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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BUDGET GROUP, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 7514 59-3227576
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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125 BASIN STREET, SUITE 210
DAYTONA BEACH, FLORIDA 32114
(904) 238-7035
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ROBERT L. APRATI
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
BUDGET GROUP, INC.
4225 NAPERVILLE ROAD
LISLE, ILLINOIS 60532
PHONE: (630) 955-7570
FACSIMILE: (630) 955-7810
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
JEFFREY M. STEIN
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303
PHONE: (404) 572-4600
FACSIMILE: (404) 572-5146
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as
practicable following the effectiveness of this Registration Statement.
If any securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
9 1/8% Senior Note Due April 1, 2006.... $400,000,000 $1,000 $400,000,000 $111,200
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(1) Estimated solely for the purpose of calculating the registration fee and
computed pursuant to Rule 457(f) under the Securities Act of 1933; the
proposed maximum offering price is based on the average of the bid and asked
prices for the notes on May 3, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED , 1999
PROSPECTUS
OFFER TO EXCHANGE
$400,000,000 9 1/8% SENIOR NOTES DUE APRIL 1, 2006
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
FOR
ALL OUTSTANDING UNREGISTERED
9 1/8% SENIOR NOTES DUE APRIL 1, 2006
BUDGET GROUP, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED.
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BUDGET GROUP, INC.
- issued $400,000,000 aggregate principal amount of its unregistered 9 1/8%
senior notes due April 1, 2006 on April 13, 1999, and will exchange them
as described in this prospectus for an equal amount of registered
exchange notes having the same terms.
THE NEW NOTES
- have a stated maturity of April 1, 2006;
- will receive interest payments on each April 1 and October 1, commencing
October 1, 1999;
- will be unsecured senior obligations of Budget Group, Inc.;
- will rank equally in right of repayment with all other existing and
future unsecured senior indebtedness;
- will rank senior in right of repayment to all existing and future
subordinated indebtedness;
- will be effectively subordinated to all existing and future secured
indebtedness to the extent of the value of the assets securing such
indebtedness;
- will be structurally subordinated to all the indebtedness and other
obligations, including trade payables, of our subsidiaries; and
- currently have no public market and will not be listed on any national
securities exchange.
INVESTING IN THE NEW NOTES INVOLVES RISKS. SEE "RISK FACTORS," BEGINNING ON
PAGE 9 FOR A DISCUSSION OF THE CERTAIN FACTORS THAT YOU SHOULD CONSIDER IN
CONNECTION WITH THIS EXCHANGE OFFER AND AN INVESTMENT IN THE NEW NOTES.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is , 1999.
<PAGE> 3
REFERENCES TO ADDITIONAL INFORMATION
This prospectus incorporates important business and financial information
about Budget Group from documents that are not included in or delivered with
this document. You can obtain documents incorporated by reference in this
prospectus (other than certain exhibits to those documents) by requesting them
in writing or by telephone from us at the following address:
Budget Group, Inc.
125 Basin Street
Suite 210
Daytona Beach, Florida 32114
Attention: Investor Relations
(904) 238-7035
YOU WILL NOT BE CHARGED FOR ANY OF THESE DOCUMENTS THAT YOU REQUEST. IF YOU
WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY , 1999 IN ORDER TO
RECEIVE THEM BEFORE THE EXCHANGE OFFER EXPIRES ON , 1999.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL BUDGET GROUP ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
i
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PROSPECTUS SUMMARY
This summary may not contain all the information that may be important to
you. You should read this entire prospectus before making an investment
decision. You should also read the documents incorporated by reference into this
prospectus, which are listed in the section entitled "Incorporation of Certain
Documents by Reference" on page 66. You should pay special attention to the
section entitled "Risk Factors" beginning on page 9 of this prospectus to
determine whether an investment in the new notes is appropriate for you.
In this prospectus, the terms "Budget Group," "the Company" and "we" refer
to Budget Group, Inc. and its subsidiaries as a consolidated entity, except
where it is clear that such terms mean only the parent company. "BRAC" refers to
Budget Rent a Car Corporation, a subsidiary of Budget Group. "Budget" and
"Budget Rent a Car" refer to the business of renting cars and trucks (as
applicable) under the "Budget" name, by BRAC and its franchisees.
THE COMPANY
Budget Group operates Budget Rent a Car, the world's third largest general
use car and truck rental system. We currently maintain more local market car
rental locations throughout the world than most of our major competitors and are
unique among major car rental companies in that we also rent trucks in most of
our major markets. Through our two truck rental companies, Ryder TRS and Budget
Truck Rental, we operate the nation's second and third largest consumer truck
rental companies. We also sell used cars in 27 markets nationwide through our 33
Budget Car Sales facilities. In 1998, we had revenue of $2.6 billion, EBITDA of
$761.0 million and Adjusted EBITDA of $84.0 million. On a pro forma basis and
adjusted for the offering of the old notes and certain non-recurring charges, we
had Adjusted EBITDA of $127.4 million. We define Adjusted EBITDA as EBITDA less
depreciation and interest incurred in connection with fleet vehicles financed
under fleet financing programs. Our business is organized into three principal
segments: Car Rental, Truck Rental and Car Sales.
Budget is one of only three vehicle rental systems that offer rental
vehicles throughout the world under a single brand name. We and our franchisees
operate Budget Rent a Car locations in over 120 countries. We own approximately
536 of the 970 Budget locations within the United States and 212 of the 2,170
Budget locations abroad. Our corporate-owned locations accounted for
approximately 80% of U.S. Budget Rent a Car revenue in 1998. In 1998, we
purchased 83,300 cars for our North American operations under a vehicle supply
agreement with Ford Motor Company, 90% of which were subject to repurchase
agreements that required Ford to repurchase the vehicles at guaranteed prices
after nine months in our rental fleet. Within our Car Rental segment, we also
provide rental vehicles to the insurance replacement market and operate commuter
van pooling services and airport parking facilities; our revenue from these
activities was $115.2 million in 1998. For 1998, our Car Rental segment had
revenue of $1.5 billion (54.3% of our 1998 pro forma revenue), EBITDA of $604.3
million and Adjusted EBITDA of $78.8 million.
Our combined Budget Truck Rental and Ryder TRS business is a leading
service provider in the long distance one-way market and the second largest
operator in the local market. We have 418 corporate-owned rental locations
nationwide, a network of approximately 3,730 dealer and franchised locations and
a system-wide fleet of approximately 49,000 trucks at December 31, 1998. Our
Truck Rental business also includes Cruise America, Inc., the largest
recreational vehicle rental and sales company in North America, which had
revenue of $92.7 million in 1998. Our Truck Rental segment had 1998 revenue of
$613.7 million, EBITDA of $203.0 million and Adjusted EBITDA of $55.8 million.
Pro forma for the Ryder TRS acquisition, our Truck Rental segment had 1998
revenue of $810.4 million (28.8% of our 1998 pro forma revenue), EBITDA of
$234.5 million and Adjusted EBITDA of $43.0 million.
We also operate Budget Car Sales, one of the leading independent retailers
of late model cars, sport utility vehicles and trucks in the United States. We
typically locate our used car stores in mid-sized suburban areas and maintain an
average inventory of approximately 100 vehicles per store. For 1998, our Car
Sales segment had revenue of $547.7 million (19.5% of our 1998 pro forma
revenue), EBITDA of $(17.2) million and Adjusted EBITDA of $(22.1) million.
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Budget Group was incorporated in Delaware in 1992. Our principal executive
offices are located at 125 Basin Street, Suite 210, Daytona Beach, Florida
32114, and our telephone number at that address is (904) 238-7035.
OUR FIRST QUARTER 1999 RESULTS
On April 21, 1999, we reported a net loss for the first quarter of 1999 of
$23.0 million versus a loss of $3.4 million in the first quarter of the prior
year. Revenue increased 48.8% to $678.7 million from $456.0 million in the prior
year first quarter. Operating income for the quarter was $11.3 million compared
to $34.2 million in the prior year. Prior year first quarter excludes Ryder TRS
and other acquisitions of Budget licensees, insurance replacement businesses and
new car dealerships.
Revenue for the first quarter of 1999 for the Car Rental segment increased
14.4% to $387.6 million compared to $338.8 million in 1998. Car Rental operating
income was $24.2 million compared to $36.2 million in the prior year first
quarter. First quarter 1999 operating income showed an approximate $22 million
improvement over fourth quarter 1998. Budget Rent a Car North America, which
represents 75% of this segment, saw revenue growth of 9.0% versus prior year
first quarter (up 5.3% on a same-market basis). On a same-market basis, daily
dollar average at $39.29 was essentially flat due to competitive pricing in
certain leisure markets, notwithstanding, rental days were up 6% for the
quarter.
Revenue from our international Budget operations, driven primarily by
corporate operations, saw growth of 36.7%. On a same-store basis, revenue was up
25.5%. This increase resulted from stepped up worldwide sales and marketing
efforts and the recent acquisition of key Budget licensee operations in France
and the UK.
Revenue for the Truck Rental group reached $151.5 million in the first
quarter of 1999 versus $43.2 million in 1998, which excluded Ryder TRS. Budget
Truck Rental continued to see robust volume growth of 21.0% versus prior year.
Budget truck rental rates increased over 2% as it aligned its pricing with
Ryder. Ryder's revenue was down 6.5% versus prior year pro forma and was in line
with company expectations as the two truck rental businesses are being
integrated. For the quarter, the Truck Rental group had an operating loss of
$3.7 million compared to operating income of $2.5 million in the prior year
first quarter. The year-over-year decline in reported earnings is a result of
the acquisition of Ryder TRS which has seasonal earnings.
Revenue from the Car Sales group reached $160.1 million in the first
quarter of 1999 compared to $92.0 million in the prior year. Revenue includes
proceeds from the sale of units at retail and wholesale within the group. The
first quarter of 1999 saw operating losses of $4.5 million compared to a loss of
$1.0 million in first quarter 1998. Operating results for first quarter 1999
represent a $2.9 million improvement over fourth quarter 1998, excluding
non-recurring charges. Three unprofitable locations were closed during the first
quarter of 1999, with an additional two closed in April of 1999. Units sold
retail during the first quarter increased to 7,957 compared to 4,859 units
during the prior year first quarter.
THE EXCHANGE OFFER
The exchange offer............ We are offering to exchange
- $1,000 principal amount of our registered
9 1/8% senior notes due April 1, 2006, which
we refer to as the "new notes"
for
- each $1,000 principal amount of our
unregistered 9 1/8% senior notes due April 1,
2006, which we refer to as the "old notes."
We sometimes will refer to the new notes and
the old notes together as the "notes."
Currently, $400 million principal amount of old
notes are outstanding.
Expiration date............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , unless we extend it.
In that case, the phrase
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"expiration date" will mean the latest date and
time to which we extend the exchange offer.
Procedures for participating
in the exchange offer......... If you wish to participate in the exchange
offer, you must complete, sign and date an
original or faxed letter of transmittal in
accordance with the instructions in the letter
of transmittal accompanying this prospectus.
Then you must mail, fax or deliver the
completed letter of transmittal together with
the old notes you wish to exchange and any
other required documentation to The Bank of New
York, which is acting as exchange agent. Its
address appears on the letter of transmittal.
By signing the letter of transmittal you will
represent to and agree with Budget Group that,
- you are acquiring the new notes in the
ordinary course of your business;
- you have no arrangement or understanding with
anyone to participate in a distribution of
the new notes;
and
- you are not an "affiliate," as defined in
Rule 405 under the Securities Act, of Budget
Group.
If you are a broker-dealer that will receive
new notes for your own account in exchange for
old notes that you acquired as a result of your
market-making or other trading activities, you
will be required to acknowledge in the letter
of transmittal that you will deliver a
prospectus in connection with any resale of
such new notes.
Resale of new notes........... We believe that you can resell and transfer
your new notes without registering them under
the Securities Act and delivering a prospectus,
if you can make the same three representations
that appear above under the heading "Procedures
for participating in the exchange offer." Our
belief is based on interpretations of the SEC
for other exchange offers that the SEC
expressed in some of the SEC's no-action
letters to other issuers in exchange offers
like ours.
We cannot guarantee that the SEC would make a
similar decision about this exchange offer. If
our belief is wrong, or if you cannot
truthfully make the representations appearing
above, and you transfer any new note issued to
you in the exchange offer without meeting the
registration and prospectus delivery
requirements of the Securities Act, or without
an exemption from such requirements, you could
incur liability under the Securities Act. We
are not indemnifying you for any such
liability.
A broker-dealer can only resell or transfer new
notes if it will deliver a prospectus.
Special procedures for
beneficial owners............. If your old notes are held through a broker,
dealer, commercial bank, trust company or other
nominee and you wish to surrender such notes,
you should contact your intermediary promptly
and instruct it to surrender your notes on your
behalf.
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Guaranteed delivery
procedures.................... If you cannot meet the expiration date
deadline, or you cannot deliver your old notes,
the letter of transmittal or any other
documentation on time, then you must surrender
your old notes according to the guaranteed
delivery procedures appearing below under "The
Exchange Offer -- Guaranteed Delivery
Procedures."
Acceptance of your old notes
and delivery of the new
notes......................... We will accept for exchange any and all old
notes that are surrendered in the exchange
offer prior to the expiration date if you
comply with the procedures of the offer. The
new notes will be delivered on the earliest
practicable date after the expiration date.
Withdrawal rights............. You may withdraw the surrender of your old
notes at any time prior to the expiration date.
U.S. federal income tax
consequences.................. You will not have to pay federal income tax as
a result of your participation in the exchange
offer.
Exchange agent................ The Bank of New York is serving as the exchange
agent in connection with the exchange offer.
The Bank of New York also serves as trustee
under the indenture that governs the notes.
THE NEW NOTES
The new notes have the same financial terms and covenants as the old notes,
which are as follows:
Issuer........................ Budget Group, Inc.
Securities offered............ $400 million aggregate principal amount of
9 1/8% Senior Notes Due April 1, 2006.
Maturity...................... April 1, 2006.
Interest rate................. 9 1/8% per year.
Interest payment dates........ April 1 and October 1 of each year, commencing
October 1, 1999.
Ranking....................... The new notes will:
- be unsecured senior obligations of Budget
Group;
- rank equally in right of repayment with all
other existing and future unsecured senior
indebtedness;
- rank senior in right of repayment to all
existing and future subordinated
indebtedness;
- be effectively subordinated to all existing
and future secured indebtedness to the extent
of the value of the assets securing such
indebtedness; and
- be structurally subordinated to all the
indebtedness and other obligations, including
trade payables, of our subsidiaries.
Change of control offer....... If a change in control of Budget Group occurs,
we must give holders of notes the opportunity
to sell to us their notes at a purchase price
of 101% of their face amount, plus accrued
interest. The term "Change of Control" is
defined in the "Description of the New
Notes -- Change of Control" section of this
prospectus.
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Certain covenants............. The indenture governing the new notes contains
covenants that limit our ability and the
ability of our subsidiaries to:
- incur additional indebtedness;
- pay dividends or distributions on, or redeem
or repurchase, our capital stock;
- make investments;
- issue or sell capital stock of subsidiaries;
- engage in transactions with affiliates;
- create liens on our assets to service debt;
- transfer or sell assets;
- guarantee indebtedness;
- restrict dividend or other payments to us;
- consolidate, merge or transfer all or
substantially all of our assets and the
assets of our subsidiaries; and
- engage in sale/leaseback transactions.
These covenants are subject to important
exceptions and qualifications, which are
described in the "Description of the New Notes"
section of this prospectus.
RISK FACTORS
See "Risk Factors" immediately following this summary beginning on page 9
for a discussion of risks relating to the new notes, all of which apply to the
old notes as well.
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SUMMARY HISTORICAL AND PRO FORMA DATA OF BUDGET GROUP
The following information as of and for the years ended December 31, 1996,
1997 and 1998 is derived from the audited consolidated financial statements of
Budget Group, which reflect the pooled operations of Budget Group and Cruise
America, Inc., which was acquired by Budget Group on January 28, 1998. The pro
forma financial information is derived from the 1998 audited consolidated
financial statements of Budget Group and the unaudited consolidated financial
statements of Ryder TRS for the period from January 1, 1998 through May 31,
1998, as adjusted for various transactions. The following financial data should
be read in conjunction with the Consolidated Financial Statements and the notes
thereto and the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in our Annual Report on
Form 10-K for the year ended December 31, 1998 which is incorporated by
reference into this prospectus, as well as the other documents incorporated
herein by reference. The pro forma financial information should be read in
conjunction with the unaudited pro forma consolidated statement of operations
and the notes thereto beginning on page 17 of this prospectus.
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YEAR ENDED DECEMBER 31,
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HISTORICAL PRO FORMA(A) AS ADJUSTED(B)
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1996 1997 1998 1998 1998
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(IN MILLIONS, EXCEPT OPERATING DATA)
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Statement of Operations Data:
Vehicle rental revenue............ $276.3 $1,070.4 $1,934.7 $2,131.5 $2,131.5
Retail vehicle sales revenue...... 169.3 289.1 583.3 583.3 583.3
Royalty fees and other............ 2.2 51.9 98.2 98.2 98.2
Total operating revenue........... 447.8 1,411.4 2,616.2 2,813.0 2,813.0
Operating income.................. 47.6 171.0 206.3 201.1 233.7
Income before income taxes........ 12.9 55.6 6.6 8.4 27.9
Extraordinary item(c)............. -- -- (45.3) -- --
Net income (loss)................. 7.8 29.8 (48.9) (8.7) 3.4
Segment Revenue:(d)
Car Rental(e)..................... 313.7(f) 1,014.8 1,527.5 1,527.5 1,527.5
Truck Rental(e)................... n/a(f) 215.9 613.7 810.4 810.4
Car Sales......................... 134.1 239.4 547.7 547.7 547.7
Operating Data:
Car rental data(g):
Average rental days per
vehicle...................... 250(f) 297 294
Average fleet.................. 8,917(f) 64,554 95,425
Average monthly revenue per
unit......................... 1,350(f) 1,011 1,009
Truck rental data:
Average rental days per
vehicle...................... n/a(f) 205(h) 183(i)
Average fleet.................. n/a(f) 11,148(h) 36,439(i)
Average monthly revenue per
unit......................... n/a(f) 1,212(h) 1,268(i)
Other Data:
EBITDA(j)......................... 124.8 $ 486.6 $ 761.0 $ 792.5 $ 820.4
Depreciation-- vehicle............ 71.8 292.1 500.2 530.1 528.6
Interest-vehicle, net(k).......... 31.6 95.3 176.8 189.6 164.4
Adjusted EBITDA(j)................ 21.4 99.2 84.0 72.9 127.4
Total interest expense, net....... 34.7 115.4 190.2 192.8 205.9
Non-vehicle capital
expenditures................... 3.4 10.9 88.4 88.4 88.4
Ratio of Adjusted EBITDA to non-
vehicle interest............... 6.9x 4.9x 6.3x 3.1x
Ratio of net non-vehicle debt to
Adjusted EBITDA(l)................ 1.4x 1.6x NM 3.1x
Ratio of earnings to fixed
charges(m)..................... 1.32x 1.39x 1.06x 1.10x
</TABLE>
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AS OF DECEMBER 31,
---------------------------------------------
HISTORICAL AS ADJUSTED(B)
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1996 1997 1998 1998
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(IN MILLIONS)
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Balance Sheet Data:
Restricted cash(n)................................. $ 66.3 $ 282.7 $ 421.5 $ 421.5
Total cash......................................... 120.3 444.2 557.7 557.7
Manufacturer receivables(o)........................ 13.9 150.2 241.0 241.0
Rental fleet, net.................................. 401.5 2,093.3 2,839.2
Retail vehicle inventory........................... 28.5 46.9 81.0
Total assets....................................... 700.4 3,689.9 5,134.1
Vehicle debt....................................... 447.5 2,367.9 3,508.9 3,120.9
Non-vehicle debt................................... 83.9 318.3 126.2 526.2
Total debt......................................... 531.4 2,686.2 3,635.1 3,647.1
Stockholders' equity............................... 120.4 458.9 650.6
</TABLE>
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(a) Reflects the full-year impact of the Ryder TRS acquisition which was
consummated on June 19, 1998 and the recapitalization transactions which
occurred in 1998 as further described in the section entitled "Pro Forma
Financial Information."
(b) Reflects the pro forma financial information referred to in (a) as adjusted
for the offering of the old notes, as further described in "Pro Forma
Financial Information," and certain one-time and restructuring charges
recorded by Budget Group during 1998. The one-time and restructuring charges
of $32.6 million ($20.2 million, net of tax) include (i) $14.9 million of
restructuring charges, largely related to severance and related costs and
location closing expenses, (ii) $1.6 million of pooling expenses, (iii) $3.2
million of impairment loss related to goodwill at Car Sales (recorded as
amortization and non-vehicle depreciation) and (iv) $12.9 million of other
charges (which includes $1.5 million recorded as depreciation -- vehicle),
net of $12.4 million of taxes.
(c) Reflects costs of the retirement of $165.0 million 9.57% senior notes of
BRAC and $175.0 million 10% senior notes of Ryder TRS. See "Pro Forma
Financial Information." Pro Forma and Pro Forma As Adjusted columns do not
include the extraordinary item as the pro forma financial information
reflects data from continuing operations.
(d) Segment revenue excludes intercompany eliminations of $58.7 million and
$72.7 million for the years ended December 31, 1997 and 1998. Revenue for
the Truck Rental segment include $49.7 million and $35.6 million of Cruise
America's retail sales for the years ended December 31, 1997 and 1998, which
are included in retail vehicle sales revenue in the Statement of Operations
Data above.
