDGET GROUP CAPITAL TRUST
<TABLE>
<S> <C> <C>
6 1/4% Convertible Preferred Securities
Remarketable Term Income Deferrable Equity Securities (HIGH
TIDES)(SM*)
(liquidation amount $50 per HIGH TIDE)
guaranteed to the extent set forth herein by,
BUGET GROUP LOGO and convertible into Class A Common Stock of,
</TABLE>
Budget Group, Inc.
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This Prospectus relates to the 6 1/4% Remarketable Term Income Deferrable
Equity Securities (HIGH TIDES)(SM) (the "HIGH TIDES"), which represent undivided
preferred beneficial ownership interests in the assets of Budget Group Capital
Trust, a statutory business trust formed under the laws of the State of Delaware
(the "Trust" or the "Issuer"), and the shares of Class A Common Stock, par value
$0.01 per share (the "Class A Common Stock"), of Budget Group, Inc., a Delaware
corporation (the "Company"), issuable upon conversion of the HIGH TIDES. The
HIGH TIDES were issued and sold (the "Original Offering") on June 19, 1998 (the
"Original Offering Date") to the Initial Purchasers (as defined herein) and were
simultaneously sold by the Initial Purchasers in transactions exempt from the
registration requirements of the Securities Act of 1933 (the "Securities Act"),
to persons reasonably believed by the Initial Purchasers to be qualified
institutional buyers as defined in Rule 144A under the Securities Act. The
Company owns all the common securities issued by the Trust (the "Common
Securities" and, together with the HIGH TIDES, the "Trust Securities"). The
Trust was formed for the sole purpose of issuing the Trust Securities and using
the proceeds thereof to purchase from the Company the HIGH TIDES Debentures Due
2028 (the "HIGH TIDES Debentures") having the terms described herein. The
holders of the HIGH TIDES have a preference with respect to payments in respect
of distributions and payments upon liquidation, redemption or otherwise over
holders of the Common Securities of the Trust.
The HIGH TIDES, the HIGH TIDES Debentures and the Class A Common Stock
issuable upon conversion of the HIGH TIDES (collectively the "Offered
Securities") may be offered and sold from time to time by the holders named
herein or by their transferees, pledgees, donees or successors (collectively,
the "Selling Holders") pursuant to this Prospectus. The Offered Securities may
be sold by the Selling Holders from time to time directly to purchasers or
through agents, underwriters or dealers. See "Selling Holders" and "Plan of
Distribution." If required, the names of any other Selling Holders, agents or
underwriters involved in the sale of the Offered Securities and the applicable
agent's commission, dealer's purchase price or underwriter's discount, if any,
will be set forth in an accompanying supplement to this Prospectus (a
"Prospectus Supplement"). The Selling Holders will receive all of the proceeds
from the sale of the Offered Securities and will pay all underwriting discounts
and selling commissions, if any, applicable to any such sale. The Company is
responsible for payment of all other expenses incident to the offer and sale of
the Offered Securities. The Selling Holders and any broker-dealers, agents or
underwriters which participate in the distribution of the Offered Securities may
be deemed to be "underwriters" within the meaning of the Securities Act, and any
commission received by them and any profit on the resale of the Offered
Securities purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. See "Plan of Distribution" for a description
of indemnification arrangements.
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* Credit Suisse First Boston Corporation has filed an application with the
United States Patent and Trademark Office for the registration of Remarketable
Term Income Deferrable Equity Securities (HIGH TIDES)(SM) or HIGH TIDES(SM)
servicemarks.
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PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER
THE CAPTION INVESTMENT CONSIDERATIONS BEGINNING ON PAGE 1.
APPLICATION WILL BE MADE TO LIST THE COMMON STOCK REGISTERED PURSUANT
HERETO ON THE NEW YORK STOCK EXCHANGE.
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.
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THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 3
As used herein, unless the context otherwise requires: (i) the "Indenture"
means the HIGH TIDES Debentures Indenture between the Company and The Bank of
New York, as trustee (the "Debenture Trustee"); (ii) the "Declaration" means the
Amended and Restated Declaration of Trust among the Company, as Depositor (the
"Depositor"), The Bank of New York, as Property Trustee (the "Property
Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the "Delaware
Trustee"), and the individuals named as Administrative Trustees therein (the
"Administrative Trustees") (collectively with the Property Trustee and the
Delaware Trustee, the "Issuer Trustees") and the holders, from time to time, of
undivided beneficial interests in the assets of the Trust; (iii) the "Company,"
"Budget" or "Budget Group" refers to Budget Group, Inc. and its subsidiaries
after giving effect to Budget Group, Inc.'s acquisition of Budget Rent A Car
Corporation on April 29, 1997; and (iv) the "Budget System" refers to the
business of renting cars and trucks and retailing late model vehicles conducted
by Budget and its franchisees under the Budget name.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"SEC" or the "Commission"). Such reports, proxy statements, and other
information filed by the Company can be inspected and copied at the public
reference facilities of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street,
NW, Washington, DC 20549, and at the following Regional Offices of the
Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511;
and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such material may also be obtained from the Public Reference Section of the SEC
at Judiciary Plaza. 450 Fifth Street, NW, Washington, DC 20549, at prescribed
rates. Such material can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005. In addition, material may
be accessed electronically by means of the Commission's home page on the
Internet (http://www.sec.gov).
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the Offered
Securities. This Prospectus, which forms a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement.
For further information with respect to the Trust and the Offered Securities,
reference is made to the Registration Statement and the exhibits and schedules
filed as a part thereof. Any statements made in this Prospectus concerning the
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. The
Registration Statement and the exhibits and schedules thereto may be inspected,
without charge, at the public reference section or regional offices of the SEC
at the addresses indicated above. Copies of the Registration Statement can be
obtained from the public reference section of the SEC upon payment of prescribed
fees.
No separate financial statements of the Issuer have been included herein.
The Company does not consider that such financial statements would be material
to holders of the HIGH TIDES because (i) all of the voting securities of the
Issuer are owned by the Company, a reporting company under the Exchange Act,
(ii) the Issuer has no independent operations but exists for the sole purpose of
issuing securities representing undivided beneficial interests in the assets of
the Issuer and investing the proceeds thereof in HIGH TIDES Debentures issued by
the Company and (iii) the obligations of the Issuer under the Trust Securities
are fully and unconditionally guaranteed by the Company to the extent that the
Issuer has funds available to meet such obligations. See "Description of HIGH
TIDES Debentures" and "Description of the Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
(File No. 0-23962) are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1997;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
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(c) The Company's Current Reports on Form 8-K dated July 2, 1998, June
19, 1998, May 28, 1998, April 6, 1998, March 4, 1998, January 28, 1998 and
May 13, 1997, each as amended (if applicable);
(d) The consolidated balance sheets of Ryder TRS, Inc. as of December
31, 1996 and 1997 and the related consolidated statements of operations,
stockholders' equity and cash flows for the period from September 5, 1996
(date of inception) to December 31, 1996 and the year ended December 31,
1997, contained in the Company's Registration Statement on Form S-4 (File
No. 333-49679) filed on April 8, 1998, as amended on April 27, 1998;
(e) The combined balance sheet of Ryder Consumer Truck Rental (a
division of Ryder Truck Rental, Inc., a wholly-owned subsidiary of Ryder
System, Inc.) as of October 16, 1996, and the related combined statements
of earnings and changes in Ryder investment and cash flows for the period
from January 1, 1996 to October 16, 1996, contained in the Company's
Registration Statement on Form S-4 (File No. 333-49679) filed on April 8,
1998, as amended on April 27, 1998; and
(f) The description of the Class A Common Stock of the Company
included in the Company's Registration Statement on Form 8-A, dated April
15, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities made hereby shall be deemed to
be incorporated by reference in this Prospectus and made a part hereof from the
date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other document subsequently filed with the
Commission which also is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference herein (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to: Budget Rent A Car Corporation, 4225 Naperville Road, Lisle,
Illinois 60532, Attention: General Counsel, telephone (630) 955-7571.
CAUTIONARY INFORMATION
CERTAIN INFORMATION INCLUDED IN THIS PROSPECTUS CONTAINS, AND OTHER
MATERIALS FILED OR TO BE FILED BY THE COMPANY WITH THE COMMISSION INCORPORATED
BY REFERENCE HEREIN (AS WELL AS INFORMATION INCLUDED IN ORAL STATEMENTS MADE OR
TO BE MADE BY THE COMPANY) CONTAIN OR WILL CONTAIN, FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE
EXCHANGE ACT. THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF
OR CURRENT EXPECTATIONS OF THE COMPANY AND MEMBERS OF ITS MANAGEMENT TEAM, AS
WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE
INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES AND THAT
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING
STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE STATEMENT FOR
FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 AND ANNEX A TO THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, WHICH ARE HEREBY INCORPORATED BY REFERENCE. THE
COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS
TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR
CHANGES TO FUTURE OPERATING RESULTS OVER TIME.
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OFFERING SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus or
incorporated by reference herein. Certain capitalized terms used but not defined
are used as defined elsewhere in this Prospectus.
THE OFFERING
The Issuer................. Budget Group Capital Trust, a Delaware business
trust. Substantially all of the assets of the Trust
consist of the HIGH TIDES Debentures of the
Company. The Company owns, directly or indirectly,
100% of the outstanding Common Securities of the
Issuer.
Securities Registered
Pursuant Hereto.......... 6,000,000 HIGH TIDES, the HIGH TIDES Debentures,
the Class A Common Stock issuable upon conversion
of the HIGH TIDES and the Guarantee of Budget
Group, Inc. with respect to the HIGH TIDES.
Distributions.............. Distributions on the HIGH TIDES accrue from the
date of original issuance of the HIGH TIDES and are
payable on the HIGH TIDES at the Applicable Rate
applied to the stated liquidation amount of $50 per
HIGH TIDE. The Applicable Rate is 6 1/4% per annum
(the "Initial Rate") from the date of original
issuance of the HIGH TIDES to (but excluding) the
Reset Date, and the Term Rate from and after the
Reset Date. The Term Rate will be set based on the
outcome of the Remarketing. The Applicable Rate
will also increase upon a Registration Default, if
any. See "The Remarketing" and "Registration
Rights." Subject to the distribution deferral
provisions described below, Distributions are
payable quarterly in arrears on each March 15, June
15, September 15 and December 15, commencing
September 15, 1998. Because Distributions on the
HIGH TIDES constitute interest, corporate holders
thereof are not entitled to a dividends received
deduction. See "Description of HIGH
TIDES -- Distributions."
Distribution Deferral
Provisions............... The ability of the Issuer to pay Distributions on
the HIGH TIDES is solely dependent on its receipt
of interest payments from the Company on the HIGH
TIDES Debentures. The Company has the right at any
time, and from time to time, to defer the interest
payments due on the HIGH TIDES Debentures for
successive periods (a "Deferral Period") not
exceeding 20 consecutive quarters for each such
Deferral Period. Quarterly Distributions on the
HIGH TIDES will be deferred by the Issuer during
any Deferral Period, but will continue to
accumulate additional Distributions thereon,
compounded quarterly until the end of any such
Deferral Period. The Company will cause the Issuer
to give written notice of its deferral of an
interest payment and the deferral of Distributions
on the HIGH TIDES to the holders of the HIGH TIDES
not later than 10 days prior to the related record
date. The Company has agreed, among other things,
not to declare or pay any dividend on its capital
stock (subject to certain exceptions) during any
Deferral Period. If a deferral of an interest
payment occurs, the holders of the HIGH TIDES will
continue to recognize interest income for United
States federal income tax purposes in advance of
the receipt of any corresponding cash distribution.
If a holder of HIGH TIDES converts its HIGH TIDES
during any Deferral Period, the holder will not
receive any cash
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related to any deferred Distributions. See
"Investment Considerations -- Option to Extend
Interest Payment Period; Tax Considerations,"
"Description of HIGH TIDES -- Distributions,"
"Description of HIGH TIDES Debentures -- Option to
Extend Interest Payment Date" and "United States
Federal Tax Considerations -- Interest Income and
Original Issue Discount."
Conversion into Class A
Common Stock............. On or prior to the Tender Notification Date, each
HIGH TIDE is convertible, at the option of the
holder, into shares of Class A Common Stock of the
Company at the rate of 1.5179 shares of Class A
Common Stock for each HIGH TIDE (the "Initial
Conversion Ratio") (equivalent to a conversion
price of $32.94 liquidation amount of HIGH TIDES
per share (the "Initial Conversion Price") of Class
A Common Stock), subject to adjustment in certain
circumstances. The last reported sale price of the
Class A Common Stock on the New York Stock Exchange
on August , 1998 was $ per share. On and
after the Reset Date, each HIGH TIDE may, at the
option of the Issuer and subject to the results of
Remarketing, become nonconvertible or convertible
into a different number of shares of Class A Common
Stock. See "The Remarketing." The conversion price
and conversion ratio in effect at any time shall
hereinafter be referred to as the Applicable
Conversion Price and the Applicable Conversion
Ratio, respectively, each of which will be subject
to adjustment in certain circumstances. In
connection with any conversion of the HIGH TIDES,
the conversion agent will exchange such HIGH TIDES
for a Like Amount of HIGH TIDES Debentures held by
the Issuer and immediately convert such HIGH TIDES
Debentures into Class A Common Stock. No fractional
shares of Class A Common Stock will be issued as a
result of conversion, but in lieu thereof such
fractional interest will be paid by the Company in
cash based on the then current market value of the
Class A Common Stock. In addition, no additional
shares of Class A Common Stock will be issued upon
conversion of HIGH TIDES to account for any accrued
but unpaid Distributions on the HIGH TIDES at the
time of conversion. See "Description of HIGH
TIDES -- Conversion Rights."
Liquidation Amount......... In the event of any liquidation of the Issuer
(after satisfaction of liabilities of creditors to
the Trust), a holder of a HIGH TIDE will be
entitled to receive the liquidation amount thereof
($50 per HIGH TIDE) plus an amount equal to any
accrued and unpaid Distributions thereon to the
date of payment, unless a HIGH TIDE Debenture is
distributed to such holder. See "Description of
HIGH TIDES -- Liquidation of the Trust and
Distribution of the HIGH TIDES Debentures."
Maturity................... Although the HIGH TIDES do not have a stated
maturity, they are subject to mandatory redemption,
at the applicable Redemption Price, upon the
repayment or redemption, in whole or in part, of
the HIGH TIDES Debentures. The HIGH TIDES
Debentures will mature on June 15, 2028, unless
earlier redeemed as described below under
"-- Optional Redemption" or "-- Tax Event or
Investment Company Event Redemption." The Company
has covenanted in the Indenture to fund any
repayment of the principal of, and accrued and
unpaid interest on, any outstanding HIGH TIDES
Debentures on June 15, 2028 with the proceeds of
the offering of nonconvertible preferred securities
or noncon-
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<PAGE> 7
vertible trust preferred securities of the Company.
See "-- Effect of Redemption" and "Description of
HIGH TIDES Debentures -- Repayment at Maturity;
Redemption of HIGH TIDES."
The Remarketing............ The Remarketing Agent has agreed to use its best
efforts to remarket (the "Remarketing") all HIGH
TIDES tendered for remarketing. The Remarketing
Agent will establish (i) the rate per annum (the
"Term Rate") at which distributions will accrue on
the HIGH TIDES, (ii) the number of shares of Class
A Common Stock, if any, into which each HIGH TIDE
may be converted (the "Term Conversion Ratio") and
(iii) the price, manner and time, if any, at which
the HIGH TIDES may be redeemed from the proceeds of
a Common Stock Offering, at the option of the
Company, prior to the stated maturity date of the
HIGH TIDES Debentures (the "Term Call Protections"
and together with the Term Rate and Term Conversion
Ratio, the "Term Provisions"), to be effective
beginning on June 15, 2005 (or, if such day is not
a Business Day, the next succeeding Business Day)
or such earlier day as may be determined by the
Remarketing Agent, in its sole discretion, for
settlement of a successful remarketing (the "Reset
Date"). See "The Remarketing -- Effect of Failed
Remarketing" and "-- Settlement." The Remarketing
Agent will use its best efforts to establish the
Term Provisions most favorable to the Company
consistent with the remarketing of all HIGH TIDES
tendered therefor at a price (the "Reset Price")
equal to 101% of the liquidation amount thereof.
At least 40 days but not more than 60 days prior to
June 15, 2005, the Issuer will send a notice to the
holders of HIGH TIDES ("a Remarketing Notice")
stating whether it intends to remarket the HIGH
TIDES as securities which will be convertible into
Class A Common Stock (a "Convertible Remarketing")
or which will be nonconvertible (a "Nonconvertible
Remarketing"). All HIGH TIDES will be deemed
tendered for remarketing unless the holder thereof
delivers irrevocable notice to the contrary to the
Tender Agent (which the Tender Agent will promptly
remit to the Remarketing Agent) prior to May 20,
2005 (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Tender
Notification Date").
If no HIGH TIDES are tendered for remarketing, the
Remarketing will not take place, and the
Remarketing Agent will set the Term Provisions in a
manner consistent with the Remarketing Notice in
the manner that it believes, in its sole
discretion, would result in a price per HIGH TIDE
equal to 101% of the liquidation amount thereof
were a Remarketing actually to occur.
If any HIGH TIDES are tendered for remarketing, the
Remarketing Agent will commence a Convertible
Remarketing or a Nonconvertible Remarketing, as the
case may be (in either case, an "Initial
Remarketing"), pursuant to the instructions set
forth in the Remarketing Notice. The Initial
Remarketing will fail (an "Initial Failed
Remarketing") if (i) despite using its best
efforts, the Remarketing Agent is unable to
establish a Term Rate less than or equal to the
Maximum Rate during the Initial Remarketing Period,
(ii) the Remarketing Agent is excused from its
obligations because of the failure by the Company
or the Trust to satisfy certain conditions or the
occurrence of certain market events specified in
the Remarketing Agreement or (iii) there is no
Remarketing
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<PAGE> 8
Agent on the first day of the Initial Remarketing
Period. In the event of an Initial Failed
Remarketing, the Remarketing Agent will commence a
second remarketing (the "Final Remarketing") during
the Final Remarketing Period which will be a
Convertible Remarketing if the Initial Remarketing
was a Nonconvertible Remarketing and vice versa. If
the Remarketing Agent is still not able to
establish a Term Rate less than or equal to the
Maximum Rate during the Final Remarketing Period or
upon the failure by the Company or the Trust to
satisfy certain conditions or the occurrence of
certain market events specified in the Remarketing
Agreement, the Final Remarketing will fail (a
"Failed Final Remarketing"). In the event of a
Failed Final Remarketing, the Company will be
required to redeem in whole, but not in part, the
outstanding HIGH TIDES Debentures on the Reset Date
at 101% of the aggregate liquidation amount
thereof, plus any accrued and unpaid interest
thereon (the "Failed Remarketing Redemption
Price"). See "Effect of Redemption" below, "The
Remarketing" and "Description of HIGH TIDES
Debentures -- Redemption -- Mandatory Redemption."
If the Remarketing Agent is able to establish a
Term Rate less than or equal to the Maximum Rate
during the Initial Remarketing Period or the Final
Remarketing Period, as the case may be, new holders
will deliver the Reset Price for the remarketed
HIGH TIDES, and the Term Provisions will become
effective on the Reset Date. See "The Remarketing."
If for any reason Term Provisions are established
by the Remarketing Agent but on the Reset Date the
Remarketing Agent is unable to sell one or more
HIGH TIDES tendered for remarketing, the
Remarketing Agent will be obligated (subject to
certain conditions) to purchase such HIGH TIDES for
the Reset Price on the Reset Date.
The Remarketing Agent...... Credit Suisse First Boston Corporation will act as
the initial Remarketing Agent, but may resign or be
replaced by the Company prior to the Remarketing in
accordance with the Remarketing Agreement. The
Remarketing will be done without charge to the
holders of HIGH TIDES, but the Company will pay the
Remarketing Agent a fee equal to 1% of the
aggregate liquidation amount of the HIGH TIDES
outstanding on the Reset Date upon settlement of
the transactions contemplated by the Remarketing.
See "The Remarketing Agent."
Optional Redemption........ The Company may redeem the HIGH TIDES Debentures
solely from the proceeds of a Common Stock
Offering, (i) in whole or in part, at any time
after June 20, 2001 until (but excluding) the
Tender Notification Date, at a redemption price
equal to 103.13% of the aggregate principal amount
thereof, declining ratably to 100% of the aggregate
principal amount thereof after June 15, 2004, plus
any accrued and unpaid interest thereon and (ii)
after the Reset Date, in accordance with the Term
Call Protections established in the Remarketing.
Upon the redemption in whole or in part of the HIGH
TIDES Debentures, the proceeds of such redemption
shall concurrently be applied to redeem, at the
applicable Redemption Price, the related Trust
Securities having an aggregate liquidation amount
equal to the aggregate principal amount of HIGH
TIDES Debentures so redeemed, upon the terms and
conditions described herein. See "-- Effect of
Redemption" and "Description of HIGH TIDES
Debentures -- Redemption -- Optional Redemption."
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Mandatory Redemption....... The HIGH TIDES Debentures must be redeemed in the
event of a Failed Final Remarketing, on the Reset
Date at 101% of the aggregate principal amount
thereof plus any accrued and unpaid interest
thereon (the "Failed Remarketing Redemption
Price"). See "-- Effect of Redemption" and
"Description of HIGH TIDES Debentures -- Redemption
Mandatory Redemption."
Tax Event or Investment
Company Event Redemption
or Distribution.......... Upon the occurrence of a Tax Event, except in
certain limited circumstances, or an Investment
Company Event, the Company will cause the Issuer
Trustees to liquidate the Issuer and cause the HIGH
TIDES Debentures to be distributed to the holders
of the HIGH TIDES. In certain limited
circumstances, the Company will have the right to
redeem the HIGH TIDES Debentures in whole, but not
in part, at a price equal to the aggregate
principal amount thereof plus accrued and unpaid
interest thereon (the "Tax Event Redemption
Price"), in lieu of a distribution of the HIGH
TIDES Debentures. See "-- Effect of Redemption." In
the case of a Tax Event, the Company may also elect
to cause the HIGH TIDES to remain outstanding and
pay Additional Amounts on the HIGH TIDES
Debentures. See "Description of HIGH TIDES -- Tax
Event or Investment Company Event Redemption or
Distribution" and "Description of HIGH TIDES
Debentures -- Additional Amounts."
Effect of Redemption....... "Stated Maturity Price," "Failed Remarketing
Redemption Price," "Initial Redemption Price,"
"Term Redemption Price" (if applicable) and "Tax
Event Redemption Price" shall each hereinafter be
referred to as a Redemption Price. Upon the
repayment or redemption of any HIGH TIDES
Debentures (other than following the distribution
of the HIGH TIDES Debentures to the holders of
Trust Securities), the proceeds from such repayment
or redemption shall concurrently be applied to
redeem, at the applicable Redemption Price, the
related Trust Securities with an aggregate
liquidation amount equal to the aggregate principal
amount of such HIGH TIDES Debentures; provided that
in the case of a Debenture Event of Default or an
Event of Default under the Declaration, the HIGH
TIDES will receive a preference over the Common
Securities. See "Description of HIGH
TIDES -- Subordination of Common Securities" and
"Description of HIGH TIDES Debentures -- Redemption
-- Repayment at Maturity; Redemption of Convertible
Preferred Securities" and "-- Optional Redemption."
Guarantee.................. The Company has irrevocably guaranteed, on a
subordinated basis and to the extent set forth
herein, the payment in full of (i) the
Distributions on the HIGH TIDES to the extent of
funds of the Trust available therefor, (ii) the
amount payable upon redemption of the HIGH TIDES to
the extent of funds of the Trust available therefor
and (iii) generally, the liquidation amount of the
HIGH TIDES to the extent of the assets of the Trust
available for distribution to holders of HIGH
TIDES. The Guarantee is unsecured and is
subordinate to all Senior Debt of the Company. Upon
the liquidation, dissolution or winding up of the
Company, its obligations under the Guarantee will
rank junior to all of its Senior Debt, and, as a
result, funds may not be available for payment
under the Guarantee. See "Investment
Considerations -- Ranking of
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Obligations Under the Guarantee and the HIGH TIDES
Debentures" and "-- Rights Under the Guarantee" and
"Description of Guarantee." Effectively, the
Company has, through the Guarantee, the HIGH TIDES
Debentures, the Indenture and the Declaration,
taken together, fully, irrevocably and
unconditionally guaranteed all of the Issuer's
obligations under the HIGH TIDES. 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 Issuer's obligations under the
HIGH TIDES. See "Description of the Guarantee" and
"Effect of Obligations Under the HIGH TIDES
Debentures and the Guarantee."
Liquidation of the Trust... The Company, as the holder of the outstanding
Common Securities, has the right at any time
(including, without limitation, upon the occurrence
of a Tax Event or Investment Company Event) to
dissolve the Trust (subject to certain conditions).
In the event of such dissolution of the Trust,
after satisfaction of liabilities to creditors of
the Trust as required by applicable law, the
holders of the Trust Securities generally will be
entitled to receive per related Trust Security the
liquidation amount plus accumulated and unpaid
Distributions thereon to the date of payment, which
may be in the form of a distribution of related
HIGH TIDES Debentures in certain circumstances on a
pro rata basis in accordance with the respective
liquidation amounts of such Trust Securities. If
HIGH TIDES Debentures are distributed to the
holders of the Trust Securities prior to the Reset
Date, the procedures in respect of the Remarketing
of the HIGH TIDES will apply mutatis mutandis to
the HIGH TIDES Debentures. See "Description of HIGH
TIDES -- Liquidation of the Trust and Distribution
of HIGH TIDES Debentures."
Voting Rights.............. Generally, holders of the HIGH TIDES do not have
any voting rights. However, if (i) an Event of
Default with respect to the HIGH TIDES Debentures
occurs and is continuing or (ii) the Company
defaults under the Guarantee with respect to the
HIGH TIDES, the holders of the HIGH TIDES will be
entitled, by majority vote, to appoint a Special
Trustee of the Trust. See "Description of HIGH
TIDES -- Voting Rights; Amendment of the
Declaration."
Ranking.................... Payments on the HIGH TIDES are made pro rata with
the Common Securities except as described under
"Description of HIGH TIDES -- Subordination of
Common Securities." The HIGH TIDES Debentures are
unsecured and subordinate and junior in right of
payment in the manner set forth in the Indenture to
all Senior Debt of the Company. See "Description of
HIGH TIDES Debentures -- Subordination." At March
31, 1998, the Company had approximately $45 million
of Senior Debt (on a pro forma basis after giving
effect to the Ryder TRS Acquisition and the Series
A Notes Conversion described herein). In addition,
the Company is principally a holding company and
the HIGH TIDES Debentures are effectively
subordinated to all existing and future liabilities
of the Company's subsidiaries, which totaled $3.0
billion at March 31, 1998 ($3.4 billion on a pro
forma basis after giving effect to the Ryder TRS
Acquisition).
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<PAGE> 11
Form of HIGH TIDES......... The HIGH TIDES are represented by a global
certificate registered in the name of Cede & Co.,
as nominee for The Depository Trust Company
("DTC"). Beneficial interests in such HIGH TIDES
are evidenced by, and transfers thereof are
effected only through, records maintained by the
participants in DTC. Except under the limited
circumstances described herein, HIGH TIDES in
certificated form will not be issued in exchange
for the global certificate. See "Description of
HIGH TIDES -- Form, Book-Entry Procedures and
Transfer."
Registration Rights........ Pursuant to the Registration Agreement, the Company
and the Issuer have agreed to use their best
efforts to cause the Registration Statement to be
declared effective within 120 days after June 19,
1998 (the "Issue Date") and to keep the
Registration Statement effective and useable
(subject to certain exceptions) for two years or
such other period as shall be required under Rule
144(k) of the Securities Act or any successor rule
thereto or such shorter period ending when all the
Registrable Securities have been sold thereunder.
The Applicable Rate will increase to the
Registration Default Rate if the Company and the
Trust are not in compliance with certain of their
obligations under the Registration Agreement. See
"Registration Rights."
Use of Proceeds............ The Selling Holders will receive all of the
proceeds from the sale of the Offered Securities.
Neither the Company nor the Issuer will receive any
proceeds from the sale of the Offered Securities.
See "Use of Proceeds."
Trading.................... The HIGH TIDES are eligible for trading on the
PORTAL Market. Application will be made to list the
shares of Class A Common Stock issuable upon
conversion of the HIGH TIDES on the New York Stock
Exchange.
Ratings.................... The HIGH TIDES have been rated "BB-" by Standard &
Poor's Ratings Group and "B2" by Moody's Investors
Services, Inc. A security rating is not a
recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any
time by the assigning rating organization.
Ratio of Earnings to Fixed
Charges.................. The Company's ratios of earnings to fixed charges
for the fiscal years ended December 31, 1995, 1996
and 1997 were 1.14, 1.32 and 1.39, respectively.
Additional earnings of $2.4 million, $.6 million
and $5.7 million would have been required to bring
the ratio to 1.0 for the fiscal years ended
December 31, 1995 and 1996 and the three-month
period ended March 31, 1998, respectively. See
"Ratio of Earnings to Fixed Charges."
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<PAGE> 12
INVESTMENT CONSIDERATIONS
Prospective purchasers of the Offered Securities should carefully review
the information contained elsewhere in this Prospectus and should particularly
consider the following matters. This Prospectus contains certain forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements included in the risk factors set forth below and
elsewhere in this Prospectus as a result of any number of factors.
RISK FACTORS RELATING TO THE COMPANY
Ryder TRS Acquisition
On June 19, 1998 the Company acquired Ryder TRS, Inc. ("Ryder TRS"), one of
the largest providers of truck rentals and related moving supplies and services
to consumers and light commercial users in the United States (the "Ryder TRS
Acquisition"). The Company will be required to devote significant resources to
the combination and integration of the Ryder TRS business with the Company's
existing truck rental operations. The difficulties of managing such combination
and integration are increased by the necessity of coordinating the operations of
geographically diverse organizations, of integrating different strategies and
operating systems and of integrating management and operating personnel from
both businesses. The success of the Company following the Ryder TRS Acquisition
will depend on the ability of the Company's management team to: (i) manage a
significantly larger organization; (ii) maintain and further develop
relationships with Ryder TRS's independent dealers; and (iii) integrate Ryder
TRS with the Company's existing truck rental operations. There can be no
assurance that the Company's management team will be able to successfully manage
the combined truck rental operations of Ryder TRS and the Company. An inability
to successfully manage the integration of the truck rental operations of Ryder
TRS and the Company would have a material adverse effect on the Company's
financial condition and results of operations.
Pursuant to the Ryder TRS Acquisition, the Company issued 3,455,206 shares
of Class A Common Stock, paid $125 million in cash, issued warrants to purchase
Class A Common Stock with a value of up to $19 million and is obligated to
deliver a make-whole payment in the event that the market value of the Class A
Common Stock declines over stated measurement periods (two 30-day periods
ending, respectively, on June 19, 1999 and February 19, 2000). Such make-whole
payment may be made in cash or stock, at the Company's option, and could, if
made, have a dilutive effect on the earnings per share of Class A Common Stock.
Shares Eligible for Future Sale
The Company has filed a shelf registration statement under the Securities
Act with respect to up to 3,450,465 shares of Class A Common Stock issued in the
Ryder TRS Acquisition. The principal stockholders of Ryder TRS have, however,
agreed not to sell the shares of Class A Common Stock received by them in
connection with the Ryder TRS Acquisition until on or after September 17, 1998.
In connection with the Ryder TRS Acquisition, the Company may elect to pay
certain contingent additional consideration, if any is owed, by issuing shares
of Class A Common Stock. Further, in connection with various acquisitions, the
Company has granted to sellers certain unlimited "piggyback" registration rights
with respect to shares of Class A Common Stock.
The Company's outstanding 6.85% Series B Convertible Subordinated Notes Due
2007 (the "Series B Notes") and the 4,305,814 shares of Class A Common Stock
issued upon conversion of the Company's previously outstanding 7.0% Series A
Convertible Subordinated Notes Due 2007 (the "Series A Notes") have been
registered under the Securities Act. The Series B Notes are convertible into an
aggregate of 1,609,436 shares of Class A Common Stock which have been registered
under the Securities Act.
The Company also periodically grants options to purchase shares of Class A
Common Stock and Class B Common Stock $.01 par value per share (the "Class B
Common Stock" and together with the Class A Common Stock, the "Common Stock").
As of March 31, 1998, options to purchase 3,070,624 shares of Class A Common
Stock and 545,000 shares of Class B Common Stock were outstanding.
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<PAGE> 13
Upon the registration of any of the foregoing shares of common stock, such
shares will be freely tradeable without restriction or further registration
under the Securities Act and sales of these shares could adversely affect the
market price of the Common Stock.
Additional Risk Factors
Prospective purchasers of the Offered Securities should carefully review
the risk factors set forth in the Safe Harbor Compliance Statement for
forward-looking statements included as Exhibit 99.1 and Annex A to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, which Annual
Report is incorporated herein by reference.
RISK FACTORS RELATING TO THE HIGH TIDES
Ranking of Obligations Under the Guarantee and the HIGH TIDES Debentures
Since the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary upon such
subsidiary's dissolution, winding-up, liquidation or reorganization or otherwise
(and thus the ability of holders of the HIGH TIDES to benefit indirectly from
such distribution), is subject to the prior claims of creditors of that
subsidiary, except to the extent that the Company may itself be a creditor of
that subsidiary and its claims are recognized. There are various legal
limitations on the extent to which certain of the Company's subsidiaries may
extend credit, pay dividends or otherwise supply funds to, or engage in
transactions with, the Company or certain of its other subsidiaries.
Accordingly, the HIGH TIDES Debentures and Guarantee are effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of HIGH TIDES Debentures and the Guarantee should look
only to the assets of the Company for payments on the HIGH TIDES Debentures and
the Guarantee. See "The Company." At March 31, 1998, the Company's subsidiaries
had liabilities totaling $3.0 billion ($3.4 billion on a pro forma basis after
giving effect to the Ryder TRS Acquisition). None of the Indenture, the
Guarantee and the Declaration places any limitation on the amount of secured or
unsecured debt, including Senior Debt, that may be incurred by the Company or
the amount of debt that may be incurred by the Company's subsidiaries. See
"Description of Guarantee -- Status of the Guarantee" and "Description of HIGH
TIDES Debentures -- Subordination."
The obligations of the Company arising and accruing under the Guarantee
issued by the Company for the benefit of the holders of HIGH TIDES and under the
HIGH TIDES Debentures are general unsecured obligations of the Company which are
subordinate and junior in right of payment, to the extent and in the manner set
forth in the Guarantee and the Indenture, to all Senior Debt of the Company. At
March 31, 1998, the aggregate outstanding Senior Debt of the Company was
approximately $45 million after giving effect to the conversion of $80.0 million
aggregate principal amount of the Company's Series A Notes on June 19, 1998 (the
"Series A Notes Conversion").
The ability of the Issuer to pay amounts due on the HIGH TIDES is solely
dependent upon the Company making payments on the HIGH TIDES Debentures as and
when required.
Option to Extend Interest Payment Period
Provided that no Event of Default (as defined in the Indenture) has
occurred and is continuing with respect to the HIGH TIDES Debentures (a
"Debenture Event of Default"), the Company has the right under the Indenture to
defer the payment of interest on the HIGH TIDES Debentures accruing at any time
or from time to time for a period not exceeding 20 consecutive quarters with
respect to each Deferral Period; provided that no Deferral Period may extend
beyond (i) the maturity (whether at June 15, 2028 or by declaration of
acceleration, call for redemption or otherwise) and (ii) in the case of a
Deferral Period that begins prior to the Reset Date, the Reset Date. See
"Description of HIGH TIDES Debentures -- Option to Extend Interest Payment
Period." As a consequence of any such deferral, quarterly Distributions on the
HIGH TIDES by the Issuer will be deferred (and the amount of Distributions to
which holders of the HIGH TIDES are entitled will accumulate additional
Distributions thereon at the Applicable Rate, compounded quarterly from the
relevant payment date for such Distributions) during any such Deferral Period.
During any
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<PAGE> 14
such Deferral Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common stock
and preferred stock) other than stock dividends paid by the Company which
consist of stock of the same class as that on which the dividend is being paid
or (ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company (including its
junior subordinated deferrable interest debentures) that then rank pari passu in
all respects with or junior in interest to the HIGH TIDES Debentures (other than
(a) dividends or distributions in Common Stock of the Company, (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
Company's 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 to the HIGH TIDES Debentures), (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 stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged). A Deferral Period
will terminate upon the payment by the Company of all amounts then accrued and
unpaid on the HIGH TIDES Debentures (together with interest thereon accrued at
the Applicable Rate compounded quarterly, to the extent permitted by applicable
law). Prior to the termination of any such Deferral Period, the Company may
further defer the payment of interest; provided that no Deferral Period may
exceed 20 consecutive quarters or extend beyond (i) the maturity (whether at
June 15, 2028 or by declaration of acceleration, call for redemption or
otherwise) and (ii) in the case of a Deferral Period which begins prior to the
Reset Date, the Reset Date. Upon the termination of any Deferral Period, and
subject to the foregoing limitations, the Company may elect to begin a new
Deferral Period subject to the above conditions. There is no limitation on the
number of times that the Company may elect to begin a Deferral Period. See
"Description of HIGH TIDES -- Distributions" and "Description of HIGH TIDES
Debentures -- Option to Extend Interest Payment Date."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the HIGH TIDES
Debentures. However, should the Company elect to exercise such right in the
future, the market price of the HIGH TIDES would likely be adversely affected. A
holder that disposes of its HIGH TIDES during a Deferral Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its HIGH TIDES. In addition, as a result of the existence of the
Company's right to defer interest payments on the HIGH TIDES Debentures, the
market price of the HIGH TIDES may be more volatile than the market prices of
other securities on which original issue discount ("OID") accrues that are not
subject to such deferrals.
Tax Considerations
Holders of HIGH TIDES generally will include their allocable share of the
interest on the HIGH TIDES Debentures (in the form of OID) in taxable income for
United States federal income tax purposes on a constant yield basis, regardless
of their own methods of tax accounting. If the Company were to exercise its
right to defer payments of interest, holders of the HIGH TIDES would continue to
include their pro rata share of OID in gross income as it accrues in advance of
the receipt of cash attributable to such income. Such holders would not receive
the cash related to such income if they dispose of the HIGH TIDES prior to the
record date for payment of distributions thereafter. Moreover, because the Reset
Price exceeds the principal amount of the HIGH TIDES Debentures, during the
period through the Reset Date holders will accrue OID for federal income tax
purposes at a rate slightly in excess of the Initial Rate. See "United States
Federal Tax Considerations -- Interest Income and Original Issue Discount" and
"-- Sale of HIGH TIDES."
A holder which disposes of its HIGH TIDES between record dates for payments
of Distributions thereon will be required to include OID on the HIGH TIDES
Debentures through the date of disposition in income as ordinary income, and to
add such amount to its adjusted tax basis. To the extent the selling price is
less than the holder's adjusted tax basis (which basis will include all accrued
but unpaid OID), a holder will recognize a
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<PAGE> 15
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "United States Federal Tax Considerations -- Sale of HIGH TIDES."
In addition, there are a number of uncertainties concerning the proper
federal income tax treatment of the HIGH TIDES. As a result, there are certain
risks of adverse tax treatment to holders. See "United States Federal Tax
Considerations -- Tax Treatment of HIGH TIDES Debentures as Reset Bonds."
Remarketing of HIGH TIDES
The Remarketing Agent has agreed to use its best efforts to remarket all
HIGH TIDES which have been tendered for remarketing. All HIGH TIDES will be
deemed so tendered unless the holder thereof duly provides irrevocable notice to
the Tender Agent (which the Tender Agent will promptly remit to the Remarketing
Agent) to the contrary not later than May 20, 2005 (or, if such day is not a
Business Day, the next succeeding Business Day) (the "Tender Notification
Date"). Accordingly, if a holder of HIGH TIDES does not so notify the
Remarketing Agent, the HIGH TIDES it holds will no longer be outstanding after
the Remarketing, and such holder will have no further rights thereunder except
to receive an amount equal to (i) from the proceeds of the Remarketing or, in
the event of a Failed Final Remarketing, from the Company, 101% of the aggregate
liquidation amount of such HIGH TIDES, plus (ii) from the Company, accrued and
unpaid Distributions on such HIGH TIDES to (but excluding) the Reset Date.
Notwithstanding the foregoing, the Remarketing will be deemed to have
failed if (i) despite using its best efforts the Remarketing Agent cannot
establish a Term Rate less than or equal to the Maximum Rate, (ii) the
Remarketing Agent is excused from remarketing the HIGH TIDES because of (a) the
failure by the Company to satisfy a condition in the Remarketing Agreement or
(b) the occurrence of certain market events specified in the Remarketing
Agreement or (iii) there is no Remarketing Agent on the first day of the Initial
Remarketing Period. Should the Remarketing be deemed to have failed, the HIGH
TIDES Debentures will be mandatorily redeemable on the Reset Date (and,
accordingly, the HIGH TIDES will be redeemed on such date). If no HIGH TIDES are
tendered for remarketing, the Remarketing will not take place (although the
Remarketing will not be deemed to have failed) and the Remarketing Agent will
set the Term Provisions in accordance with the instructions set forth in the
Remarketing Notice in the manner that it believes, in its sole discretion, would
result in a price per HIGH TIDE equal to 101% of the liquidation amount thereof
were a Remarketing actually to occur.
Each HIGH TIDE is initially convertible, at the option of the holder
thereof, into 1.5179 shares of Class A Common Stock, as adjusted in certain
circumstances. See "Description of HIGH TIDES -- Conversion Rights." The Company
may elect to remarket the HIGH TIDES such that after the Reset Date the HIGH
TIDES are not convertible into shares of Class A Common Stock, or such that each
HIGH TIDE is convertible into a smaller number of shares of Class A Common
Stock. See "The Remarketing."
Tax Event or Investment Company Event Redemption or Distribution
Upon the occurrence of a Tax Event (except in certain limited
circumstances) or an Investment Company Event, the Company will cause the Issuer
Trustees to liquidate the Issuer and cause HIGH TIDES Debentures to be
distributed pro rata to the holders of the HIGH TIDES. In certain limited
circumstances upon the occurrence of a Tax Event, the Company will have the
right to redeem the HIGH TIDES Debentures, in whole, but not in part, for the
principal amount thereof plus accrued and unpaid interest thereon, in lieu of a
distribution of the HIGH TIDES Debentures, in which event the HIGH TIDES will be
redeemed in whole at the liquidation preference of $50 per HIGH TIDE plus
accrued and unpaid Distributions. In the case of a Tax Event, the Company may
alternatively elect to cause the HIGH TIDES to remain outstanding and pay
Additional Amounts on the HIGH TIDES Debentures. See "Description of HIGH
TIDES -- Tax Event or Investment Company Event Redemption or Distribution" and
"Description of HIGH TIDES Debentures -- Additional Amounts."
Under current United States federal income tax law, a distribution of the
HIGH TIDES Debentures would not be a taxable event to holders of the HIGH TIDES.
However, if a Tax Event results in the Issuer
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<PAGE> 16
being treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to holders of the HIGH TIDES. See "United
States Federal Tax Considerations -- Receipt of HIGH TIDES Debentures or Cash
Upon Liquidation of the Trust."
There can be no assurance as to the market prices for HIGH TIDES or for
HIGH TIDES Debentures that may be distributed in respect of HIGH TIDES if a
liquidation of the Issuer occurs. Accordingly, the HIGH TIDES, or the HIGH TIDES
Debentures that a holder of HIGH TIDES may receive upon liquidation of the
Issuer, may trade at a discount to the price that the investor paid to purchase
the HIGH TIDES offered hereby. Because holders of HIGH TIDES may receive HIGH
TIDES Debentures upon termination of the Issuer, prospective purchasers of HIGH
TIDES are also making an investment decision with regard to the HIGH TIDES
Debentures and should carefully review all the information regarding the HIGH
TIDES Debentures contained herein. See "Description of HIGH TIDES Debentures."
Liquidation of the Trust and Distribution of HIGH TIDES Debentures
The holders of all of the outstanding Common Securities have the right at
any time (except during the period beginning on the Business Day following the
Tender Notification Date and ending on the Reset Date, other than upon the
occurrence of a Tax Event or an Investment Company Event) to dissolve the Issuer
and, after satisfaction of liabilities to creditors of the Issuer in accordance
with applicable law, to cause the HIGH TIDES Debentures to be distributed to the
holders of the HIGH TIDES and Common Securities in liquidation of the Issuer;
provided that the Issuer Trustees shall have received an opinion of tax counsel
to the effect that holders of HIGH TIDES will not recognize any income, gain or
loss on such distribution for United States federal income tax purposes. If HIGH
TIDES Debentures are distributed to the holders of Trust Securities on or prior
to the Reset Date, the remarketing arrangements described herein with respect to
the HIGH TIDES will apply mutatis mutandis to the HIGH TIDES Debentures
distributed to the holders thereof. The HIGH TIDES Debentures, if distributed,
may be subject to restrictions on transfer as described under "Transfer
Restrictions."
Rights Under the Guarantee
The Bank of New York is the Guarantee Trustee under the Guarantee Agreement
between the Company, the Issuer and the Guarantee Trustee (the "Guarantee") and
holds the Guarantee for the benefit of the holders of the HIGH TIDES. The Bank
of New York also is the Debenture Trustee for the HIGH TIDES Debentures and
Property Trustee under the Declaration. The Guarantee guarantees to the holders
of the HIGH TIDES the following payments, to the extent not paid by the Issuer:
(i) any accumulated and unpaid Distributions required to be paid on the HIGH
TIDES, to the extent that the Issuer has funds on hand available therefor at
such time; (ii) the Redemption Price with respect to any HIGH TIDES called for
redemption, to the extent that the Issuer has funds on hand available therefor
at such time; and (iii) upon a voluntary or involuntary termination, dissolution
or liquidation of the Issuer (unless the HIGH TIDES Debentures are distributed
to holders of the Trust Securities), the lesser of (a) the aggregate of the
liquidation amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Issuer has funds on hand available therefor at
such time, and (b) the amount of assets of the Issuer remaining available for
distribution to holders of the HIGH TIDES on liquidation of the Issuer. The
Company's obligations arising or accruing under the Guarantee are general
unsecured obligations and are subordinated as described under "-- Ranking of
Obligations Under the Guarantee and the HIGH TIDES Debentures." The holders of
at least a majority in aggregate liquidation amount of the outstanding HIGH
TIDES have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee under the Guarantee.
Any holder of the HIGH TIDES may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Issuer, the Guarantee Trustee or any
other person or entity. If the Company were to default on its obligation to pay
amounts payable under the HIGH TIDES Debentures, the Issuer will lack funds for
the payment of Distributions or amounts payable on redemption of the HIGH TIDES
or otherwise, and, in such event,
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<PAGE> 17
holders of the HIGH TIDES would not be able to rely upon the Guarantee for
payment of such amounts. Instead, if a Debenture Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay any amounts payable in respect of the HIGH TIDES Debentures on the
payment date on which such payment is due, then a holder of HIGH TIDES may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of any amounts payable in respect of such HIGH TIDES
Debentures having a principal amount equal to the aggregate liquidation amount
of the HIGH TIDES of such holder (a "Direct Action"). In connection with such
Direct Action, the Company will have a right of set-off under the Indenture to
the extent of any payment made by the Company to such holder of HIGH TIDES in
the Direct Action. Except as described herein, holders of HIGH TIDES will not be
able to exercise directly any other remedy available to the holders of the HIGH
TIDES Debentures or assert directly any other rights in respect of the HIGH
TIDES Debentures. See "Description of HIGH TIDES Debentures -- Debenture Events
of Default" and "-- Enforcement of Certain Rights by Holders of HIGH TIDES" and
"Description of Guarantee." The Declaration provides that each holder of HIGH
TIDES by acceptance thereof agrees to the provisions of the Guarantee and the
Indenture.
Limited Voting Rights
Holders of HIGH TIDES have limited voting rights relating generally to the
modification of the HIGH TIDES and the Guarantee and the exercise of the
Issuer's rights as holder of HIGH TIDES Debentures. Holders of HIGH TIDES are
not entitled to appoint, remove or replace the Property Trustee or the Delaware
Trustee except upon the occurrence of certain events described herein. The
Property Trustee and the holders of all of the Common Securities may, subject to
certain conditions, amend the Declaration without the consent of any holders of
HIGH TIDES to cure any ambiguity or to make other provisions not inconsistent
with existing provisions of the Declaration or to ensure that the Issuer will
not be classified for United States federal income tax purposes as an
association subject to taxation as a corporation or will be classified as a
grantor trust. See "Description of HIGH TIDES -- Voting Rights; Amendment of the
Declaration" and "-- Removal of Issuer Trustees; Appointment of Successors."
Absence of Public Market
There is no existing market for the HIGH TIDES (or the HIGH TIDES
Debentures) and there can be no assurance as to the liquidity of any markets
that may develop for the HIGH TIDES (or the HIGH TIDES Debentures), the ability
of the holders to sell their HIGH TIDES (or HIGH TIDES Debentures) or at what
price holders of the HIGH TIDES (or the HIGH TIDES Debentures) will be able to
sell such securities. Trading prices of the HIGH TIDES (and the HIGH TIDES
Debentures) depend on many factors including, among other things, prevailing
interest rates, the Company's operating results and the market for similar
securities. Credit Suisse First Boston Corporation currently makes a market for
the HIGH TIDES; however, none of the Initial Purchasers are 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.
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<PAGE> 18
THE COMPANY
THE COMPANY
The Company, through subsidiary companies and franchisees, operates the
Budget System and related transportation service businesses. The Budget System
is the third largest worldwide car and truck rental system, with over 3,200
locations and a peak fleet size during 1997 of 283,000 cars and 22,500 trucks.
The Budget System includes locations in both the airport and local (downtown and
suburban) markets in all major metropolitan areas in the United States, in many
other small and mid-size U.S. markets and in more than 120 countries worldwide.
The Budget System had approximately 509 Budget-owned locations in the United
States and 71 Budget-owned locations outside of the United States at December
31, 1997. In addition, Budget franchisees operated approximately 455
royalty-paying franchise locations in the United States and 2,171 locations
internationally at December 31, 1997.
Management's long-term strategy is to create a network of
transportation-related companies which leverage the asset base and expertise of
Budget Group. Budget Group's assets include a trade name recognized around the
world; locations for the rental, sale and maintenance of vehicles; a workforce
that is proficient in acquiring, financing, monitoring, maintaining and selling
vehicles; and advanced information systems to support these operations.
Increasing the utilization of these assets by acquiring related businesses
delivers economies of scale and increases profitability. The economies of scale
are achieved primarily in the areas of purchasing, financing, facilities
utilization and management, maintenance and advertising. In pursuit of this
strategy, the Company has substantially expanded its operations during the last
15 months, principally through its acquisitions of Budget Rent A Car
Corporation, Premier Car Rental LLC ("Premier Car Rental"), Cruise America, Inc.
("Cruise America") and Ryder TRS.
Budget-owned locations in the United States account for approximately 80%
of the Budget System's U.S. vehicle rental revenues, while Budget-owned
locations outside the United States account for approximately nine percent of
the Budget System's international vehicle rental revenues. Management believes
this high level of domestic corporate ownership is a competitive advantage in
the marketplace as it facilitates more consistent delivery of high quality
services and improved operations and communications, thereby strengthening the
Budget brand name among consumers.
The Budget System is one of only three vehicle rental systems that offer
rental vehicles throughout the world under a single brand name, with locations
in Europe, Canada, Latin America, the Middle East, Asia/ Pacific and Africa. The
Budget System currently maintains more local market rental locations throughout
the world than most of its major competitors and is unique among major car
rental systems in that it rents trucks in most major markets worldwide. The
Budget System, including the franchisees and agents acquired as a result of the
Ryder TRS Acquisition, operates the second largest consumer truck rental
business and the third largest general use car and truck rental system in the
world.
In addition, the Company owns Cruise America, one of the largest North
American companies specializing primarily in the rental and sale of recreational
vehicles; Premier Car Rental, which serves the insurance replacement market,
Budget Car Sales, Inc., one of the largest independent retailers of late model
vehicles in the United States.
The Company acquired Cruise America in January 1998. Cruise America began
rental and sales operations in Miami, Florida in 1972 with an initial strategy
to locate rental centers in metropolitan gateway cities which are destinations
for large numbers of domestic and international travelers. Since that time,
Cruise America has established rental and/or sales locations across the United
States and Canada. At December 31, 1997, Cruise America operated a total of 16
hub offices, 76 satellite offices and a rental fleet of 2,810 RVs. In addition
to rentals, Cruise America sells new and used RVs (including vehicles retired
form the rental fleet) from its hub offices. The sales effort is conducted under
the name RV DEPOT. For the year ended April 30, 1997, RV sales represented
approximately 44% of Cruise America's total revenue. Cruise America comple-
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<PAGE> 19
ments and enhances the Company's truck rental operations by providing a source
of used trucks for the Company's truck rental fleet and access to its ten modern
truck maintenance facilities and allows the Budget System to capitalize on the
growing base of inbound European leisure travelers.
In July 1997 the Company acquired Premier Car Rental, which provides rental
cars for the insurance replacement market under its own trade name. At December
31, 1997, Premier Car Rental owned and operated approximately 8,500 vehicles
from 150 locations in 16 major U.S. markets. Management believes the acquisition
of Premier Car Rental enables the Company to compete effectively in the
insurance replacement market with an established brand name and creates
synergies with the Company's other businesses. The acquisition of Premier Car
Rental allows the Company to better manage the strategic disposition of higher
mileage vehicles that are not subject to manufacturers' repurchase programs by
transferring such vehicles form Budget Car Rental locations to Premier Car
Rental locations.
Budget Car Sales is one of the largest U.S. independent retailers of used
cars, offering late model, low mileage cars. As of December 31, 1997, there were
26 Budget Car Sales stores in 16 U.S. markets. Budget Car Sales complements the
Company's strategy of building a network of transportation-related companies
and, like Premier Car Rental, allows the Company to better manage the strategic
disposition of vehicles that are not subject to manufacturers' repurchase
programs. On June 1, 1998, Budget Car Sales acquired three new car dealerships
which had combined revenue of $165 million in 1997. The Company believes that
both its vehicle rental and vehicle sales operations will benefit from its
ownership of these new car dealerships.
Van Pool Services, the Company's commuter van pooling subsidiary, was
acquired in February 1996 and maintains offices in 28 cities located in 18
states and the District of Columbia. Founded in 1977, Van Pool Services provides
van pooling services to individuals, corporations and municipalities. At
December 31, 1997, Van Pool Services operated a fleet of approximately 3,700
passenger vans. Van Pool Services benefits from the Budget System through shared
repair and maintenance facilities and fleet purchasing programs.
THE RYDER TRS ACQUISITION
On June 19, 1998, the Company acquired Ryder TRS, the second largest
provider of truck rentals and related moving supplies and services to consumers
and light commercial users in the United States, with a fleet of approximately
29,000 trucks as of December 31, 1997. As consideration for the Ryder TRS
Acquisition, the Company issued 3,455,206 shares of Class A Common Stock, paid
$125 million in cash and issued warrants to purchase Class A Common Stock, the
value of which is capped at $19 million. In addition, the Company agreed to pay
Ryder TRS stockholders a make-whole payment, the amount of which will depend on
the performance of the Class A Common Stock following the Ryder TRS Acquisition.
The Company also assumed approximately $522 million of Ryder TRS's debt.
Ryder TRS rents trucks to both individual consumers and businesses.
Consumers rent trucks primarily to move household goods. Ryder TRS also serves a
wide range of businesses that rent light- and medium-duty trucks (i.e., trucks
with a gross vehicle weight of less than 26,000 pounds) for a variety of light
commercial applications. Commercial customers range from small local businesses,
such as florists, package delivery companies and local private moving companies,
to large national companies that rent trucks primarily for the transportation
and delivery of inventory and packages. Commercial rentals complement Ryder
TRS's consumer rentals by enabling Ryder TRS to improve utilization of its
trucks on weekdays, when consumer demand is typically lower than it is on
weekends.
The Company's management believes that business conducted by Ryder TRS will
complement and enhance Budget's truck rental business. As a result of the Ryder
TRS Acquisition, the Company, its franchisees and agents operate the second
largest consumer truck rental business and third largest general use car and
truck rental system in the world. The Ryder TRS Acquisition is expected to
result in significant cost savings, including (i) significant economies of scale
in fleet purchasing and management, vehicle maintenance
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<PAGE> 20
and in the cost of parts, supplies and equipment and (ii) the opportunity to
consolidate fleet and yield management systems.
* * *
The principal executive offices of the Company are located at 125 Basin
Street, Suite 210, Daytona Beach, Florida 32114 (telephone number: (904)
238-7035).
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis, including the effect of retroactive restatement
for pooling of interests with Cruise America, Inc., for each of the five years
ended December 31, 1997 and for the three-month period ended March 31, 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------- MARCH 31,
1993 1994 1995 1996 1997 1998
----- ----- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................ (1) (1) 1.14x 1.32x 1.39x (1)
</TABLE>
- ---------------
(1) Earnings for the fiscal years ended December 31, 1993 and 1994 and for the
three-month period ended March 31, 1998 were inadequate to cover fixed charges.
Additional earnings of $2.4 million, $.6 million and $5.7 million, respectively,
would have been required to bring the ratio to 1.0 in the respective periods.
The ratio of earnings to fixed charges has been computed on a total
enterprise basis. Earnings represent income before taxes, plus fixed charges.
Fixed charges represent interest (including amortization of debt issuance cost)
and the estimated interest portion of rental charges.
ACCOUNTING TREATMENT
For financial reporting purposes, the accounts of the Trust will be
included in the consolidated financial statements of the Company. The HIGH TIDES
will be presented as a separate line item in the consolidated balance sheet of
the Company entitled "Company-obligated mandatorily redeemable Securities of
Budget Group Capital Trust," and appropriate disclosures about the HIGH TIDES,
the Guarantee and the HIGH TIDES Debentures will be included in the notes to the
Company's consolidated financial statements. For financial reporting purposes,
the Company records distributions payable on the HIGH TIDES as a minority
interest in the Company's statement of consolidated income.
USE OF PROCEEDS
The Selling Holders will receive all of the proceeds from the sale of the
Offered Securities. Neither the Company nor the Issuer will receive any of the
proceeds from the sale of the Offered Securities.
BUDGET GROUP CAPITAL TRUST
Budget Group Capital Trust is a statutory business trust that was formed
under Delaware law on June 4, 1998. The Trust's original declaration of trust
was amended and restated in its entirety by the Company, as Depositor, and the
trustees of the Issuer (the "Issuer Trustees") (as so amended and restated, the
"Declaration"), in connection with the issuance of the Trust Securities. The
Company owns Common Securities in an aggregate liquidation amount equal to
approximately 3% of the total capital of the Issuer. Payment on the Common
Securities is made pro rata with the HIGH TIDES except that upon the occurrence
and during the continuance of an Event of Default under the Declaration, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of the holders of the HIGH TIDES. The assets of the
Trust consist principally of the HIGH TIDES Debentures, and payments under the
HIGH TIDES Debentures are the sole revenue of the Issuer. The Issuer exists for
the exclusive purposes of (i) issuing the Trust Securities
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<PAGE> 21
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the HIGH TIDES
Debentures and (iii) engaging in only those other activities necessary or
incidental thereto.
Pursuant to the Declaration, (i) the number of Issuer Trustees is five,
(ii) three of the Issuer Trustees (the "Administrative Trustees") are officers
of Company, (iii) the fourth trustee is a financial institution that is
unaffiliated with the Company (the "Property Trustee") and (iv) the fifth
trustee is an entity which maintains its principal place of business in the
State of Delaware (the "Delaware Trustee"). The Bank of New York, a New York
banking corporation, acts as Property Trustee and its affiliate, The Bank of New
York (Delaware), a Delaware banking corporation, acts as Delaware Trustee. The
Property Trustee and the Delaware Trustee may be removed or replaced by the
holder of the Common Securities. The Bank of New York also acts as trustee under
the Guarantee (the "Guarantee Trustee") and under the Indenture (the "Debenture
Trustee"). See "Description of Guarantee" and "Description of HIGH TIDES
Debentures." In certain circumstances, the holders of a majority of the HIGH
TIDES are entitled to appoint one additional trustee (a "Special Trustee"), who
need not be an officer or employee of or otherwise affiliated with the Company
and who will have the same rights, powers and privileges as the Administrative
Trustees. See "Description of HIGH TIDES -- Voting Rights; Amendment of the
Declaration."
