<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 7, 1998
REGISTRATION NO. 333-41093
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
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
(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
(904) 238-7035
(Name, address, including zip code, and telephone number, including area code of
agent for service)
COPIES TO:
JEFFREY M. STEIN
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303
(404) 572-4600
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
---------------------
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. [ ]
---------------
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>
============================================================================================================================
PROPOSED
PROPOSED MAXIMUM
TITLE OF CLASS AMOUNT MAXIMUM AGGREGATE
OF SECURITIES TO BE AGGREGATE PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE(3)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, par value $.01
per share............................ 5,841,649 shares(2) $34.75 $ 8,554,303
7.0% Convertible Subordinated Notes,
Series A, due 2007................... $80,000,000 N/A $80,000,000
6.85% Convertible Subordinated Notes,
Series B, due 2007................... $45,000,000 N/A $45,000,000
------------ ---- ------------
Total......................... N/A N/A $133,554,303 $40,471
============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a).
(2) Includes up to 5,595,482 shares of Class A Common Stock of the Registrant
that may be issued upon conversion of the Convertible Subordinated Notes
being registered hereunder. Such shares of Class A Common Stock will, if
issued, be issued for no additional consideration and therefore no
registration fee is required as to such shares.
(3) Previously paid.
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.
================================================================================
<PAGE> 2
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, PRELIMINARY PROSPECTUS DATED JANUARY 7, 1998.
BUDGET GROUP, INC.
5,841,649 SHARES
CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------
$80,000,000 AGGREGATE PRINCIPAL AMOUNT
7.0% CONVERTIBLE SUBORDINATED NOTES, SERIES A, DUE 2007
------------------------
$45,000,000 AGGREGATE PRINCIPAL AMOUNT
6.85% CONVERTIBLE SUBORDINATED NOTES, SERIES B, DUE 2007
This Prospectus relates to an aggregate of (i) up to 5,841,649 shares (the
"Shares") of Class A Common Stock, par value $.01 per share ("Class A Common
Stock"), of Budget Group, Inc. (the "Company"); (ii) up to $80,000,000 aggregate
principal amount of the Company's 7.0% Convertible Subordinated Notes, Series A,
due 2007 ("Series A Convertible Notes"); and (iii) up to $45,000,000 aggregate
principal amount of the Company's 6.85% Convertible Subordinated Notes, Series
B, due 2007 (the "Series B Convertible Notes" and, together with the Series A
Convertible Notes, the "Convertible Notes") which may be offered for sale by
persons (the "Selling Securityholders") who have acquired such securities from
the Company in the acquisition of a business by the Company not involving a
public offering and in certain private placement transactions. See "Selling
Securityholders". The Company will not receive any of the proceeds from the sale
of the Shares or the Convertible Notes. The Company is registering the Shares
and the Convertible Notes for sale to provide the holders thereof with freely
tradeable securities, but the registration of such Shares and Convertible Notes
does not necessarily mean that any of such Shares or Convertible Notes will be
offered or sold by the holders thereof.
The Company has two classes of Common Stock, the Class A Common Stock, par
value $.01 per share, and the Class B Common Stock, par value $.01 per share.
Holders of the Class A Common Stock are entitled to one vote per share and
holders of the Class B Common Stock are entitled to ten votes per share. The
Class A Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the symbol "BD".
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK AND THE CONVERTIBLE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Selling Securityholders from time to time may offer and sell the Shares
or the Convertible Notes directly or through agents or broker-dealers on terms
to be determined at the time of sale. To the extent required, the names of any
agent or broker-dealer and applicable commissions or discounts and any other
required information with respect to any particular offer will be set forth in
an accompanying Prospectus Supplement. See "Plan of Distribution". Each of the
Selling Securityholders reserves the sole right to accept or reject, in whole or
in part, any proposed purchase of the Shares or the Convertible Notes to be made
directly or through agents.
The Selling Securityholders and any agents or broker-dealers that
participate with the Selling Securityholders in the distribution of Shares or
Convertible Notes may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Securities Act"), and any commissions received by
them and any profit on the resale of the Shares or Convertible Notes may be
deemed to be underwriting commissions or discounts under the Securities Act.
The date of this Prospectus is January , 1998.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference section of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its Regional Offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a World Wide Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants such as the Company which file electronically with the Commission.
In addition, the Company's Class A Common Stock currently is traded on the New
York Stock Exchange ("NYSE") and such reports, proxy and information statements
and other information concerning the Company can be inspected and copied at the
offices of the NYSE located at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Class A Common Stock and
Convertible Notes offered hereby. This Prospectus, which is 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 Company, the
Class A Common Stock and the Convertible Notes, reference is made to the
Registration Statement and the exhibits and schedules filed as a part thereof.
The Company believes that all statements made herein that summarize the
provisions of any documents accurately describe the material provisions of all
such referenced documents. The Registration Statement and the exhibits and
schedules thereto may be inspected, without charge, at the public reference
section or regional offices of the Commission at the addresses indicated above.
Copies of the Registration Statement can be obtained from the public reference
section of the Commission upon payment of prescribed fees.
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, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997;
(c) The Company's Current Reports on Form 8-K dated April 29, 1997,
and December 1, 1997, as amended; and
(d) The description of the 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
2
<PAGE> 4
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 Group, Inc., 4225 Naperville Road, Lisle,
Illinois 60532, Attention: Executive Vice President and General Counsel,
telephone (630) 955-7571.
THE COMPANY
The Company and its franchisees (the "Budget System") operate the third
largest worldwide general use car and truck rental system, with approximately
3,200 locations and a peak fleet size during 1996 of 266,000 cars and 18,000
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 110
countries worldwide. Pro forma for the acquisition of Budget Rent a Car
Corporation ("BRACC") on April 29, 1997 (the "Budget Acquisition"), the Budget
System included approximately 455 company-owned locations in the United States
at December 31, 1996, accounting for approximately 76% of 1996 U.S. system-wide
revenues. In addition, Budget franchisees operated approximately 500
royalty-paying franchise locations in the United States at December 31, 1996.
Budget 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. The Budget System is also unique among
major car rental systems in that it rents trucks in most major markets
worldwide. The Budget System's consumer truck rental fleet is the fourth largest
in the United States. The Budget System had vehicle rental revenues of $2.5
billion for 1996.
The Company is also one of the largest independent retailers of late model
vehicles in the United States, with 26 retail car sales facilities and pro forma
revenues of $246.9 million for 1996. The Company operates its retail car sales
facilities under the name "Budget Car Sales". On November 25, 1997, the Company
agreed to acquire Cruise America, Inc., one of the largest North American
companies specializing primarily in the rental and sale of recreational
vehicles. Under the terms of the transaction, Cruise America stockholders will
receive 0.28073 shares of the Company's Class A Common Stock for each share of
Cruise America, or a total of approximately 1.77 million shares of Budget Class
A Common Stock. The parties expect that the transaction will close in the first
quarter of 1998.
Sanford Miller (Chairman of the Board and Chief Executive Officer), Jeffrey
D. Congdon (Vice Chairman of the Board and President of Budget Car Sales) and
John P. Kennedy (Vice Chairman of the Board) (collectively, the "Principal
Executive Officers") together have over 75 years of experience in the vehicle
rental business and had acquired and operated 54 Budget franchises prior to the
Budget Acquisition. In addition, Messrs. Miller and Congdon together have over
25 years of experience operating retail car sales facilities.
The principal executive offices of the Company are located at 125 Basin
Street, Suite 210, Daytona Beach, Florida 32114 (telephone number: (904)
238-7035).
3
<PAGE> 5
THE OFFERING
This Prospectus relates to the sale by the securityholders listed herein
(the "Selling Securityholders") of the Company of (i) up to 246,167 shares of
Class A Common Stock (the "Secondary Shares") acquired by certain Selling
Securityholders in a private placement in connection with the Company's
acquisition of the St. Louis Budget franchise (the "St. Louis Acquisition"),
which was consummated in November 1997, (ii) up to 5,595,482 shares of Class A
Common Stock (the "Conversion Shares" and, together with the Secondary Shares,
the "Shares") issuable upon conversion of the Convertible Notes (which will be
issued in exchange for the Old Convertible Notes (as defined herein) which were
issued in a private placement exempt from the registration requirements of the
Securities Act), (iii) $80,000,000 aggregate principal amount of Series A
Convertible Notes (which will be issued in exchange for the Old Series A
Convertible Notes (as defined herein) which were issued in a private placement
exempt from the registration requirements of the Securities Act) and (iv)
$45,000,000 aggregate principal amount of Series B Convertible Notes (which will
be issued in exchange for the Old Series B Convertible Notes (as defined herein)
which were issued in a private placement exempt from the registration
requirements of the Securities Act).
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares or the Convertible Notes by the Selling Securityholders but has agreed to
bear certain expenses of registration of the Shares and the Convertible Notes
under Federal and state securities laws. The Company is registering the Shares
and the Convertible Notes for sale to provide the holders thereof with freely
tradeable securities, but the registration of such Shares and Convertible Notes
does not necessarily mean that any of such Shares or Convertible Notes will be
offered or sold by the holders thereof.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the nine months ended
September 30, 1997 was 1.56, and for the years ended December 31, 1996, 1995,
1994, 1993 and 1992 was 1.24, 1.07, 1.08, 1.18, and 1.14 respectively. The ratio
for the nine months ended September 30, 1997 includes earnings and fixed charges
from BRACC.
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges, excluding capitalized interest, to pre-tax income from
continuing operations. Fixed charges consist of interest costs, whether expensed
or capitalized, and amortization of debt issuance costs.
4
<PAGE> 6
SUPPLEMENTAL EARNINGS PER SHARE DATA
The following table sets forth the pro forma earnings per common and common
equivalent share of the Company for the years ended December 31, 1994, 1995 and
1996, and the nine months ended September 30, 1997, to give effect to the
issuance of the Conversion Shares as if the conversion of the Convertible Notes
had occurred at the beginning of each period presented.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE
ENDED DECEMBER 31, MONTHS ENDED
-------------------------- SEPTEMBER 30,
1994 1995 1996 1997
------ ------- ------- -------------
<S> <C> <C> <C> <C>
Net income(a)....................................... $ 250 $ 337 $ 4,497 $36,020(c)
Pro forma weighted average common and common
equivalent shares outstanding(a).................. 9,299 11,964 15,083 24,919
Pro forma earnings per common and common equivalent
share(b).......................................... $ 0.03 $ 0.03 $ 0.30 $ 1.45
====== ======= ======= =======
</TABLE>
- ---------------
(a) Amounts in thousands.
(b) Pro forma weighted average common and common equivalent shares outstanding
and pro forma earnings per common and common equivalent share give effect to
the issuance of the 5,595,482 shares of Class A Common Stock issuable upon
conversion of the Convertible Notes as of the beginning of each period
presented.
(c) Historical net income adjusted for interest expense related to the
Convertible Notes, net of related income tax benefits.
5
<PAGE> 7
RISK FACTORS
Prospective investors should consider carefully the following factors in
addition to other information included in this Prospectus before purchasing any
of the shares of Class A Common Stock or Convertible Notes.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
The Company has substantial indebtedness and significant debt service
requirements. As of September 30, 1997, the Company's total indebtedness was
$2.6 billion (representing 74.2% of its total capitalization), of which $2.3
billion represented senior secured indebtedness for the purchase of vehicles and
$299 million represented non-vehicle indebtedness (representing 8.6% of its
total capitalization, excluding fleet debt). As of September 30, 1997, the
Company had $367.4 million of incremental availability under its vehicle
financing facilities to finance the purchase of fleet vehicles. The degree to
which the Company is leveraged has important consequences for holders of the
Class A Common Stock, including the following: (i) the ability of the Company to
obtain additional financing in the future, whether for working capital, fleet
purchases, acquisitions or other purposes, may be impaired; (ii) a substantial
portion of the Company's cash flow from operations is required to be dedicated
to the payment of principal and interest on its indebtedness, thereby reducing
funds available to the Company for other purposes; (iii) the Company's
flexibility in planning for or reacting to changes in market conditions may be
limited; (iv) the Company may be more vulnerable in the event of a downturn in
its business; and (v) because a substantial portion of its indebtedness bears
interest at floating rates, any increase in prevailing interest rates will
result in an increase in interest expense incurred by the Company, which could
have an adverse effect on its results of operations.
The ability of the Company to meet its debt service obligations will depend
on its future operating performance and financial results, which will be subject
in part to factors beyond the control of the Company. Although management
believes that the Company's cash flow will be adequate to meet its interest and
principal payments, there can be no assurance that the Company will continue to
generate earnings in the future sufficient to cover its fixed charges. If the
Company is unable to generate earnings in the future sufficient to cover its
fixed charges and is unable to borrow sufficient funds under its existing credit
lines or from other sources, it may be required to refinance all or a portion of
its existing indebtedness or to sell all or a portion of its assets. There can
be no assurance that a refinancing would be possible, nor can there be any
assurance as to the timing of any asset sales or the proceeds which the Company
could realize therefrom. In addition, the terms of certain indebtedness of the
Company restrict the ability of the Company to sell assets and the use of the
proceeds therefrom.
If for any reason, including a shortfall in anticipated operating results
or proceeds from asset sales, the Company were unable to meet its debt service
obligations, it would be in default under the terms of its indebtedness. In the
event of such a default, the holders of such indebtedness could elect to declare
all such indebtedness immediately due and payable, including accrued and unpaid
interest, and to terminate their commitments (if any) with respect to funding
obligations under such indebtedness. In addition, such holders could proceed
against their collateral, which, in the case of the fleet financing facilities,
consists of substantially all the Company's fleet. Any default with respect to
any of the Company's indebtedness could result in a default under other
indebtedness or result in a bankruptcy of the Company.
AVAILABILITY OF FINANCING
The Company depends upon third-party financing to purchase its fleet
vehicles. Continued availability of such financing on favorable terms will be
critical to the Company's operations. As of September 30, 1997, 68.6% of the
Company's indebtedness was incurred in connection with major vehicle
manufacturers' vehicle repurchase programs. As a result, a significant change in
the credit quality of the vehicle manufacturers, particularly Ford Motor Company
("Ford"), would significantly affect the Company's ability to obtain such
financing on favorable terms. In addition, certain events, such as a material
increase in damage to vehicles, could reduce the value of the collateral
securing the Company's fleet financing
6
<PAGE> 8
facilities and cause the acceleration of the repayment of such facilities. An
inability of the Company to obtain vehicle financing on favorable terms would
have a material adverse effect on the Company's financial condition and results
of operations. There can be no assurance that the sources of financing utilized
by the Company or alternative financing will remain or become available to the
Company or that such financing will be available on terms acceptable to the
Company.
INTEGRATION OF BUDGET ACQUISITION
The Budget Acquisition was significantly larger than any of the Company's
previous acquisitions and the combination and integration of the respective
operations of the Company and BRACC are of a substantially greater scale than
previously undertaken by either company. 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, of integrating management and operating
personnel from both companies and of managing a worldwide franchise system. The
success of the Company following the Budget Acquisition depends on the ability
of the Company's management team to: (a) manage a significantly larger
organization, (b) maintain and further develop relationships with Budget
franchisees and (c) conduct operations on a worldwide basis. There can be no
assurance that the Company's management team will be able to successfully manage
the combined operations of the Company and BRACC. An inability to successfully
manage the integration of the Company and BRACC would have a material adverse
effect on the Company's results of operations and financial condition.
ABILITY TO IMPLEMENT GROWTH STRATEGY
Management is undertaking initiatives to increase the Company's revenues
and improve its profitability by, among other things, acquiring the operations
of certain franchisees, enhancing its operations outside the United States,
expanding its retail car sales operations, adding car rental locations in its
existing markets, adding truck rental locations and expanding its truck rental
fleet, and increasing its marketing efforts to corporate accounts. In addition,
management expects the Company to realize certain cost savings and other
operating efficiencies as a result of the implementation of its business
strategy. Increasing the revenues of the Company, and realizing cost savings and
other operating efficiencies, could be affected by a number of factors beyond
the Company's control, such as general economic conditions, increased operating
costs, competitive conditions in the vehicle rental industry, levels of air
travel, fuel shortages, increased costs of vehicles and regulatory developments.
Each of these initiatives will involve risks to the Company, and there can be no
assurance that the Company will be successful in growing its business or that
the Company will achieve the expected cost savings and other operating
efficiencies. In addition, the Company's substantial leverage could affect its
success in growing its business. See "-- Substantial Leverage; Ability to
Service Debt".
COMPETITION
The vehicle rental industry is characterized by intense competition,
particularly with respect to price and service. In any geographic market, the
Company may encounter competition from national, regional and local vehicle
rental companies. Budget's main competitors in the car rental market are The
Hertz Corporation, Avis, Inc., Alamo Rent-A-Car, Inc., National Car Rental
System, Inc. and Enterprise Rent-A-Car Company. In consumer truck rentals,
Budget faces competition primarily from U-Haul International, Inc., Ryder TRS,
Inc. and Penske Truck Rental. There have been occasions when the major vehicle
rental companies have been adversely affected by industry-wide price cutting,
and the Company has on such occasions lowered its prices in response. The
Company will not generally be able to unilaterally raise its prices or to
maintain its prices in times of industry-wide price cutting.
The retail car sales industry also is characterized by intense competition,
consisting primarily of local new car dealerships selling new and late model
cars. In addition to local dealerships, the Company may face competition from
retailers such as CarMax and AutoNation that compete on the basis of large
inventory size, no-haggle pricing and after-sale service.
7
<PAGE> 9
RESTRICTIONS IMPOSED BY INDEBTEDNESS
The terms of the Company's indebtedness include a number of significant
covenants that, among other things, restrict the ability of the Company to
dispose of assets, incur additional indebtedness, create liens, repay other
indebtedness, pay dividends, make certain investments or acquisitions,
repurchase or redeem capital stock, engage in mergers or consolidations, or
engage in certain transactions with affiliates, and otherwise restrict corporate
activities. There can be no assurance that such restrictions will not adversely
affect the Company's ability to finance its future operations or capital needs
or to engage in other business activities that may be in the interest of the
Company. In addition, the terms of certain of such indebtedness also require the
Company to comply with certain financial tests. The ability of the Company to
comply with such covenants may be affected by events beyond the Company's
control. A breach of any of these covenants or the inability of the Company to
comply with the required financial ratios could result in a default under such
indebtedness. In the event of any such default, the lenders under such
indebtedness could elect to declare all borrowings outstanding under such
indebtedness, together with accrued interest and other fees, to be due and
payable, to require the Company to apply all of its available cash to repay such
borrowings or to prevent the Company from making scheduled debt service
payments. If the Company were unable to repay any such borrowings when due, the
lenders could proceed against their collateral. If the indebtedness of the
Company under such collateralized indebtedness or other indebtedness were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay such indebtedness in full. There can be no assurance that
the Company will be able to comply with the covenants included in its debt
agreements in the future or that it would be able to obtain any necessary
waivers of those covenants.
SUBORDINATION OF CONVERTIBLE NOTES
The Convertible Notes are unsecured and subordinated in right of payment in
full to all existing and future senior indebtedness of the Company. As a result
of such subordination, in the event of the Company's liquidation or insolvency,
payment default with respect to senior indebtedness, a covenant default with
respect to senior indebtedness, or upon acceleration of the Convertible Notes
due to an event of default, the assets of the Company will be available to pay
obligations on the Convertible Notes only after all senior indebtedness has been
paid in full, and there may not be sufficient assets remaining to pay amounts
due on any or all of the Convertible Notes then outstanding. The Company may
from time to time incur indebtedness constituting senior indebtedness. The
Convertible Notes are also effectively subordinated in right of payment to all
indebtedness and other liabilities, including trade payables, of the Company's
subsidiaries. The Indenture (as defined herein) does not prohibit or limit the
incurrence of senior indebtedness or other indebtedness and other liabilities by
the Company or its subsidiaries. The incurrence of additional indebtedness and
other liabilities by the Company or its subsidiaries could adversely affect the
Company's ability to pay its obligations on the Convertible Notes. In addition,
the cash flow and ability of the Company to service debt, including the
Convertible Notes, may in the future become dependent in part upon the earnings
from the business conducted by the Company through subsidiaries and distribution
of those earnings, or upon loans or other payments of funds by those
subsidiaries to the Company. See "Description of Convertible
Notes -- Subordination."
LIMITATIONS ON REPURCHASE OF CONVERTIBLE NOTES
Upon a Change of Control (as defined herein), the Company is obligated to
offer to repurchase all Convertible Notes whereupon each holder of Convertible
Notes will have the right, at the holder's option, to accept such offer with
respect to all or a portion of such holder's Convertible Notes. If a Change of
Control were to occur, there can be no assurance that the Company would have
sufficient funds to repurchase all Convertible Notes tendered by the holders
thereof. In addition, the Company's repurchase of Convertible Notes as a result
of the occurrence of a Change of Control may be prohibited or limited by, or
create an event of default under, the terms of agreements related to borrowings
which the Company may enter into from time to time, including agreements
relating to senior indebtedness.
8
<PAGE> 10
ABSENCE OF PUBLIC MARKET FOR THE CONVERTIBLE NOTES
There is currently no public market for the Convertible Notes, and there
can be no assurance as to the liquidity of the Convertible Notes, the ability of
any holders of Convertible Notes to sell their Convertible Notes or the prices
at which holders of the Convertible Notes would be able to sell their
Convertible Notes. The Company does not intend to list the Convertible Notes on
any securities exchange or to seek the admission thereof to trading on the New
York Stock Exchange or any other exchange or automated securities quotation
system. The Convertible Notes will be tradable in the over-the-counter market,
but any such trading may be limited and sporadic. If a market for the
Convertible Notes does develop, the Convertible Notes may trade at a discount
from their initial trading price depending on prevailing interest rates, the
market for similar securities, performance of the Company, performance of the
vehicle rental and sale industry and other factors. There can be no assurance
that there will be a liquid trading market for the Convertible Notes or that any
trading market that does develop will continue.
POTENTIAL CHANGES IN MANUFACTURERS' REPURCHASE PROGRAMS
Approximately 89% of the vehicles purchased by Team Rental Group, Inc.
("TEAM"), the predecessor to the Company, and approximately 85% of the vehicles
purchased by BRACC in model year 1997 were eligible for repurchase by specified
automobile manufacturers at fixed prices on designated dates pursuant to such
manufacturers' vehicle repurchase programs ("Program Vehicles"). The
availability of Program Vehicles limits a car rental company's risk of a decline
in residual value at the time of disposition and enables it to fix its
depreciation expense in advance. Vehicle depreciation is the largest cost factor
in the Company's vehicle rental operations. Management believes that
manufacturers' repurchase programs enable the manufacturers to stimulate fleet
sales in times of weak consumer demand for new automobiles. In response to
strong U.S. consumer demand for passenger vehicles in 1993 and 1994, the major
U.S. automobile manufacturers reduced the number of vehicles subject to
repurchase programs and the financial incentives associated with these programs.
U.S. consumer demand for passenger vehicles began to weaken during the second
quarter of 1995, and this weakness continued through 1996. In response to these
market conditions, there was an increase in the availability of repurchase
programs with respect to 1996 model year vehicles, particularly repurchase
programs for imported vehicles, and these programs have continued for 1997 model
year vehicles. However, the Company could be adversely affected if automobile
manufacturers reduce the availability of Program Vehicles, related incentives or
increase the guaranteed depreciation.
SEASONALITY
The third quarter, during the peak summer travel months, has historically
been the strongest quarter of the year for the Company. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the Company's annual performance.
COSTS OF REGULATORY AND ENVIRONMENTAL COMPLIANCE
The Company is subject to various foreign, federal, state and local laws
and regulations that affect the conduct of its operations, including those
relating to the sale of loss damage waivers, vicarious liability of vehicle
owners, consumer protection, advertising, used vehicle sales, the taxing and
licensing of vehicles, franchising operations and sales, and environmental
compliance and remediation. There can be no assurance that compliance with these
laws and regulations or the adoption of modified or additional laws and
regulations will not require material expenditures by the Company or otherwise
have a material adverse effect on its results of operations or financial
condition.
DEPENDENCE ON PRINCIPAL SUPPLIER
Ford is the Company's principal supplier of vehicles. The number of
vehicles purchased from Ford has varied from year to year. In model year 1997,
approximately 73% of BRACC's U.S. vehicle purchases were comprised of Ford
vehicles. The Company has agreed to purchase or lease Ford vehicles in such
9
<PAGE> 11
quantity that the percentage of new Ford vehicles purchased or leased by the
Company in the United States, Canada, and other countries outside the European
Union represents at least 70% of the total new vehicle acquisitions by the
Company, with a minimum quantity of at least 80,000 vehicles in the United
States in each model year. Given the volume of vehicles purchased from Ford by
the Company, shifting significant portions of the fleet purchases to other
manufacturers would require lead time and certain operational changes. As a
result, any inability of Ford to supply the Company with the planned number and
types of vehicles, any significant decline in the quality and customer
satisfaction with respect to Ford vehicles or any failure of the parties to
reach an agreement on the terms of any purchases, could have a material adverse
effect on the Company's financial condition and results of operations.
RISKS OF INTERNATIONAL OPERATIONS
For 1996, on a pro forma basis, 8.9% of the Company's revenues were derived
from its international operations. The Company's international vehicle rental
operations are subject to certain risks, including adverse developments in the
foreign political and economic environment, varying governmental regulations,
foreign currency fluctuations, potential difficulties in staffing and managing
foreign operations and potential adverse tax consequences. There can be no
assurance that any of these factors will not have a material adverse effect on
the Company's results of operations or financial condition.
DEPENDENCE ON PRINCIPAL EXECUTIVE OFFICERS
The Company's existing operations and continued future development are
dependent in part on the active participation of Messrs. Miller, Kennedy and
Congdon, the Company's principal executive officers. The loss of the services of
one or more of these individuals could have a material adverse effect on the
Company. The Company has no employment agreements or covenants not to compete
with any of its executive officers or significant employees.
SUBSTANTIAL VOTING POWER BY PRINCIPAL EXECUTIVE OFFICERS
The Company has two classes of Common Stock: Class A Common Stock, holders
of which are entitled to one vote per share, and Class B Common Stock, holders
of which are entitled to ten votes per share. Messrs. Miller, Kennedy and
Congdon own all outstanding shares of Class B Common Stock, which, together with
the Class A Common Stock owned by such individuals, represent approximately
49.5% of the combined voting power of both classes of Common Stock. As a result,
such officers will be able to exert substantial influence over the election of
the Company's Board of Directors, thereby increasing the probability that
members elected by them will continue to direct the business, policies and
management of the Company.