(e) Includes revenue from car or truck rentals, as appropriate, and related
products (such as insurance and loss damage waivers).
(f) Truck rental revenue data for the year ended December 31, 1996 cannot be
segregated from car rental revenue. Therefore, car rental revenue data for
the year ended December 31, 1996 include both car and truck rental data.
(g) Includes data for Budget Group's North American car rental operations
excluding Van Pool Services, our commuter van pooling company and Premier
Car Rental, our insurance replacement rental car company.
(h) Includes data for Budget Truck Rental and Cruise America.
(i) Includes data for Budget Truck Rental, Cruise America and Ryder TRS.
(j) EBITDA consists of income before income taxes plus (i) vehicle interest
expense, net, (ii) non-vehicle interest expense (including certain debt
extinguishment costs), (iii) vehicle depreciation expense and (iv)
amortization and non-vehicle depreciation expense. Adjusted EBITDA consists
of income before income taxes plus (i) non-vehicle interest expense
(including certain debt extinguishment costs) and (ii) amortization and
non-vehicle depreciation expense. EBITDA and Adjusted EBITDA are not
presented as, and should not be considered, alternative measures of
operating results or cash flows from operations (as determined in accordance
with generally accepted accounting principles), but are presented because
they are widely accepted financial indicators of a company's ability to
incur and service
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<PAGE> 11
debt. EBITDA and Adjusted EBITDA reflect certain administrative expenses not
allocated to operating segments.
(k) Consists of vehicle interest, net of interest income on restricted cash.
(l) Net non-vehicle debt consists of non-vehicle debt less unrestricted cash.
(m) Ratio of earnings to fixed charges consists of income from continuing
operations (before extraordinary items) before income taxes and fixed
charges, divided by fixed charges of interest (including amounts capitalized
and the interest factor in rental expense), amortization of debt expenses
and distributions on trust preferred securities.
(n) Restricted cash consists of funds borrowed under medium term note and
commercial paper programs not invested in rental fleet.
(o) Manufacturer receivables arise from the sale of vehicles to manufacturers
pursuant to guaranteed repurchase programs. These manufacturer receivables,
to the extent they relate to vehicles pledged as collateral under our fleet
financing facilities, are also pledged as collateral under those facilities.
8
<PAGE> 12
RISK FACTORS
You should carefully consider the risk factors described below before
deciding to surrender your old notes in exchange for new notes in this exchange
offer. These risks apply to both the old notes and the new notes. The risks
described below are not the only ones facing our company. Additional risks not
presently known to us or that we currently deem immaterial may also impair our
business operations.
WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS
We maintain a substantial amount of secured indebtedness to finance our
fleet purchases. At December 31, 1998, we had $3.64 billion of total outstanding
indebtedness, of which $3.59 billion was secured ($3.20 billion pro forma for
the offering of the old notes). We had $45.0 million of unsecured indebtedness
at December 31, 1998 ($445.0 million pro forma for the offering of the old
notes), and stockholders' equity of $650.6 million at that date. The offering of
the old notes represented a shift in our funding strategy, as we have begun to
utilize unsecured indebtedness to finance our fleet, rather than relying solely
on the type of secured indebtedness that we have used historically.
Notwithstanding our capacity to incur additional secured and unsecured
indebtedness, our substantial indebtedness could have negative consequences for
our business, including:
- limiting our ability to obtain additional financing in the future;
- limiting our ability to use operating cash flow in other areas of our
business because we must dedicate a substantial portion of these funds to
debt service;
- limiting our flexibility in reacting to changes in our industry and
changes in market conditions;
- increasing our vulnerability to a downturn in our business; and
- increasing our interest expense due to increases in prevailing interest
rates, because a substantial portion of our indebtedness bears interest
at floating rates.
We cannot assure you that we will be able to generate sufficient earnings
or to borrow sufficient funds to cover our debt service obligations. Our ability
to pay interest on the notes and meet our other debt service obligations will
depend on our future operating performance and financial results. If we are
unable to generate earnings sufficient to make scheduled payments on the notes
or to meet our other obligations, we will need to refinance these obligations,
obtain additional financing or sell assets.
If for any reason we are in default under the terms of our indebtedness,
the holders of our indebtedness will be able to declare all this indebtedness
immediately due and payable and terminate their commitments, if any, with
respect to additional funding obligations. These holders could also proceed
against their collateral, which, in the case of the vehicle financing
facilities, consists of substantially all our fleet vehicles.
OUR DEBT AGREEMENTS CONTAIN RESTRICTIONS THAT MAY AFFECT OUR ABILITY TO TAKE
CERTAIN ACTIONS
The restrictions and covenants in our existing debt agreements and in any
future financing agreements may adversely affect our ability to finance our
operations or capital needs or to engage in other business activities that may
be in our interest. Events beyond our control may affect our ability to comply
with these covenants, including covenants requiring compliance with certain
financial ratios. A breach of any of these covenants or our inability to comply
with the required financial ratios could result in a default under the notes and
other debt agreements. A significant portion of our debt may then become
immediately due and payable. We are not certain whether we would be able to
obtain sufficient funds to make these accelerated payments, including payments
on the notes.
THE NOTES ARE UNSECURED
The notes are not secured by any of our assets. Our fleet financing
facilities are secured by our vehicle fleet, related manufacturers' repurchase
obligations and restricted cash, and our credit facility is secured by a pledge
of the capital stock of our subsidiaries. If we become insolvent or are
liquidated, or if payment under
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<PAGE> 13
any of these facilities is accelerated, our lenders would be entitled to
exercise the remedies available to a secured lender under applicable law and
will have a claim on such assets before the holders of the notes. We cannot
assure you that the liquidation value of our assets would be sufficient to repay
in full the indebtedness under our vehicle financing facilities, the credit
facility and our other indebtedness, including the notes.
WE ARE A HOLDING COMPANY AND ARE DEPENDENT ON OUR SUBSIDIARIES FOR CASH FLOW
We may not be able to access cash generated by our subsidiaries in order to
pay interest and principal on the notes or fulfill other cash commitments. As a
holding company with no business operations, our material assets consist only of
the stock of our subsidiaries and the proceeds raised from the sale of our
equity and debt securities. We have loaned or contributed, or intend to loan or
contribute, all of these assets to our subsidiaries. We will have to rely upon
dividends and other payments from our subsidiaries to generate the funds
necessary to pay the principal of and interest on the notes. Our subsidiaries,
however, are legally distinct from us and have no obligation, contingent or
otherwise, to pay amounts due pursuant to the notes or to make funds available
for these payments. Our subsidiaries have not guaranteed the notes. The ability
of our subsidiaries to make dividend and other payments to us is subject to,
among other things, the availability of funds, the terms of our subsidiaries'
indebtedness and applicable state laws. Our right or any right of our creditors,
including holders of the notes, to participate in the assets of any subsidiary
upon the liquidation or reorganization of that subsidiary will be subject to the
prior claims of that subsidiary's creditors, including holders of its
indebtedness and trade creditors. Accordingly, the notes will be structurally
subordinated to all existing and future indebtedness and other obligations of
our subsidiaries, including trade payables.
WE HAVE HAD NET LOSSES IN RECENT PERIODS
We incurred a net loss of $48.9 million for 1998 and a net loss of
approximately $23.0 million for the quarter ended March 31, 1999. The net loss
for 1998 included (i) an extraordinary charge of $45.3 million (after tax)
relating to retirements of indebtedness and (ii) one-time restructuring and
other non-recurring charges of $20.2 million (after tax). In 1998 and the first
quarter of 1999, we had losses before income taxes of $23.2 million and $4.5
million, respectively in our Car Sales segment. We are evaluating various
alternatives relating to Budget Car Sales to restore its profitability,
including franchising stores, closing stores, working with a strategic partner
to manage stores and other measures. We cannot assure you that our losses will
not continue in the future.
OUR BUSINESS IS HIGHLY SEASONAL
Our business is highly seasonal, particularly the leisure travel and
consumer truck rental segments, and our results of operations and cash flows
fluctuate significantly from quarter to quarter. Historically, revenues have
been stronger in the third quarter due to the overall increase in business and
leisure travel during the peak summer travel months and the increase in moving
activity during this period. The first quarter is generally weakest, when there
is limited leisure travel and a greater potential for adverse weather
conditions. The third quarter accounted for 37.2% of total revenue and 56.4% of
operating income for 1997 and 32.7% of total revenue and 76.1% of operating
income for 1998. Any occurrence that disrupts travel patterns during the summer,
or any adverse competitive conditions during this period, may materially
adversely impact our annual operating performance.
Our business practice is to increase the size of our vehicle fleet and
workforce during the spring and summer months to accommodate increased activity
during these periods and to decrease our fleet and workforce in the fall and
winter months. However, many of our operating expenses (such as rent, insurance
and administrative personnel) are fixed and cannot be reduced during the fall
and winter months when there is decreased rental demand. If we are unable to
manage successfully the size of our vehicle fleet and workforce during periods
of decreased business activity, our annual operating performance may be
materially adversely affected.
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<PAGE> 14
OUR BUSINESS IS HIGHLY COMPETITIVE
There is intense competition in the vehicle rental industry particularly
with respect to price and service. We cannot assure you that we will be able to
compete successfully with either existing or new competitors. In any geographic
market, we may encounter competition from national, regional and local vehicle
rental companies. Our main competitors in the car rental market are Alamo, Avis,
Enterprise, Hertz and National. In our Truck Rental business, we face
competition primarily from Penske and U-Haul. Many of our competitors have
larger rental volumes, greater financial resources and a more stable customer
base than we have.
In the past, we have had to lower our rental prices in response to
industry-wide price cutting and have been unable to unilaterally raise our
prices. Moreover, when the car rental industry has experienced vehicle
oversupply competitive pressure has intensified.
The retail car sales industry is also characterized by intense competition,
consisting primarily of local new car dealerships selling new and late model
used cars. In addition to local dealerships, we may face competition from
retailers such as CarMax and AutoNation. These retailers compete on the basis of
large inventory size, no-haggle pricing and after-sale service. We cannot assure
you that we will be able to compete effectively in the retail care sales
industry.
WE HAVE NOT COMPLETED THE INTEGRATION OF OUR RECENT ACQUISITIONS
Our recent growth has been largely attributable to two major
acquisitions -- the BRAC acquisition in April 1997 and the Ryder TRS acquisition
in June 1998. We have devoted significant resources to the combination and
integration of our previously existing operations with BRAC and our Budget Truck
Rental business with Ryder TRS, and these efforts are ongoing. Completing the
integration of these acquisitions with our other businesses and achieving the
anticipated levels of cost savings involves a number of risks that could affect
our operating results. These risks include:
- the difficulty of managing a significantly larger organization;
- the diversion of management's attention from other business issues;
- the difficulty of integrating different distribution and marketing
systems, which include independent dealers, franchisees and
corporate-owned operations;
- the risk that the financial and accounting systems utilized by the
acquired businesses may not be efficiently integrated into our own
systems;
- the difficulty of attracting and retaining qualified personnel to manage
the combined business; and
- dealing with potential liabilities associated with the acquired
businesses, which liabilities may not have been disclosed and may exceed
the amount of indemnification available from the sellers.
Integration of these acquisitions has required significant investments to
build management and infrastructure to support our combined business operations.
We cannot assure you that we will be able to fully realize the benefits that we
anticipated from any acquired operations or to manage effectively the combined
business. An inability to do so could have a significant negative effect on our
financial condition and results of operations.
WE MAY BE OBLIGATED TO DELIVER A MAKE-WHOLE PAYMENT
In connection with the Ryder TRS acquisition, we issued 3,455,206 shares of
Class A common stock, paid $125.0 million in cash, issued warrants to purchase
Class A common stock with a value of up to approximately $19 million and are
obligated to deliver a make-whole payment (with respect to the shares of Class A
common stock issued in the acquisition) to the extent, if any, that the Class A
common stock trades below approximately $33 per share over two 30-day
measurement periods ending, respectively, on June 19, 1999 and February 19,
2000. This make-whole payment may be made in cash and/or stock, at our option.
This payment would, if made in cash, divert cash from other business purposes.
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<PAGE> 15
WE ARE DEPENDENT ON THIRD PARTIES FOR FINANCING
We depend on third-party financing to fund our purchases of fleet vehicles.
Accordingly, the availability of financing on favorable terms is critical to our
business. We cannot assure you that we will be able to obtain financing on
favorable terms, if at all. A majority of our debt is incurred in connection
with manufacturers' vehicle repurchase programs. As a result, significant
changes in the credit programs of the vehicle manufacturers, particularly Ford
Motor Company, could significantly affect our ability to obtain this financing
on favorable terms. In addition, certain events, such as significant increases
in the damage to vehicles, could reduce the value of the collateral securing our
vehicle financing facilities and cause the acceleration of the repayment of such
debt. Our inability to obtain vehicle financing on favorable terms would have a
material adverse effect on our financial condition and operating results. We
cannot assure you that the sources of financing used in the past will remain or
that alternative financing will become available on terms acceptable to us.
WE ARE DEPENDENT ON A PRINCIPAL SUPPLIER
Ford Motor Company has been and continues to be our principal supplier of
vehicles. Under the terms of our supply agreement with Ford, we have agreed that
in the United States, Canada, and other countries outside the European Union our
leases and purchases of Ford vehicles will represent at least 70% of the total
new vehicle acquisitions by us, with a minimum purchase requirement of at least
80,000 vehicles in the United States in each model year. Shifting significant
portions of our fleet purchases to other manufacturers would require significant
advance notice and operational changes. Also, there can be no assurance that
vehicles would be available from other suppliers on competitive terms, if at
all. As a result, our financial condition and operating results could be
materially adversely affected if Ford is unable to supply our vehicles or if
there is any significant decline in the quality and customer satisfaction with
Ford vehicles.
CHANGES IN MANUFACTURERS' REPURCHASE PROGRAMS MAY AFFECT OUR BUSINESS
Our ability to resell our vehicles at a favorable price and fix our
depreciation expense in advance is dependent upon the terms of manufacturers'
repurchase programs. As of December 31, 1998, 73% of our vehicle fleet was
covered by these programs. Our ability to sell vehicles under manufacturers'
repurchase programs limits the risk of decline in residual value at the time of
disposition and enables us to fix a substantial portion of our depreciation
expense in advance. Vehicle depreciation is the largest expense in our vehicle
rental operations. In the past, automobile manufacturers have changed the terms
of these programs by, among other things, reducing the number of vehicles that
can be sold under their repurchase programs, reducing related incentives,
increasing guaranteed depreciation and reducing the mileage allowed on program
vehicles. We could be adversely affected if our vehicle suppliers make these or
other adverse changes in their repurchase programs.
WE MAY BE ADVERSELY IMPACTED BY LITIGATION WITH OUR FORMER GERMAN FRANCHISEE
In October 1998, we discontinued providing services to our German
franchisee (such as reservations and credit card processing services) after
having previously terminated the related franchise agreements for alleged
contract violations. On April 15, 1999, the Munich Regional Court of Appeal held
that we had validly terminated our license agreement with the former franchisee
effective as of May 1997. The possibility remains, however, that a higher court
in Germany could reverse the Appeal court's decision. As a result of this
dispute, we have experienced an adverse effect on our business in, and
originating from, Germany. We intend to replace the current franchisee with new
franchisees and/or corporate-owned locations. However, there is no assurance
that such replacement will be commercially successful.
OUR OPERATIONS AND FINANCIAL PERFORMANCE ARE AFFECTED BY VARIOUS TYPES OF
REGULATIONS
We are subject to various foreign, federal, state and local laws and
regulations that affect the conduct of our operations. These laws and
regulations cover matters such as the sale of loss damage waivers, vicarious
liability of vehicle owners, consumer protection, advertising, used vehicle
sales, the taxing and licensing of
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<PAGE> 16
vehicles, franchising operations and sales, and environmental compliance and
clean-up, particularly with regard to our substantial on-site use and storage of
petroleum products. We cannot assure you that compliance with these laws and
regulations or the adoption of modified or additional laws and regulations will
not require large expenditures by us or otherwise have a significant effect on
our financial condition or results of operations.
OUR INTERNATIONAL OPERATIONS MAY BE SUBJECT TO ADDITIONAL RISKS
Our international operations are subject to 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. We cannot assure you
that these factors will not have a significant effect on our financial condition
or results of operations.
OUR RECENT INVESTMENTS AND COST-CUTTING INITIATIVES MAY NOT BE SUCCESSFUL
During 1998, we expended significant capital resources on several
initiatives designed to increase our revenue and reduce our costs, and these
initiatives will continue during 1999. We expect to realize certain cost savings
and other operating efficiencies during 1999 as a result of these and other
initiatives that will be implemented in 1999. Major areas in which we will seek
to reduce our operating expenses, as well as the major assumptions we have made
in estimating our cost savings include:
- reductions in administrative, personnel and overhead expenses;
- improvements in operations and consolidations of our reservations
centers;
- improvements in our Car Rental field operations to increase vehicle
utilization;
- improvements in vehicle maintenance procedures;
- increased efficiencies in non-vehicle purchasing; and
- reduction of vehicle carrying costs through renegotiation of
manufacturers' vehicle repurchase agreements.
Our ability to achieve the cost savings mentioned above is inherently
uncertain. We may not be able to successfully implement these initiatives; cost
increases in other areas may offset the effect of these measures; implementation
of these measures may initially lead to additional costs; and events beyond our
control may cause us to otherwise fail to succeed in our cost cutting plans. In
addition, it is always possible that the implementation of our cost cutting
initiatives could adversely affect our ability to generate revenue. We cannot
assure you that we will be successful at growing our business or realizing the
cost savings that these initiatives were intended to achieve.
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY THE POTENTIAL FAILURE OF COMPUTER
SYSTEMS TO RECOGNIZE THE YEAR 2000
We are dependent on business systems that may be affected by Year 2000
problems. The Year 2000 issue exists because many computer systems and
applications and non-computer systems that utilize computer technology currently
use two-digit date fields to designate a year. As the Year 2000 approaches,
certain date sensitive systems will recognize the Year 2000 as the Year 1900 or
may not recognize the date at all. This inability to properly treat or recognize
the Year 2000 may cause certain systems to process critical information
incorrectly, including our reservations and rental processing systems. A failure
in these systems could cause significant disruption in customer service levels
and therefore materially impact our financial condition and results of
operations. In addition, if we incur costs of upgrading these systems to be Year
2000 compliant that are significantly in excess of expectations, our operating
results will also be adversely affected.
We have assessed and continue to assess the impact of the Year 2000 on our
reporting systems and operations. We estimate that approximately $4 million will
be spent in 1999 specifically for Year 2000 modifications.
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<PAGE> 17
We are also assessing the impact of the Year 2000 issue on the ability of
our significant suppliers and vendors to also maintain adequate service levels.
Finally, we are developing contingency plans which are intended to allow us to
continue operating in the event of a year 2000 failure. The contingency plans
will include performing certain processes manually, repairing affected systems
and changing suppliers and vendors as necessary. We cannot assure you that we or
the third party suppliers on whom we rely will be successful in addressing Year
2000 problems in a timely manner, if at all, or that our contingency plan will
be successful in avoiding the disruption of service.
OUR FOUNDERS HAVE SUBSTANTIAL STOCKHOLDER VOTING POWER
A large portion of the voting power of our common stock is concentrated in
the hands of three individuals, Sanford Miller, John P. Kennedy and Jeffrey D.
Congdon. These individuals own all outstanding shares of Class B common stock.
Our Class B common stock entitles its holders to ten votes per share, while our
Class A common stock entitles holders to one vote per share. The Class B common
stock beneficially owned by Messrs. Miller, Kennedy and Congdon, together with
the Class A common stock beneficially owned by these individuals, represents
approximately 40% of the combined voting power of both classes of common stock.
As a result, these three individuals are able to exert substantial influence
over the election of our Board of Directors along with other matters put to a
stockholder vote. This increases the probability that members elected by them
will continue to direct our business, policies, and management.
WE MAY NOT BE ABLE TO PURCHASE NOTES UPON A CHANGE OF CONTROL
If there is a change of control under the terms of the indenture governing
the notes, each holder of Notes may require us to purchase all or a portion of
its notes at a purchase price equal to 101% of the principal amount of the
notes, plus accrued interest. Our ability to purchase the notes upon a change of
control event will be limited by the terms of our other debt agreements. Upon a
change of control, we may be required to repay immediately the outstanding
principal, any accrued interest on and any other amounts owed by us under our
$550.0 million credit facility. We cannot assure you that we would be able to
repay amounts outstanding under our credit facility or obtain necessary consents
under such facility to purchase the notes. In order to purchase any outstanding
notes, we may have to refinance our outstanding indebtedness, which we may not
be able to do. In addition, even if we were able to refinance such indebtedness,
such financing may be on terms unfavorable to us. The term "change of control"
is defined in the "Description of the New Notes -- Certain Definitions" section
of this prospectus.
THERE IS CURRENTLY NO MARKET FOR THE NEW NOTES
The new notes are new securities for which there is currently no market. We
can give you no assurance as to the development or liquidity of any market for
the new notes. If a market for the new notes does develop, the new notes could
trade at prices that may be higher or lower than their principal amount
depending upon many factors. These factors would include:
- prevailing interest rates;
- our operating results; and
- the markets for similar securities.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of securities
similar to the new notes. If a market for the new notes does develop, such a
market may be subject to similar disruptions.