The Property Trustee holds title to the HIGH TIDES Debentures for the
benefit of the holders of the Trust Securities, and the Property Trustee has the
power to exercise all rights, powers and privileges under the Indenture as the
holder of the HIGH TIDES Debentures. In addition, the Property Trustee maintains
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the HIGH TIDES
Debentures for the benefit of the holders of the Trust Securities. The Guarantee
Trustee holds the Guarantee for the benefit of the holders of the HIGH TIDES.
Subject to the right of the holders of the HIGH TIDES to appoint a Special
Trustee, the Company, as the direct or indirect holder of all the Common
Securities, has the right to appoint, remove or replace any of the Issuer
Trustees and to increase or decrease the number of trustees, provided that the
number of trustees shall be at least three, a majority of which shall be
Administrative Trustees. See "Description of HIGH TIDES Debentures."
The rights of the holders of the HIGH TIDES, 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 HIGH TIDES." The Declaration, the Indenture and the Guarantee also
incorporate by reference the terms of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). At the time the Registration Statement
becomes effective, the Declaration, the Indenture and the Guarantee will be
qualified under the Trust Indenture Act.
The place of business and the telephone number of the Trust are the
principal executive offices and telephone number of the Company.
THE REMARKETING
NOTICE OF REMARKETING; TENDER FOR SALE BY REMARKETING; RETENTION OF HIGH TIDES
At least 40 days but not more than 60 days prior to June 15, 2005, the
Issuer will send to the holders of HIGH TIDES a notice (the "Remarketing
Notice") stating whether it intends to remarket (the "Remarketing") the HIGH
TIDES as securities which will be convertible into Class A Common Stock (a
"Convertible Remarketing") or which will be nonconvertible (a "Nonconvertible
Remarketing"). So that no holder of HIGH TIDES, through inadvertence or
otherwise, may fail to tender any HIGH TIDES for sale in the Remarketing, each
outstanding HIGH TIDE will be deemed to have been tendered for remarketing
unless the holder thereof has given irrevocable notice to the contrary to the
Tender Agent (which the Tender Agent will promptly remit to the Remarketing
Agent). Such irrevocable notice, which may be telephonic or written, must be
delivered not earlier than 30 days prior to May 20, 2005 (or, if such day is not
a Business Day, the next succeeding Business Day) (the "Tender Notification
Date"), and not later than 5:00 p.m., New York City time, on the Tender
Notification Date. A holder's notice of an election to retain HIGH TIDES must
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<PAGE> 22
state the number of HIGH TIDES to be retained (which must be all of the HIGH
TIDES represented by the applicable certificate, unless such certificate is a
Global HIGH TIDE), the number of the certificate representing the HIGH TIDES not
to be deemed to have been so tendered and the number of HIGH TIDES represented
by such certificate. Any transferee of a HIGH TIDE for which such notice has
been provided shall be bound thereby.
The failure by a holder of HIGH TIDES to give timely notice of an election
to retain all (or, in the case of a Global HIGH TIDE, any part) of such holder's
HIGH TIDES will constitute the irrevocable tender for sale in the Remarketing of
all the HIGH TIDES it holds. On and after the Reset Date, the terms of all HIGH
TIDES, whether or not tendered for remarketing, will be modified by the Term
Provisions, as the same shall be established by the Remarketing Agent.
If the HIGH TIDES are not held by DTC or its nominee in the form of one or
more Global HIGH TIDES, certificates representing remarketed HIGH TIDES will be
issued to the purchasers thereof, irrespective of whether the certificates
formerly representing such HIGH TIDES have been delivered to the Tender Agent. A
holder of HIGH TIDES which has not duly given notice that it will retain its
HIGH TIDES will cease to have any further rights with respect to such HIGH TIDES
upon the successful remarketing thereof, except the right of such holder to
receive an amount equal to (i) from the proceeds of the Remarketing or, in the
event of a Failed Final Remarketing, from the Company, 101% of the aggregate
liquidation amount of such HIGH TIDES (the "Reset Price"), plus (ii) from the
Company, any accrued and unpaid Distributions on such HIGH TIDES to (but
excluding) the Reset Date, (upon surrender of the certificate representing such
HIGH TIDES to the Tender Agent properly endorsed for transfer, in the case of a
holder other than DTC which has taken physical delivery of a HIGH TIDES
certificate), but without additional interest thereon (and any such certificate
will cease to represent outstanding HIGH TIDES).
If no HIGH TIDES are tendered for remarketing, the Remarketing will not
take place (although the Remarketing will not be deemed to have failed), and the
Remarketing Agent will set the Term Provisions in a manner consistent with the
Remarketing Notice that it believes, in its sole discretion, would result in a
price per HIGH TIDE equal to 101% of the liquidation amount thereof were a
Remarketing actually to occur.
THE REMARKETING PROCESS
The Remarketing Agent has agreed to use its best efforts to remarket all
HIGH TIDES tendered for Remarketing in accordance with the Remarketing
Agreement. The Remarketing Agent will establish, effective beginning on the
Reset Date, (i) the rate (the "Term Rate") per annum at which Distributions will
accrue on the HIGH TIDES, (ii) the number of shares of Class A Common Stock, if
any, into which each HIGH TIDE may be converted (the "Term Conversion Ratio")
and (iii) the price, manner and time, if any, at which the HIGH TIDES may be
redeemed from the proceeds of a Common Stock Offering (the "Term Call
Protections" and together with the Term Rate and the Term Conversion Ratio, the
"Term Provisions"). The Remarketing Agent will use its best efforts to establish
the Term Provisions most favorable to the Company consistent with the successful
remarketing of all HIGH TIDES tendered therefor at a price equal to 101% of the
liquidation amount thereof. The Remarketing Agent may purchase HIGH TIDES
tendered for remarketing, but it shall not be obligated to purchase any HIGH
TIDES except to the extent expressly provided under "The Remarketing Agent."
The Remarketing will be done without charge to the holders of the HIGH
TIDES, but the Company shall be obligated to pay the Remarketing Agent fees for
its services. See "The Remarketing Agent." Neither the Company nor any of its
affiliates will be permitted to submit orders or purchase tendered HIGH TIDES in
the Remarketing. See "-- Purchases by the Company and Its Affiliates."
In establishing the Term Provisions during the Remarketing, the Remarketing
Agent will take into account the following factors (the "Remarketing
Conditions"): (i) short- and long-term market interest rates and indices of such
short- and long-term interest rates; (ii) market supply and demand for short-
and long-term securities; (iii) yield curves for short- and long-term securities
comparable to the HIGH TIDES; (iv) industry and financial conditions which may
affect the HIGH TIDES; (v) the number of HIGH TIDES to be remarketed; (vi) the
number of potential purchasers; (vii) the current ratings by nationally
recognized
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<PAGE> 23
statistical rating organizations of long-term subordinated debt of the Company
and of other outstanding capital securities of the Company's trust subsidiaries;
(viii) the number of shares of Class A Common Stock, if any, into which the HIGH
TIDES will be convertible; and (ix) the length and type of call protections, if
any. The Company currently has no intention of causing the Applicable Conversion
Price on the Reset Date to be less than 110% of the fair market value of the
Class A Common Stock on the Reset Date.
If any HIGH TIDES are tendered for remarketing, on the Business Day
following the Tender Notification Date, the Remarketing Agent will commence a
Convertible Remarketing or a Nonconvertible Remarketing, as the case may be (in
either case, an "Initial Remarketing"), in accordance with the Remarketing
Agreement and pursuant to the instructions set forth in the Remarketing Notice.
The Remarketing Agent will determine, and upon request make available to
interested persons non-binding indications of, the Term Provisions based upon
then-current Remarketing Conditions. The Remarketing Agent will solicit and
receive orders from prospective investors to purchase tendered HIGH TIDES. The
Remarketing Agent will continue using its best efforts to remarket the HIGH
TIDES as described above, adjusting the non-binding indications of the Term
Provisions as necessary to establish the Term Conditions most favorable to the
Company consistent with remarketing all HIGH TIDES tendered therefor at 101% of
the aggregate liquidation amount thereof until the Remarketing is completed or
is deemed to have failed for any of the reasons set forth under "-- Effect of a
Failed Remarketing."
If the Remarketing Agent determines that the Remarketing has not failed and
the Term Provisions have been established during the period (the "Initial
Remarketing Period") beginning on the first Business Day following the Tender
Notification Date and ending on June 1, 2005 (or, if such date is not a Business
Day, the next succeeding Business Day) the ("Initial Remarketing Termination
Date"), the Remarketing Agent will promptly communicate the Term Provisions to
the Tender Agent, who will communicate the Term Provisions to the Issuer
Trustees, the Debenture Trustee, the Issuer, the Paying Agent, the Company and
each holder (if any) which timely elected not to tender all of its HIGH TIDES
for remarketing, by written notice or by telephone promptly confirmed by
telecopy or other writing. On the Reset Date, new holders will tender the Reset
Price for the tendered HIGH TIDES as set forth below under "-- Settlement," and
the Term Provisions will become effective.
EFFECT OF FAILED REMARKETING
The Initial Remarketing will fail (an "Initial Failed Remarketing") if (i)
despite using its best efforts the Remarketing Agent is unable to establish,
prior to the Initial Remarketing Termination Date, a Term Rate which is less
than or equal to the Treasury Rate plus 6% per annum (the "Maximum Rate"), (ii)
the Remarketing Agent is excused from remarketing the HIGH TIDES because of (a)
the failure by the Company or the Trust to satisfy a condition in the
Remarketing Agreement or (b) the occurrence of certain market events specified
in the Remarketing Agreement, or (iii) there is no Remarketing Agent on the
first day of the Initial Remarketing Period.
If the Initial Remarketing fails because the Remarketing Agent was not able
to establish a Term Rate less than or equal to the Maximum Rate, the Remarketing
Agent will commence a second remarketing (the "Final Remarketing") during the
period beginning on the Business Day following the Initial Remarketing
Termination Date and ending on the date which is three Business Days (or such
shorter period as shall be agreed to by the Remarketing Agent) prior to June 15,
2005 (or, if such day is not a Business Day, the next succeeding Business Day)
(the "Final Remarketing Period"), which will be a Convertible Remarketing if the
Initial Remarketing was a Nonconvertible Remarketing and vice versa.
If the Remarketing Agent is able to establish a Term Rate less than or
equal to the Maximum Rate during the Final Remarketing Period, it shall promptly
communicate the Term Provisions to the Tender Agent, who will communicate the
Term Provisions to the Issuer Trustees, the Issuer, the Paying Agent, the
Company and each holder (if any) which timely elected not to tender all of its
HIGH TIDES for remarketing, by written notice or by telephone promptly confirmed
by telecopy or other writing. On the Reset Date, new holders will tender the
Reset Price for the tendered HIGH TIDES as set forth below under
"-- Settlement," and the Term Provisions will become effective.
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<PAGE> 24
If despite using its best efforts, the Remarketing Agent is still not able
to establish a Term Rate less than or equal to the Maximum Rate prior to the
expiration of the Final Remarketing Period, the Final Remarketing will fail (a
"Failed Final Remarketing"). In the event of a Failed Final Remarketing, the
Company will be required to redeem the outstanding HIGH TIDE Debentures on the
Reset Date at 101% of the aggregate principal amount thereof, plus any accrued
and unpaid interest thereon (the "Failed Remarketing Redemption Price"). The
failure of the Company to redeem the outstanding HIGH TIDES Debentures in whole
on the Reset Date in the event of a Failed Final Remarketing shall constitute a
Debenture Event of Default. See "Description of HIGH TIDES
Debentures -- Debenture Events of Default." Upon redemption of any HIGH TIDE
Debentures as a result of a Failed Final Remarketing, a Like Amount of HIGH
TIDES will be redeemed at the Failed Remarketing Redemption Price. See
"Description of HIGH TIDES -- Mandatory Redemption" and "Description of HIGH
TIDES Debentures -- Redemption -- Mandatory Redemption." There can be no
assurance that all of the HIGH TIDES tendered therefor will be remarketed.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the date of calculation, appearing in
the most recently published statistical release designated H.15(519) or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
the Reset Date. The Treasury Rate shall be calculated on the third Business Day
preceding the Reset Date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the Remaining Life. If no United States Treasury
security has a maturity which is within a period from three months before to
three months after the Reset Date, the two most closely corresponding United
States Treasury securities shall be used as the Comparable Treasury Issue, and
the rate being calculated shall be interpolated or extrapolated on a
straight-line basis, rounding to the nearest month using such securities.
"Comparable Treasury Price" means (A) the arithmetic mean of five Reference
Treasury Dealer Quotations for the Reset Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
arithmetic mean of all such Reference Treasury Dealer Quotations.
"Quotation Agent" means Credit Suisse First Boston Corporation and its
successors; provided, however, that if the foregoing shall cease to be a primary
United States Government securities dealer in The City of New York (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and the Reset Date, the arithmetic mean, as determined
by the Debenture Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Debenture Trustee by such Reference Treasury Dealer at
5:00 p.m., New York City time, on the third Business Day preceding the Reset
Date.
"Remaining Life" means the period beginning on the Reset Date and ending at
June 15, 2028.
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SETTLEMENT
Settlement of transactions in connection with the Remarketing will take
place on June 15, 2005 (or, if such day is not a Business Day, the next
succeeding Business Day), or such earlier date as the Remarketing Agent may, in
its sole discretion, determine. Payments in respect of the tendered HIGH TIDES
in an amount equal to the Reset Price will be made by the Tender Agent (but only
to the extent in fact received by the Tender Agent) on such date in the manner
described under "Description of HIGH TIDES -- Form, Book Entry Procedures and
Transfer," but, in the case of a holder (other than DTC) which has taken
physical delivery of a certificate representing its HIGH TIDES, such payment
shall be made only upon surrender to the Tender Agent by 2:30 p.m. on such date
(or any succeeding date) of the certificate representing such HIGH TIDES,
properly endorsed for transfer. See "-- Tender Agent."
None of the Issuer, the Issuer Trustees, the Tender Agent and (except to
the extent expressly provided under "The Remarketing" and "The Remarketing
Agent") the Company and the Remarketing Agent will be obligated to provide or
advance funds to make payment to the holders of HIGH TIDES tendered in the
Remarketing.
PURCHASES BY THE COMPANY AND ITS AFFILIATES
While the Company (or an affiliate thereof) may from time to time purchase,
hold and sell HIGH TIDES, neither the Company nor any of its affiliates may
purchase any HIGH TIDES on the Reset Date or submit orders in the Remarketing,
and the Remarketing Agent has agreed that it will not knowingly remarket any
HIGH TIDES to the Company or any of its affiliates.
TENDER AGENT
Tenders of HIGH TIDES in the Remarketing will be made to the tender agent
(the "Tender Agent"), and the Tender Agent will pay to the prior holders thereof
the Reset Price (provided the Tender Agent receives such amount from the
Remarketing Agent). The Tender Agent will be the Property Trustee (or, in the
event of the distribution of HIGH TIDES Debentures to the holders of HIGH TIDES
prior to the Reset Date, the Debenture Trustee).
TERMINATION OF THE ISSUER
If the Issuer is for any reason liquidated or dissolved prior to the Reset
Date and the HIGH TIDES Debentures are distributed to the holders of Trust
Securities in connection therewith, the Remarketing will proceed as described
herein except that the HIGH TIDES Debentures rather than the HIGH TIDES will be
remarketed by the Remarketing Agent, the Debenture Trustee rather than the
Property Trustee will be the Tender Agent and the descriptions herein of the
Remarketing of the HIGH TIDES (including under "The Remarketing" and "The
Remarketing Agent") will apply mutatis mutandis to such remarketing of HIGH
TIDES Debentures. Accordingly, in such an event, without limiting the generality
of the foregoing statements, (i) the HIGH TIDES Debentures instead of the HIGH
TIDES will be deemed to have been tendered for remarketing absent timely notice
to the contrary (provided that any notice duly and timely given in respect of
the tender for remarketing of any HIGH TIDES will apply to the HIGH TIDES
Debentures distributed in respect thereof), (ii) the HIGH TIDES Debentures
instead of the HIGH TIDES will be remarketed by the Remarketing Agent, (iii) the
Remarketing Agent will use its best efforts to establish the Term Provisions
most favorable to the Company consistent with the successful remarketing of all
HIGH TIDES Debentures tendered therefor at a Reset Price equal to 101% of the
principal amount thereof and (iv) subject to the proviso in clause (i) above, a
holder of HIGH TIDES Debentures which has not duly given notice by the Tender
Notification Date that it will retain its HIGH TIDES Debentures will cease to
have any further rights with respect to such HIGH TIDES Debentures upon the
successful remarketing thereof, except the right of such holder to receive an
amount equal to (i) from the proceeds of the Remarketing or, in the event of a
Failed Final Remarketing, from the Company, 101% of the principal amount of such
HIGH TIDES Debentures, plus (ii) from the Company, any accrued but unpaid
interest on such HIGH TIDES Debentures to (but excluding) the Reset Date (upon
surrender of the certificate representing such HIGH TIDES
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Debentures to the Tender Agent properly endorsed for transfer, in the case of a
holder (other than DTC) which has taken physical delivery of a HIGH TIDES
Debentures certificate), but without any additional interest thereon (any such
certificate will cease to represent outstanding HIGH TIDES Debentures).
If the HIGH TIDES Debentures are accelerated, redeemed or otherwise prepaid
on or prior to the Reset Date, the Remarketing will not take place.
THE REMARKETING AGENT
The Company will use its reasonable best efforts to assure that, at all
times prior to and including the Reset Date, an investment bank, broker, dealer
or other organization which, in the judgment of the Company, is qualified to
remarket HIGH TIDES and to establish the Term Rate is acting as Remarketing
Agent (the "Remarketing Agent"), provided that if the Company fails to appoint a
successor upon the resignation or removal of the Remarketing Agent reasonably
promptly, a successor having such qualifications may be appointed by the holders
of at least 25% in aggregate liquidation amount of the outstanding HIGH TIDES.
Credit Suisse First Boston Corporation has agreed to act as the initial
Remarketing Agent but may resign or be replaced by the Company, in accordance
with the terms of the Remarketing Agreement. The Remarketing Agent may authorize
any broker-dealer to assist in the Remarketing.
The Remarketing Agreement among the Company, the Issuer, the Administrative
Trustees and the Tender Agent (the "Remarketing Agreement") provides that the
Remarketing Agent will receive fees from the Company for the Remarketing equal
to 1% of the aggregate liquidation amount of outstanding HIGH TIDES on the Reset
Date upon settlement of the transactions contemplated by the Remarketing. In
addition to such fees, the Company will reimburse the Remarketing Agent for all
out-of-pocket expenses reasonably incurred in connection with the performance of
its duties. In the event that both the Initial Remarketing and the Final
Remarketing fail, the Company shall not be required to pay any fees to, or
reimburse any out-of-pocket expenses of, the Remarketing Agent. The Remarketing
will be done without charge to the holders of the HIGH TIDES.
The Issuer has agreed in the Remarketing Agreement to indemnify the
Remarketing Agent against certain liabilities arising out of or in connection
with its duties or to contribute to payments which the Remarketing Agent may be
required to make in respect thereof.
The Remarketing Agent may resign and be relieved from its duties under the
Remarketing Agreement under certain conditions on a date specified in a notice
in writing delivered to the Issuer and the Company, which resignation will be
effective no earlier than 30 days after delivery of such notice. The successor
Remarketing Agent must be an investment bank, broker, dealer or other
organization which, in the judgment of the Company, is qualified to remarket the
HIGH TIDES and to establish the Term Provisions and which has entered into a
remarketing agreement with the Company and the Issuer in which it has agreed to
conduct the Remarketing in accordance with the terms and conditions described
herein and provided in the Remarketing Agreement. The holders of a majority in
aggregate liquidation amount of the outstanding HIGH TIDES may remove the
Remarketing Agent for cause. The Tender Agent will send notice to the holders of
HIGH TIDES of the resignation or removal of the Remarketing Agent and the
appointment of a successor Remarketing Agent. If there is no Remarketing Agent
on the first day of the Initial Remarketing Period, the Remarketing will fail
and the HIGH TIDES Debentures will be mandatorily redeemable on the Reset Date.
See "The Remarketing -- Effect of Failed Remarketing."
The Remarketing Agreement provides that the Remarketing Agent will not be
obligated to remarket HIGH TIDES if (i) there is a material misstatement or
omission in any (a) disclosure document approved by the Issuer or the Company in
connection with the Remarketing or (b) document publicly disclosed (including in
a filing pursuant to the Exchange Act) by or on behalf of the Issuer or the
Company, unless in each case the Remarketing Agent is satisfied that such
misstatement or omission has been properly corrected or (ii) either the Issuer
or the Company fails to satisfy conditions customary in an offering.
Broker-dealers, if any, which obtain purchasers for the HIGH TIDES will be
paid a commission or fee by the Remarketing Agent based upon the remarketing fee
described above and the number of HIGH TIDES
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sold. Broker-dealers will enter into broker-dealer agreements with the
Remarketing Agent, which will provide for their participation in the Remarketing
and will require them to follow certain private placement procedures. The
identity of the broker-dealers, if any, which will participate in the
Remarketing has not yet been determined; the Remarketing Agent will have the
right to select broker-dealers therefor at any time prior to the Reset Date. No
broker-dealer will be obligated to purchase the HIGH TIDES.
If for any reason Term Provisions are established by the Remarketing Agent
but on the Reset Date the Remarketing Agent is unable to sell one or more HIGH
TIDES tendered for remarketing, the Remarketing Agent will be obligated (except
upon the occurrence of certain market events specified in the Remarketing
Agreement) to purchase such HIGH TIDES for the Reset Price on the Reset Date.
DESCRIPTION OF HIGH TIDES
Pursuant to the terms of the Declaration, the Issuer Trustees on behalf of
the Trust have issued the HIGH TIDES and the Common Securities in fully
registered form without interest coupons. The HIGH TIDES represent preferred
undivided beneficial ownership interests in the Trust, and the holders thereof
are entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust over the Common Securities, as well as other benefits
as described in the Declaration. See "-- Subordination of Common Securities."
The Declaration will be qualified under and will be subject to and governed by
the Trust Indenture Act upon effectiveness of the Registration Statement in
respect of the HIGH TIDES. See "Registration Rights." This summary of certain
provisions of the HIGH TIDES, the Common Securities and the Declaration does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Declaration, including the definitions
therein of certain terms. Copies of the Declaration are available upon request
from the Issuer Trustees.
GENERAL
Payments on the HIGH TIDES are made pro rata with the Common Securities
except as described under "-- Subordination of Common Securities." Legal title
to the HIGH TIDES Debentures is held by the Property Trustee on behalf of the
Trust in trust for the benefit of the holders of the HIGH TIDES and Common
Securities. The Guarantee executed by the Company for the benefit of the holders
of the HIGH TIDES provides for a guarantee on a subordinated basis with respect
to the HIGH TIDES but does not guarantee payment of Distributions or amounts
payable on redemption of the HIGH TIDES or on liquidation of the Trust when the
Trust does not have funds on hand available to make such payments. See
"Description of Guarantee."
Credit Suisse First Boston Corporation will act as the initial Remarketing
Agent with respect to the HIGH TIDES and will be paid fees for its services and
may resign or be replaced by the Company under certain circumstances. See "The
Remarketing Agent."
RATINGS
The HIGH TIDES have been rated "BB-" by Standard & Poor's Ratings Group and
"B2" by Moody's Investors Services, Inc. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization.
DISTRIBUTIONS
Distributions accrue on the HIGH TIDES from the date of their original
issuance at the Applicable Rate applied to the stated liquidation amount of $50
per HIGH TIDE, and are payable quarterly in arrears on each March 15, June 15,
September 15 and December 15 (each, a "Distribution Date"), commencing September
15, 1998, to the person in whose name each HIGH TIDE is registered, subject to
certain exceptions, at the close of business on the first of each March, June,
September and December next preceding the applicable Distribution Date. Each
registered holder of HIGH TIDES on June 1, 2005 (including any holder which has
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tendered or is deemed to have tendered its HIGH TIDES for remarketing) shall be
paid a Distribution of interest and Additional Amounts, if any, accrued to (but
excluding) the Reset Date on June 15, 2005 (or, if such day is not a Business
Day, the next succeeding Business Day). Interest and Additional Amounts, if any,
accrued from and after the Reset Date to (but excluding) September 15, 2005
shall be paid on September 15, 2005 (or, if such day is not a Business Day, the
next succeeding Business Day) to the person in whose name each HIGH TIDE is
registered on the preceding September 1, subject to the right of the Company to
initiate a Deferral Period (as described below). The Applicable Rate is 6 1/4%
per annum (the "Initial Rate") from the date of original issuance of the HIGH
TIDES to (but excluding) the Reset Date, and the Term Rate from the Reset Date
and thereafter. The Term Rate is the rate established by the Remarketing Agent
to be effective on the Reset Date and communicated on such date by the
Remarketing Agent, who will communicate such rate to the Issuer Trustees, the
Issuer, the Debenture Trustee, the Paying Agent, the Company and the holders (if
any) which elected not to tender all their HIGH TIDES for remarketing, by
written notice or by telephone promptly confirmed by telecopy or other writing.
The Applicable Rate will be increased upon a Registration Default. See "The
Remarketing" and "Registration Rights." The amount of Distributions payable for
any period is computed on the number of days elapsed in a 360-day year of twelve
30-day months. In the event that any Distribution Date is not a Business Day,
payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional Distributions
or other payments in respect to any such delay) with the same force and effect
as if made on the date such payment was originally payable. Accrued
Distributions that are not paid on the applicable Distribution Date will accrue
additional Distributions on the amount thereof (to the extent permitted by law)
at the Applicable Rate, compounded quarterly from the relevant Distribution
Date. "Distribution" as used herein shall include quarterly distributions,
additional distributions on quarterly distributions not paid on the applicable
Distribution Date and Additional Amounts, as applicable. See "Description of
HIGH TIDES Debentures -- Additional Amounts" and "Registration Rights." A
"Business Day" shall mean any day other than a Saturday or a Sunday, or a day on
which banking institutions in The City of New York 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.
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
on the HIGH TIDES Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Deferral Period, provided
that no Deferral Period may extend beyond (i) the maturity (whether at June 15,
2028 or by declaration of acceleration, call for redemption or otherwise) and
(ii) in the case of a Deferral Period that begins prior to the Reset Date, the
Reset Date. See "Description of HIGH TIDES Debentures -- Option to Extend
Interest Payment Period." As a consequence of any such election, quarterly
Distributions on the HIGH TIDES by the Trust will be deferred during any such
Deferral Period. Deferred distributions to which holders of the HIGH TIDES are
entitled will accumulate additional Distributions thereon at the Applicable
Rate, compounded quarterly from the relevant payment date for such Distributions
during any such Deferral Period, to the extent permitted by applicable law.
During any such Deferral Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) other than stock dividends paid by the
Company which consist of stock of the same class as that on which the dividend
is being paid, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank
pari passu with or junior in interest to the HIGH TIDES Debentures, 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 HIGH TIDES Debentures (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 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 to the HIGH TIDES
Debentures), (e) as a result of a reclassification of the Company's capital
stock or the exchange or conversion
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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 stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged). A Deferral Period will terminate upon the payment by the Company of
all amounts then accrued and unpaid on the HIGH TIDES Debentures (together with
interest thereon accrued at the Applicable Rate compounded quarterly, to the
extent permitted by applicable law). Prior to the termination of any such
Deferral Period, the Company may further extend such Deferral Period, provided
that such deferral does not cause such Deferral Period to exceed 20 consecutive
quarters or to extend beyond (i) the maturity (whether at June 15, 2028 or by
declaration of acceleration, call for redemption or otherwise) and (ii) in the
case of a Deferral Period that begins prior to the Reset Date, the Reset Date.
Upon the termination of any Deferral Period, and subject to the foregoing
limitations, the Company may elect to begin a new Deferral Period. No interest
or other amounts shall be due and payable during a Deferral Period, except at
the end thereof. The Company must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of any such Deferral
Period and shall cause the Issuer to give such notice (which shall include
notice of the deferral of Distributions on the HIGH TIDES) to holders of HIGH
TIDES not later than ten days prior to the related record date for Distributions
on the HIGH TIDES. There is no limitation on the number of times that the
Company may elect to begin a Deferral Period. See "Description of HIGH TIDES
Debentures -- Option to Extend Interest Payment Date" and "United States Federal
Tax Considerations -- Interest Income and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest on the HIGH TIDES Debentures.
The revenue of the Trust available for distribution to holders of the HIGH
TIDES is limited to payments under the HIGH TIDES Debentures in which the Trust
invested the proceeds from the issuance and sale of the Trust Securities. See
"Description of HIGH TIDES Debentures -- General." If the Company does not make
interest payments on the HIGH TIDES Debentures, the Property Trustee will not
have funds available to pay Distributions on the HIGH TIDES. The payment of
Distributions (if and to the extent the Trust has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Company on a limited basis as set forth herein under
"Description of Guarantee."
CONVERSION RIGHTS
General. HIGH TIDES are convertible at any time prior to 5:00 p.m., New
York City time, on or prior to the Tender Notification Date and, in the event of
a Convertible Remarketing which does not fail, from and after the Reset Date to
and including June 15, 2028 (except that HIGH TIDES called for redemption by the
Company will be convertible at any time prior to 5:00 p.m., New York City time,
on any Redemption Date), at the option of the holder thereof and in the manner
described below, into shares of Class A Common Stock. On or prior to the Tender
Notification Date, each HIGH TIDE is convertible, at the option of the holder,
into 1.5179 shares of Class A Common Stock for each High Tide (the "Initial
Conversion Ratio") (equivalent to a conversion price (the "Initial Conversion
Price") of $32.94 liquidation amount of HIGH TIDES per share of Class A Common
Stock). On the Reset Date and thereafter, each HIGH TIDE may, at the option of
the Issuer and subject to the results of the Remarketing, become nonconvertible
or convertible into a different number of shares of Class A Common Stock. See
"The Remarketing." The conversion ratio and the equivalent conversion price in
effect at any given time are referred to as the "Applicable Conversion Ratio"
and the "Applicable Conversion Price," respectively, and will be subject to
adjustment as described under "-- Conversion Price Adjustments" below. The
Issuer will covenant in the Declaration not to convert HIGH TIDES Debentures
held by it except pursuant to a notice of conversion delivered to the conversion
agent by a holder of HIGH TIDES. A holder of a HIGH TIDE wishing to exercise its
conversion right shall deliver an irrevocable conversion notice, together, if
the HIGH TIDE is in certificated form, with such certificated security, to the
conversion agent which shall, on behalf of such holder, exchange such HIGH TIDE
for a Like Amount of HIGH TIDES Debentures and immediately convert such HIGH
TIDES Debentures into Class A Common Stock. Holders may obtain copies of the
required form of the conversion notice from the conversion agent. For purposes
of this section entitled "Conversion Rights," the term "Common Stock" includes
any
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class of common stock of the Company, except that the Common Stock issuable upon
conversion means the Class A Common Stock.
Holders of HIGH TIDES at the close of business on a Distribution record
date will be entitled to receive the Distribution payable on such HIGH TIDES on
the corresponding Distribution Date notwithstanding the conversion of such HIGH
TIDES following such Distribution record date but prior to such Distribution
Date. Except as provided in the immediately preceding sentence, neither the
Issuer nor the Company will make, or be required to make, any payment, allowance
or adjustment for accrued and unpaid Distributions, whether or not in arrears,
on converted HIGH TIDES. The Company will make no payment or allowance for
distributions on the shares of Class A Common Stock issued upon such conversion,
except to the extent that such shares of Class A Common Stock are held of record
on the record date for any such distributions. Each conversion will be deemed to
have been effected immediately prior to the close of business on the day on
which the related conversion notice was received by the Issuer and the
conversion agent.
No fractional shares of Class A Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid by the
Company in cash based on the Closing Price of the Class A Common Stock.
Conversion Price Adjustments -- General. The Applicable Conversion Price
will be subject to adjustment in certain events including, without duplication:
(i) the payment of dividends (and other distributions) payable in Common Stock
on the Common Stock; (ii) the issuance to all holders of Common Stock of rights
or warrants; (iii) subdivisions and combinations of Common Stock; (iv) the
payment of dividends (and other distributions) to all holders of Common Stock
consisting of evidences of indebtedness of the Company, securities or capital
stock, cash or assets (including securities, but excluding those rights,
warrants, dividends and distributions referred to in clauses (i) and (ii) and
dividends and distributions paid exclusively in cash); (v) the payment of
dividends (and other distributions) on Common Stock paid exclusively in cash,
excluding (a) cash dividends that do not exceed the per share amount of the
smallest of the immediately four preceding quarterly cash dividends (as adjusted
to reflect any of the events referred to in clauses (i) through (vi) of this
sentence) and (b) cash dividends the per share amount of which, together with
the aggregate per share amount of any other cash dividends paid within the 12
months preceding the date of payment of such cash dividends, does not exceed
12 1/2% of the current market price of Common Stock as of the trading day
immediately preceding the date of declaration of such dividend; and (vi) payment
to holders of Common Stock in respect of a tender or exchange offer (other than
an odd-lot offer) by the Company or any subsidiary of the Company for Common
Stock at a price in excess of 110% of the current market price of Common Stock
as of the trading day next succeeding the last date tenders or exchanges may be
made pursuant to such tender or exchange offer.
The Company may, at its option, make such reductions in the Applicable
Conversion Price as the Company's Board of Directors deems advisable to avoid or
diminish any income tax to holders of 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. See "United States Federal Tax
Considerations -- Adjustment of Conversion Price."
No adjustment of the Applicable Conversion Price will be made upon 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 or the issuance of any shares of Common Stock
or options or rights to purchase such shares pursuant to any present or future
employee, director or consultant benefit plan or program of the Company or
pursuant to any option, warrant, right, or exercisable, exchangeable or
convertible security outstanding as of the date the HIGH TIDES were first
issued. 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. No
adjustment in the Applicable Conversion Price will be required unless such
adjustment would require an increase or decrease of at least 1% of the
Applicable Conversion Price, but any adjustment that would otherwise be required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
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Conversion Price Adjustments -- Merger, Consolidation or Sale of Assets of
the Company. In the event that the Company is a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the assets of the Company, recapitalization or
reclassification of Common Stock or any compulsory share exchange (each of the
foregoing 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 Transaction whereby the holder of each
HIGH TIDE then outstanding shall have the right thereafter to convert such HIGH
TIDE only into (i) in the case of any Company Transaction other than a Company
Transaction involving a Common Stock Fundamental Change, the kind and amount of
securities, cash and other property receivable upon the consummation of such the
Company Transaction by a holder of that number of shares of Common Stock into
which a HIGH TIDE was convertible immediately prior to such Transaction, or (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 (but in
each case after giving effect to any adjustment discussed below relating to a
Fundamental Change if such Company Transaction constitutes a Fundamental
Change). The holders of HIGH TIDES will have no voting rights with respect to
any Company Transaction described in this section.
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 HIGH TIDES will thereupon become the lower of (a)
the Applicable Conversion Price immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior adjustments,
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 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 HIGH TIDES immediately prior to such Common Stock
Fundamental Change, but after giving effect to any other prior adjustments,
will thereupon be adjusted by multiplying such Applicable Conversion Price
by a fraction of which the numerator will be the Purchaser Stock Price and
the denominator will 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 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 Applicable Conversion Price of the HIGH
TIDES immediately prior to such Common Stock Fundamental Change will
thereupon be adjusted by multiplying such 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 Common Stock as a result of such
Common Stock Fundamental Change.
In the absence of the adjustments to the Applicable Conversion Price after
a Fundamental Change, in the case of a Company Transaction each HIGH TIDE would
become convertible into the securities, cash, or other property receivable by a
holder of the number of shares of Common Stock into which such HIGH TIDE was
convertible immediately prior to such Company Transaction. Thus, in the absence
of the Fundamental Change provisions, a Company Transaction could substantially
lessen or eliminate the value of the conversion privilege associated with the
HIGH TIDES. For example, if the Company were acquired in a cash merger, each
HIGH TIDE would become convertible solely into cash and would no longer be
convertible into securities whose value would vary depending on the future
prospects of the Company 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 HIGH TIDE is convertible. In a Non-Stock Fundamental
Change transaction in which the initial value received per share of Common Stock
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(measured as described in the definition of Adjusted Relevant Price) is lower
than the then Applicable Conversion Price of a HIGH TIDE but greater than or
equal to the Adjusted Reference Market Price, the Applicable Conversion Price
will be adjusted as described above with the effect that each HIGH TIDE will be
convertible into securities, cash or other property of the same type received by
the holders of Common Stock in such transaction with the Applicable Conversion
Price adjusted as though such initial value had been the Adjusted Relevant
Price. In a Non-Stock Fundamental Change transaction in which the initial value
received per share of Common Stock (measured as described in the definition of
Adjusted Relevant Price) is lower than both the Applicable Conversion Price of a
HIGH TIDE and the Adjusted Reference Market Price, the Applicable Conversion
Price will be adjusted as described above but calculated as though such initial
value had been the Adjusted Reference Market Price.
In Common Stock Fundamental Change transactions, the foregoing adjustments
are designed to provide in effect that (i) where Common Stock is converted
partly into such common stock and partly into other securities, cash or
property, each HIGH TIDE will be convertible solely into a number of shares of
such common stock determined so that the initial value of such shares (measured
as described in the definition of Purchaser Stock Price) equals the value of the
shares of Common Stock into which such HIGH TIDE was convertible immediately
before the transaction (measured as aforesaid) and (ii) where Common Stock is
converted solely into such common stock, each HIGH TIDE will be convertible into
the same number of shares of such common stock receivable by a holder of the
number of shares of Common Stock into which such HIGH TIDE was convertible
immediately before such transaction.
"Closing Price" of any security on any day means 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 National Market System of the National Association of
Securities Dealers, Inc. or any successor national automated interdealer
quotation system (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 of such security in the over-the-counter
market as furnished by any New York Stock Exchange member firm selected by the
Company for such purpose.
"Common Stock Fundamental Change" means any Fundamental Change in which
more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) 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 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 NNM.
"Entitlement Date" means 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.
"Fundamental Change" means 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 that, 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 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 all outstanding shares of Common Stock shall have been
exchanged for, converted into, or acquired for or constitute solely the right to
receive securities, cash or other property.
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"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 Optional Redemption Price or,
on or prior to June 20, 2001 and at any time after the Reset Date at which the
HIGH TIDES are not redeemable at the option of the Company, an amount per HIGH
TIDE 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 HIGH TIDES 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 such
Common Stock Fundamental Change for the ten consecutive trading days prior to
and including the Entitlement Date, as adjusted in good faith by the Company to
appropriately reflect any of the events referred to in clauses (i) through (vi)
of the first paragraph under "-- Applicable Conversion Price
Adjustments -- General."
"Reference Market Price" shall initially mean on the date of original
issuance of the HIGH TIDES, $17.88 (which is an amount equal to 66 2/3% of the
last reported sale price for the Class A Common Stock on the New York Stock
Exchange Composite Tape on June 16, 1998) and, in the event of any adjustment to
the Applicable Conversion Price from such date to (but excluding) the Reset
Date, other than as a result of a Non-Stock Fundamental Change, the Reference
Market Price shall 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 $17.88 to the Initial
Conversion Price. If the HIGH TIDES are convertible into Class A Common Stock on
and after the Reset Date, the Reference Market Price on the Reset Date will be
an amount equal to 66 2/3% of the Closing Price of the Class A Common Stock on
the Reset Date and, in the event of any adjustment to the Applicable Conversion
Price from the Reset Date and thereafter, other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall 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
the Closing Price of the Class A Common Stock on the Reset Date to the Term
Conversion Price.
"Relevant Price" means (i) in the case of a Non-Stock Fundamental Change in
which the holder of Common Stock receives only cash, the amount of cash received
by the holder of 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 for Common Stock during the ten 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 clauses (i) through (vi) of the first paragraph under "-- Applicable
Conversion Price Adjustments -- General."
MANDATORY REDEMPTION
Upon the repayment in full of the HIGH TIDES Debentures at their stated
maturity or a redemption in whole or in part of the HIGH TIDES Debentures (other
than following any distribution of the HIGH TIDES Debentures to the holders of
the Trust Securities), the proceeds from such repayment or redemption shall be
applied by the Property Trustee to redeem, on a pro rata basis, a Like Amount of
Trust Securities, on the Redemption Date, in an amount per Trust Security equal
to the applicable Redemption Price, which Redemption Price will be equal to (i)
the liquidation amount of each HIGH TIDE plus any accrued and unpaid
Distributions thereon in the case of (A) the repayment of the HIGH TIDES
Debentures at their stated maturity (the "Stated Maturity Price"), or (B) the
redemption of the HIGH TIDES Debentures in certain limited circumstances upon
the occurrence of a Tax Event, (ii) in the case of an Optional Redemption after
June 20, 2001, but prior to (and excluding) the Reset Date, the Initial
Redemption Price (as defined under "Description of HIGH TIDES
Debentures -- Redemption -- Optional Redemption"), (iii) in the case of an
Optional Redemption after the Reset Date, in accordance with the Term Call
Protections, if any, established in the Remarketing and (iv) in the event of
redemption of the HIGH TIDES Debentures upon a
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Failed Final Remarketing, 101% of the liquidation amount of each HIGH TIDE plus
any accrued and unpaid Distributions thereon.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the HIGH TIDES Debentures such amounts as shall be
required so that the Distributions payable by the Trust in respect of the Trust
Securities shall not be reduced as a result of any such additional taxes, duties
or other governmental charges. See "Description of HIGH TIDES
Debentures -- Additional Amounts."
REDEMPTION PROCEDURES
Trust Securities shall be redeemed, if at all, at the applicable Redemption
Price with the proceeds from the contemporaneous repayment or redemption of the
HIGH TIDES Debentures. Redemptions of the Trust Securities shall be made and the
applicable Redemption Price shall be payable on each Redemption Date only to the
extent that the Trust has funds on hand available for the payment of such
Redemption Price. See also "-- Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the HIGH TIDES,
then, by 10:00 a.m., New York City time, on the date fixed for redemption (the
"Redemption Date"), to the extent funds are available, with respect to the HIGH
TIDES held in global form, the Property Trustee will deposit irrevocably with
DTC funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the applicable Redemption Price to
the holders of the HIGH TIDES. See "-- Form, Book-Entry Procedures and
Transfer." With respect to the HIGH TIDES held in certificated form, the
Property Trustee, to the extent funds are available, will irrevocably deposit
with the paying agent for the HIGH TIDES funds sufficient to pay the applicable
Redemption Price and will give such paying agent irrevocable instructions and
authority to pay the Redemption Price to the holders thereof upon surrender of
their certificates evidencing the HIGH TIDES. See "-- Payment and Paying
Agency." Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of the HIGH TIDES on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of the HIGH TIDES will cease,
except the right of the holders of the HIGH TIDES to receive the applicable
Redemption Price, but without interest on such Redemption Price, and the HIGH
TIDES will cease to be outstanding. In the event that any Redemption Date is not
a Business Day, then payment of the applicable Redemption Price 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), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
applicable Redemption Price is improperly withheld or refused and not paid
either by the Trust or by the Company pursuant to the Guarantee as described
under "Description of Guarantee," Distributions on HIGH TIDES will continue to
accrue at the then Applicable Rate, from the Redemption Date originally
established by the Trust to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding HIGH TIDES by tender in the open market
or by private agreement except as provided under "The Remarketing -- Purchases
by the Company and its Affiliates."
If the Company desires to consummate an Optional Redemption it must send a
notice to each holder of Trust Securities at its registered address in
accordance with the notice procedures set forth under "Description of HIGH TIDES
Debentures -- Redemption -- Optional Redemption." Notice of a Tax Event
Redemption will be mailed at least 30 days but not more than 60 days before the
Redemption Date to each holder of HIGH TIDES. Notice of repayment at the stated
maturity of the HIGH TIDES Debentures or of redemption in the event of a Failed
Final Remarketing is not required, except to the extent set forth under "The
Remarketing."
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TAX EVENT OR INVESTMENT COMPANY EVENT REDEMPTION OR DISTRIBUTION
If a Tax Event shall occur and be continuing, the Company shall cause the
Issuer Trustees to liquidate the Issuer and cause HIGH TIDES Debentures to be
distributed to the holders of the HIGH TIDES in liquidation of the Issuer within
90 days following the occurrence of such Tax Event; provided, however, that such
liquidation and distribution shall be conditioned on (i) the Issuer Trustees'
receipt of an opinion of nationally recognized independent tax counsel
(reasonably acceptable to the Issuer Trustees) experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on published revenue rulings
of the Internal Revenue Service (the "IRS"), to the effect that the holders of
the HIGH TIDES will not recognize any income, gain or loss for United States
federal income tax purposes as a result of such liquidation and distribution of
HIGH TIDES Debentures, and (ii) the Company being unable to avoid such Tax Event
within such 90-day period by taking some ministerial action or pursuing some
other reasonable measure that, in the sole judgment of the Company, will have no
adverse effect on the Issuer, the Company or the holders of the HIGH TIDES and
will involve no material cost. Furthermore, if (i) the Company has received an
opinion (a "Redemption Tax Opinion") of 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 HIGH
TIDES Debentures for United States federal income tax purposes, even after the
HIGH TIDES Debentures were distributed to the holders of the HIGH TIDES upon
liquidation of the Issuer as described above, or (ii) the Issuer Trustees shall
have been informed by such tax counsel that it cannot deliver a No Recognition
Opinion, the Company shall have the right, upon not less than 30 nor more than
60 days' notice and within 90 days following the occurrence and continuation of
the Tax Event, to redeem the HIGH TIDES Debentures, in whole, but not in part,
for cash, for the principal amount thereof plus accrued and unpaid interest
thereon and, following such redemption, all the HIGH TIDES will be redeemed by
the Issuer at the aggregate liquidation amount thereof plus accrued and unpaid
Distributions thereon; provided, however, that, if at the time there is
available to the Company or the Issuer the opportunity to eliminate, within such
90-day period, the Tax Event by taking some ministerial action or pursuing some
other reasonable measure that, in the sole judgment of the Company, will have no
adverse effect on the Issuer, the Company or the holders of the HIGH TIDES and
will involve no material cost, the Issuer or the Company will pursue such
measure in lieu of redemption. See "-- Mandatory Redemption." In lieu of the
foregoing options, the Company will also have the option of causing the HIGH
TIDES to remain outstanding and pay Additional Amounts on the HIGH TIDES
Debentures. See "Description of HIGH TIDES Debentures -- Additional Amounts."
"Tax Event" means the receipt by the Property Trustee of an opinion of a
nationally recognized independent tax counsel to the Company (reasonably
acceptable to the Issuer 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 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 HIGH TIDES Debentures or the issue date of the HIGH TIDES issued
by the Trust, there is more than an insubstantial risk that (a) if the HIGH
TIDES Debentures are held by the Property Trustee, (x) 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 HIGH TIDES
Debentures or subject to more than a de minimis amount of other taxes, duties or
other governmental charges as determined by such counsel, or (y) any portion of
interest payable by the Company to the Trust (or OID accruing) on the HIGH TIDES
Debentures 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 (b) with respect to HIGH
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TIDES Debentures which are no longer held by the Property Trustee, any portion
of interest payable by the Company (or OID accruing) on the HIGH TIDES
Debentures 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, provided, however, that clauses (a)(y) and (b) shall not apply if
the reason for the nondeductibility of such interest (or OID) is based on the
particular use (or deemed use) by the Company or an affiliate of the proceeds of
the issuance of the HIGH TIDES Debentures.
If an Investment Company Event shall occur and be continuing, the Company
shall cause the Issuer Trustees to liquidate the Issuer and cause the HIGH TIDES
Debentures to be distributed to the holders of the HIGH TIDES in liquidation of
the Issuer 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 Issuer is or will
be considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus.
The distribution by the Company of the HIGH TIDES Debentures will
effectively result in the cancellation of the HIGH TIDES. See "-- Liquidation of
the Trust and Distribution of HIGH TIDES Debentures."
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF HIGH TIDES DEBENTURES
The Company, as the holder of the outstanding Common Securities, has the
right at any time (including, without limitation, upon the occurrence of a Tax
Event or an Investment Company Event) to dissolve the Trust and cause a Like
Amount of the HIGH TIDES Debentures to be distributed to the holders of the
Trust Securities upon liquidation of the Trust; provided, however, that the
Company may not dissolve the Issuer during the period beginning on the Business
Day following the Tender Notification Date and ending on the Reset Date (other
than upon the occurrence of a Tax Event or an Investment Company Event as
provided herein); provided, further that, the Issuer Trustees shall have
received a No Recognition Opinion prior to the liquidation of the Trust;
provided, further that, following such distribution of the HIGH TIDES
Debentures, the Company agrees to use its best efforts to maintain any ratings
of such HIGH TIDES Debentures by any nationally recognized rating agency for so
long as any such HIGH TIDES Debentures are outstanding.
The Trust shall automatically dissolve upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Company; (ii)
the distribution of a Like Amount of the HIGH TIDES Debentures to the holders of
the Trust Securities if the Company, as Depositor, has given written direction
to the Property Trustee to terminate the Trust (which direction is optional and,
except as described above, wholly within the discretion of the Company, as
Depositor); (iii) redemption of all the Trust Securities as described under
"-- Mandatory Redemption" above; (iv) the conversion of all outstanding Trust
Securities as described under "-- Conversion Rights" above; (v) expiration of
the term of the Trust; or (vi) the entry of an order for the dissolution of the
Trust by a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii), (v) or
(vi) above, the Trust shall be liquidated by the Issuer Trustees as
expeditiously as the Issuer Trustees determine to be possible by distributing,
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
HIGH TIDES Debentures, unless such distribution would not be practical, 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, an amount equal to, in the
case of holders of HIGH TIDES, 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 HIGH TIDES shall be paid on a pro rata basis. The holder(s)
of the Common
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Securities will be entitled to receive distributions upon any such liquidation
pro rata with the holders of the HIGH TIDES, except that if a Debenture Event of
Default (or an event that, with notice or passage of time, would become such a
Debenture Event of Default) has occurred and is continuing, the HIGH TIDES shall
have a priority over the Common Securities with respect to any such
distributions. See "-- Subordination of Common Securities."
"Like Amount" means (i) with respect to a redemption of HIGH TIDES, HIGH
TIDES having an aggregate liquidation amount equal to that portion of the
principal amount of HIGH TIDES Debentures to be contemporaneously redeemed in
accordance with the Indenture, allocated to the Common Securities and to the
HIGH TIDES 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
HIGH TIDES and (ii) with respect to a distribution of HIGH TIDES Debentures to
holders of HIGH TIDES in connection with a dissolution or liquidation of the
Trust, HIGH TIDES Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Trust Securities of the holder to whom such
HIGH TIDES Debentures are distributed.
If the Company does not redeem the HIGH TIDES Debentures prior to maturity
and the Trust is not liquidated and the HIGH TIDES Debentures are not
distributed to holders of the Trust Securities, the HIGH TIDES will remain
outstanding until the repayment of the HIGH TIDES Debentures at their stated
maturity and the distribution of the Liquidation Distribution to the holders of
the HIGH TIDES.
On and after the liquidation date fixed for any distribution of HIGH TIDES
Debentures to holders of the Trust Securities, (i) the HIGH TIDES will no longer
be deemed to be outstanding, (ii) DTC or its nominee, as the record holder of
the HIGH TIDES, will receive a registered global certificate or certificates
representing the HIGH TIDES Debentures to be delivered upon such distribution
with respect to HIGH TIDES held by DTC or its nominee and (iii) any certificates
representing HIGH TIDES not held by DTC or its nominee will be deemed to
represent HIGH TIDES Debentures having a principal amount equal to the
liquidation amount of such HIGH TIDES and bearing accrued and unpaid interest in
an amount equal to the accumulated and unpaid Distributions on such HIGH TIDES
until such certificates are presented to the Administrative Trustees or their
agent for cancelation, whereupon the Company will issue to such holder, and the
Debenture Trustee will authenticate, a certificate representing such HIGH TIDES
Debentures.
There can be no assurance as to the market prices for the HIGH TIDES or the
HIGH TIDES Debentures that may be distributed in exchange for the Trust
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the HIGH TIDES that an investor may purchase, or the HIGH TIDES
Debentures that the investor may receive on dissolution and liquidation of the
Trust, may trade at a discount to the price that the investor paid to purchase
the HIGH TIDES offered hereby.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the HIGH TIDES
and Common Securities, as applicable, shall be made pro rata to the holders of
HIGH TIDES and Common Securities based on the liquidation amount of the Trust
Securities, provided that, if on any Distribution Date or Redemption Date any
Debenture Event of Default (or an event that, with notice or passage of time,
would become such an Event of Default) or an Event of Default under the
Declaration shall have occurred and be continuing, no payment of any
Distribution on, or applicable Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accrued and unpaid Distributions on all of the outstanding
HIGH TIDES for all Distribution periods terminating on or prior thereto, or, in
the case of payment of the applicable Redemption Price, the full amount of such
Redemption Price on all of the outstanding HIGH TIDES, shall have been made or
provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or the
applicable Redemption Price of, the HIGH TIDES then due and payable.
In the case of any Event of Default under the Declaration resulting from a
Debenture Event of Default, the Company 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 until the effect of all such Events of Default
have been
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cured, waived or otherwise eliminated. Until all such Events of Default under
the Declaration have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the holders of such HIGH TIDES and not on
behalf of the Company as holder of the Common Securities, and only the holders
of the HIGH TIDES 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 (an "Event of Default") (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description
of HIGH TIDES Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer 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 Issuer in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer 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 Issuer
Trustee or Issuer Trustees by the holders of at least 25% in aggregate
liquidation amount of the outstanding HIGH TIDES, 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 occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the HIGH TIDES, the
Administrative Trustees and the Company, as Depositor, unless such Event of
Default shall have been cured or waived. The Company, as Depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If a Debenture Event of Default (or an event that with notice or the
passage of time, would become such an Event of Default) or an Event of Default
under the Declaration has occurred and is continuing, the HIGH TIDES shall have
a preference over the Common Securities as described above. See "-- Liquidation
of the Trust and Distribution of HIGH TIDES Debentures" and "-- Subordination of
Common Securities."
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in liquidation amount of the outstanding HIGH TIDES. In no
event will the holders of the HIGH TIDES have the right to vote to appoint,
remove or replace the Administrative Trustees, which voting rights are vested
exclusively in the Company as the holder of the Common Securities. No
resignation or removal of the Delaware Trustee or the Property Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Declaration.
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CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust's property
may at the time be located, the Company, as the holder of the Common Securities,
and the Administrative Trustees shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or any
part of such Trust's property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Declaration. In case a Debenture Event of Default has occurred
and is continuing, the Property Trustee alone shall have power to make such
appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Declaration, provided such person shall be otherwise qualified and eligible.
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. The Trust may, at
the request of the Company, as Depositor, with the consent of the Administrative
Trustees but without the consent of the holders of the HIGH TIDES, the Property
Trustee or 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 as such under the laws of any
State; provided, however, that (i) such successor entity either (a) expressly
assumes all of the obligations of the Trust with respect to the HIGH TIDES or
(b) substitutes for the HIGH TIDES other securities having substantially the
same terms as the HIGH TIDES (the "Successor Securities") so long as the
Successor Securities rank the same as the HIGH TIDES rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) the Company expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the HIGH TIDES Debentures, (iii) the Successor Securities are listed
or traded, or any Successor Securities will be listed or traded upon
notification of issuance, on any national securities exchange, national
automated quotation system or other organization on which the HIGH TIDES are
then listed or traded, if any, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the HIGH TIDES
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (v) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the HIGH TIDES
(including any Successor Securities) in any material respect, (vi) such
successor entity has a purpose substantially identical and limited to that of
the Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the HIGH TIDES (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act,
(viii) the Company or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee and (ix) such merger, consolidation, amalgamation, replacement
or lease is not a taxable event for holders of the HIGH TIDES. Notwithstanding
the foregoing, the Trust shall not, except with the consent of holders of 100%
in aggregate liquidation amount
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of the Trust Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the successor entity to be classified as an association taxable as a
corporation (or to substantially increase the likelihood that the Trust or the
successor entity would be classified as other than a grantor trust) for United
States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under "Description of Guarantee -- Amendments
and Assignment" and as otherwise required by law and the Declaration, the
holders of the HIGH TIDES will have no voting rights.
In addition to the rights of the holders of HIGH TIDES with respect to the
enforcement of payment to the Issuer of principal of or interest on the HIGH
TIDES Debentures as provided under "Description of HIGH TIDES
Debentures -- Debenture Events of Default," if (i) a Debenture Event of Default
occurs and is continuing or (ii) the Company defaults under the Guarantee with
respect to the HIGH TIDES (each an "Appointment Event"), then the holders of the
HIGH TIDES, acting as a single class, will be entitled by a vote of a majority
in aggregate stated liquidation amount of the outstanding HIGH TIDES to appoint
a Special Trustee. Any holder of HIGH TIDES (other than the Company or any of
its affiliates) shall 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 Issuer Trustees shall convene a meeting of the holders of
HIGH TIDES for the purpose of appointing a Special Trustee. If the Issuer
Trustees fail to convene such meeting within such 30-day period, the holders of
not less than 10% of the aggregate stated liquidation amount of the outstanding
HIGH TIDES will be entitled to convene such meeting. 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. Notwithstanding the appointment of any such Special Trustee, the
Company shall retain all rights under the Indenture, including the right to
defer payments of interest by extending the interest payment period as provided
under "Description of HIGH TIDES Debentures -- Option to Extend Interest Payment
Date." If such an extension occurs, there will be no Debenture Event of Default
and, consequently, no Event of Default for failure to make any scheduled
interest payment during the Deferral Period on the date originally scheduled.
The Declaration may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities, (i) to cure any ambiguity, correct or
supplement any provision in the Declaration that may be inconsistent with any
other provision, or to make any other provisions with respect to 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 Trust Securities are outstanding or to ensure that the Trust will not be
required to register as an "investment company" under the 1940 Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any holder of Trust Securities, and any
amendments of the Declaration shall become effective when notice thereof is
given to the holders of the Trust Securities. The Declaration may be amended by
the Issuer Trustees and the Company with (i) the consent of holders representing
not less than a majority (based upon liquidation amounts) of the outstanding
HIGH TIDES, and (ii) receipt by the Issuer Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not affect 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 1940 Act. In
addition, without the consent of each holder of Trust Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to
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be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any HIGH TIDES Debentures are held by the Trust, the Issuer
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the HIGH TIDES
Debentures, (ii) waive any past default that is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the HIGH TIDES Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the HIGH TIDES
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
liquidation amount of all outstanding HIGH TIDES; provided, however, that where
a consent under the Indenture would require the consent of each holder of HIGH
TIDES Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior consent of each holder of the HIGH TIDES. The
Issuer Trustees shall not revoke any action previously authorized or approved by
a vote of the holders of the HIGH TIDES except by subsequent vote of such
holders. The Property Trustee shall notify each holder of HIGH TIDES of any
notice of default with respect to the HIGH TIDES Debentures. In addition to
obtaining the foregoing approvals of such holders of the HIGH TIDES, prior to
taking any of the foregoing actions, the Issuer Trustees shall obtain an opinion
of counsel experienced in such matters to the effect that such action will not
affect the Trust's status as a grantor trust for United States federal income
tax purposes on account of such action.
Any required approval of holders of HIGH TIDES may be given at a meeting of
such holders convened for such purpose or pursuant to written consent. The
Property Trustee will cause a notice of any meeting at which holders of HIGH
TIDES are entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be given to each holder of record of
HIGH TIDES in the manner set forth in the Declaration.