POTENTIAL ANTI-TAKEOVER EFFECTS OF CHARTER AND BYLAW PROVISIONS;
POSSIBLE ISSUANCES OF PREFERRED STOCK
Certain provisions of Delaware law, the Company's Amended and Restated
Certificate of Incorporation (in particular, the voting rights of the Class B
Common Stock) and the Company's Bylaws could delay or impede the removal of
incumbent directors and could make it more difficult for a third party to
acquire, or could discourage a third party from attempting to acquire, control
of the Company. Such provisions could limit the price that certain investors
might be willing to pay in the future for shares of the Class A Common Stock. In
addition, shares of preferred stock may be issued by the Board of Directors
without stockholder approval on such terms and conditions, and having such
rights, privileges and preferences, as the Board of Directors may determine. The
rights of the holders of the Class A Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. The Company has no current plans to issue any shares of
preferred stock. See "Description of Capital Stock -- Preferred Stock" and
"Description of Capital Stock -- Section 203".
10
<PAGE> 12
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, with respect to
the financial condition, results of operations and business of the Company.
These forward-looking statements involve certain risks and uncertainties. No
assurance can be given that any of such matters will be realized. Factors that
may cause actual results to differ materially from those contemplated by such
forward-looking statements include, among others, the following: (a) the
Company's ability to service its debt or to obtain financing for its fleet
vehicles; (b) management and integration of the operations of TEAM and BRACC
following the Budget Acquisition and the success of initiatives undertaken by
the Company to increase its revenues and improve its profitability; (c)
competitive pressure in the vehicle rental and retail car sales industries; and
(d) general economic conditions. For further information on other factors which
could affect the financial results of the Company and such forward-looking
statements, see "Risk Factors".
11
<PAGE> 13
SELLING SECURITYHOLDERS
As described herein, the Selling Securityholders are those persons who (i)
acquired shares of Class A Common Stock in the St. Louis Acquisition; (ii)
received shares of Class A Common Stock as a charitable gift from a selling
securityholder who received such shares in the St. Louis Acquisition; or (iii)
purchased Convertible Notes from the Company. The following table provides the
names of and the number of shares of Common Stock beneficially owned by each
Selling Securityholder (presented on an as-converted basis in the case of
holders of the Convertible Notes). Since the Selling Securityholders may sell
all, some or none of their Shares and Convertible Notes or, in the case of
holders of Convertible Notes, convert the same in whole or in part into Shares,
no estimate can be made of the aggregate number of Shares and Convertible Notes
that are to be offered hereby or that will be owned by each Selling
Securityholder upon completion of the offering to which this Prospectus relates.
None of the Selling Securityholders has any material relationship with the
Company.
The Shares and Convertible Notes offered by this Prospectus may be offered
from time to time by the Selling Securityholders named below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
SERIES A SERIES B
NUMBER OF CONVERTIBLE CONVERTIBLE
NUMBER OF SHARES NOTES NOTES
SHARES WHICH MAY BE WHICH MAY BE WHICH MAY BE
BENEFICIALLY OFFERED OFFERED OFFERED
NAME OWNED HEREBY HEREBY HEREBY
- ---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ST. LOUIS STOCKHOLDERS:
David K. Adam(1)................. 11,100 11,100 0 0
James L. Cowhey(1)(2)............ 16,423 16,423 0 0
Jill Cowhey(1)................... 1,242 1,242 0 0
Kathleen P. Cowhey(1)............ 4,597 4,597 0 0
Kevin P. Cowhey(1)(3)............ 11,247 11,247 0 0
Michael J. Cowhey(1)............. 13,104 13,104 0 0
Sandra Cowhey(1)................. 2,737 2,737 0 0
Sheila Cowhey(1)................. 2,258 2,258 0 0
Terry J. Cowhey(1)(4)............ 67,826 67,826 0 0
Peter K. Cowhey(1)(5)............ 41,605 41,605 0 0
Mary Ann Morgan(1)(6)............ 15,882 15,882 0 0
Michael P. Morgan(1)(7).......... 30,927 30,927 0 0
Louis Waltke(1).................. 2,258 2,258 0 0
Susan C. Waltke(1)(8)............ 23,644 23,644 0 0
The Curators of the University of
Missouri....................... 306 306 0 0
The Saint Louis Archdiocese...... 306 306 0 0
The New City School.............. 245 245 0 0
The St. Louis Cathedral.......... 153 153 0 0
The Arthritis Foundation......... 184 184 0 0
The Animal Health Foundation..... 123 123 0 0
--------- --------- ----------- -----------
Subtotal............... 246,167 246,167 0 0
--------- --------- ----------- -----------
CONVERTIBLE NOTEHOLDERS:
John Hancock Mutual Life
Insurance Company.............. 1,082,717 1,082,717 $18,500,000 $ 4,500,000
John Hancock Variable Life
Insurance Company.............. 117,533 117,533 2,000,000 500,000
New York Life Insurance
Company........................ 1,354,165 1,354,165 20,000,000 10,000,000
Massachusetts Mutual Life
Insurance Company.............. 293,834 293,834 5,000,000 1,250,000
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
SERIES A SERIES B
NUMBER OF CONVERTIBLE CONVERTIBLE
NUMBER OF SHARES NOTES NOTES
SHARES WHICH MAY BE WHICH MAY BE WHICH MAY BE
BENEFICIALLY OFFERED OFFERED OFFERED
NAME OWNED HEREBY HEREBY HEREBY
- ---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Massmutual Corporate Investors... 99,651 99,651 2,000,000 0
Massmutual Corporate Value
Partners Limited............... 99,651 99,651 2,000,000 0
Massmutual Participation
Investors...................... 49,825 49,825 1,000,000 0
Metropolitan Life Insurance
Company........................ 2,027,053 1,335,053 25,000,000 2,500,000
The Northwestern Mutual Life
Insurance Company.............. 268,240 268,240 0 7,500,000
Signature 1A (Cayman), Ltd....... 224,215 224,215 4,500,000 0
Teachers Insurance and Annuity
Association of America......... 357,653 357,653 0 10,000,000
The Travelers Insurance
Company........................ 55,883 55,883 0 1,562,500
The Travelers Indemnity
Company........................ 78,236 78,236 0 2,187,500
The Variable Annuity Life
Insurance Company.............. 178,826 178,826 0 5,000,000
--------- --------- ----------- -----------
Subtotal.................... 6,287,482 5,595,482 $80,000,000 $45,000,000
--------- --------- ----------- -----------
Total.................. 6,533,659 5,841,649 $80,000,000 $45,000,000
========= ========= =========== ===========
</TABLE>
- ---------------
(1) Includes certain shares of Class A Common Stock that were placed in escrow.
(2) Includes 4,043 shares held in trust for Lauren S. Cowhey and 1,167 shares
held in trust for Leah C. Cowhey, with respect to which Mr. Cowhey and his
wife are co-trustees.
(3) Includes 4,043 shares held in trust for Brooke E. Cowhey, with respect to
which Mr. Cowhey is co-trustee with his former wife, and 1,000 shares held
in trust for Brett Cowhey.
(4) Includes 6,383 shares held in trust for Sarah P. Cowhey and 3,507 shares
held in trust for Ian P. Cowhey.
(5) Includes 5,002 shares held in trust for Matthew K. Cowhey, 2,018 shares held
in trust for Timothy J. Cowhey, and 3,488 shares held in trust for Casey M.
Cowhey.
(6) Includes 7,102 shares held in trust for Neil A. Cowhey, with respect to
which Ms. Morgan and her sister, Susan C. Waltke, are co-trustees.
(7) Includes 3,740 shares held in trust for Christian P. Morgan and 4,043 shares
held in trust for Michaela Morgan with respect to which Mr. Morgan and his
wife are co-trustees.
(8) Includes 4,043 shares held in trust for Andrew J. Waltke and 2,529 shares
held in trust for Scott A. Waltke with respect to which Ms. Waltke and her
husband are co-trustees.
13
<PAGE> 15
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 35,000,000 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 December 26, 1997, there were 23,905,071 shares of the Class A
Common Stock and 1,936,600 shares of the Class B Common Stock outstanding. All
of the outstanding shares of Class B Common Stock are held by the principal
executive officers of the Company (the "Principal Executive Officers").
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 will
have, together with the Class A Common Stock owned by such individuals,
approximately 49.5% of the combined voting power of the outstanding Class A and
Class B Common Stock. As a result, the Principal Executive Officers will be 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 on 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. Shares of the Class A Common Stock are not convertible.
14
<PAGE> 16
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 to be outstanding upon
completion of the Offering 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 (the "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.
In January 1997, the Board of Directors authorized the issuance of 10,000
shares of Preferred Stock, par value $0.01 per share, designated as the "Series
A Convertible Preferred Stock". All of such shares have been converted into
Class A Common Stock.
CONVERTIBLE NOTES
In December 1996, the Company issued $80.0 million aggregate principal
amount of 7.0% Convertible Subordinated Notes, Series A, due 2003 which were
extended to 2007 and amended in connection with the Budget Acquisition (as
extended and amended, the "Old Series A Convertible Notes") which will be
exchanged for the Series A Convertible Notes. The Old Series A Convertible Notes
are, and the Series A Convertible Notes will be, convertible, at the option of
the holders, into Class A Common Stock at a conversion price of $20.07 per
share. The Series A Convertible Notes are convertible into an aggregate of
3,986,046 shares of Class A Common Stock. In connection with the Budget
Acquisition, the Company issued $45.0 million aggregate principal amount of
6.85% Convertible Subordinated Notes, Series B, due 2007 (the "Old Series B
Convertible Notes" and, together with the Old Series A Convertible Notes, the
"Old Convertible Notes") which will be exchanged for the Series B Convertible
Notes. The Series B Convertible Notes will be convertible, at the option of the
holders, into Class A Common Stock at a conversion price of $27.96 per share.
The Series B Convertible Notes will be convertible into an aggregate of
1,609,436 shares of Class A Common Stock. Pursuant to the terms of the Note
Purchase Agreements under which the Old Convertible Notes were issued (the "Note
Purchase Agreements"), the holders of the Old Convertible Notes are obligated,
upon request by the Company, to exchange their Old Convertible Notes for Series
A Convertible Notes and Series B Convertible Notes, as applicable. No Series A
Convertible Notes or Series B Convertible Notes will be issued by the Company
until all Old Convertible Notes are received by the Company for exchange as
required by the Note Purchase Agreements. See "The Offering" and "Description of
Convertible Notes."
15
<PAGE> 17
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. These provisions will make it more difficult for a third party
to gain control of the Company.
REGISTRATION RIGHTS
In connection with the St. Louis Acquisition in November 1997, the Company
entered into a registration rights agreement granting holders registration
rights with respect to the shares of Class A Common Stock acquired thereby (the
"St. Louis Registration Rights Agreement"). The St. Louis Registration Rights
Agreement provides that the Company will file a shelf registration statement
relating to the shares of Class A Common Stock issued in the acquisition on or
before December 1, 1997. The registration statement of which this Prospectus is
a part is being filed pursuant to the St. Louis Registration Rights Agreement.
In connection with the sale of the Old Series A Convertible Notes in
December 1996, the Company entered into a registration rights agreement granting
holders registration rights with respect to the shares of Class A Common Stock
into which such notes were convertible. In connection with the sale of the Old
Series B Convertible Notes, the Company amended and restated the registration
rights agreement (the "Notes Registration Rights Agreement") to which the
holders of the Old Series A Convertible Notes were parties, and the holders of
the Old Series B Convertible Notes became parties thereto. The Notes
Registration Rights Agreement provides that the Company will file a shelf
registration statement relating to the Convertible Notes and the shares of Class
A Common Stock issuable upon conversion of the Convertible Notes at the earlier
of one year from the date of issuance of the Series B Convertible Notes or
promptly after the disposition by Ford of at least 2.25 million shares of Class
A Common Stock. The registration statement of which this Prospectus is a part is
being filed pursuant to the Notes Registration Rights Agreement. The holders may
require the Company to effect an underwritten public offering pursuant to the
shelf registration statement. The Company may prohibit offers and sales of
securities pursuant to the registration statements under certain circumstances.
The Company has also agreed to pay the costs and expenses of each registration
effected under the Notes Registration Rights Agreement, other than underwriting
discounts and commissions.
Concurrently with completion of its initial public offering in August 1994,
the Company entered into the registration rights agreement (the "Registration
Rights Agreement") granting holders registration, rights with respect to the
shares of Common Stock received by them as a result of the Share Exchange (as
defined in the Registration Rights Agreement). The Registration Rights Agreement
provides that the holders of at least 33% of the outstanding shares received in
the Share Exchange may require the Company to register such shares under the
Securities Act of 1933 (the "Securities Act") on two occasions, provided that
the aggregate offering price of the shares so registered is not less than $1
million on each occasion. The Company has agreed to refrain from selling its
securities during the 10-day period prior to, and the 180-day period following,
the consummation of each underwritten offering made pursuant to the Registration
Rights Agreement. The Company has also agreed to pay the costs and expenses of
each registration effected under the Registration Rights Agreement, other than
underwriting discounts and commissions. The Registration Rights Agreement was
amended in November 1994 to include persons who received 18,500 shares of Class
A Common Stock in the Company's acquisition of a Budget franchise territory.
In connection with the Los Angeles Acquisition, the Company and SoCal
entered into a registration rights agreement granting SoCal and its affiliated
entities unlimited "piggyback" registration rights,
16
<PAGE> 18
subject to certain conditions. The Company will bear the expenses of registering
such shares, other than underwriting discounts and commissions. SoCal and its
affiliated entities exercised certain of these rights in the October 1997 Public
Offering.
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 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 Class A Common Stock is
ChaseMellon Shareholder Services.
17
<PAGE> 19
DESCRIPTION OF CONVERTIBLE NOTES
The Convertible Notes registered hereby are to be issued under an
Indenture, to be dated as of January 9, 1998 (the "Indenture"), between the
Company and The Chase Manhattan Bank, as Trustee (the "Trustee"), a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. Pursuant to the terms of the Note Purchase Agreements, the
Old Series A Convertible Notes and the Old Series B Convertible Notes must be
delivered to the Trustee for cancellation by the respective holders thereof for
a like principal amount of the Series A Convertible Notes and the Series B
Convertible Notes, respectively. No Series A Convertible Notes or Series B
Convertible Notes will be issued by the Company until all the Old Series A
Convertible Notes and Old Series B Convertible Notes are received by the Company
for exchange as required by the terms of the Note Purchase Agreements. The terms
of the Old Convertible Notes and the terms of the Convertible Notes for each
respective series are substantially identical. Accordingly, the Convertible
Notes are convertible at the same respective conversion prices and into the same
respective number of shares of Class A Common Stock as the corresponding series
of Old Convertible Notes. Any capitalized terms used herein and not defined
shall have the meaning set forth in the Indenture. References in this section to
the "Company" are solely to Budget Group, Inc. and not to its subsidiaries. The
following summaries of certain provisions of the Indenture are subject to, and
are qualified in their entirety by reference to, the detailed provisions of the
Convertible Notes and the Indenture, including the definitions therein of
certain terms. Section references below are references to Sections of the
Indenture.
GENERAL
The Convertible Notes are unsecured subordinated obligations of the
Company. The aggregate principal amount of Series A Convertible Notes is limited
to $80 million aggregate principal amount, and the aggregate principal amount of
Series B Convertible Notes is limited to $45 million aggregate principal amount.
The Convertible Notes mature on April 29, 2007. The Series A Convertible Notes
bear interest at a rate per annum of 7.0%, payable semiannually on June 18 and
December 18 of each year, commencing June 18, 1998. The Series B Convertible
Notes bear interest at the rate of 6.85% per annum, payable semiannually on
April 29 and October 29 of each year.(sec. 301)
The Convertible Notes are convertible into Class A Common Stock initially
at the respective conversion rates stated herein, subject to adjustment upon the
occurrence of certain events described under "-- Conversion Rights," at any time
prior to the close of business on the Business Day preceding the maturity date,
unless previously called for redemption or tendered for repurchase. (sec. 1301)
The Convertible Notes are redeemable under the circumstances and at the
redemption prices set forth below under "-- Optional Redemption," plus accrued
interest to the redemption date. (sec. 1101)
The Convertible Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof.
(sec. 302) No service charge will be made for any registration of transfer or
exchange of Convertible Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith, other than certain exchanges listed in the Indenture. (sec. 305)
CONVERSION RIGHTS
The holder of any Convertible Note has the right, at the holder's option,
to convert any portion of the principal amount of a Convertible Note into shares
of Class A Common Stock at any time prior to the close of business on the
Business Day prior to the maturity date, unless previously redeemed or
repurchased, at the applicable Conversion Price (subject to adjustment as
described below). Each Series A Convertible Note is convertible into such number
of whole shares of Class A Common Stock as is equal to the unpaid principal
amount being converted of Series A Convertible Notes divided by the initial
conversion price of $20.07 per share, subject to adjustment (the "Series A
Conversion Price"). Each Series B Convertible Note is convertible into such
number of whole shares of Class A Common Stock as is equal to the unpaid
principal amount being converted of Series B Convertible Notes divided by the
initial
18
<PAGE> 20
conversion price of $27.96 per share, subject to adjustment (the "Series B
Conversion Price") (the Series A Conversion Price and the Series B Conversion
Price each being sometimes referred to herein as the "Conversion Price"). The
right to convert a Convertible Note called for redemption will terminate at the
close of business on the business day prior to the Redemption Date for such
Convertible Note, and the right to convert a Convertible Note tendered for
repurchase will terminate at the close of business on the Repurchase Date for
such Convertible Note unless the Company defaults in payment of the amount due
upon such redemption or repurchase. (sec. 1301)
The right of conversion attaching to any Convertible Note may be exercised
by the holder by delivering the Convertible Note at the specified office of the
Conversion Agent (if other than the Trustee), accompanied by a duly signed and
completed notice of conversion, a copy of which may be obtained from the
Trustee. The conversion date will be the date on which the Convertible Note and
the duly signed and completed notice of conversion are so delivered. As promptly
as practicable on or after the conversion date, the Company will issue and
deliver to the Trustee a certificate or certificates for the number of full
shares of Class A Common Stock issuable upon conversion, together with payment
in lieu of any fraction of a share; such certificate will be sent by the Trustee
to the Conversion Agent (if other than the Trustee) for delivery to the holder
within five Business Days after the conversion date. Such shares of Class A
Common Stock issuable upon conversion of the Convertible Notes, in accordance
with the provisions of the Indenture, will be fully paid and nonassessable. Any
Convertible Note surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except Convertible Notes
(or portions thereof) called for redemption on a Redemption Date or which are
redeemable on a Repurchase Date occurring, in either case, within such period
(including any Convertible Notes or portions thereof called for redemption on a
Redemption Date that is a Record Date or Interest Payment Date, as the case may
be)) must be accompanied by payment of an amount equal to the interest payable
on such Interest Payment Date on the principal amount of Convertible Notes being
surrendered for conversion. The interest so payable on such Interest Payment
Date with respect to any Convertible Note (or portion thereof, if applicable)
which has been called for redemption on a Redemption Date, or which may be
repurchased on a Repurchase Date, occurring, in either case, during the period
from the close of business on any Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date (including
any Convertible Notes (or portions thereof) called for redemption on a
Redemption Date that is a Regular Record Date or Interest Payment Date, as the
case may be), which Convertible Note (or portion thereof, if applicable) is
surrendered for conversion during such period (or on the last Business Day prior
to the Regular Record Date or Interest Payment Date in the case of a Convertible
Note (or portions thereof) called for redemption on a Regular Record Date or
Interest Payment Date, as the case may be), shall be paid to the Holder of such
Convertible Note being converted in an amount equal to the interest that would
have been payable on such Convertible Note if such Convertible Note had been
converted as of the close of business on such Interest Payment Date. The
interest so payable on such Interest Payment Date in respect of any Convertible
Note (or portion thereof, as the case may be) which has not been called for
redemption on a Redemption Date, or is not eligible for repurchase on a
Repurchase Date, occurring, in either case, during the period from the close of
business on any Record Date next preceding any Interest Payment Date to the
opening of business of such Interest Payment Date, which Convertible Note (or
portion thereof, as the case may be) is surrendered for conversion during such
period, shall be paid to the Holder of such Convertible Note as of such Regular
Record Date. Interest payable in respect of any Convertible Note surrendered for
conversion or repurchase on or after an Interest Payment Date shall be paid to
the Holder of such Convertible Note as of the next preceding Regular Record
Date, notwithstanding the exercise of the right of conversion or repurchase. As
a result of the foregoing provisions, except as provided above, Holders that
surrender Convertible Notes for conversion on a date that is not an Interest
Payment Date will not receive any interest for the period from the Interest
Payment Date next preceding the date of conversion to the date of conversion or
for any later period, even if the Convertible Notes are surrendered after a
notice of redemption (except for the payment of interest on Convertible Notes
called for redemption on a Redemption Date or to be repurchased on a Repurchase
Date between a Regular
19
<PAGE> 21
Record Date and the Interest Payment Date to which it relates (including any
Convertible Notes (or portion thereof) called for redemption on a Redemption
Date that is a Record Date or Interest Payment Date, as the case may be), as
provided above). No other payment or adjustment for interest, or for any
dividends in respect of Class A Common Stock, will be made upon conversion.
Holders of Class A Common Stock issued upon conversion will not be entitled to
receive any dividends payable to holders of Class A Common Stock as of any
record time or date before the close of business on the conversion date. No
fractional shares will be issued upon conversion but, in lieu thereof, the
Company will pay an appropriate amount in cash based on the market price of
Class A Common Stock at the close of business on the date of conversion.
(sec.sec. 101, 307, 1302 and 1303)
A Holder delivering a Convertible Note for conversion will not be required
to pay any taxes or duties in respect of the issue or delivery of Class A Common
Stock upon conversion but will be required to pay any tax or duty which may be
payable in respect of any transfer involved in the issue or delivery of the
Class A Common Stock in a name other than that of the holder of the Convertible
Note. Certificates representing shares of Class A Common Stock will not be
issued or delivered unless all taxes and duties, if any, payable by the Holder
have been paid. (sec. 1308)
The applicable Conversion Price is subject to adjustment in certain events,
including, without duplication: (a) subdivisions, combinations and
reclassifications of Class A Common Stock, (b) dividends (and other
distributions) payable in Class A Common Stock on shares of Class A Common
Stock, (c) the issuance to all holders of Class A Common Stock of rights,
options or warrants entitling them to subscribe for or purchase Class A Common
Stock at less than the then Current Market Price of such Class A Common Stock
(determined as provided in the Indenture) on the day after the record date for
stockholders entitled to receive such rights, options or warrants, (d) the
issuance to an Affiliate (as defined in the Indenture) of shares of Class A
Common Stock or Class B Common Stock at a net price per share less than the then
Current Market Price per share of such Class A Common Stock or Class B Common
Stock (determined as provided in the Indenture) and (e) distributions to all
holders of Class A Common Stock of evidences of indebtedness of the Company,
equity securities or assets other than shares of Class A Common Stock, or other
assets (other than ordinary cash dividends out of earnings), or distributions to
all or substantially all holders of Class A Common Stock rights, warrants or
options to subscribe to securities (other than those referred to in clause
(c)above). No adjustment in the applicable Conversion Price shall be required in
respect of any dividend or distribution if holders of the Convertible Notes may
participate therein (on a basis and with notice that the Board of Directors
determines in good faith to be fair and appropriate) and receive the same
consideration they would have received if they had converted the Convertible
Notes immediately prior to the record date with respect to such dividend or
distribution. In addition, no adjustment in the applicable Conversion Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the applicable Conversion Price. Except as expressly set forth
in the Indenture, no adjustment in the applicable Conversion Price shall be made
because the Company issues, in exchange for cash, property or services, shares
of Class A Common Stock, or any securities convertible into or exchangeable for
shares of Class A Common Stock, or securities (including warrants, rights and
options) carrying the right to subscribe for or purchase shares of Class A
Common Stock or such convertible or exchangeable securities (including shares of
Class B Common Stock), provided that in the case of any such issuance to an
Affiliate written evidence of the action of the Board of Directors authorizing
such issuance shall be filed with the secretary of the Company (which evidence
shall include a determination by the Board of Directors that the terms of such
issuance are not less favorable to the Company and would have been obtainable in
a comparable arms'-length transaction with a person not an Affiliate) a notice
thereon shall have been given to each holder of the Convertible Notes.
(sec. 1304) The Company shall compute any adjustments to the Conversion Price
pursuant to this paragraph and will give notice to the Holders of the
Convertible Notes of any adjustments. (sec. 1305)
If any transaction shall occur, including without limitation, (1) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from no par value to par value, or as a result of a
subdivision or combination of Common Stock), (2) any consolidation, merger or
amalgama-
20
<PAGE> 22
tion of the Company with or into another person or any merger of another person
into the Company (other than a merger that does not result in the
reclassification, conversion, exchange or cancellation of Common Stock), (3) any
sale or transfer of all or substantially all of the assets of the Company, or
(4) any compulsory share exchange, pursuant to any of which holders of shares of
Class A Common Stock or Class B Common Stock shall be entitled to receive other
securities, cash or other property, each Convertible Note then outstanding will,
with appropriate provisions satisfactory to the Majority Holders of the
Convertible Notes, become convertible only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Class A Common Stock
into which such Convertible Note was convertible immediately prior thereto
(assuming such holder of Class A Common Stock failed to exercise any rights of
election and that such Convertible Note was then convertible). (sec. 1311)
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
United States federal income tax purposes (e.g., distributions of evidence of
indebtedness or assets of the Company, but generally not stock dividends on
Common Stock or rights to subscribe for Common Stock) and, pursuant to the
anti-dilution provisions of the Indenture, the number of shares into which
Convertible Notes are convertible is increased, such increase may be deemed for
federal income tax purposes to be the payment of a taxable dividend to Holders
of Convertible Notes. See "Certain United States Federal Tax Considerations."
SUBORDINATION
The payment of the principal of, premium, if any, and interest on
(including any amounts payable upon the redemption or repurchase of the
Convertible Notes permitted by the Indenture) the Convertible Notes is
subordinated in right of payment, to the extent set forth in the Indenture, to
the prior payment in full of the principal of, premium, if any, interest and
other amounts in respect of all Senior Indebtedness of the Company. The
Convertible Notes also are effectively subordinated in right of payment to all
indebtedness and other liabilities of the Company's subsidiaries. As of
September 30, 1997, the Company had $2.5 billion of Senior Indebtedness
outstanding, and the aggregate amount of indebtedness and other liabilities of
the Company's subsidiaries was $2.9 billion.