In addition, to the extent that old notes are surrendered and accepted in
the exchange offer, the trading market for unsurrendered and surrendered but
unaccepted old notes could be adversely affected due to the limited amount, or
"float," of the old notes that are expected to remain outstanding following the
exchange offer. Generally, a lower "float" of a security could result in less
demand to purchase such security and could, therefore, result in lower prices
for such security. For the same reason, to the extent that a large amount of old
notes is not surrendered or is surrendered and not accepted in the exchange
offer, the trading market for the
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<PAGE> 18
new notes could be adversely affected. See "Plan of Distribution" and "The
Exchange Offer" for further information regarding the distribution of the new
notes and the consequences of failure to participate in the exchange offer.
NO CASH PROCEEDS TO BUDGET GROUP FROM EXCHANGE OFFER
The exchange offer is intended to satisfy certain of our obligations under
our registration rights agreement with the initial purchasers of the old notes.
Budget Group will not receive any proceeds from the issuance of the new notes,
and we have agreed to pay for the expenses of the exchange offer. In
consideration for issuing the new notes as contemplated in this prospectus, we
will receive, in exchange, old notes in like principal amount. The form and
terms of the new notes are identical in all material respects to the form and
terms of the old notes, except as otherwise described herein under "The Exchange
Offer -- Terms of the Exchange Offer." The old notes surrendered in exchange for
the new notes will be retired and cancelled and cannot be reissued. Accordingly,
issuance of the new notes will not result in any increase in our outstanding
debt.
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<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of Budget Group as of
December 31, 1998 and as adjusted to give effect the issuance of the old notes
and the application of the net proceeds therefrom.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN MILLIONS)
<S> <C> <C>
Restricted Cash............................................. $ 421.5 $ 421.5
Total Cash.................................................. $ 557.7 $ 557.7
VEHICLE DEBT:
Asset-Backed MTN Notes.................................... $2,381.6 $1,993.6
Commercial Paper Facility(2).............................. 840.5 840.5
Other Budget Fleet Obligations(3)......................... 286.8 286.8
-------- --------
Total Vehicle Debt................................ $3,508.9 $3,120.9
NON-VEHICLE DEBT:
9 1/8% Senior Notes Due 2006.............................. -- $ 400.0
6.85% Convertible Subordinated Notes Due 2007............. 45.0 45.0
Working Capital Facility.................................. 50.0 50.0
Other Non-Vehicle Debt.................................... 31.2 31.2
-------- --------
Total Non-Vehicle Debt............................ 126.2 526.2
-------- --------
Total Debt........................................ 3,635.1 3,647.1
-------- --------
Convertible Preferred Stock(4)............................ 300.0 300.0
Stockholders' Equity...................................... 650.6 650.6
-------- --------
Total Capitalization.............................. $4,585.7 $4,597.7
======== ========
</TABLE>
- ---------------
(1) The net proceeds from the offering of the old notes were approximately $388
million. These proceeds are being used to repay a portion of outstanding
indebtedness under two series of our medium term asset-backed notes ("MTNs")
that mature in 1999 -- our BFFC 1994-A MTNs and our TFFC 1994-1 MTNs. The
BFFC 1994-A MTNs bear interest at a rate of 6.15% and mature between April
1999 and September 1999. The TFFC 1994-1 MTNs bear interest at rates ranging
from 6.38% to 6.93% and mature between June 1999 and December 1999. On April
30, 1999, $522.4 million of indebtedness was outstanding under these series
of MTNs. Pending the repayment of these MTNs, the proceeds from the offering
of the old notes have been used to temporarily reduce amounts outstanding
under our commercial paper facilities. See the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" appearing in our Annual
Report on Form 10-K for the year ended December 31, 1998 which is
incorporated by reference into this prospectus for a more detailed
discussion of our indebtedness.
(2) Our commercial paper facility (the "CP Facility") bears interest at rates
ranging from 5.45% to 5.75%.
(3) Consists of $101.5 million of vehicle debt of our international operating
subsidiaries, $60.6 million of vehicle debt of Cruise America, $58.9 million
of vehicle debt of Car Sales, $56.8 million of borrowings under an interim
facility and $9.0 million of other vehicle debt facilities.
(4) Represents company obligated mandatorily redeemable preferred securities of
Budget Group Capital Trust, one of our subsidiaries.
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PRO FORMA FINANCIAL INFORMATION
The Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1998, is based on the audited historical consolidated financial
statements of Budget Group and the unaudited historical financial statements of
Ryder TRS for the five months ended May 31, 1998, incorporated herein by
reference, adjusted to give effect to (i) the Ryder TRS acquisition, (ii) the
recapitalization transactions described below that occurred concurrently with
the Ryder TRS acquisition and (iii) the offering of the old notes and the
application of the net proceeds therefrom as described under "Capitalization"
above, as if they had occurred on January 1, 1998.
As consideration for our purchase of Ryder TRS, Ryder TRS stockholders
received $125.0 million in cash, 3,455,206 shares of Class A common stock and
warrants to purchase shares of Class A common stock with a value of up to $19.0
million in return for 100% of the outstanding Ryder TRS stock. We also assumed
Ryder TRS fleet debt of $347.0 million, as well as public notes of $175.0
million in connection with the Ryder TRS Acquisition.
The recapitalization transactions consisted of the following: (i) the
amendment and restatement of our existing $300.0 million secured revolving
credit facility to increase the facility to $550.0 million; (ii) the conversion
of $80.0 million of Series A convertible subordinated notes into 4,305,814
shares of Class A common stock, including 319,768 shares issued in lieu of
interest payments which the holders of the Series A notes agreed to forego as a
result of the early conversion; (iii) the redemption of $165.0 million of our
guaranteed senior notes; (iv) the redemption of $175.0 million of Ryder TRS's
outstanding 10% senior subordinated notes due 2006; (v) the issuance of
6,000,000 convertible preferred shares of Budget Group Capital Trust and the
application of the net proceeds therefrom; (vi) the issuance of $1.1 billion of
MTNs (the "TFFC-98 Notes") and the application of the net proceeds therefrom;
and (vii) the write-off of loan costs related to converted or retired debt.
The Pro Forma Consolidated Statement of Operations does not purport to
represent what our results of operations would have been had the Ryder TRS
acquisition, the recapitalization transactions and the offering of the old notes
occurred on the dates indicated or to predict our results of operations in the
future. This statement is qualified in its entirety by, and should be read in
conjunction with, the historical financial statements of each of Budget Group
and Ryder TRS and the notes thereto which are incorporated by reference in this
prospectus.
The Pro Forma Consolidated Statement of Operations has been prepared using
the purchase method of accounting, whereby the total cost of the Ryder TRS
acquisition was allocated to the tangible and intangible assets acquired and
liabilities assumed based upon their respective fair values at the effective
date of the Ryder TRS acquisition. Such allocations have been based on studies
and valuations which have not yet been completed. Accordingly, the allocations
reflected in the Pro Forma Consolidated Statement of Operations are preliminary
and subject to revision. However, we do not expect material changes to the
allocation of the purchase price.
The Pro Forma Consolidated Statement of Operations gives effect only to the
adjustments set forth in the accompanying notes and does not reflect any other
benefits anticipated by management as a result of the Ryder TRS acquisition, the
recapitalization transactions, the offering of the old notes and the
implementation of our business strategy.
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
BUDGET GROUP
ADJUSTMENTS PRO FORMA FOR THE RYDER
FOR RYDER BUDGET GROUP TRS ADJUSTMENTS
HISTORICAL HISTORICAL TRS FOR THE ADJUSTMENTS FOR ACQUISITION AND FOR THE
BUDGET RYDER ACQUISITION RYDER TRS RECAPITALIZATION RECAPITALIZATION OFFERING OF
GROUP TRS TRANSACTION ACQUISITION TRANSACTIONS TRANSACTIONS OLD NOTES
---------- ---------- ----------- ------------ ---------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenue:
Vehicle rental
revenue........... $1,934,750 $196,762 $ -- $2,131,512 $ -- $2,131,512 $ --
Retail vehicle sales
revenue........... 583,252 -- -- 583,252 -- 583,252 --
Royalty fees and
other............. 98,197 -- -- 98,197 -- 98,197 --
---------- -------- ------- ---------- -------- ---------- --------
Total
operating
revenue..... 2,616,199 196,762 -- 2,812,961 -- 2,812,961 --
---------- -------- ------- ---------- -------- ---------- --------
Operating costs and
expenses:
Depreciation --
vehicle........... 500,210 29,857 -- 530,067 -- 530,067 --
Costs of retail
vehicle sales..... 524,907 -- -- 524,907 -- 524,907 --
Direct vehicle and
operating......... 815,748 73,180 -- 888,928 -- 888,928 --
Selling, general and
administrative.... 498,075 92,441 (354) 590,162 -- 590,162 --
Restructuring and
pooling........... 16,457 -- -- 16,457 -- 16,457 --
Amortization and
non-vehicle
depreciation...... 54,526 4,979 1,805 61,310 -- 61,310 --
---------- -------- ------- ---------- -------- ---------- --------
Total
operating
costs and
expenses.... 2,409,923 200,457 1,451 2,611,831 -- 2,611,831 --
---------- -------- ------- ---------- -------- ---------- --------
Operating income
(loss).............. 206,276 (3,695) (1,451) 201,130 -- 201,130 --
---------- -------- ------- ---------- -------- ---------- --------
Other expenses:
Vehicle interest
expense........... 188,165 14,450 -- 202,615 (3,508) 199,107 (25,114)
Non-vehicle interest
expense........... 13,422 -- -- 13,422 (10,212) 3,210 38,214
Interest income --
restricted cash... (11,348) -- -- (11,348) 1,805 (9,543) --
Debt extinguishment
costs............. 9,454 -- -- 9,454 (9,454) -- --
---------- -------- ------- ---------- -------- ---------- --------
199,693 14,450 -- 214,143 (21,369) 192,774 13,100
---------- -------- ------- ---------- -------- ---------- --------
Income (loss) before
taxes............... 6,583 (18,145) (1,451) (13,013) 21,369 8,356 (13,100)
Provision (benefit)
for income taxes.... 257 (6,854) 135 (6,462) 4,802 (1,660) (4,978)
Distribution on
convertible
preferred
securities.......... 9,957 -- -- 9,957 8,733 18,690 --
---------- -------- ------- ---------- -------- ---------- --------
Net income (loss).... $ (3,631) $(11,291) $(1,586) $ (16,508) $ 7,834 $ (8,674) $ (8,122)
========== ======== ======= ========== ======== ========== ========
EBITDA............... 761,012 792,507 792,507
Adjusted EBITDA...... 83,985 71,173 72,876
Ratio of Adjusted
EBITDA to non-
vehicle interest
expense............. 6.3 5.3 22.7
Weighted average
shares
outstanding --
basic............... 32,067 33,667 35,660
========== ========== ==========
Basic EPS............ $ (0.12) $ (0.49) $ (0.24)
========== ========== ==========
Weighted average
shares outstanding--
diluted............. 32,067 33,667 35,660
========== ========== ==========
Diluted EPS.......... $ (0.12) $ (0.49) $ (0.24)
========== ========== ==========
<CAPTION>
PRO FORMA
BUDGET GROUP
------------
<S> <C>
Operating revenue:
Vehicle rental
revenue........... $2,131,512
Retail vehicle sales
revenue........... 583,252
Royalty fees and
other............. 98,197
----------
Total
operating
revenue..... 2,812,961
----------
Operating costs and
expenses:
Depreciation -- vehi 530,067
Costs of retail
vehicle sales..... 524,907
Direct vehicle and
operating......... 888,928
Selling, general and
administrative.... 590,162
Restructuring and
pooling........... 16,457
Amortization and
non-vehicle
depreciation...... 61,310
----------
Total
operating
costs and
expenses.... 2,611,831
----------
Operating income
(loss).............. 201,130
----------
Other expenses:
Vehicle interest
expense........... 173,993
Non-vehicle interest
expense........... 41,424
Interest income --
restricted cash... (9,543)
Debt extinguishment
costs............. --
----------
205,874
----------
Income (loss) before
taxes............... (4,744)
Provision (benefit)
for income taxes.... (6,638)
Distribution on
convertible
preferred
securities.......... 18,690
----------
Net income (loss).... $ (16,796)
==========
EBITDA............... 792,507
Adjusted EBITDA...... 97,990
Ratio of Adjusted
EBITDA to non-
vehicle interest
expense............. 2.4
Weighted average
shares
outstanding --
basic............... 35,660
==========
Basic EPS............ $ (0.47)
==========
Weighted average
shares outstanding--
diluted............. 35,660
==========
Diluted EPS.......... $ (0.47)
==========
</TABLE>
18
<PAGE> 22
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
(a) Reflects the elimination of management fees incurred by Ryder under an
agreement terminated in connection with the Ryder TRS acquisition.
(b) Reflects the elimination of $2,734 of amortization of Ryder's existing
intangibles and records an increase in amortization of $4,539 on the net
intangibles established through purchase accounting adjustments.
(c) Reflects a tax provision attributable to the combined group on a pro
forma basis.
(d) Reflects the decrease in vehicle interest expense attributable to:
<TABLE>
<S> <C>
Elimination of interest on Ryder TRS's 10% senior
subordinated notes due 2006............................... $ 8,679
Interest savings on the CP Facility partially refinanced
through the issuance of the TFFC-98 Notes................. 18,539
Interest savings on Ryder TRS's commercial paper facility
refinanced through the issuance of the TFFC-98 Notes...... 7,617
Elimination of amortization of loan costs on retired debt... 1,606
-------
Decrease in vehicle interest expense...................... $36,441
=======
</TABLE>
(e) Reflects the increase in vehicle interest expense attributable to:
<TABLE>
<S> <C>
Interest expense related to the TFFC-98 Notes............... $31,590
Amortization of costs incurred in connection with the
TFFC-98 Notes and the increase in the secured revolving
credit facility........................................... 1,192
Amortization of costs incurred in connection with the
issuance of the convertible preferred securities of Budget
Group Capital Trust....................................... 151
-------
Increase in vehicle interest expense...................... $32,933
=======
</TABLE>
(f) Reflects the decrease in non-vehicle interest expense attributable to:
<TABLE>
<S> <C>
Elimination of interest on Series A notes due to
conversion................................................ $ 2,608
Elimination of interest on the guaranteed senior notes...... 7,355
Elimination of amortization of loan costs on retired debt... 249
-------
Decrease in non-vehicle interest expense.................. $10,212
=======
</TABLE>
(g) Reflects the reduction in interest income due to increased utilization
of existing medium term notes.
(h) Reflects the elimination of the debt extinguishment costs.
(i) Reflects the accrual of distributions on the convertible preferred
securities of Budget Group Capital Trust.
(j) Reflects the decrease in vehicle interest expense attributable to:
<TABLE>
<S> <C>
Interest expense related to the TFFC-94 Notes............... $ 6,933
Interest expense related to the BFFC-94A Notes.............. 18,181
-------
Decrease in vehicle interest expense...................... $25,114
=======
</TABLE>
19
<PAGE> 23
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 -- (CONTINUED)
(k) Reflects the increase in non-vehicle interest expense attributable to:
<TABLE>
<S> <C>
Interest expense related to the old notes................... $36,500
Amortization of costs incurred in connection with issuance
of the old notes.......................................... 1,714
-------
Increase in non-vehicle interest expense.................. $38,214
=======
</TABLE>
20
<PAGE> 24
THE COMPANY
Budget Group operates Budget Rent a Car, the world's third largest general
use car and truck rental system. We currently maintain more local market car
rental locations throughout the world than most of our major competitors and are
unique among major car rental companies in that we also rent trucks in most of
our major markets. Through our two truck rental companies, Ryder TRS and Budget
Truck Rental, we operate the nation's second and third largest consumer truck
rental companies. We also sell used cars in 27 markets nationwide through our 33
Budget Car Sales facilities. In 1998, we had revenue of $2.6 billion, EBITDA of
$761.0 million and Adjusted EBITDA of $84.0 million. On a pro forma basis and
adjusted for the offering of the old notes and certain non-recurring charges, we
had Adjusted EBITDA of $124.2 million. We define Adjusted EBITDA as EBITDA less
depreciation and interest incurred in connection with fleet vehicles financed
under fleet financing programs. Our business is organized into three principal
segments: Car Rental, Truck Rental and Car Sales.
Budget is one of only three vehicle rental systems that offer rental
vehicles throughout the world under a single brand name. We and our franchisees
operate Budget Rent a Car locations in over 120 countries. We own approximately
536 of the 970 Budget locations within the United States and 212 of the 2,170
Budget locations abroad. Our corporate-owned locations accounted for
approximately 80% of U.S. Budget Rent a Car revenue in 1998. In 1998, we
purchased 83,300 cars for our North American operations under a vehicle supply
agreement with Ford Motor Company, 90% of which were subject to repurchase
agreements that required Ford to repurchase the vehicles at guaranteed prices
after nine months in our rental fleet. Within our Car Rental segment, we also
provide rental vehicles to the insurance replacement market and operate commuter
van pooling services and airport parking facilities; our revenue from these
activities was $115.2 million in 1998. For 1998, our Car Rental segment had
revenue of $1.5 billion (54.3% of our 1998 pro forma revenue), EBITDA of $604.3
million and Adjusted EBITDA of $78.8 million.
Our combined Budget Truck Rental and Ryder TRS business is a leading
service provider in the long distance one-way market and the second largest
operator in the local market. We have 418 corporate-owned rental locations
nationwide, a network of approximately 3,730 dealer and franchised locations and
a system-wide fleet of approximately 49,000 trucks at December 31, 1998. Our
Truck Rental business also includes Cruise America, Inc., the largest
recreational vehicle rental and sales company in North America, which had
revenue of $92.7 million in 1998. Our Truck Rental segment had 1998 revenue of
$613.7 million, EBITDA of $203.0 million and Adjusted EBITDA of $55.8 million.
Pro forma for the Ryder TRS acquisition, our Truck Rental segment had 1998
revenue of $810.4 million (28.8% of our 1998 pro forma revenue), EBITDA of
$234.5 million and Adjusted EBITDA of $43.0 million.
We also operate Budget Car Sales, one of the leading independent retailers
of late model cars, sport utility vehicles and trucks in the United States. We
typically locate our used car stores in mid-sized suburban areas and maintain an
average inventory of approximately 100 vehicles per store. For 1998, our Car
Sales segment had revenue of $547.7 million (19.5% of our 1998 pro forma
revenue), EBITDA of $(17.2) million and Adjusted EBITDA of $(22.1) million.
Budget Group was incorporated in Delaware in 1992. Our principal executive
offices are located at 125 Basin Street, Suite 210, Daytona Beach, Florida
32114, and our telephone number at that address is (904) 238-7035.
OUR FIRST QUARTER 1999 RESULTS
On April 21, 1999, we reported a net loss for the first quarter of 1999 of
$23.0 million versus a loss of $3.4 million in the first quarter of the prior
year. Revenue increased 48.8% to $678.7 million from $456.0 million in the prior
year first quarter. Operating income for the quarter was $11.3 million compared
to $34.2 million in the prior year. Prior year first quarter excludes Ryder TRS
and other acquisitions of Budget licensees, insurance replacement businesses and
new car dealerships.
Revenue for the first quarter of 1999 for the Car Rental segment increased
14.4% to $387.6 million compared to $338.8 million in 1998. Car Rental operating
income was $24.2 million compared to $36.2
21
<PAGE> 25
million in the prior year first quarter. First quarter 1999 operating income
showed an approximate $22 million improvement over fourth quarter 1998. Budget
Rent a Car North America, which represents 75% of this segment, saw revenue
growth of 9.0% versus prior year first quarter (up 5.3% on a same-market basis).
On a same-market basis, daily dollar average at $39.29 was essentially flat due
to competitive pricing in certain leisure markets, notwithstanding, rental days
were up 6% for the quarter.
Revenue from our international Budget operations, driven primarily by
corporate operations, saw growth of 36.7%. On a same-store basis, revenue was up
25.5%. This increase resulted from stepped up worldwide sales and marketing
efforts and the recent acquisition of key Budget licensee operations in France
and the UK.
Revenue for the Truck Rental group reached $151.5 million in the first
quarter of 1999 versus $43.2 million in 1998, which excluded Ryder TRS. Budget
Truck Rental continued to see robust volume growth of 21.0% versus prior year.
Budget truck rental rates increased over 2% as it aligned its pricing with
Ryder. Ryder's revenue was down 6.5% versus prior year pro forma and was in line
with company expectations as the two truck rental businesses are being
integrated. For the quarter, the Truck Rental group had an operating loss of
$3.7 million compared to operating income of $2.5 million in the prior year
first quarter. The year-over-year decline in reported earnings is a result of
the acquisition of Ryder TRS which has seasonal earnings.
Revenue from the Car Sales group reached $160.1 million in the first
quarter of 1999 compared to $92.0 million in the prior year. Revenue includes
proceeds from the sale of units at retail and wholesale within the group. The
first quarter of 1999 saw operating losses of $4.5 million compared to a loss of
$1.0 million in first quarter 1998. Operating results for first quarter 1999
represent a $2.9 million improvement over fourth quarter 1998, excluding
non-recurring charges. Three unprofitable locations were closed during the first
quarter of 1999, with an additional two closed in April of 1999. Units sold
retail during the first quarter increased to 7,957 compared to 4,859 units
during the prior year first quarter.