No vote or consent of the holders of HIGH TIDES will be required for the
Trust to redeem and cancel or remarket the HIGH TIDES in accordance with the
Declaration.
Notwithstanding that holders of the HIGH TIDES are entitled to vote or
consent under any of the circumstances described above, any of the HIGH TIDES
that are owned by the Company, the Issuer Trustees or any affiliate of the
Company or any Issuer Trustees, shall, for purposes of such vote or consent, be
treated as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to payments of Distributions, amounts
payable upon redemption and the liquidation amount of the Trust Securities) and
all costs and expenses of the Trust (including costs and expenses relating to
the organization of the Trust, the fees and expenses of the Issuer Trustees and
the costs and expenses relating to the operation of the Trust) and the offering
of the HIGH TIDES, and to pay any and all taxes and all costs and expenses with
respect to the foregoing (other than United States withholding taxes) to which
the Trust might become subject. The foregoing obligations of the Company under
the Indenture are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against the Trust or any other person
before proceeding against the Company. The Company has also agreed in the
Indenture to execute such additional agreement(s) as may be necessary or
desirable to give full effect to the foregoing.
FORM, BOOK-ENTRY PROCEDURES AND TRANSFER
The HIGH TIDES were offered and sold initially only to QIBs in reliance on
Rule 144A. The HIGH TIDES were issued in the form of one or more fully
registered global HIGH TIDES certificates (collectively, the "Global HIGH
TIDES"), except as described below. The Global HIGH TIDES were deposited upon
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issuance with the Property Trustee as custodian for DTC, in New York, New York,
and registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global HIGH TIDES may be transferred, in
whole but not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global HIGH TIDES may not be
exchanged for HIGH TIDES in certificated form except in the limited
circumstances described below. See "-- Certificated HIGH TIDES." In addition, a
transfer of beneficial interests in the Global HIGH TIDES will be subject to the
applicable rules and procedures of DTC and its direct or indirect participants
which may change from time to time.
Depositary Procedures
DTC has advised the Trust and the Company 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 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 for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
to accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers
(including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global HIGH TIDES, DTC will credit
the accounts of Participants designated by the Initial Purchaser with portions
of the principal amount of the Global HIGH TIDES and (ii) ownership of such
interests in the Global HIGH TIDES will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC (with
respect to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial interests in the Global
HIGH TIDES).
Investors in the Global HIGH TIDES may hold their interests therein
directly through DTC, if they are Participants in DTC, or indirectly through
organizations which are Participants in such system. All interests in a Global
HIGH TIDE will be subject to the procedures and requirements of DTC. The laws of
some states require that certain persons take physical delivery in certificated
form of certain securities, such as the HIGH TIDES, that they own. Consequently,
the ability to transfer beneficial interests in a Global HIGH TIDE to such
persons will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a Global HIGH TIDE
to pledge such interests to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests. For
certain other restrictions on the transferability of the HIGH TIDES, see
"-- Certificated HIGH TIDES."
EXCEPT AS DESCRIBED BELOW, OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL
HIGH TIDES ARE NOT ENTITLED TO HAVE HIGH TIDES REGISTERED IN THEIR NAMES, AND
WILL NOT RECEIVE OR BE ENTITLED TO RECEIVE PHYSICAL DELIVERY OF HIGH TIDES IN
CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS
THEREOF UNDER THE DECLARATION FOR ANY PURPOSE.
Payments in respect of the Global HIGH TIDES registered in the name of DTC
or its nominee will be payable by the Property Trustee to DTC or its nominee as
the registered holder under the Declaration by wire transfer in immediately
available funds on each Distribution Date. Under the terms of the Declaration,
the Property Trustee will treat the persons in whose names the HIGH TIDES,
including the Global HIGH
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TIDES, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Property Trustee nor any agent thereof has or will have any responsibility
or liability for (i) any aspect of DTC's records or any Participant's or
Indirect Participant's records relating to, or payments made on account of,
beneficial ownership interests in the Global HIGH TIDES, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global HIGH TIDES, or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and the Company that its current practice, upon receipt of any
payment in respect of securities such as the HIGH TIDES, is to credit the
accounts of the relevant Participants with the payment on the payment date, in
amounts proportionate to their respective holdings in liquidation amount of
beneficial interests in the Global HIGH TIDES, as shown on the records of DTC,
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of HIGH TIDES represented by Global HIGH TIDES held through
such Participants will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee or
the Trust. Neither the Trust nor the Property Trustee will be liable for any
delay by DTC or any of its Participants in identifying the beneficial owners of
the HIGH TIDES, and the Trust and the Property Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee for all
purposes.
Interests in the Global HIGH TIDES will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. Transfers between Participants
in DTC will be effected in accordance with DTC's procedures, and will be settled
in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of HIGH TIDES (including, without limitation,
the presentation of HIGH TIDES for exchange as described below) only at the
direction of one or more Participants to whose account with DTC interests in the
Global HIGH TIDES are credited and only in respect of such portion of the
aggregate liquidation amount of the HIGH TIDES represented by the Global HIGH
TIDES as to which such Participant or Participants has or have given such
direction. However, if there is an Event of Default under the Declaration, DTC
reserves the right to exchange the Global HIGH TIDES for legended HIGH TIDES in
certificated form and to distribute such HIGH TIDES to its Participants.
So long as DTC or its nominee is the registered owner of the Global HIGH
TIDES, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the HIGH TIDES represented by the Global HIGH TIDES for all
purposes under the Declaration.
Neither DTC nor its nominee will consent or vote with respect to the HIGH
TIDES. Under its usual procedures, DTC would mail an omnibus proxy to the Trust
as soon as possible after the record date. The omnibus proxy assigns the
consenting or voting rights of DTC or its nominee to those Participants to whose
accounts the HIGH TIDES are credited on the record date (identified in a listing
attached to the omnibus proxy).
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global HIGH TIDES among Participants in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Trust nor the Property
Trustee 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.
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Certificated HIGH TIDES
The HIGH TIDES represented by the Global HIGH TIDES are exchangeable for
certificated HIGH TIDES in definitive form of like tenor as such HIGH TIDES
("Certificated HIGH TIDES") in denominations of U.S. $50.00 and integral
multiples thereof if (i) DTC notifies the Company or the Issuer that it is
unwilling or unable to continue as depositary for the Global HIGH TIDES or if at
any time DTC ceases to be a clearing agency registered under the Exchange Act,
(ii) the Company or the Issuer in its discretion at any time determines not to
have all of the HIGH TIDES evidenced by Global HIGH TIDES or (iii) a default
entitling the holders of the HIGH TIDES to accelerate the maturity thereof has
occurred and is continuing. Any of the HIGH TIDES that is exchangeable pursuant
to the preceding sentence is exchangeable for Certificated HIGH TIDES issuable
in authorized denominations and registered in such names as DTC shall direct.
Subject to the foregoing, the Global HIGH TIDES are not exchangeable, except for
Global HIGH TIDES of the same aggregate denomination to be registered in the
name of DTC or its nominee.
PAYMENT AND PAYING AGENCY
Payments in respect of the HIGH TIDES held in global form shall be made to
DTC, which shall credit the relevant accounts at DTC on the applicable
Distribution Dates, or, in respect of the HIGH TIDES that are not held by DTC,
such payments shall be made by check mailed to the address of the holder
entitled thereto as such address shall appear on the register. The paying agent
(the "Paying Agent") shall initially be the Property Trustee and any co-paying
agent chosen by the Property Trustee and acceptable to the Administrative
Trustees and the Company. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Property Trustee, the
Administrative Trustees and the Company. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Company) to act as Paying Agent.
The Property Trustee has informed the Trust that so long as it serves as
paying agent for the HIGH TIDES, it anticipates that information regarding
Distributions on the HIGH TIDES, including payment date, record date and
redemption information, will be made available through The Bank of New York at
101 Barclay Street, New York, New York 10286, Attention: Corporate Trust
Department.
REGISTRAR, CONVERSION AGENT AND TRANSFER AGENT
The Property Trustee acts as registrar, conversion agent and transfer agent
for the HIGH TIDES.
Registration of transfers of HIGH TIDES, will be effected without charge by
or on behalf of the Trust, but only upon payment in respect of any tax or other
government charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required to register or cause to be registered
the transfer or exchange of the HIGH TIDES after they have been 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 such duties as are specifically
set forth in the Declaration and, during the existence of an Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any holder of Trust
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
Declaration or is unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of the HIGH TIDES or the Common
Securities are entitled under the Declaration to vote, then the Property Trustee
shall take such action as is directed by the Company and, if not so directed,
shall take such action as it deems advisable and in the best interests of the
holders of the Trust Securities and will have no liability except for its own
bad faith, negligence or willful misconduct.
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MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate 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 or 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 so that the HIGH TIDES Debentures will
be treated as indebtedness of the Company for United States federal income tax
purposes. In this connection, the Company and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Declaration, that the Company and the
Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
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DESCRIPTION OF HIGH TIDES DEBENTURES
The HIGH TIDES Debentures were issued under a HIGH TIDES Debentures
Indenture (the "Indenture"), between the Company and The Bank of New York, as
the Debenture Trustee. The Indenture will be qualified under and will be subject
to and governed by the Trust Indenture Act upon effectiveness of the
Registration Statement in respect of the HIGH TIDES. See "Registration Rights."
This summary of certain terms and provisions of the HIGH TIDES Debentures and
the Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, some of which are not otherwise defined herein,
are qualified in their entirety by reference to all of the provisions of the
Indenture and those terms made a part of the Indenture by the Trust Indenture
Act.
GENERAL
Concurrently with the issuance of the Trust Securities, the Trust invested
the proceeds thereof in HIGH TIDES Debentures issued by the Company. Interest
accrues on the HIGH TIDES Debentures from the date of their original issuance,
at the Applicable Rate applied to the principal amount thereof, and is payable
quarterly in arrears on March 15, June 15, September 15 and December 15 (each,
an "Interest Payment Date"), commencing September 15, 1998, to the person in
whose name each HIGH TIDES Debenture is registered, subject to certain
exceptions, at the close of business on the first of each March, June, September
and December next preceding the applicable Interest Payment Date. Each
registered holder of HIGH TIDES on June 1, 2005 (including any holder which has
tendered or is deemed to have tendered its HIGH TIDES for remarketing) shall be
paid interest and Additional Amounts, if any, accrued to (but excluding) the
Reset Date on June 15, 2005 (or, if such day is not a Business Day, the next
succeeding Business Day). Interest and Additional Amounts, if any, accrued from
and after the Reset Date to (but excluding) September 15, 2005 shall be paid on
September 15, 2005 (or, if such day is not a Business Day, the next succeeding
Business Day) to the person in whose name each HIGH TIDES Debenture is
registered on the preceding September 1, subject to the right of the Company to
initiate a Deferral Period. See "-- Option to Extend Interest Payment Date." The
Applicable Rate will be 6 1/4% per annum from the date of original issuance of
the HIGH TIDES to (but excluding) the Reset Date, and the Term Rate from the
Reset Date and thereafter. The Applicable Rate will be increased upon a
Registration Default. See "The Remarketing" and "Registration Rights." It is
anticipated that, until the liquidation of the Trust, each HIGH TIDES Debenture
will be registered in the name of the Trust and held by the Property Trustee for
the benefit of the holders of the Trust 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 of twelve 30-day months. In the event that any
Interest Payment Date is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
with the same force and effect as if made on the applicable Interest Payment
Date. Accrued interest that is not paid on the applicable Interest Payment Date
will bear additional interest on the amount thereof (to the extent permitted by
law) at the Applicable Rate, compounded quarterly from the relevant Interest
Payment Date. The term "interest" as used herein shall include quarterly
payments, interest on quarterly interest payments not paid on the applicable
Interest Payment Date and Additional Amounts, as applicable. See "-- Additional
Amounts" and "Registration Rights."
If the HIGH TIDES Debentures are distributed to the holders of the HIGH
TIDES, the descriptions herein of the Remarketing of the HIGH TIDES and the
conversion rights of holders of HIGH TIDES will apply mutatis mutandis to such
remarketing or conversion of HIGH TIDES Debentures. See "The Remarketing," "The
Remarketing Agent" and "Description of HIGH TIDES -- Conversion Rights."
Unless previously redeemed or repurchased in accordance with the Indenture,
the HIGH TIDES Debentures will mature on June 15, 2028; provided, however, that
if the Final Remarketing shall fail as described under "The
Remarketing -- Effect of a Failed Remarketing," the Company will be required to
redeem any outstanding HIGH TIDES Debentures on the Reset Date. See
"-- Redemption."
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<PAGE> 47
The HIGH TIDES Debentures are unsecured and rank junior and subordinate in
right of payment to all Senior Debt. Because the Company is a holding company,
the right of the Company to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of holders of the HIGH TIDES to benefit indirectly from
such distribution), is subject to the prior claims of creditors of such
subsidiary, except to the extent that the Company may itself be recognized as a
creditor of such subsidiary. Accordingly, the HIGH TIDES Debentures are
subordinated to all Senior Debt and effectively subordinated to all existing and
future liabilities of the Company's subsidiaries, and holders of HIGH TIDES
Debentures should look only to the assets of the Company for payments on the
HIGH TIDES Debentures. The Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Company, including Senior Debt,
whether under the Indenture or any existing or other indenture that the Company
may enter into in the future or otherwise. See "Investment
Considerations -- Ranking of Obligations Under the Guarantee and the HIGH TIDES
Debentures" and "-- Subordination."
OPTION TO EXTEND INTEREST PAYMENT DATE
As long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
on the HIGH TIDES Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Deferral Period,
provided, that no Deferral Period may extend beyond (i) the maturity (whether at
June 15, 2028 or by declaration of acceleration, call for redemption or
otherwise) and (ii) in the case of a Deferral Period that begins prior to the
Reset Date, the Reset Date. At the end of a Deferral Period, the Company must
pay all interest then accrued and unpaid on the HIGH TIDES Debentures (together
with interest thereon accrued at an annual rate equal the Applicable Rate
compounded quarterly from the relevant Interest Payment Date, to the extent
permitted by applicable law). During a Deferral Period and for so long as the
HIGH TIDES Debentures remain outstanding, interest will continue to accrue and
holders of HIGH TIDES Debentures (and holders of the HIGH TIDES while HIGH TIDES
are outstanding) will be required to accrue interest income (in the form of OID)
for United States federal income tax purposes. Moreover, because the Reset Price
exceeds the principal amount of the HIGH TIDES Debentures during the period
through the Reset Date, holders will accrue OID for federal income tax purposes
at a rate slightly in excess of the Initial Rate. See "United States Federal Tax
Considerations -- Interest Income and Original Issue Discount."
During any Deferral Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) other than stock dividends paid by the
Company which consist of stock of the same class as that on which the dividend
is being paid, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank
pari passu with or junior in interest to the HIGH TIDES Debentures 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 HIGH TIDES Debentures (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 Company's 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 to the HIGH
TIDES Debentures), (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). A Deferral Period will
terminate upon the payment by the Company of all interest then accrued and
unpaid on the HIGH TIDES Debentures (together with interest thereon accrued at
an annual rate equal to the Applicable Rate, compounded quarterly, to the extent
permitted by applicable law). Prior to the termination of any Deferral Period,
the Company may further extend such Deferral Period, provided, however, that
such deferral does not cause such Deferral Period to exceed 20 consecutive
quarters or to extend beyond (i) the maturity (whether
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<PAGE> 48
at June 15, 2028 or by declaration of acceleration, call for redemption or
otherwise) and (ii) in the case of a Deferral Period that begins prior to the
Reset Date, the Reset Date. Upon the termination of any Deferral Period, and
subject to the foregoing limitations, the Company may elect to begin a new
Deferral Period. No interest shall be due and payable during a Deferral Period,
except at the end thereof. The Company must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of any
Deferral Period at least ten days prior to the record date for the Distributions
on the HIGH TIDES that would have been payable except for the election to begin
or extend such Deferral Period. The Debenture Trustee shall give notice of the
Company's election to begin or extend a new Deferral Period to the holders of
the HIGH TIDES Debentures. There is no limitation on the number of times that
the Company may elect to begin a Deferral Period.
REDEMPTION
Repayment at Maturity; Redemption of HIGH TIDES Debentures
The HIGH TIDES Debentures must be repaid at their stated maturity on June
15, 2028, unless earlier redeemed. The Company has covenanted in the Indenture
that it will fund such repayment with the proceeds of an offering of
nonconvertible preferred securities or nonconvertible trust-preferred securities
of the Company. The circumstances in which the Company may, or is required to,
redeem the HIGH TIDES Debentures prior to their stated maturity are described
below. Upon the repayment in full at maturity or redemption, in whole or in
part, of the HIGH TIDES Debentures (other than following the distribution of the
HIGH TIDES Debentures to the holders of the Trust Securities), the proceeds from
such repayment or redemption shall concurrently be applied to redeem, at the
applicable Redemption Price, a Like Amount of Trust Securities, upon the terms
and conditions described herein. See "Description of HIGH TIDES -- Mandatory
Redemption."
Mandatory Redemption
In the event of a Failed Final Remarketing, the Company must redeem the
HIGH TIDES Debentures on the Reset Date, in whole, but not in part, at 101% of
the principal amount thereof plus accrued and unpaid interest thereon to the
date of redemption (the "Failed Remarketing Redemption Price"). If the Company
fails to so redeem all outstanding HIGH TIDES Debentures, a Debenture Event of
Default will occur. See "The Remarketing" and "-- Debenture Events of Default."
Optional Redemption
The Company may redeem the HIGH TIDES Debentures solely from the proceeds
of a Common Stock Offering (an "Optional Redemption"), (i) in whole or in part,
at any time after June 20, 2001 until (but excluding) the Tender Notification
Date, at a redemption price (the "Initial Redemption Price") equal to the
following prices per $50 principal amount of HIGH TIDES Debentures, plus accrued
and unpaid interest thereon, if redeemed during the 12-month period ending June
15:
<TABLE>
<CAPTION>
PRICE PER
YEAR $50 PRINCIPAL AMOUNT
- ---- --------------------
<S> <C>
2002................................................... $51.5625
2003................................................... $51.0417
2004................................................... $50.5208
2005................................................... $50.0000
</TABLE>
and (ii) after the Reset Date, in accordance with the Term Call Protections, if
any, established in the Remarketing (any Redemption Price so established in the
Remarketing, the "Term Redemption Price" and together with the Initial
Redemption Price an "Optional Redemption Price"). The Remarketing Agent will
establish Term Call Protections, if any, in the Remarketing that when taken
together with the Term Rate and the Term Conversion Ratio, if any, result in a
price per HIGH TIDE equal to 101% of the liquidation amount thereof; provided,
that the Company may not, at any time, redeem the HIGH TIDES Debentures for a
price less than the aggregate principal amount thereof plus any accrued and
unpaid interest thereon.
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"Common Stock Offering" means any sale or sales of Common Stock by the
Company, in any manner, the closing or closings of which occur not more than 90
days prior to an Optional Redemption Notification Date.
If the Company desires to consummate an Optional Redemption, it must cause
a notice of such intent (an "Optional Redemption Notice") to be sent, within 90
days following the closing of the applicable Common Stock Offering (the
"Optional Redemption Notification Date"), to each holder of HIGH TIDES
Debentures (and each holder of the corresponding HIGH TIDES) to be redeemed;
provided that if the Company elects to complete an Optional Redemption on an
accelerated basis (an "Accelerated Redemption"), the Optional Redemption Notice
must be received by such holders not later than the Business Day immediately
following the Optional Redemption Notification Date. Holders of HIGH TIDES (or,
if the HIGH TIDES Debentures have been distributed to the holders of the HIGH
TIDES, the HIGH TIDES Debentures) may convert their HIGH TIDES (or HIGH TIDES
Debentures, if applicable) called for redemption into Class A Common Stock at
the Applicable Conversion Ratio prior to 5:00 p.m., New York City time, on or
prior to the Optional Redemption Date.
"Optional Redemption Date" means the date which is (i) 20 to 40 days
following the Optional Redemption Notification Date, as specified in the
Optional Redemption Notice (or if such date is not a Business Day, the next
succeeding Business Day) or (ii) in the event that the Company decides to make
an Accelerated Redemption, five Business Days following the Optional Redemption
Notification Date.
The Company may make an "Accelerated Redemption" whenever, on an Optional
Redemption Notification Date, the Closing Price for the Class A Common Stock for
each of the five consecutive trading days prior to such Optional Redemption
Notification Date was equal to or greater than 125% of the Applicable Conversion
Price.
Tax Event Redemption
The Company may also, under certain limited circumstances within 90 days of
the occurrence and continuation of a Tax Event, redeem (a "Tax Event
Redemption") the HIGH TIDES Debentures in whole, but not in part, at the
aggregate principal amount thereof plus accrued and unpaid interest thereon to
the date of redemption (the "Tax Event Redemption Price"). See "Description of
HIGH TIDES -- Tax Event or Investment Company Event Redemption or Distribution."
If the Company is permitted to consummate a Tax Event Redemption and it
desires to do so, it must cause a notice to be mailed to each holder of HIGH
TIDES and each holder of HIGH TIDES Debentures at least 30 days but not more
than 60 days before the Redemption Date. In the event of a Tax Event Redemption,
holders of HIGH TIDES (or, if the HIGH TIDES Debentures have been distributed to
the holders of the HIGH TIDES, HIGH TIDES Debentures) may convert their HIGH
TIDES (or HIGH TIDES Debentures, if applicable) called for redemption into Class
A Common Stock at the Applicable Conversion Ratio prior to 5:00 p.m., New York
City time, on the applicable Redemption Date.
ADDITIONAL AMOUNTS
If (i) the Property Trustee is the sole holder of all the HIGH TIDES
Debentures and (ii) the Trust is required to pay any additional taxes, duties,
assessments or other governmental charges as a result of a Tax Event
("Additional Sums"), the Company will pay as additional amounts ("Additional
Amounts") on the HIGH TIDES Debentures such amounts as shall be required so that
the Distributions payable by the Trust in respect of the Trust Securities shall
not be reduced as a result of any such Additional Sums.
RESTRICTIONS ON CERTAIN PAYMENTS
If (i) there shall have occurred a Debenture Event of Default, (ii) the
Company shall be in default with respect to its payment of any obligations under
the Guarantee or (iii) the Company shall have given notice of its election of a
Deferral Period as provided in the Indenture and shall not have rescinded such
notice, or such Deferral Period shall be continuing, the Company will covenant
that it will not (a) declare or pay any
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<PAGE> 50
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 paid by the
Company which consist of stock of the same class as that on which the dividend
is being paid, (b) 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 HIGH TIDES Debentures or (c) 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 HIGH TIDES Debentures (in each case other than
(A) dividends or distributions in Common Stock of the Company, (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 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 HIGH TIDES Debentures), (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).
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of HIGH TIDES 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 HIGH TIDES Debentures
or the holders of the HIGH TIDES so long as they remain outstanding) and
qualifying, or maintaining the qualification of, the Indenture under the Trust
Indenture Act. The Indenture contains provisions permitting the Company and the
Debenture Trustee, with the consent of the holders of not less than a majority
in principal amount of HIGH TIDES Debentures, to modify the Indenture in a
manner affecting the rights of the holders of HIGH TIDES Debentures; provided,
however, that no such modification may, without the consent of the holder of
each outstanding HIGH TIDES Debenture so affected, change the Reset Date or any
date specified in the Indenture on which interest on, or the principal, together
with any accrued and unpaid interest, of the HIGH TIDES Debentures is due and
payable ("Stated Maturity") or reduce the principal amount of the HIGH TIDES
Debentures, or reduce the rate or extend the time of payment of interest thereon
or reduce the percentage of principal amount of HIGH TIDES 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.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the HIGH TIDES Debentures that has occurred and is
continuing constitutes a "Debenture Event of Default":
(i) failure for 30 days to pay any interest on the HIGH TIDES
Debentures when due (subject to the deferral of any due date in the case of
a Deferral Period); or
(ii) failure to pay any principal or premium, if any, on the HIGH
TIDES Debentures when due, whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or
(iii) failure to observe or perform certain other covenants contained
in the Indenture for 90 days after written notice to the Company from the
Debenture Trustee or the holders of at least 25% in aggregate outstanding
principal amount of the HIGH TIDES Debentures; or
(iv) failure by the Company to issue and deliver shares of Class A
Common Stock upon an election by a holder of HIGH TIDES to convert such
HIGH TIDES; or
(v) certain events in bankruptcy, insolvency or reorganization of the
Company; or
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<PAGE> 51
(vi) the failure of the Company to redeem the outstanding HIGH TIDES
Debentures in whole on the Reset Date in the event of a Failed Final
Remarketing; or
(vii) the failure of the Company to repay all of the outstanding HIGH
TIDES Debentures on June 15, 2028 with the proceeds of the sale of
nonconvertible preferred or nonconvertible trust preferred securities of
the Company; or
(viii) the voluntary or involuntary dissolution, winding-up or
termination of the Trust, except in connection with the distribution of the
HIGH TIDES Debentures to the holders of Trust Securities in liquidation of
the Trust, the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration.
The holders of a majority in aggregate outstanding principal amount of the
HIGH TIDES 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 HIGH TIDES Debentures may declare the principal due and
payable immediately upon a Debenture Event of Default and, should the Debenture
Trustee or such holders of HIGH TIDES Debentures fail to make such declaration,
the holders of at least 25% in aggregate liquidation amount of the HIGH TIDES
shall have such right; provided that any such declaration will not be effective
until the earlier to occur of (i) ten business days after receipt by the Company
and the administrative agent under the Senior Credit Agreement of written notice
of such declaration and (ii) acceleration of obligations under the Senior Credit
Agreement. The holders of a majority in aggregate outstanding principal amount
of the HIGH TIDES Debentures may annul such declaration and waive the default if
the default (other than the non-payment of the principal of the HIGH TIDES
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 HIGH TIDES Debentures fail to annul such declaration and
waive such default, the holders of a majority in aggregate liquidation amount of
the HIGH TIDES shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
HIGH TIDES Debentures affected thereby may, on behalf of the holders of all the
HIGH TIDES Debentures, waive any past default, except a default in the payment
of principal of (or premium, if any) or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding HIGH TIDES Debenture. Should the holders of such HIGH
TIDES Debentures fail to annul such declaration and waive such default, the
holders of a majority in aggregate liquidation amount of the HIGH TIDES shall
have such right. The Company is required to file annually with the Debenture
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on the HIGH TIDES Debentures, and any other amounts payable under the
Indenture, to be forthwith due and payable and to enforce its other rights as a
creditor with respect to the HIGH TIDES Debentures; provided that any such
declaration will not be effective until the earlier to occur of (i) ten business
days after receipt by the Company and the administrative agent under the Senior
Credit Agreement of written notice of such declaration and (ii) acceleration of
obligations under the Senior Credit Agreement.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF HIGH TIDES
If a Debenture 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 HIGH TIDES Debentures on the date such interest or principal is otherwise
payable, a holder of HIGH TIDES may institute a Direct Action. The Company may
not amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the HIGH TIDES. If
the right to bring a Direct Action is removed following
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<PAGE> 52
the effectiveness of a Shelf Registration Statement in respect of the HIGH TIDES
Debentures, the Trust may become subject to the reporting obligations under the
Exchange Act. Notwithstanding any payments made to a holder of HIGH TIDES by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal of and interest on the HIGH TIDES Debentures, and the
Company shall be subrogated to the rights of the holder of such HIGH TIDES with
respect to payments on the HIGH TIDES to the extent of any payments made by the
Company to such holder in any Direct Action.
The holders of the HIGH TIDES will not be able to exercise directly any
remedies, other than those set forth in the preceding paragraph, available to
the holders of the HIGH TIDES Debentures unless there shall have been an Event
of Default under the Declaration. See "Description of HIGH TIDES -- Events of
Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that 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:
(i) in case the Company consolidates with or merges with or into another person
or conveys, transfers or leases its properties and assets substantially as an
entirety to any person, the successor person is organized under the laws of the
United States or any State of the United States or the District of Columbia, and
such successor person expressly assumes the Company's obligations on the HIGH
TIDES Debentures issued under the Indenture and shall have provided for
conversion rights in accordance with Article XIII of the Indenture; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have occurred and be continuing; (iii) if at the time
any HIGH TIDES are outstanding, such transaction is permitted under the
Declaration and the Guarantee and does not give rise to any breach or violation
of the Declaration or the Guarantee; and (iv) certain other conditions as
prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the HIGH
TIDES Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the HIGH
TIDES Debentures.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any HIGH TIDES
Debentures issued thereunder shall be subordinate and junior in right of payment
to all 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 the Company, the
holders of Senior Debt will first be entitled to receive payment in full in cash
of principal of (and premium, if any), interest, and all other obligations with
respect to such Senior Debt before the holders of HIGH TIDES Debentures, or the
Property Trustee (or any other person or entity) on behalf of the holders, will
be entitled to receive or retain any payment or distribution in respect thereof.
In the event of the acceleration of the maturity of the HIGH TIDES
Debentures, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full in cash of all
amounts due thereon (including any amounts due upon acceleration) before the
holders of the HIGH TIDES Debentures will be entitled to receive or retain any
payment or distribution in respect of the HIGH TIDES Debentures.
In the event that the Company shall default in the payment of any principal
of, premium (if any), interest on, or any other amount with respect to, any
Senior Debt when the same becomes due and payable (a "payment default"), whether
at maturity or at a date fixed for prepayment or by declaration of acceleration
or otherwise, and in the case of Senior Debt other than Designated Senior Debt
such default continues beyond the period of grace, if any, specified in the
instrument evidencing such Senior Debt, then, unless and until such
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<PAGE> 53
default shall have been cured or waived or shall have ceased to exist or all
Senior Debt shall have been paid in full in cash, no direct or indirect payment
or distribution (in cash, property, securities, by set-off or otherwise) shall
be made or agreed to be made for or in respect of the HIGH TIDES Debentures, or
in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the HIGH TIDES Debentures. In the event the Company shall
suffer a default (other than a payment default) under any Designated Senior Debt
and such default continues beyond the period of grace, if any, specified in the
instrument evidencing such Designated Senior Debt, then, commencing upon the
receipt by the Debenture Trustee (with a copy to the Company) of written notice
of such default from the representative of the holders of such Designated Senior
Debt and until such default shall have been cured or waived or shall have ceased
to exist or all such Designated Senior Debt shall have been paid in full in
cash, no direct or indirect payment or distribution (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made for or
in respect of the HIGH TIDES Debentures, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the HIGH TIDES
Debentures.
"Designated Senior Debt" means (i) any obligation under the Senior Credit
Agreement and (ii) following termination of the Senior Credit Agreement, any
other Senior Debt the principal amount of which is $50.0 million or more and
that has been designated by the Company as "Designated Senior Debt."
"Senior Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated June 19, 1998, by and among the Company, the lenders parties
thereto, Credit Suisse First Boston, as a co-arranger, a co-syndication agent
and the administrative agent, and NationsBanc Montgomery Securities LLC, as a
co-arranger, a co-syndication agent and the documentation agent, including,
without limitation, any related notes, letters of credit, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and, in
each case, as amended, amended and restated, modified, renewed, refunded,
replaced or refinanced from time to time, including any agreement (i) extending
or shortening the maturity of any obligation incurred thereunder or contemplated
thereby, (ii) adding or deleting borrowers or guarantors thereunder and (iii)
increasing the amount of credit extended, or available to be extended,
thereunder.
"Senior Debt" means (i) all obligations of the Company under the Senior
Credit Agreement, including, without limitation, principal (including, without
limitation, reimbursement obligations in respect of letters of credit (whether
or not drawn) and obligations to cash collateralize letters of credit), premium
(if any), interest (including, without limitation, interest accruing subsequent
to the filing of, or which would have accrued but for the filing of, a petition
for bankruptcy, whether or not such interest is an allowable claim in such
bankruptcy proceeding), fees, indemnifications, expenses and other amounts
payable pursuant thereto, (ii) the principal of, and premium and interest, if
any, on all indebtedness of the Company for money borrowed, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, (iii) 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 (ii) and (iii) 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 HIGH TIDES Debentures, (iv) indebtedness or obligations of others of
the kind described in (i), (ii) and (iii) above for the payment of which the
Company is responsible or liable as guarantor or otherwise and (v) any
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 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 HIGH
TIDES 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
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liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject.
"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.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Company. The Company expects from time to time to incur
additional indebtedness constituting Senior Debt. At March 31, 1998, the
aggregate outstanding Senior Debt of the Company was approximately $125 million
($45 million on a pro forma basis giving effect to the Ryder TRS Acquisition and
the Series A Note Conversion). The Indenture also places no limitation on the
Debt of the Company's subsidiaries, which rank senior in right of payment to the
HIGH TIDES Debentures. As of March 31, 1998, the Company's subsidiaries had Debt
and other liabilities of approximately $3.0 billion ($3.4 billion on a pro forma
basis giving effect to the Ryder TRS Acquisition).
REGISTRATION AND TRANSFER
The HIGH TIDES 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 Trust Securities. Until such time,
the HIGH TIDES Debentures will remain registered in the name of and held by the
Property Trustee. Should the HIGH TIDES Debentures be distributed to holders of
the Trust Securities, beneficial interests in the HIGH TIDES Debentures will be
shown on, and transfers thereof will be effected only through, records
maintained by Participants in DTC. Except as described below, HIGH TIDES
Debentures in certificated form will not be issued in exchange for the global
certificates.
A global security shall be exchangeable for HIGH TIDES Debentures in
certificated form registered in the names of persons other than Cede & Co. only
if (i) DTC notifies the Company that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have been
appointed, or it at any time DTC ceases to be a "clearing agency" registered
under the Exchange Act, at a time when DTC 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 a Debenture Event of Default. Any global security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
certificates registered in such names as DTC shall direct. It is expected that
such instructions will be based upon directions received by DTC from its
Participants with respect to ownership of beneficial interests in such global
security.
Payments on HIGH TIDES Debentures held in global form will be made to DTC,
as the depositary for the HIGH TIDES Debentures. In the case of HIGH TIDES
Debentures issued in certificated form, principal and interest will be payable,
the transfer of the HIGH TIDES Debentures will be registrable, and HIGH TIDES
Debentures will be exchangeable for HIGH TIDES 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 the Company, provided that payment of interest may be made at
the option of the Company by check mailed to the address of the persons entitled
thereto 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, see "Description of HIGH TIDES -- Form, Book-Entry Procedures
and Transfer." If the HIGH TIDES Debentures are distributed to the holders of
the Trust Securities upon the termination of the Trust, the form, book-entry and
transfer procedures with respect
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to the HIGH TIDES as described under "Description of HIGH TIDES -- Form,
Book-Entry Procedures and Transfer," shall apply to the HIGH TIDES Debentures
mutatis mutandis.
PAYMENT AND PAYING AGENTS
Payment of the principal of and interest on the HIGH TIDES Debentures will
be made at the office or agency of the Company 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;
provided, however, that, at the option of the Company, payment of interest may
be made (except in the case of HIGH TIDES Debentures that are held in global
form) by check mailed to each registered holder or by wire transfer. Payment of
any interest on any HIGH TIDES Debenture will be made to the person in whose
name such HIGH TIDES 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 HIGH TIDES Debentures are governed by and will be
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 HIGH TIDES Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. 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 THE GUARANTEE
The Guarantee was executed and delivered by the Company concurrently with
the issuance by the Trust of the HIGH TIDES for the benefit of the holders from
time to time of such HIGH TIDES. The Bank of New York acts as trustee (the
"Guarantee Trustee") under the Guarantee. The Guarantee is not qualified under
the Trust Indenture Act. This summary of certain provisions of the Guarantee
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, all of the provisions of the Guarantee, including the
definitions therein of certain terms, and the Trust Indenture Act. The Guarantee
Trustee holds the Guarantee for the benefit of the holders of the HIGH TIDES.
GENERAL
Pursuant to the Guarantee, the Company irrevocably agreed to pay in full on
a subordinated basis, to the extent set forth herein, the Guarantee Payments to
the holders of the HIGH TIDES, as and when due, 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 with respect to the HIGH TIDES, to
the extent not paid by or on behalf of the Trust (the "Guarantee Payments"), are
subject to the Guarantee: (i) any accrued and unpaid Distributions required to
be paid on the HIGH TIDES, to the extent that the Trust has funds on hand
available therefor at such time, (ii) the applicable Redemption Price with
respect to HIGH TIDES called for redemption, to the extent that the Trust has
funds on hand available therefor at such time and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (other than in
connection with the distribution of HIGH TIDES Debentures to the holders of the
HIGH TIDES or the redemption of all of the HIGH TIDES) the lesser of (a) the
Liquidation Distribution, to the extent the Trust has funds available therefor
and (b) the amount of assets of the Trust remaining available for distribution
to holders of the HIGH TIDES upon liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust as required by applicable law. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the HIGH TIDES
or by causing the Trust to pay such amounts to such holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of the
Trust's obligations under the HIGH TIDES, although it applies only to the extent
that the Trust has funds sufficient to make such payments, and is not a
guarantee of collection. If the Company does not make interest payments on the
HIGH TIDES Debentures held by the Trust, the Trust will not be able to pay
Distributions on the HIGH TIDES and will not have funds legally available
therefor.
The Guarantee ranks subordinate and junior in right of payment to all
Senior Debt. See "-- Status of the Guarantee." Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of any subsidiary, upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of the holders of HIGH TIDES to benefit
indirectly from any such distribution), is subject to the prior claims of
creditors of such subsidiary, except to the extent the Company may itself be
recognized as a creditor of that subsidiary. Accordingly, the Company's
obligations under the Guarantee are effectively subordinated to all existing and
future liabilities of the Company's subsidiaries, including deposits, and
claimants should look only to the assets of the Company for payments thereunder.
The Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, including Senior Debt, whether under any
indenture that the Company may enter into in the future or otherwise.
Taken together, the Company's obligations under the Guarantee, the
Declaration, the HIGH TIDES Debentures and the Indenture, including the
Company's obligation to pay the costs, expenses and other liabilities of the
Trust (other than the Trust's obligations to the holders of the Trust Securities
under the Trust Securities), provide, in the aggregate, a full, irrevocable and
unconditional guarantee of all of the Trust's obligations under the HIGH TIDES.
No single document standing alone or operating in conjunction with fewer than
all 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
HIGH TIDES. See "Relationship Among the HIGH TIDES, the HIGH TIDES Debentures
and the Guarantee."
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STATUS OF THE GUARANTEE
The Guarantee constitutes an unsecured obligation of the Company and ranks
subordinate and junior in right of payment to all Senior Debt in the same manner
as HIGH TIDES Debentures.
The Guarantee constitutes a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against any other person or entity). The Guarantee is held
for the benefit of the holders of the HIGH TIDES. 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 HIGH TIDES or the
HIGH TIDES Debentures. The Guarantee does not place a limitation on the amount
of additional Senior Debt that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the HIGH TIDES (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 such
outstanding HIGH TIDES. The manner of obtaining any such approval will be as set
forth under "Description of HIGH TIDES -- Voting Rights; Amendment of the
Declaration." All guarantees and agreements contained in the Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the HIGH TIDES then
outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder; provided,
however, that except with respect to a default in payment of any Guarantee
Payment, the Company shall have received notice of default and shall not have
cured such default within 60 days after receipt of such notice. The holders of
not less than a majority in aggregate liquidation amount of the HIGH TIDES 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 HIGH TIDES may institute a legal proceeding directly
against the Company 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.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care and
skill as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Guarantee Trustee is under no obligation
to exercise any of the powers vested in it by the Guarantee at the request of
any holder of the HIGH TIDES unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the HIGH TIDES, upon full payment of the
amounts payable upon liquidation of the Trust or upon distribution of HIGH TIDES
Debentures to the holders of the HIGH TIDES. The Guarantee will continue
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to be effective or will be reinstated, as the case may be, if at any time any
holder of the HIGH TIDES must restore payment of any sums paid under the HIGH
TIDES or the Guarantee.
GOVERNING LAW
The Guarantee is governed by and will be construed in accordance with the
laws of the State of New York.
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RELATIONSHIP AMONG THE HIGH TIDES,
THE HIGH TIDES DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the HIGH TIDES (to the
extent the Trust has funds available for the payment of such Distributions) are
irrevocably guaranteed by the Company as and to the extent set forth under
"Description of Guarantee." Taken together, the Company's obligations under the
HIGH TIDES Debentures, the Indenture, the Declaration and the Guarantee provide,
in the aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the HIGH TIDES. 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 Trust Securities. If and to the
extent that the Company does not make payments on the HIGH TIDES Debentures, the
Trust will not pay Distributions or other amounts due on the HIGH TIDES. 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 HIGH TIDES is to institute a Direct Action. The obligations of the
Company under the Guarantee are subordinate and junior in right of payment to
all Senior Debt.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
HIGH TIDES Debentures, such payments will be sufficient to cover Distributions
and other payments due on the HIGH TIDES, primarily because (i) the aggregate
principal amount or applicable Redemption Price of the HIGH TIDES Debentures
will be equal to the sum of the aggregate liquidation amount or applicable
Redemption Price, as applicable, of the Trust Securities; (ii) the Applicable
Rate and interest and other payment dates on the HIGH TIDES Debentures will
match the Distribution rate and Distributions and other payment dates for the
HIGH TIDES; (iii) the Company shall pay for all costs, expenses and liabilities
of the Trust except the Trust's obligations to holders of Trust Securities under
such Trust Securities; and (iv) the Declaration further provides that the Trust
will not engage in any activity that is not consistent with the limited purposes
thereof.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is 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 HIGH TIDES
A holder of any HIGH TIDES may institute a legal proceeding directly
against the Company 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.
A default or event of default under any Senior Debt would not constitute a
default or Event of Default under the Declaration. However, in the event of
payment and certain other defaults under, or acceleration of, Senior Debt, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the HIGH TIDES Debentures until such Senior Debt has been paid in
full or such payment or other default thereunder has been cured or waived.
Failure to make required payments on HIGH TIDES Debentures would constitute an
Event of Default under the Declaration.
LIMITED PURPOSE OF THE TRUST
The HIGH TIDES evidence an undivided beneficial interest in the Trust, and
the Trust exists for the sole purpose of issuing the HIGH TIDES and Common
Securities and investing the proceeds of the Trust Securities in HIGH TIDES
Debentures.
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RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Trust involving the liquidation of the HIGH TIDES Debentures, after
satisfaction of the liabilities of creditors of the Trust as required by
applicable law, the holders of the Trust Securities will be entitled to receive,
out of assets held by the Trust, the Liquidation Distribution in cash. See
"Description of HIGH TIDES -- Liquidation of the Trust and Distribution of HIGH
TIDES Debentures." Upon any voluntary or involuntary liquidation or bankruptcy
of the Company, the Property Trustee, as holder of the HIGH TIDES Debentures,
would be a subordinated creditor of the Company, 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 stockholders of
the Company receive payments or distributions. Since the Company is the
guarantor under the Guarantee and has agreed to pay for all costs, expenses and
liabilities of the Trust (other than the Trust's obligations to the holders of
its Trust Securities), the positions of a holder of HIGH TIDES and a holder of
HIGH TIDES Debentures relative to other creditors and to stockholders of the
Company in the event of liquidation or bankruptcy of the Company are expected to
be substantially the same.
REGISTRATION RIGHTS
The Company and the Trust are subject to a registration agreement with the
Initial Purchasers (the "Registration Agreement") for the benefit of the holders
of the HIGH TIDES wherein the Company and the Trust agreed, at the Company's
sole expense, to use their best efforts to cause the Registration Statement to
be declared effective under the Securities Act within 120 days after the Issue
Date and use their best efforts to keep the Registration Statement effective and
usable for two years or such other period as shall be required under Rule 144(k)
of the Securities Act or any successor rule thereto or, if earlier, such time as
all of the applicable HIGH TIDES, the Guarantee, the HIGH TIDES Debentures and
the related Class A Common Stock issuable upon conversion of the HIGH TIDES (the
"Registerable Securities") have been sold thereunder (except that the Company
will be permitted to suspend the use of the Registration Statement during
certain periods under certain circumstances). The Company will provide to each
holder for whom the Registration Statement was filed copies of this Prospectus
notify each such holder when the Registration Statement for the Registerable
Securities has become effective and take certain other actions as are required
to permit unrestricted resales of the Registerable Securities. A holder that
sells Registerable Securities pursuant to the Registration Statement is required
to be named as a Selling Holder in the 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 within 120 days of the Issue Date the Registration Statement has not
been declared effective by the Commission or in the event that a Registration
Statement is declared effective by the Commission, the Company or the Trust
fails to keep such Registration Statement continuously effective and usable
(subject to certain exceptions) for the period required by the Registration
Agreement (each such event referred to above a "Registration Default"), then the
Applicable Rate at which interest will accrue on the HIGH TIDES Debentures,
(including in respect of amounts accruing during any Deferral Period), and
corresponding distributions will accrue on the Trust 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 will be increased 0.50% per annum of the principal amount or
liquidation amount (the "Registration Default Rate"), as applicable, subject to
certain exceptions. Following the cure of a Registration Default, the Applicable
Rate will become the rate in effect immediately prior to such Registration
Default.
The Registration Agreement is governed by, and will be construed in
accordance with, the laws of the State of New York. The summary herein of
certain provisions of the Registration Agreement does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Registration Agreement, a form of which is available upon
request to the Company. See "Available Information."
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UNITED STATES FEDERAL TAX CONSIDERATIONS
GENERAL
Except as otherwise indicated in an amendment or supplement to this
Prospectus, the following summary describes the material United States federal
income tax consequences of the purchase, ownership, disposition, and conversion
of HIGH TIDES and Class A Common Stock, and, in the opinion of King & Spalding,
special tax counsel to the Company and the Trust ("Tax Counsel"), is accurate in
all material respects with respect to the matters discussed therein. Unless
otherwise stated, this summary deals only with HIGH TIDES and Class A Common
Stock held as capital assets by U.S. Holders (as defined below). It does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, or tax-exempt investors. This summary also does not
address the tax consequences to persons that have a functional currency other
than the U.S. Dollar or the tax consequences to shareholders, partners or
beneficiaries of a holder of HIGH TIDES or Class A Common Stock. Further, it
does not include any description of any alternative minimum tax consequences or
the tax laws of any state or local government or of any foreign government that
may be applicable to the HIGH TIDES or Class A Common Stock. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder (the "Treasury Regulations") and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis.
As used herein, the term "U.S. Holder" means any beneficial owner of HIGH
TIDES or Class A Common Stock that is, for United States federal income tax
purposes, (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in or under the laws of the United States, any
state thereof or the District of Columbia (other than a partnership that is not
treated as a United States person under any applicable Treasury Regulations),
(iii) an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) a trust if (A) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (B) one or more United States persons have the authority to
control all substantial decisions of the trust. Notwithstanding the preceding
sentence, to the extent provided in Treasury Regulations, certain trusts in
existence on August 20, 1996 and treated as United States persons prior to such
date that elect to continue to be treated as United States persons also will be
U.S. Holders. As used herein, the term "Non-U.S. Holder" means a beneficial
owner of HIGH TIDES or Class A Common Stock that is not a U.S. Holder.
In part because of the uncertainties concerning the proper tax treatment of
HIGH TIDES as discussed below, it is particularly important that each holder
consult with its own tax advisor regarding the tax treatment of the potential
acquisition, ownership and disposition of its HIGH TIDES. HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE FEDERAL, STATE AND LOCAL INCOME,
FRANCHISE, PERSONAL PROPERTY, AND ANY OTHER TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE HIGH TIDES.
CLASSIFICATION OF THE TRUST AS A GRANTOR TRUST
In the opinion of Tax Counsel, under current law, the Trust will be
classified for United States federal income tax purposes as a grantor trust and
not as a partnership, an association taxable as a corporation, or a publicly
traded partnership. Accordingly, for United States federal income tax purposes,
each holder of HIGH TIDES generally will be considered the owner of an undivided
interest in the HIGH TIDES Debentures, and each holder will be required to
include in its gross income all income or gain with respect to its allocable
share of those HIGH TIDES Debentures.
CLASSIFICATION OF THE HIGH TIDES DEBENTURES AS INDEBTEDNESS
In the opinion of Tax Counsel, under current law, the HIGH TIDES Debentures
will be classified for United States federal income tax purposes as indebtedness
of the Company. This opinion is not binding on the Internal Revenue Service
("IRS") and, accordingly, no complete assurance can be given that the IRS will
not
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challenge the classification of the HIGH TIDES Debentures as debt, or if the
classification were challenged, that such a challenge would not be successful.
The remainder of this discussion assumes that the HIGH TIDES Debentures will be
classified as indebtedness of the Company for United States federal income tax
purposes.
TAX TREATMENT OF HIGH TIDES DEBENTURES AS RESET BONDS
Because no debt instrument closely comparable to the HIGH TIDES Debentures
has been the subject of any Treasury Regulation, revenue ruling or judicial
decision, the federal income tax treatment of debt obligations such as the HIGH
TIDES Debentures is not certain. The Company intends to treat the HIGH TIDES
Debentures for federal income tax purposes as being "reset bonds" under Treasury
Regulations relating to variable rate debt instruments ("VRDI") (Treasury
Regulation Section 1.1275-5(f)). Assuming the HIGH TIDES Debentures are reset
bonds, they will be treated, solely for purposes of the OID rules of the Code,
as maturing on the date immediately preceding the Reset Date for the Reset Price
and, if the Remarketing Agent remarkets the HIGH TIDES, as being reissued on the
Reset Date at the Reset Price.
There can be no assurance that the IRS will agree with, or that a court
would uphold, the treatment of the HIGH TIDES Debentures as reset bonds. In
particular, the IRS could instead attempt to treat the HIGH TIDES Debentures as
maturing at their stated maturity on June 15, 2028. If the HIGH TIDES Debentures
were treated as maturing on such date, the HIGH TIDES Debentures would be
treated as having contingent interest under the Treasury Regulations governing
debt instruments that provide for contingent payments (the "Contingent Payment
Regulations"). In that event, the Company would be required to construct a
projected payment schedule for the HIGH TIDES Debentures, based on the Company's
current borrowing costs for comparable noncontingent debt instruments of the
Company, from which an estimated yield on the HIGH TIDES Debentures would be
calculated. A U.S. Holder would be required to include in income OID in an
amount equal to the product of the "adjusted issue price" of the HIGH TIDES
Debentures at the beginning of each interest accrual period and the estimated
yield of the HIGH TIDES Debentures and to make certain adjustments to such
income accruals for differences between actual payments and projected payments.
In general, the "adjusted issue price" of a HIGH TIDES Debenture would be equal
to its "issue price" (the first price at which a substantial amount of the HIGH
TIDES are sold to the public, ignoring sales to bond houses, brokers and similar
persons acting as underwriters, placement agents or wholesalers), increased by
the OID previously accrued on the HIGH TIDES Debenture, and reduced by all
payments made on the HIGH TIDES Debenture. Under the Contingent Payment
Regulations, during the period prior to the Reset Date, OID would accrue at a
rate that is greater than the Initial Rate, and U.S. Holders would have more
taxable income than the cash payable on the HIGH TIDES.
In addition, under the Contingent Payment Regulations, U.S. Holders who
sold or redeemed their HIGH TIDES would recognize ordinary loss or reduced gain
at that time to reflect any excess of prior OID accruals over actual interest
payments received. U.S. Holders who retain their HIGH TIDES following the Reset
Date would reduce their OID accruals after that date to reflect any such excess
prior to the Reset Date. Furthermore, under the Contingent Payment Regulations,
any gain realized with respect to the HIGH TIDES would generally be treated as
ordinary income; any loss realized would generally be treated as ordinary loss
to the extent of the U.S. Holder's prior ordinary income inclusions with respect
to the HIGH TIDES, and any additional loss would be capital loss.
The following discussion assumes the HIGH TIDES Debentures are properly
treated as reset bonds rather than as contingent payment debt instruments.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Because the Company has the option, under the terms of the HIGH TIDES
Debentures, to defer payments of interest by extending interest payment periods
for up to 20 consecutive quarters, the Company will treat the HIGH TIDES
Debentures as having been issued with OID. As a result, U.S. Holders of HIGH
TIDES will be required to include in income their allocable share of the OID
accrued by the Trust with respect to the HIGH TIDES Debentures on an economic
accrual basis over the period of time that the HIGH
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TIDES (and underlying allocable share of the HIGH TIDES Debentures) are held,
regardless of their regular methods of tax accounting and regardless of whether
interest has been paid on the HIGH TIDES Debentures or distributions are made on
the HIGH TIDES. Assuming that the HIGH TIDES Debentures are treated as reset
bonds (as discussed above), the total OID that will accrue during the period up
to the day before the Reset Date will be equal to the excess of (i) the sum of
(A) the Reset Price, plus (B) the total stated interest payments called for
under the HIGH TIDES Debentures prior to the Reset Date, over (ii) the issue
price of the HIGH TIDES Debentures. Because the Reset Price exceeds the
principal amount of the HIGH TIDES Debentures, during the period through the
Reset Date U.S. Holders will accrue OID at a rate slightly in excess of the
Initial Rate.
Actual distributions of stated interest will not be separately reported as
taxable income. Any OID included in income will increase the U.S. Holder's tax
basis in the HIGH TIDES and the U.S. Holder's actual receipt of interest
payments will reduce such basis. If the Company were to exercise its option to
defer payments of stated interest on the HIGH TIDES Debentures, U.S. Holders of
HIGH TIDES would continue to accrue OID income even though the Company would not
be making any actual cash payments during the Deferral Period.
Because the income underlying the HIGH TIDES will not be characterized as
dividends for federal income tax purposes, corporate holders of the HIGH TIDES
will not be entitled to a dividends received deduction for any income recognized
with respect to the HIGH TIDES.
ACQUISITION PREMIUM; PREMIUM
A U.S. Holder that purchases a HIGH TIDE will be considered to have
purchased the underlying HIGH TIDE Debenture at an "acquisition premium" if such
U.S. Holder's adjusted basis in the HIGH TIDE immediately after the purchase is
(i) greater than the adjusted issue price of the underlying HIGH TIDE Debenture
as of the purchase date and (ii) less than or equal to the sum of all amounts
payable on the underlying HIGH TIDE Debenture after the purchase date. Under the
acquisition premium rules, the amount of OID which such U.S. Holder must include
in its gross income for any taxable year (or portion thereof in which the U.S.
Holder holds the HIGH TIDES) will be reduced (but not below zero) by the portion
of the acquisition premium properly allocable to the period.
A U.S. Holder who purchases a HIGH TIDE will be considered to have
purchased the underlying HIGH TIDE Debenture at a "premium" if such U.S.
Holder's adjusted basis in the HIGH TIDE immediately after the purchase is
greater than the sum of all amounts payable on the underlying HIGH TIDE
Debenture after the purchase date. A U.S. Holder that purchases a HIGH TIDE at a
"premium" will not include any OID in gross income.
MARKET DISCOUNT
A U.S. Holder who purchases a HIGH TIDE will be considered to have
purchased the underlying HIGH TIDE Debenture at a "market discount" if such U.S.
Holder's adjusted basis in the HIGH TIDE immediately after the purchase is less
than the adjusted issue price of the underlying HIGH TIDE Debenture as of the
purchase date, unless such market discount is less than a specified de minimis
amount (generally 1/4 of 1 percent of the adjusted issue price of the HIGH TIDE
Debenture as of the purchase date multiplied by its weighted average maturity as
of such date).
Under the market discount rules, a U.S. Holder will be required to treat
any gain realized on the sale, exchange, retirement or other disposition of the
HIGH TIDES as ordinary income to the extent of the lesser of (i) the amount of
such realized gain or (ii) the market discount which has not previously been
included in income and is treated as having accrued on the underlying HIGH TIDES
Debentures at the time of such disposition. Market discount will be considered
to accrue ratably, unless the U.S. Holder elects to accrue market discount on a
constant yield basis. Once made, such an election is irrevocable.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry HIGH TIDES with market discount until the
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maturity of the HIGH TIDES Debentures or certain earlier dispositions. A current
deduction is only allowed to the extent the interest expense exceeds the portion
of market discount allocable to the days during the taxable year in which the
HIGH TIDES were held by the taxpayer. A U.S. Holder may elect to include market
discount in income currently as it accrues (on either a ratable or constant
yield basis), in which case the rules described above regarding the treatment as
ordinary income of gain upon the disposition of the HIGH TIDES and the deferral
of interest deductions will not apply. Generally, such currently included market
discount is treated as ordinary interest for federal income tax purposes. Such
an election will apply to all debt instruments with market discount acquired by
the holder on or after the first day of the taxable year to which such election
applies and may be revoked only with the consent of the IRS.
RECEIPT OF HIGH TIDES DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
HIGH TIDES -- Tax Event or Investment Company Event Redemption or Distribution,"
HIGH TIDES Debentures may be distributed to holders in exchange for the HIGH
TIDES and in liquidation of the Trust. Under current law, such a distribution to
holders, for United States federal income tax purposes, would be treated as a
nontaxable event to each U.S. Holder, and each U.S. Holder would receive an
aggregate tax basis in the HIGH TIDES Debentures equal to such U.S. Holder's
aggregate tax basis in its HIGH TIDES. A U.S. Holder's holding period in the
HIGH TIDES Debentures so received in liquidation of the Trust would include the
period during which the HIGH TIDES were held by such U.S. Holder. If, however,
the exchange is caused by a Tax Event which results in the Trust being treated
as an association taxable as a corporation, the distribution would likely
constitute a taxable event to U.S. Holders of the HIGH TIDES.
Under certain circumstances described herein (see "Description of HIGH
TIDES"), the HIGH TIDES Debentures may be redeemed for cash and the proceeds of
such redemption distributed to holders in redemption of their HIGH TIDES. Under
current law, such a redemption would, for United States federal income tax
purposes, constitute a taxable disposition of the redeemed HIGH TIDES as to U.S.
Holders, and a U.S. Holder would recognize gain or loss as if it sold such
redeemed HIGH TIDES for cash. See "-- Sale of HIGH TIDES."
SALE OF HIGH TIDES
A U.S. Holder that sells HIGH TIDES will recognize capital gain or loss
equal to the difference between the amount realized on the sale of the HIGH
TIDES and the holder's adjusted tax basis in such HIGH TIDES. A U.S. Holder's
adjusted tax basis in the HIGH TIDES generally will be its initial purchase
price, increased by any OID included in income (and accrued market discount, if
any, if the U.S. Holder has included such market discount in income), and
decreased by payments received on the HIGH TIDES. In the case of a U.S. Holder
other than a corporation, the maximum marginal federal income tax rate
applicable to such gain will be lower than the maximum marginal federal income
tax rate applicable to ordinary income if such holder's holding period for such
HIGH TIDES exceeds one year.
A U.S. Holder who disposes of its HIGH TIDES between record dates for
payments of distributions thereon will be required to include OID on the HIGH
TIDES Debentures through the date of disposition in income as ordinary income,
and to add such amount to its adjusted tax basis in the HIGH TIDES. To the
extent the selling price is less than the U.S. Holder's adjusted tax basis
(which basis will include OID previously included in income, less interest
payments actually received), a U.S. Holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
CONVERSION OF HIGH TIDES INTO CLASS A COMMON STOCK
A U.S. Holder of HIGH TIDES will not recognize income, gain or loss upon
the conversion, through the conversion agent, of HIGH TIDES Debentures into
Class A Common Stock (although the holder will be required to continue to accrue
any OID through the date of conversion). The U.S. Holder will recognize gain
upon the receipt of cash in lieu of a fractional share of Class A Common Stock
equal to the amount of cash
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received less the holder's tax basis in such fractional share. A U.S. Holder's
tax basis in the Class A Common Stock received upon conversion would generally
be equal to the U.S. Holder's tax basis in the HIGH TIDES delivered to the
conversion agent for exchange less the basis allocated to any fractional share
for which cash is received, and a U.S. Holder's holding period in the Class A
Common Stock received upon conversion would generally include the period during
which the HIGH TIDES were held by such U.S. Holder.
DIVIDENDS
The amount of any distribution by the Company in respect of Class A Common
Stock will be equal to the amount of cash and the fair market value, on the date
of distribution, of any property distributed. Generally, distributions will be
treated as a dividend, subject to tax as ordinary income, to the extent of the
Company's current or accumulated earnings and profits, then as a tax-free return
of capital to the extent of a U.S. Holder's tax basis in the Class A Common
Stock and thereafter as gain from the sale or exchange of such stock (as
described below).