Senior Indebtedness, as defined in the Indenture, means the principal of
(and premium, if any) and interest (including all interest accruing subsequent
to the commencement of any bankruptcy or similar proceeding, whether or not a
claim for post-petition interest is allowable as a claim in any such proceeding)
on, and all fees and other amounts payable in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of the Indenture or thereafter created, incurred or
assumed: (A) all indebtedness of the Company (including obligations of the
Company arising from its guarantee of the indebtedness of others) to banks,
insurance companies and other financial institutions evidenced by credit or loan
agreements, notes or other written obligations; (B) all other indebtedness of
the Company (including obligations of the Company arising from its guarantee of
the indebtedness of others) other than the Convertible Notes; (C) all
Capitalized Lease Obligations (as defined in the Indenture) of the Company or in
respect of any lease or related document (including a purchase agreement) which
provides that the Company is contractually obligated to purchase or cause a
third party to purchase the leased property and thereby effectively guarantees a
minimum residual value of the leased property to the lessor and the obligations
of the Company under such lease or related document to purchase or cause a third
party to purchase such leased property; (D) all obligations of the Company
issued or assumed as the deferred purchase price of property (but excluding any
portion thereof constituting trade accounts payable arising in the ordinary
course); and (E) all obligations of the Company for the reimbursement of any
letter of credit or any amendments, renewals, extensions, modifications and
refundings; provided that Senior Indebtedness shall not include (i) any such
indebtedness or obligation if the terms of such indebtedness or obligation (or
the terms of the instrument under which or pursuant to which, it is issued)
expressly provide that such indebtedness or obligation shall not be senior in
right of payment to the Convertible Notes, or expressly provide that
21
<PAGE> 23
such indebtedness or obligation is pari passu with or junior to the Convertible
Notes of either or both series and (ii) accounts payable of the Company to trade
creditors. (sec.sec. 101, 1201 and 1202)
Upon any acceleration of the principal due on the Convertible Notes or
payment or distribution of assets of the Company to creditors upon any
dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other similar
proceedings of the Company, all principal, premium, if any, and interest or
other amounts due on all Senior Indebtedness must be paid in full before the
Holders of the Convertible Notes are entitled to receive any payment.
(sec. 1203) If (i) a default in the payment of the principal of, premium, if
any, interest or other amounts due on any Senior Indebtedness occurs and is
continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Senior Indebtedness that permits
holders of the Senior Indebtedness as to which such default relates to
accelerate the maturity thereof and the Trustee receives a notice of such
default (a "Payment Blockage Notice") from the Company, any lender of Designated
Senior Indebtedness (or agent bank on behalf of such lender) or other person
permitted to give such notice under the Indenture. Payments on the Convertible
Notes may and shall be resumed (a) in the case of a payment default, upon the
date on which such default is cured or waived in accordance with the agreements
evidencing such Senior Indebtedness and (b) in case of a nonpayment default, the
earlier of (i) the date on which such nonpayment default is cured or waived or
shall have ceased to exist in accordance with the agreements evidencing such
Senior Indebtedness or any acceleration of the Senior Indebtedness shall have
been rescinded or annulled or such Senior Indebtedness shall have been
discharged or (ii) 180 days after the date on which the applicable Payment
Blockage Notice is received. During any 360-day period the aggregate of all
periods of payment blockage shall not exceed 180 days and there shall be a
period of at least 180 consecutive days in each 360-day period when no period of
payment blockage is in effect. No default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been cured for a period of not less than 60 consecutive days.
(sec. 1202)
By reason of the foregoing subordination, in the event of insolvency,
creditors of the Company who are holders of Senior Indebtedness are likely to
recover more, ratably, than the Holders of the Convertible Notes, and such
subordination may result in a reduction or elimination of payments to the
Holders of the Convertible Notes.
The Indenture does not limit the Company's ability to incur Senior
Indebtedness or any other indebtedness or the ability of any subsidiary of the
Company to incur any indebtedness or other liabilities.
OPTIONAL REDEMPTION
The Convertible Notes may not be redeemed prior to April 29, 2000.
Thereafter, the Convertible Notes may be redeemed, in whole or in part, at the
option of the Company in a minimum amount of $1,000,000 and in integral
multiples of $1,000, upon not less than 20 nor more than 60 days' prior notice
as provided under "-- Notices" below, at a price equal to the unpaid principal
amount of such Convertible Notes, together with interest accrued thereon to the
date fixed for redemption, plus the applicable redemption premium for such
Convertible Notes (expressed as a percentage of the principal amount so to be
redeemed) indicated below (such amount being referred to as the "Redemption
Price"). (sec. 1101)
22
<PAGE> 24
The Redemption Prices for the Series A Convertible Notes are set forth
below:
<TABLE>
<CAPTION>
REDEMPTION DATE REDEMPTION PREMIUM
- --------------- ------------------
<S> <C>
April 29, 2000 to April 28, 2001............................ 4.667%
April 29, 2001 to April 28, 2002............................ 3.889%
April 29, 2002 to April 28, 2003............................ 3.111%
April 29, 2003 to April 28, 2004............................ 2.333%
April 29, 2004 to April 28, 2005............................ 1.556%
April 29, 2005 to April 28, 2006............................ 0.778%
after April 28, 2006........................................ none
</TABLE>
provided that prior to April 29, 2002, Series A Convertible Notes may not be
redeemed unless the closing price per share of Class A Common Stock for a period
of 10 consecutive trading days commencing 20 trading days before the date of the
Company's notice of redemption in respect of such redemption is at least 150% of
the Series A Conversion Price then in effect.
The Redemption Prices for the Series B Convertible Notes are set forth
below:
<TABLE>
<CAPTION>
REDEMPTION DATE REDEMPTION PREMIUM
- --------------- ------------------
<S> <C>
April 29, 2000 to April 28, 2001............................ 4.567%
April 29, 2001 to April 28, 2002............................ 3.806%
April 29, 2002 to April 28, 2003............................ 3.044%
April 29, 2003 to April 28, 2004............................ 2.283%
April 29, 2004 to April 28, 2005............................ 1.522%
April 29, 2005 to April 28, 2006............................ 0.761%
after April 28, 2006........................................ none
</TABLE>
provided that prior to April 29, 2002, Series B Convertible Notes may not be
redeemed unless the Closing Price per share of Class A Common Stock for a period
of 10 consecutive trading days commencing 20 trading days before the date of the
Company's notice of redemption in respect of such redemption is at least 150% of
the Series B Conversion Price then in effect.
The Company will not redeem Convertible Notes of either series unless the
Company shall concurrently redeem ratable portions of outstanding Convertible
Notes of both series issued pursuant to the Indenture, provided, however, that
prior to April 29, 2002 concurrent redemption of the Series B Convertible Notes
shall not be required if the condition to such redemption with respect to the
Closing Price for the 20 trading days before the date of the Company's notice
for such redemption is not met.
Any Convertible Note that is converted in whole or in part into shares of
Class A Common Stock after notice of redemption and prior to the redemption date
specified therein shall be deemed to have been redeemed on the date of such
redemption to the extent of the lesser of (i) the principal amount of such
Convertible Note so converted and (ii) the principal amount of such Convertible
Note called for redemption on the date of such redemption; and, accordingly, the
principal amount of such Convertible Notes actually to be redeemed on such
redemption date shall be reduced by an amount equal to the amount that is deemed
to have been redeemed by reason of conversion as aforesaid and the aggregate
principal amount of the Convertible Notes to be redeemed on such redemption date
shall be reduced by an amount equal to the aggregate principal amount of all
Convertible Notes deemed to have been redeemed by reason of conversion as
aforesaid.
No sinking fund, financial covenants or ratios are provided for the
Convertible Notes.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL
Promptly and in any event within 20 days after the occurrence of a Change
in Control (as defined herein), the Company shall deliver to the holders of the
Convertible Notes notice, as provided in the Indenture (the "Company Notice"),
of the occurrence of such Change of Control and an offer to repurchase all
Convertible Notes outstanding on the date therein specified (the "Repurchase
Date"),
23
<PAGE> 25
which shall be not less than 30 nor more than 60 days after the date of such
notice, at a price equal to 101% of the principal amount of the Convertible
Notes to be repurchased plus interest accrued to the Repurchase Date (the
"Repurchase Price"). (sec. 1401)
At the request and expense of the Company on or before the 10th day after
such occurrence, the Trustee shall give the Company Notice on behalf of the
Company. The Company must also deliver a copy of the Company Notice to the
Trustee and to the office of each Paying Agent. To exercise the repurchase
right, a Holder of Convertible Notes must deliver, on or before the fifth
Business Day prior to the Repurchase Date irrevocable written notice to the
Trustee or Paying Agent of the Holder's exercise of such right, together with
the Convertible Notes with respect to which the right is being exercised.
(sec. 1403)
A Change of Control shall be deemed to have occurred at such time after the
original issuance of the Old Convertible Notes as:
(i) a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), excluding any "person" or "group" of which
Sanford Miller, John P. Kennedy or Jeffrey D. Congdon, or their controlled
Affiliates (as defined in the Indenture), are a substantial part (and for
such purpose Messrs. Miller, Kennedy and Congdon, and their controlled
Affiliates, shall not be deemed to be a substantial part of such person or
group unless in the aggregate they own beneficially at least 15% of the
total then outstanding voting power of the Voting Stock (as defined herein)
of the Company), (A) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of more than 50% of the total then
outstanding voting power of the Voting Stock of the Company or (B) has the
right or the ability by voting right, contract or otherwise to elect or
designate for election a majority of the entire Board of Directors;
(ii) (A) the Company consolidates with or merges into any other Person
(as defined in the Indenture) or conveys, transfers, sells or leases all or
substantially all of its assets as an entirety to any Person or (B) any
Person merges into the Company, in either event pursuant to a transaction
in which Voting Stock of the Company representing more than 50% of the
total voting power of the Company outstanding immediately prior to the
effectiveness thereof is reclassified or changed into or exchanged for
cash, securities or other property; provided that any consolidation,
merger, conveyance, transfer, sale or lease between the Company and any of
its Subsidiaries (including without limitation the reincorporation of the
Company in another jurisdiction) shall be excluded from the operation of
this clause (ii); or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors, or whose
nomination for election by the shareholders of the Company, as the case may
be, was approved by a vote of 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors then in office.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by virtue of the Company's or any of its employee benefit or stock
plan's filing (or being required to file after the lapse of time) a Schedule 13D
or 14D-1 (or any successor or similar schedule, form or report under the
Exchange Act) as a result of the Company or any such plan becoming the
beneficial owner of shares of capital stock of the Company entitling such person
to exercise a majority of the total voting power of the Voting Stock of the
Company. "Voting Stock" means, with respect to any person, any shares of stock
or other equity interests of any class or classes of such person whose holders
are entitled under ordinary circumstances (irrespective of whether at the time
stock or other equity interests or any other class or classes shall have or
might have voting power by reason of the happening of any contingency) to vote
for the election of a majority of the directors, managers, trustees or other
governing body of such person. (sec. 101)
24
<PAGE> 26
The Company's ability to repurchase Convertible Notes upon the occurrence
of a Change of Control is subject to limitations. There can be no assurance that
the Company would have the financial resources or be able to arrange financing
on acceptable terms to pay the Repurchase Price for all the Convertible Notes as
to which the purchase right is exercised. Further, any offer to repurchase or
repurchase in connection with a Change of Control could, depending on the
circumstances and absent a waiver from the holders of Senior Indebtedness, be
blocked by the subordination provisions of the Convertible Notes. See
"-- Subordination." The agreement relating to the Company's current Senior
Indebtedness would limit the Company's ability to repurchase the Convertible
Notes. Failure by the Company to offer to repurchase or repurchase the
Convertible Notes when required may result in an Event of Default with respect
to the Convertible Notes (and with respect to Senior Indebtedness) whether or
not such repurchase is permitted by the subordination provisions. See "-- Events
of Default" and "Risk Factors -- Limitations on Repurchase of Convertible
Notes."
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to Holders of
the Convertible Notes. The Company will comply with this rule to the extent
applicable at that time.
The foregoing provisions would not necessarily afford Holders of the
Convertible Notes protection in the event of highly leveraged or other
transactions involving the Company that may adversely affect Holders.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not, directly or indirectly, merge, consolidate or
amalgamate with any other Person or sell, lease, transfer or otherwise dispose
of all or substantially all of its assets (as an entirety) to any person,
unless: (a) the Company shall be the continuing or surviving corporation, or the
continuing, surviving or acquiring person shall be a solvent corporation
organized in the United States of America and shall expressly assume, by
supplemental indenture, the due and punctual payment of the principal, premium
(if any) and interest on the Convertible Notes and all of the other obligations
of the Company under the Indenture and the performance of every covenant of the
Indenture on the part of the Company and shall have provided for conversion
rights in accordance with the Indenture; (b) immediately after any such merger,
consolidation, amalgamation, sale, lease or other disposition and giving effect
to any concurrent transactions, no Default or Event of Default under the
Indenture shall have occurred and be continuing and the Company shall have
complied with its obligations with respect to the adjustment of the applicable
Conversion Prices of the Convertible Securities and with respect to a Change of
Control resulting from such transaction; and (c) the Company has delivered to
the Trustee an Officers' Certificate and opinion of counsel, each stating that
such consolidation, merger, amalgamation, conveyance, transfer or lease and such
supplemental indenture comply with the Indenture and that all conditions
precedent in the Indenture have been complied with. (sec. 801)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) failure to pay
principal of or premium, if any, on any Convertible Note when due; (b) failure
to pay any interest on any Convertible Note when due, continuing for 30 days;
(c) failure to perform any other term, covenant or agreement with respect to a
repurchase upon a Change of Control; (d) default by the Company or any
Significant Subsidiary beyond any applicable grace period in any payment of
principal of or premium or interest on any indebtedness in excess of $10,000,000
in aggregate unpaid principal amount (other than the Convertible Notes), or in
the due performance or observance of any provision contained in any agreement
relating to such indebtedness the effect of which is (i) to cause such
indebtedness to become or be declared due and payable prior to its stated
maturity or (ii) to require the repayment or repurchase of such indebtedness
prior to its stated maturity, provided that if such default shall be remedied or
cured by the Company or waived by the holders of such indebtedness prior to an
acceleration under the Indenture, then the Event of Default under this section
(d) by reason thereof shall be deemed likewise to have been
25
<PAGE> 27
therefore remedied, cured or waived without further action upon the part of any
of the holders of the Convertible Notes; (e) default or breach in the
performance of any covenant or warranty made by the Company in the Indenture or
in any certificate or other writing furnished pursuant to the Indenture and such
default or breach shall have continued for a period of 60 days after the Company
becomes aware of such default or breach; or (f) certain events of bankruptcy,
insolvency or reorganization relating to the Company or any "Significant
Subsidiary" as determined in accordance with Rule 1-02(w) of Regulation S-X
promulgated by the Commission under the Exchange Act. (sec.sec. 101, 501)
Subject to the provisions of the Indenture relating to the duties of the Trustee
in case an Event of Default shall occur and be continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee indemnity satisfactory to the Trustee. (sec. 603)
Subject to such provisions for the indemnification of the Trustee, the holders
of a majority in aggregate principal amount of the outstanding Convertible Notes
will 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. (sec. 512)
If an Event of Default (other than an Event of Default specified in
subsection (f) above) occurs and is continuing, the Holders of not less than 25%
in aggregate principal amount of the unpaid principal amount of Convertible
Notes outstanding at the time, by notice in writing to the Company, may declare
the principal of all the Convertible Notes to be due and payable immediately,
and upon any such declaration such principal and any accrued interest thereon
will become immediately due and payable. If an Event of Default specified in
subsection (f) occurs and is continuing, the principal and any accrued interest
on all of the then outstanding Convertible Notes shall ipso facto become due and
payable immediately without any declaration or other Act on the part of the
Trustee or any Holder. (sec. 502)
At any time after a declaration of acceleration has been made but before a
judgment or decree based on acceleration, the Holders of a majority in aggregate
principal amount of outstanding Convertible Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal of, premium, if any, and
accrued interest on the Convertible Notes, have been cured or waived as provided
in the Indenture. (sec. 502)
No Holder of any Convertible Note will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default and unless also the Holders of at least 25% in
aggregate principal amount of the outstanding Convertible Notes shall have made
written request, and offered indemnity satisfactory to the Trustee, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in aggregate principal amount of the
outstanding Convertible Notes a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. (sec. 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Convertible Note for the enforcement of payment of the principal of, premium, if
any, or interest on such Convertible Note on or after the respective due dates
expressed in such Convertible Note or of the right to convert such Convertible
Note in accordance with the Indenture. (sec. 508)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (sec. 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made, and certain past
defaults by the Company may be waived, with the written consent of the Holders
of not less than 66 2/3% of the aggregate principal amount of the Convertible
Notes at the time outstanding. However, no such modification or amendment may,
without the consent of the Holder of each outstanding Convertible Note affected
thereby, (a) change the Stated Maturity (as defined in the Indenture) of the
principal of, or any installment of interest on, any Convertible Note or the
amounts payable upon the redemption or repurchase of any Convertible Note, (b)
reduce the principal amount of, or the premium, if any, or rate of
26
<PAGE> 28
interest on, any Convertible Note, (c) modify the number or the method of
calculating the rates at which the Convertible Notes are convertible into Class
A Common Stock, (d) modify the provisions with respect to the repurchase right
or conversion rights of the Holders in a manner adverse to the Holder, (e)
change the place or currency of payment of principal of, premium, if any, or
interest on, any Convertible Note, (f) impair the right to institute suit for
the enforcement of any payment on or with respect to any Convertible Note
(including any payment of the Repurchase Price in respect of such Convertible
Note), (g) modify the obligation of the company to maintain an office or agency
in New York City, (h) except as otherwise permitted by the Indenture or
contemplated by provisions concerning consolidation, merger, conveyance,
transfer, sale or lease of all or substantially all of the property and assets
of the Company, adversely affect the right of holders to convert any of the
Convertible Notes or to require the Company to repurchase any Convertible Note
other than as provided in the Indenture, (i) modify the subordination provisions
in a manner adverse to the holders of the Convertible Notes, (j) reduce the
above-stated percentage of outstanding Convertible Notes necessary to modify or
amend the Indenture, or (k) reduce the percentage of aggregate principal amount
of outstanding Convertible Notes necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults. (sec.sec. 902 and
513)
The holders of 66 2/3% of the aggregate principal amount of the outstanding
Convertible Notes may waive compliance by the Company with certain restrictive
provisions of the Indenture. (sec. 1009) The Holders of 66 2/3% of the aggregate
principal amount of the outstanding Convertible Notes also may waive any past
default under the Indenture, except a default in the payment of principal,
premium, if any, or interest on Convertible Notes due and payable solely by
virtue of acceleration or in the redemption or repurchase of any Convertible
Note. (sec. 513)
TRANSFER AND EXCHANGE
The Company has initially appointed the Trustee as security registrar and
transfer agent, acting through its Corporate Trust Office. The Company reserves
the right to vary or terminate the appointment of the security registrar or of
any transfer agent or to appoint additional or other transfer agents or to
approve any change in the office through which any security registrar or any
transfer agent acts. (sec. 1002)
PURCHASE AND CANCELLATION
All Convertible Notes surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Convertible
Notes so delivered to the Trustee shall be cancelled promptly by the Trustee.
The Company may at any time deliver to the Trustee for cancellation any
Convertible Notes previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Convertible Notes so
delivered shall be promptly cancelled by the Trustee. No Convertible Notes shall
be authenticated in lieu of or in exchange for any cancelled Convertible Notes,
except as expressly permitted by the Indenture. All cancelled Convertible Notes
held by the Trustee shall be destroyed by the Trustee and a certificate of
destruction delivered to the Company by the Trustee.
TITLE
The Company and the Trustee may treat the registered owner (as reflected in
the Security Register) of any Convertible Note as the absolute owner thereof
(whether or not such Convertible Note shall be overdue) for the purpose of
making payment and for all other purposes. (sec. 308)
NOTICES
Notice to Holders of the Convertible Notes will be given by mail to the
addresses of such Holders as they appear in the Security Register. Such notices
will be deemed to have been given on the date of such mailing. (sec. 106)
27
<PAGE> 29
Notice of a redemption of Convertible Notes will be given not less than 20
nor more than 60 days prior to the redemption date (which notice shall be
irrevocable) and will specify the redemption date. (sec. 1105)
REPLACEMENT OF CONVERTIBLE NOTES
Convertible Notes that become mutilated, destroyed, stolen or lost will be
replaced by the Company at the expense of the Holder upon delivery of the
Trustee of the mutilated Convertible Notes or evidence of the loss, theft or
destruction thereof satisfactory to the Company and the Trustee. In the case of
a lost, stolen or destroyed Convertible Note indemnity satisfactory to the
Trustee and the Company may be required at the expense of the Holder of such
Convertible Note before a replacement Convertible Note will be issued.
(sec. 306)
SATISFACTION AND DISCHARGE
The Company may discharge its payment obligations under the Indenture while
Convertible Notes remain outstanding if (a) all outstanding Convertible Notes
have become due and payable or will become due and payable at their scheduled
maturity within one year, (b) all outstanding Convertible Notes are scheduled
for redemption within one year or (c) all outstanding Convertible Notes are
delivered to the Trustee for conversion in accordance with the Indenture and in
the case of (a) or (b) above, the Company has deposited with the Trustee an
amount sufficient to pay and discharge the entire indebtedness on all
outstanding Convertible Notes on the date of their scheduled maturity or the
scheduled date of redemption. (sec. 401)
GOVERNING LAW
The Indenture and the Convertible Notes will be governed by and construed
in accordance with the laws of the State of New York. (sec. 112)
THE TRUSTEE
In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders of
Convertible Notes, unless they shall have offered to the Trustee security or
indemnity satisfactory to the Trustee. (sec.sec. 601 and 603)
BOOK-ENTRY
Each series of Convertible Notes will be issued in the form of a global
note (the "Global Note") deposited with, or on behalf of, The Depository Trust
Company ("DTC") and registered in the name of Cede & Co. as DTC's nominee.
Owners of beneficial interests in the Convertible Notes represented by the
Global Note will hold such interests pursuant to the procedures and practices of
DTC and must exercise any rights in respect of their interests (including any
right to convert or require repurchase of their interests) in accordance with
those procedures and practices. Such beneficial owners will not be Holders, and
will not be entitled to any rights under the Global Note or the Indenture, and
the Company and the Trustee, and any of their respective agents, may treat DTC
as the sole Holder and owner of the Global Note.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC holds securities that its participants
deposit with DTC. DTC also facilitates the settlement among participants of
securities transactions, such as transfer and pledges, in deposited securities
through electronic computerized book-entry changes in participants' accounts,
thereby
28
<PAGE> 30
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporation, and certain other organizations. DTC is owned by a number
of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the Securities and Exchange Commission.
Unless and until they are exchanged in whole or in part for certificated
Convertible Notes in definitive form as set forth below, the Global Notes may
not be transferred except as a whole by DTC to a nominee of DTC, or by a nominee
of DTC to DTC or another nominee of DTC.
The Convertible Notes represented by the Global Notes will not be
exchangeable for certificated Convertible Notes, provided that if (a) DTC is at
any time unwilling, unable or ineligible to continue as depositary and a
successor depositary is not appointed by the Company within 90 days or (b) there
shall have occurred and be continuing an Event of Default with respect to the
Convertible Notes, the Company will issue individual Convertible Notes in
definitive form in exchange for the Global Notes. In addition, the Company may
at any time and in its sole discretion determine not to have Global Notes, and,
in such event, will issue individual Convertible Notes in definitive form in
exchange for the Global Notes previously representing all such Convertible
Notes. In either instance, an owner of a beneficial interest in a Global Note
will be entitled to physical delivery of Convertible Notes in definitive form
equal in principal about to such beneficial interest and to have such
Convertible Notes registered in its name. Individual Convertible Notes so issued
in definitive form will be issued in denominations of $1,000 and any larger
amount that is an integral multiple of $1,000 and will be issued in registered
form only, without coupons.
Payments of principal of and interest on the Convertible Notes will be made
by the Company through the Trustee to DTC or its nominee, as the case may be, as
the registered owner of the Global Note. Neither the Company nor the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of the Global
Note or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. The Company expects that DTC, upon receipt of
any payment of principal or interest in respect of the Global Note, will credit
the accounts of the related participants with payment in amounts proportionate
to their respective holdings in principal amount of beneficial interest in the
Global Note as shown on the records of DTC. The Company also expects that
payments by participants to owners of beneficial interests in the Global Note
will be governed by standing customer instructions and customary practices, as
is now the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
participants.
So long as the Convertible Notes are represented by a Global Note, DTC or
its nominee will be the only entity that can exercise a right to redemption
pursuant to the Holder's option to elect redemption of its Convertible Notes or
the right of conversion of the Convertible Notes. Notice by participants or by
owners of beneficial interests in a Global Note held through such participants
of the exercise of the option to elect redemption, or the right of conversion,
of beneficial interests in Convertible Notes represented by the Global Note must
be transmitted to DTC in accordance with its procedures on a form required by
DTC and provided to participants. In order to ensure that DTC's nominee will
timely exercise a right to redemption, or the right of conversion, with respect
to a particular Convertible Note, the beneficial owner of such Convertible Notes
must instruct the broker or other participant through which it holds an interest
in such Convertible Notes to notify DTC of its desire to exercise a right to
redemption, or the right of conversion. Different firms have different cut-off
times for accepting instructions from their customers and, accordingly, each
beneficial owner should consult the broker or other participant through which it
holds an interest in a Convertible Note in order to ascertain the cut-off time
by which such an instruction must be given in order for timely notice to be
delivered to DTC. The Company will not be liable for any delay in delivery of
such notice to DTC.
29
<PAGE> 31
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States federal income and
estate tax considerations relating to the purchase, ownership and disposition of
the Convertible Notes and of Class A Common Stock into which the Convertible
Notes may be converted, but does not purport to be a complete analysis of all
the potential tax considerations relating thereto. This summary is based on
laws, regulations, rulings and decisions now in effect (or, in the case of
certain United States Treasury Regulations ("Treasury Regulations"), now in
proposed form), all of which are subject to change, possibly on a retroactive
basis. This summary deals only with holders that will hold Convertible Notes and
Class A Common Stock into which Convertible Notes may be converted as "capital
assets" (within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended (the "Code")) and does not address tax considerations
applicable to investors that may be subject to special tax rules, such as banks,
tax-exempt organizations, insurance companies, dealers in securities or
currencies, persons that will hold Convertible Notes as a position in a hedging
transaction, "straddle" or "conversion transaction" for tax purposes, or persons
that have a "functional currency" other than the U.S. dollar. The Company has
not sought any ruling from the Internal Revenue Service ("IRS") with respect to
the statements made and the conclusions reached in the following summary, and
there can be no assurance that the IRS will agree with such statements and
conclusions. INVESTORS CONSIDERING THE PURCHASE OF CONVERTIBLE NOTES OR CLASS A
COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
APPLICATION OF THE UNITED STATES FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF
ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX
TREATY.
UNITED STATES HOLDERS
As used herein, the term "United States Holder" means the beneficial owner
of a Convertible Note or of Class A Common Stock that for United States federal
income tax purposes is (i) a citizen or resident of the United States, (ii)
treated as a domestic corporation or domestic partnership, or (iii) an estate or
trust other than a "foreign estate" or "foreign trust" as defined in Section
7701(a)(31) of the Code.