22
<PAGE> 26
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We sold the old notes on April 13, 1999 to Credit Suisse First Boston
Corporation, Goldman Sachs & Co. and NationsBanc Montgomery Securities LLC
pursuant to a purchase agreement. These initial purchasers subsequently sold the
old notes to:
- "qualified institutional buyers" ("QIBs"), as defined in Rule 144A under
the Securities Act, in reliance on Rule 144A; and
- persons in offshore transactions in reliance on Regulation S under the
Securities Act.
As a condition to the initial sale of the old notes, Budget Group and the
initial purchasers entered into a registration rights agreement. Pursuant to the
registration rights agreement, we agreed to:
- file with the SEC by June 14, 1999 a registration statement under the
Securities Act with respect to the issuance of the new notes in an
exchange offer; and
- use our commercially reasonable efforts to cause the registration
statement to become effective under the Securities Act on or before
August 31, 1999; and
- issue and exchange the new notes for all old notes properly surrendered
and not withdrawn before the expiration of the exchange offer.
In the event that:
- applicable interpretations of the staff of the SEC do not permit us to
effect the exchange offer; or
- for any other reason we do not consummate the exchange offer by October
11, 1999; or
- an initial purchaser notifies us within 10 business days following
consummation of the exchange offer that old notes held by it are not
eligible to be exchanged for new notes in the exchange offer; or
- any holder notifies us within 10 business days following consummation of
the exchange offer that such holder is prohibited by law or SEC policy
from participating in the exchange offer; such holder may not resell the
new notes acquired by it in the exchange offer to the public without
delivering a prospectus and the prospectus contained in the registration
statement for the exchange offer is not appropriate or available for such
resales by such holder; or such holder is a broker-dealer and holds old
notes that are part of an unsold allotment from the original sale of the
old notes,
then, we will, at our cost,
- as promptly as practicable, file a shelf registration statement covering
resales of the old notes or the new notes, as the case may be;
- use our commercially reasonable efforts to cause the shelf registration
statement to be declared effective under the Securities Act; and
- keep the shelf registration statement effective until the earliest of (A)
the time when the notes covered by the shelf registration statement can
be sold pursuant to Rule 144 without any limitations under clauses (c),
(e), (f) and (h) of Rule 144, (B) two years from the effective date and
(C) the date on which all notes registered thereunder are disposed of in
accordance therewith.
We will pay additional cash interest on the applicable notes if:
- by October 11, 1999, the exchange offer is not consummated and, if
applicable, the shelf registration statement is not declared effective;
or
- after either the registration statement or the shelf registration
statement is declared effective, such registration statement thereafter
ceases to be effective or usable (subject to certain exceptions) (each
such event referred to in the preceding clauses, a "Registration
Default");
23
<PAGE> 27
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured.
Subject to certain exceptions, the rate of the additional interest will be
0.50% per annum for the first 90-day period immediately following the occurrence
of a Registration Default, and such rate will increase by an additional 0.50%
per annum with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum additional interest rate of 2.0% per
annum.
We will pay such additional interest on regular interest payment dates.
Such additional interest will be in addition to any other interest payable from
time to time with respect to the notes.
A copy of the registration rights agreement has been filed as an exhibit to
the registration statement which includes this prospectus. The registration
statement is intended to satisfy some of our obligations under the registration
rights agreement and the purchase agreement.
TERMS OF THE EXCHANGE OFFER
Based on the terms and conditions in this prospectus and in the letter of
transmittal, we will issue $1,000 principal amount of new notes in exchange for
each $1,000 principal amount of outstanding old notes properly surrendered
pursuant to the exchange offer and not withdrawn prior to the expiration date.
Old notes may be surrendered only in integral multiples of $1,000. The form and
terms of the new notes are the same as the form and terms of the old notes
except that
- the new notes will be registered for the exchange offer under the
Securities Act and, therefore, the new notes will not bear legends
restricting the transfer of the new notes and
- holders of the new notes will not be entitled to any of the registration
rights of holders of old notes under the registration rights agreement,
which will terminate upon the consummation of the exchange offer.
The new notes will evidence the same indebtedness as the old notes, which
they replace, and will be issued under, and be entitled to the benefits of, the
same indenture, which authorized the issuance of the old notes. As a result,
both series of notes will be treated as a single class of debt securities under
the indenture.
As of the date of this prospectus, $400 million in aggregate principal
amount of the old notes is outstanding. All of it is registered in the name of
Cede & Co., as nominee for The Depository Trust Company ("DTC"). Solely for
reasons of administration, we have fixed the close of business on
as the record date for the exchange offer for purposes of determining
the persons to whom this prospectus and the letter of transmittal will be mailed
initially. There will be no fixed record date for determining holders of the old
notes entitled to participate in this exchange offer.
In connection with the exchange offer, neither the General Corporation Law
of the State of Delaware nor the indenture governing the notes gives you any
appraisal or dissenters' rights nor any other right to seek monetary damages in
court. We intend to conduct the exchange offer in accordance with the provisions
of the registration rights agreement and the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
related SEC rules and regulations.
For all relevant purposes we will be regarded as having accepted properly
surrendered old notes if and when we give oral or written notice of our
acceptance to the exchange agent. The exchange agent will act as agent for the
surrendering holders of old notes for the purposes of receiving the new notes
from us.
If you surrender old notes in the exchange offer, you will not be required
to pay brokerage commissions or fees. In addition, subject to the instructions
in the letter of transmittal, you will not have to pay transfer taxes for the
exchange of old notes. We will pay all charges and expenses, other than certain
applicable taxes described under "-- Fees and Expenses."
24
<PAGE> 28
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The "expiration date" is 5:00 p.m., New York City time on
, unless we extend the exchange offer, in which case the expiration date is
the latest date and time to which we extend the exchange offer.
In order to extend the exchange offer, we will
- notify the exchange agent of any extension by oral or written notice and
- issue a press release or other public announcement which will include
disclosure of the approximate number of old notes deposited; such press
release or announcement would be issued prior to 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration
date.
We reserve the right
- to delay accepting any old notes,
- to extend the exchange offer or
- if, in the opinion of counsel for us, the consummation of the exchange
offer would violate any law or interpretation of the staff of the SEC, to
terminate or amend the exchange offer by giving oral or written notice to
the exchange agent.
Any delay in acceptance, extension, termination or amendment will be
followed as soon as practicable by a press release or other public announcement.
If the exchange offer is amended in a manner determined by us to constitute
a material change, we will promptly disclose that amendment by means of a
prospectus supplement that will be distributed to the holders. We will also
extend the exchange offer for a period of five to ten business days, depending
upon the significance of the amendment and the manner of disclosure to the
holders, if the exchange offer would otherwise expire during the five to ten
business day period.
We will have no obligation to publish, advertise or otherwise communicate
any public announcement of any delay, extension, amendment or termination that
we may choose to make, other than by making a timely release to an appropriate
news agency.
INTEREST ON THE EXCHANGE NOTES
The new notes will accrue cash interest on the same terms as the old
notes -- at the rate of 9 1/8% per year from April 13, 1999, payable
semi-annually in arrears on April 1 and October 1 of each year, commencing
October 1, 1999.
RESALE OF THE NEW NOTES
We believe that you will be allowed to resell the new notes to the public
without registration under the Securities Act, and without delivering a
prospectus that satisfies the requirements of Section 10 of the Securities Act,
if you can make the three representations set forth above under "Summary -- The
Exchange Offer -- Procedures for participating in the exchange offer" on page
. However, if you intend to participate in a distribution of the new notes,
you must comply with the registration requirements of the Securities Act and
deliver a prospectus, unless an exemption from registration is otherwise
available. In addition, you will be subject to additional restrictions if you
are an "affiliate" of Budget Group as defined under Rule 405 of the Securities
Act. You will be required to represent to Budget Group in the letter of
transmittal accompanying this prospectus that you meet these conditions
exempting you from the registration requirements.
We base our view on interpretations by the staff of the SEC in no-action
letters issued to other issuers in exchange offers like ours. However, we have
not asked the SEC to consider this particular exchange offer in
25
<PAGE> 29
the context of a no-action letter. Therefore, you cannot be certain that the SEC
will treat it in the same way it has treated other exchange offers in the past.
A broker-dealer that has bought old notes for market-making or other
trading activities has to deliver a prospectus in order to resell any new notes
it has received for its own account in the exchange. This prospectus may be used
by a broker-dealer to resell any of its exchange notes. We have agreed in the
registration rights agreement to send this prospectus to any broker-dealer that
requests copies in the letter of transmittal for a period of up to 180 days
after the registration statement relating to this exchange offer is declared
effective. See "Plan of Distribution" for more information regarding
broker-dealers.
PROCEDURES FOR TENDERING
If you wish to surrender old notes you must
- complete, sign and date the letter of transmittal, or a facsimile
thereof,
- have the signatures guaranteed if required by the letter of transmittal
and
- mail or deliver the letter of transmittal or the facsimile to the
exchange agent at the address appearing below under "-- Exchange Agent"
for receipt prior to the expiration date.
In addition, either
- certificates for such old notes must be received by the exchange agent
along with the letter of transmittal,
- a timely confirmation of a book-entry transfer of the old notes into the
exchange agent's account at DTC, pursuant to the procedure for book-entry
transfer described below, must be received by the exchange agent prior to
the expiration date or
- you must comply with the procedures described below under "-- Guaranteed
Delivery Procedures."
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT
TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. DO NOT
SEND THE LETTER OF TRANSMITTAL OR ANY OLD NOTES TO US. YOU MAY REQUEST THAT YOUR
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE PERFORM THESE
TRANSACTIONS FOR YOU.
If you do not withdraw your surrender of old notes prior to the expiration
date, you will be regarded as agreeing to surrender the new notes in accordance
with the terms and conditions in this offer.
If you are a beneficial owner of the old notes and your old notes are held
through a broker, dealer, commercial bank, trust company or other nominee and
you want to surrender your old notes, you should contact your intermediary
promptly and instruct it to surrender the old notes on your behalf.
Signatures on a letter of transmittal or a notice of withdrawal described
below under "-- Withdrawal of Tendering," as the case may be, must generally be
guaranteed by an eligible institution. You can submit a letter of transmittal
without guarantee if you surrender your old notes (a) as a registered holder and
you have not completed the box titled "Special Delivery Instruction" on the
letter of transmittal or (b) for the account of an eligible institution. In the
event that signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be made by
- a member firm of a registered national securities exchange or of the
NASD,
- a commercial bank or trust company having an office or correspondent in
the United States or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act which is a member of one of the recognized
signature guarantee programs identified in the letter of transmittal.
26
<PAGE> 30
If you sign the letter of transmittal even though you are not the
registered holder of any old notes listed in the letter of transmittal, your
notes must be endorsed or accompanied by a properly completed bond power, signed
by the registered holder exactly as the registered holder's name appears on the
old notes.
In connection with any surrender of old notes in definitive certificated
form, if you sign the letter of transmittal or any old notes or bond powers in
your capacity as trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or if you are otherwise acting in a fiduciary or
representative capacity, you should indicate this when signing. Unless waived by
us, you must submit with the letter of transmittal evidence satisfactory to us
of your authority to act in the particular capacity.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's automated tender offer
program to surrender old notes.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of surrendered old notes will be determined
by us in our sole discretion, which will be final and binding.
We reserve the absolute right to reject any and all old notes not properly
surrendered. Nor will we accept any old notes if our acceptance of them would,
in the opinion of our counsel, be unlawful. We also reserve the right to waive
any defects, irregularities or conditions of surrender as to particular old
notes.
Unless waived, you must cure any defects or irregularities in connection
with surrenders of old notes within the time period we will determine. Although
we intend to notify holders of defects or irregularities in connection with
surrenders of old notes, neither we, the exchange agent nor anyone else will be
liable for failure to give such notice. Surrenders of old notes will not be
deemed to have been made until any defects or irregularities have been cured or
waived.
We do not currently intend to acquire any old notes that are not
surrendered in the exchange offer or to file a registration statement to permit
resales of any old notes that are not surrendered pursuant to the exchange
offer. We reserve the right in our sole discretion to purchase or make offers
for any old notes that remain outstanding after the expiration date. To the
extent permitted by law, we also reserve the right to purchase old notes in the
open market, in privately negotiated transactions or otherwise. The terms of any
future purchases or offers could differ from the terms of the exchange offer.
By surrendering old notes pursuant to the exchange offer, you will be
telling us that, among other things,
- you have full power and authority to surrender, sell, assign and transfer
the old notes surrendered,
- we will acquire good title to the old notes being surrendered, free and
clear of all security interests, liens, restrictions, charges,
encumbrances, conditional sale agreements or other obligations relating
to their sale or transfer, and not subject to any adverse claim when the
old notes are accepted by us,
- you are acquiring the new notes in the ordinary course of your business,
- you have no arrangement or understanding with any person to participate
in the distribution of the new notes,
- you acknowledge and agree that if you are a broker-dealer registered
under the Exchange Act or you are participating in the exchange offer for
the purposes of distributing the new notes, you must comply with the
registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale of the new notes. You cannot rely
on the position of the SEC's staff in their no-action letters,
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- you understand that a secondary resale transaction described above and
any resales of new notes obtained by you in exchange for old notes
acquired by you directly from us should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or Item 508 of Regulation S-K of the SEC and
- you are not an "affiliate," as defined in Rule 405 under the Securities
Act, of Budget Group.
If you are a broker-dealer and you will receive new notes for your own
account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, you will be required to
acknowledge in the letter of transmittal that you will deliver a prospectus in
connection with any resale of such new notes.
RETURN OF OLD NOTES
If any surrendered old notes are not accepted for any reason described here
or if old notes are withdrawn or are submitted for a greater principal amount
than you desire to exchange, those old notes will be returned without expense to
(a) the person who surrendered them or (b) in the case of old notes surrendered
by book-entry transfer into the exchange agent's account at DTC. The old notes
will be credited to an account maintained with DTC as promptly as practicable.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer within two business
days after the date of this prospectus. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of old notes by
causing DTC to transfer the old notes into the exchange agent's account at DTC
in accordance with DTC's procedures for transfer. However, although delivery of
old notes may be effected through book-entry transfer at DTC, you have to
transmit the letter of transmittal with any required signature guarantees and
any other required documents to the exchange agent at the address appearing
below under "-- Exchange Agent" for its receipt on or prior to the expiration
date or pursuant to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to surrender your old notes and (a) your old notes are not
readily available so you can meet the expiration date deadline or (b) you cannot
deliver your old notes, the letter of transmittal or any other required
documents to the exchange agent prior to the expiration date, you may still
participate in the exchange offer if
- the surrender is made through an eligible institution,
- prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed notice of
guaranteed delivery substantially in the form provided by us, by
facsimile transmission, mail or hand delivery, containing the name and
address of the holder, the certificate number(s) of the old notes, if
applicable, and the principal amount of old notes surrendered. The notice
of guaranteed delivery must also state that the surrender is being made
thereby and guarantee that, within five New York Stock Exchange trading
days after the expiration date, the letter of transmittal, together with
the certificate(s) representing the old notes in proper form for transfer
or a book-entry confirmation, and any other required documents, will be
deposited by the eligible institution with the exchange agent and
- the properly executed letter of transmittal, as well as the
certificate(s) representing all surrendered old notes in proper form for
transfer or a book-entry confirmation, and all other documents required
by the letter of transmittal are received by the exchange agent within
five New York Stock Exchange trading days after the expiration date.
The exchange agent will send you a notice of guaranteed delivery upon your
request if you wish to surrender your old notes according to the guaranteed
delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
surrender of old notes at any time prior to the expiration date.
To withdraw a surrender of old notes in the exchange offer, the exchange
agent must receive a written or facsimile transmission notice of withdrawal at
its address set forth herein prior to the expiration date. Any notice of
withdrawal must
- specify the name of the person having deposited the old notes to be
withdrawn,
- identify the old notes to be withdrawn, including the certificate number
or numbers, if applicable, and principal amount of the old notes and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old notes were tendered.
All questions as to the validity, form, eligibility and time of receipt of
notices will be determined by us, in our sole discretion, and our determination
shall be final and binding on all parties. Any old notes so withdrawn will be
deemed not to have been validly surrendered for purposes of the exchange offer,
and no new notes will be issued unless the old notes so withdrawn are validly
retendered. Properly withdrawn old notes may be resurrendered by following one
of the procedures described above under "-- Procedures for Tendering" at any
time prior to the expiration date.
EXCHANGE AGENT
The Bank of New York is the exchange agent for the exchange offer. You
should direct any questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal and requests for
notice of guaranteed delivery to the exchange agent, addressed as follows:
By mail:
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Reorganization Section
Attention: [ ]
To confirm by telephone of for information call:
(212) 815- [ ]
Facsimile Transmissions (eligible institutions only):
(212) 815-[ ]
By Hand or Overnight Delivery:
The Bank of New York
101 Barclay Street, 7E
Corporate Trust Services Window
Ground Level
Reorganization Section
Attention: [ ]
The Bank of New York also serves as trustee under the indenture.
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FEES AND EXPENSES
We will pay for the expenses of this exchange offer. The principal
solicitation is being made by mail. However, additional solicitation may be made
by telegraph, facsimile transmission, e-mail, telephone or in person by our
officers and regular employees.
We have not retained a dealer-manager for the exchange offer, and will not
make any payments to brokers, dealers or others soliciting acceptances of the
exchange offer. We will, however, pay the exchange agent reasonable and
customary fees and out-of-pocket expenses.
We will pay any transfer taxes applicable to the exchange of old notes. If,
however, a transfer tax is imposed for any reason other than the exchange, then
the amount of any transfer taxes will be payable by the person surrendering the
notes. If you do not submit satisfactory evidence of payment of taxes or of an
exemption with the letter of transmittal, the amount of those transfer taxes
will be billed directly to you.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. You are urged to consult
your financial and tax advisors in making your decisions on what action to take.
Old notes that are not exchanged will remain "restricted securities" within
the meaning of Rule 144(a)(3)(iv) of the Securities Act. Accordingly, they may
not be offered, sold, pledged or otherwise transferred except
- to a person who the seller reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities
Act purchasing for its own account or for the account of a qualified
institutional buyer in a transaction meeting the requirements of Rule
144A,
- in an offshore transaction complying with Rule 903 or Rule 904 of
Regulation S under the Securities Act,
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144, if available,
- pursuant to an effective registration statement under the Securities Act
or
- pursuant to another available exemption from the registration
requirements of the Securities Act, and in accordance with all other
applicable securities laws.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the remaining term of the notes.
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DESCRIPTION OF CREDIT FACILITY
The following is only a summary of certain provisions of our $550.0 million
credit facility with certain financial institutions as lenders, Credit Suisse
First Boston, New York Branch ("CSFB"), as the Co-Syndication Agent and
Administrative Agent, and NationsBanc Montgomery Securities LLC, as the Co-
Syndication Agent and Documentation Agent (the "Credit Facility"), and does not
purport to be complete. You may request copies of these agreements at our
address set forth under "References to Additional Information."
In connection with the acquisition of Ryder TRS on June 19, 1998, we
entered into the Credit Facility. Under the Credit Facility, which expires in
2003, we may borrow up to $550.0 million. The proceeds from this facility may be
used for our general corporate purposes and for the general corporate purposes
of our subsidiaries. In addition, Letters of Credit are available which may be
used by us or our subsidiaries as credit or liquidity enhancement for commercial
paper or similar fleet financing programs or for financing for general corporate
purposes.
Our obligations under the Credit Facility are secured primarily by pledged
shares of our capital stock and the capital stock of our material subsidiaries,
cash, accounts receivable and vehicles and the Credit Facility requires
quarterly interest payments on the outstanding balance.
Borrowings under the Credit Facility bear an interest rate equal to LIBOR
plus 1.75% or prime plus 0.75%. As of December 31, 1998 our interest rate was
8.50%.
The principal amount of any borrowings is payable on June 19, 2003. If any
payments are made after the applicable payment date, the interest rate on those
amounts will increase by 2%. At any time prior to maturity we may prepay any
amount outstanding as long as the aggregate amount prepaid is a minimum of $3.0
million or $5.0 million, depending on the applicable interest rate. In addition,
if we reduce the total amount of funds available under the Credit Facility, we
will be required to immediately repay the amount outstanding that exceeds the
new maximum amount available under the Credit Facility.
If a default occurs for any reason other than for bankruptcy, all amounts
outstanding could be declared immediately due and payable and all Letter of
Credit commitments can be terminated. Defaults under the Credit Facility
include, but are not limited to (i) nonpayment of principal and interest, (ii)
breach of warranties, (iii) non-performance of covenants and obligations, (iv)
defaults on other indebtedness in excess of $15.0 million, (v) judgments
rendered against us in excess of $15.0 million, (vi) a change of control, (vii)
insolvency or (viii) impairment of security.
The Credit Facility contains certain covenants that require us to maintain
certain financial ratios and minimum net worth requirements including (i) a net
worth of at least $538.0 million plus 50% of our net income for each fiscal year
plus 50% of the net proceeds from certain sales of capital stock, (ii) a
leverage ratio ranging from 4.00 to 1.00 in 1999 to 2.75 to 1.00 in the fourth
quarter of 2001 and thereafter, and (iii) an interest coverage ratio ranging
from 3.75 to 1.00 in 1999 to 4.00 to 1.00 for the fourth quarter of 1999 and
thereafter. In addition, the covenants impose certain limitations on our ability
to (A) incur additional debt unless the additional debt falls within certain
prescribed categories, (B) incur liens on our property, revenues or assets
except liens for permitted debt, (C) make certain investments in other entities,
(D) make capital expenditures above certain prescribed dollar amounts for each
year, (E) liquidate, dissolve, consolidate with, or merge with or into any other
entity not constituting an investment and (F) sell any of our assets other than
in the ordinary course of business. We are also limited in our ability to pay
cash dividends and are required to have our material subsidiaries guarantee our
obligations under the Credit Facility.