In general, a dividend distribution to a corporate U.S. Holder will qualify
for the 70% dividends received deduction if the U.S. Holder owns less than 20%
of the voting power and value of the Company's stock (other than any non-voting,
non-convertible, non-participating preferred stock). A corporate U.S. Holder
that owns 20% or more of the voting power and value of the Company's stock
(other than any non-voting, non-convertible, non-participating preferred stock)
generally will qualify for an 80% dividends received deduction. The dividends
received deduction is subject to certain holding period, taxable income and
other limitations.
SALE OF CLASS A COMMON STOCK
Upon the sale or exchange of Class A Common Stock, a U.S. Holder generally
will recognize capital gain or loss equal to the difference between (i) the
amount of cash and the fair market value of any property received upon the sale
or exchange and (ii) such U.S. Holder's adjusted tax basis in the Class A Common
Stock. In the case of a U.S. Holder other than a corporation, the maximum
marginal federal income tax rate applicable to such gain will be lower than the
maximum marginal federal income tax rate applicable to ordinary income if such
holder's holding period for such Class A Common Stock exceeds one year. A U.S.
Holder's basis and holding period in Class A Common Stock received upon
conversion of HIGH TIDES are determined as discussed above under "-- Conversion
of HIGH TIDES into Class A Common Stock."
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would treat
holders of HIGH TIDES as having received a constructive distribution from the
Company in the event the Applicable Conversion Ratio of the HIGH TIDES
Debentures were adjusted if (i) as a result of such adjustment, the
proportionate interest (measured by the amount of Class A Common Stock into
which the HIGH TIDES Debentures are convertible) of the holders of the HIGH
TIDES in the assets or earnings and profits of Company were increased, and (ii)
the adjustment was not made pursuant to a bona fide, reasonable antidilution
formula. An adjustment in the Applicable Conversion Ratio would not be
considered made pursuant to such a formula if the adjustment was made to
compensate for certain taxable distributions with respect to the Class A Common
Stock. Thus, under certain circumstances, a reduction in the conversion price
for the holders may result in deemed dividend income to holders to the extent of
the current or accumulated earnings and profits of the Company. Holders of the
HIGH TIDES would be required to include their allocable share of such deemed
dividend income in gross income but will not receive any cash related thereto.
In addition, the Company will take the position that the adjustment to the
Initial Conversion Ratio in connection with the Remarketing will constitute an
"isolated" recapitalization for federal income tax purposes and, therefore, not
be deemed a constructive dividend under Section 305. However, the IRS might
contend that any increase in such Initial Conversion Ratio on the Reset Date is
a constructive dividend to holders of the HIGH TIDES who hold the HIGH TIDES
immediately before the Reset Date and that any decrease in such Initial
Conversion Ratio on the Reset Date (or elimination of the conversion feature on
the Reset Date) is a constructive dividend to all holders of Class A Common
Stock at that time. In each case, the amount of
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the constructive dividend would be the fair market value on the Reset Date of
the number of shares of Class A Common Stock which, if actually distributed to
holders of HIGH TIDES (in the case of an increase in the Initial Conversion
Ratio) or to holders of the Class A Common Stock (in the case of a decrease in
the Initial Conversion Ratio or elimination of convertibility of HIGH TIDES),
would produce the same increase in the proportionate interests of such holders
in the assets or earnings and profits of the Company as that produced by the
adjustment. The aggregate deemed dividend is limited to the current or
accumulated earnings and profits of the Company. Holders of the HIGH TIDES would
be required to include any such constructive dividend to them in gross income
but would not receive any cash related thereto.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a HIGH TIDE, payments of dividends
on Class A Common Stock, payments of the proceeds of the sale of a HIGH TIDE and
payments of the proceeds of the sale of Class A Common Stock, and a 31% backup
withholding tax may apply to such payments if the U.S. Holder (i) fails to
furnish or certify his correct taxpayer identification number to the payor in
the manner required, (ii) is notified by the IRS that he has failed to report
payments of interest and dividends properly, or (iii) under certain
circumstances, fails to certify that he has not been notified by the IRS that he
is subject to backup withholding for failure to report interest and dividend
payments. Any amounts withheld under the backup withholding rules from a payment
to a U.S. Holder will be allowed as a credit against such U.S. Holder's United
States federal income tax and may entitle the holder to a refund, provided that
the required information is furnished to the IRS.
NON-U.S. HOLDERS
The rules governing United States federal income taxation of a beneficial
owner of HIGH TIDES or Class A Common Stock that, for United States federal
income tax purposes, is a Non-U.S. Holder are complex and no attempt will be
made herein to provide more than a summary of such rules. NON-U.S. HOLDERS
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE THE EFFECT OF FEDERAL,
STATE, LOCAL AND FOREIGN INCOME TAX LAWS, AS WELL AS TREATIES, WITH REGARD TO AN
INVESTMENT IN THE HIGH TIDES AND CLASS A COMMON STOCK, INCLUDING ANY REPORTING
REQUIREMENTS.
Interest Income and Original Issue Discount
Generally, interest income (or OID) of a Non-U.S. Holder that is not
effectively connected with a United States trade or business will be subject to
a withholding tax at a 30% rate (or, if applicable, a lower tax rate specified
by a treaty). However, interest income (or OID) earned on the HIGH TIDES
Debentures by a Non-U.S. Holder will qualify for the "portfolio interest"
exemption and therefore will not be subject to United States federal income tax
or withholding tax, provided that such interest income is not effectively
connected with a United States trade or business of the Non-U.S. Holder and
provided that (i) the Non-U.S. Holder does not actually or constructively
(including by virtue of its interest in the underlying HIGH TIDES Debentures)
own 10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote (ii) the Non-U.S. Holder is not a controlled
foreign corporation that is related to the Company through stock ownership,
(iii) the Non-U.S. Holder is not a bank which acquired the HIGH TIDES in
consideration for an extension of credit made pursuant to a loan agreement
entered into in the ordinary course of business and (iv) either (A) the Non-U.S.
Holder certifies to the Trust or its agent, under penalties of perjury, that it
is not a U.S. Holder and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds customer'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds HIGH TIDES in such capacity, certifies to the Trust or
its agent, under penalties of perjury, that such statement has been received
from the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof.
Recently finalized Treasury Regulations would modify the certification
requirements on payments of interest made after December 31, 1998. In Notice
98-16, the IRS announced that the Treasury Department
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and the IRS intend to amend these regulations by delaying the effective date, so
that the regulations will apply to payments made after December 31, 1999,
subject to certain transition rules. Prospective investors should consult their
own tax advisors as to the effect, if any, of the final regulations and Notice
98-16 on their purchase, ownership and disposition of the HIGH TIDES and Class A
Common Stock.
Except to the extent that an applicable treaty otherwise provides, a
Non-U.S. Holder generally will be taxed in the same manner as a U.S. Holder with
respect to interest (or OID) if the interest (or OID) income is effectively
connected with a United States trade or business of the Non-U.S. Holder.
Effectively connected interest (or OID) received or accrued by a corporate
Non-U.S. Holder may also, under certain circumstances, be subject to an
additional "branch profits" tax at a 30% rate (or, if applicable, a lower tax
rate specified by a treaty). Even though such effectively connected interest (or
OID) is subject to income tax, and may be subject to the branch profits tax, it
is not subject to withholding tax if the holder delivers a properly executed IRS
Form 4224 (or successor form) to the payor.
Sale, Exchange or Redemption of HIGH TIDES
A Non-U.S. Holder of HIGH TIDES generally will not be subject to United
States federal income tax or withholding tax on any gain realized on the sale,
exchange or redemption of the HIGH TIDES (including the receipt of cash in lieu
of fractional shares upon conversion of HIGH TIDES into Class A Common Stock)
unless (i) the gain is effectively connected with a United States trade or
business of the Non-U.S. Holder, (ii) in the case of a Non-U.S. Holder who is an
individual, such holder is present in the United States for a period or periods
aggregating 183 days or more during the taxable year of the disposition, and
either such holder has a "tax home" in the United States or the disposition is
attributable to an office or other fixed place of business maintained by such
holder in the United States, or (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of the Code applicable to certain United States
expatriates.
Conversion of HIGH TIDES
In general, no United States federal income tax or withholding tax will be
imposed upon the conversion of HIGH TIDES into Class A Common Stock by a
Non-U.S. Holder (except with respect to the Non-U.S. Holder's receipt of cash in
lieu of fractional shares) where one of the conditions described above under
"-- Non-U.S. Holders -- Sale, Exchange or Redemption of HIGH TIDES" is
satisfied.
Sale or Exchange of Class A Common Stock
A Non-U.S. Holder generally will not be subject to United States federal
income tax or withholding tax on the sale or exchange of Class A Common Stock
unless one of the conditions described above under "-- Non-U.S. Holders -- Sale,
Exchange or Redemption of HIGH TIDES" is satisfied.
Dividends
Distributions by the Company with respect to the Class A Common Stock that
are treated as dividends paid (or deemed paid), as described above under
"-- Dividends" to a Non-U.S. Holder (excluding dividends that are effectively
connected with the conduct of a United States trade or business by such holder
and are taxable as described below), will be subject to United States federal
withholding tax at a 30% rate (or a lower rate provided under any applicable
income tax treaty). Except to the extent that an applicable tax treaty otherwise
provides, a Non-U.S. Holder will be taxed in the same manner as a U.S. Holder on
dividends paid (or deemed paid) that are effectively connected with the conduct
of a United States trade or business by the Non-U.S. Holder. If such Non-U.S.
Holder is a foreign corporation, it may also be subject to a United States
branch profits tax on such effectively connected income at a 30% rate (or such
lower rate as may be specified by an applicable tax treaty). Even though such
effectively connected dividends are subject to income tax, and may be subject to
the branch profits tax, they will not be subject to U.S. withholding tax if the
holder delivers a properly executed IRS Form 4224 (or successor form) to the
payor.
Under current Treasury Regulations, dividends paid to an address in a
foreign country are presumed to be paid to a resident of that country (unless
the payor has knowledge to the contrary) for purposes of the 30%
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withholding discussed above and for purposes of determining the applicability of
a tax treaty rate. Under recently issued Treasury Regulations, however, Non-U.S.
Holders of Class A Common Stock who wish to claim the benefit of an applicable
treaty rate would be required to satisfy certain certification requirements.
Based on IRS Notice 98-16, the new regulations generally will be effective for
payments made after December 31, 1999, subject to certain transition rules.
Prospective investors should consult their own tax advisors as to the effect, if
any, of the final regulations and Notice 98-16 on their purchase, ownership and
disposition of the HIGH TIDES and Class A Common Stock.
Certain United States Federal Estate Tax Considerations Applicable to a
Non-U.S. Holder
HIGH TIDES held by an individual who is a Non-U.S. Holder at the time of
death will not be includable in the decedent's gross estate for United States
federal estate tax purposes, provided that such holder or beneficial owner did
not at the time of death actually or constructively (including by virtue of its
interest in the underlying HIGH TIDES Debentures) own 10% or more of the
combined voting power of all classes of stock of the Company entitled to vote,
and provided that at the time of death, payments with respect to such HIGH TIDES
would not have been effectively connected with the conduct by such Non-U.S.
Holder of a trade or business within the United States.
Class A Common Stock actually or beneficially held (other than through a
foreign corporation) by a Non-U.S. Holder at the time of his or her death (or
previously transferred subject to certain retained rights or powers) will be
subject to United States federal estate tax unless otherwise provided by an
applicable estate tax treaty.
Information Reporting and Backup Withholding Tax
United States information reporting requirements and backup withholding tax
will not apply to payments on HIGH TIDES to a Non-U.S. Holder if the statement
described in "-- Non-U.S. Holders -- Interest Income and Original Issue
Discount" is duly provided by such holder, provided that the payor does not have
actual knowledge that the holder is a U.S. Holder.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of HIGH TIDES, or any payment
of the proceeds of the sale of Class A Common Stock effected outside the United
States by a foreign office of a "broker" (as defined in applicable Treasury
Regulations), unless such broker (i) is a United States person, (ii) is a
foreign person that derives 50% or more of its gross income for certain periods
from the conduct of a trade or business in the United States or (iii) is a
controlled foreign corporation for United States federal income tax purposes.
Payment of the proceeds of any such sale effected outside the United States by a
foreign office of any broker that is described in (i), (ii) or (iii) of the
preceding sentence will not be subject to backup withholding tax, but will be
subject to information reporting requirements, unless such broker has
documentary evidence in its records that the beneficial owner is a Non-U.S.
Holder and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption. Payment of the proceeds of any such sale to or through
the United States office of a broker is subject to information reporting and
backup withholding requirements unless the beneficial owner of the HIGH TIDES
provides the statement described in "-- Non-U.S. Holders -- Interest Income and
Original Issue Discount" or otherwise establishes an exemption.
If paid to an address outside the United States, dividends on Class A
Common Stock held by a Non-U.S. Holder generally will not be subject to the
information reporting and backup withholding requirements described in this
section. However, under recently issued Treasury Regulations, dividend payments
will be subject to information reporting and backup withholding unless certain
certification requirements are satisfied. Based on IRS Notice 98-16, the new
regulations generally will be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors should consult
their own tax advisors as to the effect, if any, of the final regulations and
Notice 98-16 on their purchase, ownership and disposition of the HIGH TIDES and
Class A Common Stock.
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Foreign Investment in Real Property Tax Act
Under the Foreign Investment in Real Property Tax Act ("FIRPTA"), any
person who acquires a "United States real property interest" (as described
below) from a foreign person must deduct and withhold a tax equal to 10% of the
amount realized by the foreign transferor. In addition, a foreign person who
disposes of a United States real property interest generally is required to
recognize gain or loss that is subject to United States federal income tax. A
"United States real property interest" generally includes any interest (other
than an interest solely as a creditor) in a United States corporation unless it
is established under specific procedures that the corporation is not (and was
not for the prior five-year period) a "United States real property holding
corporation." The Company does not believe that it is or has been a United
States real property holding corporation as of the date hereof, and does not
expect to become a United States real property holding corporation in the future
(although there can be no assurance that this future expectation will be
accurate). Moreover, even if the Company becomes a United States real property
holding corporation, so long as the Company's stock is regularly traded on an
established securities market, an exemption should apply to the HIGH TIDES and
the Class A Common Stock except with respect to a Non-U.S. Holder whose
beneficial ownership of HIGH TIDES or Class A Common Stock exceeds 5% of the
total fair market value of the Class A Common Stock.
Any investor that may approach or exceed the 5% ownership threshold
discussed above, either alone or in conjunction with related persons, should
consult its own tax advisor concerning the United States tax consequences that
may result. A Non-U.S. Holder who sells or otherwise disposes of HIGH TIDES or
Class A Common Stock may be required to inform its transferee whether such HIGH
TIDES or Class A Common Stock constitute a United States real property interest.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
HIGH TIDES AND CLASS A COMMON STOCK, INCLUDING THE TAX CONSEQUENCES UNDER STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans and certain
other retirement plans and arrangements, including individual retirement
accounts and annuities, that are subject to ERISA and the Code (all of which are
hereinafter referred to as "ERISA Plans") and on persons who are fiduciaries
with respect to such ERISA Plans. In accordance with ERISA's general fiduciary
standards, before investing in HIGH TIDES, an ERISA Plan fiduciary should
determine whether such an investment is permitted under the governing ERISA Plan
instruments and is appropriate for the ERISA Plan in view of its overall
investment policy and the composition and diversification of its portfolio.
Other provisions of ERISA and the Code prohibit certain transactions involving
the assets of an ERISA Plan and persons who have certain specified relationships
to the ERISA Plan ("parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of the Code). Accordingly, any ERISA
Plan with respect to which the Company or any of its affiliates would be
considered a party in interest or a disqualified person should not purchase HIGH
TIDES.
In addition, under United States Department of Labor Regulation Section
2510.3-101 (the "Regulation"), if immediately after any acquisition of HIGH
TIDES, 25% or more of the value of the HIGH TIDES is held by ERISA Plans,
employee benefit plans not subject to ERISA (for example, governmental plans)
and entities whose underlying assets include plan assets by reason of a plan's
investment in the entity, then the assets of the Issuer (including the HIGH
TIDES Debentures) would be treated as assets of ERISA Plans holding HIGH TIDES,
unless another exemption or exception applied. In such event, the persons
providing services with respect to the assets of the Trust may be subject to the
fiduciary responsibility provisions of
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<PAGE> 70
Title I of ERISA and the prohibited transaction provisions of ERISA and Section
4975 of the Code with respect to transactions involving such assets. In order to
avoid certain prohibited transactions that might otherwise arise in connection
with the Trust assets, each investing ERISA Plan, by its purchase of HIGH TIDES,
will be deemed to have directed the Trustee to purchase HIGH TIDES Debentures
and to have approved all of the documents relating to the Trust assets.
Moreover, the holders of HIGH TIDES will have the right to direct the Property
Trustee as to the exercise of remedies in connection with any Event of Default.
ANY ERISA PLAN PROPOSING TO PURCHASE HIGH TIDES SHOULD CONSULT WITH ITS
COUNSEL REGARDING THE APPLICATION OF ERISA, THE CODE AND THE REGULATION WITH
RESPECT TO INVESTMENT IN HIGH TIDES.
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DESCRIPTION OF COMPANY CAPITAL STOCK
The authorized capital stock of the Company consists of 70,000,000 shares
of the Class A Common Stock, 2,500,000 shares of the Class B Common Stock, and
250,000 shares of the preferred stock, $.01 par value per share (the "Preferred
Stock"). As of August 10, 1998, there were outstanding 34,020,309 shares of the
Class A Common Stock, 1,936,600 shares of the Class B Common Stock and no shares
of the Preferred Stock. All the outstanding shares of Class B Common Stock are
held by the principal executive officers of the Company.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Voting Rights
Each share of the Class A Common Stock is entitled to one vote and each
share of the Class B Common Stock is entitled to ten votes on all matters
submitted to a vote of the stockholders. The Class A Common Stock and the Class
B Common Stock vote together as a single class on all matters presented for a
vote of the stockholders, except as noted below and as provided under the
Delaware General Corporation Law. The holders of the Class B Common Stock have,
together with the Class A Common Stock owned by such individuals greater than
40% of the combined voting power of the outstanding Class A and Class B Common
Stock. As a result, these holders are able to exert substantial influence over
the election of the Company's Board of Directors, thereby ensuring that members
elected by them will continue to direct the business, policies and management of
the Company.
The Company's Amended and Restated Certificate of Incorporation requires a
vote of 60% of the number of shares of the Class B Common Stock outstanding,
voting separately as a class, and a majority of the shares of the Class A Common
Stock, voting separately as a class, to approve any modification to the rights
and privileges of the Class A Common Stock or the Class B Common Stock or any
reclassification or recapitalization of the Company's outstanding capital stock.
Dividends
Each share of the Class A Common Stock is entitled to receive dividends if,
as and when declared by the Board of Directors of the Company out of funds
legally available therefor. Identical dividends, if any, must be paid on both
the Class A Common Stock and the Class B Common Stock at any time that dividends
are paid on either, except that stock dividends payable on shares of the Class B
Common Stock are payable only in shares of the Class B Common Stock and stock
dividends payable on shares of the Class A Common Stock are payable only in
shares of the Class A Common Stock. If a dividend or distribution payable in the
Class A Common Stock is made on the Class A Common Stock, the Company must also
make a pro rata and simultaneous dividend or distribution of shares of Class B
Common Stock on the Class B Common Stock. If a dividend or distribution payable
in Class B Common Stock is made on the Class B Common Stock, the Company must
also make a pro rata and simultaneous dividend or distribution of shares of
Class A Common Stock on the Class A Common Stock.
Convertibility
Each share of the Class B Common Stock is convertible at any time at the
option of the holder into the Class A Common Stock on a share-for-share basis.
Shares of the Class B Common Stock will be automatically converted into shares
of the Class A Common Stock on a share-for-share basis in the event that the
record or beneficial ownership of such shares of the Class B Common Stock is
transferred (including, without limitation, by way of gift, settlement, will or
intestacy) to any person or entity that was not a holder of Class B Common Stock
at the time of transfer. Therefore, the shares of Class B Common Stock will only
exist so long as they are held by one or more of the principal executive
officers of the Company. Shares of the Class A Common Stock are not convertible.
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Liquidation Rights
In the event of the dissolution of the Company, after satisfaction of
amounts payable to creditors and distribution to the holders of outstanding
Preferred Stock, if any, of amounts to which they may be preferentially
entitled, holders of the Class A Common Stock and the Class B Common Stock are
entitled to share ratably in the assets available for distribution to the
stockholders.
Other Provisions
There are no preemptive rights to subscribe for any additional securities
which the Company may issue and there are no redemption provisions or sinking
fund provisions applicable to the Class A Common Stock or the Class B Common
Stock, nor is either class subject to calls or assessments by the Company. All
outstanding shares of Common Stock are, and all shares of Class A Common Stock
to be outstanding upon conversion of the HIGH TIDES will be, legally issued,
fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors of the Company has the authority, without further
action by the stockholders, to cause the Company to issue up to 250,000 shares
of Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions granted to or imposed upon any unissued shares of
Preferred Stock and to fix the number of shares comprising any series and the
designations of such series. The issuance of Preferred Stock, while providing
flexibility in connection with possible financings, acquisitions and other
corporate transactions, could, among other things, adversely affect the voting
power of the holders of Common Stock and, under certain circumstances, make it
more difficult for a third party to gain control of the Company, deny
stockholders the receipt of a premium on their Common Stock and have an adverse
effect on market price of the Common Stock.
CONVERTIBLE NOTES
In April 1997, the Company issued $45.0 million aggregate principal amount
of Series B Convertible Notes. The Series B Convertible Notes are convertible,
at the option of the holders, into Class A Common Stock at a conversion price of
$27.96 per share. The outstanding Series B Convertible Notes are convertible
into an aggregate of 1,609,436 shares of Class A Common Stock.
BYLAW PROVISIONS
The Company's Bylaws provide that special meetings of the stockholders may
be called only by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer, the President or the Secretary of the Company, or by one or
more stockholders holding shares entitled to cast not less than a majority of
the aggregate votes entitled to be cast at such meeting. The Bylaws also provide
that any action which may be taken at any meeting of stockholders may be taken
without a meeting and without prior notice if written consents approving the
action are signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to take such action at a meeting
of stockholders. Further, directors may only be removed for cause by vote of the
record holders of a majority of the combined voting power of the Common Stock.
These provisions will make it more difficult for a third party to gain control
of the Company.
INDEMNIFICATION MATTERS
As permitted by the Delaware General Corporation Law, the Company's Amended
and Restated Certificate of Incorporation provides that directors of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, relating to prohibited dividends,
distributions and repurchases or redemptions of stock, or (iv) for any
transaction from which the director derives an improper
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<PAGE> 73
personal benefit. The Company's Bylaws provide that the Company shall indemnify
its directors, officers, employees and other agents, to the fullest extent
provided by Delaware law. The Company has also entered into indemnification
agreements with certain of its executive officers and directors. The
indemnification agreements require the Company, among other things, to indemnify
such directors and officers against certain liabilities that may arise by reason
of their status or service as directors or officers (other than liabilities
arising from willful misconduct of a culpable nature), and to advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified. The Company maintains directors' and officers' insurance
against certain liabilities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the arrangements described above, the Company has been advised that,
in the opinion of the Commission, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
At present, there is no pending material litigation or proceeding involving
any director, officer, employee or agent of the Company where indemnification
will be required or permitted.
SECTION 203
The Company is subject to Section 203 of the Delaware General Corporation
Law, which prohibits a publicly held Delaware corporation from consummating a
"business combination", except under certain circumstances, with an "interested
stockholder" for a period of three years after the date such person became an
"interested stockholder" unless (i) before such person became an interested
stockholder, the board of directors of the corporation approved the transaction
in which the interested stockholder became an interested stockholder or approved
the business combination; (ii) upon consummation of the transaction that
resulted in the interested stockholder's becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares held by
directors who are also officers of the corporation and certain shares held by
employee stock plans); or (iii) following the transaction in which such person
became an interested stockholder, the business combination is approved by the
board of directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of the holders of 66 2/3% of the
outstanding voting stock of the corporation not owned by the interested
stockholder. An "interested stockholder" generally is defined as a person who,
together with affiliates and associates, owns (or, within the prior three years,
owned) 15% or more of a corporation's outstanding voting stock. A "business
combination" includes mergers, asset sales and certain other transactions
resulting in a financial benefit to an interested stockholder.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services.
SELLING HOLDERS
The HIGH TIDES were originally issued by the Trust and sold by Credit
Suisse First Boston Corporation, Goldman, Sachs & Co., J.P. Morgan Securities
Inc., ABN AMRO Incorporated, BT Alex. Brown Incorporated, McDonald & Company
Securities, Inc. and NationsBanc Montgomery Securities LLC (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 Selling Holders may from time to time offer and sell pursuant to this
Prospectus any or all of the HIGH TIDES, the HIGH TIDES Debentures, Class A
Common Stock issued upon conversion of the HIGH TIDES and the associated
Guarantee. The term "Selling Holder" includes the holders listed below and the
beneficial owners of the HIGH TIDES and their transferees, pledgees, donees and
other successors. The Offered Securities have been registered pursuant to the
Registration Agreement. See "Registration Rights."
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<PAGE> 74
Prior to any use of this Prospectus in connection with an offering of the
Offered Securities, this Prospectus will be amended or supplemented to set forth
the names of the Selling Holders intending to sell such Offered Securities and
the number of Offered Securities that may be offered pursuant to this
Prospectus. The Prospectus Supplement will also disclose whether any Selling
Holder has held any position or office, or otherwise has had a material
relationship with, the Company or any of its predecessors or affiliates, during
the three years prior to the date of the Prospectus Supplement.
PLAN OF DISTRIBUTION
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
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 and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Offered Securities may be sold 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. 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) in transactions
otherwise than on such exchanges or in the over-the-counter market or (iv)
through the writing and exercise of options. At the time a particular offering
of the Offered Securities is made, a Prospectus Supplement, if required, will be
distributed, which will set forth the aggregate amount and type of Offered
Securities being offered and 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 to paid
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.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and rules and regulations thereunder, which provisions may limit
the timing of purchases and sales of any of the Offered Securities by the
Selling Holders. The foregoing may affect the marketability of such securities.
Pursuant to the Registration Agreement, the Company shall bear all fees and
expenses incurred in connection with the registration of the Offered Securities;
provided, however, that the Selling Holders will pay all broker's commissions
and underwriting discounts and commissions, if any. 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 the
Exchange Act or otherwise, 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 otherwise, or will be entitled to contribution in
connection therewith.
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LEGAL MATTERS
The validity of the HIGH TIDES, the HIGH TIDES Debentures, the Guarantee
and any Common Stock issuable upon conversion of such HIGH TIDES will be passed
upon for the Company and the Issuer by King & Spalding, Atlanta, Georgia, and
certain matters of Delaware law relating to the Issuer and the validity of the
HIGH TIDES will be passed upon for the Issuer by Richards, Layton & Finger,
P.A., Wilmington, Delaware, special Delaware counsel to the Issuer and the
Company. Certain matters relating to United States federal income tax
considerations have been passed upon for the Company by King & Spalding,
Atlanta, Georgia, as special tax counsel to the Company and the Issuer.
EXPERTS
The consolidated balance sheets of the Company and its subsidiaries as of
December 31, 1997 and 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997, after restatement for the 1998 pooling of
interests with Cruise America, Inc., included in the Company's Current Report on
Form 8-K dated July 2, 1998 and incorporated by reference in this Prospectus,
have been audited by Arthur Andersen LLP, independent certified public
accountants, as indicated in their report with respect thereto and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements for the year ended December 31, 1995
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, and incorporated by reference in this Prospectus, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference and have been incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of Budget Rent A Car Corporation as
of December 31, 1995 and 1996 and for each of the years in the three-year period
ended December 31, 1996 included in the Company's Current Report on Form 8-K
dated April 29, 1997 and incorporated by reference in this Prospectus, have been
incorporated herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, given upon the authority of said firm
as experts in accounting and auditing.
The consolidated balance sheets of Ryder TRS, Inc. and Subsidiaries as of
December 31, 1996 and 1997 and the related consolidated statements of
operations, stockholders' equity and cash flows for the period from September 5,
1996 (date of inception) to December 31, 1996 and the year ended December 31,
1997, included in the Company's Registration Statement on Form S-4 (File No.
333-49679) and incorporated by reference in this Prospectus, have been
incorporated herein in reliance upon the report of PricewaterhouseCoopers LLP,
independent accountants, given upon the authority of that firm as experts in
accounting and auditing.
The combined balance sheet of Ryder Consumer Truck Rental (a division of
Ryder Truck Rental, Inc., a wholly-owned subsidiary of Ryder System, Inc.) as of
October 16, 1996, and the related combined statements of earnings and changes in
Ryder investment and cash flows for the period from January 1, 1996 to October
16, 1996, included in the Company's Registration Statement on Form S-4 (File No.
333-49679) have been incorporated by reference in this Prospectus, in reliance
on the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
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- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE ISSUER OR ANY INITIAL PURCHASER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR THE ISSUER SINCE SUCH DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. i
Incorporation of Certain Documents by
Reference........................... i
Cautionary Information................ ii
Offering Summary...................... 1
Investment Considerations............. 8
The Company........................... 14
Ratio of Earnings to Fixed Charges.... 16
Accounting Treatment.................. 16
Use of Proceeds....................... 16
Budget Group Capital Trust............ 16
The Remarketing....................... 17
The Remarketing Agent................. 22
Description of HIGH TIDES............. 23
Description of HIGH TIDES
Debentures.......................... 42
Description of the Guarantee.......... 52
Relationship Among the HIGH TIDES, the
HIGH TIDES Debentures and the
Guarantee........................... 55
Registration Rights................... 56
United States Federal Tax
Considerations...................... 57
Certain ERISA Considerations.......... 65
Description of Company Capital
Stock............................... 67
Selling Holders....................... 69
Plan of Distribution.................. 70
Legal Matters......................... 71
Experts............................... 71
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
BUDGET GROUP
CAPITAL TRUST
REMARKETABLE TERM INCOME
DEFERRABLE EQUITY SECURITIES
(HIGH TIDES)(SM)
6 1/4% CONVERTIBLE PREFERRED SECURITIES
6,000,000 HIGH TIDES(SM)
guaranteed to the extent set forth herein by, and convertible into Class A
Common Stock of,
BUDGET GROUP LOGO
Budget Group, Inc.
Prospectus
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 77
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder, all of
which are being paid by the Company. Except for the SEC registration fee, all
amounts are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 88,500
Transfer agents' fees....................................... *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Miscellaneous............................................... *
--------
Total............................................. $ *
========
</TABLE>
- ---------------
* To be filed by amendement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following summary is qualified in its entirety by reference to the
complete statute, Restated Certificate of Incorporation, Bylaws and agreements
referred to below.
Section 145 of the General Corporation Law of the State of Delaware
("DGCL") provides that a corporation has the power to indemnify any director or
officer, or former director or officer, who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) against the expenses (including
attorneys' fees), judgments, fines or amounts paid in settlement actually and
reasonably incurred by them in connection with the defense of any action by
reason of being or having been directors or officers, if such person shall have
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, provided that such person had no reasonable cause to
believe his conduct was unlawful, except that, if such action shall be in the
right of the corporation, no such indemnification shall be provided as to any
claim, issue or matter as to which such person shall have been judged to have
been liable to the corporation unless and to the extent that the Court of
Chancery of the State of Delaware, or any court in which such suit or action was
brought, shall determine upon application that, in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
As permitted by Section 102(b)(7) of the DGCL, the Amended and Restated
Certificate of Incorporation of the Registrant (the "Restated Certificate of
Incorporation") provides that no director shall be liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a director
other than (i) for breaches of the director's duty of loyalty to the Registrant
and its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for the
unlawful payment of dividends or unlawful stock purchases or redemptions under
Section 174 of the DGCL, and (iv) for any transaction from which the director
derived an improper personal benefit.
The Registrant's Bylaws provide indemnification of the Registrant's
directors and officers, both past and present, to the fullest extent permitted
by the DGCL, and allow the Registrant to advance or reimburse litigation
expenses upon submission by the director or officer of an undertaking to repay
such advances or reimbursements if it is ultimately determined that
indemnification is not available to such director or officer pursuant to the
Bylaws. The Registrant's Bylaws will also authorize the Registrant to purchase
and maintain insurance on behalf of an officer or director, past or present,
against any liability asserted against him in any such capacity whether or not
the Registrant would have the power to indemnify him against such liability
II-1
<PAGE> 78
under the provisions of the Restated Certificate of Incorporation or Section 145
of the DGCL. The Registrant has entered into indemnification agreements with
each of its directors and certain of its executive officers. The indemnification
agreements require the Registrant, among other things, to indemnify such
directors and officers against certain liabilities that may arise by reason of
their status or service as directors or officers (other than liabilities arising
from willful misconduct of a culpable nature), and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified.
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<PAGE> 79
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The Registrant agrees to furnish a copy of all agreements relating to the
Offered Securities upon request of the Commission. A list of exhibits included
as part of this Registration Statement is set forth below.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <C> <S>
3.1 -- Amended and Restated Certificate of Incorporation.
3.2 -- Amended and Restated Bylaws.
4.1 -- Certificate of Trust of Budget Group Capital Trust.
4.2 -- Declaration of Trust of Budget Group Capital Trust dated as
of June 4, 1998, between Budget Group, Inc., The Bank of New
York and the Administrative Trustees name therein.
4.3 -- Amended and Restated Declaration of Trust dated as of June
19, 1998 between Budget Group, Inc., The Bank of New York
(Delaware), the Bank of New York and the Administrative
Trustees named therein.
4.4 -- Indenture for the HIGH TIDES Debentures Due 2028 dated as of
June 19, 1998 between Budget Group, Inc. and The Bank of New
York.
4.5 -- Form of Budget Group, Inc. Class A Common Stock Certificate
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1, File No. 333-34799,
dated September 26, 1997).
4.6 -- Form of HIGH TIDES (included in Exhibit 4.5).
4.7 -- Form of HIGH TIDES Debentures Due 2028 (included in Exhibit
4.6).
4.8 -- Guarantee Agreement dated as of June 19, 1998 by Budget
Group, Inc., as Guarantor.
5.1* -- Opinion of King & Spalding as to the legality of the HIGH
TIDES, the HIGH TIDES Debentures Due 2028, the Guarantee and
any Class A Common Stock issuable upon conversion of the
HIGH TIDES.
5.2* -- Opinion of Richards, Layton & Finger, P.A. as to the
legality of the HIGH TIDES.
8.1 -- Opinion of King & Spalding as to certain tax matters
(included in the Prospectus under the caption "United States
Federal Tax Considerations").
10.1 -- Registration Rights Agreement dated as of June 19, 1998
between Budget Group Capital Trust, Budget Group, Inc. and
the several Purchasers named herein.
10.2 -- Remarketing Agreement dated as June 19, 1998 between Budget
Group, Inc., Budget Group Capital Trust, The Bank of New
York, the Administrative Trustees named therein and the
Remarketing Agent named therein.
12.1 -- Computation of Ratios of Earnings to Fixed Charges.
23.1* -- Consent of King & Spalding (included in the opinions filed
as Exhibits 5.1 and 8.1).
23.2 -- Consent of Richards, Layton & Finger, P.A. (included in the
opinion filed as Exhibit 5.2).
23.3 -- Consent of Arthur Andersen LLP.
23.4 -- Consent of Deloitte & Touche LLP.
23.5 -- Consent of KPMG Peat Marwick LLP.
23.6 -- Consent of PricewaterhouseCoopers LLP.
23.7 -- Consent of KPMG Peat Marwick LLP.
24.1 -- Power of Attorney (included on page II-5).
25.1 -- Statement of Eligibility of Indenture Trustee under the
Indenture.
25.2 -- Statement of Eligibility of Property Trustee under the
Amended and Restated Declaration.
25.3 -- Statement of Eligibility of Guarantee Trustee under the
Guarantee.
99.1 -- Private Securities Litigation Reform Act of 1995 Safe Harbor
Compliance Statement for Forward-Looking Statements
(incorporated by reference to Exhibit 99.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, Commission File No. 0-23962).
</TABLE>
- ---------------
* To be filed by amendment.
II-3
<PAGE> 80
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(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 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.
(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 paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if the registration statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in the
periodic reports filed with or furnished to the commission by the
registrant 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes that:
(1) For the purpose of determining any liability under the Securities
Act of 1993, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions in Item 15 above, or
II-4
<PAGE> 81
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Lisle, State of Illinois on August 10, 1998.
BUDGET GROUP, INC.
By: /s/ MICHAEL B. CLAUER
------------------------------------
Michael B. Clauer
Chief Financial Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Budget Group, Inc., do hereby
constitute and appoint Robert L. Aprati, Michael B. Clauer and Scott R. White,
and each or any of them, our true and lawful attorneys-in-fact and agents, to do
any and all acts and things in our names and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
name in the capacities as indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable said Corporation to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
registration statement, or any registration statement for this offering that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, including specifically, but without limitation, power and authority to
sign for us or any of us in our names in the capacities indicated below, any and
all amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of the 10th day of August, 1998.
II-5
<PAGE> 82
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ SANFORD MILLER Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer (Principal Executive Officer) and
Sanford Miller Director
/s/ JOHN P. KENNEDY Vice Chairman and Director
- -----------------------------------------------------
John P. Kennedy
/s/ JEFFREY D. CONGDON Vice Chairman and Director
- -----------------------------------------------------
Jeffrey D. Congdon
/s/ MICHAEL B. CLAUER Chief Financial Officer (Principal Financial
- ----------------------------------------------------- Officer)
Michael B. Clauer
/s/ THOMAS L. KRAM Vice President -- Controller (Principal
- ----------------------------------------------------- Accounting Officer)
Thomas L. Kram
/s/ RONALD D. AGRONIN Director
- -----------------------------------------------------
Ronald D. Agronin
/s/ STEPHEN L. WEBER Director
- -----------------------------------------------------
Stephen L. Weber
/s/ F. PERKINS HIXON Director
- -----------------------------------------------------
F. Perkins Hixon
/s/ JAMES F. CALVANO Director
- -----------------------------------------------------
James F. Calvano
/s/ MARTIN P. GREGOR Director
- -----------------------------------------------------
Martin P. Gregor
</TABLE>
II-6
<PAGE> 83
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Budget Group Capital Trust 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 Lisle, State of Illinois, on August
10, 1998.
BUDGET GROUP CAPITAL TRUST
By: /s/ MICHAEL B. CLAUER
------------------------------------
Michael B. Clauer
Trustee
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ MICHAEL B. CLAUER Administrative Trustee August 10, 1998
- -----------------------------------------------------
Michael B. Clauer
/s/ ROBERT L. APRATI Administrative Trustee August 10, 1998
- -----------------------------------------------------
Robert L. Aprati
/s/ SCOTT R. WHITE Administrative Trustee August 10, 1998
- -----------------------------------------------------
Scott R. White
</TABLE>
II-7
<PAGE> 1
EXHIBIT 3.1
AMENDED AND
RESTATED
CERTIFICATE OF INCORPORATION
OF
BUDGET GROUP, INC.
FIRST: Name. The name of the corporation is Budget Group,
Inc. (the "Corporation").
SECOND: Registered Office and Agent. The address of the
registered office of the Corporation in the State of Delaware is 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The name of the
registered agent at such address is The Corporation Trust Company.
THIRD: Purposes. The purposes for which the Corporation is
formed are to engage in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law and to possess and exercise
all of the powers and privileges granted by such law and any other law of
Delaware.
FOURTH: A. Authorized Capital
The Corporation is authorized to issue 72,750,000 shares of
capital stock, consisting of 72,500,000 shares of common stock, par value $.01
per share (the "Common Stock"), and 250,000 shares of preferred stock, par value
$.01 per share (the "Preferred Stock"). Of the shares of Common Stock,
70,000,000
<PAGE> 2
shares shall be designated "Class A Common Stock" and 2,500,000 shares shall be
designated "Class B Common Stock." The rights, preferences, privileges and
restrictions granted and imposed upon the Preferred Stock, Class A Common Stock
and Class B Common Stock are set out hereinbelow.
B. Preferred Stock
The Preferred Stock may be issued from time to time in one or
more series with such designations, preferences, and relative participating,
optional or other special rights and qualifications, limitations or restrictions
adopted by the Board of Directors providing for the issuance of such Preferred
Stock or series thereof; and the Board of Directors is hereby expressly granted
the authority to fix by resolution or resolutions such designations and powers,
preferences and rights and such qualifications, limitations or restrictions
which are permitted by Section 151 of the General Corporation Law of Delaware,
as amended from time to time, in respect of any class or classes of stock or any
series of any class of stock of the Corporation that may be desired, including,
but not by way of limitation, the number, distinctive name and serial
designation of such class or series; any dividends payable and the rate, time
for and priority of payment thereof; whether such dividends shall be cumulative
or not; any participating or other special rights with respect to the payment of
dividends; any conversion, exchange, purchase or other privilege to acquire
shares of any other class or series of the Preferred Stock or Common Stock of
the Corporation; any
- 2 -
<PAGE> 3
voting power; and any redemption and liquidation price or preference.
C. Class A Common Stock.
The shares of Class A Common Stock and shares of Class B Common
Stock shall be identical in all respects and shall have equal rights and
privileges except as expressly set forth in this paragraph C and in paragraph D
of this Article FOURTH. Upon dissolution of the Corporation, shares of Class A
Common Stock and Class B Common Stock are entitled to share ratably in the
assets thereof that may be available for distribution after satisfaction of
creditors and the payment of any liquidation preference of any outstanding
shares of Preferred Stock.
1. Dividends.
(a) Subject to the rights of the holders of the Preferred Stock,
if any, such dividends or distributions as may be determined by the Board of
Directors of the Corporation from time to time may be declared and paid or made
upon shares of Class A Common Stock out of any source at the time lawfully
available for the payment of dividends; provided that (subject to subparagraphs
(b) and (c) below of this paragraph C.1.) identical dividends or distributions
are declared and paid concurrently on shares of Class B Common Stock. If
dividends or distributions are declared and paid upon shares of Class B Common
Stock (subject to subparagraphs (b) and (c) below of this paragraph C.1.),
identical dividends or distributions shall be declared and paid concurrently on
shares of Class A Common Stock.
- 3 -
<PAGE> 4
(b) No dividend may be declared and paid in shares of Class A
Common Stock unless (i) the dividend is payable only to holders of shares of
Class A Common Stock and (ii) a dividend payable to holders of Class B Common
Stock is declared and paid concurrently in the same number of shares of Class B
Common Stock per outstanding share of Class B Common Stock as the number of
shares of Class A Common Stock declared and paid per outstanding share of Class
A Common Stock.
(c) No dividend may be declared and paid in Class B Common Stock
unless (i) the dividend is payable only to holders of Class B Common Stock and
(ii) a dividend payable to holders of shares of Class A Common Stock is
declared and paid concurrently in the same number of shares of Class A Common
Stock per outstanding share of Class A Common Stock as the number of shares of
Class B Common Stock declared and paid per outstanding share of Class B Common
Stock.
2. Stock Combinations and Subdivisions. Shares of Class A Common
Stock shall not be combined or subdivided unless at the same time there is a
proportionate combination or subdivision of shares of Class B Common Stock. If
shares of Class B Common Stock are combined or subdivided, a proportionate
combination or subdivision of shares of Class A Common Stock shall be made at
the same time.
3. Voting. Except as may otherwise be required by law, the holders
of shares of Class A Common Stock shall vote together with the holders of Class
B Common Stock as a
- 4 -
<PAGE> 5
single class, provided that the holders of Class A Common Stock will have one
(1) vote per share and the holders of Class B Common Stock shall have ten (10)
votes per share.
D. Class B Common Stock.
1. Dividends and Distributions. Subject to the provisions of
paragraph C.1. of this Article FOURTH, dividends and distributions may be
declared and paid or made upon shares of Class B Common Stock as may be
permitted by applicable law.
2. Stock Combinations and Subdivisions. Subject to the provisions of
paragraph C.2. of this Article FOURTH, shares of Class B Common Stock may be
combined or subdivided in such manner as may be permitted by applicable law.
3. Voting. Subject to the provisions of paragraph C.3. of this
Article FOURTH, shares of Class B Common Stock shall have ten (10) votes per
share on all matters that may be submitted to a vote or consent of the
shareholders.
4. Conversion.
(a) Each holder of record of shares of Class B Common Stock may,
in such holder's sole discretion and at such holder's option, convert any whole
number or all of such holder's shares of Class B Common Stock into fully paid
and nonassessable shares of Class A Common Stock at the rate of one (1) share
of Class A Common Stock for each share of Class B Common Stock surrendered for
conversion. Any such conversion may be effected by any holder of Class B Common
Stock by surrendering such holder's certificate or certificates for the shares
of Class B
- 5 -
<PAGE> 6
Common Stock to be converted, duly endorsed, at the office of the Corporation
or any transfer agent for Class B Common Stock, together with a written notice
to the Corporation at such office that such holder elects to convert all or a
specified number of shares of Class B Common Stock and stating the name or
names in which such holder desires the certificate or certificates for such
shares of Class A Common Stock to be issued. Promptly thereafter, unless
otherwise prohibited by law, the Corporation shall issue and deliver to such
holder or such holder's nominee or nominees, a certificate or certificates for
the number of shares of Class A Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have been made at
the close of business on the day of such surrender and the person or persons
entitled to receive shares of Class A Common Stock issuable on such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Class A Common Stock on that date.
(b) Each share of Class B Common Stock shall automatically be
converted into one share of Class A Common Stock in the event that the
beneficial or record ownership of such share of Class B Common Stock shall be
transferred (including, without limitation, by way of gift, settlement, will or
intestacy) to any person or entity that is not then a record or beneficial
holder of shares of Class B Common Stock. A pledge of shares of Class B Common
Stock as security for an obligation of a holder of such shares of Class B
Common Stock shall not be
- 6 -
<PAGE> 7
considered a transfer for purposes of this paragraph D.4(b), unless and until
beneficial ownership of such shares is transferred to the pledgeholder. The
conversion into Class A Common Stock shall be deemed to have occurred (whether
or not certificates representing such shares are surrendered) as of the close of
business on the date of transfer, and the person or persons entitled to receive
shares of Class A Common Stock issuable on such conversion shall be treated for
all purposes as the record holder or holders of such shares of Class A Common
Stock on that date.
(c) Before any shares of Class A Common Stock shall be delivered
upon conversion, the holder of shares of Class B Common Stock whose shares have
been converted into shares of Class A Common Stock shall deliver the
certificate(s) representing such shares to the Corporation or its duly
authorized agent (or if such certificates have been lost stolen or destroyed,
such holder shall execute an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
conversion), specifying the place where the Common Stock issued in conversion
thereof shall be sent. The endorsement of the share certificate shall be in
form satisfactory to the Corporation or such agent, as the case may be.
(d) The number of shares of Class A Common Stock into which the
shares of Class B Common Stock may be converted shall be subject to adjustment
from time to time in the event of
- 7 -
<PAGE> 8
any capital reorganization, reclassification of stock of the Corporation,
consolidation or merger of the Corporation with or into another corporation, or
sale or conveyance of all or substantially all of the assets of the Corporation
to another corporation or other entity or person. Each share of Class B Common
Stock shall thereafter be convertible into such kind and amount of securities
or other assets, or both, as are issuable or distributable in respect of each
share of Class A Common Stock. In any such case, appropriate adjustments shall
be made by the Board of Directors of the Corporation in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of Class B Common Stock to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or other assets thereafter deliverable on conversion
of shares of Class B Common Stock.
(e) The Corporation shall, at all times, reserve and keep available out
of the authorized and unissued shares of Class A Common Stock, solely for the
purpose of effecting the conversion of the outstanding shares of Class B Common
Stock, such number of shares of Class A Common Stock as shall from time to time
be sufficient to effect conversion of all outstanding shares of Class B Common
Stock and if, at any time, the number of authorized and unissued shares of Class
A Common Stock shall not be sufficient to effect conversion of the then
outstanding shares of Class B Common Stock, the Corporation shall take such
- 8 -
<PAGE> 9
corporate action as may be necessary to increase the number of authorized
and unissued shares of Class A Common Stock to such number as shall be
sufficient for such purposes.
(f) The Corporation shall pay any and all issue and other taxes that
may be payable in respect of any issue or delivery of shares of Class A Common
Stock on conversion of shares of Class B Common Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of the issue of any shares of Class A Common Stock in a name other
than that in which the shares of Class B Common Stock so converted was
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established, to the satisfaction of the Corporation, that such tax
has been paid.
(g) If any shares of capital stock to be reserved for the purpose of
conversion of shares of Class B Common Stock require registration or listing
with, or approval of, or inclusion in any governmental authority, stock exchange
or other regulatory body, or any automated quotation system of a national
securities association, under any federal or state law or regulation or
otherwise, before such shares may be validly issued or delivered upon
conversion, the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration, listing, approval or inclusion, as the
case may be.
- 9 -
<PAGE> 10
(h) All shares of Class A Common Stock which may be issued upon
conversion of shares of Class B Common Stock will upon issuance by the
Corporation be validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issuance thereof.
(i) All certificates representing shares of Class B Common
Stock surrendered for conversion shall be appropriately canceled on the books
of the Corporation, and the number of authorized shares of Class B Common
Stock shall be reduced by the number of shares so converted.
(j) In case the Corporation shall take a record of the holders
of its shares of Class A Common Stock for the purpose of:
(1) entitling them to receive a dividend, or any other
distribution, payable otherwise than in cash; or
(2) entitling them to receive rights to acquire any
security issued by the Corporation; or
(3) any proposed reclassification, reorganization,
consolidation, merger, conveyance or voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
holders of record of the outstanding shares of Class B Common Stock at least
ten (10) days prior to the date hereinafter specified, a notice stating the
date on which (x) a
- 10 -
<PAGE> 11
record is to be taken for the purpose of such dividend, distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take place and the
day, if any is to be fixed, as of which record holders of shares of Class A
Common Stock shall be entitled to exchange their shares of Class A Common Stock
for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(k) So long as any shares of Class B Common Stock are
outstanding, the Corporation shall not, without first obtaining the approval by
vote or written consent, in the manner provided by law, of the holders of (i)
at least a majority of the total number of shares of Class A Common Stock
outstanding, voting separately as a class, and (ii) at least sixty percent
(60%) of the total number of shares of Class B Common Stock outstanding, voting
separately as a class, (A) alter or change the rights or privileges of shares
of the Common Stock; (B) amend any provision of Section C or this Section D of
this Article FOURTH; or (C) effect any reclassification or recapitalization of
the Corporation's outstanding Common Stock.
FIFTH: Additional Powers of Board of Directors. The Board of
Directors shall have power, without shareholder action, to make by-laws for the
Corporation and to amend, alter or repeal any by-laws.
- 11 -
<PAGE> 12
SIXTH: Voting by Ballot. Elections of Directors need not be by
ballot unless the by-laws of the Corporation provide otherwise.
SEVENTH: Limited Liability of Directors. The directors of the
Corporation shall be entitled to the full benefits of all limitations on the
liability of directors generally that are now or hereafter become available
under the Delaware General Corporation Law. Without limiting the generality of
the foregoing, no director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability: (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for any acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv)
for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article SEVENTH shall be prospective
only, and shall not affect, to the detriment of any director, any limitation on
the personal liability of a director of the Corporation existing at the time of
such repeal or modification.
EIGHTH: Classified Board of Directors. The directors shall be
divided into three classes, designated Class I, Class II and Class III. Each
Class shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The term of the
initial Class I Directors shall terminate on the date of the 2001 Annual Meeting
of Stockholders; the term of the initial Class II Directors shall terminate on
the date of the 2000 Annual Meeting of Stockholders; and the term of the initial
Class III Directors shall terminate on the date of the 1999 Annual Meeting of
Stockholders. At each Annual Meeting of Stockholders beginning in 1999,
successors to the Class of directors whose term expires at that Annual Meeting
of Stockholders shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease in directorship shall be
apportioned among the Classes so as to maintain the number of directors in each
Class as nearly equal as possible, and any additional directors of any Class
elected to fill a vacancy resulting from an increase in such class shall hold
office only until the next election of directors of that Class by the
stockholders of the Corporation, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. Directors shall hold
office until the Annual Meeting of Stockholders for the year in which their
terms expire and until their successors shall be duly elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of Preferred Stock issued by the corporation shall have the right,
voting separately by class or series, to elect directors at an Annual or
Special Meeting of Stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation, or the resolution or resolutions
adopted by the board of directors creating such class or series, as the case
may be, applicable thereto, and such directors so elected shall not be divided
into classes pursuant to this Article EIGHTH unless expressly provided by such
terms.
-12-
<PAGE> 1
EXHIBIT 3.2
=======================================
AMENDED AND RESTATED BY-LAWS
OF
BUDGET GROUP, INC.
=======================================
<PAGE> 2
AMENDED AND RESTATED BY-LAWS
OF
BUDGET GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE I
OFFICES
1.01. Registered Office ............................................... 1
1.02. Other Offices ................................................... 1
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.01 Annual Meetings ................................................ 1
2.02 Special Meetings ............................................... 1
2.03 Notice of Meetings ............................................. 2
2.04 Waiver of Notice ............................................... 2
2.05 Adjournments ................................................... 2
2.06 Quorum ......................................................... 3
2.07 Voting ......................................................... 3
2.08 Proxies ........................................................ 3
2.09 Stockholders' Consent in Lieu of Meeting ....................... 3
ARTICLE III
BOARD OF DIRECTORS
3.01 General Powers ................................................. 4
3.02 Number and Term of Directors ................................... 4
3.03 Resignation .................................................... 4
3.04 Removal ........................................................ 4
3.05 Vacancies ...................................................... 5
3.06 Meetings ....................................................... 5
3.07 Committees of the Board ........................................ 6
3.08 Directors' Consent in Lieu of Meeting .......................... 7
3.09 Action by Means of Telephone or Similar
Communications Equipment ..................................... 7
3.10 Compensation ................................................... 8
</TABLE>
-i-
<PAGE> 3
<TABLE>
ARTICLE IV
OFFICERS
<S> <C> <C>
4.01. Officers............................................ 8
4.02. Authority and Duties................................ 8
4.03. Term of Office, Resignation and Removal............. 8
4.04. Vacancies........................................... 9
4.05. The Chairman........................................ 9
4.06. The Chief Executive Officer......................... 9
4.07. The President....................................... 9
4.08. The Chief Operating Officer......................... 9
4.09. Vice Presidents..................................... 10
4.10. The Secretary....................................... 10
4.11. Assistant Secretaries............................... 10
4.12. The Chief Financial Officer......................... 10
4.13. Other Officers...................................... 11
ARTICLE V
CHECKS, DRAFTS, NOTES AND PROXIES
5.01. Checks, Drafts and Notes............................ 11
5.02. Execution of Proxies................................ 11
ARTICLE VI
SHARES AND TRANSFERS OF SHARES
6.01. Certificates Evidencing Shares...................... 12
6.02. Stock Ledger........................................ 12
6.03. Transfers of Shares................................. 12
6.04. Addresses of Stockholders........................... 12
6.05. Lost, Destroyed and Mutilated Certificates.......... 13
6.06. Regulations; Transfer Agent and Registrar........... 13
6.07. Fixing Date for Determination of
Stockholders of Record............................ 13
ARTICLE VII
SEAL
7.01. Seal................................................ 13
</TABLE>
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<TABLE>
ARTICLE VIII
FISCAL YEAR
<S> <C> <C>
8.01. Fiscal Year......................................... 14
ARTICLE IX
INDEMNIFICATION AND INSURANCE
9.01. Indemnification..................................... 14
9.02. Insurance for Indemnification....................... 16
ARTICLE X
AMENDMENTS
10.01. Amendments.......................................... 17
</TABLE>
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AMENDED AND RESTATED
BY-LAWS
OF
BUDGET GROUP, INC.
ARTICLE I
OFFICES
SECTION 1.01. Registered Office. The registered office of Budget Group,
Inc. (the "Corporation") in the State of Delaware shall be at the principal
office of The Corporation Trust Company in the City of Wilmington, County of New
Castle, and the registered agent in charge thereof shall be The Corporation
Trust Company.
SECTION 1.02. Other Offices. The Corporation may also have an office or
offices at any other place or places within or without the State of Delaware as
the Board of Directors of the Corporation (the "Board") may from time to time
determine or the business of the Corporation may from time to time require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Annual Meetings. The annual meeting of stockholders of the
Corporation for the election of directors of the Corporation ("Directors"), and
for the transaction of such other business as may properly come before such
meeting, shall be held at such place, date and time as shall be fixed by the
Board and designated in the notice or waiver of notice of such annual meeting;
provided, however, that no annual meeting of stockholders need be held if all
actions, including the election of Directors, required by the General
Corporation Law of the State of Delaware (the "General Corporation Law") to be
taken at such annual meeting are taken by written consent in lieu of meeting
pursuant to Section 2.09 hereof.
SECTION 2.02. Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called by the Board or the Chairman of the Board,
the Chief Executive Officer, the President or the Secretary of the Corporation
or by the recordholders of at least a majority of the combined voting power of
the shares of capital stock of the Corporation issued and
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outstanding and entitled to vote thereat ("Shares"), to be held at such place,
date and time as shall be designated in the notice or waiver of notice thereof.
SECTION 2.03. Notice of Meetings. (a) Except as otherwise provided by
law, written notice of each annual or special meeting of stockholders stating
the place, date and time of such meeting and, in the case of a special meeting,
the purpose or purposes for which such meeting is to be held, shall be given
personally or by first-class mail (airmail in the case of international
communications) to each recordholder of Shares (a "Stockholder") entitled to
vote thereat, not less than 10 nor more than 60 days before the date of such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the Stockholder at such
Stockholder's address as it appears on the records of the Corporation. If,
prior to the time of mailing, the Secretary of the Corporation (the "Secretary")
shall have received from any Stockholder a written request that notices intended
for such Stockholder are to be mailed to some address other than the address
that appears on the records of the Corporation, notices intended for such
Stockholder shall be mailed to the address designated in such request.
(b) Notice of a special meeting of Stockholders may be given by the person
or persons calling the meeting, or, upon the written request of such person or
persons, such notice shall be given by the Secretary on behalf of such person or
persons. If the person or persons calling a special meeting of Stockholders
give notice thereof, such person or persons shall deliver a copy of such notice
to the Secretary. Each request to the Secretary for the giving of notice of a
special meeting of Stockholders shall state the purpose or purposes of such
meeting.
SECTION 2.04. Waiver of Notice. Notice of any annual or special meeting of
Stockholders need not be given to any Stockholder who files a written waiver of
notice with the Secretary, signed by the person entitled to notice, whether
before or after such meeting. Neither the business to be transacted at, nor the
purpose of, any meeting of Stockholders need be specified in any written waiver
of notice thereof. Attendance of a Stockholder at a meeting, in person or by
proxy, shall constitute a waiver of notice of such meeting, except when such
Stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the grounds that
the notice of such meeting was inadequate or improperly given.
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SECTION 2.05. Adjournments. Whenever a meeting of Stockholders, annual
or special, is adjourned to another date, time or place, notice need not be
given of the adjourned meeting if the date, time and place thereof are
announced at the meeting at which the adjournment is taken. If the adjournment
is for more than 30 days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each Stockholder entitled to vote thereat. At the adjourned meeting,
any business may be transacted which might have been transacted at the original
meeting.
SECTION 2.06. Quorum. Except as otherwise provided by law or the
Certificate of Incorporation of the Corporation, including any amendment or
restatement thereof (the "Certificate of Incorporation"), the presence in
person or by proxy of the recordholders of a majority of the combined voting
power of the Shares entitled to vote at a meeting of Stockholders shall
constitute a quorum for the transaction of business at such meeting. If,
however, such quorum shall not be present in person or by proxy at any meeting
of Stockholders, the Stockholders entitled to vote thereat may adjourn the
meeting from time to time in accordance with Section 2.05 hereof until a quorum
shall be present in person or by proxy.