PAYMENT OF INTEREST
Interest on a Convertible Note generally will be included in the income of
a United States Holder as ordinary income at the time such interest is received
or accrued, in accordance with such Holder's method of accounting for United
States federal income tax purposes.
MARKET DISCOUNT
If a United States Holder purchases a Convertible Note for an amount that
is less than its stated redemption price at maturity, such United States Holder
will be treated as having purchased such Convertible Note at a "market discount"
unless such market discount is less than one-fourth of one percent of the stated
redemption price of the Convertible Note at maturity, multiplied by the number
of complete years to maturity (after the United States Holder acquired the
Convertible Note).
Under the market discount rules, a United States Holder will be required to
treat any partial principal payment on a Convertible Note, or any gain realized
on the sale, exchange, retirement or other disposition of a Convertible Note, as
ordinary income to the extent of the lesser of (i) the amount of such payment or
realized gain or (ii) the market discount which has not previously been included
in income and is treated as having accrued on such Convertible Note at the time
of such payment or disposition. Market discount will be considered to accrue
ratably during the period from the date of acquisition to the maturity date of
the Convertible Note, unless the United States Holder elects to accrue market
discount on a constant yield basis. Once made, such an election is irrevocable.
A United States 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 a Convertible Note with
30
<PAGE> 32
market discount until the maturity of the Convertible Note or certain earlier
dispositions, because a current deduction is only allowed to the extent that the
interest expense exceeds the portion of market discount allocable to the days
during the taxable year in which the Convertible Note was held by the taxpayer.
A United States 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 Convertible Note and upon the receipt of certain cash
payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States federal income tax purposes. Such an election will
apply to all debt instruments with market discount acquired by the United States
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.
BOND PREMIUM
If a United States Holder purchases a debt instrument for an amount in
excess of its stated redemption price at maturity, such United States Holder
will be considered to have purchased the debt instrument with "amortizable bond
premium," generally equal in amount to such excess, but reduced by the value of
any conversion features attached to the debt instrument. A United States Holder
may elect to amortize bond premium using a constant yield method over the
remaining term of the debt instrument and may offset interest (including
original issue discount) otherwise required to be included in respect of the
debt instrument during any taxable year by the amortized amount for the taxable
year. Any election to amortize bond premium applies to all taxable debt
obligations then owned and thereafter acquired by the United States 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.
The conversion features of the Convertible Notes and the Company's option
to redeem the Convertible Notes at the Redemption Price prior to maturity will
affect a United States Holder's calculation of amortizable bond premium. As
noted in the preceding paragraph, the amount of amortizable bond premium
generally equals the excess of the United States Holder's tax basis in the debt
instrument over the debt instrument's stated redemption price at maturity, but
reduced by the value of the conversion features of the debt instrument.
Accordingly, the value of the conversion features of the Convertible Notes must
be excluded from the calculation of amortizable bond premium. Treasury
Regulations provide that the value of the conversion features of a particular
debt instrument is determined as of the time of acquisition by subtracting from
the cost of the debt instrument the assumed price at which the debt instrument
would be purchased on the open market if it did not have the conversion
features. This assumed price of the debt instrument without conversion features
is determined by comparing the yields on which debt instruments of a similar
character, but not having conversion features, are sold on the open market and
adjusting the price of the debt instrument in question to this yield. In
addition, in view of the Company's option to redeem the Convertible Notes prior
to maturity, the amount of amortizable bond premium on the Convertible Notes
will be determined by subtracting from the United States Holder's tax basis in
the Convertible Notes the applicable Redemption Price payable on the first date
on which the Convertible Notes could be redeemed (rather than the stated
redemption price at maturity). If the Company does not in fact exercise its
right to redeem the Convertible Notes on this date, the Convertible Notes will
be treated (for purposes of the bond premium rules) as having matured and then
as having been reissued for the Redemption Price at which the Convertible Notes
could have been redeemed on such date. The Convertible Notes deemed to have been
reissued will again be subject to the amortizable bond premium rules with
respect to the remaining dates on which the Convertible Notes are redeemable.
Recently issued Treasury Regulations clarify the treatment of bond premium.
These regulations describe the constant yield method under which such premium is
amortized and provide that the resulting offset to interest income generally can
be taken into account only as a United States Holder takes the corresponding
interest income into account under such United States Holder's regular
accounting method. If the bond premium allocable to an accrual period exceeds
the qualified stated interest allocable to such period, the excess is treated by
the United States Holder as a bond premium
31
<PAGE> 33
deduction. However, the bond premium deduction for the accrual period is limited
to the amount by which the United States Holder's total interest inclusions on
the debt instrument in prior accrual periods exceed the total amount treated by
such Holder as a bond premium deduction on the debt instrument in prior accrual
periods. Any amounts not deductible in an accrual period may be carried forward
to the next accrual period and treated as bond premium allocable to that period.
In the case of instruments that may be redeemed prior to maturity, the
regulations provide that the premium is calculated by assuming that the issuer
or holder will exercise or not exercise its redemption rights in the manner that
maximizes the holder's yield. The regulations are effective for debt instruments
acquired on or after March 2, 1998. If a United States Holder elects to amortize
bond premium for the taxable year containing such effective date, the
regulations will apply to all the United States Holder's debt instruments held
on or after the first day of that taxable year.
SALE, EXCHANGE OR REDEMPTION OF THE CONVERTIBLE NOTES
Upon the sale, exchange or redemption of a Convertible Note, a United
States Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash proceeds and the fair market value of
any property received on the sale, exchange or redemption (except to the extent
such amount is attributable to accrued interest income, which is taxable as
ordinary income) and (ii) such Holder's adjusted tax basis in the Convertible
Note. For purposes of determining gain or loss, a United States Holder's
adjusted tax basis in a Convertible Note generally will equal the cost of the
Convertible Note to such Holder, increased by accrued market discount, if any,
if the United States Holder has included such market discount in income, reduced
by any principal payments received by such Holder, and reduced by amortizable
bond premium, if any, taken with respect to such Convertible Note. The tax rate
applicable to such a capital gain will depend, among other things, upon the
United States Holder's holding period for the Convertible Notes that are sold,
exchanged or redeemed.
CONVERSION OF THE CONVERTIBLE NOTES
A United States Holder generally will not recognize any income, gain or
loss upon conversion of a Convertible Note into Class A Common Stock except to
the extent of ordinary income recognized with respect to accrued and unpaid
interest on the Convertible Note at that time. A United States Holder also will
recognize capital gain or loss upon the receipt of cash in lieu of a fractional
share of Class A Common Stock equal to the amount of cash received less the
Holder's tax basis in such fractional share. Such Holder's tax basis in the
Class A Common Stock received on conversion of a Convertible Note will be the
same as such Holder's adjusted tax basis in the Convertible Note at the time of
conversion (reduced by any basis allocable to a fractional share interest), and
the holding period for the Class A Common Stock received on conversion will
generally include the holding period of the Convertible Note converted.
DIVIDENDS
Dividends paid on the Class A Common Stock generally will be included in
the income of a United States Holder 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 United States Holder's tax basis in the Class A
Common Stock and thereafter as gain from the sale or exchange of such stock.
In general, a dividend distribution to a corporate United States Holder
will qualify for the 70% dividends received deduction if the Holder owns less
than 20% of the voting power and value of the Company's stock (other than
certain non-voting, non-convertible, non-participating preferred stock). A
corporate United States Holder that owns 20% or more of the voting power and
value of the Company's stock (other than certain non-voting, non-convertible,
non-participating preferred stock) generally will qualify for an 80% dividends
received deduction. The dividends received deduction is subject, however, to
certain holding period, taxable income and other limitations.
32
<PAGE> 34
SALE OF CLASS A COMMON STOCK
Upon the sale or exchange of Class A Common Stock, a United States 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 Holder's adjusted tax basis in the Class A
Common Stock. The tax rate applicable to such capital gain will depend, among
other things, upon the Holder's holding period for the Shares of Class A Common
Stock that are sold or exchanged. A United States Holder's basis and holding
period in Class A Common Stock received upon conversion of a Convertible Note
are determined as discussed above under "-- Conversion of the Convertible
Notes."
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would treat
holders of the Convertible Notes as having received a constructive distribution
from the Company in the event that the conversion ratio of the Convertible Notes
were adjusted if (i) as a result of such adjustment, the proportionate interest
(measured by the quantum of Class A Common Stock into or for which the
Convertible Notes are convertible or exchangeable) of the holders of the
Convertible Notes in the assets or earnings and profits of the Company were
increased, and (ii) the adjustment was not made pursuant to a bona fide,
reasonable anti-dilution formula. An adjustment in the conversion ratio would
not be considered made pursuant to such 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 my result in deemed dividend income to holders to the extent of
the Company's current or accumulated earnings and profits.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a Convertible Note, payments of
dividends on Class A Common Stock, payments of the proceeds of the sale of a
Convertible Note 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 United
States 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 United States Holder will be allowed as a
credit against such 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-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any beneficial
owner of a Convertible Note or Class A Common Stock that is not a United States
Holder. The rules governing the United States federal income and estate taxation
of a Non-United States Holder are complex and no attempt will be made herein to
provide more than a summary of such rules. NON-UNITED STATES HOLDERS SHOULD
CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE THE EFFECT OF FEDERAL, STATE,
LOCAL AND FOREIGN TAX LAWS, INCLUDING TREATIES, WITH REGARD TO AN INVESTMENT IN
THE CONVERTIBLE NOTES AND CLASS A COMMON STOCK, INCLUDING ANY REPORTING
REQUIREMENTS.
PAYMENT OF INTEREST
Generally, payment of interest on a Convertible Note by the Company or any
Paying Agent to a Non-United States 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-United
States Holder and provided that the
33
<PAGE> 35
Non-United States Holder (i) does not actually or constructively own 10% or more
of the combined voting power of all classes of stock of the Company entitled to
vote, (ii) is not a controlled foreign corporation related to the Company
actually or constructively through stock ownership, (iii) is not a bank
receiving interest on a loan entered into in the ordinary course of business and
(iv) either (a) provides a Form W-8 (or a suitable substitute form) signed under
penalties of perjury that includes its name and address and certifies as to its
non-United States status in compliance with applicable law and regulations, or
(b) a securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business
holds the Convertible Note and provides a statement to the Company or its agent
under penalties of perjury in which it certifies that such a Form W-8 (or a
suitable substitute) has been received by it from the Non-United States Holder
or qualifying intermediary and furnishes the Company or its agent with a copy
thereof.
Recently released Treasury Regulations provide alternative methods for
satisfying the certification requirements described in clause (iv) above. The
Treasury Regulations generally are effective for payments made after December
31, 1998, subject to certain transition rules. Non-United States Holders are
urged to consult their own tax advisors regarding the new Treasury Regulations.
Except to the extent that an applicable treaty otherwise provides, a
Non-United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non-United States
Holder. Effectively connected interest received by a corporate Non-United States
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Even though such effectively connected interest 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 IRS Form 4224 to the payor.
Interest income of a Non-United States Holder that is not effectively
connected with a United States trade or business and that does not qualify for
the portfolio interest exemption described above will generally be subject to a
withholding tax at a 30% rate (or, if applicable, a lower treaty rate).
SALE, EXCHANGE OR REDEMPTION OF THE CONVERTIBLE NOTES
A Non-United States Holder of a Convertible Note will generally not be
subject to United States federal income tax or withholding tax on any gain
realized on the sale, exchange or redemption of a Convertible Note (including
the receipt of cash in lieu of fractional shares upon conversion of a
Convertible Note into Class A Common Stock) unless (1) the gain is effectively
connected with a United States trade or business of the Non-United States
Holder, (2) in the case of a Non-United States 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, (3) the Holder is subject to tax pursuant to the provisions of the Code
applicable to certain United States expatriates, or (4) the Company is a United
States real property holding corporation (see discussion under "United States
Foreign Investment in Real Property Tax Act" below).
CONVERSION OF THE CONVERTIBLE NOTES
In general, no United States federal income tax or withholding tax will be
imposed upon the conversion of a Convertible Note into Class A Common Stock by a
Non-United States Holder except with respect to the receipt of cash in lieu of
fractional shares by Non-United States Holders upon conversion of a Convertible
Note where any of the conditions described above under "Non-United States
Holders -- Sale, Exchange or Redemption of the Convertible Notes" is satisfied.
34
<PAGE> 36
SALE OR EXCHANGE OF CLASS A COMMON STOCK
A Non-United States 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 any of the conditions described above under "Non-United States
Holders -- Sale, Exchange or Redemption of the Convertible Notes" is satisfied.
DIVIDENDS
Dividends paid (or deemed paid, as described above under "United States
Holders -- Dividends") on Class A Common Stock to a Non-United States Holder
(excluding dividends that are effectively connected with the conduct of a trade
or business in the United States by such Holder and are taxable as described
below) will be subject to United States federal withholding tax at a 30% rate
(or lower rate provided under any applicable income tax treaty). Except to the
extent that an applicable tax treaty otherwise provides, a Non-United States
Holder will be taxed in the same manner as a United States Holder on dividends
paid (or deemed paid) that are effectively connected with the conduct of a trade
or business in the United States by the Non-United States Holder. If such
Non-United States 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 income 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 IRS Form 4224 to the payor.
Under currently applicable 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
withholding discussed above and for purposes of determining the applicability of
a tax treaty rate. Under recently issued Treasury Regulations, however,
Non-United States 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. The new Treasury Regulations are generally effective for payments
made after December 31, 1998. Non-United States Holders are urged to consult
their own tax advisors regarding the new Treasury Regulations.
CERTAIN UNITED STATES FEDERAL ESTATE TAX CONSIDERATIONS
A Convertible Note beneficially owned by an individual who is not a citizen
or resident of the United States at the time of death will not be included in
the decedent's gross estate for United States federal estate tax purposes,
provided that such non-United States Holder did not at the time of death
actually or constructively 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 Convertible Note would not have been
effectively connected with the conduct by such Non-United States 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-United States 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 a Convertible Note to a Non-United States Holder
if the statement described in "Non-United States Holders -- Payment of Interest"
is duly provided by such Holder, provided that the payor does not have actual
knowledge that the Holder is a United States person.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Convertible Note or any
payment of the proceeds of the sale of Class A
35
<PAGE> 37
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) 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 as to the United States. 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-United States 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 Convertible Note
provides the statement described in "Non-United States Holders -- Payment of
Interest" or otherwise establishes an exemption.
Recently released Treasury Regulations make certain modifications to the
withholding, backup withholding and information reporting rules described above.
The new Treasury Regulations will generally be effective for payments made after
December 31, 1998, subject to certain transition rules. Prospective investors
are urged to consult their own tax advisors regarding the new Treasury
Regulations.
UNITED STATES 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 a United States real
property holding corporation as of the date hereof, although it has not
conducted or obtained an appraisal of its assets to determine whether it is now
or will be a United States real property holding corporation. If it is not
established that the Company is not a United States real property holding
corporation, then, unless an exemption applies, both the Class A Common Stock
and the Convertible Notes would be treated as United States real property
interests. As discussed below, however, an exemption should apply to the Class A
Common Stock and the Convertible Notes except with respect to a Non-United
States Holder whose beneficial ownership of Class A Common Stock or Convertible
Notes exceeds 5% of the total fair market value of the Class A Common Stock.
An interest in a United States corporation generally will not be treated as
a United States real property interest if, at any time during the calendar year,
any class of stock of the corporation is "regularly traded" on an established
securities market (the "regularly-traded exemption"). The Company believes that
the Company's Class A Common Stock is regularly traded on an established
securities market within the meaning of the applicable regulations, although
there can be no assurance that the Class A Common Stock will remain regularly
traded. The remainder of this discussion assumes that the Class A Common Stock
is and will remain regularly traded on an established securities market.
The regularly-traded exemption is not available to a regularly traded
interest (such as the Class A Common Stock) if such interest is owned by a
person who beneficially owns (actually or constructively) more than 5% of the
total fair market value of that class of interests at any time during the
five-year period ending on the date of disposition of such interest or other
applicable determination date. Accordingly, except with respect to a sale or
other disposition of Class A Common Stock by a Non-United States Holder whose
aggregate beneficial ownership has exceeded that 5% threshold, no withholding or
income taxation under the FIRPTA rules should be required with respect to the
sale, exchange or other disposition of Class A Common Stock by a Non-United
States Holder.
36
<PAGE> 38
The regularly-traded exemption will apply to a "non-regularly traded class
of interests" in a United States corporation that is convertible into a
regularly traded class of interests in the corporation unless, on the date such
non-regularly traded interest was acquired by its present holder, such interest
had a fair market value greater than the fair market value on that date of 5% of
the regularly traded class of the corporation's stock into which it is
convertible. (Interests of a non-regularly traded class acquired over a period
of time will be aggregated and valued as of the date of the subsequent
acquisition for purposes of applying the 5% test described above.) Accordingly,
except with respect to the sale, exchange, conversion or redemption of the
Convertible Notes by a Non-United States Holder whose aggregate actual or
constructive ownership of such Convertible Notes on an applicable determination
date had a fair market value greater than 5% of the Class A Common Stock, no
withholding or income taxation under the FIRPTA rules should be required with
respect to the sale, exchange, conversion or redemption of Convertible Notes by
a Non-United States Holder. The foregoing discussion assumes that the
Convertible Notes constitute interests that are nonregularly traded interests
convertible into a regularly traded class of interests. If the Convertible Notes
were to become regularly traded, the regularly-traded exemption might not apply
to Convertible Notes owned by a person who beneficially owns (actually or
constructively) more than 5% of the total fair market value of the Convertible
Notes at any time during the five year period ending on the date of disposition
of the Convertible Notes or other applicable determination date.
Any investor that may approach or exceed any of the 5% ownership thresholds
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-United States Holder who sells or otherwise disposes of
Convertible Notes may be required to inform its transferee whether such
Convertible Notes constitute a United States real property interest.
PLAN OF DISTRIBUTION
This Prospectus relates to the sale by the Selling Securityholders of (i)
up to 246,167 shares of Class A Common Stock of the Company acquired by certain
Selling Securityholders in connection with the Company's acquisition of the St.
Louis Budget franchise (the "St. Louis Acquisition"), which was consummated in
November 1997, (ii) up to 5,595,482 shares of Class A Common Stock issuable upon
conversion of the Convertible Notes, (iii) $80,000,000 aggregate principal
amount of Series A Convertible Notes and (iv) $45,000,000 aggregate principal
amount of Series B Convertible Notes. The Company is registering the Shares and
the Convertible Notes for sale to provide the holders thereof with freely
tradeable securities, but the registration of such shares or notes does not
necessarily mean that any of such shares or notes will be issued by the Company
or offered or sold by the holders thereof.
The Shares and Convertible Notes may be sold from time to time to
purchasers directly by any of the Selling Securityholders. Alternatively, the
Selling Securityholders may from time to time offer the Shares and Convertible
Notes through dealers or agents, who may receive compensation in the form of
commissions from the Selling Securityholders and/or the purchasers of Shares and
Convertible Notes for whom they may act as agent. Without limiting the
foregoing, such sales may be in the form of secondary distributions, exchange
distributions, block trades, ordinary brokerage transactions or a combination of
such methods of sale. The Selling Securityholders and any dealers or agents that
participate in the distribution of Shares and Convertible Notes may be deemed to
be "underwriters" within the meaning of the Securities Act and any profit on the
sale of Shares and Convertible Notes by them and any commissions received by any
such dealers or agents might be deemed to be underwriting commissions under the
Securities Act.
At a time a particular offer of Shares or Convertible Notes is made, a
Prospectus Supplement, if required, will be distributed that will set forth the
name and names of any dealers or agents and any commissions and other terms
constituting compensation from the Selling Securityholders and any other
required information. The Shares and Convertible Notes may be sold from time to
time at varying prices determined at the time of sale or at negotiated prices.
37
<PAGE> 39
In order to comply with the securities laws of certain states, if
applicable, the Shares and Convertible Notes may be sold only through registered
or licensed brokers or dealers. In addition, in certain states, the Shares and
Convertible Notes may not be sold unless they have been registered or qualified
for sale in such state or an exemption from such registration or qualification
requirement is available and is complied with.
38
<PAGE> 40
LEGAL MATTERS
The validity of the shares of the Class A Common Stock and Convertible
Notes offered hereby has been passed upon for the Company by King & Spalding,
Atlanta, Georgia.
EXPERTS
The consolidated financial statements of Budget Group, Inc. and
subsidiaries as of and for the year ended December 31, 1996, incorporated by
reference from the Company's Current Report on Form 8-K dated December 1, 1997,
as amended, 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 as of December 31, 1995 and for each
of the two years in the period ended December 31, 1995 incorporated in this
prospectus by reference from Budget Group Inc.'s Current Report on Form 8-K
dated December 1, 1997, as amended, and appearing in the Annual Report on Form
10-K for the year ended December 31, 1996 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of BRACC as of December 31, 1995 and
1996 and for each of the years in three-year period ended December 31, 1996 have
been incorporated by reference in the Registration Statement in reliance upon
the report of KPMG Peat Marwick LLP, independent auditors incorporated by
reference elsewhere herein and upon the authority of said firm as experts in
accounting and auditing.
With respect to the unaudited pro forma consolidated statement of
operations of Budget Group, Inc. for the six months ended June 30, 1997,
incorporated by reference from the Company's Current Report on Form 8-K dated
December 1, 1997, as amended, Arthur Andersen LLP has applied limited procedures
in accordance with professional standards for a review of that information.
However, their separate report thereon states that they did not audit and they
do not express an opinion on that pro forma financial information. Accordingly,
the degree of reliance on their report on that information should be restricted
in light of the limited nature of the review procedures applied. In addition,
the accountants are not subject to the liability provisions of Section 11 of the
Securities Act (the "Act") of 1933 for their report on the unaudited pro forma
financial information referred to above because that report is not a "report" or
a "part" of the Registration Statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Act.
39
<PAGE> 41
==========================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................... 2
Incorporation of Certain Documents by
Reference.............................. 2
The Company.............................. 3
The Offering............................. 4
Use of Proceeds.......................... 4
Ratio of Earnings to Fixed Charges....... 4
Supplemental Earnings per Share Data..... 5
Risk Factors............................. 6
Selling Securityholders.................. 12
Description of Capital Stock............. 14
Description of Convertible Notes......... 18
Certain United States Federal Tax
Considerations......................... 30
Plan of Distribution..................... 37
Legal Matters............................ 39
Experts.................................. 39
</TABLE>
==========================================================
==========================================================
5,841,649 SHARES
CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------
$80,000,000
AGGREGATE PRINCIPAL AMOUNT
7.0% CONVERTIBLE
SUBORDINATED NOTES,
SERIES A, DUE 2007
------------------
$45,000,000
AGGREGATE PRINCIPAL AMOUNT
6.85% CONVERTIBLE
SUBORDINATED NOTES,
SERIES B, DUE 2007
BUDGET GROUP, INC.
==========================================================
<PAGE> 42
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......... 40,471
Transfer agents' fees....................................... 10,000
Printing and engraving expenses............................. 30,000
Legal fees and expenses..................................... 30,000
Accounting fees and expenses................................ 30,000
Miscellaneous............................................... 9,529
--------
Total............................................. $150,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
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 Company (filed herewith as Exhibit 3.2) (the
"Restated Certificate of Incorporation") provides that no director shall be
liable to the Company 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 Company 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 Company's Bylaws provide indemnification of the Company's directors and
officers, both past and present, to the fullest extent permitted by the DGCL,
and allow the Company 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 Company's
Bylaws will also authorize the Company 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 Company would have
the power to indemnify him against such liability under the provisions of the
Restated Certificate of Incorporation or Section 145 of the DGCL.
II-1
<PAGE> 43
The Company has entered into indemnification agreements with each of its
directors and certain of its executive officers. 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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The Registrant agrees to furnish a copy of all agreements relating to
long-term debt upon request of the Commission.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <C> <S>
2.1 -- Common Stock Purchase Agreement, dated as of January 13,
1997, between John J. Nevin and the Company (incorporated by
reference to Exhibit 2.7 to the Company's Registration
Statement on Form S-1, File No. 333-21691, dated February
12, 1997).
2.2 -- Budget Stock Purchase Agreement, dated as of January 13,
1997, between Budget Rent A Car Corporation and Team Rental
Group, Inc. (currently known as Budget Group, Inc.)
(incorporated by reference to Exhibit 2.8 to the Company's
Registration Statement on Form S-1, File No. 333-21691,
dated February 12, 1997).
2.3 -- Preferred Stock Purchase Agreement, dated as of January 13,
1997, between Ford Motor Company and the Company
(incorporated by reference to Exhibit 2.9 to the Company's
Registration Statement on Form S-1, File No. 333-21691,
dated February 12, 1997).
2.4 -- Preferred Stockholders Agreement between Ford Motor Company
and the Company (incorporated by reference to Exhibit 2.10
to the Company's Registration Statement on Form S-1, File
No. 333-34799, dated September 26, 1997).
2.5 -- Merger Agreement dated as of November 25, 1997 among the
Company, CA Acquisition Corporation and Cruise America, Inc.
(incorporated by reference to Exhibit 2.1 to the Company's
Registration Statement on Form S-4, File No. 333-42327,
dated December 16, 1997).
3.1 -- Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1, File No.
33-78274, dated April 28, 1994).
3.2 -- Amendment to Amended and Restated Certificate of
Incorporation of the Company (incorporated by reference to
Exhibit 3.2 to Amendment No. 2 to the Company's Registration
Statement on Form S-1, File No. 333-4507, dated June 28,
1996).
3.3 -- Amendment to Amended and Restated Certificate of
Incorporation of the Company (incorporated by reference to
Exhibit 3.3 to the Company's Registration Statement on Form
S-1, File No. 333-34799, dated September 26, 1997).
3.4 -- By-Laws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-1,
File No. 33-78274, dated April 28, 1994).
4.1 -- Specimen 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).
4.2 -- Registration Rights Agreement, dated as of August 25, 1994,
among the Company, Brian Britton, Jeffrey Congdon, Richard
Hinkle, John Kennedy, Sanford Miller and Richard Sapia
(incorporated by reference to Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994).
4.3 -- First Amendment to Registration Rights Agreement, dated as
of November 1, 1994, among the Company, Brian Britton,
Jeffrey Congdon, Richard Hinkle, John Kennedy, Sanford
Miller and Richard Sapia (incorporated by reference to
Exhibit 10.24 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
</TABLE>
II-2
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <C> <S>
4.4 -- Letter Agreement, dated as of November 1, 1994, between
Andrew Klein and the Company acknowledging that Andrew Klein
is a party to the Registration Rights Agreement, dated as of
August 25, 1994, as amended (incorporated by reference to
Exhibit 10.25 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
4.5 -- Registration Rights Agreement, dated as of October 20, 1995,
between the Company and Budget Rent-A-Car of Southern
California (incorporated by reference to Exhibit 4.12 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995).