In connection with the offering of the old notes, we amended the Credit
Facility to, among other things: (i) permit the offering; (ii) permit capital
expenditures of up to $85.0 million in 1999; (iii) permit the divestiture of
non-core assets; (iv) permit up to $100 million of working capital and
acquisition facilities for our European operations; (v) permit the payment of up
to $35 million for "make-whole" payments to the stockholders of Ryder TRS; (vi)
permit stock repurchases under certain circumstances; (vii) increase the
leverage ratio; and (viii) decrease the third quarter 1999 interest coverage
ratio.
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DESCRIPTION OF THE NEW NOTES
The form and terms of the new notes and the old notes are identical in all
material respects, except that transfer restrictions and registration rights
applicable to the old notes do not apply to the new notes.
The old notes are, and the new notes will be, issued under an indenture,
dated as of April 13, 1999, between Budget Group and The Bank of New York, as
trustee. References to the notes include the old notes and the new notes unless
the context otherwise requires. The terms of the notes include those stated in
the indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939 (sometimes referred to herein as the "TIA"). This
description of the notes contains definitions of terms, including those defined
under the subheading "-- Certain Definitions," that are used in the indenture
and are necessary to understand this section of the prospectus. In this section
the word "Company" refers only to Budget Group, Inc. and not to any of its
subsidiaries.
The following description is only a summary of the material provisions of
the indenture. We urge you to read the indenture because it, and not this
description, defines your rights as holders of the notes. We have filed a copy
of the indenture as an exhibit to the registration statement which includes this
prospectus. You may request a copy of the indenture at our address set forth
under "References to Additional Information."
BRIEF DESCRIPTION OF THE NOTES
These notes:
- are unsecured senior obligations of the Company;
- are pari passu in right of repayment with all other existing and future
unsecured Senior Indebtedness of the Company; and
- are senior in right of payment to all existing and any future
Subordinated Obligations of the Company.
PRINCIPAL, MATURITY AND INTEREST
The old notes are, and the new notes will be, issued initially in a maximum
aggregate principal amount of $400 million. The old notes are, and the new notes
will be, issued in denominations of $1,000 and any integral multiple of $1,000.
The notes will mature on April 1, 2006. Subject to our compliance with the
covenants described under the subheading "-- Certain Covenants -- Limitation on
Indebtedness" and "-- Limitation on Permitted Vehicle Indebtedness," we are
permitted to issue more notes under the indenture in an unlimited principal
amount (the "Additional Notes"). Any such Additional Notes that are actually
issued will be treated as issued and outstanding notes for all purposes of the
indenture and this "Description of the New Notes" and will vote together with
the notes as a single class on all matters, unless the context indicates
otherwise.
Interest on the notes will accrue at the rate of 9 1/8% per annum and will
be payable semiannually in arrears on April 1 and October 1, commencing on
October 1, 1999. We will make each interest payment to the holders of record of
the notes on the immediately preceding March 15 and September 15.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
Additional interest may accrue on the notes in certain circumstances
pursuant to the registration rights agreement.
OPTIONAL REDEMPTION; MANDATORY REDEMPTION; OFFERS TO PURCHASE; OPEN MARKET
PURCHASES
We are not permitted to redeem the notes prior to their maturity. We are
also not required to make any mandatory redemption or sinking fund payments with
respect to the notes. However, under certain circumstances, we may be required
to offer to purchase the notes as described under the captions "-- Change
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of Control" and "-- Certain Covenants -- Limitation on Sales of Assets and
Subsidiary Stock." We may at any time and from time to time purchase notes in
the open market or otherwise.
RANKING
Senior Indebtedness versus Notes
The indebtedness evidenced by the notes ranks pari passu in right of
payment to the Senior Indebtedness of the Company and is effectively
subordinated to all existing and future Secured Indebtedness of the Company to
the extent of the value of the assets securing such Indebtedness. As of December
31, 1998, after giving pro forma effect to the offering of the old notes and the
application of the net proceeds therefrom as described under the section
entitled "Capitalization," the Company's Senior Indebtedness would have been
approximately $450 million, of which approximately $50 million would represent
Secured Indebtedness.
Liabilities of Subsidiaries versus Notes
All our operations are conducted through our subsidiaries. Claims of
creditors of such subsidiaries, including trade creditors and creditors holding
indebtedness or guarantees issued by such subsidiaries, and claims of preferred
stockholders of such subsidiaries generally have priority with respect to the
assets and earnings of such subsidiaries over the claims of our creditors,
including holders of the notes. Accordingly, the notes are effectively
subordinated to creditors (including trade creditors) and preferred
stockholders, if any, of our subsidiaries.
At December 31, 1998, after giving pro forma effect to the offering of the
old notes, our subsidiaries had Indebtedness of approximately $3,152.1 million,
including trade payables and $3,120.9 million of Permitted Vehicle Indebtedness.
Although the indenture limits the incurrence of Indebtedness and the issuance of
preferred stock of certain of our subsidiaries, such limitation is subject to a
number of significant qualifications. Moreover, the indenture does not impose
any limitation on the incurrence by such subsidiaries of liabilities that are
not considered Indebtedness under the indenture. See "-- Certain Covenants --
Limitation on Indebtedness."
Senior Subordinated Indebtedness versus Notes
The indebtedness evidenced by the notes ranks senior in right of payment to
all future Subordinated Obligations of the Company.
BOOK-ENTRY, DELIVERY AND FORM
We will initially issue the new notes in the form of one or more global
notes (the "Global Note"). The Global Note will be deposited with, or on behalf
of, the DTC and registered in the name of the DTC or its nominee. Except as set
forth below, the Global Note may be transferred, in whole and not in part, only
to the DTC or another nominee of the DTC. You may hold your beneficial interests
in the Global Note directly through the DTC if you have an account with the DTC
or indirectly through organizations which have accounts with the DTC.
The DTC has advised the Company as follows: the DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and "a clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. The DTC was created to hold
securities of institutions that have accounts with the DTC ("participants") and
to facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The DTC's participants include securities brokers
and dealers (which may include the initial purchasers), banks, trust companies,
clearing corporations and certain other organizations. Access to the DTC's
book-entry system is also available to others such as banks, brokers, dealers
and trust companies (collectively, the "indirect
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participants") that clear through or maintain a custodial relationship with a
participant, whether directly or indirectly.
The Company expects that pursuant to procedures established by the DTC,
upon the deposit of the Global Note with the DTC, the DTC will credit, on its
book-entry registration and transfer system, the principal amount of new notes
represented by such Global Note to the accounts of participants. The accounts to
be credited shall be designated by the initial purchasers. Ownership of
beneficial interests in the Global Note will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in the Global Note will be shown on, and the transfer of those
ownership interests will be effected only through, records maintained by the DTC
(with respect to participants' interests), the participants and the indirect
participants (with respect to the owners of beneficial interests in the Global
Note other than participants). The laws of some jurisdictions may require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to transfer or
pledge beneficial interests in the Global Note.
So long as the DTC, or its nominee, is the registered holder and owner of
the Global Note, the DTC or such nominee, as the case may be, will be considered
the sole legal owner and holder of any related new notes evidenced by the Global
Note for all purposes of such new notes and the indenture. Except as set forth
below, as an owner of a beneficial interest in the Global Note, you will not be
entitled to have the new notes represented by the Global Note registered in your
name, will not receive or be entitled to receive physical delivery of
certificated new notes and will not be considered to be the owner or holder of
any new notes under the Global Note. We understand that under existing industry
practice, in the event an owner of a beneficial interest in the Global Note
desires to take any action that the DTC, as the holder of the Global Note, is
entitled to take, the DTC would authorize the participants to take such action,
and the participants would authorize beneficial owners owning through such
participants to take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
We will make payments of principal of, premium, if any, and interest on new
notes represented by the Global Note registered in the name of and held by the
DTC or its nominee to the DTC or its nominee, as the case may be, as the
registered owner and holder of the Global Note.
We expect that the DTC or its nominee, upon receipt of any payment of
principal of, premium, if any, or interest on the Global Note will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Note as
shown on the records of the DTC or its nominee. We also expect that payments by
participants or indirect participants to owners of beneficial interests in the
Global Note held through such participants or indirect participants will be
governed by standing instructions and customary practices and will be the
responsibility of such participants or indirect participants. We will not have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Global Note
for any new note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between the DTC and its participants or indirect participants or
the relationship between such participants or indirect participants and the
owners of beneficial interests in the Global Note owning through such
participants.
Although the DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Note among participants of the
DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
trustee nor the Company will have any responsibility or liability for the
performance by the DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
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CERTIFICATED NOTES
Subject to certain conditions, the new notes represented by the Global Note
are exchangeable for certificated new notes in definitive form of like tenor in
denominations of $1,000 and integral multiples thereof if:
(1) the DTC notifies us that it is unwilling or unable to continue as
DTC for the Global Note or the DTC ceases to be a clearing agency
registered under the Exchange Act, and, in either case, we are unable to
locate a qualified successor within 90 days;
(2) we in our discretion at any time determine not to have all the new
notes represented by the Global Note; or
(3) a default entitling the holders of the new notes to accelerate the
maturity thereof has occurred and is continuing.
Any new note that is exchangeable as above is exchangeable for certificated
new notes issuable in authorized denominations and registered in such names as
the DTC shall direct. Subject to the foregoing, the global note is not
exchangeable, except for a global note of the same aggregate denomination to be
registered in the name of the DTC or its nominee.
SAME-DAY PAYMENT
The indenture requires us to make payments in respect of notes (including
principal, premium and interest) by wire transfer of immediately available funds
to the accounts specified by the holders thereof or, if no such account is
specified, by mailing a check to each such holder's registered address.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder of notes shall have the right to require that the Company
repurchase all or any portion of such holder's notes at a purchase price in cash
equal to 101% of the principal amount thereof on the date of purchase plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date):
(1) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 35% of the total voting power
of the Voting Stock of the Company; provided, however, that the Permitted
Holders beneficially own (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the Voting Stock of the Company than such
other person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors (for the purposes of this clause (1), such other person shall be
deemed to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the "parent
corporation"), if such other person is the beneficial owner (as first
defined in this clause (1), directly or indirectly, of more than 35% of the
voting power of the Voting Stock of such parent corporation and the
Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent
corporation and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the board of
directors of such parent corporation);
(2) during any period of twenty-four consecutive months, individuals
who on the Issue Date constituted the Board of Directors (together with any
new directors whose election by such Board of Directors or whose nomination
for election by the stockholders of the Company was approved by a vote of
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66 2/3% of the directors of the Company then still in office who were
either directors on the Issue Date 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; or
(3) the merger or consolidation of the Company with or into another
Person (other than a Person that is controlled by the Permitted Holders) or
the merger of another Person with or into the Company, or the sale of all
or substantially all the assets of the Company to another Person (other
than a Person that is controlled by the Permitted Holders), and, in the
case of any such merger or consolidation, the securities of the Company
that are outstanding immediately prior to such transaction and that
represent 100% of the aggregate voting power of the Voting Stock of the
Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of the
surviving corporation.
Within 30 days following any Change of Control, we will mail a notice to
each holder of notes with a copy to the trustee (the "Change of Control Offer")
stating:
(1) that a Change of Control has occurred and that such holder has the
right to require us to purchase such holder's notes at a purchase price in
cash equal to 101% of the principal amount thereof on the date of purchase,
plus accrued and unpaid interest, if any, to the date of purchase (subject
to the right of holders of record on the relevant record date to receive
interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of
Control);
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions, as determined by us, consistent with the
covenant described under this caption, that a holder must follow in order
to have its notes purchased.
We will not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture applicable to a Change of Control Offer made by us and
purchases all notes validly tendered and not withdrawn under such Change of
Control Offer.
We will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of notes as a result of a Change of Control. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions of the covenant described under this caption, we will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached our obligations under the covenant described under this caption by
virtue thereof.
The Change of Control purchase feature of the notes may in certain
circumstances make more difficult or discourage a sale or takeover of the
Company and, thus, the removal of incumbent management. The Change of Control
purchase feature is a result of negotiations between the Company and the initial
purchasers. We have no present intention to engage in a transaction involving a
Change of Control, although it is possible that we could decide to do so in the
future. Subject to the limitations discussed below, we could, in the future,
enter into certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect our capital structure or credit ratings.
Restrictions on our ability to Incur additional Indebtedness are contained in
the covenants described under "-- Certain Covenants -- Limitation on
Indebtedness," "-- Limitation on Permitted Vehicle Indebtedness," "-- Limitation
on Liens" and "-- Limitation on Sale/Leaseback Transactions." Such restrictions
can only be waived with the consent of the holders of a majority in principal
amount of the notes then outstanding. Except for the limitations
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contained in such covenants, however, the indenture does not contain any
covenants or provisions that may afford holders of the notes protection in the
event of a highly leveraged transaction.
The Credit Facility and other agreements pursuant to which the Company or
its Restricted Subsidiaries have Incurred Permitted Vehicle Indebtedness provide
that the occurrence of certain change of control events with respect to the
Company would constitute a default thereunder. Future indebtedness that we or
our Restricted Subsidiaries may incur may contain prohibitions on the occurrence
of certain events that would constitute a Change of Control or require the
repurchase of such indebtedness upon a Change of Control. Moreover, the exercise
by the holders of their right to require us to repurchase the notes could cause
a default under such future indebtedness, even if the Change of Control itself
does not, due to the financial effect of such repurchase on us. Finally, our
ability to pay cash to the holders of notes following the occurrence of a Change
of Control may be limited by our then existing financial resources. There can be
no assurance that sufficient funds will be available when necessary to make any
required repurchases.
The provisions under the indenture relative to our obligation to make an
offer to repurchase notes as a result of a Change of Control may be waived or
modified with the written consent of the holders of a majority in principal
amount of the notes.
CERTAIN COVENANTS
The indenture contains covenants including, among others, the following:
Limitation on Indebtedness
(a) The Company will not, and will not permit any Restricted Subsidiary to,
Incur, directly or indirectly, any Indebtedness; provided, however, that the
Company and its Restricted Subsidiaries may Incur Indebtedness if, on the date
of such Incurrence and after giving effect thereto on a pro forma basis, the
Consolidated Coverage Ratio exceeds 2.25 to 1.
(b) Notwithstanding the foregoing paragraph (a), the Company and the
Restricted Subsidiaries may Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred pursuant to the Credit Facility; provided,
however, that, after giving effect to any such Incurrence, the aggregate
principal amount of such Indebtedness then outstanding does not exceed $550
million less the sum of all principal payments with respect to such
Indebtedness pursuant to paragraph (a)(3)(A) of the covenant described
under "-- Limitation on Sales of Assets and Subsidiary Stock";
(2) Indebtedness of Foreign Subsidiaries in an aggregate principal
amount that, when taken together with the principal amount of all other
Indebtedness Incurred pursuant to this clause (2) (and any Indebtedness
Incurred by Foreign Subsidiaries prior to the Issue Date to finance working
capital) and then outstanding, does not exceed $125 million;
(3) Indebtedness owed to and held by the Company or a Restricted
Subsidiary; provided, however, that (A) any subsequent issuance or transfer
of any Capital Stock which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or a Restricted Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such Indebtedness
by the obligor thereon and (B) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all obligations with respect to the notes;
(4) the old notes and the new notes (other than any Additional Notes);
(5) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2), (3) or (4) of this covenant);
(6) Indebtedness of a Restricted Subsidiary Incurred and outstanding
on or prior to the date on which such Subsidiary was acquired by the
Company or a Restricted Subsidiary (other than Indebted-
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ness Incurred in connection with, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company or a Restricted Subsidiary);
provided, however, that on the date of such acquisition and after giving
effect thereto, the Company would have been able to Incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of this covenant;
(7) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (4), (5) or (6) or this
clause (7); provided, however, that to the extent such Refinancing
Indebtedness directly or indirectly Refinances Indebtedness of a Subsidiary
Incurred pursuant to clause (6), such Refinancing Indebtedness shall be
Incurred only by such Subsidiary;
(8) Hedging Obligations consisting of Currency Agreements or Interest
Rate Agreements directly related to Indebtedness permitted to be Incurred
by the Company pursuant to the indenture;
(9) Permitted Vehicle Indebtedness;
(10) Indebtedness represented by Guarantees issued to airports and
airport and other governmental authorities for the construction of airport
rental or related facilities to be used by the Company or any Restricted
Subsidiary in the ordinary course of business that do not exceed for the
Company and all Restricted Subsidiaries in the aggregate $50 million at any
time outstanding;
(11) the Guarantee of any Indebtedness otherwise permitted to be
Incurred pursuant to the indenture (other than Indebtedness Incurred
pursuant to clause (6) above or Refinancing Indebtedness Incurred pursuant
to clause (7) above in respect of Indebtedness Incurred pursuant to clause
(6) above);
(12) Indebtedness of the Company or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price or similar
obligations, in each case Incurred in connection with the disposition of
any assets of the Company or any Restricted Subsidiary in a principal
amount not to exceed the gross proceeds actually received by the Company or
any Restricted Subsidiary in connection with such disposition; and
(13) Indebtedness in an aggregate principal amount which, together
with all other Indebtedness of the Company outstanding on the date of such
Incurrence (other than Indebtedness permitted by clauses (1) through (12)
above or paragraph (a)) does not exceed $50 million.
(c) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof are
used, directly or indirectly, to Refinance any Subordinated Obligations unless
such Indebtedness shall be subordinated to the notes to at least the same extent
as such Subordinated Obligations.
(d) For purposes of determining compliance with this covenant, (1) in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness described above, the Company, in its sole discretion, will
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of the above clauses and (2) an item of
Indebtedness may be divided and classified in more than one of the types of
Indebtedness described above.
(e) For the purpose of determining amounts of Indebtedness outstanding
under the covenant described in this caption and for the purpose of avoiding
duplication only, Indebtedness of a Person resulting from the grant by such
Person of security interest with respect to, or from the issuance by such Person
of Guarantees (and security interests with respect thereof) of, or from the
assumption of obligations with respect to letters of credit supporting,
Indebtedness Incurred by such Person pursuant to the indenture (or Indebtedness
which such Person is otherwise permitted to Incur under the indenture) shall not
be deemed to be a separate Incurrence of Indebtedness by such Person.
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Limitation on Permitted Vehicle Indebtedness
The aggregate principal amount of outstanding Permitted Vehicle
Indebtedness as of the last calendar day of each month (the "Determination
Date") shall not exceed the net book value of the Permitted Vehicle Collateral
on such Determination Date. Notwithstanding the foregoing, if the Company is not
in compliance with the preceding sentence on any Determination Date, the Company
will not be in breach thereof so long as:
(1) within 25 days from the Determination Date (or if such day is not
a Business Day, on the next succeeding Business Day) the Company repays
sufficient Permitted Vehicle Indebtedness or deposits as collateral
additional Permitted Vehicle Collateral so that the Company would have been
in compliance as of the Determination Date assuming such repayment or
deposit had been made on such date; or
(2) the Company delivers to the trustee an Officers' Certificate
setting forth the amount of the shortfall within 25 days of such
Determination Date (or if such day is not a Business Day, on the next
succeeding Business Day) and within 45 days from the Determination Date (or
if such day is not a Business Day, on the next succeeding Business Day) the
Company (A) repays sufficient Permitted Vehicle Indebtedness, (B) deposits
as collateral additional Permitted Vehicle Collateral or (C) redesignates
sufficient Permitted Vehicle Indebtedness that is not secured by an actual
Lien on Permitted Vehicle Collateral to no longer constitute Permitted
Vehicle Indebtedness, in each case so that the Company would have been in
compliance as of the Determination Date assuming such repayment, deposit or
redesignation had been made on such date; provided, however, that, in the
case of a redesignation pursuant to clause (C) above, on the date of such
redesignation and after giving effect thereto as if such redesignated
Indebtedness were Incurred by the Company on such date, the Company would
have been able to Incur at least $1.00 of additional Indebtedness pursuant
to paragraph (a); provided further, however, that in determining whether
the Company would have been able to Incur such $1.00 of additional
Indebtedness, the Company shall be entitled to exclude an amount of such
redesignated Indebtedness equal to the amount of Indebtedness the Company
could have Incurred on such date pursuant to paragraph (b)(13) of the
covenant described under "-- Limitation on Indebtedness," and such excluded
amount shall be deemed to have been Incurred pursuant to such paragraph
(b)(13).
Limitation on Restricted Payments
(a) The Company will not, and will not permit any Restricted Subsidiary,
directly or indirectly, to make a Restricted Payment if at the time the Company
or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under
"-- Limitation on Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of (without
duplication):
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which the Issue
Date occurs to the end of the most recent fiscal quarter ending at least
45 days prior to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit);
plus
(B) the aggregate Net Cash Proceeds received by the Company from
the issuance or sale of, or as a capital contribution in respect of, its
Capital Stock (other than Disqualified Stock) subsequent to the Issue
Date (other than an issuance or sale to a Subsidiary of the Company and
other than an issuance or sale to an employee stock ownership plan or to
a trust established by the Company or any of its Subsidiaries for the
benefit of their employees); plus
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(C) the amount by which Indebtedness of the Company is reduced on
the Company's balance sheet upon the conversion or exchange (other than
by a Subsidiary of the Company) subsequent to the Issue Date of any
Indebtedness of the Company convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the amount of
any cash, or the fair value of any other property, distributed by the
Company upon such conversion or exchange); plus
(D) an amount equal to the sum of (x) the net reduction in
Investments in Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances or other transfers of assets, in each
case to the Company or any Restricted Subsidiary from Unrestricted
Subsidiaries, and (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets
of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary
is designated a Restricted Subsidiary; provided, however, that the
foregoing sum shall not exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made (and treated as a
Restricted Payment) by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary.