SECTION 2.07. Voting. Each Stockholder shall be entitled to one vote
for every Share of Class A Common Stock held of record by such Stockholder and
each Stockholder shall be entitled to ten votes for every Share of Class B
Common Stock held of record by such Stockholder. The number of votes to which
Shares of other classes of capital stock that may from time to time be
authorized and issued by the Corporation shall be as set forth in the
Certificate of Incorporation. Except as otherwise provided by law or the
Certificate of Incorporation, the vote of a majority of the combined voting
power of the Shares represented in person or by proxy at any meeting at which a
quorum is present shall decide any question brought before such meeting.
SECTION 2.08. Proxies. Each Stockholder entitled to vote at a meeting
of Stockholders or to express, in writing, consent to or dissent from any
action of Stockholders without a meeting may authorize another person or
persons to act for such Stockholder by proxy. Such proxy shall be filed with
the Secretary before such meeting of Stockholders or such action of
Stockholders without a meeting, at such time as the Board may require. No proxy
shall be voted or acted upon more than three years from its date, unless the
proxy provides for a longer period.
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SECTION 2.09. Stockholders' Consent in Lieu of Meeting. Any action
required by the General Corporation Law to be taken at any annual or special
meeting of Stockholders, and any action which may be taken at any annual or
special meeting of Stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the recordholders of Shares having not less than the
minimum number of votes necessary to authorize or take such action at a meeting
at which the recordholders of all Shares entitled to vote thereon were present
and voted.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. General Powers. The business and affairs of the
Corporation shall be managed by the Board, which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by law,
the Certificate of Incorporation or these By-laws directed or required to be
exercised or done by Stockholders.
SECTION 3.02. Number and Term of Directors. Subject to the rights of
the holders of any series of Preferred Stock to elect additional directors, the
number of Directors shall be three or such other number as shall be fixed from
time to time by the Board. Directors need not be Stockholders. The Directors
shall be and are divided into three classes, designated Class I, Class II and
Class III. Each Class shall consist, as nearly as may be possible, of one-third
of the total number of Directors constituting the entire Board. The term of the
initial Class I Directors shall terminate on the date of the 2001 Annual
Meeting of Stockholders; the term of the initial Class II Directors shall
terminate on the date of the 2000 Annual Meeting of Stockholders; and the term
of the initial Class III Directors shall terminate on the date of the 1999
Annual Meeting of Stockholders. At each annual meeting of Stockholders
beginning in 1999, successors to the Class of Directors whose term expires at
that annual meeting of Stockholders shall be elected for a three-year term. If
the number of Directors is changed, any increase or decrease in Directorship
shall be apportioned among the Classes so as to maintain the number of
Directors in each Class as nearly equal as possible, and any additional
Directors of any Class elected to fill a vacancy resulting from an increase in
such class shall hold office only until the next election of Directors of that
Class by the stockholders of the corporation, but in no case will a decrease in
the number of Directors shorten the term of any incumbent Director. Directors
shall hold office until the annual meeting of Stockholders for the year in
which their terms expire and until their successors shall be duly elected and
qualified, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Notwithstanding the foregoing,
whenever the holders of any one or more classes or series of Preferred Stock
issued by the Corporation shall have the right, voting separately by class or
series, to elect Directors at an annual or special meeting of Stockholders, the
election, term of office, filling of vacancies and other features of such
Directorships shall be governed by the terms of the Corporation's Certificate
of Incorporation.
SECTION 3.03. Resignation. Any Director may resign at any time by
giving written notice to the Board, the Chairman of the Board of the
Corporation (the "Chairman") or the Secretary. Such resignation shall take
effect at the time specified in such notice or, if the time be not specified,
upon receipt thereof by the Board, the Chairman or the Secretary, as the case
may be. Unless otherwise specified therein, acceptance of such resignation
shall not be necessary to make it effective.
SECTION 3.04. Removal. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any or all of the Directors may be
removed from office at any time for cause by vote of the recordholders of a
majority of the combined voting power of the Shares then entitled to vote at an
election of Directors, or by
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written consent of the recordholders of Shares pursuant to Section 2.09 hereof.
SECTION 3.05. Vacancies. Subject to the rights of the holders of any
series of Preferred Stock then outstanding to fill Director vacancies, vacancies
occurring on the Board for any reason, including, without limitation, vacancies
occurring as a result of the creation of new directorships that increase the
number of Directors, may be filled by such vote or written consent or by vote
of the Board or by written consent of the Directors pursuant to Section 3.08
hereof. If the number of Directors then in office is less than a quorum, such
other vacancies may be filled by vote of a majority of the Directors then in
office or by written consent of all such Directors pursuant to Section 3.08
hereof. Unless earlier removed pursuant to Section 3.04 hereof, each Director
chosen in accordance with this Section 3.05 shall hold office until the next
annual election of Directors by the Stockholders and until his successor shall
be elected and qualified.
SECTION 3.06. Meetings. (a) Annual Meetings. As soon as practicable
after each annual election of Directors by the Stockholders, the Board shall
meet for the purpose of organization and the transaction of other business,
unless it shall have transacted all such business by written consent pursuant
to Section 3.08 hereof.
(b) Other Meetings. Other meetings of the Board shall be held at such
times as the Chairman, the President of the Corporation (the "President"), the
Secretary or a majority of the Board shall from time to time determine.
(c) Notice of Meetings. The Secretary shall give written notice to each
Director of each meeting of the Board, which notice shall state the place, date,
time and purpose of such meeting. Notice of each such meeting shall be given to
each Director, if by mail, addressed to him at his residence or usual place of
business, at least two days before the day on which such meeting is to be held,
or shall be sent to him at such place by telecopy, telegraph, cable, or other
form of recorded communication, or be delivered personally or by telephone not
later than the day before the day on which such meeting is to be held. A
written waiver of notice, signed by the Director entitled to notice, whether
before of after the time of the meeting referred to in such waiver, shall be
deemed equivalent to notice. Neither
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the business to be transacted at, nor the purpose of any meeting of the Board
need be specified in any written waiver of notice thereof. Attendance of a
Director at a meeting of the Board shall constitute a waiver of notice of such
meeting, except as provided by law.
(d) Place of Meetings. The Board may hold its meetings at such place or
places within or without the State of Delaware as the Board or the Chairman may
from time to time determine, or as shall be designated in the respective
notices or waivers of notice of such meetings.
(e) Quorum and Manner of Acting. One-third of the total number of
Directors then in office (but in no event less than two if the total number of
directorships, including vacancies, is greater than one and in no event a
number less than one-third of the total number of directorships, including
vacancies) shall be present at any meeting of the Board in order to constitute
a quorum for the transaction of business at such meeting, and the vote of a
majority of those Directors present at any such meeting at which a quorum is
present shall be necessary for the passage of any resolution or act of the
Board, except as otherwise expressly required by law, the Certificate of
Incorporation or these By-laws. In the absence of a quorum for any such
meeting, a majority of the Directors present thereat may adjourn such meeting
from time to time until a quorum shall be present.
(f) Organization. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside, in the following order of
precedence:
(i) the Chairman;
(ii) Chief Executive Officer;
(iii) the President; or
(iv) any Director chosen by a majority of the Directors present.
The Secretary or, in the case of his absence, any person (who shall be an
Assistant Secretary, if an Assistant Secretary is present) whom the chairman of
the meeting shall appoint shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 3.07. Committees of the Board. The Board may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more
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Directors. The Board may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of such committee. In the absence or disqualfication of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another Director to act at the meeting in the place of any
such absent or disqualfied member. Any committee of the Board, to the extent
provided in the resolution of the Board designating such committee, shall have
and may exercise all the powers and authority of the Board in the management of
the business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; provided, however,
that no such committee shall have such power or authority in reference to
amending the Certificate of Incorporation (except that such a committee may, to
the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board as provided in Section 151(a)
of the General Corporation Law, fix the designations and any of the preferences
or rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes of stock of
the Corporation or fix the number of shares of any series of stock or authorize
the increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation under Section 251 or 252 of the General Corporation Law,
recommending to the Stockholders the sale, lease or exchange of all or
substantially all the Corporation's property and assets, recommending to the
Stockholders a dissolution of the Corporation or the revocation of a
dissolution, or amending these By-laws; provided further, however, that, unless
expressly so provided in the resolution of the Board designating such committee,
no such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law. Each committee
of the Board shall keep regular minutes of its proceedings and report the same
to the Board when so requested by the Board.
SECTION 3.08. Directors' Consent in Lieu of Meeting. Any action required
or permitted to be taken at any meeting of the Board or of any committee thereof
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by all
the members of the Board or such committee and such consent is filed with the
minutes of the proceedings of the Board or such committee.
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SECTION 3.09. Action by Means of Telephone or Similar Communications
Equipment. Any one or more members of the Board, or of any committee thereof,
may participate in a meeting of the Board or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting by such means shall constitute presence in person at such meeting.
SECTION 3.10. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board may determine the compensation of
Directors. In addition, as determined by the Board, Directors may be reimbursed
by the Corporation for their expenses, if any, in the performance of their
duties as Directors. No such compensation or reimbursement shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
OFFICERS
SECTION 4.01. Officers. The officers of the Corporation shall be the
Chairman, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer and the Secretary and may include one or
more Vice Presidents and one or more Assistant Secretaries. Any two or more
offices may be held by the same person.
SECTION 4.02. Authority and Duties. All officers shall have such
authority and perform such duties in the management of the Corporation as may
provided in these By-laws or, to the extent not so provided, by resolution of
the Board.
SECTION 4.03. Term of Office, Resignation and Removal. (a) Each officer
shall hold office until his successor has been appointed and qualified or his
earlier death or resignation or removal in the manner hereinafter provided.
(b) Any officer may resign at any time by giving written notice to the
Board, the Chairman, the President or the Secretary. Such resignation shall
take effect at the time specified in such notice or, if the time be not
specified, upon receipt thereof by the Board, the Chairman, the President or the
Secretary, as the case may be. Unless otherwise specified therein, acceptance
of such resignation shall not be necessary to make it effective.
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(c) All officers and agents appointed by the Board shall be subject to
removal, with or without cause, at any time by the Board or by the action of
the recordholders of a majority of the combined voting power of the Shares
entitled to vote thereon.
SECTION 4.04. Vacancies. Any vacancy occurring in any office of the
Corporation, for any reason, shall be filled by action of the Board. Unless
earlier removed pursuant to Section 4.03 hereof, any officer appointed by the
Board to fill any such vacancy shall serve only until such time as the
unexpired term of his predecessor expires unless reappointed by the Board.
SECTION 4.05. The Chairman. The Chairman shall have the power to call
special meetings of Stockholders, to call special meetings of the Board and, if
present, to preside at all meetings of Stockholders and all meetings of the
Board. The Chairman shall perform all duties incident to the office of Chairman
of the Board and all such other duties as may from time to time be assigned to
him by the Board or these By-laws.
SECTION 4.06 The Chief Executive Officer. The chief executive officer
(the "Chief Executive Officer") shall be the most senior officer of the
Corporation and shall generally direct the business and affairs of the
Corporation, subject to supervision and direction by the Board, and shall see
that all orders and resolutions of the Board are carried into effect. The Chief
Executive Officer shall perform all duties incident to the office of Chief
Executive Officer and all such other duties as may from time to time be
assigned to him by the Board or these By-laws.
SECTION 4.07 The President. The President shall have general and
active management and control of the business and affairs of the Corporation,
subject to supervision and direction by the Chief Executive Officer and the
Board, and shall see that all orders and resolutions of the Board and orders of
the Chief Executive Officer are carried into effect. The President shall
perform all duties incident to the office of President and all such other
duties as may from time to time be assigned to him by the Chief Executive
Officer or these By-laws.
SECTION 4.08 The Chief Operating Officer. The chief operating officer
(the "Chief Operating Officer") shall be generally responsible for the
day-to-day conduct of the Corporation's business, subject to supervision and
direction by the Chief Executive Officer and President, and shall see that all
orders of the Chief Executive Officer and President are carried into effect.
The Chief Operating Officer shall perform all
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duties incident to the office of Chief Operating Officer and all such other
duties as may from time to time be assigned to him by the Chief Executive
Officer, the President or these By-laws.
SECTION 4.09 Vice Presidents. Vice Presidents, if any, in order of
their seniority or in any other order determined by the Board, shall generally
assist the President and perform such other duties as the Board or the
President shall prescribe, and in the absence or disability of the President,
shall perform the duties and exercise the powers of the President.
SECTION 4.10. The Secretary. The Secretary shall, to the extent
practicable, attend all meetings of the Board and all meetings of Stockholders
and shall record all votes and the minutes of all proceedings in a book to be
kept for that purpose, and shall perform the same duties for any committee of
the Board when so requested by such committee. He shall give or cause to be
given notice of all meetings of Stockholders and of the Board, shall perform
such other duties as may be prescribed by the Board, the Chairman or the
President and shall act under the supervision of the Chairman. He shall keep in
safe custody the seal of the Corporation and affix the same to any instrument
that requires that the seal be affixed to it and which shall have been duly
authorized for signature in the name of the Corporation and, when so affixed,
the seal shall be attested by his signature or by the signature of the Chief
Financial Officer of the Corporation (the "Chief Financial Officer") or an
Assistant Secretary of the Corporation. He shall keep in safe custody the
certificate books and stockholder records and such other books and records of
the Corporation as the Board, the Chairman, the Chief Executive Officer or the
President may direct and shall perform all other duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
by the Board, the Chairman, the Chief Executive Officer or the President.
SECTION 4.11 Assistant Secretaries. Assistant Secretaries of the
Corporation ("Assistant Secretaries"), if any, in order of their seniority or
in any other order determined by the Board, shall generally assist the
Secretary and perform such other duties as the Board or the Secretary shall
prescribe, and, in the absence or disability of the Secretary, shall perform
the duties and exercise the powers of the Secretary.
SECTION 4.12 The Chief Financial Officer. The Chief Financial Officer
shall have the care and custody of all the funds of the Corporation and shall
deposit such funds in such banks or other depositories as the Board, or any
officer or officers, or any officer and agent jointly, duly authorized by
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the Board, shall, from time to time, direct or approve. He shall disburse the
funds of the Corporation under the supervision and direction of the Board, the
Chief Executive Officer, the Chief Operating Officer and the President. He
shall keep a full and accurate account of all moneys received and paid on
account of the Corporation and shall render a statement of his accounts
whenever the Board, the Chairman, the Chief Executive Officer or the President
shall so request. The Chief Financial Officer shall also be the principal
accounting officer of the Corporation, unless the Board shall assign such
duties to another officer. He shall perform all other necessary actions and
duties in connection with the administration of the financial affairs of the
Corporation and shall generally perform all the duties usually appertaining to
the office of treasurer of a corporation. When required by the Board, he shall
give bonds for the faithful discharge of his duties in such sums and with such
sureties as the Board shall approve.
SECTION 4.13 Other Officers. The Board may designate and appoint by
resolution such other officers, including without limitation a treasurer,
assistant treasurers and a controller, as they determine to be in the best
interests of the Corporation. The duties and obligations of each such officer
shall be as set forth in the resolution designating and appointing such officer.
ARTICLE V
CHECKS, DRAFTS, NOTES AND PROXIES
SECTION 5.01. Checks, Drafts and Notes. All checks, drafts and other orders
for the payment of money, notes and other evidences of indebtedness issued in
the name of the Corporation shall be signed by such officer or officers, agent
or agents of the Corporation and in such manner as shall be determined, from
time to time, by resolution of the Board.
SECTION 5.02. Execution of Proxies. The Chairman, the Chief Executive
Officer or the President, or, in the absence or disability of any of them, any
Vice President, may authorize, from time to time, the execution and issuance of
proxies to vote shares of stock or other securities of other corporations held
of record by the Corporation and the execution of consents to action taken or to
be taken by any such corporation. All such proxies and consents, unless
otherwise authorized by the Board, shall be signed in the name of the
Corporation by the Chairman, the Chief Executive Officer, the President or any
Vice President.
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ARTICLE VI
SHARES AND TRANSFERS OF SHARES
SECTION 6.01. Certificates Evidencing Shares. Shares may, but need not
be, represented by certificates in such from or forms as shall be approved by
the Board. Certificates shall be issued in consecutive order and shall be
numbered in the order of their issue, and shall be signed by the Chairman, the
President or any Vice President and by the Secretary or any Assistant Secretary.
Any signature on the certificate may be a facsimile. In the event any such
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to hold such office or to be employed by the
Corporation before such certificate is issued, such certificate may be issued
by the Corporation with the same effect as if such officer had held such
office on the date of issue.
SECTION 6.02 Stock Ledger. A stock ledger in one or more counterparts
shall be kept by the Secretary or by a registrar duly appointed by the
Corporation, in which shall be recorded the name and address of each person,
firm or corporation owning the Shares evidenced by each certificate evidencing
Shares issued by the Corporation, the number of Shares evidenced by each such
certificate, the date of issuance thereof and, in the case of cancellation, the
date of cancellation. Except as otherwise expressly required by law, the person
in whose name Shares stand on the stock ledger of the Corporation shall be
deemed the owner and recordholder thereof for all purposes.
SECTION 6.03 Transfers of Shares. Registration of transfers of Shares
shall be made only in the stock ledger of the Corporation upon request of the
registered holder of such shares, of his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or with the
registrar of the Corporation, and upon the surrender of the certificate or
certificates evidencing such Shares properly endorsed or accompained by a
stock power duly executed, together with such proof of the authenticity of
signatures as the Corporation may reasonably required.
SECTION 6.04 Addresses of Stockholders. Each Stockholder shall
designate to the Secretary an address at which notices of meetings and
all other corporate notices may be served or mailed to such Stockholder, and, if
any Stockholder shall fail to so designate such an address, corporate notices
may be served upon such Stockholder by mail directed to the mailing address, if
any, as the same appears in the stock ledger of the Corporation or at the last
known mailing address of such Stockholder.
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SECTION 6.05. Lost, Destroyed and Mutilated Certificates. Each
recordholder of Shares shall promptly notify the Corporation of any loss,
destruction or mutilation of any certificate or certificates evidencing any
Share or Shares of which he is the recordholder. The Board may, in its
discretion, cause the Corporation or its transfer agent to issue a new
certificate in place of any certificate theretofore issued by it and alleged to
have been mutilated, lost, stolen or destroyed, upon the surrender of the
mutilated certificate or, in the case of loss, theft or destruction of the
certificate, upon satisfactory proof of such loss, theft or destruction, and the
Board may, in its discretion, require the recordholder of the Shares evidenced
by the lost, stolen or destroyed certificate or his legal representative to give
the Corporation a bond sufficient to indemnify the Corporation against any claim
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
SECTION 6.06. Regulations; Transfer Agent and Registrar. The Board may
make such other rules and regulations as it may deem expedient, not inconsistent
with these By-laws, concerning the issue, transfer and registration of
certificates evidencing Shares including, without limitation, the appointment of
one or more transfer agents and one or more registrars.
SECTION 6.07. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the Stockholders entitled to notice
of or to vote at any meeting of Stockholders or any adjournment thereof, or to
express consent to, or to dissent from, corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board may fix, in advance, a record date, which shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other such action. A determination of the
Stockholders entitled to notice of or to vote at a meeting of Stockholders
shall apply to any adjournment of such meeting; provided, however, that the
Board may fix a new record date for the adjourned meeting.
ARTICLE VII
SEAL
SECTION 7.01. Seal. The Board may approve and adopt a corporate seal,
which shall be in the form of a circle and shall
-13-
<PAGE> 18
bear the full name of the Corporation, the year of its incorporation and the
words "Corporate Seal Delaware".
ARTICLE VIII
FISCAL YEAR
SECTION 8.01. Fiscal Year. The fiscal year of the Corporation shall end
on the thirty-first day of December of each year unless changed by resolution of
the Board.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 9.01. Indemnification. (a) The Corporation shall 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, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or
-14-
<PAGE> 19
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 9.01 (a) and (b) of these
By-laws, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under Section 9,01 (a) and (b) of these By-laws
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Section 9.01 (a) and (b) of
these By-laws. Such determination shall be made (i) by the Board by a majority
vote of a quorum consisting of directors who were not parties to such action,
suite or proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders of the
Corporation.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation pursuant to this Article IX. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board deems appropriate.
-15-
<PAGE> 20
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, other Sections of this Article IX shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any law, by-law, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office.
(g) For purposes of this Article IX, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article IX with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(h) For purposes of this Article IX, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves service by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
IX.
(i) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article IX shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 9.02. Insurance for Indemnification. The Corporation may purchase
and maintain insurance on behalf of any
-16-
<PAGE> 21
person who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred by
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 of the General Corporation Law.
ARTICLE X
AMENDMENTS
SECTION 10.01. Amendments. The Board may adopt, amend or repeal the
Corporation's By-laws unless (a) the Certificate of Incorporation or the
General Corporation Law reserves this power exclusively to the Stockholders in
whole or in part; or (b) the Stockholders in adopting, amending or repealing a
particular By-law expressly provide that the Board may not amend or repeal that
By-law. The Stockholders of the Corporation may adopt, amend or repeal the
Corporation's By-laws even though the By-laws may also be adopted, amended or
repealed by its Board.
-17-
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF TRUST
OF
BUDGET GROUP CAPITAL TRUST
THIS CERTIFICATE OF TRUST of Budget Group Capital Trust (the
"Trust"), dated as of June 4, 1998, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. ss. 3801, et seq.).
(i) Name. The name of the business trust being formed hereby is
Budget Group Capital Trust.
(ii) Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware are The Bank of New York
(Delaware), White Clay Center, Route 273, Newark, Delaware 19711.
(iii) Effective Date. This Certificate of Trust shall be effective
as of its filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
THE BANK OF NEW YORK, as trustee
By: /s/ Mary La Gumina
--------------------------------------
Name: MARY LA GUMINA
Title: ASSISTANT VICE PRESIDENT
THE BANK OF NEW YORK (DELAWARE), as trustee
By: /s/ Frederick W. Clark
--------------------------------------
Name: FREDERICK W. CLARK
Title: Authorized Signatory
-------------------------------------------
SCOTT R. WHITE, as trustee
-------------------------------------------
ROBERT L. APRATI, as trustee
-------------------------------------------
MICHAEL B. CLAUER, as trustee
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:00 AM 06/04/1998
981214942 - 2902202
<PAGE> 2
CERTIFICATE OF TRUST
OF
BUDGET GROUP CAPITAL TRUST
THIS CERTIFICATE OF TRUST of Budget Group Capital Trust (the
"Trust"), dated as of June 4, 1998, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. ss. 3801, et seq.).
(i) Name. The name of the business trust being formed hereby is
Budget Group Capital Trust.
(ii) Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware are The Bank of New York
(Delaware), White Clay Center, Route 273, Newark, Delaware 19711.
(iii) Effective Date. This Certificate of Trust shall be effective
as of its filing with the Secretary of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
THE BANK OF NEW YORK, as trustee
By: ----------------------------------------
Name:
Title:
THE BANK OF NEW YORK (DELAWARE), as trustee
By: ----------------------------------------
Name:
Title:
/s/ Scott R. White
---------------------------------------------
SCOTT R. WHITE, as trustee
/s/ Robert L. Aprati
---------------------------------------------
ROBERT L. APRATI, as trustee
/s/ Michael B. Clauer
---------------------------------------------
MICHAEL B. CLAUER, as trustee
<PAGE> 1
EXHIBIT 4.2
DECLARATION OF TRUST
OF
BUDGET GROUP CAPITAL TRUST
THIS DECLARATION OF TRUST is made as of June 4, 1998 (the "Declaration of
Trust"), by and among Budget Group, Inc., a Delaware corporation, as sponsor
(the "Sponsor"), The Bank of New York, as trustee (the "Property Trustee"), The
Bank of New York (Delaware), as trustee (the "Delaware Trustee"), and Scott R.
White, as trustee, Robert L. Aprati, as trustee, and Michael B. Clauer, as
trustee (collectively, the "Administrative Trustees") (the Property Trustee,
the Delaware Trustee and the Administrative Trustees being hereinafter
collectively referred to as the "Trustees"). The Sponsor and The Trustees
hereby agree as follows:
1. The trust created hereby shall be known as Budget Group Capital Trust
(the "Trust"), in which name the Trustees or the Sponsor, to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trust the sum of $10. It is the intention of the parties hereto that the Trust
created hereby constitute a business trust under Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801, et seq. (the "Business Trust Act"), and
that this document constitute the governing instrument of the Trust. The
Trustees are hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in accordance with the provisions of
the Business Trust Act.
3. An amended and restated Declaration of Trust satisfactory to each
party to it, in such form as the parties thereto may approve, will be entered
into to provide for the contemplated operation of the Trust created hereby and
the issuance of the Capital or Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Declaration of Trust, the Trustees shall not have any duty or
obligation hereunder or with respect to the trust estate, except as otherwise
required by applicable law or as may be necessary to obtain prior to such
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise. Notwithstanding the foregoing, the Trustees may
take all actions deemed proper as are necessary to effect the transactions
contemplated herein.
4. The Sponsor, as the sponsor of the Trust, is hereby authorized, in
its discretion, (i) to prepare one or more offering memoranda or circular in
preliminary and final form relating to the offering and sale of Capital or
Preferred Securities of the Trust in a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and such forms or filings as may be required by the 1933 Act, the
Securities Exchange Act of 1934, as amended, or the Trust Indenture Act of
1939, as amended, in each case relating to the Capital or Preferred Securities
of the Trust; (ii) to file and execute on behalf of the Trust, such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents that shall be
necessary or desirable to register or establish the exemption from registration
of the Capital or Preferred Securities of the Trust under
<PAGE> 2
the securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on
behalf of the Trust, may deem necessary or desirable; (iii) to execute and file
an application, and all other applications, statements, certificates,
agreements and other instruments that shall be necessary or desirable, to the
Private Offerings, Resales and Trading through Automated Linkages ("PORTAL")
Market; (iv) to execute and deliver letters or documents to, or instruments for
filing with, a depository relating to the Capital or Preferred Securities of
the Trust; and (v) to execute, deliver and perform on behalf of the Trust one
or more purchase agreements, dealer manager agreements, escrow agreements,
registration rights agreements and other related agreements providing for or
relating to the sale of the Capital or Preferred Securities of the Trust.
In the event that any filing referred to in this Section 4 is required by
the rules and regulations of the Securities and Exchange Commission (the
"Commission"), PORTAL or state securities or "Blue Sky" laws to be executed on
behalf of the Trust by the Trustees, the Trustees, in their capacity as
trustees of the Trust, are hereby authorized to join in any such filing and to
execute on behalf of the Trust any and all of the foregoing, it being
understood that the Trustees, in their capacity as trustees of the Trust, shall
not be required to join in any such filing or execute on behalf of the Trust any
such document unless required by the rules and regulations of the Commission,
PORTAL or state securities or "Blue Sky" laws.
5. This Declaration of Trust may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be five and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Sponsor which may
increase or decrease the number of trustees of the Trust; provided, however,
that to the extent required by the Business Trust Act, one trustee of the Trust
shall either be a natural person who is a resident of the State of Delaware or,
if not a natural person, an entity which has its principal place of business in
the State of Delaware. Subject to the foregoing, the Sponsor is entitled to
appoint or remove without cause any trustee of the Trust at any time. Any
trustee of the Trust may resign upon thirty days' prior notice to the Sponsor.
7. This Declaration of Trust shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
8. The Sponsor hereby agrees to indemnify the Trustees and any of the
officers, directors, employees and agents of the Trustees (the "Indemnified
Persons") for, and to hold each Indemnified Person harmless against, any
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (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.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
BUDGET GROUP, INC.,
as Sponsor
By: /s/ Robert L. Aprati
---------------------------------------
Name: Robert L. Aprati
Title: Executive Vice President, General
Counsel and Secretary
THE BANK OF NEW YORK,
as Property Trustee
By:
---------------------------------------
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:
---------------------------------------
Name:
Title:
/s/ Scott R. White
--------------------------------------------
SCOTT R. WHITE, as Administrative Trustee
/s/ Robert L. Aprati
--------------------------------------------
ROBERT L. APRATI, as Administrative Trustee
/s/ Michael B. Clauer
--------------------------------------------
MICHAEL B. CLAUER, as Administrative Trustee
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
BUDGET GROUP, INC.,
as Sponsor
By:
---------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Mary La Gumina
---------------------------------------
Name: MARY LA GUMINA
Title: ASSISTANT VICE PRESIDENT
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Frederick W. Clark
---------------------------------------
Name: Frederick W. Clark
Title: Authorized Signatory
--------------------------------------------
SCOTT R. WHITE, as Administrative Trustee
--------------------------------------------
ROBERT L. APRATI, as Administrative Trustee
--------------------------------------------
MICHAEL B. CLAUER, as Administrative Trustee
3
<PAGE> 1
EXHIBIT 4.3
==============================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
Of
BUDGET GROUP CAPITAL TRUST
Dated as of June 19, 1998
==============================================================================
<PAGE> 2
2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Interpretation and Definitions
<S> <C> <C>
SECTION 1.01. Definitions................................................................... 2
ARTICLE II
Trust Indenture Act
SECTION 2.01. Trust Indenture Act; Application.............................................. 13
SECTION 2.02. Lists of Holders of Securities................................................ 14
SECTION 2.03. Reports by the Property Trustee............................................... 14
SECTION 2.04. Periodic Reports to Property Trustee.......................................... 14
SECTION 2.05. Evidence of Compliance with Conditions
Precedent.................................................................. 15
SECTION 2.06. Events of Default; Waiver..................................................... 15
SECTION 2.07. Event of Default; Notice...................................................... 17
ARTICLE III
Organization
SECTION 3.01. Name.......................................................................... 18
SECTION 3.02. Office........................................................................ 18
SECTION 3.03. Purpose....................................................................... 18
SECTION 3.04. Authority..................................................................... 18
SECTION 3.05. Title to Property of the Trust................................................ 19
SECTION 3.06. Powers and Duties of the Administrative
Trustees................................................................... 19
SECTION 3.07. Prohibition of Actions by the Trust and
the Trustees............................................................... 23
SECTION 3.08. Powers and Duties of the Property
Trustee.................................................................... 24
SECTION 3.09. Certain Duties and Responsibilities of
the Property Trustee....................................................... 26
SECTION 3.10. Certain Rights of Property Trustee............................................ 28
SECTION 3.11. Delaware Trustee.............................................................. 31
SECTION 3.12. Execution of Documents........................................................ 31
SECTION 3.13. Not Responsible for Recitals or
Issuance of Securities..................................................... 31
SECTION 3.14. Duration of Trust............................................................. 32
SECTION 3.15. Mergers....................................................................... 32
</TABLE>
<PAGE> 3
3
<TABLE>
<CAPTION>
Page
----
ARTICLE IV
Depositor
<S> <C> <C>
SECTION 4.01. Depositor's Purchase of Common
Securities................................................................ 34
SECTION 4.02. Responsibilities of the Sponsor............................................... 34
SECTION 4.03. Guarantee of Payment of Trust
Obligations............................................................... 35
ARTICLE V
Trustees
SECTION 5.01. Number of Trustees............................................................ 36
SECTION 5.02. Delaware Trustee.............................................................. 36
SECTION 5.03. Property Trustee; Eligibility................................................. 36
SECTION 5.04. Qualifications of Administrative
Trustees and Delaware Trustee
Generally................................................................. 37
SECTION 5.05. Initial Trustees.............................................................. 37
SECTION 5.06. Appointment, Removal and Resignation of
Trustees.................................................................. 38
SECTION 5.07. Vacancies among Trustees...................................................... 41
SECTION 5.08. Effect of Vacancies........................................................... 41
SECTION 5.09. Meetings...................................................................... 42
SECTION 5.10. Delegation of Power........................................................... 42
SECTION 5.11. Merger, Conversion, Consolidation or
Succession to Business.................................................... 43
ARTICLE VI
Distributions
SECTION 6.01. Distributions................................................................. 43
ARTICLE VII
Issuance of Securities
SECTION 7.01. General Provisions Regarding
Securities................................................................ 43
SECTION 7.02. Execution and Authentication.................................................. 44
SECTION 7.03. Form and Dating............................................................... 45
SECTION 7.04. Registrar, Paying Agent, Conversion
Agent and Tender Agent.................................................... 48
</TABLE>
<PAGE> 4
4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 7.05. Paying Agent to Hold Money in Trust........................................... 49
SECTION 7.06. Replacement Securities........................................................ 49
SECTION 7.07. Outstanding Preferred Securities.............................................. 50
SECTION 7.08. Preferred Securities in Treasury.............................................. 50
SECTION 7.09. Temporary Securities.......................................................... 50
SECTION 7.10. Cancellation.................................................................. 51
ARTICLE VIII
Termination of Trust
SECTION 8.01. Termination of Trust.......................................................... 51
ARTICLE IX
Transfer and Exchange
SECTION 9.01. General....................................................................... 52
SECTION 9.02. Transfer Procedures and Restrictions.......................................... 54
SECTION 9.03. Deemed Security Holders....................................................... 59
SECTION 9.04. Notices to Clearing Agency................................................... 59
SECTION 9.05. Appointment of Successor Clearing
Agency..................................................................... 59
ARTICLE X
Limitation of Liability of
Holders of Securities, Trustees or Others
SECTION 10.01. Liability..................................................................... 60
SECTION 10.02. Exculpation................................................................... 60
SECTION 10.03. Fiduciary Duty................................................................ 61
SECTION 10.04. Indemnification............................................................... 62
SECTION 10.05. Outside Businesses............................................................ 63
ARTICLE XI
Accounting
SECTION 11.01. Fiscal Year................................................................... 63
SECTION 11.02. Certain Accounting Matters.................................................... 63
SECTION 11.03. Banking....................................................................... 64
SECTION 11.04. Withholding................................................................... 64
</TABLE>
<PAGE> 5
5
<TABLE>
<CAPTION>
Page
----
ARTICLE XII
Amendments and Meetings
<S> <C> <C>
SECTION 12.01. Amendments................................................................. 65
SECTION 12.02. Meetings of the Holders of Securities;
Action by Written Consent.............................................. 66
ARTICLE XIII
Representations of Property Trustee
and Delaware Trustee
SECTION 13.01. Representations and Warranties of
Property Trustee....................................................... 68
SECTION 13.02. Representations and Warranties of
Delaware Trustee....................................................... 69
ARTICLE XIV
Registration Rights
SECTION 14.01. Registration Rights........................................................ 70
ARTICLE XV
Miscellaneous
SECTION 15.01. Notices.................................................................... 70
SECTION 15.02. Governing Law.............................................................. 71
SECTION 15.03. Intention of the Parties................................................... 71
SECTION 15.04. Headings................................................................... 71
SECTION 15.05. Successors and Assigns..................................................... 72
SECTION 15.06. Partial Enforceability..................................................... 72
SECTION 15.07. Counterparts............................................................... 73
</TABLE>
ANNEX I Terms of Remarketable Term Income
Deferable Equity Securities HIGH TIDES
Common Securities
Exhibit A-1 Form of Preferred Security
Exhibit A-2 Form of Common Security
<PAGE> 6
6
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
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)
</TABLE>
- ------------------
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
BUDGET GROUP CAPITAL TRUST
JUNE 19, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of June 19, 1998, 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"), Budget
Group, Inc., a Delaware corporation, as trust Depositor (the "Depositor"), and
by the holders, from time to time, of undivided beneficial interests in the
Trust (as defined below) issued pursuant to this Declaration;
WHEREAS, the Trustees and the Depositor established Budget
Group Capital Trust (the "Trust") under the Business Trust Act (as hereinafter
defined) pursuant to a Declaration of Trust dated as of June 4, 1998 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on June 4, 1998, 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 hereinafter defined); and
WHEREAS, all of the Trustees and the Depositor, 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.
<PAGE> 8
2
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 or the
Indenture has the same meaning throughout;
(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.
"Additional Amounts" has the meaning specified in the
Indenture.
"Administrative Action" has the meaning set forth in the
definition of "Tax Event" in this Section 1.01.
"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
<PAGE> 9
3
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
Preferred Securities Certificate, ownership and transfers of which shall be
maintained and made through book entries by a Depositary as described in
Section 9.02.
"Business Day" means any day other than a Saturday or a
Sunday, a day on which banking institutions in New York, New York are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 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.
"Change in 1940 Act Law" has the meaning specified in
paragraph 4(d) of Annex I.
"Closing Date" means June 19, 1998.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor legislation.
"Commission" means the Securities and Exchange
Commission.
<PAGE> 10
4
"Common Securities" has the meaning specified in Section
7.01(a).
"Common Stock" has the meaning specified in the Indenture.
"Compounded Interest" has the meaning specified in the
Indenture.
"Conversion Agent" has the meaning set forth in
Section 7.04.
"Conversion Date" has the meaning specified in paragraph 5(b)
of Annex I.
"Conversion Request" has the meaning specified in paragraph
5(b) of Annex I.
"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 Depositor in its capacity as
issuer of the Debentures.
"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.
"Debenture Trustee" means The Bank of New York, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Declaration" means this Amended and Restated Declaration of
Trust as originally executed or as it may from time to time be supplemented or
amended.
"Deferral Period" has the meaning specified in paragraph 2(b)
of Annex I.
"Definitive Preferred Securities" means any Preferred
Securities in definitive form issued by the Trust.
<PAGE> 11
5
"Delaware Trustee" has the meaning set forth in Section 5.02.
"Depositary" means The Depository Trust Company, the initial
clearing agency, until a successor shall be appointed pursuant to Section 9.05,
and thereafter means such successor Depositary.
"Depositor" means Budget Group, Inc., a Delaware corporation,
or any successor entity in a merger, consolidation or amalgamation, in its
capacity as Depositor of the Trust.
"Direct Action" has the meaning specified in Section 3.08(e).
"Disclosure Documents" has the meaning specified in the
Remarketing Agreement.
"Dissolution Tax Opinion" has the meaning specified in the
definition of Tax Event in this Section 1.01.
"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 Issuer Trustee or Issuer Trustees by
the holders of at least 25% in aggregate liquidation amount of the
outstanding Preferred Securities, a written notice specifying such
<PAGE> 12
6
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 Depositor 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.
"Failed Final Remarketing" has the meaning specified in the
Remarketing Agreement.
"Fiscal Year" shall have the meaning specified in Section
11.01.
"Global Preferred Securities" means Rule 144A Global
Preferred Securities and/or Unrestricted Global Preferred Securities, as the
context requires.
"Guarantee" means the Guarantee Agreement between the
Depositor and The Bank of New York, as Guarantee Trustee, for the benefit of
the holders of the Trust Securities from time to time.
"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 June 19, 1998,
between the Debenture Issuer and the Debenture Trustee, as it may be amended
from time to time.
"Initial Conversion Price" has the meaning specified in
paragraph 5(a) of Annex I.
"Initial Rate" has the meaning specified in paragraph 2(a) of
Annex I.
"Initial Redemption Price" has the meaning specified in the
Indenture.
<PAGE> 13
7
"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.
"Investment Company Event" has the meaning specified in
paragraph 4(d) of Annex I.
"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
contemporan eously 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.
"Liquidation Distribution" has the meaning specified in
paragraph 3 of Annex I.
"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, liquida
tion or otherwise, plus accrued and unpaid Distributions to the date upon which
the voting percentages are determined) of all outstanding Securities of the
relevant class.
"Ministerial Action" has the meaning set forth in paragraph
4(d) in Annex I.
<PAGE> 14
8
"No Recognition Opinion" has the meaning specified in
paragraph 4(d) of 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 June 16, 1998, 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:
(a) a statement that each officer signing
the Certificate has read the covenant or
condition and the definition relating
thereto;
(b) a brief statement of the nature and scope
of the examination or investigation
undertaken by each officer in rendering the
Certificate;
(c) a statement that each such officer has made
such examination or investigation as, in
such officer's opinion, is necessary to
enable such officer to express an informed
opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion
of each such officer, such condition or
covenant has been complied
with.
"OID" means original issue discount.
"Optional Closing Date" has the meaning assigned to such term
in the Purchase Agreement.
"Optional Redemption" has the meaning specified in the
Indenture.
<PAGE> 15
9
"Participants" has the meaning set forth in Section 7.03(b).
"Paying Agent" has the meaning specified in Section 7.04.
"Payment Amount" has the meaning specified in Section 6.01.
"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.
"Preferred Securities" has the meaning specified in Section
7.01(a).
"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).
"Pro Rata" has the meaning specified in paragraph 9 of
Annex I.
"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 specified in the
Indenture.
"Redemption Tax Opinion" has the meaning specified in
paragraph 4 (d) of Annex I.
<PAGE> 16
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"Registrar" has the meaning set forth in Section 7.04.
"Registration Default" has the meaning specified in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated June 19, 1998, among the Depositor, the Trust, and the Initial
Purchasers named in the Purchase Agreement.
"Related Party" means, with respect to the Depositor, any
direct or indirect wholly owned subsidiary of the Depositor or any other Person
that owns, directly or indirectly, 100% of the outstanding voting securities of
the Depositor.
"Remarketing" has the meaning specified in the Remarketing
Agreement.
"Remarketing Agent" has the meaning specified in the
Indenture.
"Remarketing Agreement" means the Remarketing Agreement dated
June 19, 1998 among the Depositor, the Trust, the Tender Agent, the
Administrative Trustees and the Remarketing Agent.
"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 mean the Rule 144A
Global Preferred Securities.
"Restricted Securities Legend" has the meaning specified in
Section 9.02(h).
"Rule 144A Global Preferred Security" has the meaning
specified in Section 7.03(a).
"Securities" means the Common Securities and the Preferred
Securities.
<PAGE> 17
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"Securities Act" means the Securities Act of 1933 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.
"Shelf Registration Statement" has the meaning specified in
the Registration Rights Agreement.
"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).
"Successor Delaware Trustee" has the meaning set forth in
Section 5.06(d).
"Successor Entity" has the meaning specified in Section
3.15(b)
"Successor Property Trustee" has the meaning set forth in
Section 5.06(d).
"Successor Securities" has the meaning specified in Section
3.15(b).
"Super Majority" has the meaning set forth in Section 2.06(a)
(ii).
"Tax Event" means the receipt by the Property Trustee of an
opinion of nationally recognized independent tax counsel to the Depositor
(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 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
<PAGE> 18
12
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,
(x) 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
(y) any portion of interest payable by the Depositor to the Trust (or OID
accruing) on the Debentures is not, or within 90 days of the date of such
opinion will not be, deductible by the Depositor 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
Depositor (or OID accruing) on the Debentures is not, or within 90 days of the
date of such opinion will not be, deductible by the Depositor in whole or in
part for United States federal income tax purposes, provided, however, that
clauses (a)(y) and (b) shall not apply if the reason for nondeductibility of
such interest (or OID) is based on the particular use (or deemed use) by the
Depositor or an affiliate of the proceeds of such issuance of Debentures.
"Tender Agent" means the Property Trustee if any Preferred
Securities are outstanding and the Debenture Trustee if the Debentures have
been distributed to the Holders of the Preferred Securities.
"Tender Notification Date" has the meaning specified in the
Indenture.
"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, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Term Provisions" has the meaning specified in the
Remarketing Agreement.
<PAGE> 19
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"Term Redemption Price" has the meaning specified in the
Remarketing Agreement.
"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" has the meaning specified in the first recital of
this Agreement.
"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 Security" has the meaning set forth in
Section 9.02(b).
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 appli cable, be
governed by such provisions. This Declaration will not be qualified under the
Trust Indenture Act except upon the effectiveness of the Shelf Registration
Statement.
(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 ss.
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
<PAGE> 20
14
(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 Depositor 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 Depositor
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
Depositor 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 ss. 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, 1999, the Property Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by ss. 313 of the Trust Indenture Act, if any, in the form and in the
manner provided by ss. 313 of the Trust Indenture Act. The Property Trustee
shall also comply with the requirements of ss. 313(d) of the Trust Indenture
Act.
SECTION 2.04. Periodic Reports to Property Trustee. Each of
the Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by ss. 314 of the Trust Indenture Act (if any) and the compliance
certificate required by ss. 314 of the Trust Indenture Act in the form, in the
manner and at the times required by ss. 314 of the Trust Indenture Act.
<PAGE> 21
15
SECTION 2.05. Evidence of Compliance with Conditions
Precedent. Each of the Depositor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Declaration that
relate to any of the matters set forth in ss. 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
ss. 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 ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 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.
<PAGE> 22
16
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 Preferred 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
<PAGE> 23
17
of the Securities. The foregoing provisions of this Section 2.06(b) shall be in
lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and
such ss. 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 ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 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.
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 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
Depositor, notices of all defaults actually known to the Property Trustee,
unless such defaults have been cured or waived 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.
<PAGE> 24
18
(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 "Budget Group
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 Budget Group, Inc., 125 Basin Street, Suite 210, Daytona
Beach, Florida 32114, Attention: Secretary. On ten Business Days' written
notice to the Holders of Securities, the Administrative Trustees may designate
another principal office.
SECTION 3.03. Purpose. The exclusive purposes and
functions of the Trust are (a) to issue and sell the Securities and use the
proceeds from such sale to acquire the Debentures, and (b) 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
Administra tive 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
<PAGE> 25
19
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:
(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;
<PAGE> 26
20
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Depositor, to:
(i) assist in the preparation of the Offering Circular and
a preliminary offering circular, in each case prepared by the
Depositor, 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 Depositor, a registration statement
filed on Form S-3 prepared by the Depositor, including any amendments
thereto, in relation to the Preferred Securities;
(ii) execute and file any documents prepared by the
Depositor, or take any acts as determined by the Depositor 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 Depositor
has determined to qualify or register such Preferred Securities for
sale;
(iii) execute and file an application, prepared by the
Depositor, to the Private Offerings, Resale and Trading through
Automated Linkages ("PORTAL") Market and, at such time as determined
by the Depositor, 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 Depositor, a registration statement on Form 8-A,
including any amendments thereto, prepared by the Depositor relating
to the registration of the Preferred Securities under Section 12 of
the Exchange Act; and
(vi) execute and enter into the Remarketing 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
<PAGE> 27
21
held of record in the name of the Property Trustee for the benefit of the
Holders of the Preferred Securities and the Holders or Common Securities;
(d) to give the Depositor and the Property Trustee prompt
written notice of the occurrence of a Tax Event or an Investment Company Event;
provided that the Administrative Trustees (and Special Trustee, if any) shall
consult with the Depositor 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 ss.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;
(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 ss. 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, Conversion Agent, Paying Agent, Tender Agent and transfer agent for
the Securities;
<PAGE> 28
22
(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;
(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 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
<PAGE> 29
23
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;
(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
5.14 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
<PAGE> 30
24
(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.
(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
<PAGE> 31
25
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 Depositor 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, subject to the terms of the Indenture (including the subordination
provisions set forth in Article XII thereof), 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
Holders of the Common Securities will be subrogated to the rights of such
Holder of Preferred Securities to the extent of any payment made by the
Depositor 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 the rights of the Property Trustee or
any other Person. 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.
<PAGE> 32
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(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, 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 shall act as the initial Paying
Agent and Registrar 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 ss. 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Administrative Trustees at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Administrative Trustees. The Paying Agent may resign upon 30 days'
written notice to the Property Trustee, the Administrative Trustees and the
Depositor.
(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.
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
<PAGE> 33
27
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 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
<PAGE> 34
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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 Depositor. 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
Depositor 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 Depositor.
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
<PAGE> 35
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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, sent or
presented by the proper party or parties;
(ii) any direction or act of the Depositor 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 Depositor 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 Depositor or any
of its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this 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
<PAGE> 36
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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 the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and 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
<PAGE> 37
31
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 ss. 3807 of the Business Trust Act.
SECTION 3.12. Execution of Documents. Except as otherwise
required by applicable law, 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 Depositor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make
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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
June 19, 2034.
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 or paragraph 3 of
Annex I.
(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 Preferred 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 or in the assets of the
Successor Entity at least as high as the Preferred Securities
rank with respect to participation in the profits and
dividends or in the assets of the Trust;
(ii) the Debenture Issuer expressly acknowledges such
Successor Entity 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;
<PAGE> 39
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(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 or replacement
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 and limited to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Depositor 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 Depositor nor the
Successor Entity will be required to register as an Investment
Company;
(C) such merger, consolidation, amalgamation or
replacement will not adversely affect the limited liability of
the Holders of the Securities (including any Successor
Securities);
(viii) the Depositor or any permitted successor or assignee
directly or indirectly owns all the Common Securities and provides a
guarantee to the Holders of the Successor Securities with respect to
the Successor Entity having substantially the same terms as the
Guarantee; and
(xi) such merger, consolidation, amalgamation, replacement or
lease is not a taxable event for the 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 Common
Securities, consolidate,
<PAGE> 40
34
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, 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
Depositor
SECTION 4.01. Depositor's Purchase of Common Securities. On
the Closing Date and any Optional Closing Date the Depositor will purchase an
amount of Common Securities issued by the Trust such that the aggregate
liquidation amount of such Common Securities purchased by the Depositor shall at
such date equal at least 3% of the total capital of the Trust.
SECTION 4.02. Responsibilities of the Depositor. In connection
with the issue and sale of the Preferred Securities, the Depositor shall have
the exclusive right and responsibility to engage in the following activities:
(a) to prepare the Offering Circular and the Disclosure
Documents, if any, 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 (including at the time of
the Remarketing), 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 Depositor deems
necessary or advisable in order to comply with the applicable laws of any such
States and foreign jurisdictions;
(c) 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 (including at the time of the Remarketing);
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to
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the registration of the Preferred Securities (both at the time of their original
issuance and at the time of the Remarketing, if required) under Section 12 of
the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of and execute the Purchase
Agreement and the Registration Rights Agreement, and to negotiate the terms of
the Remarketing Agreement and other related agreements providing for the sale of
the Preferred Securities (both at the time of their original issuance and at the
time of the Remarketing).
SECTION 4.03. Guarantee of Payment of Trust Obligations. (a)
Subject to the terms and conditions of this Section 4.03, the Depositor hereby
irrevocably and unconditionally guarantees, to the extent set forth in the
Guarantee and subject to the terms of the Indenture (including the subordination
provisions set forth in Article XII thereof), to each Person to whom the Trust
is now or hereafter becomes indebted or liable (the "Beneficiaries") the full
payment, when and as due, of any and all Obligations to such Beneficiaries.
(b) The agreement of the Depositor 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 Depositor 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 Guarantee or
under this Agreement for any reason whatsoever. Such agreement is continuing,
irrevocable, unconditional and absolute.
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ARTICLE V
Trustees
SECTION 5.01. Number of Trustees. The number of Trustees shall
initially be five (5), and:
(a) at any time before the issuance of any
Securities, the Depositor 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 be an entity which has its
principal place of business in the State of Delaware, and otherwise meets the
require ments of applicable law, provided that, if the Property Trustee has its
principal place of 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 Depositor; 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 Fifty million
U.S.
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37
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 ss. 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 ss. 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.
(d) The 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 Administra tive 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:
Scott R. White
c/o Budget Group, Inc.
125 Basin Street, Suite 210
Daytona Beach, Florida 32114
Robert L. Aprati
c/o Budget Group, Inc.
125 Basin Street, Suite 210
Daytona Beach, Florida 32114
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Michael B. Clauer
c/o Budget Group, Inc.
125 Basin Street, Suite 210
Daytona Beach, Florida 32114
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
Attention: Corporate Trust Trustee Administration
The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
SECTION 5.06. Appointment, Removal and Resignation of
Trustees. (a) Except as provided otherwise in this Section 5.06, Trustees may
be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Depositor; 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, 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; 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
<PAGE> 45
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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 Depositor.
(c) The Depositor 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; or
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The Depositor shall appoint a Successor Property Trustee within 60 days of such
an event.
(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 Depositor.
(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 Depositor 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 Depositor 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 Depositor 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 Depositor and the Trust or
such later date
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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 Depositor and the Trust of an
instrument of resignation or removal, the resigning Property Trustee or Delaware
Trustee, resigning or being removed as 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 dissolve,
terminate or annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of 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
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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 by the unanimous written consent of the Administrative
Trustees.
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,
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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 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 Amounts (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.
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 Remarketable Term Income
Deferrable Equity Securities (HIGH TIDES)(sm), representing undivided beneficial
interests in the assets of the Trust
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44
(the "Preferred Securities"), having such terms as are set forth in Annex I
(including as such terms may be modified in accordance with the provisions of
the Remarketing Agreement) 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. On the Reset Date and as contemplated by the Remarketing
Agreement, the Trust may also issue securities having Term Provisions to be set
by the Remarketing Agent in accordance with the terms of the Remarketing
Agreement. 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.
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 the
execution and delivery of the Declaration any such person was not such a
Administrative Trustee.
(b) One Administrative Trustee shall sign the Preferred
Securities for the Trust by manual or facsimile signature. Unless otherwise
determined by the Trust, such
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signature shall, in the case of Common Securities, be a manual signature.
A Preferred Security shall not be valid until authenticated by
the manual 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
Sections 7.06 and 7.07.
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 Depositor 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 Depositor 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
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Trustee and the Depositor, 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 June 16, 1998, among the Trust, the Depositor 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 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 New York office, as custodian for the Depositary, and registered
in the name of the Depositary or a nominee of the Depositary, duly executed by
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.
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
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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 Depositor 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 Administrative Trustees decide in their 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 the Borough of Manhattan, City of New York, to be so
transferred, in whole or from time to time in part, without charge, and the
Property Trustee shall 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
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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 Section 9.02(h).
(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, Conversion Agent and
Tender Agent. The Administrative Trustees shall maintain in the Borough of
Manhattan, City of New York, State of New York (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 Administrative Trustees 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 Administrative Trustees may change any Paying Agent,
Registrar, co-registrar or Conversion Agent without prior notice to any Holder;
provided that the Administrative Trustees shall provide notice of such change to
all Holders promptly thereafter. The Administrative Trustees shall notify the
Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Administrative Trustees fail 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.
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The Trust initially appoints the Property Trustee as
Registrar, Paying Agent, and Conversion Agent for the Preferred Securities. The
Property Trustee shall also serve as Tender Agent and shall have the
responsibilities of such described in the Remarketing Agreement for so long as
the Debentures are held by the Property Trustee.
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 Administrative Trustees at any time may require a
Paying Agent to pay all money held by it to the Property Trustee 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 Depositor or an
Affiliate of the Trust or the Depositor 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, the Trust shall issue and
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 Property Trustee, the
Depositor or any authenticating agent from any loss which any of them may suffer
if a Security is replaced. The Depositor 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 Depositor pursuant to Article III hereof, the Depositor in its discretion
may, instead of issuing a new Security, pay or purchase such Security, as the
case may be.
Every replacement Security is an additional obligation of the
Trust.
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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 (as such term is used in
Section 8-405 of the Delaware Uniform Commercial Code).
If Preferred Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and interest on them
ceases to accrue.
A Preferred Security does not cease to be outstanding because
one of the Trust, the Depositor or an Affiliate of the Depositor 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
Depositor or an Affiliate of the Depositor, 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 on
any such direction, waiver or consent, only Securities which the Property
Trustee knows are so owned shall be so disregarded.
SECTION 7.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Trust 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 the Trust considers
appropriate for temporary Securities. Without unreasonable delay, the Trust
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
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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 VIII
Termination of Trust
SECTION 8.01. Dissolution 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 Depositor;
(ii) the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Depositor; the revocation of the charter of the Holder of the Common
Securities or the Depositor and the expiration of 90 days after the
date of revocation without a reinstatement thereof;
(iii) the distribution of 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 expiration of the term of the Trust on
June 19, 2034;
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(vi) the entry of a decree of judicial dissolution
of the Holder of the Common Securities, the Depositor
or the Trust;
(vii) upon distribution of the Common Stock of the Depositor
to Holders of all outstanding Securities upon conversion of all such
Securities; or
(viii) before the issuance of any Securities, with
the consent of all the Administrative Trustees and the
Depositor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.01(a), and after the completion of the winding up of
the affairs of the Trust, the Trustees shall file a certificate of cancellation
with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.09 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 Trust shall issue and the
Property Trustee shall authenticate Preferred Securities at the Registrar's
request.
(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 Depositor and any Related
Party may only transfer Common Securities to the Depositor or a Related Party of
the Depositor; provided that, any such transfer is subject to the condition
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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 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 cancelled 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.
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SECTION 9.02. Transfer Procedures and Restrictions. (a)
General. Subject to Sections 9.02(b) and 9.02(h)(iii), 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 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 licensed to
practice law in the State of New York, as may be reasonably required by the
Depositor, 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 (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 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 Trust shall issue 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) 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
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(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 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, 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:
(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 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(d)
except as otherwise provided in Section 7.03(d).
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(d) 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 Trust shall issue and the Property Trustee
shall authenticate, upon written order of any Administrative Trustee, an
appropriate number of Preferred Securities in global form.
(e) 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.
(f) Transfer of a Beneficial Interest in a Global Preferred
Security for a Definitive Preferred Security. (i) Definitive Preferred
Securities issued in exchange for a beneficial interest in a Global Preferred
Security pursuant to this Section 9.02(f) shall be registered in 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.
(g) 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
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Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(h) Legend.
(i) Except as permitted by the following paragraph (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 the "Restricted Securities Legend") in substantially the
following form:
"EACH OF THE HIGH TIDES (OR ITS PREDECESSOR) WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND EACH OF THE
HIGH TIDES AND ANY HIGH TIDES DEBENTURES ISSUED UPON EXCHANGE FOR THE
HIGH TIDES REPRESENTED HEREBY 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 EACH OF THE HIGH TIDES IS HEREBY NOTIFIED THAT THE
SELLER OF EACH OF THE HIGH TIDES MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
THE HOLDER OF EACH OF THE HIGH TIDES AGREES FOR THE BENEFIT OF
THE ISSUER AND THE COMPANY THAT (A) EACH OF THE HIGH TIDES AND ANY HIGH
TIDES DEBENTURES OR COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY
BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) 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 EACH OF THE HIGH TIDES 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
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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 Security.
(i) 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 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 Registrar for such Global Preferred
Security) with respect to such Global Preferred Security, by the Property
Trustee or the Registrar, to reflect such reduction.
(j) 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
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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 Property Trustee, the Registrar or a
co-registrar shall have actual or other notice thereof.
SECTION 9.04. Notices to Clearing Agency. Whenever a notice or
other communication to the Preferred Security Holders is required under this
Declaration, the Administrative 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 9.05. Appointment of Successor Clearing Agency. If
the Depositary 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.
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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 Guarantee and the terms of the Securities the
Depositor 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 ss. 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 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
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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.
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(c) Whenever in this Declaration an Indemnified
Person is permitted or required to make a decision
(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.
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SECTION 10.05. Outside Businesses. Any Covered Person, the
Depositor, 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 Depositor, 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 Depositor, 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 Depositor or any
Affiliate of the Depositor, 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 Depositor 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.
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(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 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 Trust and the Administrative
Trustees shall comply with all withholding requirements under United States
federal, state and local law. 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 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
<PAGE> 71
65
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 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 Depositor, 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 Depositor 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
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
<PAGE> 72
66
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
<PAGE> 73
67
taken at a meeting of the Holders of Securities may be taken without a
meeting 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;
(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
<PAGE> 74
68
matter with respect to the exercise of any such right
to vote.
ARTICLE XIII
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 Depositor 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 Depositor 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 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 incorpor ation or by-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration
with or notice to, any New York or federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the Declaration.
<PAGE> 75
69
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 Depositor 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 Depositor 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.
(e) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
(f) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration.
<PAGE> 76
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ARTICLE XIV
Registration Rights
SECTION 14.01. Registration Rights. The Holders of the
Preferred Securities, the Debentures, the Guarantee and the shares of Common
Stock of the Depositor issuable upon conversion of the Securities are entitled
to the benefits of a Registration Rights Agreement.
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 Budget Group, Inc.
125 Basin Street, Suite 210
Daytona Beach, Florida 32114
Attention: Secretary
(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):
The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
(c) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as
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71
the Delaware Trustee may give notice of to the Holders of the Securities):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(d) if given to the Holder of the Common Securities, at the
mailing address of the Depositor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
c/o Budget Group, Inc.