4.6 -- Registration Rights Agreement, dated as of December 1, 1996,
between the Company and the holders of the Convertible
Subordinated Notes (incorporated by reference to Exhibit
4.12 to the Company's Registration Statement on Form S-1,
File No. 333-21691, dated February 12, 1997).
**4.7 -- Registration Rights Agreement, dated as of November 6, 1997,
among the Company and the Stockholders of Budget Rent A Car
of St. Louis, Inc.
*4.8 -- Form of Indenture dated as of January 8, 1998 between the
Company and The Chase Manhattan Bank, as Trustee.
**5.1 -- Opinion of King & Spalding as to the legality of the
securities being registered.
**12.1 -- Statement regarding computation of ratio of earnings to
fixed charges.
*23.1 -- Consent of Deloitte & Touche LLP.
*23.2 -- Consent of Arthur Andersen LLP.
*23.3 -- Consent of KPMG Peat Marwick LLP.
**23.4 -- Consent of King & Spalding (included in Exhibit 5.1).
**24.1 -- Power of Attorney.
*25.1 -- Statement of Eligibility of the Trustee on Form T-1.
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
+ The Company has been granted confidential treatment of portions of this
Exhibit. Accordingly, portions thereof have been omitted and filed separately
with the Commission.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
(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 (the "Securities Act");
(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 and 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 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
II-3
<PAGE> 45
(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) 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 periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 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, 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, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 46
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 January 7, 1998.
BUDGET GROUP, INC.
By: /s/ ROBERT L. APRATI
------------------------------------
Robert L. Aprati
Executive Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on this 7th day of January, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer (Principal Executive Officer) and
Sanford Miller Director
* Vice Chairman and Director
- -----------------------------------------------------
John Kennedy
* Vice Chairman and Director
- -----------------------------------------------------
Jeffrey Congdon
* Chief Financial Officer
- ----------------------------------------------------- (Principal Financial Officer)
Michael Clauer
* Vice President -- Controller
- ----------------------------------------------------- (Principal Accounting Officer)
Thomas Kram
* Director
- -----------------------------------------------------
Ronald D. Agronin
* Director
- -----------------------------------------------------
Stephen L. Weber
* Director
- -----------------------------------------------------
Jeffrey Mirkin
* Director
- -----------------------------------------------------
Alan Liker
</TABLE>
II-5
<PAGE> 47
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director
- -----------------------------------------------------
James F. Calvano
* Director
- -----------------------------------------------------
Martin P. Gregor
*By: /s/ ROBERT L. APRATI
-----------------------------------------------
Robert L. Aprati
Attorney-in-fact
</TABLE>
II-6
<PAGE> 1
EXHIBIT 4.8
BUDGET GROUP, INC.
AND
THE CHASE MANHATTAN BANK,
TRUSTEE
------------------------------------
INDENTURE
JANUARY 15, 1998
------------------------------------
$80,000,000
7.0% CONVERTIBLE SUBORDINATED NOTES,
SERIES A, DUE 2007
$45,000,000
6.85% CONVERTIBLE SUBORDINATED NOTES,
SERIES B, DUE 2007
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
<S> <C> <C>
SECTION 101. Definitions........................................................................... 2
SECTION 102. Compliance Certificates and Opinions..................................................13
SECTION 103. Form of Documents Delivered to Trustee................................................13
SECTION 104. Acts of Holders; Record Dates.........................................................14
SECTION 105. Notices, Etc., to Trustee and Company.................................................16
SECTION 106. Notice to Holders; Waiver.............................................................16
SECTION 107. Conflict with Trust Indenture Act.....................................................17
SECTION 108. Effect of Headings and Table of Contents..............................................17
SECTION 109. Successors and Assigns................................................................17
SECTION 110. Separability Clause...................................................................17
SECTION 111. Benefits of Indenture.................................................................17
SECTION 112. Governing Law.........................................................................17
SECTION 113. Legal Holidays........................................................................18
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.......................................................................18
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.......................................................................19
SECTION 302. Denominations.........................................................................20
SECTION 303. Execution, Authentication, Delivery and Dating........................................20
SECTION 304. Temporary Securities..................................................................21
SECTION 305. Registration, Registration of Transfer and Exchange...................................21
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities......................................23
SECTION 307. Payment of Interest; Interest Rights Preserved........................................24
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 308. Persons Deemed Owners.................................................................25
SECTION 309. Cancellation..........................................................................25
SECTION 310. Computation of Interest.............................................................. 26
SECTION 311. CUSIP Number..........................................................................26
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture...............................................26
SECTION 402. Application of Trust Money............................................................27
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.....................................................................27
SECTION 502. Acceleration of Maturity; Rescission and Annulment....................................29
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.......................30
SECTION 504. Trustee May File Proofs of Claim......................................................30
SECTION 505. Trustee May Enforce Claims Without Possession of Securities...........................31
SECTION 506. Application of Money Collected........................................................31
SECTION 507. Limitation or Suits...................................................................32
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert...............................................................33
SECTION 509. Restoration of Rights and Remedies....................................................33
SECTION 510. Rights and Remedies Cumulative........................................................33
SECTION 511. Delay or Omission Not Waiver..........................................................33
SECTION 512. Control by Holders....................................................................34
SECTION 513. Waiver of Past Defaults...............................................................34
SECTION 514. Undertaking for Costs.................................................................34
SECTION 515. Waiver of Stay or Extension Laws......................................................35
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities...................................................35
SECTION 602. Notice of Defaults....................................................................36
SECTION 603. Certain Rights of Trustee.............................................................36
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 604. Not Responsible for Recitals or Issuance of Securities................................37
SECTION 605. May Hold Securities...................................................................38
SECTION 606. Money Held in Trust...................................................................38
SECTION 607. Compensation and Reimbursement........................................................38
SECTION 608. Disqualification; Conflicting Interests...............................................39
SECTION 609. Corporate Trustee Required; Eligibility...............................................39
SECTION 610. Resignation and Removal; Appointment of Successor.....................................39
SECTION 611. Acceptance of Appointment by Successor................................................40
SECTION 612. Merger, Conversion, Consolidation or Succession to Business...........................41
SECTION 613. Preferential Collection of Claims Against Company.....................................41
SECTION 614. Appointment of Authenticating Agent...................................................41
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.............................43
SECTION 702. Preservation of Information; Communications to Holders................................43
SECTION 703. Reports by Trustee....................................................................44
SECTION 704. Reports by Company....................................................................44
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms..................................44
SECTION 802. Successor Substituted.................................................................45
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders....................................45
SECTION 902. Supplemental Indentures with Consent of Holders.......................................46
SECTION 903. Execution of Supplemental Indentures..................................................47
SECTION 904. Effect of Supplemental Indentures.....................................................47
SECTION 905. Conformity with Trust Indenture Act...................................................47
SECTION 906. Reference in Securities to Supplemental Indentures....................................47
SECTION 907. Notice of Supplemental Indentures.....................................................48
</TABLE>
-iii-
<PAGE> 5
ARTICLE TEN
COVENANTS
<TABLE>
<S> <C> <C>
SECTION 1001. Payment of Principal, Premium and Interest............................................48
SECTION 1002. Maintenance of Office or Agency.......................................................48
SECTION 1003. Money for Security Payments to Be Held in Trust.......................................49
SECTION 1004. Statement by Officers as to Default...................................................50
SECTION 1005. Existence.............................................................................51
SECTION 1006. Maintenance of Properties.............................................................51
SECTION 1007. Keeping of Books; Payment of Taxes and Other Claims...................................51
SECTION 1008. Book-Entry System.....................................................................51
SECTION 1009. Waiver of Certain Covenants...........................................................52
SECTION 1010. Further Instruments and Acts..........................................................52
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption...................................................................52
SECTION 1102. Maintenance of Office or Agency.......................................................52
SECTION 1103. Election to Redeem; Notice to Trustee.................................................54
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.....................................54
SECTION 1105. Notice of Redemption..................................................................55
SECTION 1106. Deposit of Redemption Price...........................................................55
SECTION 1107. Securities Payable on Redemption Date.................................................56
SECTION 1108. Securities Redeemed in Part...........................................................56
SECTION 1109. Conversion Arrangement on Call for Redemption.........................................57
ARTICLE TWELVE
SUBORDINATION OF SECURITIES
SECTION 1201. Securities Subordinate to Senior Indebtedness.........................................57
SECTION 1202. No Payments in Certain Circumstances; Payment Over of Proceeds
Upon Dissolution, Etc.................................................................58
SECTION 1203. Prior Payment to Senior Indebtedness Upon Acceleration of Securities..................60
SECTION 1204. [Reserved]............................................................................60
SECTION 1205. Payment Permitted if No Default.......................................................60
SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness...............................61
SECTION 1207. Provisions Solely to Define Relative Rights...........................................61
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 1208. Trustee to Effectuate Subordination...................................................61
SECTION 1209. No Waiver of Subordination Provisions.................................................61
SECTION 1210. Notice to Trustee.....................................................................62
SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent........................63
SECTION 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness..............................63
SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights...................................................................64
SECTION 1214. Article Applicable to Paying Agents...................................................64
SECTION 1215. Certain Conversions Deemed Payment....................................................64
ARTICLE THIRTEEN
CONVERSION OF SECURITIES
SECTION 1301. Conversion Privilege and Conversion Price.............................................65
SECTION 1302. Exercise of Conversion Privilege......................................................65
SECTION 1303. Fractions of Shares...................................................................67
SECTION 1304. Adjustment of Conversion Price........................................................67
SECTION 1305. Notice of Adjustments of Conversion Price.............................................71
SECTION 1306. Notice of Certain Corporate Action....................................................72
SECTION 1307. Company to Reserve Class A Shares.....................................................73
SECTION 1308. Taxes on Conversions..................................................................73
SECTION 1309. Covenant as to Class A Shares.........................................................73
SECTION 1310. Cancellation of Converted Securities..................................................74
SECTION 1311. Provision in Case of Consolidation, Merger or Sale of Assets..........................74
SECTION 1312. Responsibility of Trustee for Conversion Provisions...................................75
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL
SECTION 1401. Right to Require Repurchase...........................................................76
SECTION 1402. [Reserved]............................................................................76
SECTION 1403. Notices, Method of Exercising Repurchase Right, Etc...................................76
SECTION 1404. Certain Definitions...................................................................78
SECTION 1405. Consolidation, Merger, Etc............................................................78
</TABLE>
-v-
<PAGE> 7
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
<TABLE>
<S> <C> <C>
SECTION 1501. Indenture and Securities Solely Corporate Obligations................79
</TABLE>
Certain Sections of this Indenture relating to Section 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------- ---------
<S> <C> <C>
Section 310(a)(1) ................................................. 609
(a)(2) ................................................. 609
(a)(3) ................................................. Not Applicable
(a)(4) ................................................. Not Applicable
(b) ................................................. 608 610
Section 311(a) ................................................. 613
(b) ................................................. 613
Section 312(a) ................................................. 701 702(a)
(b) ................................................. 702(b)
(c) ................................................. 702(c)
Section 313(a) ................................................. 703(a)
(b) ................................................. 703(a)
(c) ................................................. 703(a)
(d) ................................................. 703(b)
Section 314(a) ................................................. 704
(b) ................................................. Not Applicable
(c)(1) ................................................. 102
(c)(2) ................................................. 102
(c)(3) ................................................. Not Applicable
(d) ................................................. Not Applicable
(e) ................................................. 102
Section 315(a) ................................................. 601
(b) ................................................. 602
(c) ................................................. 601
(d) ................................................. 601
(e) ................................................. 514
Section 316(a)(1)(A) ................................................. 512
(a)(1)(B) ................................................. 513
(a)(2) ................................................. Not Applicable
(b) ................................................. 508
</TABLE>
-v-
<PAGE> 8
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
--------------- ---------
<S> <C> <C>
(c) ................................................. 104
Section 317(a)(1) ................................................. 503
(a)(2) ................................................. 504
(b) ................................................. 1003
Section 318(a) ................................................. 107
</TABLE>
- --------------
Note: This reconciliation and tie shall not, for any purpose be deemed
to be a part of the indenture.
-vii-
<PAGE> 9
INDENTURE
INDENTURE, dated as of January 8, 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 Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has previously authorized and issued $80,000,000 aggregate
principal amount of its 7.0% Convertible Subordinated Notes, Series A, Due 2007
(the "Original Series A Notes") and $45,000,000 aggregate principal amount of
its 6.85% Convertible Subordinated Notes, Series B, Due 2007 (the "Original
Series B Notes") (the Original Series A Notes and the Original Series B Notes
being referred to herein collectively as the "Original Securities").
The Company is obligated to register notes that will be issued in
exchange for the Original Securities and the underlying Class A Common Stock,
par value $.01 per share ("Class A Shares"), of the Company issuable upon
conversion of such notes under the Securities Act of 1933 (the "Securities
Act"), and to exchange the Original Securities for convertible subordinated
notes in two series having the same maturity and other terms and bearing
interest at the same rate as the respective series of Original Securities and in
the respective aggregate principal amounts equal to the aggregate unpaid
principal amount of the Original Securities of each series.
In satisfaction of such obligation, the Company has duly authorized the
creation and issuance, upon receipt of all the issued and outstanding Original
Securities for exchange pursuant to the terms of the Note Purchase Agreements
(as defined herein) and cancellation of all such Original Securities, of
$80,000,000 of aggregate principal amount of its 7.0% Convertible Subordinated
Notes, Series A, Due 2007 (the "Series A Exchange Notes") and $45,000,000
aggregate principal amount of its 6.85% Convertible Subordinated Notes, Series
B, Due 2007 (the "Series B Exchange Notes") (the Series A Exchange Notes and the
Series B Exchange Notes being referred to herein collectively as the
"Securities"), in each case of substantially the tenor and amount of, and
evidencing the same indebtedness originally evidenced by, the Original Series A
Notes and the Original Series B Notes, respectively.
The Company has duly authorized the registration of the Securities and
the underlying Class A Shares under the Securities Act and to provide therefore
has duly authorized the execution and delivery of this Indenture.
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
<PAGE> 10
their and its terms, have been done. Further, all things necessary to duly
authorize the issuance of the Class A Shares of the Company issuable upon the
conversion of the Securities, and to duly reserve for issuance the number of
shares of Class A Shares issuable upon such conversion, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article One 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, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act" when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person. Notwithstanding the
foregoing, in no event shall any Holder or any of its
-2-
<PAGE> 11
Affiliates be deemed to be an Affiliate of the Company solely by reason of the
ownership of the Securities or other securities of the Company (including
without limitation the Class A Shares acquired upon the conversion of the
Securities).
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Global Security to the extent
applicable to such transaction and as in effect from time to time.
"As Converted Basis" means, when used in reference to Securities of
either series, whether at the time of a determination of the number of Class A
Shares or otherwise, that number of Class A Shares into which such Securities
may then be converted based upon the conversion rights of such Securities as
adjusted pursuant to Section 1304 of this Indenture.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means the board of directors of the Company or any
committee of directors lawfully exercising the relevant powers of said board of
directors.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, 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, shall have been
delivered to the Trustee.
"Business Day" means any day other than a Saturday or Sunday or a day
on which commercial banks are required or authorized by law to be closed in New
York, New York.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests (however designated) in stock issued by that
corporation.
"Capitalized Lease Obligations" means, with respect to any Person, all
outstanding obligations of such Person in respect of any rental obligation which
is required to be capitalized on the face of a balance sheet of such Person
under GAAP, taken at the capitalized amount thereof accounted for as liability
(net of interest expense) in accordance with GAAP.
"Change of Control" means such time as
(i) a "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act), excluding any "person" or
"group" of which Sanford Miller, John P. Kennedy or Jeffrey D. Congdon,
or their controlled Affiliates, are a substantial part
-3-
<PAGE> 12
(and for such purpose Messrs. Miller, Kennedy and Congdon, and their
controlled Affiliates, shall not be deemed to be a substantial part of
such person or group unless in the aggregate they own beneficially at
least 15.0% of the total then outstanding voting power of the Voting
Stock of the Company), (A) becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) of more than 50% of the total
then outstanding voting power of the Voting Stock of the Company or (B)
has the right or the ability by voting right, contract or otherwise to
elect or designate for election a majority of the entire Board of
Directors;
(ii) (A) the Company consolidates with or merges into any
other Person or conveys, transfers, sells or leases all or
substantially all of its assets as an entirety to any Person or (B) any
Person merges into the Company, in either event pursuant to a
transaction in which Voting Stock of the Company representing more than
50% of the total voting power of the Company outstanding immediately
prior to the effectiveness thereof is reclassified or changed into or
exchanged for cash, securities or other property; provided that any
consolidation, merger, conveyance, transfer, sale or lease between the
Company and any of its Subsidiaries (including without limitation the
reincorporation of the Company in another jurisdiction) shall be
excluded from the operation of this clause (ii); or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors, or whose nomination for election by the shareholders of the
Company, as the case may be, was approved by a vote of 66 2/3% of the
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by virtue of the Company's or any of its employee benefit or stock
plan's filing (or being required to file after the lapse of time) a Schedule 13D
or 14D-1 (or any successor or similar schedule, form or report under the
Exchange Act) as a result of the Company or any such plan becoming the
beneficial owner of shares of capital stock of the Company entitling such person
to exercise a majority of the total voting power of the Voting Stock of the
Company.
"Class A Preferred Stock" means the Class A Convertible Preferred
Stock, par value $.01 per share, of the Company.
"Class A Shares" means the Class A Common Stock, par value $.01 per
share, of the Company.
"Class B Shares" means the Class B Common Stock, par value $.01 per
share, of the Company.
-4-
<PAGE> 13
"Closing Price" on any Trading Day with respect to the per share price
of Class A Shares means the last reported sales price regular way or, in case no
such reported sale takes place on such Trading Day, (i) the reported closing bid
price regular way on The New York Stock Exchange if the Class A Shares are
listed or admitted to trading on The New York Stock Exchange, or (ii) if the
Class A Shares are not listed or admitted to trading on The New York Stock
Exchange, the average of the reported closing bid and asked prices regular way
on the principal national securities exchange on which the Class A Shares are
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, the closing bid price in the over-the-counter
market as furnished by any New York Stock Exchange member firm that is selected
from time to time by the Company for that purpose and is reasonably acceptable
to the Majority Holders.
"Code" has the meaning specified in Section 201.
"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 Stock" means the Class A Shares and Class B Shares.
"common stock" includes any stock of any class of capital stock which
has no preference in respect of dividends or of amount payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
issuer thereof and which is not subject to redemption by the issuer thereof.
"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 Notice" has the meaning specified in Section 1403.
"Company Order" or "Company Request" means a written order or request
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.
"Constituent Person" has the meaning specified in Section 1311.
"Control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
-5-
<PAGE> 14
"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with Article Thirteen. The Company has
initially appointed the Trustee as its Conversion Agent.
"Conversion Price" has the meaning specified in Section 1301.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 450 W. 33rd
Street, New York, New York 10001, Attention:
Corporate Trust Administration.
"Custodian" means The Chase Manhattan Bank, as custodian with respect
to any Global Security, or any successor entity thereto.
"Debt" of any person means, without duplication,
(a) the principal of and premium, if any, in respect of (1)
indebtedness of such person for money borrowed and (2) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such person is responsible or liable;
(b) all Capitalized Lease Obligations of such person;
(c) all obligations of such person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(d) all obligations of such person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in
clauses (a) through (c) above) entered into in the ordinary course of
business of such person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third Business Day following receipt by
such person of a demand for reimbursement following payment on the
letter of credit);
(e) all obligations of such person with respect to the
redemption, repayment or other repurchase of any Redeemable Capital
Stock or Exchangeable Capital Stock (but excluding any accrued
dividends);
(f) all obligations of the type referred to in clauses (a)
through (e) above of other persons and all dividends of other persons
for the payment of which, in either case,
-6-
<PAGE> 15
such person is responsible or liable as obligor, guarantor or
otherwise, including any guarantees of such obligations and dividends;
and
(g) all obligations of the type referred to in clauses (a)
through (f) of other persons secured by any Lien on any property or
asset of such person (whether or not such obligation is assumed by such
person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.
The amount of Debt of any person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations referred to above at such date.
"Default" means an event which, with the lapse of time and/or the
giving of notice, would constitute an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to any Global Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Global Securities (or any successor
securities clearing agency so registered).
"DTC" means The Depository Trust Company, a New York corporation.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the United States Securities Exchange Act of 1934
(or any successor statute), as amended from time to time.
"Exchangeable Capital Stock" means any Capital Stock which is
exchangeable for or convertible into another security (other than Capital Stock
of the Company which is neither Exchangeable Capital Stock nor Redeemable
Capital Stock).
"Expiration Date" has the meaning specified in Section 104.
"GAAP" means generally accepted accounting principles from time to time
in the United States.
"Global Security" means a Security that is registered in the Security
Register in the name of a Depositary or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
-7-
<PAGE> 16
"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.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Majority Holders" means the Holders of a majority in principal amount
of the Outstanding Securities.
"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 on the Redemption Date or
Repurchase Date or by declaration of acceleration, or otherwise.
"Note Purchase Agreements" means (i) with respect to the Original
Series A Notes, the Note Purchase Agreement dated December 1, 1996, as
supplemented by the Supplemental Agreement dated as of April 25, 1997 and (ii)
with respect to the Original Series B Notes, the Note Purchase Agreement dated
as of April 25, 1997.
"Notice of Default" means a written notice of the kind specified in
Section 501(4) or 501(5).
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a 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 1004 shall be the
principal executive, financial or accounting officer of the Company, and one of
the officers signing an Officers' Certificate given pursuant to Section 1105 or
Section 1304 shall be the principal financial or accounting officer, treasurer
or controller of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee or other counsel for the Company, and who and which shall be reasonably
acceptable to the Trustee.
"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 cancelled by the Trustee or delivered to the
Trustee for cancellation;
-8-
<PAGE> 17
(ii) Securities for payment or redemption of which money in
the necessary amount has been deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities
are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision for notice of redemption
satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company; and
(iv) Securities converted into Class A Shares pursuant to
Article Thirteen;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
for quorum purposes or have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such determination as to the presence of a quorum or upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities as
to which the Trustee has received written notice are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Payment Blockage Notice" has the meaning specified in Section 1202.
"Person" or "person" means and includes an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
association, a joint-stock company, an unincorporated organization and a
government or any department or agency 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 306 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.
-9-
<PAGE> 18
"Record Date Period" means the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date.
"Record Date" means any Regular Record Date or Special Record Date.
"Redeemable Capital Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed on or prior to the first anniversary of the
Stated Maturity of the Securities or is redeemable at the option of the holder
thereof at any time on or prior to the first anniversary of the Stated Maturity
of the Securities; provided that such Redeemable Capital Stock shall not include
any Capital Stock redeemable upon a Change of Control and provided further that
such redemption rights are subordinate to the Company's obligation to prepay
Securities upon a Change of Control pursuant to Article Fourteen.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date, which shall be a Business Day, fixed for such
redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means (a) in the case of the Series A Notes, the June 3 or December 3
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date, and (b) in the case of the Series B Notes, the April 15
or October 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date.
"Repurchase Date" has the meaning specified in Section 1401.
"Repurchase Price" has the meaning specified in Section 1401.
"Responsible Officer", when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee (including without
limitation any vice president, assistant treasurer, assistant secretary,
corporate trust officer, assistant corporate trust officer or other employee of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers) and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge and familiarity with the particular subject.
"Securities" has the meaning specified to it in the third paragraph
under the caption "Recitals of the Company".
"Securities Act" means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.
-10-
<PAGE> 19
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of the Indenture or thereafter created, incurred or assumed: (A) all
indebtedness of the Company (including obligations of the Company arising from
its guarantee of the indebtedness of others) to banks, insurance companies and
other financial institutions evidenced by credit or loan agreements, notes or
other written obligations, (B) all other indebtedness of the Company (including
obligations of the Company arising from its guarantee of the indebtedness of
others) other than the Securities, (C) all Capitalized Lease Obligations of the
Company or in respect of any lease or related document (including a purchase
agreement) which provides that the Company is contractually obligated to
purchase or cause a third party to purchase the leased property and thereby
effectively guarantees a minimum residual value of the leased property to the
lessor and the obligations of the Company under such lease or related document
to purchase or cause a third party to purchase such leased property; (D) all
obligations of the Company issued or assumed as the deferred purchase price of
property (but excluding any portion thereof constituting trade accounts payable
arising in the ordinary course) and (E) all obligations of the Company for the
reimbursement of any letter of credit or any amendment, renewals, extensions,
modifications and refundings; provided that Senior Indebtedness shall not
include (i) any such indebtedness or obligation if the terms of such
indebtedness or obligation (or the terms of the instrument under which or
pursuant to which, it is issued) expressly provide that such indebtedness or
obligation shall not be senior in right of payment to the Securities, or
expressly provide that such indebtedness or obligation is pari passu with or
junior to the Securities of either or both series and (ii) accounts payable of
the Company to trade creditors.
"Significant Subsidiary" means, at any time, any Subsidiary that
constitutes a "Significant Subsidiary" of the Company, as such term is defined
in Rule 1-02(w) of Regulation S-X promulgated under the Securities Act.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest, as the case may be, is due and payable.
"Subsidiary" of any Person means any corporation or other entity a
majority of the total combined voting power of all classes of Voting Stock of
which shall, at the time as of which any determination is being made, be owned
by such Person and/or one or more of its Subsidiaries.
-11-
<PAGE> 20
Except as otherwise expressly indicated herein, references to Subsidiaries shall
mean Subsidiaries of the Company.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"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.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Voting Stock" means, with respect to any Person, any shares of stock
or other equity interests of any class or classes of such Person whose holders
are entitled under ordinary circumstances (irrespective of whether at the time
stock or other equity interests of any other class or classes shall have or
might have voting power by reason of the happening of any contingency) to vote
for the election of a majority of the directors, managers, trustees or other
governing body of such Person.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate (other than certificates provided pursuant to Section
1004) or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include, without limitation:
-12-
<PAGE> 21
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Indenture relating to such covenant or condition;
(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, each such
individual has made such examination or investigation as is necessary to enable
each such individual 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 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given 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 otherwise expressly provided in
-13-
<PAGE> 22
this Indenture, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is expressly required in
this Indenture, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are 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 601) 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 of any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) The Company may set any day as a record date for the
purpose of determining the Holders entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given, made or taken by Holders;
provided that the Company may not set a record date for, and the provisions of
this Section 104(d) shall not apply with respect to, the giving or making of any
notice, declaration, request or direction referred to in Section 104(e). If any
record date is set pursuant to this Section 104(d), the Holders on such record
date, and only such Persons, shall be entitled to take the relevant action,
whether or not such Holders remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Securities on such record date. Nothing in this Section 104(d) shall be
construed to prevent the Company from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be cancelled and of no effect), and nothing in this Section 104(d)
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Securities on the date such action is taken.