(b) The preceding provisions will not prohibit:
(1) any Restricted Payment made by exchange for, or out of the
proceeds of the substantially concurrent sale of, or capital contribution
in respect of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company
or an employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their employees);
provided, however, that (A) such Restricted Payment shall be excluded in
the calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale shall be excluded from the calculation of amounts
under clause (3)(B) of paragraph (a) above;
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness of the Company which is permitted to be Incurred pursuant
to the covenant described under "-- Limitation on Indebtedness"; provided,
however, that such purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in the calculation of
the amount of Restricted Payments;
(3) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that at the time of payment of such
dividend, no other Default shall have occurred and be continuing (or result
therefrom); provided further, however, that such dividend shall be included
in the calculation of the amount of Restricted Payments;
(4) the payment of interest to Budget Group Capital Trust to the
extent required to pay non-deferrable scheduled cash dividends on its HIGH
TIDES 6 1/4% Convertible Preferred Securities; provided, however, that (A)
no Default shall have occurred and be continuing (or would result
therefrom) and (B) Budget Group Capital Trust shall immediately apply any
such interest payment to pay such scheduled cash dividend; provided
further, however, that such interest payments shall be included in the
calculation of the amount of Restricted Payments;
(5) the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of the Company or any of its Subsidiaries
from employees, former employees, directors or former directors of the
Company or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors), pursuant to
the terms of the agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or sell,
shares of such common stock; provided, however, that the aggregate amount
of such repurchases and other acquisitions shall not exceed $5 million in
any calendar year; provided further, however, that such repurchases and
other acquisitions shall be excluded in the calculation of the amount of
Restricted Payments;
(6) any purchase or defeasance of Subordinated Obligations upon a
change of control to the extent required by the indenture or other
agreement or instrument pursuant to which such Subordinated
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Obligations were issued, but only if the Company has first complied with
all its obligations under the provisions described under the caption
"-- Change of Control"; provided, however, that the amount of such purchase
or defeasance shall be excluded in the calculation of Restricted Payments;
(7) the payment of Contingent Additional Consideration (as defined in
the Ryder Merger Agreement) in an aggregate amount not to exceed the
aggregate amount of Net Available Cash received by the Company since the
Issue Date as consideration from the sale of assets of a Non-Core Business
(or the Capital Stock of a Subsidiary of the Company engaged in the conduct
of a Non-Core Business) to the extent such Net Available Cash is being
applied pursuant to clause (a)(3)(C) of the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock"; provided, however,
that the amount of such payment shall be included in the calculation of the
amount of Restricted Payments; and
(8) Other Restricted Payments in an aggregate amount which, when taken
together with all other Restricted Payments made pursuant to this clause
(8) and then outstanding, does not exceed $35 million at any time
outstanding; provided, however, that the amount of such Restricted Payments
shall be included in the calculation of Restricted Payments.
Limitation on Restrictions on Distributions from Restricted Subsidiaries
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distributions on its Capital Stock to the
Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company,
(b) make any loans or advances to the Company or (c) transfer any of its
property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the funds
or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on
such date;
(3) any encumbrance or restriction pursuant to an agreement effecting
a Refinancing of Indebtedness Incurred pursuant to an agreement referred to
in clause (1) or (2) of this covenant or this clause (3) or contained in
any amendment to an agreement referred to in clause (1) or (2) of this
covenant or this clause (3); provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in any
such refinancing agreement or amendment are no less favorable in any
material respect to the noteholders than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in such predecessor
agreements;
(4) any such encumbrance or restriction consisting of customary
non-assignment provisions in leases governing leasehold interests to the
extent such provisions restrict the transfer of the lease or the property
leased thereunder;
(5) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements or
mortgages;
(6) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition
of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or
disposition;
(7) any encumbrance or restriction arising under applicable law;
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(8) any encumbrance or restriction consisting of any restriction on
the sale or other disposition of assets or property securing
Indebtedness as a result of a Lien permitted to be Incurred under
the indenture on such asset or property; and
(9) any encumbrance or restriction imposed solely upon a Foreign
Subsidiary, so long as there does not exist any Guarantee by the
Company of any Indebtedness of such Foreign Subsidiary or any of
such Foreign Subsidiary's Subsidiaries.
Limitation on Sales of Assets and Subsidiary Stock
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives consideration
at the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of
Directors, of the shares and assets subject to such Asset
Disposition;
(2) at least 75% of the consideration thereof received by the Company
or such Restricted Subsidiary is in the form of cash or cash
equivalents; and
(3) an amount equal to 100% of the Net Available Cash from such by the
Company (or such Restricted Subsidiary, as the case may be)
(A) first, to the extent the Company elects (or is required by the
terms of any Indebtedness), to prepay, repay, redeem or
purchase Senior Indebtedness or Indebtedness (other than any
Disqualified Stock) of a Wholly Owned Subsidiary (in each case
other than Indebtedness owed to the Company or an Affiliate of
the Company) within one year from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net Available Cash
after application in accordance with clause (A), to the extent
the Company elects, to acquire Additional Assets within one
year from the later of the date of such Asset Disposition or
the receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A) and (B), in
the case of Net Available Cash received by the Company as
consideration from the sale of assets of or the Capital Stock
of a Subsidiary of the Company engaged in the conduct of a
Non-Core Business, to the extent the Company elects, to make a
payment of Contingent Additional Consideration pursuant to
clause (8) of the covenant described under "-- Limitation on
Restricted Payments" within one year from the later of the date
of such asset disposition or the receipt of such Net Available
Cash;
(D) fourth, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B) and (C),
to make an offer to the holders of the notes (and to holders of
other Senior Indebtedness designated by the Company) to
purchase notes (and such other Senior Indebtedness) pursuant to
and subject to the conditions contained in the indenture; and
(E) fifth, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B), (C) and
(D), for any purpose not prohibited by the terms of the
indenture;
provided, however, that in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A) or (D) above, the
Company or such Restricted Subsidiary shall permanently retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. In the event the
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terms of the Company's Credit Facility require the Company to
permanently reduce the available credit under the facility in an amount
equal to the amount of Net Available Cash, such permanent reduction
shall constitute application of such Net Available Cash pursuant to
clause (A) above.
Notwithstanding the foregoing provisions of this covenant, the Company and
the Restricted Subsidiaries will not be required to apply any Net Available Cash
in accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this covenant exceeds $10 million. Pending application of Net Available
Cash pursuant to this covenant, such Net Available Cash shall be invested in
Permitted Investments.
For the purposes of this covenant, the following are deemed to be cash or
cash equivalents:
(1) the assumption of Indebtedness of the Company or any Restricted
Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection
with such Asset Disposition (in which case the Company shall,
without further action, be deemed to have applied such assumed
Indebtedness in accordance with clause (A) of the preceding
paragraph); and
(2) securities received by the Company or any Restricted Subsidiary
from the transferee that are promptly converted by the Company or
such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of the
notes (and other Senior Indebtedness) pursuant to clause (a)(3)(D) above, the
Company will be required to purchase notes tendered pursuant to an offer by the
Company for the notes (and other Senior Indebtedness) at a purchase price of
100% of their principal amount without premium, plus accrued but unpaid interest
(or, in respect of such other Senior Indebtedness, such lesser price, if any, as
may be provided for by the terms of such Senior Indebtedness) in accordance with
the procedures (including prorating in the event of oversubscription) set forth
in the indenture. If the aggregate purchase price of the notes (and any other
Senior Indebtedness) tendered exceeds the Net Available Cash allotted to
purchase thereof, the Company will select the securities to be purchased on a
pro rata basis but in denominations of $1,000 or multiples thereof. The Company
shall not be required to make such an offer to purchase notes (and other Senior
Indebtedness) pursuant to this covenant if the Net Available Cash available
therefor is less than $10 million (which lesser amount shall be carried forward
for purposes of determining whether such an offer is required with respect to
the Net Available Cash from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this clause by virtue thereof.
Limitation on Affiliate Transactions
(a) The Company will not, and will not permit any Restricted Subsidiary to,
enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property, employee compensation arrangements or the
rendering of any service) with, or for the benefit of, any Affiliate of the
Company (an "Affiliate Transaction") unless:
(1) the terms of the Affiliate Transaction are no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained
at the time of the Affiliate Transaction in arm's-length dealings with a
Person who is not an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess of $2.5
million, the terms of the Affiliate Transaction are set forth in writing
and a majority of the non-employee directors of the Company disinterested
with respect to such Affiliate Transaction have determined in good faith
that the criteria set forth in clause (1) are satisfied and have approved
the relevant Affiliate Transaction as evidenced by a Board Resolution; and
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(3) if such Affiliate Transaction involves an amount in excess of $10
million, the Board of Directors shall also have received a written opinion
from a nationally recognized investment banking firm that is not an
Affiliate of the Company to the effect that such Affiliate Transaction is
fair, from a financial standpoint, to the Company and its Restricted
Subsidiaries.
(b) The provisions of the preceding paragraph (a) shall not prohibit:
(1) any Investment (other than a Permitted Investment) or other
Restricted Payment, in each case permitted to be made pursuant to the
covenant described under "-- Limitation on Restricted Payments";
(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors;
(3) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of
Directors;
(4) loans or advances to employees in the ordinary course of business
in accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed $1 million in the aggregate
outstanding at any one time;
(5) the payment of reasonable fees to directors of the Company and its
Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries;
(6) any Affiliate Transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries;
(7) the issuance or sale of any Capital Stock (other than Disqualified
Stock) of the Company; and
(8) transactions currently contemplated by and pursuant to agreements
as in existence on the Issue Date.
Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries
The Company shall not sell or otherwise dispose of any Capital Stock of a
Restricted Subsidiary, and shall not permit any Restricted Subsidiary, directly
or indirectly, to issue or sell or otherwise dispose of any of its Capital Stock
except:
(1) to the Company or a Wholly Owned Subsidiary;
(2) directors' qualifying shares;
(3) if, immediately after giving effect to such issuance, sale or
other disposition, neither the Company nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary; or
(4) if, immediately after giving effect to such issuance, sale or
other disposition, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after
giving effect thereto would have been permitted to be made under the
covenant described under "-- Limitation on Restricted Payments" if made on
the date of such issuance, sale or other disposition.
Notwithstanding the foregoing, the issuance or sale of shares of Capital
Stock of any Restricted Subsidiary of the Company will not violate the
provisions of the immediately preceding sentence if such shares are issued or
sold in connection with (x) the formation or capitalization of a Restricted
Subsidiary or (y) a single transaction or a series of substantially
contemporaneous transactions whereby such Restricted Subsidiary becomes a
Restricted Subsidiary of the Company by reason of the acquisition of securities
or assets from another Person.
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Limitation on Liens
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, Incur or permit to exist any Lien (the "Initial Lien")
of any nature whatsoever on any of its properties (including Capital Stock of a
Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired,
other than Permitted Liens, without effectively providing that the notes shall
be secured equally and ratably with (or prior to) the obligations so secured for
so long as such obligations are so secured.
Any Lien created for the benefit of the holders of the notes pursuant to
the preceding sentence shall provide by its terms that such Lien shall be
automatically and unconditionally released and discharged upon the release and
discharge of the Initial Lien.
Limitation on Sale/Leaseback Transactions
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale/Leaseback Transaction with respect to any property unless:
(1) the Company or such Subsidiary would be entitled to (A) Incur
Indebtedness in an amount equal to the Attributable Debt with respect to
such Sale/Leaseback Transaction pursuant to the covenant described under
"-- Limitation on Indebtedness" and (B) create a Lien on such property
securing such Attributable Debt without equally and ratably securing the
notes pursuant to the covenant described under "-- Limitation on Liens";
(2) the net proceeds received by the Company or any Restricted
Subsidiary in connection with such Sale/Leaseback Transaction are at least
equal to the fair value (as determined by the Board of Directors) of such
property; and
(3) the Company applies the proceeds of such transaction in compliance
with the covenant described under "-- Limitation on Sales of Assets and
Subsidiary Stock."
Merger and Consolidation
The Company will not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental thereto, executed and delivered to the trustee, in
form reasonably satisfactory to the trustee, all the obligations of the
Company under the notes and the indenture;
(2) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Restricted Subsidiary as a result of such transaction as having been
Incurred by such Successor Company or such Restricted Subsidiary at the
time of such transaction), no Default shall have occurred and be
continuing;
(3) immediately after giving effect to such transaction, the Successor
Company would be able to Incur an additional $1.00 of Indebtedness pursuant
to paragraph (a) of the covenant described under "-- Limitation on
Indebtedness";
(4) immediately after giving effect to such transaction, the Successor
Company shall have Consolidated Net Worth in an amount that is not less
than the Consolidated Net Worth of the Company immediately prior to such
transaction; and
(5) the Company shall have delivered to the trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the indenture.
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The Successor Company will be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the notes.
SEC Reports
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, we will file with the
SEC and provide the trustee and noteholders with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filings of such information, documents
and reports under such Sections.
In addition, whether or not required by the SEC, we will file a copy of all
of the information and reports referred to above with the SEC for public
availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing).
DEFAULTS
Each of the following is an Event of Default:
(1) a default in the payment of interest on the notes when due,
continued for 30 days;
(2) a default in the payment of principal of any note when due at its
Stated Maturity, upon required repurchase, upon declaration or otherwise;
(3) the failure by the Company to comply with its obligations under
"-- Certain Covenants -- Merger and Consolidation" above;
(4) the failure by the Company to comply for 30 days after notice with
any of its obligations in the covenants described above under "Change of
Control" (other than a failure to purchase notes) or under "-- Certain
Covenants" under "-- Limitation on Indebtedness," "-- Limitation on
Permitted Vehicle Indebtedness," "-- Limitation on Restricted Payments,"
"-- Limitation on Restrictions on Distributions from Restricted
Subsidiaries," "-- Limitation on Sales of Assets and Subsidiary Stock"
(other than a failure to purchase notes), "-- Limitation on Affiliate
Transactions," "-- Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries," "-- Limitation on Liens," "-- Limitation on
Sale/Leaseback Transactions," or "-- SEC Reports";
(5) the failure by the Company to comply for 60 days after notice with
its other agreements contained in the indenture;
(6) Indebtedness of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $15 million (the
"cross acceleration provision");
(7) certain events of bankruptcy, insolvency or reorganization of the
Company or a Significant Subsidiary (the "bankruptcy provisions"); or
(8) any judgment or decree for the payment of money in excess of $15
million is entered against the Company or a Significant Subsidiary, remains
outstanding for a period of 60 consecutive days following such judgment and
is not discharged, waived or stayed within 10 days after notice (the
"judgment default provision");
However, a default under clauses (4), (5), (6) and (8) will not constitute an
Event of Default until the trustee or the holders of 25% in principal amount of
the outstanding notes notify the Company of the default and the Company does not
cure such default within the time specified after receipt of such notice.
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If an Event of Default occurs and is continuing, the trustee or the holders
of at least 25% in principal amount of the outstanding notes may declare the
principal of and accrued but unpaid interest on all the notes to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and interest on all the notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the trustee or any holders of the notes. Under certain
circumstances, the holders of a majority in principal amount of the outstanding
notes may rescind any such acceleration with respect to the notes and its
consequences.
Subject to the provisions of the indenture relating to the duties of the
trustee, in case an Event of Default occurs and is continuing, the trustee will
be under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the holders of the notes unless
such holders have offered to the trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder of a note
may pursue any remedy with respect to the indenture or the notes unless:
(1) such holder has previously given the trustee notice that an Event
of Default is continuing;
(2) holders of at least 25% in principal amount of the outstanding
notes have requested the trustee to pursue the remedy;
(3) such holders have offered the trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity; and
(5) holders of a majority in principal amount of the outstanding notes
have not given the trustee a direction inconsistent with such request
within such 60-day period.
Subject to certain restrictions, the holders of a majority in principal amount
of the outstanding notes are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee or of
exercising any trust or power conferred on the trustee. The trustee, however,
may refuse to follow any direction that conflicts with law or the indenture or
that the trustee determines is unduly prejudicial to the rights of any other
holder of a note or that would involve the trustee in personal liability.
If a Default occurs, is continuing and is known to the trustee, the trustee
must mail to each holder of the notes notice of the Default within 90 days after
it occurs. Except in the case of a Default in the payment of principal of or
interest on any note, the trustee may withhold notice if and so long as a
committee of its trust officers determines that withholding notice is not
opposed to the interest of the holders of the notes. In addition, we are
required to deliver to the trustee, within 120 days after the end of each fiscal
year, a certificate indicating whether the signers thereof know of any Default
that occurred during the previous year. We are required to deliver to the
trustee, within 30 days after the occurrence thereof, written notice of any
event which would constitute certain Defaults, their status and what action we
are taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the indenture may be amended with the
consent of the holders of a majority in principal amount of the notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the notes) and any past default or compliance with any
provisions may also be waived with the consent of the holders of a majority in
principal amount of the notes then outstanding. However, without the consent of
each holder of an outstanding note affected thereby, an amendment may not, among
other things:
(1) reduce the amount of notes whose holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any note;
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(3) reduce the principal of or extend the Stated Maturity of any note;
(4) make any note payable in money other than that stated in the note;
(5) impair the right of any holder of the notes to receive payment of
principal of and interest on such holder's notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such holder's notes;
(6) make any change in the amendment provisions which require each
holder's consent or in the waiver provisions; or
(7) make any change in the ranking or priority of any note that would
adversely affect the noteholders.
Notwithstanding the preceding, without the consent of any holder of the
notes, the Company and trustee may amend or supplement the indenture or the
notes:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to provide for the assumption by a successor corporation of the
obligations of the Company under the indenture;
(3) to provide for uncertificated notes in addition to or in place of
certificated notes (provided that the uncertificated notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated notes are described in Section 163(f)(2)(B) of
the Code);
(4) to add guarantees with respect to the notes, to secure the notes;
(5) to add to the covenants of the Company for the benefit of the
holders of the notes or to surrender any right or power conferred upon the
Company;
(6) to make any change that does not adversely affect the rights of
any holder of the notes; or
(7) to comply with any requirement of the SEC in connection with the
qualification of the indenture under the Trust Indenture Act.
The consent of the holders of the notes is not necessary under the
indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the indenture becomes effective, we are required
to mail to holders of the notes a notice briefly describing such amendment.
However, the failure to give such notice to all holders of the notes, or any
defect therein, will not impair or affect the validity of the amendment.
TRANSFER
The old notes have been and the new notes will be issued in registered form
and will be transferable only upon the surrender of the notes being transferred
for registration of transfer. We may require payment of a sum sufficient to
cover any tax, assessment or other governmental charge payable in connection
with certain transfers and exchanges.
DEFEASANCE
At any time, we may terminate all our obligations under the notes and the
indenture ("legal defeasance"), except for certain obligations, including those
respecting the defeasance trust and obligations to register the transfer or
exchange of the notes, to replace mutilated, destroyed, lost or stolen notes and
to maintain a registrar and paying agent in respect of the notes.
In addition, at any time we may terminate our obligations under the caption
"-- Change of Control" and under the covenants described under "-- Certain
Covenants" (other than the covenant described under "-- Merger and
Consolidation"), the operation of the cross acceleration provision, the
bankruptcy provisions
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with respect to Significant Subsidiaries and the judgment default provision
described under "-- Defaults" above and the limitations contained in clauses (3)
and (4) under "-- Certain Covenants -- Merger and Consolidation" above
("covenant defeasance").
We may exercise our legal defeasance option notwithstanding our prior
exercise of our covenant defeasance option. If we exercise our legal defeasance
option, payment of the notes may not be accelerated because of an Event of
Default with respect thereto. If we exercise our covenant defeasance option,
payment of the notes may not be accelerated because of an Event of Default
specified in clause (4), (6), (7) (with respect only to Significant
Subsidiaries) or (8) under "-- Defaults" above or because of the failure of the
Company to comply with clause (3) or (4) under "-- Certain Covenants -- Merger
and Consolidation" above.
In order to exercise either of our defeasance options, we must irrevocably
deposit in trust (the "defeasance trust") with the trustee money or U.S.
Government Obligations for the payment of principal and interest on the notes to
maturity, as the case may be, and must comply with certain other conditions,
including delivery to the trustee of an Opinion of Counsel to the effect that
holders of the notes will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and defeasance and will be subject to
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law).
CONCERNING THE TRUSTEE
The Bank of New York is to be the trustee under the indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the notes.
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. Subject to the TIA, the trustee will be
permitted to engage in other transactions; provided, however, if it acquires any
conflicting interest as described in the TIA it must either eliminate such
conflict within 90 days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the outstanding notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the trustee, subject to certain
exceptions. If an Event of Default occurs (and is not cured), the trustee will
be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. 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 holder of notes, unless such holder
shall have offered to the trustee security and indemnity satisfactory to it
against any loss, liability or expense and then only to the extent required by
the terms of the indenture.