125 Basin Street, Suite 210
Daytona Beach, Florida 32114
Attention: Secretary
(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 principles of conflict of laws. Sections 3540 and
3561 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.
<PAGE> 78
72
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 Depositor 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.
<PAGE> 79
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 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.
Scott R. White,
as Administrative Trustee
/s/ Scott R. White
----------------------------------------
Robert L. Aprati,
as Administrative Trustee
/s/ Robert L. Aprati
----------------------------------------
Michael B. Clauer,
as Administrative Trustee
/s/ Michael B. Clauer
----------------------------------------
BUDGET GROUP, INC.,
as Depositor and Debenture
Issuer
By: /s/ Sanford Miller
-------------------------------------
Name: Sanford Miller
Title: Chairman and CEO
<PAGE> 80
THE BANK OF NEW YORK
(DELAWARE), as Delaware Trustee
By: /s/ Walter N. Gitlin
-------------------------------------
Name: Walter N. Gitlin
Title:
THE BANK OF NEW YORK, as
Property Trustee
By: /s/ Mary La Gumira
-------------------------------------
Name: Mary La Gumira
Title: Assistant Vice President
<PAGE> 81
ANNEX I
TERMS OF
Remarketable Term Income Deferable
Equity Securities (HIGH TIDES(sm)) and
HIGH TIDES Common Securities
Pursuant to Section 7.01 of the Amended and Restated
Declaration of Trust, dated as of June 19, 1998 (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, Indenture or
Remarketing Agreement, as defined in the Offering Circular (as defined in the
Declaration):
1. Designation and Number.
(a) "Preferred Securities." 6,000,000 (or up to 6,900,000 to the
extent the over-allotment option is exercised in full)
Preferred Securities of the Trust with an aggregate
liquidation preference with respect to the assets of the Trust
of Three hundred million Dollars ($300,000,000) (or up to
Three hundred forty-five million Dollars ($345,000,000) to the
extent the over-allotment option is exercised in full), 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 "Remarketable Term Income
Deferrable Equity Securities (HIGH 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." 185,568 (or up to 213,403 to the extent
the over-allotment option is exercised in full) Common
Securities of the Trust with an aggregate liquidation amount
with respect to the assets of the Trust of Nine million, two
hundred and seventy-eight thousand and four hundred Dollars
($9,278,400) (or up to Ten million six
<PAGE> 82
2
hundred seventy thousand one hundred fifty Dollars
($10,670,150) to the extent the over-allotment option is
exercised in full) 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 "HIGH
TIDES 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 accrue at the
Applicable Rate applied to 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. The
Applicable Rate will be 6 1/4% per annum (the "Initial Rate")
from the date of original issuance of the Securities to but
excluding the Reset Date, and the Term Rate from the Reset
Date and thereafter. The Term Rate will be the rate
established by the Remarketing Agent in connection with the
Remarketing to be effective on the Reset Date. The Applicable
Rate will be increased by 0.50% during the continuation of a
Registration Default until such Registration Default is cured.
Distributions in arrears for more than one quarter will bear
interest thereon compounded quarterly at the Applicable Rate
(to the extent permitted by applicable law) 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 and Additional Amounts, 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
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3
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 September 15, 1998, except as
otherwise described below. Each registered Holder of
Securities on June 1, 2005 (including any Holder which has
tendered or is deemed to have tendered its Preferred
Securities for remarketing) shall be paid a Distribution of
interest and Additional Amounts, if any, accrued to (but
excluding) the Reset Date on June 15, 2005 (or, if such day is
not a Business Day, the next succeeding Business Day).
Interest and Additional Amounts, if any, accrued from and
after the Reset Date to (but excluding) September 15, 2005
shall be paid on September 15, 2005 (or, if such day is not a
Business Day, the next succeeding Business Day) to the Person
whose name each Security is registered on the preceding
September 1, subject to the right of the Depositor to initiate
a Deferral Period (as described below). So long as no
Debenture Event of Default has occurred and is continuing, the
Depositor 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 Applicable 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 Depositor
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 (i) the maturity (whether at the stated maturity
or by declaration of acceleration, call for redemption or
otherwise) of the Debentures under the Indenture or (ii) in
the case of a Deferral
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4
Period which begins prior to the Reset Date, the Reset Date.
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 Depositor 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 first day of each March,
June, September and December next preceding 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 HIGH 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 Depositor 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.
<PAGE> 85
5
(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, to the
Holders of the Securities a Like Amount of Debentures, unless such distribution
would not be practical, 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, 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 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.
<PAGE> 86
6
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, payable in cash, 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, (ii) (A) in the case of an Optional
Redemption after June 20, 2001 until but excluding the Tender
Notification Date, the Initial Redemption Price and (B) in the
case of an Optional Redemption on or after the Reset Date, the
Term Redemption Price or (iii) in the case of a Failed Final
Remarketing, 101% of the liquidation amount of each of the
Securities plus any accrued and unpaid Distributions thereon.
(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 Depositor, 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
neither the Depositor nor the Administrative Trustees may
cause the dissolution of the Trust during the period beginning
on the Business Day following the Tender Notification Date and
ending on the Reset Date (other than upon the occurrence of a
Tax Event or an Investment Company Event), provided that the
Administrative Trustees shall have received a No
<PAGE> 87
7
Recognition Opinion (as defined below) prior to the
liquidation of the Trust; and provided further that, following
such distribution of the Debentures, the Depositor shall use
its best efforts to maintain a rating of such Debentures by
any nationally recognized rating agency for so long as any
such Debentures are outstanding.
(d) If, at any time, a Tax Event shall occur and be continuing the
Depositor shall cause the Trustees to dissolve the Trust and,
after satisfaction of the creditors of the Trust, cause a Like
Amount of 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; provided, however,
that such liquidation 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 Preferred 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 Depositor being unable to avoid such
Tax Event within such 90-day period by taking some ministerial
action or pursuing some other reasonable measure that, in the
sole judgment of the Depositor, will have no adverse effect on
the Trust, the Depositor or the Holders of the Preferred
Securities and will involve no material cost ("Ministerial
Action").
If (i) the Depositor 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
Depositor 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 Depositor shall have the
<PAGE> 88
8
right, upon not less than 30 nor more than 60 days' notice,
and within 90 days following the occurrence and continuation
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 Depositor or the Trust the
opportunity to eliminate, within such 90-day period, the Tax
Event by taking some Ministerial Action, the Trust or the
Depositor will pursue such Ministerial Action in lieu of
redemption.
In lieu of the foregoing options, the
Depositor shall also have the option of causing the Securities
to remain outstanding and pay Additional Amounts on the
Debentures.
"Tax Event" means that the Property Trustee
shall have received an opinion of a nationally recognized
independent tax counsel to the Depositor (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 there under) 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
<PAGE> 89
9
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, (x) 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 (y) any portion of interest
payable by the Depositor to the Trust (or OID accruing) on the
Debentures is not, or within 90 days of the date of such
opinion will not be, deductible by the Depositor 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
Depositor (or OID accruing) on the Debentures is not, or
within 90 days of the date of such opinion will not be,
deductible by the Depositor in whole or in part for United
States federal income tax purposes, provided, however, that
clauses (a)(y) and (b) shall not apply if the reason for the
nondeductibility of such interest (or OID) is based on the
particular use (or deemed use) by the Depositor or an
Affiliate of the proceeds of the issuance of the Debentures.
If an Investment Company Event (as
hereinafter defined) shall occur and be continuing, the
Depositor shall cause the Trustees to dissolve the Trust and,
after satisfaction to creditors of the Trust, cause a Like
Amount of 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.
<PAGE> 90
10
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 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 Depositor 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, Distribution and Remarketing
Procedures.
(i) Holders will be given not less than 20 nor more than
40 days notice of an Optional Redemption which is not
an Accelerated Redemption. Holders will be given
five Business Days notice of an Optional Redemption
which is an Accelerated Redemption. Holders will be
given at least 30 days but not more than 60 days
notice of a redemption pursuant to paragraph 4(d).
Notice of distribution of Debentures in exchange for
the Securities will be given by the Trust by mail to
each Holder of Securities to be exchanged not fewer
than 30 nor more than 60 days before the date fixed
for exchange thereof. 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) (other than notices in connection
with an Accelerated Redemption or the Remarketing,
<PAGE> 91
11
the terms of which shall be governed by the Indenture
and/or the Remarketing Agreement, as applicable), a
redemption or 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 or 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 or 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 the Trust
gives a redemption or 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
10:00 a.m., 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 irrevocable instructions and authority to
pay the amount payable on redemption to the Holders
of such Preferred Securities, and
<PAGE> 92
12
(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 or 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 Trust 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
Depositor as guarantor pursuant to the 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 and/or distribution notices, as
applicable, shall be sent by the
<PAGE> 93
13
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 Depositor 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; provided
that neither the Depositor nor any of its Affiliates
may purchase Preferred Securities on the Reset Date
or submit orders in the Remarketing.
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 Tender Notification Date and, in
the event of a Convertible Remarketing which does not fail, from and
after the Reset Date to and including June 15, 2028 (except that
Securities called for redemption by the Depositor will be convertible
at any time prior to 5:00 p.m., New York City time on any Redemption
Date), at their option, to cause the Conversion Agent to convert
Securities, on behalf of the converting Holders, into shares of Common
Stock (as defined in the Indenture) in the manner described herein on
and subject to the following terms and conditions:
(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 on or prior to the
Tender Notification Date, into 1.5179 shares of Common Stock
per $50 principal amount of Debentures (which is equivalent
to a conversion price of $32.94 per share of Common Stock,
subject to certain adjustments set forth in the Indenture (as
<PAGE> 94
14
so adjusted, "Initial Conversion Price")). On and after the
Reset Date, the Securities may, at the option of the Depositor
and subject to the results of the Remarketing, become
nonconvertible or convertible into a different number of
shares of Common Stock.
(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 Trust shall not cause the conversion of any Debentures
except pursuant to such a Conversion Request. 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 5. The Conversion
Agent shall thereupon notify the Depositor 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 Depositor 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
<PAGE> 95
15
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 Depositor
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
The Bank of New York "Conversion Agent" for the purpose of
effecting the conversion of Securities in accordance with this
Section 5. In effecting the conversion and transactions
described in this Section 5, 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
5 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 Depositor to the Trust,
which in turn
<PAGE> 96
16
will make such payment to the Holder or Holders of Securities
so converted.
(e) The Depositor 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 Depositor shall be entitled
to deliver upon conversion of Debentures, shares of Common
Stock reacquired and held in the treasury of the Depositor (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 Depositor
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 Depositor to lawfully issue Common Stock to the
Trust upon conversion of the Debentures and the Trust to
lawfully deliver the Common Stock to each Holder upon
conversion of the Securities.
(f) The Depositor 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 by the Trust upon conversion of the Securities.
The Depositor 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 17
<PAGE> 97
17
registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Trust the amount of any such tax, or has established to the
satisfaction of the Trust 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 - Securities.
(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 Depositor
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 Depositor, or any entity
directly or indirectly controlling or controlled by or under
direct or indirect common control with the Depositor) 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
<PAGE> 98
18
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 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 Depositor 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 and as
long as the Debentures are held by the Trust, the Holders of a
majority in liquidation amount of the outstanding 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 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 5.14 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
<PAGE> 99
19
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 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 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 experienced in such matters 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 an Event of Default under the Declaration 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, subject to the terms of the Indenture (including
the subordination provisions set forth in Article XII
thereof), 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
<PAGE> 100
20
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. In
addition, the Holders of at least 25% in aggregate liquidation
preference of Preferred Securities outstanding shall, to the
fullest extent permitted by law, have the right to institute
suit on behalf of the Trust for the enforcement of the right
to receive payment of the principal of and interest on the
Debentures on or after the Stated Maturity (as defined in the
Indenture) of such Debentures or, in the case of redemption,
on the Redemption Date (as defined in the Indenture), in the
event the Debenture Trustee or the Property Trustee fails to
do so in accordance with the terms of the Indenture.
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 pursuant to written
consent. The Administrative Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are
entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be 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 or the date by which
such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the
delivery of proxies or consents.
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 Depositor or any Affiliate of the Depositor shall
<PAGE> 101
21
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.
(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 5.14 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
<PAGE> 102
22
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, after a period of 30 days has elapsed from
such Holder's written request to the Property Trustee to
enforce such rights and to the fullest extent permitted by
law, institute a legal proceeding directly against the
Depositor, 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 pursuant to written consent. The
Administrative Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of
any matter upon which action by written consent of such
Holders is to be taken, 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 or the
date by which such action is to be taken, (ii) a description
of any resolution proposed for adoption at such meeting on
which such Holders are entitled to vote or of such matter upon
which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to
<PAGE> 103
23
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
<PAGE> 104
24
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 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 a Debenture
Event of Default occurs and is continuing 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 Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Guarantee, including the
subordination
<PAGE> 105
25
provisions therein, and to the provisions of the Indenture including the
subordination provisions therein, which are each 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 Depositor will provide a copy of the Declaration, the
Guarantee, and the Indenture to a Holder without charge on written request to
the Depositor at its principal place of business.
<PAGE> 106
EXHIBIT A-1
FORM OF
PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
[Include the following Restricted Securities Legend on all
Rule 144A Global Preferred Securities unless otherwise determined by the
Depositor in accordance with applicable law -- EACH OF THE HIGH TIDES (OR ITS
PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND EACH
OF THE HIGH TIDES AND ANY HIGH TIDES DEBENTURES ISSUED UPON EXCHANGE FOR THE
HIGH TIDES REPRESENTED HEREBY 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 EACH OF THE
HIGH TIDES IS HEREBY NOTIFIED THAT THE SELLER OF THE HIGH TIDES MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER.
THE HOLDER OF EACH OF THE HIGH TIDES AGREES FOR THE BENEFIT OF
THE ISSUER AND THE COMPANY THAT (A) EACH OF THE HIGH TIDES AND ANY HIGH TIDES
DEBENTURES OR COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) 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.]
[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 TRUST 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.] Certificate Number
<PAGE> 107
2
Number of Preferred Securities
Aggregate Liquidation Value $
[CUSIP NO. [ ]]
Preferred Securities
of
Budget Group Capital Trust
Remarketable Term Income
Deferrable Equity Securities (HIGH TIDES)(sm)*
(liquidation amount $50 per HIGH TIDE)
Budget Group Capital Trust, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
- --------------------------------------------------------------------------------
(the "Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the Remarketable Term Income Deferrable Equity Securities (HIGH
TIDES)(sm)*(liquidation amount $50 per HIGH TIDE) (the "Preferred Securities").
Subject to the restrictions set forth in 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 June 19, 1998, 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 Guarantee to the extent provided
therein. The Depositor will provide a copy of the Declaration, the 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.
- ------------------------
*Credit Suisse First Boston Corporation has filed an application with the United
States Patent and Trademark office for the Remarketable Term Income Deferrable
Equity Securities (HIGH TIDES)(sm) and HIGH TIDES(sm) servicemarks.
<PAGE> 108
3
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 19th day of June, 1998.
Budget Group Capital Trust
By:
--------------------------
Name:
Title: Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
Dated: June 19, 1998
THE BANK OF NEW YORK,
as Property Trustee
By:
-----------------------
Authorized Signatory
<PAGE> 109
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will accrue
at the Applicable Rate applied to 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. The Applicable Rate will be
6 1/4% per annum (the "Initial Rate") from the date of original issuance of the
Securities to be excluding the Reset Date, and the Term Rate from the Reset Date
and thereafter. The Term Rate will be the rate established by the Remarketing
Agent in connection with the Remarketing to be effective on the Reset Date. The
Applicable Rate will be increased by 0.50% during the continuation of a
Registration Default. Distributions in arrears for more than one quarter will
bear interest thereon compounded quarterly at the Applicable 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 and Additional
Amounts, 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 (except as provided below), commencing
on September 15, 1998, to Holders of record at the close of business on the
first of each March, June, September and December next preceding the applicable
payment date, which payment dates shall correspond to the interest payment dates
(each an "Interest Payment Date") on the Debentures. Each registered Holder of
Preferred Securities on June 1, 2005 (including any Holder which has tendered or
is deemed to have tendered its Preferred Securities for remarketing) shall be
paid a Distribution of interest and Additional Amounts, if any, accrued to (but
excluding) the Reset Date on June 15, 2005 (or, if such day is not a Business
Day, the next succeeding Business Day). Interest and Additional Amounts, if any,
accrued from and after the Reset Date to (but excluding) September 15, 2005
shall be paid on September 15, 2005 (or if such day is not a Business Day, the
next succeeding Business Day) to the person in whose name each Preferred
Security is registered on the preceding September 1, subject to the right of the
Depositor to initiate a Deferral Period (as described below). So long as no
Debenture Event of Default has occurred and is continuing, 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 Applicable 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 (i)
the maturity (whether at the stated maturity or by declaration of acceleration,
call for redemption or otherwise) of the Debentures under the Indenture or (ii)
in the case of a Deferral period which begins
<PAGE> 110
2
prior to the Reset Date, the Reset Date. 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.
<PAGE> 111
CONVERSION REQUEST
To: The Bank of New York,
as Property Trustee of
Budget Group 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 (as such term is defined in the
Indenture dated June 19, 1998 between Budget Group, Inc. and The Bank of New
York, as Debenture Trustee) of BUDGET GROUP, INC. in accordance with the terms
of the Amended and Restated Declaration of Trust (as amended from time to time,
the "Declaration"), dated as of June 19, 1998, by Scott R. White, Robert L.
Aprati and Michael B. Clauer as Administrative Trustees, The Bank of New York
(Delaware), as Delaware Trustee, The Bank of New York, as Property Trustee,
Budget Group, Inc., as Depositor, and by the Holders, from time to time, of
undivided beneficial interests in the assets of 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.
<PAGE> 112
2
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
__________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number
__________________________________________
__________________________________________
__________________________________________
Signature Guarantee:** ___________________
- ---------------------
** (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.)
<PAGE> 113
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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:
------------------
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature Guarantee:***
- ----------------------
*** (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.)
<PAGE> 114
2
---------------------
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(c)(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 (2) or (3) 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.
------------------------------------
Signature
<PAGE> 115
3
Signature Guarantee:****
- --------------------------------- ----------------------------
Signature must be guaranteed 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:
----------------------- ----------------------------------------
NOTICE: To be executed by
an executive officer
- -----------------------
**** (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.)
<PAGE> 116
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 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 BUDGET GROUP, INC.]
Certificate Number Number of Common Securities
Common Securities
of
Budget Group Capital Trust
HIGH TIDES Common Securities
(liquidation amount $50 per HIGH TIDES Common Security)
Budget Group Capital Trust, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
- -------------------------------------------------------------------------------
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the HIGH TIDES Common Securities (liquidation amount $50 per
Remarketable Common Security) (the "Common Securities"). Subject to the
restrictions set forth in 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 June 19, 1998, 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 Depositor
will provide a copy of the Declaration and the Indenture to a Holder without
charge upon written request to the Depositor at its principal place of business.
Reference is hereby made to select provisions of the Common
Securities set forth on the reverse hereof, which select provisions
<PAGE> 117
2
shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Depositor 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 19th day of June, 1998.
Budget Group Capital Trust
By:
--------------------------------
Name:
Title: Administrative Trustee
<PAGE> 118
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will accrue at
the Applicable Rate applied to 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. The Applicable Rate will be 6 1/4% per annum (the
"Initial Rate") from the date of original issuance of the Securities to be
excluding the Reset Date, and the Term Rate from the Reset Date and thereafter.
The Term Rate will be the rate established by the Remarketing Agent in
connection with the Remarketing to be effective on the Reset Date. The
Applicable Rate will be increased by 0.50% during the continuation of a
Registration Default. Distributions in arrears for more than one quarter will
bear interest thereon compounded quarterly at the Applicable 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 and Additional Amounts, 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 (except as provided below), commencing
on September 15, 1998, to Holders of record at the close of business on the
first day of each March, June, September and December next preceding the
applicable payment date, which payment dates shall correspond to the interest
payment dates (each, an "Interest Payment Date") on the Debentures. Each
registered Holder of Common Securities on June 1, 2005 shall be paid a
Distribution of interest and Additional Amounts, if any, accrued to (but
excluding) the Reset Date on June 15, 2005 (or, if such day is not a Business
Day, the next succeeding Business Day). Interest and Additional Amounts, if any,
accrued from and after the Reset Date to (but excluding) September 15, 2005
shall be paid on September 15, 2005 (or if such day is not a Business Day, the
next succeeding Business Day) to the person in whose name each Common Security
is registered on the preceding September 1, subject to the right of the
Depositor to initiate a Deferral Period (as described below). So long as no
Debenture Event of Default has occurred and is continuing, 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 Applicable 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 (i)
the maturity (whether at the stated maturity or by declaration of acceleration,
call for redemption or otherwise) of the Debentures under the Indenture or (ii)
in the case of a Deferral Period which begins
<PAGE> 119
2
prior to the Reset Date, the Reset Date. 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;
provided that no Common Securities may be converted into Common Stock unless all
outstanding Common Securities are converted into Common Stock, which conversion
will result in the dissolution of the Trust.
<PAGE> 120
CONVERSION REQUEST
To: The Bank of New York,
as Property Trustee of
Budget Group 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 (as such term is defined in the
Indenture dated June 19, 1998 between Budget Group, Inc. and The Bank of New
York as Debenture Trustee) of BUDGET GROUP, INC. in accordance with the terms of
the Amended and Restated Declaration of Trust (as amended from time to time, the
"Declaration"), dated as of June 19, 1998, by Scott R. White, Robert L. Aprati
and Michael B. Clauer as Administrative Trustees, The Bank of New York
(Delaware), as Delaware Trustee, The Bank of New York, as Property Trustee,
Budget Group, Inc., as Depositor, and by the Holders, from time to time, of
undivided beneficial interests in the assets of 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.
<PAGE> 121
2
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
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number
___________________________________________
___________________________________________
___________________________________________
Signature Guarantee:*
---------------------
- ------------------
* (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.)
<PAGE> 122
3
------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_______________________________________________________________________________
___________________________________________________________________________
____________________________________ 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: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee**:_____________________________________________________
- ----------------------
** (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.)
<PAGE> 1
EXHIBIT 4.4
================================================================================
BUDGET GROUP, INC.
TO
THE BANK OF NEW YORK
TRUSTEE
----------------
INDENTURE
DATED AS OF JUNE 19, 1998
----------------
$309,278,400
(SUBJECT TO INCREASE TO UP TO $355,670,150 IN
THE EVENT AND TO THE EXTENT AN OVER-ALLOTMENT
OPTION IS EXERCISED)
HIGH TIDES DEBENTURES DUE 2028
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions and Other Provisions of
--------------------------------
General Application
-------------------
SECTION 1.01. Definitions............................................................. 3
SECTION 1.02. Compliance Certificates and
Opinions............................................................. 18
SECTION 1.03. Form of Documents Delivered to
Trustee............................................................... 18
SECTION 1.04. Acts of Holders; Record Dates........................................... 19
SECTION 1.05. Notices, Etc., to Trustee and the
Company.............................................................. 21
SECTION 1.06. Notice to Holders; Waiver............................................... 21
SECTION 1.07. Conflict with Trust Indenture Act....................................... 22
SECTION 1.08. Effect of Headings and Table of
Contents............................................................. 22
SECTION 1.09. Successors and Assigns.................................................. 22
SECTION 1.10. Separability Clause..................................................... 22
SECTION 1.11. Benefits of Indenture................................................... 22
SECTION 1.12. Governing Law........................................................... 23
SECTION 1.13. Legal Holidays.......................................................... 23
ARTICLE II
Security Forms
--------------
SECTION 2.01. Forms Generally......................................................... 23
SECTION 2.02. Initial Issuance to Property
Trustee............................................................... 24
SECTION 2.03. Additional Provisions Required in
Global Security...................................................... 24
SECTION 2.04. Issuance of Global Securities to
Holders.............................................................. 25
ARTICLE III
The Securities
--------------
SECTION 3.01. Title and Terms......................................................... 26
SECTION 3.02. Denominations........................................................... 28
SECTION 3.03. Execution, Authentication, Delivery and
Dating............................................................... 28
SECTION 3.04. Temporary Securities.................................................... 28
SECTION 3.05. Global Securities....................................................... 29
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 3.06. Registration, Transfer and Exchange
Generally; Certain Transfers and
Exchanges............................................................ 30
SECTION 3.07. Mutilated, Destroyed, Lost and Stolen
Securities........................................................... 34
SECTION 3.08. Payment of Interest; Interest Rights
Preserved............................................................ 35
SECTION 3.09. Persons Deemed Owners................................................... 37
SECTION 3.10. Cancelation............................................................. 37
SECTION 3.11. Right of Set Off........................................................ 38
SECTION 3.12. CUSIP Numbers........................................................... 38
SECTION 3.13. Extension of Interest Payment Period;
Notice of Extension.................................................. 38
SECTION 3.14. Paying Agent, Security Registrar and
Conversion Agent..................................................... 39
ARTICLE IV
Satisfaction and Discharge
--------------------------
SECTION 4.01. Satisfaction and Discharge of
Indenture............................................................. 40
SECTION 4.02. Application of Trust Money.............................................. 41
ARTICLE V
Remedies
--------
SECTION 5.01. Events of Default....................................................... 41
SECTION 5.02. Acceleration of Maturity; Rescission
and Annulment........................................................ 43
SECTION 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee........................................... 46
SECTION 5.04. Trustee May File Proofs
of Claim............................................................. 46
SECTION 5.05. Trustee May Enforce Claims Without
Possession of Securities............................................. 47
SECTION 5.06. Application of Money Collected.......................................... 47
SECTION 5.07. Limitation on Suits..................................................... 47
SECTION 5.08. Unconditional Right of Holders to
Receive Principal and Interest and
Convert.............................................................. 48
SECTION 5.09. Restoration of Rights and Remedies...................................... 49
SECTION 5.10. Rights and Remedies Cumulative.......................................... 49
SECTION 5.11. Delay or Omission Not Waiver............................................ 49
SECTION 5.12. Control by Holders...................................................... 49
SECTION 5.13. Waiver of Past Defaults................................................. 50
SECTION 5.14. Undertaking for Costs................................................... 50
SECTION 5.15. Waiver of Stay or Extension Laws........................................ 50
SECTION 5.16. Enforcement by Holders of Preferred
Securities........................................................... 51
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE VI
The Trustee
-----------
SECTION 6.01. Certain Duties and Responsibilities..................................... 51
SECTION 6.02. Notice of Defaults...................................................... 52
SECTION 6.03. Certain Rights of Trustee............................................... 52
SECTION 6.04. Not Responsible for Recitals or
Issuance of Securities............................................... 54
SECTION 6.05. May Hold Securities..................................................... 54
SECTION 6.06. Money Held in Trust..................................................... 54
SECTION 6.07. Compensation and Reimbursement.......................................... 54
SECTION 6.08. Disqualification; Conflicting
Interests............................................................. 55
SECTION 6.09. Corporate Trustee Required;
Eligibility........................................................... 55
SECTION 6.10. Resignation and Removal; Appointment of
Successor............................................................ 55
SECTION 6.11. Acceptance of Appointment by
Successor............................................................. 57
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business............................................... 57
SECTION 6.13. Preferential Collection of Claims
Against Company...................................................... 58
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
-------------------------------------------------
SECTION 7.01. Company to Furnish Trustee Names and
Addresses of Holders................................................. 58
SECTION 7.02. Preservation of Information;
Communications to Holders............................................ 58
SECTION 7.03. Reports by Trustee...................................................... 59
SECTION 7.04. Reports by Company...................................................... 59
SECTION 7.05. Tax Reporting .......................................................... 59
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
----------------------------------------------------
SECTION 8.01. Company May Consolidate, Etc., Only on
Certain Terms........................................................ 60
SECTION 8.02. Successor Substituted................................................... 61
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE IX
Supplemental Indentures
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent
of Holders........................................................... 61
SECTION 9.02. Supplemental Indentures with Consent of
Holders.............................................................. 62
SECTION 9.03. Execution of Supplemental
Indentures............................................................ 63
SECTION 9.04. Effect of Supplemental
Indentures............................................................ 64
SECTION 9.05. Conformity with Trust Indenture
Act................................................................... 64
SECTION 9.06. Reference in Securities to Supplemental
Indentures........................................................... 64
ARTICLE X
Covenants; Representations and Warranties
-----------------------------------------
SECTION 10.01. Payment of Principal and Interest....................................... 64
SECTION 10.02. Maintenance of Office or Agency......................................... 65
SECTION 10.03. Money for Security Payments to Be Held
in Trust............................................................. 65
SECTION 10.04. Statement by Officers as to
Default............................................................... 66
SECTION 10.05. Limitation on Dividends; Transactions
with Affiliates; Covenants as to the
Trust................................................................ 66
SECTION 10.06. Payment of Expenses of the Trust........................................ 68
SECTION 10.07. Registration Rights..................................................... 68
ARTICLE XI
Redemption of Securities
------------------------
SECTION 11.01. Optional Redemption..................................................... 69
SECTION 11.02. Mandatory Redemption Upon Failed Final
Remarketing.......................................................... 71
SECTION 11.03. Tax Event Redemption.................................................... 71
SECTION 11.04. Redemption at Stated Maturity........................................... 72
SECTION 11.05. Selection by Trustee of Securities to
Be Redeemed.......................................................... 72
SECTION 11.06. Notice of Redemption.................................................... 73
SECTION 11.07. Deposit of Redemption Price............................................. 73
SECTION 11.08. Securities Payable on
Redemption Date...................................................... 74
SECTION 11.09. Securities Redeemed in Part............................................. 74
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE XII
Subordination of Securities
---------------------------
SECTION 12.01. Agreement to Subordinate................................................ 75
SECTION 12.02. Default on Senior Debt.................................................. 75
SECTION 12.03. Liquidation; Dissolution;
Bankruptcy............................................................ 77
SECTION 12.04. Subrogation............................................................. 78
SECTION 12.05. Trustee to Effectuate
Subordination......................................................... 80
SECTION 12.06. Notice by the Company................................................... 80
SECTION 12.07. Rights of the Trustee; Holders of
Senior Debt.......................................................... 81
SECTION 12.08. Subordination May Not Be Impaired....................................... 81
ARTICLE XIII
Conversion of Securities
------------------------
SECTION 13.01. Conversion Rights....................................................... 82
SECTION 13.02. Conversion Procedures................................................... 83
SECTION 13.03. Conversion Price Adjustments............................................ 86
SECTION 13.04. Reclassification, Consolidation, Merger
or Sale of Assets.................................................... 92
SECTION 13.05. Notice of Adjustments of Conversion
Price................................................................ 93
SECTION 13.06. Prior Notice of Certain Events.......................................... 93
SECTION 13.07. Adjustments in Case of Fundamental
Changes.............................................................. 94
SECTION 13.08. Dividend or Interest Reinvestment
Plans................................................................. 98
SECTION 13.09. Certain Additional Rights............................................... 98
SECTION 13.10. Restrictions on Common Stock Issuable
Upon Conversion...................................................... 99
SECTION 13.11. Trustee Not Responsible for Determining
Conversion Price or Adjustments...................................... 99
</TABLE>
EXHIBT A Form of Security
v
<PAGE> 7
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ----------
<S> <C>
ss. 310(a)(1)....................................................................... 6.09
(a)(2)....................................................................... 6.09
(a)(3)....................................................................... Not Applicable
(a)(4)....................................................................... Not Applicable
(b).......................................................................... 6.08, 6.10
ss. 311(a).......................................................................... 6.13
(b).......................................................................... 6.13
ss. 312(a).......................................................................... 7.01
7.02(a)
(b).......................................................................... 7.02(b)
(c).......................................................................... 7.02(c)
ss. 313(a).......................................................................... 7.03(a)
(a)(4)....................................................................... 7.03(a)
(b).......................................................................... 7.03(a)
(c).......................................................................... 7.03(a)
(d).......................................................................... 7.03(b)
ss. 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
ss. 315(a).......................................................................... 6.01
6.03
(b).......................................................................... 6.02
(c).......................................................................... 6.01
(d).......................................................................... 6.01
(e).......................................................................... 5.14
ss. 316(a)(1)(A).................................................................... 5.02
5.12
(a)(1)(B).................................................................... 5.13
(a)(2)....................................................................... Not Applicable
(b).......................................................................... 5.08
(c).......................................................................... 1.04(c)
ss. 317(a)(1)....................................................................... 5.03
(a)(2)....................................................................... 5.04
(b).......................................................................... 1.003
ss. 318(a).......................................................................... 1.07
</TABLE>
Note: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Indenture.
vi
<PAGE> 8
INDENTURE, dated as of June 19, 1998, between
Budget Group, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (herein
called the "Company") having its principal office at 125
Basin Street, Suite 210, Daytona Beach, Florida 32114, and
The Bank of New York, a New York banking corporation, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS Budget Group Capital Trust, a Delaware business trust (the
"Trust"), governed by the Amended and Restated Declaration of Trust among the
Company, as Sponsor, The Bank of New York, as property trustee (the "Property
Trustee"), and The Bank of New York (Delaware), as Delaware trustee (the
"Delaware Trustee"), and Scott R. White, Robert L. Aprati and Michael B. Clauer,
as trustees (together with the Property Trustee and the Delaware Trustee, the
"Issuer Trustees"), dated as of June 19, 1998 (the "Declaration"), pursuant to
the Purchase Agreement (the "Purchase Agreement") dated June 16, 1998, among the
Company, the Trust and the Initial Purchasers named therein, will issue and sell
up to 6,000,000 of its Remarketable Term Income Deferrable Equity Securities
(HIGH TIDES) (or up to 6,900,000 to the extent the over-allotment option is
exercised in full) (the "Preferred Securities") with a liquidation preference of
$50 per Preferred Security, having an aggregate liquidation amount with respect
to the assets of the Trust of up to $300,000,000 (or up to $345,000,000 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 185,568 Common Securities (or up to 213,403 Common Securities to the
extent the over-allotment option is exercised in full), with a liquidation
preference of $50 per Common Security, having an aggregate liquidation amount
with respect to the assets of the Trust of up to $9,278,400 (or up to
$10,670,150 to the extent the over-allotment option is exercised in full), (the
"Common Securities");
WHEREAS the Trust will use the proceeds from the sale of the
Preferred Securities and the Common Securities to purchase from the Company
Securities (as defined below)
<PAGE> 9
2
in an aggregate principal amount of up to $309,278,400 (or up to $355,670,150 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 Guarantee Agreement (the "Guarantee") between the Company and
The Bank of New York, as Guarantee Trustee, for the benefit of the Holders of
the Trust Securities from time to time;
WHEREAS the Company has duly authorized the creation of an issue of
its HIGH TIDES Debentures Due 2028 (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;
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);
WHEREAS, the Company and the Remarketing Agent (as defined herein)
have entered into a Remarketing Agreement (as defined herein) dated as of the
date hereof pursuant to which such Remarketing Agent has agreed to use its best
efforts to (i) remarket all Preferred Securities tendered for remarketing (the
"Remarketing") and (ii) establish, beginning on the Reset Date (as defined
herein), (a) the rate at which distributions will accrue on the Preferred
Securities, (b) the number of shares of Common Stock, if any, into which each
Preferred Security may be converted and (c) the price, manner and time, if any,
at which the Preferred Securities may be redeemed; 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.
<PAGE> 10
3
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 I
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.
"Accelerated Redemption" has the meaning specified in
Section 11.01(a).
"Act", when used with respect to any Holder, has the
meaning specified in Section 1.04.
"Additional Amounts" has the meaning specified in
Section 3.01.
"Additional Payments" means Compounded Interest and
Additional Amounts, if any.
"Additional Sums" has the meaning specified in
Section 3.01.
<PAGE> 11
4
"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. From the
date of original issuance of the Securities to (but excluding) the Reset Date,
the Applicable Rate shall be 6 1/4% per annum (the "Initial Rate"). Beginning
with and after the Reset Date, the Applicable Rate shall be the Term Rate (as
defined in herein). In the event of a Registration Default, the Applicable Rate
shall increase by .50%, subject to 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.
<PAGE> 12
5
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in The City of New York 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.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
"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 under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" has the meaning specified in the
Second Recital to this instrument.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Article XIII, shares issuable on conversion of Securities
shall include only shares of the class designated as Class A Common Stock of the
Company at the date of this instrument or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which are not subject to redemption by the Company; provided, that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable on conversion shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Common Stock Fundamental Change" has the meaning
specified in Section 13.07(b).
"Common Stock Offering" means any sale or sales of Common Stock by
the Company, in any manner, the closing or
<PAGE> 13
6
closings of which occur not more than 90 days prior to an Optional Redemption
Notification Date.
"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.
"Convertible Remarketing" means the remarketing of the Preferred
Securities in the Remarketing as securities which will be convertible into
Common Stock.
"Corporate Trust Office" means the principal office of the Trustee in
New York, New York, at which at any particular time its corporate trust business
shall be administered and which at the date of this Indenture is 101 Barclay
Street, Floor 21 West, New York, New York 10286.
"Declaration" has the meaning specified in the Recitals of 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
<PAGE> 14
7
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 Notice" has the meaning specified in Section 3.13.
"Deferral Period" has the meaning specified in Section 3.13.
"Delaware Trustee" has the meaning given it in the first recital of
this instrument.
"Depositary" means the Depository Trust Company, or any successor
thereto.
"Designated Senior Debt" means (i) any obligation under the Senior
Credit Agreement and (ii) any other Senior Debt the principal amount of which is
$50 million or more and that has been designated by the Company as "Designated
Senior Debt" in the instruments governing such Senior Debt.
"Direct Action" has the meaning specified in Section 5.16.
"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.
"ex" date has the meaning specified in Section 13.03.
"Expiration Date" has the meaning specified in Section 1.04(d).
"Expiration Time" has the meaning specified in Section 13.03(vi).
<PAGE> 15
8
"Failed Final Remarketing" has the meaning specified in Section 2(d)
of the Remarketing Agreement.
"Failed Remarketing Redemption Price" has the meaning specified in
Section 11.02.
"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 or a Person in whose name a Preferred Security is registered
in the List of Holders, as the case may be.
"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, and Goldman, Sachs & Co., J.P. Morgan
Securities Inc., ABN AMRO Incorporated, BT Alex. Brown Incorporated, McDonald &
Company Securities, Inc. and NationsBanc Montgomery Securities LLC.
"Initial Rate" has the meaning specified in the definition of
Applicable Rate in this Section 1.01.
"Initial Redemption Price" has the meaning specified in Section
11.01.
<PAGE> 16
9
"Interest Payment Date" has the meaning specified in Section 3.01.
"Issuer Trustees" has the meaning specific in the First Recital of
this Indenture.
"List of Holders" has the meaning specified in the Declaration.
"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 acceler
ation, call for redemption or otherwise.
"90 Day Period" has the meaning specified in Section 11.03.
"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 the receipt by the Property Trustee of
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 Preferred 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.
"Notice of Default" has the meaning specified in Section 5.01.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under, or with respect to, any Debt (including claims for rescission).
<PAGE> 17
10
"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.
"OID" means original issue discount.
"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(a).
"Optional Redemption Date" means the date which is (i) 20 to 40 days
following the Optional Redemption Notification Date, as specified in the
Optional Redemption Notice (or if such date is not a Business Day, the next
succeeding Business Day) or (ii) in the event that the Company decides to make
an Accelerated Redemption, five Business Days following the Optional Redemption
Notification Date.
"Optional Redemption Notice" has the meaning specified in Section
11.01(b).
"Optional Redemption Notification Date" has the meaning set forth in
Section 11.01(b).
"Optional Redemption Price" has the meaning specified in Section
11.01(a).
"Optional Redemption Ratio" has the meaning specified in Section
13.07(a)(i).
"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 cancelation; (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
<PAGE> 18
11
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 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 specified in Section 3.13.
"Person" means any individual, corporation, limited liability
company, company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"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 Recitals to
this instrument.
"Primary Treasury Dealer" has the meaning specified in the
Remarketing Agreement.
"Property Trustee" has the meaning specified in the Recitals of 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).
<PAGE> 19
12
"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 the receipt by the Property Trustee of
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 (as defined herein), 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).
"Reference Treasury Dealer" has the meaning specified in the
Remarketing Agreement.
"Reference Treasury Dealer Quotations" has the meaning specified in
the Remarketing Agreement.
"Registrable Securities" has the meaning specified in Section 10.07.
"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).
"Remarketing" has the meaning specified in the Seventh Recital to
this instrument.
"Remarketing Agent" means an investment bank, broker, dealer, or
other organization which, in the opinion of the Company, is qualified to
remarket the Preferred
<PAGE> 20
13
Securities substantially in accordance with the terms of the Remarketing
Agreement. The initial Remarketing Agent shall be Credit Suisse First Boston
Corporation. The term "Remarketing Agent" shall also include any successor
Person appointed as such by the Company.
"Remarketing Agreement" means the Remarketing Agreement with the
Remarketing Agent dated the date hereof substantially in the form set forth in
Exhibit B to this Indenture and any substantially similar agreement entered into
by the Company with any successor Remarketing Agent.
"Reset Date" means June 15, 2005 (or, if such day is not a Business
Day, the next succeeding Business Day), or such earlier day as may be determined
by the Remarketing Agent, in its sole discretion, for settlement of a successful
remarketing.
"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 having direct
responsibility for the administration of this Indenture, 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(h) 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 Fifth Recital to this
instrument.
"Securities Act" means the Securities Act of 1933.
<PAGE> 21
14
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.06.
"Senior Credit Agreement" means that certain Amended and Restated
Credit Agreement, dated on or about June 19, 1998, by and among the Company, the
lenders parties thereto, Credit Suisse First Boston, as a co-arranger, a
co-syndication agent and the administrative agent, and NationsBanc Montgomery
Securities LLC, as a co-arranger, a co-syndication agent and the documentation
agent, including, without limitation, any related notes, letters of credit,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and, in each case, as amended, amended and restated,
modified, renewed, refunded, replaced or refinanced from time to time, including
any agreement (i) extending or shortening the maturity of any obligation
incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers
or guarantors thereunder and (iii) increasing the amount of credit extended, or
available to be extended, thereunder.
"Senior Debt" means (i) all obligations of the Company under the
Senior Credit Agreement, including, without limitation, principal (including,
without limitation, reimbursement obligations in respect of letters of credit
(whether or not drawn) and obligations to cash collateralize letters of credit),
premium (if any), interest (including, without limitation, interest accruing
subsequent to the filing of, or which would have accrued but for the filing of,
a petition for bankruptcy, whether or not such interest is an allowable claim in
such bankruptcy proceeding), fees, indemnifications, expenses and other amounts
payable pursuant thereto, (ii) the principal of, and premium and interest, if
any, on all indebtedness of the Company for money borrowed, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, (iii) 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 (ii) and (iii) 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, (iv) and indebtedness or obligations of others of the kind
described in (i), (ii) and (iii) above for the payment of which the Company is
responsible or liable as guarantor or
<PAGE> 22
15
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.
"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 or Additional Payments thereon,
means the date specified in such Security as the fixed date on which the
principal, together with any accrued and unpaid interest (and Additional
Payments, if any), of such Security or such installment of interest or
Additional Payments is due and payable.
"Stated Maturity Price" has the meaning specified in Section 11.04.
"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.
<PAGE> 23
16
"Tax Event" means the receipt by the Property Trustee of an opinion
of a nationally recognized independent tax counsel to the Company (reasonably
acceptable to the Issuer Trustees) 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 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 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 (or OID accruing) 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 (or OID accruing) 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, provided, however, that clauses (x)(ii) and (y) shall not apply if
the reason for the nondeductibility of such interest (or OID) is based on the
particular use (or deemed use) by the Company or an Affiliate of the proceeds of
the issuance of the Securities.
"Tender Notification Date" means Friday, May 20, 2005, or if such day
is not a Business Day, the next succeeding Business Day.
<PAGE> 24
17
"Term Call Protections" means the price, manner and time, if any, at
which the Securities may be redeemed with the proceeds of a Common Stock
Offering after the Reset Date. The Term Call Protections, if any, will be
established in connection with the Remarketing.
"Term Provisions" shall have the meaning specified in the Remarketing
Agreement.
"Term Rate" means the rate established by the Remarketing Agent in
connection with the Remarketing at which distributions shall accrue on the
Securities from and after the Reset Date.
"Term Redemption Price" has the meaning specified in Section
11.01(a).
"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" means Common Securities and Preferred Securities.
"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.
<PAGE> 25
18
SECTION 1.02. 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:
(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
<PAGE> 26
19
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 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
<PAGE> 27
20
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 of 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.
<PAGE> 28
21
(e) The ownership of Securities shall be proved by the Security
Register.
(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 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
or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company addressed
to it at the address of its principal office specified in the first paragraph
of this instrument or at any other address previously furnished in writing to
the Trustee by the Company.
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
<PAGE> 29
22
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
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
<PAGE> 30
23
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, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
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 (and Additional Payments, if any) 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, if such Business Day is in the
next succeeding calendar year, such Interest Payment Date, Redemption Date or
Stated Maturity, as the case may be, 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
<PAGE> 31
24
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 COMMON STOCK OF THE
COMPANY 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 COMMON STOCK OF THE COMPANY ISSUABLE
UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (i) 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
<PAGE> 32
25
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 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) TO BUDGET GROUP, INC. 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 will 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.
<PAGE> 33
26
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 (a) $309,278,400 and (b) such aggregate principal amount
(which may not exceed $46,391,750 aggregate principal amount) of Securities, if
any, as shall be purchased by the Trust pursuant to an over-allotment option in
accordance with the terms and provisions of the Purchase Agreement, 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, 11.09 or 13.01.
The Securities shall be known and designated as the "HIGH TIDES
Debentures Due 2028" of the Company. Their Stated Maturity shall be June 15,
2028, and they shall bear interest at the Applicable Rate, from June 19, 1998,
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 September 15, 1998 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 each March, June, September and December next preceding the applicable
Interest Payment Date (the "Regular Record Date"). Each registered Holder of
Securities on June 1, 2005 (including any Holder which has tendered or is deemed
to have tendered its Securities for remarketing) shall be paid interest and
Additional Payments, if any, accrued to (but excluding) the Reset Date on June
15, 2005 (or, if such day is not a Business Day, the next succeeding Business
Day). Interest and Additional Payments, if any, accrued from and after the Reset
Date to (but excluding) September 15, 2005 shall be paid on September 15, 2005
(or, if such day is not a Business Day, the next succeeding Business Day) to the
Person in whose name each Security is registered on the preceding September 1,
subject to the right of the Company to initiate a Deferral Period. 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.
<PAGE> 34
27
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), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case 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 ("Additional Sums") (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 on the Securities
held by the Property Trustee, such additional amounts ("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 (and Additional Payments, if any) 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.
<PAGE> 35
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The Securities shall be convertible as provided in Article XIII
hereof.
SECTION 3.02. Denominations. The Securities shall be issuable only in
registered form without coupons and only in denominations of $50 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. 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 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 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.
<PAGE> 36
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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 cancelation 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
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 cancelation 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 cancelation as provided
in this Article III or
<PAGE> 37
30
(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 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.
<PAGE> 38
31
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 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 11.05 and ending at the close of business
on the day of such mailing or (ii) to register the transfer of or
<PAGE> 39
32
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
<PAGE> 40
33
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.
(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 rescind any restriction on the transfer of
<PAGE> 41
34
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 in 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, 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.
<PAGE> 42
35
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 (and Additional Payments, if any) 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, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest as
in this clause provided. Thereupon the Trustee shall fix a special record
date (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
<PAGE> 43
36
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 regis tered 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 shall 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 (including in each such case Additional Payments),
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 (and Additional Payments, if any) (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
<PAGE> 44
37
Date. Except as otherwise expressly provided in the immediately preceding
sentence, 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 (and Additional Payments, if any) 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 (and
Additional Payments, if any) on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary. 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. Cancelation. 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 cancelation 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;
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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 (i) the maturity
(whether at June 15, 2028 or by declaration of acceleration, call for redemption
or otherwise) or (ii) in the case of a Deferral Period that begins prior to the
Reset Date, the Reset Date. 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 Additional Payments), 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
<PAGE> 46
39
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters or extend beyond (i) the maturity (whether at
June 15, 2028 or by declaration of acceleration, call for redemption or
otherwise) or (ii) in the case of a Deferral Period that begins prior to the
Reset Date, the Reset Date. 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 Securi ty 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 Compounded
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 Compounded 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,
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co-registrar or Conversion Agent without prior notice. The Company or any of its
Affiliates may act in any such capacity.
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 cancelation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancelation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) 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 cancelation, for principal and
<PAGE> 48
41
interest (and Additional Payments, if any) 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.
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 (and Additional Payments, if any) 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 Article XII or be voluntary or
involuntary or be effected by
<PAGE> 49
42
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 or premium, if any, 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 90 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in 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
(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
<PAGE> 50
43
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) in the event of a Failed Final Remarketing, the failure of the
Company to redeem the outstanding Securities in whole at 101% of their
aggregate principal amount, plus interest and Additional Payments, if any, on
the Reset Date; or
(8) the failure of the Company to repay the full amount of the Stated
Maturity Price on June 15, 2028 with the proceeds of the sale of
nonconvertible preferred securities or nonconvertible trust-preferred
securities of the Company in accordance with the provisions of Section 11.04;
or
(9) 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 out standing
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
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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
(and Additional Payments, if any) shall become immediately due and payable; and
provided further that any such declaration will not be effective until the
earlier to occur of (i) ten business days after receipt by the Company and the
administrative agent under the Senior Credit Agreement of written notice of such
declaration and (ii) acceleration of obligations under the Senior Credit
Agreement. The Holders of a majority in aggregate principal amount of the
Outstanding Securities of a series may annul such declaration and waive the
default by written notice to the Property Trustee, the Company and the Trustee
if the default (other than the nonpayment of the principal of these Securities
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest (and Additional Payments,
if any) and principal due otherwise than by acceleration has been deposited with
the Trustee. Should the Holders of the Securities of such a series fail to annul
such declaration and waive such default, the Holders of a majority in aggregate
liquidation amount of the Preferred Securities shall have such right. Upon the
effectiveness of any such declaration such principal amount (or specified
amount) of and the accrued interest (including any Additional Payments) on all
the Securities of such series shall then become immediately due and payable;
provided that the payment of principal and interest on, and all other
Obligations relating to, 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 hereinafter, the Holders of a
majority in aggregate principal amount of the Outstanding Securities, 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 and Additional Payments
on all Securities,
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and interest (and
Additional
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45
Payments, if any) 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.
Upon receipt by the Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, with respect to Securities
all or part of which are represented by a Global Security, a record date shall
be established for determining Holders of such Outstanding Securities entitled
to join in such notice, which record date shall be at the close of business on
the day the Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to join
in such notice, whether or not such Holders remain Holders after such record
date; provided, however, that, unless such declaration of acceleration, or
rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of
a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.02.
<PAGE> 53
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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 or any Additional
Payments on any Security when such interest or Additional Payments become 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 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 Payments), 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
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47
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:
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 Additional Payments), respectively; and
THIRD: The balance, if any, to the Person or Persons
entitled thereto.
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
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48
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 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 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
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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; and
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(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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 Additional Payments, if any) and principal due other wise 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 (and Additional Payments, if any) 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
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51
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.
SECTION 5.16. Enforcement by Holders of Preferred Securities.
Notwithstanding anything to the contrary contained herein, but subject to
Article XII, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest, Additional
Payments or principal on the Securities on the date such interest, Additional
Payments 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, interest
or Additional Payments on the Securities having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such Holder (a
"Direct Action") on or after the 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 (and Additional Payments,
if any) on the Securities held by the Trust or the Property Trustee, and the
Company shall be subrogated to the rights of the Holders of such Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payments made by the Company to such Holders 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, the
Trustee shall exercise such of the rights
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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) At the direction of the Remarketing Agent, the Trustee shall (i)
select the Primary Treasury Dealer to be a Reference Treasury Dealer and (ii)
determine the Reference Treasury Dealer Quotations, both in accordance with the
terms of the Remarketing Agreement. In addition, if the Securities are no longer
held by the Property Trustee, the Trustee shall act as Tender Agent in
accordance with the provisions of the Remarketing Agreement.
(d) 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.
SECTION 6.02. Notice of Defaults. The Trustee shall give the Holders
notice of any default hereunder 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 "de fault" 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;
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(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;
(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; and
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(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.
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);
(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
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(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.
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 New
York, New York. 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 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
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Outstanding Securities, delivered to the Trustee and to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of removal or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(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
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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 and the agent or representative for the holders of all Designated Senior
Debt 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 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
corporation 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
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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).
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
(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
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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, 1999, 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
Trust Indenture Act; provided, that any such information, documents or reports
required to be filed with the Commission pursuant 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.
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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 its properties and assets
substantially as an entirety 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, such properties and assets
substantially as an entirety 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, 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 supple mental indenture, comply with
this Article and
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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. 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
(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
materially adversely affect the interests of the Holders of the Securities
or, so long as any of the
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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 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, any 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, any Security or interest or any Additional Payments
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 any 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) change the Reset Date,
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(3) 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
(4) 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 principal
amount of such Preferred Securities then outstanding which is at least equal to
the percentage of aggregate stated liquidation amount of 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
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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 execu tion of such
supplemental indenture is authorized or permit ted 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.
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, interest and Additional Payments, if
any, on the Securities in accordance with the terms of the Securities and this
Indenture.
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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.
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, interest or Additional Payments, if any, 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, interest or
Additional Payments, if any, 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, interest or Additional Payments, if
any, on any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal, interest or Additional Payments, if any, 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.
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66
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, interest or
Additional Payments, if any, on any Security and remaining unclaimed for two
years after such principal, interest or Additional Payments, if any, 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.
SECTION 10.05. Limitation on Dividends; Transactions
with Affiliates; Covenants as to the Trust.
<PAGE> 74
67
(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, or any extension thereof, 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 or distributions
which consist of stock of the same class as that on which the dividend or
distribution is 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 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) that it shall directly
or indirectly maintain 100% ownership of the Common Securities of the Trust;
provided, however, that any permitted successor of the Company hereunder may
succeed to the Company's ownership of such Common Securities and (ii) that it
shall use its reasonable efforts, consistent with the terms and provisions of
the Declaration, to cause the Trust (x) to remain a statutory business trust,
except in connection with the distribution of the Securities to the holders of
Trust Securities in liquidation of the Trust, the redemption of all of the Trust
<PAGE> 75
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Securities of the Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, and (y) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes.
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 Securi ties) 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 underwriters 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 and the Guarantee and the shares of Common Stock
issuable upon conversion of the Securities (collectively, the "Registrable
Securities") are entitled to the benefits of a Registration Rights Agreement,
dated as of June 19, 1998, 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
<PAGE> 76
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agreed for the benefit of the holders of the Registrable Securities that they
will (i) at the Company's sole expense, prior to August 18, 1998 file a shelf
registration statement (the "Shelf Registration Statement") with the Commission
with respect to resales of the Registrable Securities, (ii) use their best
efforts to cause such Shelf Registration Statement to be declared effective
under the Securities Act prior to October 19, 1998 and (iii) use their best
efforts to maintain such Shelf Registration Statement continuously effective and
useable for two years or such other period as shall be required under Rule
144(k) under the Securities Act or any successor rule thereto or, if earlier,
such time as all of the applicable Registrable Securities have been sold
thereunder (except that the Company will be permitted to suspend the use of the
Shelf Registration Statement during certain periods under certain circumstances
specified in the Registration Rights Agreement). If the Company fails to comply
with any of clauses (i) through (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.
ARTICLE XI
Redemption of Securities
SECTION 11.01. Optional Redemption. (a) The Company shall have the
right to redeem the Securities solely from the proceeds of a Common Stock
Offering (an "Optional Redemption") (i) in whole or in part, at any time or from
time to time, prior to the Reset Date but on or after June 20, 2001 until (but
excluding) the Tender Notification Date, at a Redemption Price (the "Initial
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 June 15:
<TABLE>
<CAPTION>
Price Per $50
Principal
Year Amount
---- ------
<S> <C>
2002 $51.5625
</TABLE>
<PAGE> 77
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<TABLE>
<S> <C>
2003 51.0417
2004 50.5208
2005 50.00
</TABLE>
and (ii) after the Reset Date, in accordance with the Term Call Protections, if
any, established in the Remarketing (any Redemption Price so established in the
Remarketing, the "Term Redemption Price", and, together with the Initial
Redemption Price, an "Optional Redemption Price"). The Company may make an
Optional Redemption on an accelerated basis (an "Accelerated Redemption")
whenever, on an Optional Redemption Notification Date (as defined in Section
11.01(b)), the Closing Price of the Common Stock on New York Stock Exchange
Composite Tape for each of the five Trading Days prior to such Optional
Redemption Notification Date was equal to or greater than 125% of the Applicable
Conversion Price.
(b) If the Company desires to consummate an Optional Redemption, it
must cause to be sent, at its own expense, notice of such intent (an "Optional
Redemption Notice"), via first-class mail, postage prepaid, within 90 days
following the closing of the applicable Common Stock Offering (the "Optional
Redemption Notification Date") to each Holder of Securities (and, if the
Preferred Securities are still outstanding, to each Holder of the corresponding
Preferred Securities) to be redeemed, at such Holder's address appearing in the
Security Register and the List of Holders, if applicable; provided that in the
case of an Accelerated Redemption, the Optional Redemption Notice must be
received by such Holders not later than the Business Day immediately following
the Optional Redemption Notification Date. Holders receiving an Optional
Redemption Notice have the right, upon notification of the Trustee and the
Conversion Agent prior to the Optional Redemption Date, to convert their
Securities called for redemption into Company Common Stock at the Applicable
Conversion Ratio on or prior to the Optional Redemption Date in compliance with
Article XIII hereof.
(c) In the case of any Optional Redemption or Accelerated Redemption,
the Company must notify the Trustee and the Property Trustee in writing of the
Optional Redemption Date, the principal amount of Securities to be redeemed and
provide a copy of the Optional Redemption Notice (i) in the case of an Optional
Redemption, within 2 Business Days following the closing of the applicable
Common Stock Offering and (ii) in the case of an Accelerated
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Redemption, on the date that the applicable Common Stock Offering commences, or
as soon as practicable thereafter.
SECTION 11.02. Mandatory Redemption Upon Failed Final Remarketing. In
the event of a Failed Final Remarketing, the Company shall be required to redeem
the Securities in whole, and not in part, on the Reset Date at 101% of the
principal amount thereof, plus accrued and unpaid interest, including Additional
Payments, if any, to the Redemption Date (the "Failed Remarketing Redemption
Price"). In the event of a Failed Final Remarketing, the failure of the Company
to redeem all the Outstanding Securities on the Reset Date shall constitute an
Event of Default.
SECTION 11.03. Tax Event Redemption. (a) If a Tax Event has occurred
and is continuing and:
(1) the Company has received a Redemption Tax Opinion; or
(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 30 days nor more than
60 days notice to the Holders of the Securities and within 90 days following the
occurrence and continuation of a Tax Event 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.
<PAGE> 79
72
(b) In the event that the Company redeems the Securities
pursuant to Section 11.03(a), Holders shall have the right upon notification of
the Trustee and the Conversion Agent, to convert their Securities or Preferred
Securities, if applicable, into Common Stock at the Applicable Conversion Ratio
prior to 5:00 p.m., New York City time, on the applicable Redemption Date.
(c) If the Company opts not to redeem the Securities pursuant
to this Section 11.03, the Company shall be required to pay Additional Amounts
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 11.04. Redemption at Stated Maturity. (a) The Company
shall repay all of the Outstanding Securities, if any, on June 15, 2028, at a
price equal to the aggregate principal amount thereof, plus any accrued and
unpaid interest, including Additional Payments, if any, to the Redemption Date
(the "Stated Maturity Price"). The Company must finance payment of the Stated
Maturity Price with the proceeds of the sale of nonconvertible preferred
securities or nonconvertible trust-preferred securities of the Company.
(b) If the proceeds from such sale(s) are insufficient to
redeem all of the Outstanding Securities, if any, at the Stated Maturity Price,
an Event of Default shall occur.
SECTION 11.05. 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 pro rata, 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
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73
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.