Promptly after any record date is set pursuant to this Section 104(d), the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder in the manner set forth in Section 106.
(e) The Trustee may set any day as a record date for the
purpose of determining the Holders entitled to join in the giving or making of
(i) any Notice of Default, (ii) any declaration of acceleration referred to in
Section 502, (iii) any request to institute proceedings referred to in Section
507(2), or (iv) any direction referred to in Section 512. If any
-14-
<PAGE> 23
record date is set pursuant to this Section 104(e), the Holders on such record
date, and only such Persons, 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 be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Securities on such record date. Nothing in this
Section 104(e) 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 Section 104(e) (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this Section 104(e) shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Securities on the
date such action is taken. Promptly after any record date is set pursuant to
this Section 104(e), 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 106.
(f) With respect to any record date set pursuant to Sections
104(d) or 104(e), the party which sets such record date may designate any day as
the "Expiration Date" and from time to time may change the Expiration Date to
any earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party in
writing, and to each Holder in the manner set forth in Section 106, on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to Sections 104(d) or 104(e), the party
which set such record date shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
(h) 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.
-15-
<PAGE> 24
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Department (Budget Group, Inc. 7.0%
Convertible Subordinated Notes, Series A, Due 2007 or Budget Group,
Inc. 6.85% Convertible Subordinated Notes, Series B, Due 2007 (as
applicable)), or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose (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 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder affected by such
event, at its address as it appears in the Security Register, not later than the
latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. 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 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision of this Indenture 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 required provisions of the Trust
Indenture Act shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
-16-
<PAGE> 25
excluded, the provision of the Trust Indenture Act shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings and the Table of Contents contained in
this Indenture are for convenience only and shall not affect the construction
hereof.
SECTION 109. 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 110. 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.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties and their successors hereunder,
the holders of Senior Indebtedness (to the extent expressly provided herein) and
the Holders of Securities, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. 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 CONFLICTS
OF LAWS PRINCIPLES AS APPLIED IN SUCH STATE.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last date on which a
Holder has the right to convert such Holder's Securities shall not be a Business
Day, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) or conversion
of the Securities need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Redemption Date or Repurchase Date, or at the Stated
Maturity, or on such last day for
-17-
<PAGE> 26
conversion; provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date, Stated Maturity or last day for
conversion, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms annexed hereto as Exhibit A, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange, the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "Code"),
or as may, consistent herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities. The Company shall
furnish any such legends or endorsements to the Trustee in writing.
Any definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of securities exchange or any automated quotation
system on which the Securities may be listed or quoted, as the case may be, all
as determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
ARTICLE THREE
THE SECURITIES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to (a) $80,000,000 aggregate
principal amount of Series A Exchange Notes plus (b) $45,000,000 aggregate
principal amount of Series B Exchange Notes, in each case, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906,
1108, 1302 or 1403(d); provided, however, that at no time shall the aggregate
principal amount of Original Series A Notes outstanding plus the aggregate
principal amount of Series A Exchange Notes outstanding exceed $80,000,000 and
at no time shall the aggregate principal amount of Original
-18-
<PAGE> 27
Series B Notes outstanding plus the aggregate principal amount of Series B
Exchange Notes outstanding exceed $45,000,000.
The Series A Exchange Notes shall be known and designated as the "7.0%
Convertible Subordinated Notes, Series A, Due 2007" of the Company. Their Stated
Maturity shall be April 29, 2007, and they shall bear interest at the rate of
7.0% per annum, from December 18, 1997 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, as the case may be,
payable semi-annually in arrears on June 18 and December 18 in each year,
commencing June 18, 1998, until the principal thereof is paid or made available
for payment, and, to the fullest extent permitted by law, at the greater of (i)
9.0% and (ii) 2.0% above the rate of interest publicly announced by Citibank,
N.A. from time to time at its principal office in the City of New York as its
prime or base rate per annum (as set forth in an Officers' Certificate upon
which the Trustee may conclusively rely) on any overdue principal and on any
overdue installment of interest.
The Series B Exchange Notes shall be known and designated as the "6.85%
Convertible Subordinated Notes, Series B, Due 2007" of the Company. Their Stated
Maturity shall be April 29, 2007, and they shall bear interest at the rate of
6.85% per annum, from October 29, 1997 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, as the case may be,
payable semi-annually in arrears on April 29 and October 29 in each year,
commencing April 29, 1998, until the principal thereof is paid or made available
for payment, and, to the fullest extent permitted by law, at the greater of (i)
8.85% and (ii) 2.0% above the rate of interest publicly announced by Citibank,
N.A. from time to time at its principal office in the City of New York as its
prime or base rate per annum (as set forth in an Officers' Certificate upon
which the Trustee may conclusively rely) on any overdue principal and on any
overdue installment of interest.
The principal of (premium, if any) and interest on the Securities shall
be payable at the office or agency of the Company maintained for such purpose
pursuant to Section 1002; provided that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
The Securities shall be redeemable as provided in Article Eleven.
The Securities are not entitled to the benefit of any sinking fund.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve.
The Securities shall be convertible as provided in Article Thirteen.
The Securities shall be subject to repurchase at the option of the
Holders upon a Change of Control as provided in Article Fourteen.
-19-
<PAGE> 28
SECTION 302. DENOMINATIONS.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Upon receipt by the Company of all of the Original Securities for
exchange pursuant to the terms of the Note Purchase Agreements, the Company
shall cancel all of the Original Securities and the Securities shall be executed
on behalf of the Company by its Chairman of the Board, its Vice Chairman of the
Board, its President, any of its Executive or Senior Vice Presidents or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Chief Financial Officer, Treasurer, Controller, Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture and after the receipt by the Company and cancellation of all of
the Original Securities and the delivery of the Officers' Certificate referred
to below, 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 deliver such Securities as in this Indenture
provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Securities shall be executed, authenticated or delivered until all
the issued and outstanding Original Securities shall have been tendered to the
Company for exchange and cancelled and the Company has delivered an Officers'
Certificate to such effect to the Trustee.
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 and is entitled to the
benefits of this Indenture.
-20-
<PAGE> 29
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities, which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor 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.
For purposes of this Section 304, each Global Security shall be
considered a definitive Security.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 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.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered
-21-
<PAGE> 30
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any 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 to a Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906, 1108, 1302, or 1403(d) not
involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of, or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3), (4) and (5) below shall apply
only to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and 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.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (ii)
has ceased to be a clearing agency registered under the Exchange Act, or (B)
there shall have occurred and be continuing an Event of Default with respect to
such Global Security.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued in
exchange for a Global
-22-
<PAGE> 31
Security or any portion thereof shall be registered in such names as the
Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(5) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will 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 and
such owners of beneficial interests in a Global Security will not be considered
the owners or holders thereof. Neither the Company nor the Trustee will have any
responsibility or obligation to the Depositary or any of its Agent Members with
respect to (i) the accuracy of any records maintained by the Depositary, (ii)
the payment by the Depositary or any Agent Members of any amount due to any
owner of beneficial interests in a Global Security in respect of any Securities,
(iii) the delivery of any notice by the Depositary or any Agent Member, or (v)
any other action taken by the Depositary or any Agent Members.
SECTION 306. 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 deliver 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 written notice to 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
-23-
<PAGE> 32
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
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 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 this clause provides. Thereupon, the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the
-24-
<PAGE> 33
proposed payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Securities may be listed or quoted,
and upon such notice, as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the Trustee.
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, which were carried by such other Security.
Interest on any Security which is converted in accordance with Section
1302 during a Record Date Period shall be payable in accordance with the
provisions of Section 1302.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, repurchase,
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
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be destroyed by the Trustee and a
certificate of destruction delivered to the Company by the Trustee.
-25-
<PAGE> 34
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30- day months.
SECTION 311. CUSIP NUMBER.
The Company in issuing Securities may use a "CUSIP" number and, if so,
the Trustee may use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. 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 instruments in form and substance
satisfactory to the Company and the Trustee acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities previously 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 306 and
(ii) Securities for whose payment money has 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 1003)
have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
-26-
<PAGE> 35
(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 funds in
trust for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Trustee has not received any notice pursuant to the terms of
Section 1210; and
(4) 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 in Sections 305, 306, 1001, 1002 and 1003, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and held
by it or any Paying Agent) for the payment of securities subsequently converted
shall be returned to the Company upon Company Request.
-27-
<PAGE> 36
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default shall be made in the due and punctual payment of any
principal of or premium, if any, on any Security when and as the same shall
become due and payable, whether at Stated Maturity, by acceleration, by notice
of repurchase, redemption or otherwise;
(2) default shall be made in the due and punctual payment of any
interest on any Security when and as the same shall become due and payable and
such default shall have continued for a period of 30 days; or
(3) default shall be made in the due performance or observance of any
term, covenant or agreement contained in Article Fourteen; or
(4) the Company or any Significant Subsidiary shall default beyond any
applicable grace period in any payment of principal of or premium or interest on
any Debt in excess of $10,000,000 in aggregate unpaid principal amount (other
than the Securities) or in the due performance or observance of any provision
contained in any agreement relating to such Debt the effect of which is (1) to
cause such Debt to become or be declared due and payable prior to its stated
maturity or (2) to require the repayment or repurchase of such Debt prior to its
stated maturity, provided that if such default shall be remedied or cured by the
Company or waived by the holders of such Debt prior to an acceleration under
this Indenture, then the Event of Default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived without further
action upon the part of any of the holders of the Securities; or
(5) default or breach shall be made in the performance of any covenant
or warranty made by the Company in this Indenture or in any certificate or other
writing furnished pursuant hereto or thereto and such default or breach shall
have continued for a period of 60 days after the Company becomes aware of such
default or breach; or
(6) the Company or any Significant Subsidiary shall (1) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (2) admit in writing its inability to pay its debts as
-28-
<PAGE> 37
such debts become due, (3) make a general assignment for the benefit of its
creditors, (4) commence a voluntary case under any law relating to bankruptcy,
insolvency or reorganization, (5) file a petition seeking to take advantage of
any other law providing for the relief of debtors, or (6) fail to controvert in
a timely or appropriate manner (but within 30 days in any event), or acquiesce
in writing to, any petition filed against it in an involuntary case under any
law relating to bankruptcy, insolvency or reorganization; or
(7) a proceeding or case shall be commenced against the Company or any
Significant Subsidiary, without the application or consent of the Company or
such Significant Subsidiary in any court of competent jurisdiction seeking (1)
its liquidation, reorganization, dissolution or winding up, or composition or
readjustment of its debts, (2) the appointment of a trustee, receiver,
custodian, liquidator, encumbrancer or the like of it or of all or any
substantial part of its assets or (3) similar relief in respect of it under any
law providing for the relief of debtors, and such proceeding or case shall
continue undismissed, or unstayed and in effect, for a period of 60 days; or an
order for relief shall be entered in an involuntary case under any law relating
to bankruptcy, insolvency or reorganization against the Company or any
Significant Subsidiary.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
Upon the occurrence of any Event of Default described in paragraphs (6)
or (7) of Section 501, the unpaid principal amount of all Securities, together
with the interest accrued thereon, shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind or any other Act on the part of the Trustee or any Holder, all of which are
hereby expressly waived by the Company, and upon the occurrence and during the
continuance of any other Event of Default, the Holders of at least 25% of the
unpaid principal amount of the Outstanding Securities at the time may, by
written notice to the Company and the Trustee, declare the unpaid principal
amount of all Securities to be, and the same shall forthwith become, due and
payable, together with the interest accrued thereon, without presentment,
further demand, protest or other requirements of any kind, all of which are
hereby expressly waived by the Company.
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 Five, the Holders of a majority in
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 on all Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of
acceleration with interest on such
-29-
<PAGE> 38
principal, premium, if any, and to the extent permitted by law, on
overdue payments of interest at the applicable rate with respect to
overdue payments specified 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 nonpayment of the principal
of, premium, if any, and accrued interest on Securities which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.
No such rescission or annulment referred to above shall affect any subsequent
Default or Event of Default or impair any right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period of
30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Stated Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and to the extent
permitted by law, on overdue payments of interest at the applicable rate with
respect to overdue payments specified by the Securities, and in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts upon such demand, the Trustee,
in its own name and as Trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon the Securities and collect the moneys adjudged
or decreed to be payable in the manner provided by law out of the property of
the Company or any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may
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
-30-
<PAGE> 39
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise:
(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Securities and
take such other actions, including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such matter, and
to file such other papers or documents, in each of the foregoing cases, as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders of Securities allowed
in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim 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 to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
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 of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official and may serve on a
creditors' committee.
-31-
<PAGE> 40
SECTION 505. 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 the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Twelve, any money collected by the Trustee pursuant
to this Article Five shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest 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 premium,
if any) and interest, respectively; and
THIRD: Any remaining amounts shall be repaid to the Company.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in 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 indemnity
satisfactory to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request;
-32-
<PAGE> 41
(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 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption or repurchase, on the
Redemption Date or Repurchase Date, as the case may be) and to convert such
Security in accordance with Article Thirteen 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.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy 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
-33-
<PAGE> 42
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. 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 Five or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. CONTROL BY HOLDERS.
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
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than 66 2/3% 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 (or premium, if any) or interest
on any Security, or in the redemption or repurchase of any Security under
Article Eleven or Fourteen, respectively, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security 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.
-34-
<PAGE> 43
SECTION 514. 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 the provisions of this Section 514 (to the extent
permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than ten (10) percent in principal amount of Outstanding Securities, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of, premium, if any, or interest on any Security or to any suit or the
enforcement of the right to convert any Security in accordance with the
provisions of Article Thirteen or to require the Company to repurchase any
Security in accordance with the provisions of Article Fourteen.
SECTION 515. 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, usury or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) 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
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the
-35-
<PAGE> 44
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture, but not to verify the contents thereof.
(b) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding Securities relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and
(4) 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.
(d) 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 602. NOTICE OF DEFAULTS.
Within 90 days after the Trustee receives written notice of the
occurrence of any Default hereunder, the Trustee shall give to all Holders of
Securities, in the manner provided in Section 106, notice of such Default,
unless such Default shall have been cured or waived; provided that, except in
the case of a Default in the payment of the principal of, premium, if any, or
interest on
-36-
<PAGE> 45
any Security, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust committee
of directors or any Responsible Officer of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders; and
provided, further, that in the case of any Default of the type specified in
Section 501(5), no such notice to Holders of Securities shall be given until at
least 30 days after the occurrence of such Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, other
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company 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 is specifically required by this Indenture) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of 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 security or indemnity satisfactory to the
Trustee 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, Officers' Certificate,
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 examine the books, records and premises of the Company,
personally or by agent or attorney; and
-37-
<PAGE> 46
(g) the Trustee may execute any of the trusts or powers or
perform any duties 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.
SECTION 604. 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 Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, 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
608 and 613, may otherwise deal with the Company with the same rights it would
have it if were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent. The Trustee may become and act as trustee under
other indentures under which other securities, or certificates of interest or
participation in other securities of the Company are outstanding in the same
manner as if it were not the Trustee.
SECTION 606. 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 in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as may be
agreed in writing by the Trustee and Company from time to time for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel and other persons not regularly in its
-38-
<PAGE> 47
employ), except to the extent any such expense, disbursement or advance may be
attributable to its negligence or bad faith; and
(3) to indemnify the Trustee (in its individual capacity and as
Trustee), its officers, directors, attorneys-in-fact and agents for, and to hold
each such person harmless against, any loss, claim, damage, 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 or investigating any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in clauses (6) and (7) of Section 501, the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law. The obligations of the Company under this Section 607 to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder and shall survive the satisfaction and discharge of this Indenture. To
secure the Company's payment obligations under this Section 607, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee except money or property held in trust to pay principal
of (and premium, if any) or interest on particular Securities and such lien
shall survive the satisfaction and discharge of the Indenture and any other
termination of the Indenture including any termination under any bankruptcy law.
"Trustee" for the purposes of this Section 607 shall include any predecessor
Trustee, but the negligence or bad faith of any Trustee shall not affect the
indemnification of any other Trustee.
SECTION 608. 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 609. 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, having a
combined capital and surplus of at least $50,000,000 subject to supervision by
Federal or State Authority and in good standing. 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 609, it shall resign
-39-
<PAGE> 48
immediately in the manner and with the effect hereinafter specified in this
Article and a successor shall be appointed pursuant to Section 610.
SECTION 610. 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 611.
(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 Outstanding Securities,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request 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 609 and shall
fail to resign after written request 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 by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, 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
-40-
<PAGE> 49
acceptance of such appointment, become the successor Trustee and replace 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, the Trustee or any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. 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; but, on written request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its charges
and all sums due to it pursuant to Section 607, 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 for more fully and certainly vesting in and confirming
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 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee (including the trust created by this Indenture), shall be the
successor of the Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
-41-
<PAGE> 50
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may (at the expense of the Company) appoint an
Authenticating Agent or Agents which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon original issue and upon exchange,
registration of transfer, partial conversion or partial redemption or pursuant
to Section 306, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions
-42-
<PAGE> 51
of this Section, the Trustee may appoint a successor Authenticating Agent which
shall be acceptable to the Company and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders as their names
and addresses appear in the Security Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
THE CHASE MANHATTAN BANK,
As Trustee
By
-------------------------------
As Authenticating Agent
By
-------------------------------
Authorized Officer
-43-
<PAGE> 52
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(1) semi-annually, not more than 10 days after each Regular
Record Date for a series, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of the
Securities of such series as of such Regular Record Date, and
(2) 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;
provided that such list need not be furnished by the Company so long as the
Trustee is acting as Security Registrar.
SECTION 702. 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 of each series
contained in the most recent list furnished to the Trustee as provided in
Section 701 and the names and addresses of Holders of each series received by
the Trustee in its capacity as Security Registrar. The Trustee may destroy any
list furnished to it as provided in Section 701 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, by receiving and holding the Securities,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. Reports so required to be transmitted at stated intervals of
not more than 12 months shall be transmitted no later than March 30 in each
calendar year, commencing March 30, 1999.
(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 in writing when the Securities are listed on any
stock exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that, so long as
the Company is subject to Section 13 or 15(d) of the Securities
-44-
<PAGE> 53
Exchange Act of 1934, any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 shall be filed with the Trustee within 15 days after the
same is so required to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company will not, directly or indirectly, merge, consolidate or
amalgamate with any other Person or sell, lease, transfer or otherwise dispose
of all or substantially all of its assets (as an entirety) to any Person,
unless:
(1) The Company shall be the continuing or surviving corporation, or
the continuing, surviving or acquiring person shall be a solvent corporation
organized in the United States of America, any state thereof or the District of
Columbia and shall expressly assume, by supplemental indenture hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee and the
Required Holders, the due and punctual payment of the principal of and premium
(if any) and interest on the Securities and all of the other obligations of the
Company under this Indenture, and shall have provided for conversion rights in
accordance with Section 1311, and;
(2) Immediately after any such merger, consolidation, amalgamation,
sale, lease or other disposition and giving effect to any concurrent
transactions, no Default or Event of Default shall have occurred and be
continuing and the Company shall have complied with its obligations under
Article Thirteen and Article Fourteen resulting from such transaction; and
(3) The Company has delivered to the Trustee an Officers' Certificate
and Opinion of Counsel, each stating that such consolidation, merger,
amalgamation, conveyance, transfer or lease and such Supplemental Indenture
comply with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. 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 the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer, sale or lease is made
shall succeed to, and be substituted for, and may exercise every right and power
-45-
<PAGE> 54
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 NINE
SUPPLEMENTAL INDENTURES
SECTION 901. 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 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
(2) to secure the Securities; or
(3) 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 (5) shall not adversely affect
the interests of the Holders.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the written consent of the Holders of not less than a 66 2/3% in
principal amount of the Outstanding Securities, by the 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
that no such supplemental indenture shall, without the consent or affirmative
vote of the Holders of all Outstanding Securities:
(1) change (including any change to the definitions relating thereto)
the Stated Maturity of the principal of, or any installment of interest on, any
Security, or reduce the principal amount thereof or the rate of interest or the
time of payment thereon or the amounts payable upon the redemption or repurchase
thereof, or change the place of payment where, or the
-46-
<PAGE> 55
coin or currency in which, any Security or any premium or interest thereon or
any other amount in respect thereof is payable, or impair the right to institute
suit for the enforcement of any payment in respect of any Security on or after
the Stated Maturity thereof (or, in the case of redemption or any repurchase, on
or after the Redemption Date or Repurchase Date, as the case may be), or, except
as provided by Section 1311, adversely affect the right to convert any Security
as provided in Article Thirteen, or modify the provisions of this Indenture with
respect to the subordination of the Securities in a manner adverse to the
Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities the consent of whose Holders is required for any such supplemental
indenture or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) or acceleration of the Securities provided for
in this Indenture, or
(3) modify the obligation of the Company to maintain an office or
agency in the Borough of Manhattan, The City of New York pursuant to Section
1002, or
(4) modify any of the provisions of this Section, Section 513 or
Section 1009, except to increase any percentage contained herein or therein or
to provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder or each Outstanding Security affected
thereby, or
(5) modify (including any modifications to the definitions relating
thereto) the provisions of Article Twelve, Article Thirteen or Article Fourteen
in a manner adverse to the Holders.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Nine or the modifications of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and that such supplemental indenture
constitutes the legal, valid and binding obligation of the Company or any
successor thereto, enforceable against such entity in accordance with its terms
(subject to customary exceptions). 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.
-47-
<PAGE> 56
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article
Nine, 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 previously or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article Nine
shall conform to the requirements of the Trust Indenture Act, as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article Nine may, and shall if required
by the Trustee, bear a notation in form satisfactory to 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.
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 106. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company will duly and punctually pay, by no later than 10:00 a.m.
New York City time on the date such payment is due, the principal of, and
interest and premium, if any, on the Securities in accordance with the terms of
the Securities and this Indenture.
-48-
<PAGE> 57
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company hereby appoints the corporate trust office of the Trustee,
as its agent in The City of New York where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange, where conversion notices, certificates and other items
required to be delivered to effect conversion may be delivered and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served.
The Company hereby also appoints the Corporate Trust Office of the
Trustee as Paying Agent for the payment of principal of, premium, if any and
interest on the Securities and as Conversion Agent for the conversion of any of
the Securities in accordance with Article Thirteen, and appoints the Corporate
Trust Office of the Trustee as transfer agent where Securities may be
surrendered for registration of transfer or exchange.
The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents with or without
cause for any or all of such purposes; provided, however, that until all of the
Securities have been delivered to the Trustee for cancellation, or moneys
sufficient to pay the principal of and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 1003, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange, where Securities may be surrendered for
conversion and where notices and demand 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, and will give notice to Holders of Securities in
the manner specified in Section 106, of the appointment or termination of any
such agents and of the location and any change in the location of any 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,
presentations and surrenders may be made and notices and demands may be served
on and Securities may be surrendered for conversion to the Corporate Trust
Office of the Trustee, and the Company hereby appoints the same as its agent to
receive such respective presentations, surrenders, notices and demands.
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall act as its own Paying Agent, it will, on or before
each due date of the principal of, premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and the Company will promptly notify the Trustee of its
action or failure so to act.
-49-
<PAGE> 58
Whenever the Company shall have one or more Paying Agents, it will, on
or before each due date of the principal of, premium, if any, or interest on any
Securities, deposit with such Paying Agent(s) a sum sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held for
the benefit of the Persons entitled to such principal, premium, if any, or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of any failure so to act; provided that if such
deposit is made on such due date, such deposit shall be received by the Paying
Agent(s) by 10:00 a.m. New York City time on such date.
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:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal, premium,
if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held by
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which 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, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security 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 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, an Officers' Certificate stating whether or
not to the knowledge of the
-50-
<PAGE> 59
signers thereof the Company is in compliance with all conditions and covenants
under the Indenture (without regard to any period of grace or requirement of
notice provided hereunder).
Any notice required to be given under this Section 1004 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided that the Company shall
not be required to preserve any such right or franchise if the Company shall
determine that its preservation is no longer desirable in the conduct of the
business of the Company and that its loss is not disadvantageous in any material
respect to the Holders.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will and will cause each Subsidiary to maintain and keep,
or cause to be maintained and kept, its material properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times, provided that nothing in this Section shall prevent the
Company or any Subsidiary from discontinuing the operation and the maintenance
of any such properties if such discontinuance is, in the opinion of the Company,
in the best interest of the Company and its Subsidiaries taken as a whole.
SECTION 1007. KEEPING OF BOOKS; PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will, and will cause each Subsidiary to,
(1) keep proper books of record and account, and keep appropriate
reserves, all in accordance with GAAP; and
(2) pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its property, real, personal or mixed, or upon
any part thereof, when due and so long as the same can be paid without interest
or penalty, as well as all lawful claims for labor, materials and supplies
which, if unpaid, could by law become a lien upon its property, provided that
neither the Company nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim if the amount, applicability or validity
thereof shall be contested on a timely basis in good faith by appropriate
proceedings (so long as the enforcement of any lien arising out of such
nonpayment shall be stayed during any proceedings) and if appropriate reserves,
to the extent required by GAAP, shall have been made therefor.
-51-
<PAGE> 60
SECTION 1008. BOOK-ENTRY SYSTEM.
If the Securities cease to trade in DTC's book-entry settlement system,
the Company covenants and agrees that it shall use reasonable efforts to make
such other book-entry arrangements that it determines are reasonable for the
Securities.
SECTION 1009. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1006 and 1007, inclusive, if before
the time for such compliance the Holders of not less than 66 2/3% in principal
amount of the Outstanding Securities shall, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
SECTION 1010. FURTHER INSTRUMENTS AND ACTS.
Upon reasonable request of the Trustee, the Company will execute and
deliver such further instruments and perform such further acts as may be
reasonably necessary, or proper to carry out more effectively the purposes of
this Indenture.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. RIGHT OF REDEMPTION.
(1) Upon notice given as provided in Section 1105, the Company may at
any time on or after April 29, 2000 redeem the Series A Exchange Notes as a
whole, or from time to time in part (in a minimum amount of $1,000,000 and
otherwise in integral multiples of $1,000), in each case at the principal
amount to be redeemed, together with interest accrued thereon to the date fixed
for such redemption, plus the applicable redemption premium for the Series A
Exchange Notes (expressed as a percentage of the principal amount so to be
redeemed) indicated below (such amount being referred to as the "Series A
Redemption Price"):
<TABLE>
<CAPTION>
Redemption Date Redemption Premium
--------------- ------------------
<S> <C>
April 29, 2000 to April 28, 2001 4.667%
April 29, 2001 to April 28, 2002 3.889%
</TABLE>
-52-
<PAGE> 61
<TABLE>
<S> <C>
April 29, 2002 to April 28, 2003 3.111%
April 29, 2003 to April 28, 2004 2.333%
April 29, 2004 to April 28, 2005 1.556%
April 29, 2005 to April 28, 2006 0.778%
after April 28, 2006 none
</TABLE>
provided that prior to April 29, 2002, Series A Exchange Notes may not be
redeemed pursuant to this Section unless the Closing Price per Class A Share for
a period of 10 consecutive Trading Days commencing 20 Trading Days before the
date of the Company's notice pursuant to Section 1105 in respect of such
redemption was at least 150% of the Series A Conversion Price then in effect.