GOVERNING LAW
The indenture provides that it and the notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital Stock)
to be used by the Company or a Restricted Subsidiary in a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary; or
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(3) Capital Stock constituting a minority interest in any Person that
at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clauses (2)
or (3) above is primarily engaged in a Related Business.
"Adjusted EBITDA" for any period means the sum of Consolidated Net Income,
plus the following to the extent deducted in calculating such Consolidated Net
Income:
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) non-vehicle related depreciation and amortization expense of the
Company and its consolidated Restricted Subsidiaries; and
(4) all other non-vehicle related non-cash charges of the Company and
its Restricted Subsidiaries (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash expenditures in
any future period); in each case for such period. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and
the non-vehicle related depreciation and amortization of, a Restricted
Subsidiary shall be added to Consolidated Net Income to compute Adjusted
EBITDA only to the extent (and in the same proportion) that the net income
of such Restricted Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Affiliate" of any specified Person means:
(1) any other Person, directly or indirectly, controlling or
controlled by; or
(2) under direct or indirect common control with such specified
Person.
For the purposes of this definition, "control" when used with respect to any
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. For purposes of the covenants described
under "-- Certain Covenants -- Limitation on Restricted Payments," "-- Certain
Covenants -- Limitation on Affiliate Transactions" and "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock" only,
"Affiliate" shall also mean any beneficial owner of Capital Stock representing
10% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Company or of rights or warrants to purchase such Capital Stock
(whether or not currently exercisable) and any Person who would be an Affiliate
of any such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary; or
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(3) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary (other than, in the case of clauses (1) and (2) above
and this clause (3):
(A) the sale of inventory or Eligible Vehicles in the ordinary
course of business;
(B) a disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary;
(C) for purposes of the covenant described under "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition that constitutes a Restricted Payment permitted by the
covenant described under "-- Certain Covenants -- Limitation on
Restricted Payments" or a Permitted Investment; and
(D) a disposition of assets with a fair market value of less than
$100,000).
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the notes, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing:
(1) the sum of the products of numbers of years from the date of
determination to the dates of each successive scheduled principal payment
of or redemption or similar payment with respect to such Indebtedness
multiplied by the amount of such payment by
(2) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (x) the aggregate amount of Adjusted EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (y) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding or
if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both, Adjusted EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period,
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(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the
date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, Adjusted EBITDA and Consolidated Interest
Expense for such period shall be calculated on a pro forma basis as if such
discharge had occurred on the first day of such period and as if the
Company or such Restricted Subsidiary has not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness,
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the Adjusted
EBITDA for such period shall be reduced by an amount equal to the Adjusted
EBITDA (if positive) directly attributable to the assets which are the
subject of such Asset Disposition for such period, or increased by an
amount equal to the Adjusted EBITDA (if negative), directly attributable
thereto for such period and Consolidated Interest Expense for such period
shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital
Stock of any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after
such sale),
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction requiring
a calculation to be made hereunder, which constitutes all or substantially
all of a product line or an operating unit of a business, Adjusted EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the first
day of such period and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition, any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (3) or (4)
above if made by the Company or a Restricted Subsidiary during such period,
Adjusted EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest of such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
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"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, excluding
interest accruing on Permitted Vehicle Indebtedness and interest accruing in
respect of the Company's HIGH TIDES Debentures Due 2028, plus, to the extent not
included in such total interest expense, and to the extent incurred by the
Company or its Restricted Subsidiaries, without duplication:
(1) interest expense attributable to capital leases and the interest
expense attributable to leases constituting part of a Sale/Leaseback
Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing;
(6) net costs associated with Hedging Obligations (including
amortization of fees);
(7) Preferred Stock dividends in respect of all Preferred Stock held
by Persons other than the Company or a Wholly Owned Subsidiary (other than
dividends payable solely in Capital Stock (other than Disqualified Stock)
of the issuer of such Preferred Stock);
(8) interest incurred in connection with Investments in discontinued
operations;
(9) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is Guaranteed by (or secured by the assets of) the
Company or any Restricted Subsidiary; and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that:
(A) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period to
the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
paid to a Restricted Subsidiary, to the limitations contained in clause
(3) below); and
(B) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that:
(A) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or
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other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limitation
contained in this clause); and
(B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other
disposition of any assets of the Company, its consolidated Subsidiaries or
any other Person (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (but not loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of the covenant described
under "Certain Covenants -- Limitation on Restricted Payments" only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as the sum of:
(1) the par or stated value of all outstanding Capital Stock of the
Company plus
(2) paid-in capital or capital surplus relating to such Capital Stock
plus
(3) any retained earnings or earned surplus
less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Core Business" means the business of (a) renting worldwide for general use
passenger automobiles and trucks under the Budget and Ryder brand names, (b)
selling in the United States late model automobiles and passenger vans under the
Budget brand name and (c) franchising the foregoing rental business to other
Persons.
"Credit Facility" means the Amended and Restated Credit Agreement dated as
of June 19, 1998, among the Company, certain of its Subsidiaries, the lenders
referred to therein, Credit Suisse First Boston, as a co-syndication agent and
as Administrative Agent, and Nationsbanc Capital Markets, Inc., as a
co-syndication agent and as Documentation Agent, together with the related
documents thereto (including the revolving loans, letters of credit and any term
loans thereunder, any guarantees and security documents), as amended, extended,
renewed, restated, supplemented or otherwise modified (in whole or in part, and
without limitation as to amount, terms, conditions, covenants and other
provisions) from time to time, and any agreement (and related document)
governing Indebtedness incurred to Refinance, in whole or in part, the
borrowings and commitments then outstanding or permitted to be outstanding under
such Credit Facility or a successor Credit Facility, whether by the same or any
other lender or group of lenders.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement designed to protect
such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
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"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable at the option of the holder) or upon the
happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the occurrence
of certain events or otherwise, in whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the
notes; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the notes shall not constitute
Disqualified Stock if:
(1) the "asset sale" or "change of control" provisions applicable to
such Capital Stock are not more favorable to the holders of such Capital
Stock than the terms applicable to the notes and described under "--
Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock"
and "-- Certain Covenants -- Change of Control"; and
(2) any such requirement only becomes operative after compliance with
such terms applicable to the notes, including the purchase of any notes
tendered pursuant thereto.
"Eligible Vehicles" shall mean the motor vehicle inventory of the Company
and its Restricted Subsidiaries, consisting of (1) passenger automobiles,
light-duty and medium-duty trucks, trailers and vans and (2) motorcycles, sport
utility vehicles, buses, truck campers and motor homes, in each case, whether
held for sale, lease or rental purposes.
"Foreign Subsidiary" means a Restricted Subsidiary that is incorporated or
formed in a jurisdiction other than the United States or a State thereof or the
District of Columbia and with respect to which more than 80% of any of its
sales, earnings or assets (determined on a consolidated basis in accordance with
GAAP) are located in, generated from or derived from operations located in
territories outside of the United States of America and jurisdictions outside
the United States of America.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting
Standards Board; and
(3) such other statements by such other entity as approved by a
significant segment of the accounting profession.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part);
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provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such Person is
responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable;
(2) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(3) 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), which purchase price is due more than six months after the date
of placing such property in service or taking delivery and title thereto;
(4) 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 (1)
through (3) 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
tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, the liquidation preference
with respect to any Preferred Stock (but excluding, in each case, any
accrued dividends);
(6) all obligations of the type referred to in clauses (1) through (5)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6)
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; and
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
The amount of Indebtedness 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 at such date; provided, however, that
(1) the amount outstanding at any time of any Indebtedness issued with
original issue discount is the face amount of such Indebtedness less the
unamortized portion of the original issue discount of such Indebtedness at
such time as determined in conformity with GAAP; and
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(2) Indebtedness shall not include any liability for federal, state,
local or other taxes.
"Interest Rate Agreement" means in respect of a Person any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. In determining the amount of any
Investment in respect of any property or assets other than cash, such property
or asset shall be valued at its fair market value at the time of such Investment
(unless otherwise specified in this definition), as determined in good faith by
the Board of Directors.
For purposes of the definition of "Unrestricted Subsidiary," the definition
of "Restricted Payment" and the covenant described under "-- Certain Covenants
- -- Limitation on Restricted Payments":
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment" in
an Unrestricted Subsidiary equal to an amount (if positive) equal to (A)
the Company's "Investment" in such Subsidiary at the time of such
redesignation less (B) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors.
"Issue Date" means April 13, 1999, the date on which the old notes were
originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of
the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such
Asset Disposition;
(4) any portion of the purchase price from an Asset Disposition
required by the terms of such Asset Disposition to be placed in escrow
(whether as a reserve for a purchase price adjustment, for satisfaction of
indemnities or otherwise); provided, however, that upon the termination of
such escrow, Net Available
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Cash shall be increased by any portion of the funds therein released to the
Company or any Restricted Subsidiary; and
(5) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the property or other assets disposed in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, printing costs, underwriters' or placement agents' fees,
discounts or commissions and brokerage, stock exchange listing, consultant and
other fees actually incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
"Non-Core Business" means any business other than a Core Business.
"Permitted Holders" means each of Mr. Sanford Miller, Mr. Jeffrey D.
Congdon and Mr. John P. Kennedy.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a
Related Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related
Business;
(3) Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an Asset Disposition as permitted
pursuant to the covenant described under "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock"; and
(9) additional Investments in an aggregate amount which, together with
all other Investments made pursuant to this clause (9) that are
outstanding, does not exceed $25 million.
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under worker's compensation
laws, unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import duties or for the payment of rent, in each case
Incurred in the ordinary course of business;
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(2) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such Person
shall then be proceeding with an appeal or other proceedings for review;
(3) Liens for property taxes not yet due or payable or subject to
penalties for non-payment or which are being contested in good faith and by
appropriate proceedings;
(4) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however, that such letters of
credit do not constitute Indebtedness;
(5) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way, sewers,
electric lines, telegraph and telephone lines and other similar purposes,
or zoning or other restrictions as to the use of real property or Liens
incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect
the value of said properties or materially impair their use in the
operation of the business of such Person;
(6) Liens securing Indebtedness Incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to, property of
such Person; provided, however, that the Lien may not extend to any other
property owned by such Person or any of its Subsidiaries at the time the
Lien is Incurred, and the Indebtedness (other than any interest thereon)
secured by the Lien may not be Incurred more than 270 days after the later
of the acquisition, completion of construction, repair, improvement,
addition or commencement of full operation of the property subject to the
Lien;
(7)(A) Liens to secure Indebtedness (and related interest, fees and
other obligations) permitted under the provisions described in clause (b)
(1) under, and (B) Liens on property and assets of a Foreign Subsidiary to
secure Indebtedness (and related interest, fees and other obligations) of
such Foreign Subsidiary permitted under the provisions described in clause
(b)(2) under, "-- Certain Covenants -- Limitation on Indebtedness";
(8) Liens existing on the Issue Date;
(9) Liens on property or shares of Capital Stock of another Person at
the time such other Person becomes a Subsidiary of such Person; provided,
however, that such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such other Person becoming such a Subsidiary;
provided further, however, that such Lien may not extend to any other
property owned by such Person or any of its Subsidiaries;
(10) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such
Person; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such acquisition;
provided further, however, that the Liens may not extend to any other
property owned by such Person or any of its Subsidiaries;
(11) Liens securing Indebtedness or other obligations of a Subsidiary
of such Person owing to such Person or a wholly owned Subsidiary of such
Person;
(12) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be under
the indenture, secured by a Lien on the same property securing such Hedging
Obligations;
(13) Liens securing Permitted Vehicle Indebtedness and covering cash
collateral deposits, vehicles and assets attributable to, or directly
associated with, vehicles, such as rental receivables and receivables
arising on the disposition of vehicles, and any other property of a type
securing Permitted Vehicle Indebtedness under an agreement as in effect on
the Issue Date;
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(14) Liens on claims against Persons renting vehicles, Persons
damaging vehicles or Persons issuing applicable insurance coverage for such
Persons arising under insurance policies entered into in the ordinary
course of business consistent with past practice;
(15) Liens securing vehicles held as inventory in the Company's car
sales business;
(16) Liens on any airport concession agreements or permits to secure
loans extended to finance tenant improvements used in connection with the
concession agreement or permit subject to such Lien;
(17) rights of set off which arise under contractual arrangements in
the ordinary course of business or which arise in financing agreements in
the ordinary course of business; and
(18) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in
the foregoing clauses (6), (8), (9) and (10); provided, however, that:
(A) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements to or on such
property); and
(B) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (x) the outstanding
principal amount or, if greater, committed amount of the Indebtedness
described under clauses (6), (8), (9) or (10) at the time the original
Lien became a Permitted Lien and (y) an amount necessary to pay any fees
and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clauses (6), (9) or (10) above to the extent such Lien applies to
any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to the covenant described under "-- Certain Covenants -- Limitation on
Sales of Assets and Subsidiary Stock." For purposes of this definition, the term
"Indebtedness" shall be deemed to include interest on such Indebtedness.
"Permitted Vehicle Collateral" means, as of any Determination Date:
(1) the collateral securing Permitted Vehicle Indebtedness and
consisting of cash collateral deposits, Eligible Vehicles and receivables
arising from the acquisition or disposition of Eligible Vehicles; and
(2) Eligible Vehicles and receivables arising from the acquisition or
disposition of Eligible Vehicles that are not securing any Indebtedness and
that are of a type securing Permitted Vehicle Indebtedness under an
agreement as in effect on the Issue Date;
provided, however, that, in each case, such acquisition or disposition
receivables shall be included as Permitted Vehicle Collateral only to the extent
that:
(A) such receivables arise pursuant to the acceptance of vehicles
for repurchase under a repurchase agreement with a repurchase party
(provided the debt of such repurchase party has an investment grade
rating or, if the debt of such repurchase party does not have a rating,
the debt of the parent entity of such repurchase party has an investment
grade rating) as of such Determination Date providing for the repurchase
of such vehicles at a price substantially equivalent to depreciated book
value at the anticipated disposition date;
(B) such receivables are secured by a first priority lien under
applicable law (except for liens arising under applicable law) on the
related vehicles;
(C) in the case of receivables securing Permitted Vehicle
Indebtedness, the collateral value of such receivables does not exceed
the value for such receivables determined in accordance with the
provisions of any applicable investment-grade rated debt facility
designed to finance Eligible Vehicles and related receivables;
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(D) such receivables have been outstanding not in excess of 120
days; provided that in the case of this clause (D), (1) the collateral
value of such receivables shall be valued at their net book value
determined in accordance with GAAP, (2) the collateral value of such
receivables so valued shall not exceed 10% of the total net book value
of all Permitted Vehicle Collateral and (3) the collateral value of such
receivables so valued arising from any Person (or Persons which are
Affiliates of such Person) shall not exceed 2% of the total net book
value of all Permitted Vehicle Collateral; or
(E) such receivables are fully and unconditionally insured, bonded
or guaranteed by a Person with an investment grade rating.
Permitted Vehicle Collateral shall be valued (except as set forth in clause
(D)(1) above) at the net book value determined in accordance with GAAP of the
relevant Eligible Vehicles and receivables.
"Permitted Vehicle Indebtedness" means (1) Indebtedness Incurred to finance
or Refinance Eligible Vehicles and related receivables (but only to the extent
actually used to finance or Refinance Eligible Vehicles and related
receivables), (2) Indebtedness secured by Permitted Vehicle Collateral and (3)
any Indebtedness that Refinances Permitted Vehicle Indebtedness; provided,
however, that any Indebtedness redesignated pursuant to paragraph (2)(C) of the
covenant described under "-- Limitation on Permitted Vehicle Indebtedness" shall
not constitute Permitted Vehicle Indebtedness; and provided, further, that the
notes (other than any Additional Notes) shall be deemed not to constitute
Permitted Vehicle Indebtedness when issued.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"principal" of a note means the principal of the note plus the premium, if any,
payable on the note which is due or overdue or is to become due at the relevant
time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with the indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being Refinanced; and
(3) such Refinancing Indebtedness has an aggregate principal amount
(or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
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"Registration Rights Agreement" means the Registration Rights Agreement
dated April 8, 1999, among the Company, Credit Suisse First Boston Corporation,
Goldman, Sachs & Co. and NationsBanc Montgomery Securities LLC.
"Related Business" means any business conducted by the Company and its
Restricted Subsidiaries on the Issue Date and any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Issue Date.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) and dividends or distributions
payable solely to the Company or a Restricted Subsidiary, and other than
pro rata dividends or other distributions made by a Subsidiary that is not
a Wholly Owned Subsidiary to minority stockholders (or owners of an
equivalent interest in the case of a Subsidiary that is an entity other
than a corporation));
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company held by any Person or of any
Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due
within one year of the date of such purchase, repurchase or other
acquisition); or
(4) the making of any Investment in any Person (other than a Permitted
Investment).
In determining the amount of any Restricted Payment made in property other
than cash, such amount shall be the fair market value of such property at the
time of such Restricted Payment, as determined in good faith by the Board of
Directors.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Ryder Merger Agreement" means the Agreement and Plan of Merger, dated
March 4, 1998 (as amended on March 16, 1998 and June 19, 1998), by and among the
Borrower, BDG Corporation, Ryder TRS, Inc., Ryder Questor Partners Fund, L.P.,
Questor Side-by-Side Partners L.P. and Dearborn Capital Partners, L.P.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Indebtedness" means:
(1) Indebtedness of the Company, whether outstanding on the Issue Date
or thereafter Incurred; and
(2) accrued and unpaid interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization
relating to the Company to the extent post-filing interest is allowed in
such proceeding) in respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of
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which the Company is responsible or liable unless, in the case of clauses
(1) and (2), in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are
subordinate in right of payment to the notes;
provided, however, that Senior Indebtedness shall not include:
(1) any obligation of the Company to any Subsidiary;
(2) any liability for Federal, state, local or other taxes owed or
owing by the Company;
(3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities);
(4) any Indebtedness of the Company (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any respect
to any other Indebtedness or other obligation of the Company; or
(5) that portion of any Indebtedness which at the time of Incurrence
is Incurred in violation of the indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the notes pursuant to a written agreement to that
effect.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company or other business entity of
which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership interests) entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws
of the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50,000,000
(or the foreign currency equivalent thereof) and has outstanding debt which
is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor;
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(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings
Group; and
(5) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's Ratings Group or "A" by Moody's Investors Service,
Inc.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors in
the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
covenant described under "-- Certain Covenants -- Limitation on Restricted
Payments."
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (A) the Company could Incur $1.00 of additional Indebtedness
under paragraph (a) of the covenant described under the caption "-- Certain
Covenants -- Limitation on Indebtedness" and (B) no Default shall have occurred
and be continuing. Any such designation by the Board of Directors shall be
evidenced to the trustee by promptly filing with the trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or one or more Wholly Owned Subsidiaries.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, proposed
Treasury regulations, judicial authority and administrative rulings and
practice. There can be no complete assurance that the Internal Revenue Service
(the "IRS") will agree with the conclusions stated herein, and no ruling from
the IRS has been or will be sought. Legislative, judicial or administrative
changes or interpretations may be forthcoming that could alter or modify the
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<PAGE> 68
statements set forth herein. Any such changes or interpretations may or may not
be retroactive and could affect the tax consequences to holders. Certain holders
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) may be subject to special rules not
discussed below. We recommend that each holder consult such holder's own tax
advisor as to the particular consequences of exchanging such holder's old notes
for new notes, including the applicability and effect of any state, local or
foreign tax laws.
The exchange of old notes for new notes pursuant to the exchange offer will
not be treated as an "exchange" for federal income tax purposes because the new
notes do not differ materially in kind or extent from the old notes.
Accordingly, (i) holders will not recognize taxable gain or loss upon the
receipt of new notes in exchange for old notes in the exchange offer, (ii) the
holding period for a new note received in the exchange offer will include the
holding period of the old note surrendered in exchange therefor, and (iii) the
adjusted tax basis of a new note immediately after the exchange will be the same
as the adjusted tax basis of the old note surrendered in exchange therefor.
PLAN OF DISTRIBUTION
We are not using any underwriters for this exchange offer. We are also
bearing the expenses of the exchange.
This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of any new notes
received in exchange for old notes acquired by such broker-dealer as a result of
market-making or other trading activities. Each such broker-dealer that receives
new notes for its own account in exchange for such old notes pursuant to the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of such new notes. We have agreed that for a period of up to 180
days after the registration statement is declared effective, we will make this
prospectus, as amended or supplemented, available to any such broker-dealer that
requests copies of this prospectus in the letter of transmittal for use in
connection with any such resale.
We will not receive any proceeds from any sale of new notes by
broker-dealers or any other persons. New notes received by broker-dealers for
their own account pursuant to the exchange offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions or through the writing of options on the new notes, or a
combination of such methods of resale, at market prices prevailing at the time
of resale or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such new notes. Any broker-dealer that resells new notes that
were received by it for its own account pursuant to the exchange offer in
exchange for old notes acquired by such broker-dealer as a result of
market-making or other trading activities and any broker-dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act. Any profit on these
resales of new notes and any commissions or concessions received by any persons
may be deemed to be underwriting compensation under the Securities Act. The
letter of transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the registration rights agreement and will indemnify the
holders of old notes, including any broker-dealers, and certain parties related
to these holders, against various liabilities, including liabilities under the
Securities Act.
VALIDITY OF THE NEW NOTES
The validity of the new notes will be passed upon for us by King &
Spalding, Atlanta, Georgia.