SECTION 11.06. Notice of Redemption. Notice of redemption
(other than with respect to a redemption which is an Accelerated Redemption)
shall be given by first-class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to
be redeemed, at such Holder's address appearing in the Security Register.
Notices with respect to an Accelerated Redemption shall be provided in
accordance with the provisions of Section 11.01.
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 11.07. Deposit of Redemption Price. Prior to 10:00
a.m. on any Redemption Date, the Company shall deposit with the Trustee or with
a Paying Agent (or,
<PAGE> 81
74
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 (together with Additional Payments, if any) 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 11.08 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 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, together with accrued interest (including
Additional Payments, if any) to the Redemption Date; 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 11.09. Securities Redeemed in Part. (a) In the event
of any redemption in part, the Company shall not be required to (i) issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business 15 days before the date of 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) 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.
<PAGE> 82
75
(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, interest (including Additional Payments, if any) and other
Obligations with respect to 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 in cash of principal of (and premium, if
any), interest and all other Obligations with respect to 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, if any, interest on or any other Obligation relating to, any Senior
<PAGE> 83
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Debt when the same becomes due and payable (a "payment default"), whether at
maturity or at a date fixed for prepayment or by declaration of acceleration or
otherwise, and in the case of Senior Debt other than Designated Senior Debt such
default continues beyond the period of grace, if any, specified in the
instrument evidencing such Senior Debt, then unless and until such default shall
have been cured or waived or shall have ceased to exist or all Senior Debt and
all Obligations relating thereto have been paid in full in cash, and in the
event that the maturity of any Senior Debt has been accelerated because of a
default, then no direct or indirect payment or distribution (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made with
respect to the principal of (including redemption payments), premium, if any, or
interest on, or any other Obligation relating to, the Securities or in respect
of any redemption, repayment, retirement, purchase or other acquisition of any
of the Securities. In the event the Company shall suffer a default (other than a
payment default) under any Designated Senior Debt and such default continues
beyond the period of grace, if any, specified in the instrument evidencing such
Designated Senior Debt, then, commencing upon the receipt by the Debenture
Trustee (with a copy to the Company) of written notice of such default from the
representative of the holders of such Designated Senior Debt and until such
default shall have been cured or waived or shall have ceased to exist or all
such Designated Senior Debt shall have been paid in full in cash, no direct or
indirect payment or distribution (in cash, property, securities, by set-off or
otherwise) shall be made or agreed to be made for or in respect of the
Securities, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of 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, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, in the case of the
first sentence of the preceding paragraph, the holders of Senior Debt, or, in
the case of the second sentence of the preceding paragraph, the holders of
Designated Senior Debt, or, in either case, 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 Designated Senior
Debt, as the case may be (or their representative or representatives or a
trustee) notify the Trustee in writing within 180 days of such payment of the
amounts then due and owing to the holders of such Senior
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Debt and only the amounts specified in such notice to the Trustee shall be paid
to the holders of such Senior Debt.
SECTION 12.03. Liquidation; Dissolution; Bankruptcy. Upon any
direct or indirect payment by or on behalf of the Company or direct or indirect
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to creditors upon any
dissolution or winding up or liquidation or reorganization of the Company or
assignment for the benefit of creditors or marshaling of assets, 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 shall first be paid in full in cash,
or such payment thereof provided for in money in accordance with its terms,
before any payment or distribution is made on account of the principal (and
premium, if any), interest or any other Obligation relating to the Securities;
and upon any such dissolution or winding up or liquidation or reorganization,
any direct or indirect payment by the Company, or direct or indirect payment or
distribution (in cash, property, securities, by set-off or otherwise) 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 such Senior Debt in full, in cash, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Debt, before any
such 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, by set-off or otherwise, 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 cash in accordance with its terms, 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 repre-
<PAGE> 85
78
sentatives, 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 in accordance with its terms, 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 its properties and assets substantially as an
entirety 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 payment in full in
cash of all 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 over pursuant to the provisions of this Article XII, to or for
the benefit
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79
of the holders 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 (including Additional Payments, if any) 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; provided
that such court, trustee, receiver, agent or other Person has been apprised of,
or the order, decree or certificate makes reference to, the provisions of this
Article.
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80
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 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 two 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 they were received, and shall not be affected by any
notice to the contrary which may be received by it within two Business Days
prior to such date.
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
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81
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.
SECTION 12.08. Subordination May Not Be Impaired. (a) 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 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.
(b) 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,
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82
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.
(c) The subordination provisions of this Article XII shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Senior Debt is, pursuant to applicable law,
avoided, recovered, or rescinded or must otherwise be restored or returned by
any holder of Senior Debt, whether as a "voidable preference," "fraudulent
conveyance," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made.
(d) If, upon any proceeding referred to in Section 12.03, the
Trustee does not file a claim in such proceeding prior to fifteen Business Days
before the expiration of the time to file such claim, the holders of Designated
Senior Debt or their agent may file such claim on behalf of the Holders of the
Securities.
(e) The subordination provisions contained herein are solely
for the benefit of the holders from time to time of Senior Debt and their
representatives, assignees and beneficiaries and may not be rescinded, canceled,
amended or modified in any way other than, as to any holder of Senior Debt,
pursuant to an amendment or modification that is permitted by the documentation
relating to the Senior Debt applicable to such holder.
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 or prior to the Tender Notification Date and, in the event of a Convertible
Remarketing which does not fail, on and after the Reset Date through June 15,
2028 (except that Securities called for redemption by the Company shall be
convertible at any time prior to 5:00 p.m. New York City time, on any Redemption
Date), into fully paid and nonassessable shares of Common Stock of the Company.
On or prior to the Tender
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83
Notification Date, each Security is convertible at the option of the Holder into
1.5179 shares of Common Stock for each $50 in aggregate principal amount of
Securities (the "Initial Conversion Ratio") (equal to a conversion price of
$32.94 principal amount of Securities per share of Common Stock (the "Initial
Conversion Price")). On and after the Reset Date, the Securities may, at the
option of the Company and subject to the results of the Remarketing, become
nonconvertible or convertible into a different number of shares of Common Stock.
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
business on 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 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
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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 other wise 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 the 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 Additional Payments) 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
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85
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 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 cancelation 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
principal amount and (y) if the Trust no longer exists (i) to exchange
Securities held by the Holders in connection with the conversion of such
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 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
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86
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 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
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87
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 after 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 after 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 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
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88
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 that 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, the per
share amount of which, together with the aggregate per share amount of
any other cash dividends paid within the 12 months preceding the date
of payment of such cash
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89
dividends, does not exceed 12 1/2% 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 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 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
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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 cur rent 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 for the ten consecutive
Trading Days prior to the earlier of the day in question and, if
applicable, the day before the "ex" date (as hereinafter defined) with
respect to the issuance or distribution requiring such computation;
provided, however, that if the day in question or the "ex" date for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Applicable Conversion
Price pursuant to Section 13.03 (ii), (iv), (v) or (vi) occurs during
such 10 consecutive Trading Days, the Closing Price for each Trading
Day prior to such date for such other event shall be adjusted by
multiplying such Closing Price by the same fraction by which the
Applicable Conversion Price is so required to be adjusted as a result
of such other event. For purposes
<PAGE> 98
91
of this subparagraph (vii), the term "ex" date (I) when used with
respect to any issuance or distribution, means the first date on which
the Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the
right to receive such issuance or distribution, (II) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such
subdivision or combination becomes effective and (III) when used with
respect to any tender or exchange offer means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the Expiration Time of such offer. Notwithstanding the foregoing,
whenever successive adjustments to the Applicable Conversion Price are
called for pursuant to this Section 13.03, such adjustments shall be
made to the current market price as may be necessary or appropriate to
effectuate the intent of this Section 13.03 and to avoid unjust or
inequitable results, as determined in good faith by the Board of
Directors.
(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), 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) No adjustment of the Applicable Conversion Price shall be
made upon 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 or options or
rights to purchase such shares pursuant to any present or future
employee, director or consultant benefit plan or program of the Company
or pursuant to any option, warrant, right, or exercisable, exchangeable
or convertible security outstanding as of the date the Securities were
first issued. 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. Furthermore, no adjustment in the
Applicable Conversion Price shall be required unless such adjustment
would
<PAGE> 99
92
require an increase or decrease of at least 1% in the Applicable
Conversion Price; provided, however, that any adjustments which by
reason of this subparagraph (ix) 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 cancelation 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 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 such transaction other
than a Common Stock Fundamental Change, the kind and amount of securities, cash
and other property receivable upon consummation of such Company Transaction by a
holder of the number of shares of Common Stock of the Company into which such
Security could have been converted immediately prior to such Company
Transaction, after giving effect to any adjustment in the Applicable Conversion
Price required by the provision 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
<PAGE> 100
93
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 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) 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
<PAGE> 101
94
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) if
no Preferred Securities are outstanding, 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, then 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 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
<PAGE> 102
95
then applicable Reference Market Price by a fraction of which the
numerator shall be $50 and the denominator shall be the then-current
Optional Redemption Price or, on or prior to June 20, 2001 and at any
time on and after the Reset Date at which the Securities are not
redeemable at the option of the Company, 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 (the "Optional
Redemption Ratio") (such product shall hereinafter 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
<PAGE> 103
96
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 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 NNM.
(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 of consideration per share that
a holder of Common Stock could have received in such transactions or
events as a result of which more
<PAGE> 104
97
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) "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.
(7) "Reference Market Price" shall initially mean on the date
of original issuance of the Securities, $17.88 (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 such date) and, in the
event of any adjustment to the Applicable Conversion Price from such
date to (but excluding) the Reset Date, other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price shall 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 $17.88 to the Initial
Conversion Price. If the Securities are convertible into Common Stock
on and after the Reset Date, the Reference Market Price on such date
will be an amount equal to 66-2/3% of the Closing Price of the Common
Stock on the Reset Date and, in the event of any adjustment to the
Applicable Conversion Price from the Reset Date and thereafter, other
than as a result of a Non-Stock Fundamental Change, the Reference
Market Price shall 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 the
Closing Price of the Common Stock on the Reset Date to the Term
Conversion Price.
(8) "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
<PAGE> 105
98
Fundamental Change or any Common Stock Fundamental Change, the average
of the daily Closing Prices of the Common Stock for the ten 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.
(9) "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, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Securities were first
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
<PAGE> 106
99
determination date, converted such Security into Common Stock.
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 herein
or in any supplemental indenture provided to be employed, in making the same.
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.
<PAGE> 107
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, as of the day and year first above written.
BUDGET GROUP, INC.
by /s/ Sanford Miller
-------------------------------
Name: Sanford Miller
Title: Chairman and CEO
THE BANK OF NEW YORK
by /s/ Mary La Gumina
-------------------------------
Name: Mary La Gumina
Title: Assistant Vice President
<PAGE> 108
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) TO BUDGET GROUP, INC. 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 OF THE COMPANY 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 CLASS A COMMON STOCK OF THE COMPANY ISSUABLE UPON
CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN
<PAGE> 109
2
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.]
BUDGET GROUP, INC.
HIGH TIDES
Debenture Due 2028
No. $
[CUSIP No. ]
BUDGET GROUP, INC., 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 June 15, 2028.
Interest Payment Dates: March 15, June 15, September 15 and
December 15, commencing
September 15, 1998
Regular Record Dates: the close of business on the first
day of each March, June, September
or December immediately preceding
the applicable Interest Payment
Date
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.
- -----------------------
(1) Applicable to Global Securities only.
(2) Applicable to certificated Securities only.
<PAGE> 110
3
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.
Dated: ,
BUDGET GROUP, INC.
By:
-----------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: , THE BANK OF NEW YORK
as Trustee
By:
----------------------------------
Authorized Signatory
<PAGE> 111
[FORM OF REVERSE OF SECURITY]
BUDGET GROUP, INC.
HIGH TIDES
Debenture Due 20283(3)
1. Interest. BUDGET GROUP, INC., a Delaware corporation (the
"Company"), is the issuer of this HIGH TIDES Debenture Due 2028 (the "Security")
limited in aggregate principal amount to $309,278,400 (or up to $355,670,150 to
the extent the over-allotment option is exercised in full), issued under the
Indenture hereinafter referred to. The Company promises to pay interest on the
Securities in cash from June 19, 1998 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 September 15, 1998, at the
Applicable Rate, plus Additional Payments, if any, until the principal hereof
shall have become due and payable. Each registered Holder of Securities on June
1, 2005 (including any Holder which has tendered or is deemed to have tendered
its Securities for remarketing) shall be paid interest and Additional Payments,
if any, accrued to (but excluding) the Reset Date on June 15, 2005 (or, if such
day is not a Business Day, the next succeeding Business Day). Interest and
Additional Payments, if any, accrued from and after the Reset Date to (but
excluding) September 15, 2005 shall be paid on September 15, 2005 (or, if such
day is not a Business Day, the next succeeding Business Day) to the Person in
whose name each Security is registered on the preceding September 1, subject to
the right of the Company to initiate a Deferral Period. Prior to the Reset Date,
the Applicable Rate shall be 6 1/4% per annum (subject to increase in certain
circumstances upon a Registration Default). On and after the Reset Date, the
Applicable Rate shall be the rate established by the Remarketing Agent in
connection with the Remarketing.
The amount of interest payable for any period will
be computed on the basis of twelve 30-day months and a
- -----------------------
(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.
<PAGE> 112
5
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 Budget Group
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 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 (i) the maturity (whether at June 15, 2028 or by declaration
of acceleration, call for redemption or otherwise) or (ii) in the case of a
Deferral Period that begins prior to the Reset Date, the Reset Date. 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 extend such period, provided that such period together
with all such further extensions thereof shall not exceed 20 consecutive
quarters or extend beyond (i) the maturity (whether at June 15, 2028 or by
declaration of acceleration, call for redemption or otherwise) or (ii) in the
case of a Deferral Period that begins prior to the Reset Date, the Reset Date.
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,
<PAGE> 113
6
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 Compounded 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 March, June, September or December, as applicable,
immediately preceding each Interest Payment Date (the "Regular Record Date"),
commencing September 15, 1998. Each registered Holder of Securities on June 1,
2005 (including any Holder which has tendered or is deemed to have tendered its
Securities for remarketing) shall be paid interest and Additional Payments, if
any, accrued to (but excluding) the Reset Date on June 15, 2005 (or, if such day
is not a Business Day, the next succeeding Business Day). Interest and
Additional Payments, if any, accrued from and after the Reset Date to (but
excluding) September 15, 2005 shall be paid on September 15, 2005 (or, if such
day is not a Business Day, the next succeeding Business Day) to the Person in
whose name each Security is registered on the preceding September 1, subject to
the right of the Company to initiate a Deferral Period. 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
<PAGE> 114
7
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 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 such 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.
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 June 19, 1998 (the "Indenture"), between the Company and
The Bank of New York, 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 ss.ss.
77aaa-77bbbb) (the "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 hereon, 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
$309,278,400
<PAGE> 115
8
in aggregate principal amount (or up to $355,670,150 to the extent the
over-allotment option is exercised in full) 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 pre scribed or to convert this Security as
provided in the Indenture.
7. Optional Redemption. The Securities are redeemable at the
Company's option at any time and from time to time solely from the proceeds of a
Common Stock Offering (an "Optional Redemption") (i) in whole or in part, at any
time or from time to time, prior to the Reset Date but on or after June 20, 2001
until (but excluding) the Tender Notification Date, at a Redemption Price (the
"Initial Redemption Price") equal to the prices 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 June 15:
<TABLE>
<CAPTION>
Price Per $50
Principal
Year Amount
---- -------------
<S> <C>
2002................................... $51.5625
2003................................... 51.0417
2004................................... 50.5208
2005................................... 50.00
</TABLE>
and (ii) after the Reset Date, in accordance with the Term Call protections, if
any, established in connection with the Remarketing. The Company may make an
Optional Redemption on an accelerated basis (an "Accelerated Redemption")
whenever, on an Optional Redemption Notification Date, the Closing Price of the
Class A Common Stock of the Company, par value $.01 per share ("Class A Common
Stock"), on the New York Stock Exchange Composite Tape for each of the five
trading days prior to such Optional Redemption Notification Date was equal to or
greater than 125% of the Applicable Conversion Price.
If the Company desires to consummate an Optional Redemption,
it must cause to be sent, at its own expense, notice of such intent (an
"Optional Redemption Notice"), via
<PAGE> 116
9
first-class mail, postage prepaid, within 90 days following the closing of the
applicable Common Stock Offering (the "Optional Redemption Notification Date")
to each Holder of Securities to be redeemed, at such Holder's address appearing
in the Security Register; provided that in the case of an Accelerated
Redemption, the Optional Redemption Notice must be received by such Holders not
later than the Business Day immediately following the Optional Redemption
Notification Date. Holders receiving an Optional Redemption Notice have the
right, upon notification of the Trustee and the Conversion Agent on or prior to
the Optional Redemption Date, to convert their Securities called for redemption
into Class A Common Stock at the Applicable Conversion Ratio prior to the
Optional Redemption Date in compliance with Article XIII of the Indenture.
"Optional Redemption Date" means the date which is (i) 20 to 40 days following
the Optional Redemption Notification Date (or if such date is not a Business
Day, the next succeeding Business Day) or (ii) in the event that the Company
decides to make an Accelerated Redemption, five Business Days following the
Optional Redemption Notification Date.
Securities in denominations larger than $50 may be redeemed in
part but only in integral multiples of $50. In the event of a redemption of less
than all of the Securities, the Securities will be chosen for redemption by the
Trustee pro rata in accordance with the Indenture. In the event of redemption of
this Security in part only, a new Security or Securities for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancelation hereof. On and after the Redemption Date, interest ceases to accrue
on the Securities or portions of them called for redemption.
8. The Remarketing. At least 40 days but not more than 60 days
prior to June 15, 2005, the Company will cause a notice to be sent to all
Holders of Securities stating whether it intends to remarket the Securities as
Securities which will be convertible into Class A Common Stock or which will be
nonconvertible. All Securities will be deemed tendered for remarketing unless
the Holder thereof delivers irrevocable notice to the contrary to the Tender
Agent prior to May 20, 2005 (or, if such day is not a Business Day, the next
succeeding Business Day)(the "Tender Notification Date"). The Remarketing Agent
will establish, pursuant to the terms of the Remarketing Agreement, the Term
Provisions, including the Term Rate at which interest will accrue on the
Securities, to be effective beginning on June 15, 2005 (or, if such day is not a
Business Day, the next succeeding Business Day) or such earlier day as may be
determined by the Remarketing Agent, in its sole discretion, for settlement of a
successful Remarketing (the "Reset
<PAGE> 117
10
Date"). A Holder of Securities that has not duly given notice that it will
retain its Securities will cease to have any further rights with respect to such
Securities upon the successful remarketing thereof, except the right of such
Holder to receive an amount equal to (i) from the proceeds of the Remarketing
or, in the event of a Failed Final Remarketing or upon the occurrence of certain
Market Events (as such term is defined in the Remarketing Agreement), 101% of
the aggregate principal amount of the Securities, plus (ii) from the Company,
any accrued but unpaid interest (including Additional Payments, if any) to (but
excluding) the Reset Date. In the event of a Failed Final Remarketing, the
Company shall be required to redeem the Securities in whole, and not in part, on
the Reset Date at 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest, including Additional Payments, if any, to the Redemption
Date. The failure by the Company to redeem the Securities in whole on the Reset
Date upon the occurrence of a Failed Final Remarketing shall constitute an Event
of Default.
9. 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 shall also have the
option of causing the Securities to remain outstanding and pay Additional Sums
on the Securities.
10. Notice of Redemption in Connection with a Failed Final
Remarketing or a Tax Event. In case of a redemption in connection with a Failed
Final Remarketing or a Tax Event, notice of redemption will be mailed by
first-class mail, postage prepaid, at least 30 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.
11. Mandatory Redemption. The Securities will mature, and the
Company must redeem the securities in whole and not in part, on June 15, 2028
with the proceeds of the sale of nonconvertible preferred or nonconvertible
trust - preferred Securities of the Company at a price equal to the aggregate
principal amount thereof, plus accrued and unpaid interest, including Additional
Payments, if any, to the Redemption Date. The failure of the Company to redeem
all Outstanding Securities on June 15, 2028 with the proceeds of
<PAGE> 118
11
the sale of nonconvertible preferred and nonconvertible trust-preferred
securities of the Company shall constitute an Event of Default.
12. No Sinking Fund. There are no sinking fund
payments with respect to the Securities.
13. 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 (and Additional
Payments, if any) 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.
14. 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) all obligations of the Company under
the Senior Credit Agreement, including, without limitation, principal
(including, without limitation, reimbursement obligations in respect of letters
of credit (whether or not drawn) and obligations to cash collateralize letters
of credit), premium (if any), interest (including, without limitation, interest
accruing subsequent to the filing of, or which would have accrued but for the
filing of, a petition for bankruptcy, whether or not such interest is an
allowable claim in such bankruptcy proceeding), fees, indemnifications, expenses
and other amounts payable pursuant thereto, (ii) the principal of, and premium
and interest, if any, on all indebtedness of the Company for money borrowed,
whether outstanding on the date of execution of the Indenture or thereafter
created, assumed or incurred, (iii) 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
<PAGE> 119
12
(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 (ii) and (iii) 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, (iv) and indebtedness or obligations of others of the kind
described in (i), (ii) and (iii) 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.
15. Conversion. The Holder of any Security has the right,
exercisable at any time prior to 5:00 p.m. New York City time, on or prior to
the Tender Notification Date or, in the event of a Convertible Remarketing which
does not fail, from and after the Reset Date through June 15, 2028 (except that
Securities called for redemption by the Company will be convertible at any time
prior to 5:00 p.m., New York City time, on any Redemption Date) to convert the
principal amount thereof (or any portion thereof that is an integral multiple of
$50) into shares of Class A Common Stock. Prior to the Reset Date, each Security
is convertible, at the option of the Holder into 1.5179 shares of Class A Common
Stock for each $50 in aggregate principal amount of Securities (equivalent to a
conversion price of $32.94 per share of Class A Common Stock). On and after the
Reset Date, the Securities may, at the option of the Company and subject to the
results of the Remarketing, become nonconvertible or convertible into a
different number of shares of Class A Common Stock. The conversion ratio and
<PAGE> 120
13
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 5:00 p.m. New York City time
on 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 Class A Common Stock.
16. Registration Rights. The Holders of the Preferred
Securities, the Securities and the Guarantee and the shares of Class A 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 June 19, 1998, among the Company, the Trust and
the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement the Company has agreed for the benefit of the
holders of the Registrable Securities that they will (i) at the Company's sole
expense, prior to August 18, 1998 file a shelf registration statement (the
"Shelf Registration Statement") with the Commission with respect to resales of
the Registrable Securities, (ii) use their best efforts to cause such Shelf
Registration Statement
<PAGE> 121
14
to be declared effective under the Securities Act prior to October 19, 1998 and
(iii) use their best efforts to maintain such Shelf Registration Statement
continuously effective and useable for two years or such other period as shall
be required under Rule 144(k) of the Securities Act or any successor rule
thereto or, if earlier, such time as all of the applicable Registrable
Securities have been sold thereunder (except that the Company will be permitted
to suspend the use of the Shelf Registration Statement during certain periods
under certain circumstances specified in the Registration Rights Agreement). If
the Company fails to comply with any of clauses (i) through (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.
17. 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
<PAGE> 122
15
portion hereof will be issued in the name of the Holder hereof upon the
cancelation hereof.
18. 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.
19. 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.
20. 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 Securities and if upon
an Event of Default, the Trustee or the Holders 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 (and Additional Payments, if any) shall become immediately due and
payable; and provided further that any such declaration will not be effective
until the earlier to occur of (i) ten business days after receipt by the Company
and the administrative agent under the Senior Credit Agreement of written notice
of such declaration and (ii) acceleration of obligations under the Senior Credit
Agreement. The Holders of a majority in aggregate principal amount of the
Outstanding Securities may annul such declaration and waive the default by
written notice to the Property Trustee, the Company and the Trustee if the
default (other than the nonpayment of the principal of these Securities which
has become due solely by such acceleration) has been cured and a sum sufficient
to pay all matured installments of interest (and Additional Payments, if any)
and principal due otherwise than by acceleration has been deposited with the
Trustee. Should the Holders of the Securities of such a
<PAGE> 123
16
series fail to annul such declaration and waive such default, the Holders of a
majority in aggregate liquidation amount of the Preferred Securities shall have
such right. Upon the effectiveness of any such declaration such principal amount
(or specified amount) of and the accrued interest (including any Additional
Payments) on all the Securities of such series shall then become 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 Securities then Outstanding 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 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.
21. 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
<PAGE> 124
17
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.
22. 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.
23. 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.
24. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE INDENTURE AND THE SECURITIES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
25. Authentication. The Securities shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee or
an authenticating agent.
26. 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).
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:
Budget Group, Inc.
121 Basin Street, Suite 210
Daytona Beach, FL 32114
Attention: Secretary
<PAGE> 125
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint -------------------------------------------------------
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Your Signature:
-------------------------------------------------------
(Sign exactly as your name appears on
the other side of this Security)
Date:
------------------------
Signature Guarantee:(4)
----------------------------------
[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:
- ---------------------------
(4) (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.)
<PAGE> 126
2
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 another available exemption
from the registration requirements of the Securities
Act of 1933; or
(4) [ ] 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 (2) or (3) 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
Signature Guarantee:(5)
- ------------------------------------- ---------------------------
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.)
<PAGE> 127
3
[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]
<PAGE> 128
(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 in
crease in Principal
Amount of this
Global Security Principal Amount Signature of
including upon Amount of decrease of this Global authorized officer
exercise of in Principal Security following of Trustee or
over-allotment Amount of this such decrease or Securities
Date Made option Global Security increase Custodian
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 129
ELECTION TO CONVERT
To: Budget Group, Inc.
The undersigned owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion below designated,
into Class A Common Stock of Budget Group, Inc. 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 Class A 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.)
<PAGE> 1
EXHIBIT 4.8
GUARANTEE AGREEMENT, dated as of June 19,
1998, executed and delivered by Budget Group, Inc., a
Delaware corporation (the "Guarantor"), and The Bank
of New York, a New York banking corporation, as
trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of
the HIGH TIDES (as defined herein) of Budget Group
Capital Trust, a Delaware statutory business trust
(the "Issuer").
WHEREAS pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of June 19, 1998, executed by the Guarantor,
as Depositor, The Bank of New York (Delaware), as Delaware Trustee, The Bank of
New York, as Property Trustee, and the Administrative Trustees named therein,
the Issuer is issuing up to $300 million (or up to $345 million pursuant to the
over-allotment option) aggregate liquidation amount of its Remarketable Term
Income Deferred Equity Securities (HIGH TIDES), liquidation amount $50 per
security (the "HIGH TIDES") and up to $9,278,400 (or up to $10,670,150 pursuant
to the over-allotment option) aggregate liquidation amount of its Common
Securities, liquidation amount $50 per security (the "Common Securities" and
collectively with the HIGH TIDES, the "Trust Securities") representing undivided
beneficial ownership interests in the assets of the Issuer and having the terms
set forth in the Declaration;
WHEREAS the Trust Securities will be issued by the Issuer and
the proceeds thereof will be used to purchase the HIGH TIDES Debentures due June
15, 2028 (the "HIGH TIDES Debentures") of the Guarantor which will be deposited
with The Bank of New York as Property Trustee under the Declaration, as trust
assets; and
WHEREAS as incentive for the Holders to purchase HIGH TIDES,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the HIGH TIDES the Guarantee Payments
(as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each
Holder of HIGH TIDES, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the HIGH TIDES.
<PAGE> 2
2
ARTICLE I
Definitions
SECTION 1.01. Definitions. As used in this Guarantee
Agreement, the terms set forth below shall, unless the context otherwise
requires, have the following meanings. Capitalized or otherwise defined terms
used but not otherwise defined herein shall have the meanings assigned to such
terms in the Declaration as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person; provided, however, that the Issuer
shall be deemed not to be an Affiliate of the Guarantor. 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" shall have the meaning specified in the
first recital of this Guarantee Agreement.
"Debt" means (i) the principal of and premium, if any, and
unpaid interest 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 Guarantor 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.
"Declaration" shall have the meaning specified in the first
recital to this Guarantee Agreement.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Guarantee Agreement; provided,
however, that, except with respect to a default in payment of any Guarantee
<PAGE> 3
3
Payments, 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 HIGH TIDES, to the
extent not paid or made by or on behalf of the Issuer: (i) any accrued and
unpaid Distributions required to be paid on the HIGH TIDES, to the extent the
Issuer shall have funds on hand available therefor at such time, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), with respect to the HIGH TIDES called for
redemption by the Issuer to the extent the Issuer shall have funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Issuer, unless HIGH TIDES
Debentures are distributed to the Holders of the HIGH TIDES or all the HIGH
TIDES are redeemed, the lesser of (a) the aggregate of the liquidation amount of
$50 per High Tide plus accrued and unpaid Distributions on the HIGH TIDES to the
date of payment (the "Liquidation Distribution") to the extent the Issuer shall
have funds on hand available to make such payment at such time and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
of the HIGH TIDES upon liquidation of the Issuer after satisfaction of
liabilities to creditors of the Issuer as required by applicable law.
"Guarantee Trustee" means The Bank of New York, a New York
Banking corporation, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Guarantee Agreement
and thereafter means each such Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first
paragraph of this Guarantee Agreement.
"HIGH TIDES" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"HIGH TIDES Debentures" shall have the meaning specified in
the second recital of this Guarantee Agreement.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any HIGH TIDES; provided, however, that in determining
whether the holders of the requisite percentage of HIGH TIDES have given any
request, notice, consent or waiver hereunder, "Holder" shall
<PAGE> 4
4
not include the Guarantor, the Guarantee Trustee, or any Affiliate of the
Guarantor or the Guarantee Trustee.
"Indenture" means the Indenture dated as of June 19, 1998, as
amended or supplemented, between the Guarantor and The Bank of New York, as
trustee, relating to the issuance of HIGH TIDES Debentures.
"Issuer" shall have the meaning specified in the first
paragraph of this Guarantee Agreement.
"List of Holders" has the meaning specified in
Section 2.02(a).
"Majority in liquidation amount of the HIGH TIDES" means,
except as provided in the terms of the HIGH TIDES or by the Trust Indenture Act,
a vote by the Holder(s), voting separately as a class, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid distributions to
the date upon which the voting percentages are determined) of all then
outstanding HIGH TIDES.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman and Chief Executive Officer, President or a
Vice President, and by the Treasurer, an Associate 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 Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
<PAGE> 5
5
(d) a statement as to whether, in the opinion of each 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" when used with respect to the Guarantee
Trustee means any officer assigned to the Corporate Trust Office, including any
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers,
and having direct responsibility for the administration of this Guarantee
Agreement, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Senior Credit Agreement" means that certain Amended and
Restated Credit Agreement, dated on or about June 19, 1998, by and among the
Guarantor, the lenders parties thereto, Credit Suisse First Boston, as a
co-arranger, a co-syndication agent and the administrative agent, and
NationsBanc Montgomery Securities LLC, as a co-arranger, a co-syndication agent
and the documentation agent, including, without limitation, any related notes,
letters of credit, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and, in each case, as amended, amended and
restated, modified, renewed, refunded, replaced or refinanced from time to time,
including any agreement (i) extending or shortening the maturity of any
obligation incurred thereunder or contemplated thereby, (ii) adding or deleting
borrowers or guarantors thereunder and (iii) increasing the amount of credit
extended, or available to be extended, thereunder.
"Senior Debt" means (i) all obligations of the Guarantor under
the Senior Credit Agreement, including, without limitation, principal
(including, without limitation, reimbursement obligations in respect of letters
of credit (whether or not drawn) and obligations to cash collateralize letters
of credit), premium (if any), interest (including, without limitation, interest
accruing subsequent
<PAGE> 6
6
to the filing of, or which would have accrued but for the filing of, a petition
for bankruptcy, whether or not such interest is an allowable claim in such
bankruptcy proceeding), fees, indemnifications, expenses and other amounts
payable pursuant thereto, (ii) the principal of, and premium and interest, if
any, on all indebtedness of the Guarantor for money borrowed, whether
outstanding on the date of execution of the Indenture or thereafter created,
assumed or incurred, (iii) 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 (ii) and (iii) 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) and indebtedness or obligations of others of the
kind described in both (i), (ii) and (iii) above for the payment of which the
Guarantor 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 Guarantor 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 Guarantor, (b) trade
accounts payable and accrued liabilities arising in the ordinary course of
business, (c) any Debt of the Guarantor to any of its subsidiaries, (d) Debt to
any employee of the Guarantor, 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 HIGH TIDES Debentures as a result of the subordination provisions
of the Indenture would be greater than such payments other wise 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.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.01.
<PAGE> 7
7
"Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb), as amended.
"Trust Securities" shall have the meaning specified in the
first recital of this Guarantee Agreement.
ARTICLE II
Trust Indenture Act
SECTION 2.01. Trust Indenture Act; Application. (a) This
Guarantee Agreement is subject to the provisions of the Trust Indenture Act that
are required to be part of this Guarantee Agreement, which are incorporated by
reference in and made part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions. This Guarantee Agreement will not be
qualified under the Trust Indenture Act except upon the effectiveness of the
Shelf Registration Statement.
(b) Upon qualification under the Trust Indenture Act as
contemplated in clause (a) above, if and to the extent that any provision of
this Guarantee Agreement limits, qualifies or conflicts with the duties imposed
by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 2.02. Lists of Holders of Securities. (a) The
Guarantor shall provide the Guarantee Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders of the
HIGH TIDES ("List of Holders") as of such record 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 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 Guarantee Trustee.
(b) The Guarantee Trustee shall comply with its obligations
under Section 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, 1999, the Guarantee Trustee shall
provide to the Holders of the HIGH TIDES such reports as are required by ss. 313
of the
<PAGE> 8
8
Trust Indenture Act, if any, in the form and in the manner provided by ss. 313
of the Trust Indenture Act. The Guarantee Trustee shall also comply with the
requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to The Guarantee Trustee. The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by ss. 314 of the Trust Indenture Act (if any) and the
compliance certificate required by ss. 314 of the Trust Indenture Act in the
form, in the manner and at the times required by ss. 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 such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by any officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
SECTION 2.06. Events of Default; Waiver. The Holders of a
Majority in liquidation amount of the HIGH TIDES may, by vote, on behalf of all
the Holders, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent therefrom.
SECTION 2.07. Event of Default; Notice. (a) The Guarantee
Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders, notices of all
Events of Default known to the Guarantee Trustee, unless such Events of Default
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 determine that the
withholding of such notice is in the interests of the Holders.
<PAGE> 9
9
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless a Responsible Officer of the Guarantee
Trustee shall have received written notice of such Event of Default.
SECTION 2.08. Conflicting Interests. The Declaration shall be
deemed to be specifically described in this Guarantee Agreement for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
Powers, Duties and Rights of the
Guarantee Trustee
SECTION 3.01. Powers and Duties of the Guarantee Trustee. (a)
This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit
of the Holders, and the Guarantee Trustee shall not transfer this Guarantee
Agreement to any Person except a Holder exercising his or her rights pursuant to
Section 5.04(iv) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.06), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
<PAGE> 10
10
(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee Agreement; but in the
case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the HIGH TIDES relating to the time,
method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee, or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and
<PAGE> 11
11
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers.
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,
other evidence of indebtedness or other paper or document reasonably
believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
relating to compliance by the Guarantor with any of its obligations
contained in this Guarantee Agreement be proved or established before
taking, suffering or omitting to take any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate (with respect to the
Guarantor) which, upon receipt of such request from the Guarantee
Trustee, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel of
its selection, and the advice or opinion of such legal counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice
or opinion. Such legal counsel may be legal counsel to the Guarantor or
any of its Affiliates and may be one of its employees. The Guarantee
Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
<PAGE> 12
12
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such security and
indemnity reasonably satisfactory to it, 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)(v) shall be
taken to relieve the Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested
in it by this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received and (C) shall be fully protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in
<PAGE> 13
13
which the Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Guarantee Trustee shall be construed to be a duty to act in accordance with
such power and authority.
SECTION 3.03. Indemnity. The Guarantor agrees to indemnify the
Guarantee Trustee and its directors, officers, agents and employees for, and to
hold them harmless against, any and all loss, damage, claim, liability or
expense incurred without negligence or bad faith on the part of the Guarantee
Trustee, arising out of or in connection with the acceptance or administration
of this Guarantee Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee Trustee will
not claim or exact any lien or charge on any Guarantee Payments as a result of
any amount due to it under this Guarantee Agreement. This indemnity shall
survive the termination of this Guarantee Agreement or the resignation or
removal of the Guarantee Trustee.
SECTION 3.04. Expenses. The Guarantor shall from time to time
reimburse the Guarantee Trustee for its expenses and costs incurred in
connection with the performance of its duties hereunder. This reimbursement
obligation shall survive the termination of this Guarantee Agreement or the
resignation or removal of the Guarantee Trustee.
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 Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(c) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the
<PAGE> 14
14
purposes of this Section and to the extent permitted by the Trust
Indenture Act, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(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 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.02. Appointment, Removal and Resignation of the
Guarantee Trustee. (a) Subject to Section 4.02(b), in the absence of the
existence of an Event of Default, the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
by written instrument executed by such Successor Guarantee Trustee and delivered
to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed by
such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.02 within 30
days after delivery to the Guarantor of an instrument of resignation or notice
of removal by the Guarantor, the retiring Guarantee Trustee may petition, at the
expense of the Guarantor, any court of competent jurisdiction for appointment of
a Successor Guarantee Trustee. Such court may thereupon, after prescribing such
<PAGE> 15
15
notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
Guarantee
SECTION 5.01. Guarantee. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by or on behalf of the Issuer),
as and when due, regardless of any defense, right of set-off or counterclaim
which the Issuer may have or assert. 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. The Guarantor shall give written notice to the Guarantee Trustee as
promptly as practicable in the event it makes any direct payment hereunder.
SECTION 5.02. Waiver of Notice and Demand. The Guarantor
hereby waives notice of acceptance of the Guarantee Agreement and, with respect
to its obligations under Section 5.01, hereby waives presentment, demand for
payment, any right to require a proceeding first against the Guarantee Trustee,
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 5.03. Obligations Not Affected. The obligations,
covenants, agreements and duties of the Guarantor under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the HIGH
TIDES 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 (other than any extension of time
for payment of Distributions that results from the extension of any
interest payment period on the HIGH TIDES Debentures as so provided in
the Indenture), Redemption Price,
<PAGE> 16
16
Liquidation Distribution or any other sums payable under the terms of
the HIGH TIDES or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the HIGH
TIDES;
(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 HIGH 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 HIGH
TIDES;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain the consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.04. Rights of Holders. The Guarantor expressly
acknowledges that: (i) this Guarantee Agreement will be deposited with the
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee
Trustee has the right to enforce this Guarantee Agreement on behalf of the
Holders; (iii) the Holders of a Majority in liquidation amount of the HIGH TIDES
have the right among themselves, the other Holders, if any, and the Guarantee
Trustee to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of this Guarantee
Agreement or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and (iv) any Holder may institute
<PAGE> 17
17
a legal proceeding directly against the Guarantor to enforce, subject to the
subordination provisions hereof, its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Issuer or any other
Person.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement
creates a guarantee of payment and not of collection. This Guarantee Agreement
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 HIGH TIDES Debentures to Holders as provided in the Declaration.
SECTION 5.06. Subrogation. The Guarantor shall be subrogated
to all (if any) rights of the Holders against the Issuer in respect of any
amounts paid to the Holders by the Guarantor under this Guarantee Agreement and
shall have the right to waive payment by the 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 rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee
Agreement, if at the time of any such payment, any amounts are due and unpaid
under this Guarantee Agreement. 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. Any amounts
paid over to and not subsequently recovered from the Holders pursuant to any
insolvency law shall be deemed to have been applied by the Holders to the
Guarantee Payments.
SECTION 5.07. Independent Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the HIGH TIDES and that the Guarantor shall
(without duplication of amounts paid by or on behalf of the Issuer) be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof,
but subject to Section 6.01 hereof.
<PAGE> 18
18
ARTICLE VI
Covenants and Subordination
SECTION 6.01. Subordination. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all Senior Debt of the Guarantor in accordance
with the terms of Article XII of the Indenture, which terms (including the
definitions of all defined terms used therein) are incorporated herein, mutatis
mutandis, by this reference (it being understood and agreed that each notice
from holders of Senior Debt (or their agent or representative) to the Trustee
under the Indenture shall constitute a notice to the Guarantee Trustee hereunder
and that no payment or distribution by the Guarantor of a Guarantee Payment
shall be made within ten Business Days prior written notice thereof to the
administrative agent under the Senior Credit Agreement).
SECTION 6.02. Pari Passu Guarantees. This Guarantee Agreement
shall rank pari passu with any similar guarantee agreements issued by the
Guarantor on behalf of the holders of trust securities issued by a trust created
by the Guarantor similar to Budget Group Capital Trust.
ARTICLE VII
Termination
SECTION 7.01. Termination. This Guarantee Agreement shall
terminate and be of no further force and effect upon (i) full payment of the
Redemption Price of all HIGH TIDES, (ii) the distribution of HIGH TIDES
Debentures to the Holders in exchange for all of the HIGH TIDES or (iii) full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must repay any sums paid with respect to HIGH
TIDES or this Guarantee Agreement.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Successors and Assigns. All guarantees and
agreements contained in this Guarantee
<PAGE> 19
19
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the HIGH TIDES then outstanding. Except in connection with a consolidation,
merger or sale involving the Guarantor that is permitted under Article VIII of
the Indenture and pursuant to which the assignee agrees in writing to perform
the Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder.
SECTION 8.02. Amendments. Except with respect to any changes
which do not adversely affect the rights of the Holders in any material respect
(in which case no consent of the Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the Holders of not less
than a Majority in liquidation amount of the HIGH TIDES. The provisions of
Article XII of the Declaration concerning meetings of the Holders shall apply to
the giving of such approval.
SECTION 8.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be in writing,
duly signed by the party giving such notice, and delivered, telecopied
(confirmed by delivery of the original) or mailed by first class mail as
follows:
(a) if given to the Guarantor, to the address set forth below
or such other address, facsimile number or to the attention of such
other Person as the Guarantor may give notice to the Holders:
Budget Group, Inc.
125 Basin Street, Suite 210
Daytona Beach, FL 32114
Telephone: (904) 238-7035
Facsimile No.: (904) 226-8380
Attention: Corporate Secretary
(b) if given to the Issuer, in care of the Guarantor, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such
other
<PAGE> 20
20
address as the Issuer may, at the Issuer's direction,
give notice to the Holders:
BUDGET GROUP CAPITAL TRUST
c/o Budget Group, Inc.
125 Basin Street, Suite 210
Daytona Beach, FL 32114
Telephone: (904) 238-7035
Facsimile No.: (904) 226-8380
Attention: Secretary
with a copy to:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, NY 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
(c) if given to the Guarantee Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, NY 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
(d) if given to any Holder, at the address set forth on the
books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 8.04. Benefit. This Guarantee Agreement is solely
for the benefit of the Holders (subject to the benefits inuring to the holders
of Senior Debt pursuant to
<PAGE> 21
21
the subordination provisions hereof) and is not separately transferable from the
HIGH TIDES.
SECTION 8.05. Interpretation. In this Guarantee Agreement,
unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined
in this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
<PAGE> 22
SECTION 8.06 Governing Law. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
Budget Group, Inc.
by /s/ Sanford Miller
---------------------------------
Name: Sanford Miller
Title: Chairman & CEO
The Bank of New York, as
Guarantee Trustee,
by /s/ Mary LaGumina
--------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE> 1
EXHIBIT 10.1
BUDGET GROUP CAPITAL TRUST
UP TO 6,900,000 HIGH TIDES(SM)
(Liquidation Amount $50
per HIGH TIDE)
Guaranteed to the extent set forth in the Guarantee
Agreement by, and Convertible into
Class A Common Stock of, Budget Group, Inc.
REGISTRATION RIGHTS AGREEMENT
June 19, 1998
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
ABN AMRO Chicago Corporation
BT Alex. Brown Incorporated
McDonald & Company Securities, Inc.
NationsBanc Montgomery Securities LLC
c/o Credit Suisse First Boston Corporation
As Representative of the Several Purchasers
Eleven Madison Avenue
New York, NY 10010-3629
Dear Sirs:
Budget Group Capital Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Trust") by Budget Group, Inc., a
Delaware corporation (the "Company"), proposes to issue and sell to Credit
Suisse First Boston Corporation and the other initial purchasers (collectively,
the "Purchasers") named in Schedule A to the Purchase Agreement dated June 16,
1998 (the "Purchase Agreement"), among the Purchasers, the Company and the
Trust, upon the terms set forth in the Purchase Agreement, up to 6,000,000 (or
up to 6,900,000 to the extent the over-allotment option is exercised in full)
of its Remarketable Term Income Deferrable Equity Securities (HIGH TIDES),
liquidation amount $50 per security (the "HIGH TIDES") (the "Initial
Placement"). The proceeds of the sale by the Trust of the HIGH TIDES and the
Common Securities of the Trust, liquidation amount $50 per Common Security (the
"Common
<PAGE> 2
2
Securities"), are to be invested in the HIGH TIDES Debentures Due 2028 of the
Company issued pursuant to the Indenture dated June 19, 1998 between the
Company and The Bank of New York, as Trustee (the "HIGH TIDES Debentures")
having an aggregate principal amount equal to the aggregate liquidation amount
of the HIGH TIDES and the Common Securities. 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 the
benefit of the Purchasers and (ii) for the benefit of the registered holders
from time to time of the HIGH TIDES, the HIGH TIDES Debentures and the Class A
Common Stock, par value $.01 per share (such as Class A Common Stock and any
other shares issuable in place of or in addition to such shares pursuant to the
antidilution provisions of the HIGH TIDES Debentures, being referred to as the
"Common Stock"), of the Company issuable upon conversion of the HIGH TIDES or
the HIGH TIDES Debentures (collectively, together with the Guarantee by the
Company of the HIGH 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 June 16, 1998, in respect of the HIGH TIDES or, if not defined
therein, in the Amended and Restated Declaration of Trust dated as of June 19,
1998 (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.
"Applicable Rate" means the rate at which the HIGH TIDES
accrue distributions and the HIGH TIDES Debentures accrue interest. From the
date of original issuance of the
<PAGE> 3
3
HIGH TIDES to (but excluding) the Reset Date the Applicable Rate shall be 6
1/4% per annum. Beginning with and after the Reset Date, the Applicable Rate
shall be the Term Rate. The Applicable Rate will be increased upon the
occurrence of a Registration Default, as set forth in Section 7(a) hereof.
"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 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.
"Closing Date" has the meaning given such term in the
Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"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.
"Debenture Trustee", "Guarantee Trustee" and "Property
Trustee" each means The Bank of New York.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Guarantee" means the guarantee by the Company of the HIGH
TIDES pursuant to a Guarantee Agreement dated as of June 19, 1998 between the
Company and the Guarantee Trustee.
"HIGH TIDES" has the meaning set forth in the first paragraph
to this Agreement.
"HIGH TIDES Debentures" has the meaning set forth in the
first paragraph to this Agreement.
"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
<PAGE> 4
4
shall administer an underwritten offering, if any, as set forth in Section 6
hereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Act),
with respect to the terms of the offering of 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.
"Registrable Securities" has the meaning specified in the
Indenture.
"Registration Default" has the meaning given to
such term in Section 7(a) hereof.
"Remarketing Agent" has the meaning specified in
the Indenture.
"Reset Date" means June 15, 2005 (or, if such day is not a
Business Day, the next succeeding Business Day), or such earlier day as may be
determined by the Remarketing Agent, in its sole discretion, for settlement of
a successful remarketing.
"Securities" means the HIGH TIDES, the HIGH TIDES 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.
"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
<PAGE> 5
5
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.
"Suspension Period" has the meaning set forth in Section 7(b)
hereof.
"Term Rate" means the rate established by the Remarketing
Agent (as defined in the Indenture) in connection with the Remarketing (as
defined in the Indenture) at which interest will accrue on the HIGH TIDES
Debentures and distributions will accrue on the HIGH TIDES on and after the
Reset Date.
"Trust" has the meaning set forth in the first paragraph to
this Agreement.
"Trustee" means the Guarantee Trustee, the Debenture 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) The Trust and the Company
shall as promptly as practicable prepare and, not later than the 60th day
following the Closing Date, shall file with the Commission and thereafter shall
each use their best efforts to cause to be declared effective under the Act as
soon as practicable, but in no event later than the 120th day following the
Closing Date, a Shelf Registration Statement relating to the offer and sale of
the Securities by the Holders from time to time in accordance with the methods
of distribution elected by such Holders and set forth in such Shelf
Registration Statement.
(b) The Trust and the Company shall each use its best
efforts (i) to keep the Shelf Registration Statement continuously effective in
order to permit the Prospectus forming part thereof to be usable by Holders
until resale of the Securities is 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 earlier of the following: (A) when all the HIGH TIDES
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement, (B) when all HIGH TIDES Debentures issued to
Holders in respect of HIGH TIDES that had not been sold pursuant to the
<PAGE> 6
6
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement or (C) when all shares of Common Stock issued upon conversion of any
such HIGH TIDES or any such HIGH TIDES 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 Shelf
Registration Statement, promptly upon the request of any 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.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Trust and the Company shall furnish to the
Purchasers, 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 the Purchasers
reasonably may propose.
(b) The Trust and the Company shall take such action as
may be necessary 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.
<PAGE> 7
7
(c) (1) The Company shall advise the Purchasers and the
Holders and, if requested by the Purchasers or any such Holder,
confirm such advice in writing:
(i) 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
(ii) 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 the Purchasers
and the Holders and, if requested by the Purchasers or any such
Holder, confirm such advice in writing:
(i) 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;
(ii) 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 state or the initiation or threatening of any proceeding
for such purpose; and
(iii) of the happening, during the Shelf Registration
Period, of any 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 accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been made).
(d) Each of the Trust and the Company shall use its best
efforts to prevent the issuance, and if issued
<PAGE> 8
8
to obtain the withdrawal, of any order suspending the effectiveness of
any Shelf Registration Statement at the earliest possible time.
(e) The Trust and the Company shall furnish to each Holder
of Securities included within the coverage of any Shelf Registration
Statement, 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
Holder so requests in writing, all exhibits (including those
incorporated by reference).
(f) The Trust and the Company shall, during the Shelf
Registration Period, deliver to each Holder of Securities included
within the coverage of any Shelf Registration Statement, 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 Holder may reasonably request;
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
selling Holders of Securities 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.
(g) 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 Holders of Securities included
therein 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 states as any such
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
states 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.
(h) Unless the applicable Securities shall be in
book-entry only form, the Trust and the Company shall
<PAGE> 9
9
cooperate with the Holders of Securities 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 Holders may request in connection with the sale of
Securities pursuant to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by
Section 3(c)(1)(ii) or 3(c)(2)(iii) above, the Trust and the Company
shall promptly prepare 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 Holders of
the occurrence of any event contemplated by Section 3(c)(2)(iii)
above, the Holders shall suspend the use of the Prospectus until the
requisite changes to the Prospectus have been made.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, the Trust and the Company shall
provide a CUSIP number for the HIGH TIDES and, in the event of and at
the time of any distribution thereof to Holders, the HIGH TIDES
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.
(k) The Trust and the Company shall use their best efforts
to comply with all applicable rules and regulations of the Commission
and shall make generally available to their security holders or
otherwise in accordance with Section 11(a) of the Securities Act as
soon as practicable after the effective date of the applicable Shelf
Registration Statement an earning statement satisfying the provisions
of Section 11(a) of the Securities Act.
(l) 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.
<PAGE> 10
10
(m) The Trust and the Company may require each Holder of
Securities to be sold pursuant to any Shelf Registration Statement to
furnish to the Trust and the Company such information regarding the
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.
(n) 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.
(o) 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 hereof (or
such other customary provisions and procedures acceptable to the
Managing Underwriters, if any) with respect to all parties to be
indemnified pursuant to Section 5 hereof.
(p) The Trust and the Company shall (i) make reasonably
available for inspection by the Holders of Securities to be registered
thereunder, any underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and any attorney, accountant or
other agent retained by such 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 Holders
or any such underwriter, attorney, accountant or agent in connection
with any such Shelf Registration
<PAGE> 11
11
Statement as is customary for similar due diligence examinations;
provided, however, that any information that is designated in writing
by the Trust and the Company in good faith as confidential at the time
of delivery of such information shall be kept confidential by such
Holders or any such underwriter, attorney, accountant or agent, unless
such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality; and provided further that the foregoing inspection
and information gathering shall, to the greatest extent possible, be
coordinated on behalf of the Holders and the other parties entitled
thereto by one counsel designated by and on behalf of such Holders and
other parties; (iii) make such representations and warranties to the
Holders of Securities registered thereunder and the underwriters, if
any, 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) obtain opinions of
counsel to the Trust and the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters, if any)
addressed to each selling Holder 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 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) 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
<PAGE> 12
12
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 such Holder of Securities registered thereunder 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; and (vi) deliver such documents and
certificates as may be reasonably requested by any such Holders and
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) the effectiveness of such Shelf Registration
Statement and each post-effective amendment thereto and (B) each
closing under any underwritten offering to the extent required under
any related underwriting or similar agreement.
(q) Each of the Trust and the Company will use its 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.
(r) 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 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 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
<PAGE> 13
13
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.
(s) 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 or the
Holders for, the reasonable fees and disbursements of one counsel designated in
connection with the filing of the Shelf Registration Statement, up to a maximum
of $50,000. Notwithstanding anything to the contrary herein contained, each
holder of Securities shall pay all registration expenses to the extent required
by applicable law.
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 the Purchasers, each Holder of
HIGH TIDES covered thereby (including the Purchasers) and each person who
controls the Purchasers or any such 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 agrees 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 or action;
provided, however, that (i) the Company
<PAGE> 14
14
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 of the Purchasers or any such Holder
specifically for inclusion therein and (ii) the foregoing indemnity, with
respect to any untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus relating to a Shelf
Registration Statement, shall not inure to the benefit of any Holder (or any
person controlling such Holder) from whom the person asserting any such loss,
claim, damage or liability purchases any of the Securities that are the subject
thereof if such person did not receive a copy of the final prospectus (or the
final prospectus as supplemented) at or prior to the written confirmation of
the sale of such Securities to such person and the untrue statement or alleged
untrue statement or omission or alleged omission contained in the preliminary
prospectus was corrected in the final prospectus (or the final prospectus as
supplemented). 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 Purchasers and the selling Holders provided
in this Section 5(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 3(o)
and Section 6 hereof.
(b) Each Holder of Securities covered by a Shelf
Registration Statement (including the Purchasers) severally agrees to indemnify
and hold harmless (i) the Trust and the Company, (ii) each of the directors of
the Company, (iii) each of its officers 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 in respect of
written information relating to such Holder furnished to the Company by or on
behalf of such Holder specifically for inclusion in the documents referred to
in the foregoing indemnity. This indemnity agreement will be
<PAGE> 15
15
in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 5 of notice of the commencement of any action, 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. 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.
(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
<PAGE> 16
16
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 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. 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
<PAGE> 17
17
Trust and the Company under this Section shall be in addition to any liability
that the Trust and the Company may otherwise have.
6. Underwritten Offering. If, pursuant to written notice
delivered to the Company by the holders of a majority in aggregate liquidation
amount of the HIGH TIDES, a majority in aggregate principal amount of the HIGH
TIDES Debentures or a majority of holders of the Common Stock, as the case may
be, registered pursuant to a Shelf Registration, such holders so elect, the
offer and sale of any such HIGH TIDES, HIGH TIDES Debentures and/or Common
Stock may be effected in the form of 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 Company; provided,
however, that such investment bankers and managers and underwriting
arrangements must be reasonably satisfactory to the Holders of a majority of
the Securities to be included in such offering. The Company shall not, in any
event, 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 (i) such Holder (a) agrees to sell such
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 and (ii) at
least 20% of the outstanding Securities are included in 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 and shall reimburse the Trust and the
Company for the fees and disbursements of their counsel, their independent
public accountants and any printing expenses incurred in connection with such
underwritten offering. Notwithstanding the foregoing or the provisions of
Section 3(n) hereof, upon receipt of a request from the Managing Underwriter or
a representative of Holders of a majority of the Securities outstanding to
prepare and file an amendment or supplement to the Shelf Registration Statement
and Prospectus in connection with an underwritten offering, the Company may
delay the filing of any such amendment or supplement for up to 90 days if the
Company in good faith has a valid business reason for such delay.
<PAGE> 18
18
7. Changes to the Applicable Rate Under Certain
Circumstances. (a) The Applicable Rate at which interest is paid on the HIGH
TIDES Debentures (including in respect of amounts accruing during any Deferral
Period), and distributions are paid on the HIGH TIDES shall be adjusted as
follows, if any of the following events occur (each such event in clauses (i)
through (iii) below, a "Registration Default"):
(i) if a Shelf Registration Statement is not filed with
the Commission on or prior to the 60th day following the Closing Date;
(ii) if the Shelf Registration Statement is not declared
effective on or prior to the 120th day following the Closing Date;
(iii) if (A) after the Shelf Registration Statement is
declared effective, such Shelf Registration Statement ceases to be
effective prior to the end of the Shelf Registration Period (except as
permitted in paragraph (b) of this Section 7) or (B) such Shelf
Registration Statement or the related Prospectus ceases to be usable
in connection with resales of Securities covered by such Shelf
Registration Statement prior to the end of the Shelf Registration
Period (except as permitted in paragraph (b) of this Section 7)
because either (1) any event occurs as a result of which the related
Prospectus forming part of such Shelf Registration Statement would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in light of the
circumstances in which they were made not misleading or (2) it shall
be necessary to amend such Shelf Registration Statement, or supplement
the related Prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
The Applicable Rate will increase following the occurrence of
each Registration Default set forth in clauses (i), (ii) and (iii) above from
and including the next day following each such Registration Default, in each
case by .50% per annum of the principal amount or liquidation amount, as
applicable, of the Securities without prejudice to any other claim that any
Holder may have for any failure by the Company to obtain or maintain continuous
effectiveness of a Shelf Registration Statement in accordance with the terms of
this Registration Agreement. The increase in the Applicable Rate attributable
to each Registration Default shall cease to be effective from the
<PAGE> 19
19
date such Registration Default is cured, and the Applicable Rate shall be
reduced at such time to the Applicable Rate in effect immediately prior to such
Registration Default; provided, however, in the event a Registration Default
occurs prior to the Reset Date and is cured on or after the Reset Date, the
Applicable Rate shall be the Term Rate from the date such Registration Default
is cured.
(b) Notwithstanding anything in Section 7(a) to the
contrary, the Company may prohibit offers and sales of Registrable Securities
at any time if
(i) (A) it is in possession of material non-public
information, (B)(x) the Board of Directors of the Company or (y) the
Chief Financial Officer and the General Counsel of the Company,
determine in good faith that disclosure of such material non-public
information at such time would not be in the best interests of the
Company, and (C)(x) the Chief Executive Officer of the Company or (y)
the Chief Financial Officer and the General Counsel of the Company,
determine that such prohibition is necessary in order to avoid a
requirement to disclose such material non-public information; or
(ii) the Company has made a public announcement relating to
an acquisition or business combination transaction including the
Company and/or one or more of its Subsidiaries (A) that is material to
the Company and its Subsidiaries taken as a whole (and for such
purpose no transaction shall be deemed material unless, on a pro forma
basis and after giving effect thereto, consolidated assets or
consolidated revenues of the Company and its Subsidiaries as of the
end of or for the most recently completed fiscal year would be
increased by at least 20%) and (B) the Board of Directors of the
Company or the Chief Executive Officer or the Chief Financial Officer
of the Company determines in good faith that offers and sales of
Registrable Securities prior to the consummation of such transaction
(or such earlier date as the Board of Directors or the Chief Executive
Officer or the Chief Financial Officer of the Company shall determine)
is not in the best interests of the Company;
provided that during any period of prohibition neither the Company nor any
other Person to whom the Company shall have given registration rights with
respect to shares of Common Stock shall be entitled to make offers and sales of
Common Stock pursuant to a registration statement filed under the
<PAGE> 20
20
Securities Act, other than pursuant to an employee stock purchase plan, stock
option or other employee benefit plan or a dividend re-investment plan of the
Company (each period during which any prohibition of offers and sales of
Registrable Securities is in effect pursuant to clause (i) or (ii) of this
Section 7(b) is referred to herein as a "Suspension Period").