(2) Upon notice given as provided in Section 1105, the Company may at
any time on or after April 29, 2000 redeem the Series B Exchange Notes as a
whole, or from time to time in part (in a minimum amount of $1,000,000 and
otherwise in integral multiples of $1,000), in each case at the principal amount
to be redeemed, together with interest accrued thereon to the date fixed for
such redemption, plus the applicable redemption premium for the Series B
Exchange Notes (expressed as a percentage of the principal amount so to be
redeemed) indicated below (such amount being referred to as the "Series B
Redemption Price"):
<TABLE>
<CAPTION>
Redemption Date Redemption Premium
--------------- ------------------
<S> <C>
April 29, 2000 to April 28, 2001 4.567%
April 29, 2001 to April 28, 2002 3.806%
April 29, 2002 to April 28, 2003 3.044%
April 29, 2003 to April 28, 2004 2.283%
April 29, 2004 to April 28, 2005 1.522%
April 29, 2005 to April 28, 2006 0.761%
after April 28, 2006 none
</TABLE>
provided that prior to April 29, 2002, Series B Exchange Notes may not be
redeemed pursuant to this Section unless the Closing Price per Class A Share for
a period of 10 consecutive Trading Days commencing 20 Trading Days before the
date of the Company's notice pursuant to Section 1105 in respect of such
redemption was at least 150% of the Series B Conversion Price then in effect.
The Series A Redemption Price and the Series B Redemption Price are
sometimes referred to together as the "Redemption Price."
(3) The Company will not make any redemption of the Securities of
either series unless the Company shall concurrently redeem ratable portions of
the Outstanding Securities of the other series issued pursuant to this
Indenture, provided, however, that prior to April 29, 2002 concurrent redemption
of the Series B Exchange Notes shall not be required if the condition to such
redemption set forth in the proviso to paragraph (2) of this Section 1101 is not
met.
-53-
<PAGE> 62
(4) Any Security that is converted in whole or in part into Class A
Shares after notice of redemption given as provided in Section 1105 and prior to
the redemption date specified therein shall be deemed to have been redeemed on
the date of such redemption to the extent of the lesser of (i) the principal
amount of such Security so converted and (ii) the principal amount of such
Security called for redemption on the date of such redemption; and, accordingly,
the principal amount of such Securities actually to be redeemed on such
redemption date shall be reduced by an amount equal to the amount that is deemed
to have been redeemed by reason of conversion as aforesaid and the aggregate
principal amount of the Securities to be redeemed on such redemption date shall
be reduced by an amount equal to the aggregate principal amount of all
Securities deemed to have been redeemed by reason of conversion as aforesaid.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company, as permitted
or required by any provision of this Indenture, shall be made in accordance with
such provision and this Article Eleven.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of less than all the Securities, the Company
shall, at least 35 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed.
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be redeemed ratably in proportion to the
respective unpaid principal amounts of each series in portions (equal to
$1,000 or an integral multiple thereof) of the principal amount of Securities
of an amount larger than $1,000,000 for any single partial redemption.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of the Securities selected for partial redemption, the principal amount thereof
to be redeemed.
-54-
<PAGE> 63
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 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 20 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at such Holder's address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the applicable Redemption Price, Redemption Premium, if any, and
accrued interest, if any,
(3) if less than all the Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption of any Securities, the
principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the applicable Redemption Price and
accrued interest, if any, 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,
(5) the applicable Conversion Price, the date on which the right to
convert the Securities to be redeemed will terminate (which shall be the
Business Day preceding the Redemption Date) and the place or places where such
Securities may be surrendered for conversion, and
(6) the place or places where such Securities are to be surrendered for
payment of the applicable Redemption Price and accrued interest, if any.
Each notice of a redemption to be made prior to April 29, 2002 shall be
accompanied by an Officers' Certificate showing the Closing Price for each of
the relevant Trading Days as required by Section 1101.
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 written request
and expense, by the Trustee in the name and at the expense of the Company, and
such notice, when given to the Holders, shall be irrevocable.
-55-
<PAGE> 64
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money (which shall be in immediately available funds on such Redemption Date)
sufficient to pay the applicable Redemption Price of, Redemption Premium, if
any, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date
other than any Securities called for redemption on that date which have been
converted prior to the date of such deposit; provided that if such deposit is
made on the Redemption Date, such deposit shall be received by the Trustee or
Paying Agent, as the case may be, by 10:00 a.m. New York City time on such 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 307) be paid to the Company upon Company Request or,
if then held by the Company, shall be discharged from such trust.
SECTION 1107. 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 applicable Redemption Price, and
Redemption Premium, if any, including 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
applicable Redemption Price, together with accrued interest to the Redemption
Date; provided 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 their terms and the
provisions of Section 307.
If the applicable Redemption Price, Redemption Premium, and accrued
interest on any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the Redemption Price and Redemption Premium,
if any, shall, until paid, bear interest from the Redemption Date at a rate of
7.0% per annum in the case of the Series A Exchange Notes and at a rate of 6.85%
per annum in the case of the Series B Exchange Notes.
SECTION 1108. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in
-56-
<PAGE> 65
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 deliver 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.
SECTION 1109. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities by an agreement with
one or more investment bankers or other purchasers to purchase such Securities
by paying to the Trustee in trust for the Holders, on or before the Redemption
Date, an amount not less than the applicable Redemption Price, Redemption
Premium, if any, and interest accrued to the Redemption Date, of such
Securities. Notwithstanding anything to the contrary contained in this Article
Eleven, the obligation of the Company to pay the Redemption Price, Redemption
Premium, if any, and interest accrued to the Redemption Date, shall be deemed to
be satisfied and discharged to the extent such amount is so paid to the Holders.
If such an agreement is entered into (a copy of which shall be filed with the
Trustee prior to the Redemption Date), any Securities not duly surrendered for
conversion by the Holders thereof may, at the option of the Company, be deemed,
to the fullest extent permitted by law, and consistent with any agreement or
agreements with such purchasers, acquired by such purchasers from such Holders
and (notwithstanding anything to the contrary contained in Article Thirteen)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the Business Day prior to the Redemption Date (and the
right to convert any such Securities shall be extended through such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in the
same manner as it would monies deposited with it by the Company for the
redemption of Securities. Without the Trustee's prior written consent, no
arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise materially affect any
of the powers, duties, responsibilities or obligations of the Trustee as set
forth in this Indenture, and the Company agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses, including reasonable
legal fees, incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
-57-
<PAGE> 66
ARTICLE TWELVE
SUBORDINATION OF SECURITIES
SECTION 1201. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article Twelve (subject to the
provisions of Article Four), the indebtedness represented by the Securities and
the payment of the principal of (and premium, if any) and interest on each and
all of the Securities are hereby expressly made subordinate and subject in right
of payment to the prior payment in full of all Senior Indebtedness in accordance
with the provisions hereunder. Whenever in this Article Twelve there is a
reference, in any context, to the principal of any Security as of any time, such
reference shall be deemed to include reference to the Repurchase Price or
applicable Redemption Price payable in cash in respect of such Security to the
extent that such Repurchase Price or applicable Redemption Price payable in cash
is, was or would be so payable at such time, and express mention of the
Repurchase Price and the applicable Redemption Price in any provision of this
Article Twelve shall not be construed as excluding the Repurchase Price or
applicable Redemption Price payable in cash in those provisions of this Article
Twelve when such express mention is not made. This Article Twelve is made for
the benefit of existing and future holders of Senior Indebtedness, and such
holders are made obligees hereunder and they or each of them may enforce such
provisions. Notwithstanding anything to the contrary contained herein, this
Article 12 shall not prejudice the Trustee's rights under Section 607 hereof.
SECTION 1202. NO PAYMENTS IN CERTAIN CIRCUMSTANCES; PAYMENT OVER OF PROCEEDS
UPON DISSOLUTION, ETC.
No payment on account of principal of, premium, if any, or interest on,
or redemption or repurchase of, the Securities shall be made if, at the time of
such payment or immediately after giving effect thereto: (i) a default in the
payment of principal, premium, if any, or interest or other amounts due on any
Senior Indebtedness occurs and is continuing (or, in the case of Senior
Indebtedness for which there is a period of grace, in the event of such a
default that continues beyond the period of grace specified in the instrument or
lease evidencing such Senior Indebtedness); or (ii) a default, other than a
payment default, on any Senior Indebtedness occurs and is continuing that then
permits holders of such Senior Indebtedness to accelerate the maturity thereof
and the Trustee receives a notice of the default (a "Payment Blockage Notice")
from a holder of Senior Indebtedness (or a trustee therefor or an agent bank)
pursuant to Section 1210 hereof. Notwithstanding the foregoing, the Company may
make, and the Trustee may receive and shall apply, any payment in respect of the
Securities (for principal, premium, if any, or interest or repurchase) if such
payment was made prior to the occurrence of any of the contingencies specified
in clauses (i) and (ii) above.
-58-
<PAGE> 67
During any 360 day period, the aggregate of all periods of payment
blockage shall not exceed 180 days and there shall be a period of at least 180
consecutive days in each 360 day period when no payment blockage is in effect.
No default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such default shall have been cured for a period
of not less than 60 consecutive days.
The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of: (i) in the case of a payment
default, the date upon which the default is cured or waived in accordance with
the agreements evidencing the Senior Indebtedness with respect to which such
payment default occurred, or (ii) in the case of a nonpayment default, the
earlier of (A) the date on which such default is cured or waived or shall have
ceased to exist or any acceleration of the Senior Indebtedness for which such
nonpayment default relates shall have been rescinded or annulled or such Senior
Indebtedness shall have been discharged in accordance with the agreements
evidencing the Senior Indebtedness with respect to which such default occurred
or (B) 180 days after the applicable Payment Blockage Notice is received.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness in cash or other immediately available funds, or provision
shall be made for such payment in cash or other immediately available funds or
otherwise in a manner satisfactory to each holder of Senior Indebtedness with
respect to its indebtedness, before the Holders of the Securities are entitled
to receive any payment on account of principal of (or premium, if any) or
interest on the Securities, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for any application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Securities in
any such case, proceeding, dissolution, liquidation or other winding up or
similar event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, securities or other property, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall, at or
prior to the time of such payment or distribution, have been made known to the
Trustee or, as the case may be, such Holder, then and in such event such payment
or distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all
-59-
<PAGE> 68
Senior Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words, "cash, securities or
other property" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment which shares of stock
are subordinated in right of payment to all then outstanding Senior Indebtedness
to substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article Twelve. The consolidation of the
Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or transfer
of its properties and assets substantially as an entirety to another Person upon
the terms and conditions set forth in Article Eight shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshaling of assets and liabilities of the Company for the
purposes of this Section if the Person formed by such consolidation or into
which the Company is merged or which acquires by conveyance or transfer such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article Eight.
SECTION 1203. PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF
SECURITIES.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Securities so become due and payable
shall be entitled to receive payment in full of all amounts due or to become due
on or in respect of such Senior Indebtedness, or provisions shall be made for
such payment in money or money's worth, before the Holders of the Securities are
entitled to receive any payment by the Company on account of the principal of
(or premium, if any) or interest on the Securities or on account of the purchase
or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder then and in such event such payment shall be paid over and
delivered forthwith to the holders of Senior Indebtedness, or as a court of
competent jurisdiction shall direct, for application to the payment of any due
and unpaid Senior Indebtedness, to the extent necessary to pay all such due and
unpaid Senior Indebtedness in cash or other immediately available funds, after
giving effect to any concurrent payment to or for the holders of Senior
Indebtedness.
The provisions of this Section shall not apply to any payment with
respect to which Section 1202 would be applicable.
-60-
<PAGE> 69
SECTION 1204. [RESERVED.]
SECTION 1205. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 1202 or under the conditions
described in Section 1203, from making payments at any time of principal of (and
premium, if any) or interest on the Securities, or (b) the application by the
Trustee of any money deposited with it hereunder to the payment of or on account
of the principal of (and premium, if any) or interest on the Securities or the
retention of such payment by the Holders, if, at the time of such application by
the Trustee, it did not have knowledge that such payment would have been
prohibited by the provisions of this Article.
SECTION 1206. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION 1207. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of (and premium, if any) and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture,
-61-
<PAGE> 70
subject to the rights, if any, under this Article of the holders of Senior
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 1208. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1209. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness 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 of any Senior
Indebtedness, or by any non-compliance by the Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment, or the amount of interest, fees or other amounts
payable in respect of, or extend the time of payment of, or renew, increase, or
otherwise alter, Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner for
the payment or collection of Senior Indebtedness; (iv) exercise or refrain from
exercising any rights or remedies against the Company or any other Person; (v)
give or fail to give any notice, or take or fail to take any other action,
required by law, by agreement or otherwise to preserve the rights of any holder
of Senior Indebtedness against the Company or any other Person liable in respect
of Senior Indebtedness or with respect to any property pledged, mortgaged, or
otherwise subject to a security interest or lien securing Senior Indebtedness;
(vi) perform or fail to perform any obligation of such holders of Senior
Indebtedness under any instrument or agreement evidencing, guaranteeing,
securing or otherwise affecting or relating to Senior Indebtedness; or (vii)
take or fail to take any action that might otherwise constitute a defense
available to, or a discharge of, the Company or any other Person liable in
respect of Senior Indebtedness.
-62-
<PAGE> 71
SECTION 1210. NOTICE TO TRUSTEE.
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 to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness (or a
trustee therefor or an agent bank) or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 801, shall be entitled in all respects to assume that no such facts
exist; provided that if the Trustee shall not have received the notice provided
for in this Section 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 (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 purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by it
within two Business Days prior to such date.
Notwithstanding anything in this Article Twelve to the contrary,
nothing shall prevent any payment by the Trustee to the Holders of monies
deposited with it pursuant to Section 401, and any such payment shall not be
subject to the provisions of Section 1202 or 1203.
Subject to the provisions of Section 601, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee therefor or an agent
bank) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor or an agent bank). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 1211. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or
-63-
<PAGE> 72
similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1212. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
SECTION 1213. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1214. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided that
Section 1213 shall not apply to the Company or any Affiliate of this Company if
it or such Affiliate acts as Paying Agent.
SECTION 1215. CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article only: (1) the issuance and delivery of
Class A Shares upon conversion of Securities in accordance with Article Thirteen
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Securities or on account of the purchase
or other acquisition of Securities, and (2) the payment,
-64-
<PAGE> 73
issuance or delivery of cash, property or securities (other than junior
securities) upon conversion of a Security shall be deemed to constitute payment
on account of the principal of such Security. For the purposes of this Section,
the term "junior securities" means (a) Class A Shares and any cash, securities
or other property into which the Securities are convertible pursuant to Article
Thirteen and (b) securities of the Company which are subordinated in right of
payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the right, which is absolute and unconditional, of the Holder of any
Security to convert such Security in accordance with Article Thirteen.
ARTICLE THIRTEEN
CONVERSION OF SECURITIES
SECTION 1301. CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this Article
Thirteen, at the option of the Holder thereof any Security may be converted at
any time into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Class A Shares of the Company
at the applicable Conversion Price, determined as hereinafter provided, in
effect at the time of conversion. Such conversion right shall expire at the
close of business on April 29, 2007, subject, in the case of conversion of any
Global Security, to any Applicable Procedures. In case a Security or portion
thereof is called for redemption at the election of the Company or the Holder
thereof exercises his right to require the Company to repurchase a Security or
portion thereof, such conversion right in respect of such Security, shall expire
(a) at the close of business on the Business Day immediately preceding the
applicable Redemption Date, in the case of a Security called for redemption, and
(b) at the close of business on the Business Day immediately preceding the
Repurchase Date, in the case of a Security tendered for repurchase, in each case
unless the Company defaults in making the payment due upon redemption or
repurchase, as the case may be, and in each case subject as aforesaid to any
Applicable Procedures with respect to any Global Security.
Each Series A Exchange Note will be convertible into such number of
whole Class A Shares as is equal to the unpaid principal amount being converted
of such Series A Exchange Notes divided by the initial conversion price of
$20.07 per share (the "Series A Conversion Price") subject to adjustment as
provided in Section 1304.
-65-
<PAGE> 74
Each Series B Exchange Note will be convertible into such number of
whole Class A Shares as is equal to the unpaid principal amount being converted
of such Series B Exchange Notes divided by the initial conversion price of
$27.96 per share, subject to adjustment as provided in Section 1304 (the "Series
B Conversion Price") (the Series A Conversion Price and the Series B Conversion
Price being sometimes referred to herein as the "Conversion Price"). The
applicable Conversion Price shall be adjusted in certain instances as provided
in this Article Thirteen.
SECTION 1302. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 1002, accompanied by a duly
signed notice (in the form attached to the Security) stating that the Holder
elects to convert such Security or, if less than the entire principal amount
thereof is to be converted the portion thereof to be converted. Each Security
surrendered for conversion (in whole or in part) during the Record Date Period
shall (except in the case of any Security or portion thereof which has been
called for redemption on a Redemption Date, or which is repurchasable on a
Repurchase Date, occurring, in either case, within such Record Date Period
(including any Securities or portions thereof called for redemption on a
Redemption Date that is between a Regular Record Date or an Interest Payment
Date, as the case may be)) be accompanied by payment in New York Clearing House
funds or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of such
Security (or part thereof, as the case may be) being surrendered for conversion.
The interest so payable on such Interest Payment Date with respect to any
Security (or portion thereof, if applicable) which has been called for
redemption on a Redemption Date, or is repurchasable on a Repurchase Date,
occurring, in either case, during the Record Date Period, (including any
Security called for Redemption on a Redemption Date that is a Record Date or
Interest Payment Date, as the case may be) which Security (or portion thereof,
if applicable) is surrendered for conversion during such Record Date Period (or
on the last Business Day prior to the Regular Record Date or Interest Payment
Date in the case of any Security (or portion thereof, as the case may be) called
for redemption on such Regular Record Date or Interest Payment Date, as the case
may be), shall be paid to the Holder of such Security being converted in an
amount equal to the interest that would have been payable on such Security if
such Security had been converted as of the close of business on such Interest
Payment Date. The interest so payable on such Interest Payment Date in respect
of any Security (or portion thereof, as the case may be) which has not been
called for redemption on a Redemption Date, or is not eligible for repurchase on
a Repurchase Date, occurring, in either case, during the Record Date Period,
which Security (or portion thereof, as the case may be) is surrendered for
conversion during such Record Date Period, shall be paid to the Holder of such
Security as of such Regular Record Date. Interest payable in respect of any
Security surrendered for conversion on or after a Regular Record Date and prior
to an Interest Payment Date shall be paid to the Holder of such Security as of
such Regular Record Date. Except as provided in this paragraph and subject to
the last paragraph of
-66-
<PAGE> 75
Section 307, no cash payment of adjustment shall be made upon any conversion on
account of any interest accrued from the Interest Payment Date next preceding
the conversion date, in respect of any Security (or part thereof, as the case
may be) surrendered for conversion, or on account of any dividends on the Class
A Shares issued upon conversion. The Company's delivery to the Holder of the
number of shares of Class A Shares (and cash in lieu of fractions thereof, as
provided in this Indenture) into which a Security is convertible will be deemed
to satisfy the Company's obligation to pay the principal amount of the Security.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Class A Shares issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Class A Shares at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and deliver to the Trustee, for delivery to the Holder within five
Business Days after the Conversion Date, a certificate or certificates for the
number of full shares of Class A Shares issuable upon conversion, together with
payment in lieu of any fraction of a share, as provided in Section 1303.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in the aggregate principal amount equal
to the unconverted portion of the principal amount of such Security. A Security
may be converted in part, but only if the principal amount of such Security to
be converted is any integral multiple of $1,000 and the principal amount of
such security to remain Outstanding after such conversion is equal to any
integral multiple of $1,000.
SECTION 1303. FRACTIONS OF SHARES.
No fractional Class A Shares shall be issued upon conversion of any
Security or Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares that shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional Class A Shares which would otherwise be
issuable upon conversion of any Security or Securities (or specified portions
thereof), the Company shall calculate and pay a cash adjustment in respect of
such fraction (calculated to the nearest 1/100th of a share) in an amount equal
to the same fraction of the applicable Closing Price at the close of business on
the day of conversion.
SECTION 1304. ADJUSTMENT OF CONVERSION PRICE.
The applicable Conversion Price shall be subject to adjustments from
time to time as follows:
-67-
<PAGE> 76
(1) In case the Company shall (a) subdivide its outstanding
shares of Class A Shares into a greater number of shares or (b) combine its
outstanding Class A Shares into a smaller number of shares, the applicable
Conversion Price in effect immediately prior to such action shall be adjusted
so that the holder of any security thereafter surrendered for conversion shall
be entitled to receive the number of shares of Class A Shares which such holder
would have received or been entitled to receive immediately following such
action had such security been converted immediately prior thereto. An
adjustment made pursuant to this clause (1) shall become effective immediately.
(2) In case the Company shall pay a dividend or make a
distribution on Class A Shares in Class A Shares, on the day after the record
date for the determination of holders entitled to receive such dividend or
distribution, the applicable Conversion Price shall be adjusted to a price,
computed to the nearest cent, so that the same shall be reduced to the product
of:
(A) the applicable Conversion Price in effect immediately
prior to the record date for the determination of holders entitled to
receive such dividend or distribution multiplied by a fraction, of
which
(B) the numerator shall be the number of Class A Shares
outstanding at the close of business on the date fixed for such
determination, and of which
(C) the denominator shall be the sum of such number of Class A
Shares and the total number of Class A Shares constituting such
dividend or other distribution.
Such adjustment shall become effective immediately, except as provided
in clause (7) below, on the day after the record date for the
determination of holders entitled to receive such dividend or
distribution. For the purposes of this clause (2), the number of Class
A Shares at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not pay any dividend or make
any distribution on Class A Shares held in the treasury of the Company.
(3) In case the Company shall issue rights, warrants or options
to all holders of Class A Shares entitling them (for a period expiring within 45
days after the record date therefor) to subscribe for or purchase Class A Shares
at a price per share less than the Current Market Price per share (as determined
pursuant to clause (6) below) of the Class A Shares on the day after the record
date for the determination of holders entitled to receive such rights, warrants
or options, the applicable Conversion Price shall be adjusted to a price,
computed to the nearest cent, so that it shall equal the price determined by
multiplying:
(A) the applicable Conversion Price in effect immediately
prior to the date of issuance of such rights, warrants or options by a
fraction, of which
-68-
<PAGE> 77
(B) the numerator shall be (i) the number of Class A Shares
outstanding on the date of issuance of such rights, warrants or options
immediately prior to such issuance, plus (ii) the number of Class A
Shares which the aggregate offering price of the total number of Class
A Shares so offered for subscription or purchase would purchase at such
Current Market Price (determined by multiplying such total number of
Class A Shares by the sum of the exercise price of such rights,
warrants or options plus the fair market value of any consideration
paid to the Company for such rights, warrants or options and dividing
the product so obtained by such Current Market Price), and of which
(C) the denominator shall be (i) the number of Class A Shares
outstanding on the date of issuance of such rights, warrants or
options, immediately prior to such issuance, plus (ii) the number of
additional Class A Shares which are so offered for subscription or
purchase.
Such adjustment shall become effective immediately, except as provided
in clause (7) below, on the day after the record date for the
determination of holders entitled to receive such rights, warrants or
options. For the purposes of this clause (3), the number of Class A
Shares at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not issue any rights,
warrants or options in respect of Class A Shares held in the treasury
of the Company.
(4) In case the Company shall issue to an Affiliate Class A
Shares or Class B Shares at a net price per share less than the Current Market
Price per share (as determined pursuant to clause (6) below), on the date the
Company fixes the offering price of such additional shares, the applicable
Conversion Price shall be reduced so that it shall equal the price determined by
multiplying:
(A) such applicable Conversion Price in effect immediately
prior thereto by a fraction, of which
(B) the numerator shall be (i) the number of shares of Common
Stock outstanding immediately prior to the issuance of such additional
shares, plus (ii) the number of Class A Shares which the aggregate
offering price of the total number of shares of Common Stock so offered
would purchase at the Current Market Price, and of which
(C) the denominator shall be the number of shares of Common
Stock that would be outstanding immediately after the issuance of such
additional shares.
Such adjustment shall become effective immediately after the issuance
of such shares of Common Stock. An adjustment shall be made
successively whenever such an issuance is made. For the purposes of
this clause (4), the number of Class A Shares at any time outstanding
shall not include shares held in the treasury of the Company. This
clause (4)
-69-
<PAGE> 78
shall not apply to shares of Common Stock issued to any Affiliate under
bona fide benefits plans adopted by the Board of Directors for the
benefit of the Company's directors, employees, consultants and advisers
and approved by the holders of shares of Common Stock if required by
law.
(5) In case the Company shall distribute to all or substantially
all holders of Class A Shares documents or instruments evidencing indebtedness,
equity securities (including equity interests in a Subsidiary) other than Class
A Shares, or other assets (other than ordinary cash dividends out of earnings),
or shall distribute to all or substantially all holders of Class A Shares
rights, warrants or options to subscribe to securities (other than those
referred to in clause (3) above), then in each such case the Company shall pay
to the holder of each Security such holder's pro rata share, on an As Converted
Basis in respect of such Security, of such distributions.
(6) For the purpose of any computation under clause (3) or (4)
above, the "Current Market Price" per Class A Share on any date of determination
shall be deemed to be the average of the last sale prices of a Class A Share for
the ten consecutive Trading Days selected by the Company commencing not more
than 20 Trading Days before the day (the "Benchmark Date") which is the earlier
of (a) such date of determination and (b) the day immediately preceding the "ex"
date with respect to the issuance or distribution requiring such computation,
and ending not later than the Benchmark Date. For purposes of this clause (6),
the term "'ex' date", when used with respect to any issuance or distribution,
means the first date on which the Class A Shares trade regular way on The New
York Stock Exchange or such other principal national securities exchange on
which the Class A Shares are listed or admitted to trading (or if not so listed
or admitted on The New York Stock Exchange or any other principal national
securities exchange is no longer reporting trading information) without the
right to receive such issuance or distribution.
(7) In any case in which this Section 1304 shall require that an
adjustment be made on the day after a record date, the Company may elect to
defer the effectiveness of such adjustment (but in no event until a date later
than the effective time of the event giving rise to such adjustment), in which
case the Company shall, with respect to any Security converted after such record
date and before such adjustment shall have become effective (a) defer making any
cash payment or issuing to the holder of such Security the number of Class A
Shares and other capital stock of the Company issuable upon such conversion in
excess of the number of Class A Shares and other capital stock of the Company
issuable thereupon only on the basis of the applicable Conversion Price prior to
adjustment, and (b) not later than five Business Days after such adjustment
shall have become effective, pay to such holder the appropriate cash payment and
issue to such holder the additional Class A Shares and other capital stock of
the Company issuable on such conversion.