A Suspension Period shall commence on and include the date on
which the Company provides written notice to holders of Registrable Securities
that offers and sales of Registrable Securities cannot be made in accordance
with this Section 7(b) and shall end on the date on which each such holder of
Registrable Securities either receives copies of a prospectus supplement, or is
advised in writing by the Company that offers and sales of Registrable
Securities and use of the Prospectus may be resumed; provided, however, that
all Suspension Periods pursuant to clause (i) of this Section 7 in the
aggregate shall not exceed 60 days during any period of twelve consecutive
calendar months (nor more than 20 consecutive days for any one Suspension
Period) and each Suspension Period shall be followed by at least ten Business
Days during which no Suspension Period is in effect.
(c) A Registration Default referred to in Section
7(a)(iii) shall be deemed not to have occurred and be continuing in relation to
the Shelf Registration Statement or the related Prospectus if (i) 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 respect to the Trust or the
Company that would need to be described in such Registration Statement or the
related Prospectus and (ii) in the case of clause (y), 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, the Applicable Rate shall increase by
.50% per annum of the principal amount or the liquidation amount, as
applicable, in accordance with paragraph (a) above from the first day of such
45-day period until the date on which such Registration Default is cured.
<PAGE> 21
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8. Miscellaneous.
(a) 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.
(b) 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 Purchasers.
(c) 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 8(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar under the
Indenture, with respect to the HIGH TIDES Debentures, or the
Declaration, with respect to the HIGH TIDES, with a copy in a like
manner to Credit Suisse First Boston Corporation;
(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 when received.
The Purchaser or the Trust and the Company by notice to the
other may designate additional or different addresses for subsequent notices or
communications.
(d) 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
<PAGE> 22
22
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.
(e) 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.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in said State.
(h) 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.
<PAGE> 23
Please confirm that the foregoing correctly sets forth the
agreement between the Company, the Trust and you.
Very truly yours,
BUDGET GROUP CAPITAL TRUST, by
BUDGET GROUP, INC. as
Depositor
by /s/ Michael B. Clauer
--------------------------------
Name: Michael B. Clauer
Title: CFO
BUDGET GROUP INC.,
by /s/ Sanford Miller
--------------------------------
Name: Sanford Miller
Title:Chairman and CEO
<PAGE> 24
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION, Acting on
behalf of itself and as the
Representative of the
several Purchasers
by /s/ F.P. Hixon
-------------------------------------------
Name: F.P. Hixon
Title: Managing Director
<PAGE> 1
EXHIBIT 10.2
REMARKETING AGREEMENT, dated June 19, 1998
(this "Agreement"), among (i) Budget Group, Inc., a
Delaware Corporation (the "Company"), (ii) Budget
Group Capital Trust, a Delaware business trust (the
"Issuer Trust"), (iii) The Bank of New York, as
Tender Agent, (iv) Scott R. White, Robert L. Aprati
and Michael B. Clauer, as Administrative Trustees,
and (v) Credit Suisse First Boston Corporation, a
Massachusetts corporation (together with its
successors and assigns, the "Remarketing Agent").
RECITALS
WHEREAS the Issuer Trust is a statutory business trust that
has been created under Delaware law and exists pursuant to the Trust Agreement
(as defined below) and a certificate of trust filed with the Delaware Secretary
of State; and
WHEREAS the Issuer Trust is issuing on today's date or has
heretofore issued $300,000,000 (or up to $345,000,000 to the extent the
over-allotment option is exercised in full) aggregate Liquidation Amount (as
defined below) of Remarketable Term Income Deferable Equity Securities (the
"HIGH TIDES") representing preferred undivided beneficial interests in the
assets of the Issuer Trust and has used the proceeds of the HIGH TIDES,
together with the proceeds of $9,278,400 (or up to $10,670,150 to the extent
the over-allotment option is exercised in full) aggregate Liquidation Amount of
its Common Securities (as defined in the Trust Agreement) of the Issuer Trust,
to purchase $309,278,400 (or up to $355,670,150 to the extent the
over-allotment option is exercised in full) aggregate principal amount of HIGH
TIDES Debentures Due 2028 (the "HIGH TIDES Debentures") issued by the Company
pursuant to the Indenture (as defined below);
<PAGE> 2
2
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. (a) The following terms shall have the
meanings indicated below:
"Additional Amounts" has the meaning specified in the
Indenture.
"Administrative Trustees" has the meaning specified in the
definition of Trust Agreement in this Section 1.
"Broker-Dealer" has the meaning assigned to such term in
Section 5.
"Broker-Dealer Agreement" means an agreement between the
Remarketing Agent and a Broker-Dealer in substantially the form of Annex 1.
"Business Day" means a day other than (a) a Saturday or
Sunday, (b) a day on which banking institutions in the City of New York are
authorized or required by law or executive order to remain closed, or (c) a day
on which the Property Trustee's or Debenture Trustee's Corporate Trust Office
(as defined in the Trust Agreement with respect to the Property Trustee and in
the Indenture with respect to the Debenture Trustee) is closed for business.
"Cause" means any one of the following events or circumstances
shall have occurred and be continuing: (i) the bankruptcy or insolvency of the
Remarketing Agent; or (ii) the Remarketing Agent shall cease to be registered as
a broker-dealer under the Exchange Act.
"Commission" means the Securities and Exchange Commission or
any successor thereto.
"Common Stock" has the meaning assigned to such term in the
Indenture.
"Common Stock Offering" has the meaning specified in the
Indenture.
"Company" has the meaning assigned to such term in the
preamble to this Agreement.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
Remaining Life that would be utilized, at the time of selection and in
<PAGE> 3
3
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the Remaining Life. If no
United States Treasury security has a maturity which is within a period from
three months before to three months after the Reset Date, the two most closely
corresponding United States Treasury securities shall be used as the Comparable
Treasury Issue, and the rate being calculated shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Comparable Treasury Price" means (A) the arithmetic mean of
five Reference Treasury Dealer Quotations, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
arithmetic mean of all such Reference Treasury Dealer Quotations.
"Convertible Remarketing" has the meaning specified in Section
2(d).
"Debenture Trustee" means The Bank of New York, as Trustee
under the Indenture (including its successors as Debenture Trustee thereunder).
"Disclosure Documents" means the Registration Statement, or if
the Registration Statement is not required to be filed with the Commission
pursuant to Section 2(b), the Nonregistered Offering Documents, including any
preliminary offering document or Preliminary Prospectus, as applicable, and as
each may be amended or supplemented.
"Effective Time" means the date and time as of which the
Registration Statement or its most recent post-effective amendment is declared
effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Failed Final Remarketing" has the meaning specified in
Section 2(d).
"Final Remarketing" has the meaning specified in Section 2(d).
"Final Remarketing Period" means the period beginning on the
Business Day immediately following the Initial Remarketing Termination Date and
ending on the day which is three Business Days (or such shorter period as shall
be agreed to by the Remarketing Agent) prior to
<PAGE> 4
4
June 15, 2005 (or, if such day is not a Business Day, the next succeeding
Business Day).
"Global Security Certificate" has the meaning assigned to (i)
the term "Global Preferred Securities" in the Trust Agreement if the Subject
Securities are HIGH TIDES or (ii) the term "Global Security" in the Indenture if
the Subject Securities are HIGH TIDES Debentures.
"HIGH TIDES" has the meaning assigned to such term in the
recitals to this Agreement.
"HIGH TIDES Debentures" has the meaning assigned to such term
in the recitals to this Agreement.
"Indenture" means the Indenture, dated as of June 19, 1998,
between the Company and the Debenture Trustee, as such indenture may from time
to time be amended, modified or supplemented.
"Initial Failed Remarketing" has the meaning specified in
Section 2(d).
"Initial Remarketing" has the meaning specified in Section
2(d).
"Initial Remarketing Period" means the period beginning on the
first Business Day following the Tender Notification Date and ending on June 1,
2005 (or, if such day is not a Business Day, the next succeeding Business Day).
"Initial Remarketing Termination Date" means June 1, 2005 (or,
if such day is not a Business Day, the next succeeding Business Day).
"Interest" means all quarterly payments, interest on quarterly
payments not paid on the applicable Interest Payment Date and Additional
Amounts, as applicable.
"Interest Payment Date" has the meaning specified in the
Indenture and the Trust Agreement.
"Issuer Trust" has the meaning assigned to such term in the
preamble to this Agreement.
"Liquidation Amount" means, with respect to a HIGH TIDES or
Common Security, its stated liquidation amount of $50.
<PAGE> 5
5
"Market Event" means the occurrence of (i) a change in U.S. or
international financial, political or economic conditions or currency exchange
rates or exchange controls as would, in the sole judgment of Remarketing Agent,
be likely to prejudice materially the success of the Remarketing, issue, sale or
distribution of the Subject Securities, or (ii) (A) any change, or any
development or event involving a prospective change, in the condition (financial
or other), business, properties or results of operations of the Company or its
subsidiaries which, in the sole judgment the Remarketing Agent, is material and
adverse and makes it impractical or inadvisable to proceed with completion of
the Remarketing or the sale of and payment for the Subject Securities; (B) any
downgrading in the rating of the Subject Securities or any other debt securities
of the Company by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Securities Act), or any public
announcement that any such organization has under surveillance or review its
rating of the Subject Securities or any other debt securities of the Company
(other than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating); (C) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such exchange,
or any suspension of trading of any securities of the Company on any exchange or
in the over-the-counter market; (D) any banking moratorium declared by U.S.
Federal or New York authorities; or (E) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the sole judgment of the Remarketing Agent, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the Remarketing or the
sale of and payment for the Subject Securities.
"Maximum Rate" means a rate per annum equal to the Treasury
Rate plus 6%.
"Nonconvertible Remarketing" has the meaning specified in
Section 2(d).
"Nonregistered Offering Documents" has the meaning specified
in Section 6(a).
"No Registration Opinion" means an opinion of Securities
Counsel that the securities issuable in the Remarketing do not need to be
registered under the
<PAGE> 6
6
Securities Act and that no other filing of any kind is required to be made with
the Commission as a condition to the sale of such securities, which No
Registration Opinion shall be reasonably satisfactory to the Remarketing Agent
and its counsel.
"Notice of Purchasers" means a notice delivered by the
Remarketing Agent on the Reset Date to (i) the Tender Agent if the Subject
Securities are not evidenced by a Global Security Certificate on the Reset Date
or (ii) The Depository Trust Company if the Subject Securities are evidenced by
a Global Security Certificate on the Reset Date, in either case naming the
parties who will purchase the Subject Securities from the Remarketing Agent.
"Offering Circular" means the Confidential Offering Circular,
dated June 16, 1998, relating to the initial offer and sale of the HIGH TIDES.
"Par Amount" means $50 per Subject Security.
"Paying Agent" has the meaning specified in the Trust
Agreement.
"Primary Treasury Dealer" has the meaning specified in the
definition of Quotation Agent in this Section 1.
"Preliminary Prospectus" means each prospectus included in the
Registration Statement, or amendment thereof, before it becomes effective under
the Securities Act and any prospectus which may be filed by the Company with the
Commission pursuant to Rule 424(a) (or any successor applicable rule) of the
rules and regulations under the Securities Act (the "Rules and Regulations") in
connection with the Registration Statement.
"Property Trustee" has the meaning specified in the definition
of Trust Agreement in this Section 1.
"Prospectus" means the final prospectus which will be filed
with the Commission pursuant to Rule 424(b) (or any successor applicable rule)
of the Rules and Regulations and deemed to be a part of the Registration
Statement at the time of its effectiveness under the Securities Act pursuant to
paragraph (b) of Rule 430A (or any successor applicable rule) of the Rules and
Regulations.
"Quotation Agent" means Credit Suisse First Boston Corporation
and its successors; provided, however, that if Credit Suisse First Boston
Corporation shall cease to be a
<PAGE> 7
7
primary United States Government securities dealer in The City of New York (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and
(ii) any other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with
the Company.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer, the arithmetic mean, as determined by the
Debenture Trustee of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00
p.m., New York City time, on the third Business Day preceding the Reset Date.
"Registration Statement" means a registration statement
covering the securities to be issued in the Remarketing filed with the
Commission pursuant to the Securities Act, including any amendments thereto and
any document or other information incorporated by reference therein.
"Remaining Life" means the period beginning on (and
including) the Reset Date and ending on June 15, 2028.
"Remarketing" has the meaning specified in the
recitals to this Agreement.
"Remarketing Agent" has the meaning assigned to such term in
the preamble to this Agreement (including any successor Remarketing Agent).
"Remarketing Conditions" means the following factors: (i)
short-term and long-term market rates and indices of such short-term and
long-term rates, (ii) market supply and demand for short-term and long-term
securities, (iii) yield curves for short-term and long-term securities
comparable to the Subject Securities, (iv) industry and financial conditions
which may affect the Subject Securities, (v) the number of Subject Securities
to be remarketed, (vi) the number of potential purchasers, (vii) the current
ratings by nationally recognized statistical rating organizations of long-term
subordinated debt of the Company and of other outstanding capital securities of
the Company's trust subsidiaries, (viii) the number of shares of Common Stock,
if any, into which the Subject Securities will be convertible and (ix) the
length and type of call protections, if any.
<PAGE> 8
8
"Remarketing Notice" has the meaning specified in Section
2(d).
"Reset Date" means June 15, 2005, or, if such date is not a
Business Day, the next succeeding Business Day, or such earlier day as may be
determined by the Remarketing Agent, in its sole discretion, for settlement of a
successful remarketing.
"Rules and Regulations" has the meaning specified in the
definition of Preliminary Prospectus in this Section 1.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Counsel" means counsel experienced in matters
relating to securities law.
"Subject Securities" means (i) the HIGH TIDES if, on the Reset
Date, the HIGH TIDES Debentures have not been distributed to holders of HIGH
TIDES in connection with a liquidation or dissolution of the Issuer Trust or
(ii) otherwise, the HIGH TIDES Debentures.
"Tender Agent" means (i) the Property Trustee if the Subject
Securities are HIGH TIDES or (ii) the Debenture Trustee if the Subject
Securities are HIGH TIDES Debentures.
"Tender Notification Date" means Friday, May 20, 2005 or, if
such day is not a Business Day, the next succeeding Business Day.
"Term Call Protections" has the meaning assigned to such term
in Section 2(c).
"Term Conversion Ratio" has the meaning assigned to such term
in Section 2(c).
"Term Provisions" has the meaning specified in Section 2(c).
"Term Rate" has the meaning assigned to such term in Section
2(c).
"Treasury Rate" means (i) the yield, under the heading which
represents the average for the week immediately prior to the date of
calculation, appearing in the most recently published statistical release
designated H.15(519) or any successor publication which is published weekly by
the Federal Reserve and which establishes yields
<PAGE> 9
9
on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Remaining Life (if no maturity is within three months
before or after the Remaining Life, yields for the two published maturities
most closely corresponding to the Remaining Life shall be determined and the
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
the Reset Date. The Treasury Rate shall be calculated by the Remarketing Agent
on the third Business Day preceding the Reset Date.
"Trust Agreement" means the Amended and Restated Declaration
of Trust, dated as of June 19, 1998, among the Company, as Depositor, The Bank
of New York, as Property Trustee (the "Property Trustee"), The Bank of New York
(Delaware), as Delaware Trustee (the "Delaware Trustee"), Scott R. White,
Robert L. Aprati and Michael B. Clauer as Administrative Trustees (the
"Administrative Trustees") and the holders from time to time of undivided
beneficial interests in the assets of the Issuer Trust, as such agreement may
from time to time be amended, modified or supplemented.
(b) Capitalized terms used herein and not otherwise
defined but defined in the Trust Agreement or Indenture shall have the meanings
assigned to such terms in the Trust Agreement or Indenture, as applicable.
2. Acceptance and Performance of Duties. The Remarketing
Agent, the Company, the Administrative Trustees on behalf of the Issuer Trust
and the Tender Agent agree as follows:
(a) The Remarketing Agent will perform the duties and
obligations of Remarketing Agent for the Remarketed Securities as specified in
the Trust Agreement (if the Tendered Securities are the HIGH TIDES), the
Indenture (if the Tendered Securities are the HIGH TIDES Debentures) and in
this Agreement in good faith and in compliance with the provisions of
applicable laws.
(b) The Remarketing Agent will use its best efforts to
remarket all Subject Securities tendered or
<PAGE> 10
10
deemed tendered for sale; provided, however, that the Remarketing Agent will
not be obligated to attempt to remarket such Subject Securities, or to
determine the Term Rate pursuant to Section 2(c) below, if (A) in the
Remarketing Agent's judgment any (i) Disclosure Document provided by the Issuer
Trust or the Company in connection with the Remarketing or (ii) document
publicly disclosed (including in a filing pursuant to the Exchange Act) by or
on behalf of the Issuer Trust or the Company, includes any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, unless the Remarketing Agent is satisfied in its sole
discretion that such statement or omission has been properly corrected, (B)
unless the Company provides a No Registration Opinion to the Remarketing Agent
prior to the Tender Notification Date, the Company and the Trust (if
applicable) shall have failed to have the Registration Statement declared
effective by the Commission on or prior to the Tender Notification Date and
remain effective at least through and including the Reset Date, provided that
the Registration Statement may be declared effective later than the Tender
Notification Date if the Company provides an opinion of Securities Counsel to
the Remarketing Agent to the effect that such Registration Statement need not
become effective until the date the Initial Remarketing Period is required to
commence and the Remarketing Agent consents to such delay or (C) the Company
fails to comply with the requirements set forth in Section 6(c) of this
Agreement. Each Subject Security will be remarketed only at a purchase price
equal to 101% of its Par Amount. The Remarketing Agent may, but except as
provided in Section 11 shall not be obligated to, purchase tendered Subject
Securities for its own account.
(c) The Remarketing Agent has agreed to use its best
efforts to remarket all Subject Securities tendered for Remarketing on the
Tender Notification Date. The Remarketing Agent will establish, effective
beginning on the Reset Date, (i) the rate (the "Term Rate") per annum at which
Interest will accrue on the Subject Securities, (ii) the number of shares of
Common Stock, if any, into which each Subject Security may be converted (the
"Term Conversion Ratio") and (iii) the price, manner and time, if any, at which
the Subject Securities may be redeemed from the proceeds of a Common Stock
Offering (the "Term Call Protections" and together with the Term Rate and the
Term Conversion Ratio, the "Term Provisions"). The Remarketing Agent will use
its best efforts to establish the Term Provisions most favorable to the Company
consistent with the successful remarketing of Subject Securities tendered
there-
<PAGE> 11
11
for at a price equal to 101% of the aggregate Par Amount thereof; provided that
each Subject Security will have the same Term Provisions; provided that the
Term Provisions may not permit the Company to redeem the Subject Securities for
a price less than the aggregate Par Amount thereof plus any accrued and unpaid
Interest thereon; and, provided further, that if no Subject Security is
tendered for remarketing on the Tender Notification Date, the Remarketing will
not take place (although the Remarketing will not be deemed to have failed),
and the Remarketing Agent will set the Term Provisions in a manner consistent
with the Remarketing Notice that it believes, in its sole discretion, would
result in a price per Subject Security equal to 101% of its Par Amount.
(d) The remarketing process will commence on the first
Business Day following the Tender Notification Date and will be conducted on
the following schedule and in the
following manner:
At Least 40 Days (May 6, The Issuer Trust shall cause a notice (the
2005), But Not More Than "Remarketing The Issuer Trust shall cause a
60 Days (April 16, 2005) notice (the "Remarketing Notice") to be
Prior to June 15, 2005: sent to holders of the Subject Securities
stating whether it intends to remarket the
Subject Securities as securities which will
be convertible into Common Stock of the
Company (a "Convertible Remarketing") or
which will be nonconvertible (a
"Nonconvertible Remarketing").
Friday, April 20, 2005 Each outstanding Subject Security shall be
through the Tender deemed to have been tendered for
Notification Date remarketing unless the holder thereof has
(Friday, May 20, 2005, given irrevocable notice to the contrary to
or if such day is not a the Tender Agent (which the Tender Agent
Business Day, the next will promptly remit to the Remarketing
succeeding Business Agent). Such irrevocable notice, which may
Day): be telephonic or written, must be
delivered not earlier than 30 days prior to
the Tender Notification Date, and not later
than 5:00 p.m., New York City time, on the
Tender Notification Date. A
<PAGE> 12
12
holder's notice of an election to retain
Subject Securities must state the number of
Subject Securities to be retained (which
must be all of the Subject Securities
represented by the applicable certificate,
unless such certificate is a Global
Security Certificate), the number of the
certificate representing the Subject
Securities not to be deemed to have been so
tendered and the number of Subject
Securities represented by such certificate.
Any transferee of a Subject Security for
which such notice has been provided shall
be bound thereby. The failure by a holder
of Subject Securities to give timely notice
of an election to retain all (or, in the
case of a Global Security Certificate, any
part) of such holder's Subject Securities
will constitute the irrevocable tender for
sale in the Remarketing of all the Subject
Securities it holds. A holder of Subject
Securities which has not duly given notice
that it will not tender and retain its
Subject Securities will cease to have any
further rights with respect to such Subject
Securities upon the successful remarketing
thereof, except the right of such holder to
receive an amount equal to (i) from the
proceeds of the Remarketing, or in the
event of a Failed Final Remarketing or upon
the occurrence of certain Market Events,
from the Company, 101% of the aggregate
liquidation amount thereof,
<PAGE> 13
13
plus (ii) from the Company, any accrued and
unpaid Inter est thereon to (but excluding)
the Reset Date.
Beginning the First The Remarketing Agent will commence a
Business Day Following Convertible Remarketing or a
the Tender Notification Nonconvertible Remarketing, as the case may
Date: be (in either case, an "Initial
Remarketing"), in accordance with the terms
of this Agreement and pursuant to the
instructions set forth in the Remarketing
Notice. The Remarketing Agent will
determine, and upon request make available
to interested persons nonbinding indications
of, the Term Provisions based upon
then-current Remarketing Conditions. The
Remarketing Agent will solicit and receive
orders from prospective investors to
purchase tendered Subject Securities. The
Initial Remarketing shall be deemed to have
failed (an "Initial Failed Remarketing") if
(i) despite using its best efforts, the
Remarketing Agent is unable to establish,
prior to the Initial Remarketing Termination
Date, a Term Rate which is less than or
equal to the Maximum Rate, (ii) the
Remarketing Agent is excused from
Remarketing the Subject Securities because
of (a) the failure by the Company or the
Issuer Trust to satisfy a condition in this
Agreement or (b) the occurrence of a Market
Event or (iii) there is no Remarketing Agent
on the first day of the Initial Remarketing
Period.
<PAGE> 14
14
Remainder of the The Remarketing Agent will continue, if
Initial Remarketing necessary, using its best efforts to
Period: remarket the Subject Securities tendered
for remarketing as described above,
adjusting the non-binding indications of
the Term Provisions necessary to establish
the Term Provisions most favorable to the
Company consistent with remarketing all
Subject Securities tendered therefor at
101% of the Par Amount, until the Initial
Remarketing is completed or is deemed to
have failed. See the definition of an
Initial Failed Remarketing above. Promptly
upon determination of the Term Provisions,
the Remarketing Agent will communicate such
Term Provisions to the Tender Agent, which
will communicate such Term Provisions to
the Issuer Trustees (if the Issuer Trust
has not liquidated), the Issuer Trust (if
the Issuer Trust has not liquidated), the
Debenture Trustee, the Paying Agent, the
Company and each holder (if any) which
timely elected not to tender all of its
Subject Securities for remarketing, by
delivery of a written notice or by
telephone promptly confirmed by telecopy or
writing.
Beginning the First If the Initial Remarketing fails because
Business Day Following the Remarketing Agent was not able to
an Initial Failed establish a Term Rate less than or equal to
Remarketing (if the Maximum Rate prior to the Initial
applicable): Remarketing Termination Date, the
Remarketing Agent will commence a second
remarketing (the "Final Remarketing"),
<PAGE> 15
15
which will be a Convertible Remarketing if
the Initial Remarketing was a Nonconvertible
Remarketing and a Nonconvertible Remarketing
if the Initial Remarketing was a Convertible
Remarketing. The Remarketing Agent will
determine, and upon request make available
to interested persons nonbinding indications
of, the Term Provisions based upon
then-current Remarketing Conditions. The
Remarketing Agent will solicit and receive
orders from prospective investors to
purchase tendered Subject Securities. The
Final Remarketing will be deemed to have
failed (a "Failed Final Remarketing") if (i)
despite using its best efforts, the
Remarketing Agent is still not able to
establish a Term Rate less than or equal to
the Maximum Rate prior to the expiration of
the Final Remarketing Period, or (ii) the
Remarketing Agent is excused from
Remarketing the Subject Securities because
of (a) the failure by the Company or the
Issuer Trust to satisfy a condition in this
Agreement or (b) the occurrence of a Market
Event.
Remainder of the Final The Remarketing Agent will continue, if
Remarketing Period (if necessary, to use its best efforts to
applicable): remarket the Subject Securities, as
described above, adjusting the non-binding
indications of the Term Provisions as
necessary to establish the Term Provisions
most favorable to the Company consistent
with remarketing all Subject Securities
tendered therefor
<PAGE> 16
16
at 101% of the Par Amount until the Final
Remarketing is completed or is deemed to
have failed. See the definition of a Failed
Final Remarketing above. If the Remarketing
Agent is able to establish a Term Rate less
than or equal to the Maximum Rate during
the Final Remarketing Period, it will
promptly communicate such Term Provisions
to the Tender Agent, which will communicate
such Term Provisions to the Issuer Trustees
(if the Issuer Trust has not liquidated),
the Issuer Trust (if the Issuer Trust has
not liquidated), the Debenture Trustee, the
Paying Agent, the Company and each holder
(if any) which timely elected not to tender
all of its Subject Securities for
remarketing, by delivery of a written
notice or by telephone promptly confirmed
by telecopy or writing.
Reset Date: New holders must deliver the purchase price
for the remarketed securities in same-day
funds to the Remarketing Agent and the
Remarketing Agent, will deliver such
purchase price to the Tender Agent (in like
funds). Payments to tendering holders who
hold Subject Securities in the form of one
or more Global Security Certificates will
be made in the manner provided in the
Offering Circular under "Description of
HIGH TIDES -- Form, Book Entry Procedures
and Transfer." Tendering holders who hold
Subject Securities in certificated form
(other than in
<PAGE> 17
17
the form of Global Security Certificates)
must deliver their certificates properly
endorsed for transfer to the Tender Agent
by 2:30 p.m. on the Reset Date (or any
succeeding date) to receive payment of the
purchase price for their Subject
Securities. Subject to compliance with the
preceding two sentences, the Tender Agent
will pay former holders the proceeds of the
Remarketing of their Subject Securities by
the Remarketing Agent. In the event of a
Failed Final Remarketing, the Company will
be required to redeem all outstanding HIGH
TIDES Debentures on the Reset Date at 101%
of the aggregate principal amount thereof,
plus accrued and unpaid Interest thereon,
and, if the HIGH TIDES are still held by
the Property Trustee, the Property Trustee
shall concurrently apply the proceeds of
such redemption to redeem a Like Amount of
HIGH TIDES in accordance with the
provisions of the Trust Agreement. On and
after the Reset Date, the terms of all
Subject Securities, whether or not tendered
for remarketing, will be modified by the
Term Provisions, as the same shall be
established by the Remarketing Agent. If
the Subject Securities are not held by The
Depository Trust Company or its nominee in
the form of one or more Global Security
Certificates, certificates representing
remarketed Subject Securities will be
issued to the purchasers thereof,
irrespective of whether the
<PAGE> 18
18
certificates formerly representing such
Subject Securities have been delivered to
the Tender Agent.
3. Representations, Warranties, Covenants and Agreements
of the Company and the Remarketing Agent. (a) The Company represents, warrants,
covenants and agrees with the Remarketing Agent as follows:
(i) the Company has full power and authority to enter into
this Agreement and will have full power and authority to enter into
any agreements which it may enter into in connection with the
Remarketing; this Agreement and the transactions contemplated hereby
have been, and each other such agreement and the transactions
contemplated thereby will be, duly authorized, executed and delivered
by the Company; and this Agreement is, and each such other agreement
will be at the Reset Date, a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms;
(ii) the consummation of the transactions contemplated
herein do not now, and the consummation of the transactions
contemplated in any other agreement entered into by the Company in
connection with the Remarketing will not, at the Reset Date, conflict
with or constitute a breach of, or a default under, or result in the
creation or imposition of any lien, charge or other encumbrance upon
any property or assets of the Issuer Trust, the Company or any of the
Company's subsidiaries pursuant to any contract, indenture,
declaration of trust, deed of trust, mortgage, loan agreement, note,
lease or other instrument or agreement to which the Issuer Trust, the
Company or any of its subsidiaries is or will be a party or by which
it or any of them may be bound, or to which any of the property or
assets of any of them is or will be subject, nor will such actions
result in any violation of the provisions of the by-laws of the
Company or any of its subsidiaries or any statute (including the
Securities Act, the Exchange Act and state securities laws) or any
order, rule or regulation of any court or governmental agency or body
(including the Commission) which has or will have jurisdiction over
the Company or any of its subsidiaries or any of their material
property or assets except for a conflict, breach, default, lien,
charge or encumbrance which could not reasonably be
<PAGE> 19
19
expected to have a material adverse effect on the consummation of the
transactions contemplated herein or therein;
(iii) all required consents, rulings and approvals of
governmental authorities (other than "Blue Sky" authorities) required
in connection with the execution and delivery by the Company of this
Agreement and any agreement entered into by the Company in connection
with the transactions contemplated by any Disclosure Documents, and
the performance by the Company of its obligations hereunder and
thereunder, have been obtained and are in full force and effect or, at
the Reset Date, will have been obtained and be in full force and
effect;
(iv) except as disclosed in the Disclosure Documents,
neither the Company nor any of its subsidiaries is or, at the Reset
Date, will be (i) in violation of its by-laws, (ii) in default in any
respect, and no event has occurred or will have occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any contract, indenture, declaration of trust, deed of
trust, mortgage, loan agreement, note, lease or other instrument or
agreement to which it is or will be bound or to which any of its
properties or assets is or will be subject or (iii) in violation of
any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject;
(v) the Disclosure Documents, including as provided in
Section 3(x), will not, at the Effective Time and thereafter through
and including the Reset Date, 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;
provided that no representation or warranty is made as to information
contained in or omitted from the Disclosure Documents in reliance upon
and in conformity with written information furnished to the Company by
the Remarketing Agent specifically for inclusion therein;
(vi) the financial statements of the Company contained (or
incorporated by reference) in the Disclosure Documents will present
fairly the financial position of the Company as of the dates
indicated, and the results of operations and changes
<PAGE> 20
20
in financial position of the Company for the periods covered, in
conformity with generally accepted accounting principles applied on a
consistent basis, except as otherwise set forth therein;
(vii) after the date of the most recent financial statements
of the Company contained (or incorporated by reference) in the
Disclosure Documents, there will not have been any material adverse
change in the condition (financial or other), stockholders' equity,
results of operations or business of the Company and its subsidiaries,
except as disclosed in the Disclosure Documents;
(viii) except as disclosed in the Disclosure Documents, there
will be no legal or governmental proceedings pending at the Reset Date
to which the Company or any of its subsidiaries is a party or of which
any material property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, might have a material adverse
effect on the condition (financial or other), stockholders' equity,
results of operations or business of the Company and its subsidiaries,
taken as a whole;
(ix) any description of a contract, indenture, declaration
of trust, deed of trust, mortgage, loan agreement, note, lease or
other instrument or agreement contained in the Disclosure Documents
will be, at the Effective Time and thereafter through and including
the Reset Date, true, complete and correct; and
(x) If the Registration Statement is filed, the
Registration Statement at the Effective Time will conform to the
requirements of the Securities Act and the Rules and Regulations and
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as of
the Effective Time and thereafter through and including the Reset
Date, will conform to the requirements of the Securities Act and the
Rules and Regulations and will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that no representation
or warranty is made as to information contained in or
<PAGE> 21
21
omitted from any Preliminary Prospectus, the Registration
Statement or the Prospectus in reliance upon and in conformity
with written information furnished to the Company by the
Remarketing Agent specifically for inclusion therein.
(b) The Remarketing Agent represents, warrants, covenants
and agrees with the Company that if it shall not have received a No
Registration Opinion and the Registration Statement shall not be effective on
the Tender Notification Date (or such later date as may be provided in Section
2(b)), the Remarketing Agent will offer and sell the Subject Securities only in
compliance with the federal and state securities laws applicable to
unregistered sales of securities in effect at the time of the Remarketing.
4. Fees and Expenses. (a) The Company agrees to pay to
the Remarketing Agent upon settlement of the transactions contemplated by the
Remarketing (i) as compensation for its services hereunder, a fee equal to 1%
of the aggregate Par Amount of outstanding Subject Securities on the Reset
Date, plus (ii) all out-of-pocket expenses reasonably incurred by the
Remarketing Agent in connection with the performance of its duties; provided
that if both the Initial Remarketing and the Final Remarketing fail, the
Company shall not be required to pay any fees to, or reimburse any
out-of-pocket expenses of, the Remarketing Agent.
(b) The Remarketing Agent acknowledges and agrees that the
performance of its duties hereunder will be without charge to holders or
purchasers of the Subject Securities other than the Company.
5. Broker-Dealer Participation. The Remarketing Agent
shall enter into Broker-Dealer Agreements with all broker-dealers
("Broker-Dealers"), if any, which it selects to have participate in the
remarketing process; provided that (i) such Broker-Dealers agree to comply with
the terms of this Agreement, including the terms of Section 3(b) of this
Agreement, (ii) any fees or commissions paid to the Broker-Dealers shall be
paid by the Remarketing Agent out of the fees it is paid pursuant to Section
4(a), and (iii) the Remarketing Agent agrees to provide to the Company an
executed copy of each Broker-Dealer Agreement. None of the Remarketing Agent,
the Issuer Trust and the Company shall be responsible for the out-of-pocket
expenses of such Broker-Dealers or for ensuring compliance by such
Broker-Dealers with the terms of this Agreement (except, with
<PAGE> 22
22
respect to the Remarketing Agent, as specifically set forth in the
Broker-Dealer Agreement).
6. Disclosure Documents and Other Information. (a) If (i)
the Registration Statement is not required to be filed with the Commission
pursuant to the provisions of Section 2(b) of this Agreement and (ii) the
Remarketing Agent determines that it is necessary or desirable to use a
disclosure document in connection with the performance of its obligation to
remarket the Subject Securities, the Remarketing Agent will notify the Company
and the Company will provide to the Remarketing Agent prior to the Tender
Notification Date at the Company's expense a disclosure document or documents
reasonably satisfactory to the Remarketing Agent and its counsel in respect of
the Subject Securities (collectively, and including any documents or other
information incorporated by reference therein, the "Nonregistered Offering
Documents"). The Company will supply the Remarketing Agent at the Company's
expense with such number of copies of the Disclosure Documents as the
Remarketing Agent reasonably requests from time to time. The Company will
supplement and amend the Disclosure Documents so that at all times they will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements in the Disclosure Documents, in the light
of the circumstances under which they were made, not misleading.
(b) The Company and the Issuer Trust each agrees to
furnish to the Remarketing Agent (i) as promptly as practicable after they are
available, all regular and periodic reports, if any, which the Company or the
Issuer Trust files with the Commission under the Exchange Act and all reports
which the Company or the Issuer Trust provides generally to holders of its
publicly held securities and (ii) from time to time, such other information
concerning the Company and the Issuer Trust as the Remarketing Agent may
reasonably request.
(c) The Company will provide the Remarketing Agent with
such certificates, opinions of counsel, accountants' letters and other support
for the information contained in any Disclosure Documents as the Remarketing
Agent and its counsel may reasonably request.
<PAGE> 23
23
(d) If the Registration Statement is filed with the
Commission, the Company agrees that it will:
(i) prepare the Registration Statement in conformity with
the requirements of the Securities Act and the Rules and Regulations;
(ii) cause the Registration Statement to become effective
prior to the Tender Notification Date (or such later date as may be
permitted in accordance with the provisions of Section 2(b));
(iii) prepare the Prospectus in a form approved by the
Remarketing Agent and file the Prospectus in accordance with Rule
424(b) (or any successor applicable rule) under the Securities Act and
Rule 430A(a)(3) (or any successor applicable rule) under the
Securities Act; make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted
herein; advise the Remarketing Agent, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and furnish the
Remarketing Agent with copies thereof; advise the Remarketing Agent,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the securities covered by such
Registration Statement for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional
information; and in the event of the issuance of any stop order or of
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification,
promptly use its reasonable best efforts to obtain its withdrawal;
(iv) furnish promptly to the Remarketing Agent and to
counsel for the Remarketing Agent a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
<PAGE> 24
24
(v) deliver promptly to the Remarketing Agent such number
of the following documents as the Remarketing Agent shall reasonably
request: (1) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits) and (2) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus; and, if the
delivery of a prospectus is required at any time after the Effective
Time in connection with the offering or sale of the securities covered
by the Registration Statement and if at such time any events shall
have occurred as a result of which the Prospectus 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 when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the Securities Act, notify the
Remarketing Agent and, upon its request, prepare and furnish without
charge to the Remarketing Agent as many copies as the Remarketing
Agent may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission
or effect such compliance;
(vi) file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Remarketing
Agent, be required by the Securities Act or requested by the
Commission;
(vii) prior to filing with the Commission any amendment to
the Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 (or any applicable successor rule) of
the Rules and Regulations, furnish a copy thereof to the Remarketing
Agent and counsel for the Remarketing Agent;
(viii) as soon as practicable after the Effective Time, make
generally available to the Company's security holders and deliver to
the Remarketing Agent an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
(or any applicable successor section) of the Securities Act and the
Rules and
<PAGE> 25
25
Regulations (including, at the option of the Company, Rule 158 (or any
applicable successor rule));
(ix) promptly from time to time take such action as the
Remarketing Agent may request to qualify the securities covered by the
Registration Statement for offering and sale under the securities laws
of such jurisdictions as the Remarketing Agent may request and to take
all steps necessary to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the Subject
Securities; provided, however, that in connection therewith the
Company will not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction where
it is not so qualified; and
(x) use its best effort to have the Subject Securities
listed on any securities exchange or quoted in any automated
inter-dealer quotation system reasonably requested by the Remarketing
Agent.
7. Indemnification. (a) The Company will indemnify and
hold harmless the Remarketing Agent against any losses, claims, damages or
liabilities, joint or several, to which the Remarketing Agent may become
subject, under the Securities Act or the Exchange Act 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 any material fact contained in any Disclosure Document, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and will reimburse the Remarketing Agent for any legal or
other expenses reasonably incurred by the Remarketing Agent in connection with
investigating or defending any such loss, claim, damage liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any Disclosure Document in
reliance upon and in conformity with written information furnished to the
Company by the Remarketing Agent specifically for use therein.
<PAGE> 26
26
(b) The Remarketing Agent will indemnify and hold harmless
the Company and the Issuer Trust against any losses, claims, damages or
liabilities to which the Company or the Issuer Trust may become subject, under
the Securities Act or the Exchange Act 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 any material
fact contained in the Disclosure Documents, or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnish to
the Company or the Issuer Trust by the Remarketing Agent specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company or the Issuer Trust in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) above. 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 the 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 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
<PAGE> 27
27
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.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Remarketing Agent on the other from the
Remarketing of the Subject Securities in accordance with this Agreement or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and the Remarketing Agent on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Remarketing
Agent on the other shall be deemed to be in the same proportion as the
aggregate outstanding Liquidation Amount (if the Subject Securities are HIGH
TIDES) or principal amount (if the Subject Securities are HIGH TIDES
Debentures) bear to the fees received by the Remarketing Agent from the Company
under this Agreement. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Remarketing Agent and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. 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). Notwithstanding the provisions of this
subsection (d), the Remarketing Agent shall not be required to contribute any
amount in excess of the amount
<PAGE> 28
28
by which the aggregate outstanding Liquidation Amount (if the Subject
Securities are HIGH TIDES) or principal amount (if the Subject Securities are
HIGH TIDES Debentures) of the Subject Securities remarketed exceeds the amount
of any damages which the Remarketing Agent has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
(e) The obligations of the Company under this Section
shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls the Remarketing Agent within the meaning of the Securities Act or the
Exchange Act; and the obligations of the Remarketing Agent under this Section
shall be in addition to any liability which the Remarketing Agent may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act.
8. Remarketing Agent's Liabilities. The Remarketing Agent
shall incur no liability to the Company, the Debenture Trustee, the Property
Trustee, the Administrative Trustees, the Delaware Trustee, the Tender Agent or
any holder of Subject Securities for its actions as Remarketing Agent pursuant
to the terms hereof and of the Trust Agreement or Indenture without gross
negligence or in the absence of wilful misconduct. The undertaking of the
Remarketing Agent to remarket any Subject Securities shall be on a "best
efforts" basis.
9. Termination. This Agreement will terminate upon the
earliest to occur of the following: (i) the written agreement of all parties
hereto; (ii) the date that no HIGH TIDES Debenture is outstanding; and (iii)
the day immediately following the Reset Date. The provisions of Sections 7, 8,
11 and 12 hereof will continue in effect as to actions prior to the date of
termination, and each party will pay to the others any amounts owing at the
time of termination.
10. Resignation and Removal; Appointment of Successor. (a)
The Remarketing Agent may resign at any time hereunder by giving at least 30
days' written notice thereof to the Company and the Tender Agent. No successor
need have accepted its appointment for such resignation to be effective.
(b) The Remarketing Agent may be removed at any time for
Cause by the holders of a majority in aggregate Par Amount of the Subject
Securities outstanding, by
<PAGE> 29
29
written notice to the Remarketing Agent, the Tender Agent and the Company. No
successor need have accepted its appointment for such removal to be effective.
(c) If the Remarketing Agent resigns or is removed in
accordance with Section 10(b), the Company will use its best efforts to appoint
as the successor Remarketing Agent hereunder an investment bank, broker, dealer
or other organization which, in the judgment of the Company, is qualified to
remarket the Subject Securities and to establish the Term Provisions. If the
Company fails to so appoint a successor Remarketing Agent reasonably promptly,
in light of the proximity of the Tender Notification Date, or if such successor
fails to accept such appointment, the holders of not less than 25% in aggregate
Par Amount of the Subject Securities outstanding, by written notice to the
Tender Agent and the Company, may appoint a successor Remarketing Agent which
is an investment bank, broker, dealer or other organization qualified to
remarket the Subject Securities and to establish the Term Provisions; provided
that for purposes of determining the holders of not less than 25% in aggregate
Par Amount of the Subject Securities outstanding, Subject Securities owned by
the Company, the Issuer Trust or any trustee or administrator of the Issuer
Trust or any affiliate of any of the foregoing shall be disregarded and deemed
not to be outstanding.
(d) A successor Remarketing Agent shall accept its
appointment by executing and delivering a written instrument of acceptance to
the Tender Agent and the Company.
(e) The provisions of Sections 7, 8, 11 and 12 hereof will
continue in effect as to actions of the Remarketing Agent prior to the date of
resignation or removal, and the Remarketing Agent will pay to and have the
right to receive from the other parties hereto any amounts owing at the time of
such event.
(f) The Tender Agent shall provide written notice of each
resignation and each removal of the Remarketing Agent and each appointment of a
successor Remarketing Agent and such successor's acceptance thereof by
first-class mail, postage prepaid, to the holders of the Subject Securities as
their names and addresses appear in the applicable register.
(g) Any corporation or other entity into which the
Remarketing Agent may be merged or converted or with which it may be
consolidated, or any corporation resulting
<PAGE> 30
30
from any merger, conversion or consolidation to which the Remarketing Agent may
be a party, or any corporation succeeding to all or substantially all of the
business of the Remarketing Agent, shall be the successor of the Remarketing
Agent hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
11. Dealing in Subject Securities by Remarketing Agent.
The Remarketing Agent, either as principal or agent, may buy, sell, own, hold
and deal in Subject Securities, and may join in any action which any owner of
the Subject Securities may be entitled to take with like effect as if it did
not act in any capacity hereunder. Except as provided in the next succeeding
sentence, the Remarketing Agent is under no obligation at any time to purchase
Subject Securities. If the Term Rate is established by the Remarketing Agent
but on the Reset Date the Remarketing Agent is unable to consummate the sale of
one or more Subject Securities tendered for remarketing, the Remarketing Agent
shall purchase such Subject Securities on the Reset Date for 101% of their
aggregate Par Amount; provided that if the inability of the Remarketing Agent
to consummate the sale of one or more Subject Securities tendered for
remarketing is due to the occurrence of a Market Event, the Company shall be
required to cause the redemption of such Subject Securities on the Reset Date
for 101% of their aggregate par amount, plus any accrued and unpaid Interest
thereon to but excluding the Reset Date. The Remarketing Agent agrees that the
purchase of Subject Securities for its own account or the account of its
affiliates will be upon terms no more favorable to it than those pertaining to
the purchase of Subject Securities in the market (which shall be determined by
the Remarketing Agent in its sole discretion) in general at the time of such
purchase and that neither it nor its affiliates will elect to retain Subject
Securities on the Reset Date if the Subject Securities could be remarketed
pursuant to this Agreement on terms more favorable to the Issuer Trust or the
Company than the terms upon which the Remarketing Agent or such affiliates
would continue to hold it. The Remarketing Agent, either as principal or agent,
may also engage in or be interested in any financial or other transaction with
the Issuer Trust or the Company and may act as depository, trustee or agent for
any committee or body of owners of Subject Securities or other obligations of
the Issuer Trust or the Company as freely as if it had no obligations hereunder
or under the Trust Agreement or Indenture.
<PAGE> 31
31
12. Records. The Remarketing Agent agrees to keep books
and records relating to its activities as Remarketing Agent in accordance with
standard industry practice.
13. Purchase and Sales by Company. While the Company and
its affiliates may from time to time purchase, hold and sell Subject
Securities, the Company and the Remarketing Agent acknowledge that neither the
Company nor any affiliate of the Company may acquire or bid to acquire Subject
Securities on the Reset Date or submit orders in the Remarketing. The
Remarketing Agent agrees that it will not knowingly remarket any Subject
Securities to the Company or any of its affiliates.
14. Communication of Remarketing Conditions. The
Remarketing Agent agrees, upon request from time to time by any holder of
Subject Securities and to the extent the Remarketing Agent deems advisable, to
advise such holder of current Remarketing Conditions.
15. Notices. Unless otherwise provided herein, all
notices, requests, demands and formal actions hereunder shall be in writing
and mailed or sent by facsimile transmission or delivered, as follows:
If to the Company:
Budget Group, Inc.
125 Basin Street
Suite 210
Daytona Beach, Florida 32114
Attention: Secretary
Telecopy: (904) 226-8380
Telephone: (904) 238-7035
If to the Tender Agent:
The Bank of New York, as Tender Agent
101 Barclay Street
New York, New York 10286
Telecopy: (212) 815-5915
Telephone: (212) 815-5783
<PAGE> 32
32
If to the Issuer Trust:
c/o Budget Group, Inc.
Attention: Secretary
125 Basin Street
Suite 210
Daytona Beach, Florida 32114
Telecopy: (904) 226-8380
Telephone: (904) 238-7035
If to the Remarketing Agent:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Attention: Transactions Advisory Group -
Joseph D. Fashano
Telephone: (212) 325-2107
Telecopy: (212) 325-8278
Each of the above parties may, by written notice given
hereunder to the others, designate any further or different addresses or
telecopier numbers to which subsequent notices, certificates, requests or other
communications shall be sent. In addition, the parties hereto may agree to any
other means by which subsequent notices, certificates, requests or other
communications may be sent.
16. Successors and Assigns. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by, the respective
successors and assigns of the Company, the Issuer Trust, the Tender Agents the
Remarketing Agent and the holders of the Subject Securities.
17. The Tender Agent. In serving as the Tender Agent
hereunder, the Debenture Trustee shall be entitled to the protections and
benefits of Sections 6.01(d), 6.03, 6.06 and 12.07 of the Indenture and the
Property Trustee shall be entitled to the protections and benefits of Sections
3.09, 3.10 and 10.04 of the Trust Agreement.
18. Entire Agreement. Except as otherwise provided herein,
this Agreement contains the entire agreement between the parties relating to
the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or
inferred, among the parties.
<PAGE> 33
33
19. Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
20. Amendment; Waiver. (a) This Agreement shall not be
deemed or construed to be modified, amended, rescinded, canceled or waived, in
whole or in part, except by a written instrument signed by a duly authorized
representative of each of the Company, the Tender Agent the Administrative
Trustees and the Remarketing Agent.
(b) Failure of any party to exercise any right or remedy
under this Agreement in the event of a breach hereof by the other party shall
not constitute a waiver of any such right or remedy with respect to any
subsequent breach.
21. Severability. If any clause, provision or section of
this Agreement shall be ruled invalid or unenforceable by any court of
competent jurisdiction, the invalidity or unenforceability of such clause,
provision or section shall not affect any of the remaining clauses, provisions
or sections hereof.
22. Execution in Counterparts. This Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all of which shall constitute but
<PAGE> 34
one and the same instrument. It shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart signed by
the party against which enforcement of this Agreement is sought.
<PAGE> 35
35
23. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
BUDGET GROUP, INC.,
by /s/ Sanford Miller
-----------------------------------
Name: Sanford Miller
Title: Chairman and CEO
BUDGET GROUP CAPITAL TRUST,
by /s/ Scott R. White
-----------------------------------
Name: Scott R. White
Title: Administrative
Trustee
by /s/ Robert L. Aprati
-----------------------------------
Name: Robert L. Aprati
Title: Administrative
Trustee
by /s/ Michael B. Clauer
-----------------------------------
Name: Michael B. Clauer
Title: Administrative
Trustee
by /s/ Scott R. White
-----------------------------------
Name: Scott R. White
Title: Administrative
Trustee
<PAGE> 36
THE BANK OF NEW YORK, as Tender
Agent,
by /s/ Mary La Gumina
-----------------------------------
Name: Mary La Gumina
Title: Assistant Vice President
CREDIT SUISSE FIRST BOSTON
CORPORATION,
by /s/ F.P. Hixon
-----------------------------------
Name: F. P. Hixon
Title: Managing Director
<PAGE> 1
EXHIBIT 12.1
Budget Group Inc.
Computation of Ratio of Earnings to Fixed Charges
In Thousands
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1997 1996 1995
-------------------------------
<S> <C> <C> <C>
Pre-tax income from
continuing operations 55,599 12,852 3,179
Fixed Charges:
Interest incurred, amortization
of debt discount and premium
on all indebtedness, and
reasonable interest on rental
expense 142,890 40,402 22,937
-------------------------------
Earnings before income taxes,
minority interest and fixed
charges 198,489 53,254 26,116
Ratio of earnings to fixed charges 1.39 1.32 1.14
</TABLE>
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report on the
consolidated financial statements of Budget Group, Inc. (formerly known as Team
Rental Group, Inc.) and subsidiaries as of December 31, 1996 and 1997, and for
each of the three years in the period ended December 31, 1997, dated March 20,
1998 (except with respect to the matters discussed in Note 17, as to which the
date is June 19, 1998), included in Budget Group, Inc.'s Current Report on Form
8-K filed on July 2, 1998, and to all references to our firm included in or
made a part of this Registration Statement.
/s/ Arthur Andersen LLP
----------------------------------
August 13, 1998,
Orlando, Florida
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Budget Group, Inc. (formerly Team Rental Group, Inc.) on Form S-3 of our report
dated April 12, 1996, appearing in the Annual Report on Form 10-K of Budget
Group, Inc. for the year ended December 31, 1997, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of such
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
August 13, 1998
<PAGE> 1
(KPMG Peat Marwick LLP Letterhead)
EXHIBIT 23.5
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors of
Budget Rent a Car Corporation:
We consent to the incorporation by reference in this Registration Statement of
Budget Group, Inc. on Form S-3, of our report dated February 18, 1997, related
to the Budget Rent a Car Corporation consolidated financial statements as of
December 31, 1995 and 1996 and for the each of the years in the three-year
period ended December 31, 1996, from Budget Group, Inc.'s current report on
Form 8-K dated May 13, 1997, and to the reference to our firm under the heading
"Experts" in this Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
August 13, 1998
Chicago, Illinois
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Budget Group, Inc. on Form S-3 of our report dated March 5, 1998, on our audits
of the consolidated financial statements of Ryder TRS, Inc. and Subsidiaries
from Budget Group, Inc.'s Registration Statement on Form S-4 (SEC File No.
333-49679) filed on April 8, 1998, as amended April 27, 1998. We also consent
to the references to our firm under the caption "Experts" in this Registration
Statement.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
August 13, 1998
<PAGE> 1
EXHIBIT 23.7
Independent Auditors' Consent
The Board of Directors
Budget Group, Inc.:
We consent to the incorporation by reference in this Registration Statement of
Budget Group, Inc. of our report dated December 20, 1996 on our audit of the
combined balance sheet of Ryder Consumer Truck Rental (a division of Ryder
Truck Rental, Inc., a wholly owned subsidiary of Ryder System, Inc.) as of
October 16, 1996, and the related combined statements of earnings and changes
in Ryder investment and cash flows for the period from January 1, 1996 to
October 16, 1996, contained in the Budget Group, Inc.'s Registration Statement
on Form S-4 (SEC File No. 333-49679) filed on April 8, 1998, and to the
reference to our firm under the heading "Experts" in this prospectus. This
consent should not be regarded as in any way updating the aforementioned report
or representing that we performed any procedures subsequent to the date of such
report.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Miami, Florida
August 13, 1998
<PAGE> 1
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
------------------
BUDGET GROUP, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 59-3227576
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
125 Basin Street
Suite 210
Daytona Beach, FL 32114
(Address of principal executive offices) (Zip code)
</TABLE>
------------------
HIGH TIDES Debentures Due 2028
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 11th day of August, 1998.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
----------------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
-4-
<PAGE> 5
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 6,397,993
Interest-bearing balances .......... 1,138,362
Securities:
Held-to-maturity securities ........ 1,062,074
Available-for-sale securities ...... 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell .. 391,650
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................36,538,242
LESS: Allowance for loan and
lease losses ..............631,725
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve ... 35,906,517
Assets held in trading accounts ...... 2,145,149
Premises and fixed assets (including
capitalized leases) ................ 663,928
Other real estate owned .............. 10,895
Investments in unconsolidated
subsidiaries and associated
companies .......................... 237,991
Customers' liability to this bank on
acceptances outstanding ............ 992,747
Intangible assets .................... 1,072,517
Other assets ......................... 1,643,173
------------
Total assets ......................... $ 55,830,236
============
LIABILITIES
Deposits:
In domestic offices ................ $ 24,849,054
Noninterest-bearing ......10,011,422
Interest-bearing .........14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 15,319,002
Noninterest-bearing .........707,820
Interest-bearing .........14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase 1,906,066
Demand notes issued to the U.S.
Treasury ........................... 215,985
Trading liabilities .................. 1,591,288
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,991,119
With remaining maturity of more than
one year through three years ..... 0
With remaining maturity of more than
three years ...................... 25,574
Bank's liability on acceptances exe-
cuted and outstanding .............. 998,145
Subordinated notes and debentures .... 1,314,000
Other liabilities .................... 2,421,281
------------
Total liabilities .................... 50,631,514
------------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 40,198
Cumulative foreign currency transla-
tion adjustments ................... (36,129)
------------
Total equity capital ................. 5,198,722
------------
Total liabilities and equity
capital ............................ $ 55,830,236
============
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
-
<PAGE> 1
EXHIBIT 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
----------------------
BUDGET GROUP CAPITAL TRUST
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
</TABLE>
----------------------
<TABLE>
<S> <C>
125 Basin Street
Suite 210
Daytona Beach, FL 32114
(Address of principal executive offices) (Zip code)
</TABLE>
----------------------
6-1/4% Convertible Preferred Securities, Remarketable
Term Income Deferable Equity Securities (HIGH TIDES)
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
Name Address
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 11th day of August, 1998.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
----------------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 6,397,993
Interest-bearing balances .......... 1,138,362
Securities:
Held-to-maturity securities ........ 1,062,074
Available-for-sale securities ...... 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell .. 391,650
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................36,538,242
LESS: Allowance for loan and
lease losses ..............631,725
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve ... 35,906,517
Assets held in trading accounts ...... 2,145,149
Premises and fixed assets (including
capitalized leases) ................ 663,928
Other real estate owned .............. 10,895
Investments in unconsolidated
subsidiaries and associated
companies .......................... 237,991
Customers' liability to this bank on
acceptances outstanding ............ 992,747
Intangible assets .................... 1,072,517
Other assets ......................... 1,643,173
------------
Total assets ......................... $ 55,830,236
============
LIABILITIES
Deposits:
In domestic offices ................ $ 24,849,054
Noninterest-bearing ......10,011,422
Interest-bearing .........14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 15,319,002
Noninterest-bearing .........707,820
Interest-bearing .........14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase 1,906,066
Demand notes issued to the U.S.
Treasury ........................... 215,985
Trading liabilities .................. 1,591,288
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,991,119
With remaining maturity of more than
one year through three years ..... 0
With remaining maturity of more than
three years ...................... 25,574
Bank's liability on acceptances exe-
cuted and outstanding .............. 998,145
Subordinated notes and debentures .... 1,314,000
Other liabilities .................... 2,421,281
------------
Total liabilities .................... 50,631,514
------------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 40,198
Cumulative foreign currency transla-
tion adjustments ................... (36,129)
------------
Total equity capital ................. 5,198,722
------------
Total liabilities and equity
capital ............................ $ 55,830,236
============
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
-
<PAGE> 1
EXHIBIT 25.3
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
----------------------
BUDGET GROUP, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 59-3227576
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
125 Basin Street
Suite 210
Daytona Beach, FL 32114
(Address of principal executive offices) (Zip code)
</TABLE>
----------------------
Guarantee of 6-1/4% Convertible Preferred Securities,
Remarketable Term Income Deferable Equity Securities (HIGH TIDES)
of Budget Group Capital Trust
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
Name Address
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 11th day of August, 1998.
THE BANK OF NEW YORK
By: /s/MICHAEL CULHANE
-----------------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
- 4 -
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 6,397,993
Interest-bearing balances .......... 1,138,362
Securities:
Held-to-maturity securities ........ 1,062,074
Available-for-sale securities ...... 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell .. 391,650
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................36,538,242
LESS: Allowance for loan and
lease losses ..............631,725
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve ... 35,906,517
Assets held in trading accounts ...... 2,145,149
Premises and fixed assets (including
capitalized leases) ................ 663,928
Other real estate owned .............. 10,895
Investments in unconsolidated
subsidiaries and associated
companies .......................... 237,991
Customers' liability to this bank on
acceptances outstanding ............ 992,747
Intangible assets .................... 1,072,517
Other assets ......................... 1,643,173
------------
Total assets ......................... $ 55,830,236
============
LIABILITIES
Deposits:
In domestic offices ................ $ 24,849,054
Noninterest-bearing ......10,011,422
Interest-bearing .........14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 15,319,002
Noninterest-bearing .........707,820
Interest-bearing .........14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase 1,906,066
Demand notes issued to the U.S.
Treasury ........................... 215,985
Trading liabilities .................. 1,591,288
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,991,119
With remaining maturity of more than
one year through three years ..... 0
With remaining maturity of more than
three years ...................... 25,574
Bank's liability on acceptances exe-
cuted and outstanding .............. 998,145
Subordinated notes and debentures .... 1,314,000
Other liabilities .................... 2,421,281
------------
Total liabilities .................... 50,631,514
------------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 40,198
Cumulative foreign currency transla-
tion adjustments ................... (36,129)
------------
Total equity capital ................. 5,198,722
------------
Total liabilities and equity
capital ............................ $ 55,830,236
============
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
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