(8) No adjustment in the applicable Conversion Price shall be
required in respect of any dividend or distribution if holders of the Securities
may participate therein (on a basis and with notice that the Board of Directors
determines in good faith to be fair and appropriate) and
-70-
<PAGE> 79
receive the same consideration they would have received if they had converted
the Securities immediately prior to the record date with respect to such
dividend or distribution. In addition, no adjustment in the applicable
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the applicable Conversion Price, provided
that any adjustment which by reason of this clause (8) is not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Article Thirteen shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
(9) Except as expressly set forth in this Section 1304, no
adjustment in the applicable Conversion Price shall be made because the Company
issues, in exchange for cash, property or services, Class A Shares, or any
securities convertible into or exchangeable for Class A Shares, or securities
(including warrants, rights and options) carrying the right to subscribe for or
purchase Class A Shares or such convertible or exchangeable securities
(including Class B Shares), provided that in the case of any such issuance to an
Affiliate written evidence of the action of the Board of Directors authorizing
such issuance shall be filed with the secretary of the Company (which evidence
shall include a determination by the Board of Directors that the terms of such
issuance are not less favorable to the Company than would have been obtainable
in a comparable arm's-length transaction with a Person not an Affiliate) and
notice thereof shall have been given to each holder of the Securities.
(10) Whenever the applicable Conversion Price is adjusted as herein
provided, the Company shall promptly give each holder of Securities a notice of
such adjustment accompanied by a copy of an Officers' Certificate setting forth
the applicable Conversion Price after such adjustment and setting forth in
reasonable detail the facts requiring such adjustment and the calculations on
which the adjustment is based.
(11) At its option, the Company may make such reduction in the
applicable Conversion Price, in addition to those otherwise required by this
Section 1304, as the Board of Directors deems advisable to avoid or diminish any
income tax to holders of Class A Shares resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes; provided that any such reduction shall not be
effective until written evidence of the action of the Board of Directors
authorizing such reduction shall be filed with the secretary of the Company and
notice thereof shall have been given to each holder of Securities.
(12) Notwithstanding any other provision of this Section 1304, no
adjustment to the applicable Conversion Price shall reduce the applicable
Conversion Price below the then par value per share of the Class A Shares, and
any such purported adjustment shall instead reduce the applicable Conversion
Price to such par value. The Company hereby covenants not to take any action (i)
to increase the par value per share of the Class A Shares or (ii) that would or
does result in any adjustment in the applicable Conversion Price that, if made
without giving effect to the previous sentence, would cause the applicable
Conversion Price to be less than the then par value per share of the Class A
Shares.
-71-
<PAGE> 80
SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever any Conversion Price is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Price in
accordance with Section 1304 and shall prepare a certificate signed by the
principal accounting or financial officer of the Company setting forth the
adjusted Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall promptly be filed with the
Trustee and with each Conversion Agent; and
(2) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall forthwith be prepared, and
as soon as practicable after it is prepared, such notice shall be provided by
the Company to all Holders in accordance with Section 106.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.
SECTION 1306. NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than exclusively in cash
or (ii) exclusively in cash in an amount that would require any adjustment
pursuant to Section 1304; or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights, options or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company,
or of any consolidation, merger, or share exchange to which the Company is a
party and for which approval of any stockholders of the Company is required, or
of the conveyance, sale, transfer or lease of all or substantially all of the
assets of the Company;
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
-72-
<PAGE> 81
(e) the Company or any Subsidiary shall commence a tender
offer for all or a portion of the Company's outstanding shares of Common Stock
(or shall amend any such tender offer);
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 1002, and shall
cause to be provided to all Holders in accordance with Section 106, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record, expiration or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants or, if a record is to be
taken, the date as of which the holders of record to be entitled to such
dividend, distribution, rights, options or warrants are to be determined, (y)
the date on which the right to make tenders under such tender offer expires or
(z) the date on which such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, 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, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up. Neither the failure to give such notice or the notice
referred to in the following paragraph nor any defect in such notice shall
affect the legality or validity of the proceedings clauses (a) through (e) of
this Section 1306. If at the time the Trustee shall not be a Conversion Agent, a
copy of such notice shall also be filed by the Company with the Trustee.
The preceding paragraph to the contrary notwithstanding, the Company
shall cause to be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 1002, and shall cause to be
provided to all Holders in accordance with Section 106 notice of any tender
offer by the Company or any Subsidiary for all or any portion of the Common
Stock at or about the time that such notice of tender offer is provided to the
public generally.
SECTION 1307. COMPANY TO RESERVE CLASS A SHARES.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Class A Shares, for the
purpose of effecting the conversion of Securities, the full number of shares
then issuable upon the conversion of all Outstanding Securities.
SECTION 1308. TAXES ON CONVERSIONS.
Except as provided in the next sentence, the Company will pay any and
all taxes and duties that may be payable in respect of the issue or delivery of
Class A Shares on conversion of Securities pursuant hereto. The Company shall
not, however, be required to pay any tax or duty which may be payable in respect
of any transfer involved in the issue and delivery of Class A Shares in a name
other than that of the Holder of the Security or Securities to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid
-73-
<PAGE> 82
to the Company the amount of any such tax or duty, or has established to the
satisfaction of the Company that such tax or duty has been paid or that no such
tax or duty need be paid.
SECTION 1309. COVENANT AS TO CLASS A SHARES.
The Company agrees that all Class A Shares which may be delivered upon
conversion of Securities, upon such delivery, will have been duly authorized and
validly issued and will be fully paid and nonassessable and, except as provided
in Section 1308, the Company will pay all taxes, liens and charges with respect
to the issue thereof.
SECTION 1310. CANCELLATION OF CONVERTED SECURITIES.
All Securities delivered for conversion shall be delivered to the
Trustee to be cancelled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
SECTION 1311. PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS.
If any transaction shall occur, including without limitation (1) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from no par value to par value, or as a result of a
subdivision or combination of Common Stock), (2) any consolidation, merger or
amalgamation of the Company with or into another person or any merger of another
person into the Company (other than a merger that does not result in a
reclassification, conversion, exchange or cancellation of Common Stock), (3) any
sale or transfer of all or substantially all of the assets of the Company, or
(4) any compulsory share exchange, pursuant to any of which holders of Class A
Shares or Class B Shares shall be entitled to receive other securities, cash or
other property, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture, subject to the approval of the
Majority Holders, providing that the Holder of each Security then Outstanding
shall have the right thereafter, during the period such Security shall be
convertible as specified in Section 1301, to convert such Security only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by a holder of the
number of shares of Common Stock of the Company into which such Security might
have been converted immediately prior to such consolidation, merger, conveyance,
sale, transfer or lease, after giving effect to any adjustment in the applicable
Conversion Price in accordance with Section 1304, assuming such holder of Class
A Shares is not a company formed by such consolidation or amalgamation or
resulting from such merger or that acquires such assets or that acquires the
Company's shares, as the case may be (the "Constituent Person"), and the Company
shall not enter into any such consolidation, merger, amalgamation or sale,
unless the Constituent Person shall make provisions satisfactory to the Majority
Holders in its certificate or articles of incorporation or other constituent
document to establish such right. Such certificate or articles of incorporation
or other constituent document shall provide for adjustments that, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent
-74-
<PAGE> 83
documents, shall be as nearly equivalent as may be practicable to the relevant
adjustments provided for in this Section 1311. Prior to the occurrence of any
such transaction, the Company may redeem the Securities pursuant to Section
1101, if such redemption is then permitted by said Section. Such supplemental
indenture shall provide for adjustments which, for events subsequent to the
effective date of such supplemental indenture, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article. The above
provisions of this Section 1311 shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases. Notice of the
execution of such a supplemental indenture shall be given by the Company to the
Holder of each Security as provided in Section 106 promptly upon such execution.
Neither the Trustee, any Paying Agent, nor any Conversion Agent shall
be under any responsibility to determine the correctness of any provisions
contained in any such supplemental indenture relating either to the kind or
amount of shares of stock or other securities or property or cash receivable by
Holders of Securities upon the conversion of their Securities after any such
consolidation, merger, conveyance, transfer, sale or lease or to any such
adjustment, but may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, an Opinion of Counsel with
respect thereto, which the Company shall cause to be furnished to the Trustee
upon request.
For purposes of preventing duplicative adjustments, if and to the
extent Section 1311 applies to any event or occurrence, Section 1304 shall not
apply.
SECTION 1312. RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.
The Trustee, subject to the provisions of Section 601, and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities 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, or whether a supplemental indenture need to be entered into.
Neither the Trustee, subject to the provisions of Section 601, nor any
Conversion Agent shall be accountable with respect to the validity or value (or
the kind or amount) of any Class A Shares, or of any other securities or
property or cash, which may at any time be issued or delivered upon the
conversion of any Security; and it or they do not make any representation with
respect thereto. Neither the Trustee, subject to the provisions of Section 601,
nor any Conversion Agent shall be responsible for any failure of the Company to
make or calculate any cash payment or to issue, transfer, or deliver any Class A
Shares or share certificates or other securities or property or cash upon the
surrender of any Security for the purpose of conversion; and the Trustee,
subject to the provisions of Section 601, and any Conversion Agent shall not be
responsible for any failure of the Company to comply with any of the covenants
of the Company contained in this Article.
-75-
<PAGE> 84
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL
SECTION 1401. RIGHT TO REQUIRE REPURCHASE.
Promptly and in any event within 20 days after the occurrence of a
Change in Control, the Company shall deliver a Company Notice (as defined in
Section 1403) to the holders of all Outstanding Securities which shall offer to
prepay all Securities on the date therein specified (the "Repurchase Date"),
which shall be a Business Day not less than 30 nor more than 60 days after the
date of such Company Notice, at a price equal to 101% of the principal amount of
the Securities to be repurchased plus interest accrued to the Repurchase Date
(the "Repurchase Price"); provided, however, that installments of interest on
Securities whose Stated Maturity is on or prior to the Repurchase Date shall be
payable in cash to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Regular
Record Date according to their terms and the provisions of Section 307. Such
right to require the repurchase of the Securities shall not continue after a
discharge of the Company from its obligations with respect to the Securities in
accordance with Article Four, unless a Change of Control shall have occurred
prior to such discharge. The Repurchase Price shall be paid in cash; provided,
however, that failure of the Company to pay the Repurchase Price on the
Repurchase Date in cash shall constitute an Event of Default for purposes of
Section 501(1) hereof. Whenever in this Indenture (including Sections 202, 301,
501(2) and 508) there is a reference, in an context, to the principal of any
Security as of any time, such reference shall be deemed to include reference to
the Repurchase Price payable in respect of such Security to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those provisions of this
Indenture when such express mention is not made;
SECTION 1402. [RESERVED]
SECTION 1403. NOTICES, METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(a) Unless the Company shall have previously called for redemption all
of the Outstanding Securities or unless all of the Outstanding Securities shall
have theretofore been converted in accordance with Article Thirteen, on or
before the 20th day after the occurrence of a Change of Control, the Company or,
at the request and expense of the Company on or before the 10th day after such
occurrence, the Trustee (in the stead of the Company), shall give to all
Holders, in the manner provided in Section 106, notice (the "Company Notice") of
the occurrence of the Change of Control and of the repurchase right set forth
herein arising as a result thereof. The Company shall also deliver a copy of the
Company Notice to the Trustee.
-76-
<PAGE> 85
Each Company Notice shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised (at
least five Business Days prior to the Repurchase Date),
(3) the Repurchase Price,
(4) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such Securities are
to be surrendered for payment of the Repurchase Price and accrued interest, if
any,
(5) that on the Repurchase Date the Repurchase Price, and accrued
interest, if any, will become due and payable upon each such Security designated
by the Holder to be repurchased, and that interest thereon shall cease to accrue
on and after said date, and
(6) the Conversion Price then in effect, the date on which the
right to convert the principal amount of the Securities to be repurchased will
terminate and the place or places where such Securities may be surrendered for
conversion.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Article
Fourteen are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to
the Trustee or any Paying Agent on or before the fifth Business Day prior to the
Repurchase Date (i) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Securities to be repurchased (and, if any Security is to repurchased in part,
the portion of the principal amount thereof to be repurchased and the name of
the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered), and a statement that an election to exercise
the repurchase right is being made thereby, and (ii) the Securities with respect
to which the repurchase right is being exercised. Such written notice shall be
irrevocable, except that the right of the Holder to convert the Securities with
respect to which the repurchase right is being exercised shall continue until
the close of business on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid to
the Trustee or the Paying Agent the Repurchase Price in cash, as provided above,
for paying to the Holder on the Repurchase Date,
-77-
<PAGE> 86
together with accrued and unpaid interest to the Repurchase Date payable with
respect to the Securities as to which the purchase right has been exercised;
provided, however, that installments of interest on Securities whose Stated
Maturity is on or prior to the Repurchase Date shall be payable in cash to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Regular Date according to the
terms and provisions of Section 307.
(d) Any Security which is to be repurchased only in part shall
be surrendered to the Trustee (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, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(e) All Securities delivered for repurchase shall be delivered
to the Trustee, the Paying Agent or any other agents (as shall be set forth in
the Company Notice) to be cancelled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 309.
SECTION 1404. CERTAIN DEFINITIONS.
For purposes of Articles Thirteen and Fourteen, the term "Person" shall
include any syndicate or group which would be deemed to be a "person" under
Section 13(d)(3) of the Exchange Act, as in effect on the date of the original
execution of this Indenture.
SECTION 1405. CONSOLIDATION, MERGER, ETC.
In the case of any reclassification, change, consolidation, merger,
combination, sale or conveyance to which Section 1311 applies, in which the
Common Stock of the Company is changed or exchanged as a result into the right
to receive shares of stock and other securities or property or assets (including
cash) which includes shares of Common Stock of the Company or common stock of
another person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such shares of stock and other securities,
property and assets (including cash) (as determined by the Company, which
determination shall be conclusive and binding), then the Person formed by such
consolidation or resulting from such merger or combination or which acquires the
properties or assets (including cash) of the Company, as the case may be, shall
execute and deliver to the Trustee a supplemental indenture, subject to the
approval of the Majority Holders (which shall comply with the Trust Indenture
Act as in force at the date of execution of such supplemental
-78-
<PAGE> 87
indenture) modifying the provisions of this Indenture relating to the right of
Holders to cause the Company to repurchase the Securities following a Change of
Control, including without limitation the applicable provisions of this Article
Fourteen and the definitions of the Common Stock and Change of Control, as
appropriate, and such other related definitions set forth herein as determined
in good faith by the Company (which determination shall be conclusive and
binding), to make such provisions apply to the common stock and the issue
thereof if different from the Company and Common Stock of the Company (in lieu
of the Company and the Common Stock of the Company).
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 1501. INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS.
No recourse for the payment of the principal of or premium, if any, or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture or in any
Security, or because of the creation of any Indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer, or
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Securities.
--------------------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-79-
<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
BUDGET GROUP, INC.
By:
------------------------
Name:
Title:
Attest:
- ----------------------
THE CHASE MANHATTAN BANK,
as Trustee
By:
------------------------
Name:
Title:
Attest:
- ----------------------
-80-
<PAGE> 89
STATE OF __________) ss.:
COUNTY OF ________ )
On the ____ day of __________, 1997, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he/she is ____________________________ of BUDGET GROUP, INC., one of the
corporations described in and which said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he/she signed his/her name
thereto by like authority.
------------------------------
STATE OF ) ss.:
COUNTY OF )
On the ____ day of __________, 1997, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he/she is ____________________________ of __________________________, one
of the corporations described in and which executed the foregoing instrument;
that he/she knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he/she signed his/her name
thereto by like authority.
-----------------------------
<PAGE> 90
EXHIBIT A
[FORM OF SECURITIES]
BUDGET GROUP, INC.
[7.0% Convertible Subordinated Note, Series A, due 2007]
[6.85% Convertible Subordinated Note, Series B, due 2007]
CUSIP NO.: ______
No.___________ $________________
BUDGET GROUP, INC., a Delaware corporation (the "Company"), for value
received, hereby promises to pay to _______________, or registered assigns, the
principal sum of _______________ Dollars (or so much thereof as shall not have
been prepaid) on April 29, 2007, and to pay interest (computed on the basis of a
360-day year of twelve 30-day months) on the unpaid principal balance thereof
from the date of this Note at the rate of [7.0%] [6.85%] per annum, payable
semiannually on [APRIL 29, AND OCTOBER 29], [JUNE 18 AND DECEMBER 18] in each
year, until such principal sum shall have become due and payable (whether at
maturity, at a date fixed for redemption or by declaration, acceleration or
otherwise), and to pay on demand interest (so computed) on any overdue principal
and premium, if any, and (to the extent permitted by applicable law) on any
overdue interest, at a rate per annum equal to the greater (determined on a
daily basis) of (i) [9.0%] [8.85%] and (ii) 2% above the rate of interest
publicly announced by Citibank, N.A. from time to time at its principal office
in The City of New York as its prime or base rate. Payments of principal,
premium, if any, and interest shall be made in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts in the manner and at the address designated
by the holder hereof and, in the absence of such designation, at said principal
office of Citibank, N.A.
This Note is one of a series of convertible subordinated notes of the
Company issued pursuant to the Indenture dated as of January 8, 1998, between
the Company and The Chase Manhattan Bank, as Trustee (the "Indenture"). The
holder of this Note is entitled to the benefits of the Indenture.
The Company may at its election prepay this Note, in whole or in part,
and under certain circumstances the Company may be required to offer to prepay
this Note, and the maturity hereof
A- 1
<PAGE> 91
may be accelerated following an Event of Default, all as provided in the
Indenture, to which reference is made for the terms and conditions of such
provisions as to redemption and acceleration. This Note may also be converted
into shares of Class A Common Stock, par value $.01 per share, of the Company on
terms specified in the Indenture.
Payments of the principal of, premium, if any, and interest on this
Note are subordinate, to the extent specified in the Indenture, to all Senior
Indebtedness of the Company, as such term is defined in the Indenture. This Note
and the indebtedness of the Company in respect hereof are pari passu with the
Company's [7.0%] [6.85%] Convertible Subordinated Notes, Series [A] [B], due
2007.
Upon surrender of this Note for registration of transfer or exchange,
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note of the same series for a like principal amount will be
issued to, and, at the option of the holder, registered in the name of, the
transferee. The Company, the Trustee and any agent thereof may deem and treat
the person in whose name this Note is registered as the owner hereof for the
purpose of receiving payments of the principal of, premium, if any, and interest
hereon and for all other purposes whatsoever, whether or not this Note is
overdue, and the Company and the Trustee shall not be affected by any notice to
the contrary.
As provided in the Indenture, this Note shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized offices.
BUDGET GROUP, INC.
Dated:
By
-----------------------
Title:
Attest:
- -------------------------
Name:
Title:
A- 2
<PAGE> 92
[The following legend shall also appear on the face of each Global Security:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
REFERRED TO BELOW AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE
OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY
AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.]
[The following legend shall also appear on the face of each Global Security for
which The Depository Trust Company is to be the Depositary:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED
SECURITIES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERENCED
IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.]
A- 3
<PAGE> 93
ABBREVIATIONS
The following abbreviations, when used in the description of the fact of this
Security, shall be construed as through they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-______Custodian_______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors Act
of survivorship and not as ______________________________
tenants in common (State)
Additional abbreviations may also be used
though not in the above list
A- 4
<PAGE> 94
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
The Chase Manhattan Bank,
as Trustee
By
----------------------
Authorized Officer
A- 5
<PAGE> 95
FORM OF ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 1401 of the Indenture, the undersigned
hereby elects to have this security repurchased by the Company.
2. The undersigned hereby directs the Trustee or the Company to
pay it or ___________ an amount in cash equal to 101% of the principal amount
to be repurchased (as set forth below), plus interest accrued to the Repurchase
Date, as provided in the Indenture.
Dated:
----------------------------------
----------------------------------
Signature(s)
Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant to
Rule 17Ad- 15 under the Securities Exchange Act
of 1934.
-----------------------------------
Signature Guaranteed
Principal amount to be repurchased
(equal to an integral multiple of $1,000):
-------------------------------------
Remaining principal amount following such repurchase:
--------------------------
NOTICE: The signature to the foregoing election must correspond to the Name as
written upon the fact of this Security in every particular, without alteration
or any change whatsoever.
A- 6
<PAGE> 96
FORM OF CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is an integral multiple of $1,000, provided that the unconverted
portion of such principal amount is $1,000 or an integral multiple of $1,000 in
excess thereof) below designated, into Class A Shares in accordance with the
terms of the Indenture referred to in this Security, and directs that such
shares, together with a check in payment for any fractional share and any
Securities representing any unconverted principal amount hereof, be delivered to
and be registered in the name of the undersigned unless a different name has
been indicated below. If Class A Shares or Securities are to be registered in
the name of a Person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Any amount required to be paid by
the undersigned on account of interest accompanies this Security.
Dated:
------------------------- ---------------------------------
Fill in for registration of Class
A Shares if to be issued, and Securities
if to be delivered, other than to and in
the name of the registered holder. ---------------------------------
Signature(s)
- ---------------------------------
(Name) Signature(s) must be guaranteed by
an Eligible Guarantor Institution
with membership in an approved
signature guarantee program
pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934.
---------------------------------
Signature Guaranteed
A- 7
<PAGE> 97
FORM OF ASSIGNMENT
For value received ________________________ hereby sells(s), assign(s)
and transfer(s) unto ______________________ (Please insert social security or
other identifying number of assignee) the within Security, and hereby
irrevocably constitutes and appoints __________________________ as attorney to
transfer the said Security on the books of the Company, with full power of
substitution in the premises.
Dated: ----------------------------------
Signature(s)
Signature(s) must be guaranteed by
an Eligible Guarantor Institution
with membership in an approved
signature guarantee program pursuant
to Rule 17Ad-15 under the Securities
Exchange Act of 1934.
----------------------------------
Signature Guaranteed
A- 8
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-41093 of Budget Group, Inc. (formerly known as
Team Rental Group, Inc.) on Form S-3 of our reports dated April 12, 1996
appearing in Budget Group, Inc.'s current report on Form 8-K dated December 1,
1997, as amended, and appearing in the Annual Report on Form 10-K of Budget
Group, Inc. for the year ended December 31, 1996 and to the reference to us
under the heading "Experts" in the Prospectus, which is a part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Indianapolis, Indiana
January 6, 1998
<PAGE> 1
EXHIBIT 23.2
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 and for the year ended December 31,
1996, dated March 14, 1997, (except with respect to certain matters discussed in
Note 16 as to which the dates are April 22, April 29, July 10 and July 31,
1997), and our examination and review reports on the pro forma consolidated
statements of operations of Budget Group, Inc. for the year ended December 31,
1996, and the six months ended June 30, 1997, respectively, dated September 4,
1997, included in Budget Group, Inc.'s Current Report on Form 8-K dated December
1, 1997, as amended, and to all references to our firm included in or made a
part of this Registration Statement.
/s/Arthur Andersen LLP
January 6, 1998
Orlando, Florida
<PAGE> 1
[KPMG PEAT MARWICK LLP LETTERHEAD]
EXHIBIT 23.3
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 dated January 7, 1998, of our report dated
February 18, 1997, from Budget Group, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1996, and to the reference to our firm under the
heading "Experts" in this Registration Statement.
/s/KPMG PEAT MARWICK LLP
January 6, 1998
Chicago, Illinois
<PAGE> 1
EXHIBIT 25.1
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
BUDGET GROUP, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 59-3227576
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
125 BASIN STREET
SUITE 210
DAYTONA BEACH, FLORIDA 32114
(Address of principal executive offices) (Zip Code)
---------------------------------------------
7.0% CONVERTIBLE SUBORDINATED NOTES, SERIES A, DUE 2003
6.85% CONVERTIBLE SUBORDINATED NOTES, SERIES B, DUE 2007
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, Suite 2310, 5 Empire State
Plaza, Albany, New York 12223. Board of Governors of the
Federal Reserve System, 20th and C Street, NW, Washington,
D.C., 20551. Federal Reserve Bank of New York, District No. 2,
33 Liberty Street, New York, N.Y. 10045. Federal Deposit
Insurance Corporation, 550 Seventeenth Street NW, Washington,
D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, 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 7th day of January, 1998.
THE CHASE MANHATTAN BANK
By /s/ Anne G. Brenner
----------------------------
Anne G. Brenner
Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1997, 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 MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .............................................................. $ 11,760
Interest-bearing balances ...................................................... 4,343
Securities:
Held to maturity securities ......................................................... 2,704
Available for sale securities ....................................................... 37,885
Federal funds sold and securities purchased under
agreements to resell ........................................................... 27,358
Loans and lease financing receivables:
Loans and leases, net of unearned income .... $127,370
Less: Allowance for loan and lease losses ... 2,760
Less: Allocated transfer risk reserve ....... 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ......................................................... 124,597
Trading Assets....................................................................... 64,630
Premises and fixed assets (including capitalized leases)............................. 2,925
Other real estate owned ............................................................. 286
Investments in unconsolidated subsidiaries and
associated companies ........................................................... 232
Customers' liability to this bank on acceptances
outstanding .................................................................... 2,212
Intangible assets .................................................................. 1,480
Other assets ....................................................................... 11,117
--------
TOTAL ASSETS ........................................................................ $291,529
========
</TABLE>
-4-
<PAGE> 5
<TABLE>
LIABILITIES
<S> <C>
Deposits
In domestic offices ................................................................ $86,574
Noninterest-bearing .................... $31,818
Interest-bearing ....................... 54,756
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's .......................................................................... 69,887
Noninterest ............................ $ 3,777
Interest-bearing ....................... 66,110
Federal funds purchased and securities sold under agree-
ments to repurchase ..................................................................... 45,307
Demand notes issued to the U.S. Treasury ................................................ 161
Trading liabilities ..................................................................... 47,406
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ...................................... 4,578
With a remaining maturity of more than one year
through three years ......................................................... 261
With a remaining maturity of more than three years ................................. 131
Bank's liability on acceptances executed and outstanding ................................ 2,212
Subordinated notes and debentures ....................................................... 5,715
Other liabilities ....................................................................... 12,355
TOTAL LIABILITIES ....................................................................... 274,587
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ............................................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ............................... 10,294
Undivided profits and capital reserves .................................................. 5,414
Net unrealized holding gains (losses)
on available-for-sale securities ........................................................ 7
Cumulative foreign currency translation adjustments ..................................... 16
TOTAL EQUITY CAPITAL .................................................................... 16,942
--------
TOTAL LIABILITIES AND EQUITY CAPITAL .................................................... $291,529
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
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 appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