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EXPERTS
The consolidated balance sheets of the Company and its subsidiaries as of
December 31, 1997 and 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1998, included in the Company's Annual
Report on Form 10-K incorporated by reference in this Prospectus and elsewhere
in the registration statement, 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 in giving said
reports.
The audited consolidated financial statements of Ryder TRS, Inc. and
Subsidiaries as of and for the year ended December 31, 1997, included in the
Annual Report on Form 10-K of Ryder TRS dated December 31, 1997, contained in
our Form 8-K, dated June 19, 1998, as amended, and incorporated by reference in
this prospectus, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in auditing and accounting.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that
Budget Group has previously filed with the SEC. These documents contain
important information about Budget Group and its financial condition.
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 subsequently filed document that is also incorporated or deemed
to be incorporated by reference herein, modifies or supersedes the earlier
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.
We hereby incorporate by reference to this prospectus the following reports
filed with the SEC:
- Our Annual Report on Form 10-K for the year ended December 31, 1998;
- The audited consolidated financial statements of Ryder TRS, Inc. and
subsidiaries as of and for the year ended December 31, 1997 included in
the Annual Report on Form 10-K of Ryder TRS dated December 31, 1997 and
contained in our Form 8-K, dated June 19, 1998, as amended; and
- Our Current Reports on Form 8-K dated March 22, 1999.
In addition, all documents filed by Budget Group pursuant to Section 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 this exchange offer will be deemed to be
incorporated by reference into this prospectus and to be a part hereof from the
date of filing of such documents.
Documents incorporated by reference are available from Budget Group without
charge. Prospective investors may obtain documents incorporated by reference
into this prospectus by requesting them from us by telephone at (904) 238-7035
or in writing at our executive offices at Budget Group, Inc., Attention:
Investor Relations, 125 Basin Street, Suite 210, Daytona Beach, Florida 32114.
In order to ensure timely delivery of the documents, any request should be made
at least five days prior to , 1999, the expiration date of the
exchange offer.
WHERE YOU CAN FIND MORE INFORMATION
Budget Group files annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy the reports,
statements or other information we file at the SEC's public
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reference room in Washington, D.C., located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC also maintains regional offices where you can
read and copy the reports. These are located at 500 West Madison Street, Room
1400, Chicago, Illinois 60606 and at Seven World Trade Center, Suite 1300, New
York, New York 10048. You can request copies of these documents, upon payment of
photocopying fees, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. Our
filings are also available to the public on the SEC's Internet site at
http://www.sec.gov. These documents are also available for viewing and copying
at the offices of The New York Stock Exchange at 20 Broad Street, New York, New
York 10005.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. In addition, from time to
time, we or our representatives have made or may make forward-looking
statements, orally or in writing. Such forward-looking statements may be
included in, but are not limited to, various filings made by us with the SEC and
press releases or oral statements made by management. These statements refer to
analyses and other information which are based on forecasts of future results
and estimates of amounts not yet determinable. These statements also relate to
our future prospects, developments and business strategies.
These forward-looking statements are identified by the use of terms and
phrases such as "anticipate," "believe," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "will" and similar terms and
phrases, including references to assumptions. These statements are contained in
this prospectus and in the documents incorporated by reference into this
prospectus.
These forward-looking statements involve risks and uncertainties that may
cause our actual future activities and results of operations to be materially
different from those suggested or described in this prospectus. These risks
include, among others, the following:
- our recent losses;
- seasonality;
- competition;
- the integration of our recent acquisitions and ability to achieve cost
savings;
- our potential obligation to make a make-whole payment;
- the availability and terms of financing for our business;
- our dependence on a principal vehicle supplier;
- possible changes in manufacturers' vehicle repurchase programs;
- litigation with a former franchisee;
- the impact of various types of regulations;
- additional risks of our international operations;
- whether our investments and cost-cutting initiatives will be successful;
and
- our ability to address Year 2000 problems.
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The risks and uncertainties that may affect us are more specifically
described in the section entitled "Risk Factors" in this prospectus and in our
annual report on Form 10-K for the year ended December 31, 1998, which is
incorporated by reference into this prospectus. If one or more of these risks or
uncertainties materialize, or if our underlying assumptions prove incorrect, our
actual results may vary materially from those expected, estimated or projected.
We undertake no obligation to update our forward-looking statements or risk
factors to reflect future events or circumstances.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
References to Additional
Information......................... i
Prospectus Summary.................... 1
Risk Factors.......................... 9
Capitalization........................ 16
Pro Forma Financial Information....... 17
The Company........................... 21
Our First Quarter 1999 Results........ 21
The Exchange Offer.................... 23
Description of Credit Facility........ 31
Description of the New Notes.......... 32
U.S. Federal Income Tax
Consequences........................ 64
Plan of Distribution.................. 65
Validity of the New Notes............. 65
Experts............................... 66
Incorporation of Certain Documents by
Reference........................... 66
Where You Can Find More Information... 66
Forward-Looking Statements............ 67
</TABLE>
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LOGO
OFFER TO EXCHANGE
$400,000,000 9 1/8% SENIOR NOTES DUE APRIL 1, 2006
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
FOR
ALL OUTSTANDING UNREGISTERED
9 1/8% SENIOR NOTES DUE APRIL 1, 2006
---------------------
PROSPECTUS
---------------------
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<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following summary is qualified in its entirety by reference to the
complete statute, Certificate of Incorporation, Bylaws and agreement referred to
below.
Section 145 of the General Corporation Law of the State of Delaware
("DGCL") provides that a corporation has the power to indemnify any director or
officer, or former director or officer, who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) against the expenses,
(including attorney's 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 interest 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
indemnify for such expenses as such court shall deem proper.
As permitted by Section 102(b)(7) of the DGCL, the Amended and Restated
Certificate of Incorporation of the Registrant filed herewith (the "Restated
Certificate of Incorporation") provides that no director shall be liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director other than (i) for breaches of the director's duty of loyalty to
the Registrant and its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) for the unlawful payment of dividends or unlawful stock purchases or
redemptions under Section 174 of the DGCL, and (iv) for any transaction from
which the director derived an improper personal benefit.
The Registrant's Bylaws provide indemnification of the Registrant's
directors and officers, both past and present, to the fullest extent permitted
by the DGCL, and allow the Registrant to advance or reimburse litigation
expenses upon submission by the director or officer of an undertaking to repay
such advances or reimbursements if it is ultimately determined that
indemnification is not available to such director or officer pursuant to the
Bylaws. The Registrant's Bylaws will also authorize the Registrant to purchase
and maintain insurance on behalf of an officer or director, past or present,
against any liability asserted against him in any such capacity whether or not
the Registrant would have the power to indemnify him against such liability
under the provisions of the Restated Certificate of Incorporation or Section 145
of the DGCL.
The Registrant has entered into indemnification agreements with each of its
directors and certain of its executive officers. The indemnification agreements
require the Registrant, among other things, to indemnify such directors and
officers against certain liabilities that may arise by reason of their status or
service as directors or officers (other than liabilities arising from willful
misconduct of a culpable nature), and to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified.
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ITEM 21. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
The following list of exhibits includes both exhibits submitted with this
Report as filed with the Securities and Exchange Commission and those
incorporated by reference to other filings:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
* 1.1 -- Purchase Agreement dated as of April 8, 1999 among the
Company, Credit Suisse First Boston Corporation, Goldman,
Sachs & Co. and NationsBanc Montgomery Securities LLC.
2.1 -- Plan and Agreement of Merger dated as of November 25, 1997
among Budget Group, Inc., Cruise America, Inc. and CA
Acquisition Corporation (incorporated by reference to
Exhibit 2.1 of Registration Statement on Form S-4, File No.
333-42327, dated December 16, 1997, as amended by Amendment
No. 1 to Form S-4 dated December 29, 1997).
2.2 -- Agreement and Plan of Merger dated as of March 4, 1998 by
and among Budget Group, Inc., BDG Corporation, Ryder TRS
Inc., and certain other parties (incorporated herein by
reference to Exhibit 2.1 to the Company's Form 8-K dated
March 4, 1998).
2.3 -- Amendment No. 1 to Agreement and Plan of Merger dated as of
March 16, 1998 by and among Budget Group, Inc., BDG
Corporation, Ryder TRS, Inc., and certain other parties
(incorporated herein by reference to Exhibit 2.2 to the
Company's Form 8-K dated March 4, 1998).
2.4 -- Common Stock Purchase Agreement, dated as of January 13,
1997, between John J. Nevin and the Registrant (incorporated
by reference to Exhibit 2.7 to the Registrant's Registration
Statement on Form S-1, File No. 333-21691, dated February
12, 1997).
2.5 -- 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
Registrant's Registration Statement on Form S-1, File No.
333-21691, dated February 12, 1997).
2.6 -- Amendment No. 2 to Agreement and Plan of Merger dated as of
June 19, 1998, by and among Budget Group, Inc., BDG
Corporation, Ryder TRS, Inc., and certain other parties
(incorporated by reference to Exhibit 2.3 to the Company's
Current Report on Form 8-K filed on June 30, 1998).
2.7 -- Form of Warrant issued to former Ryder TRS shareholders and
optionholders (incorporated by reference to Exhibit 2.4 to
the Company's Current Report on Form 8-K filed on June 30,
1998).
2.8 -- 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).
2.9 -- 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).
* 3.1 -- Restated Certificate of Incorporation of the Registrant.
* 3.2 -- Amended and Restated Bylaws of the Registrant.
4.1 -- Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement on
Form S-1, File No. 333-34799, dated September 26, 1997).
4.2 -- Base Indenture between Team Fleet Financing Corporation, as
Issuer, Team Rental Group, Inc., as Servicer and Team
Interestholder, and Bankers Trust Company, as Trustee,
relating to Rental Car Asset Backed Notes (incorporated by
reference to Exhibit 4.1 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994).
</TABLE>
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<PAGE> 75
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.3 -- Supplemental Indenture relating to Rental Car Asset Backed
Notes (incorporated by reference to Exhibit 4.2 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
4.4 -- Base Indenture among BRAC SOCAL Funding Corporation, as
Issuer, BRAC-OPCO, Inc., as Servicer and Retained
Interestholder, and Bankers Trust Company, as Trustee
(incorporated by reference to Exhibit 4.5 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
4.5 -- Series 1995-1 Supplement to Base Indenture among BRAC SOCAL
Funding Corporation, as Issuer, BRAC-OPCO, Inc., as Servicer
and Retained Interestholder, and Bankers Trust Company, as
Trustee (incorporated by reference to Exhibit 4.6 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
4.6 -- Supplement No. 1 to Indenture, dated as of October 20, 1995,
among BRAC SOCAL Funding Corporation, BRAC-OPCO, Inc., Team
Rental of Southern California, Inc. and Bankers Trust
Company, as Trustee (incorporated by reference to Exhibit
4.7 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
4.7 -- Registration Rights Agreement, dated as of August 25, 1994,
among the Registrant, Brian Britton, Jeffrey Congdon,
Richard Hinkle, John Kennedy, Sanford Miller and Richard
Sapia (incorporated by reference to Exhibit 10.23 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
4.8 -- Indenture dated as of January 8, 1998 between the Company
and the Chase Manhattan Bank, as Trustee (incorporated
herein by reference from the Company's Registration
Statement on Form S-3, File No. 333-41093, dated November
26, 1997, as amended by Amendment No. 1 to Form S-3 dated
January 7, 1998).
4.9 -- First Amendment to Registration Rights Agreement, dated as
of November 1, 1994, among the Registrant, Brian Britton,
Jeffrey Congdon, Richard Hinkle, John Kennedy, Sanford
Miller and Richard Sapia (incorporated by reference to
Exhibit 10.24 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994).
4.10 -- Letter Agreement, dated as of November 1, 1994, between
Andrew Klein and the Registrant 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 Registrant's Annual Report on Form
10-K for the year ended December 31, 1994).
4.11 -- Registration Rights Agreement, dated as of October 20, 1995,
between Team Rental Group, Inc. and Budget Rent-a-Car of
Southern California (incorporated by reference to Exhibit
4.12 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
4.12 -- Registration Rights Agreement, dated as of December 1, 1996,
between Team Rental Group, Inc. and the holders of the
Convertible Subordinated Notes (incorporated by reference to
Exhibit 4.12 to the Registrant's Registration Statement on
Form S-1, File No. 333-21691, dated February 12, 1997).
4.13 -- Amended and Restated Base Indenture dated as of December 1,
1996 among Team Fleet Financing Corporation, as Issuer, Team
Rental Group, Inc., as Servicer and Team Interestholder, and
Bankers Trust Registrant, as Trustee (incorporated by
reference to Exhibit 4.15 to the Registrant's Registration
Statement on Form S-1, File No. 333-21691, dated February
12, 1997).
4.14 -- Series 1996-1 Supplement to the Amended and Restated Base
Indenture dated as of December 1, 1996 among Team Fleet
Financing Corporation, as Issuer, Team Rental Group, Inc.,
as Servicer and Team Interestholder, and Bankers Trust
Company, as Trustee (incorporated by reference to Exhibit
4.16 to the Registrant's Registration Statement on Form S-1,
File No. 333-21691, dated February 12, 1997).
</TABLE>
II-3
<PAGE> 76
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.15 -- Amended and Restated Master Motor Vehicle Lease Agreement
dated as of December 1, 1996 among Team Fleet Financing
Corporation, as Lessor, Team Rental Group, Inc., as
Guarantor, and certain subsidiaries of Team Rental Group,
Inc., as lessees (incorporated by reference to Exhibit 4.17
to the Registrant's Registration Statement on Form S-1, File
No. 333-21691, dated February 12, 1997).
4.16 -- Motor Vehicle Lease Agreement Series 1996-1 dated as of
December 1, 1996 among Team Fleet Financing Corporation, as
Lessor, Team Rental Group, Inc., as Guarantor, and certain
subsidiaries of Team Rental Group, Inc., as lessees
(incorporated by reference to Exhibit 4.18 to the
Registrant's Registration Statement on Form S-1, File No.
333-21691, dated February 12, 1997).
4.17 -- Registration Rights Agreement, dated as of November 6, 1997,
among the Registrant and the Stockholders of Budget
Rent-a-Car of St. Louis, Inc. (incorporated by reference to
Exhibit 4.7 of the Registrant's Registration Statement on
Form S-3, File No. 333-41093, dated November 26, 1997).
4.18 -- Registrant's Series A Preferred Stock Certificate of
Designations (incorporated by reference to Exhibit 3.4 to
the Registrant's Registration Statement on Form S-1, File
No. 333-34799, dated September 26, 1997).
4.19 -- 1994 Incentive Stock Option Plan (incorporated by reference
to Exhibit 10.27 to the Registrant's Registration Statement
on Form S-1, File No. 33-78274, dated April 28, 1994).
4.20 -- Amendment No. 1 to 1994 Stock Option Plan (incorporated by
reference to Exhibit 10.54 to Amendment No. 2 to the
Registrant's Registration Statement on Form S-1, File No.
333-4507, dated June 28, 1996).
4.21 -- 1994 Director's Plan (incorporated by reference to Exhibit
10.28 to the Registrant's Registration Statement on Form
S-1, File No. 33-78274, dated April 28, 1994).
4.22 -- Budget Rent a Car Corporation SavingsPlus Plan, as Amended
and Restated Effective January 1993 (incorporated by
reference to Exhibit 4.2 to Registrant's Registration
Statement on Form S-8, as filed with the Commission on July
14, 1998).
4.23 -- Amended and Restated Registration Rights Agreement, dated as
of April 29, 1997, between the Company and the holders of
the Convertible Subordinated Notes (incorporated by
reference to Exhibit 4.6 to the Registrant's Registration
Statement on Form S-3, as filed with the Commission on July
17, 1998).
4.24 -- Certificate of Trust of Budget Group Capital Trust
(incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3, as filed
with the Commission on August 13, 1998).
4.25 -- Declaration of Trust of Budget Group Capital Trust dated as
of June 4, 1998, between Budget Group, Inc., The Bank of New
York and the Administrative Trustees named therein
(incorporated by reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form S-3, as filed
with the Commission on August 13, 1998).
4.26 -- Amended and Restated Declaration of Trust dated as of June
19, 1998, between Budget Group, Inc., The Bank of New York
(Delaware), The Bank of New York and the Administrative
Trustees named therein (incorporated by reference to Exhibit
4.3 to the Registrant's Registration Statement on Form S-3,
as filed with the Commission on August 13, 1998).
4.27 -- Indenture for HIGH TIDES Debentures Due 2028 dated as of
June 19, 1998 between Budget Group, Inc. and The Bank of New
York (incorporated by reference to Exhibit 4.4 to the
Registrant's Registration Statement on Form S-3, as filed
with the Commission on August 13, 1998).
</TABLE>
II-4
<PAGE> 77
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.28 -- Form of HIGH TIDES (incorporated by reference to Exhibit 4.6
to the Registrant's Registration Statement on Form S-3, as
filed with the Commission on August 13, 1998).
4.29 -- Form of HIGH TIDES Debentures Due 2028 (incorporated by
reference to Exhibit 4.7 to the Registrant's Registration
Statement on Form S-3, as filed with the Commission on
August 13, 1998).
4.30 -- Guarantee Agreement dated as of June 19, 1998 by Budget
Group, Inc. as Guarantor (incorporated by reference to
Exhibit 4.8 to the Registrant's Registration Statement on
Form S-3, as filed with the Commission on August 13, 1998).
* 4.31 -- Indenture dates as of April 13, 1998 between the Company and
The Bank of New York, as Trustee.
* 4.32 -- Registration Rights Agreement dated as of April 8, 1999
among the Company, Credit Suisse First Boston Corporation,
Goldman, Sachs & Co. and NationsBank Montgomery Securities
LLC.
* 5.1 -- Opinion of King & Spalding.
10.1 -- Amended and Restated Sublicense Agreement, dated as of
October 20, 1995, between Budget Rent-a-Car of Southern
California and Team Rental of Southern California, Inc.,
along with Corporate Guaranty of Team Rental Group, dated as
of October 20, 1995 (incorporated by reference to Exhibit
10.11 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
10.2 -- Lease Agreement dated September 1, 1993 between Miller and
Hinkle, a Florida general partnership, and Capital City
Leasing, Inc., as amended by First Amendment dated as of
July 1, 1994 (Henrico County, Virginia) (incorporated by
reference to Exhibit 10.41 to Amendment No. 3 to the
Registrant's Registration Statement on Form S-1, File No.
33-78274, dated August 12, 1994).
10.3 -- Lease Agreement dated June 1, 1994 between Miller and
Hinkle, a Florida general partnership, and Capital City
Leasing, Inc. (Chesterfield County, Virginia) (incorporated
by reference to Exhibit 10.25 to Amendment No. 1 to the
Registrant's Registration Statement on Form S-1, File No.
333-4507, dated June 13, 1996).
10.4 -- Lease Agreement dated as of September 12, 1995 between MCK
Real Estate Corporation, Team Car Sales of Richmond, Inc.
and Team Rental Group, Inc. (incorporated by reference to
Exhibit 10.24 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.5 -- Agreement of Lease dated as of August 31, 1995 between MCK
Real Estate Corporation and Team Rental of Philadelphia,
Inc. (incorporated by reference to Exhibit 10.25 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.6 -- Supply Agreement among Ford Motor Company, Team Rental
Group, Inc. and Budget Rent-a-Car Corporation (incorporated
by reference to Exhibit 10.6 to the Registrant's
Registration Statement on Form S-1, File No. 333-21691,
dated February 12, 1997).
10.7 -- Advertising Agreement between Ford Motor Company and Budget
Rent-a-Car Corporation (incorporated by reference to Exhibit
10.7 to the Registrant's Registration Statement on Form S-1,
File No. 333-21691, dated February 12, 1997).
10.8 -- Subordinated Notes Purchase Agreement, dated as of December
1, 1996, by and between the Registrant and the investors
listed therein (incorporated by reference to Exhibit 10.20
of the Registrant's Registration Statement on Form S-1, File
No. 333-21691, dated February 12, 1997).
</TABLE>
II-5
<PAGE> 78
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.9 -- Subordination Agreement, dated as of October 20, 1995, among
Budget Rent-a-Car of Southern California, BRAC-OPCO, Inc.,
Team Rental Group, Inc. and Team Rental of Southern
California (incorporated by reference to Exhibit 10.49 to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995).
10.10 -- Shareholders' Agreement, dated as of October 20, 1995, by
and among Team Rental Group, Inc., the holders of the
Company's Class B Common Stock, and Budget Rent-a-Car of
Southern California (incorporated by reference to Exhibit
10.50 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
10.11 -- 1994 Incentive Stock Option Plan (incorporated by reference
to Exhibit 10.27 to the Registrant's Registration Statement
on Form S-1, File No. 33-78274, dated April 28, 1994).
10.12 -- Amendment No. 1 to 1994 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.54 to Amendment No.
2 to the Registrant's Registration Statement on Form S-1,
File No. 333-4507, dated June 28, 1996).
10.13 -- 1994 Director's Plan (incorporated by reference to Exhibit
10.28 to the Registrant's Registration Statement on Form
S-1, File No. 33-78274, dated April 28, 1994).
10.14 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Sanford Miller (incorporated by reference to
Exhibit 10.29 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.15 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and John Kennedy (incorporated by reference to
Exhibit 10.30 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.16 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Jeffrey Congdon (incorporated by reference to
Exhibit 10.31 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.17 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Ronald Agronin (incorporated by reference to
Exhibit 10.32 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.18 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Stephen Weber (incorporated by reference to
Exhibit 10.33 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.19 -- Second Amendment 1994 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.24 to the
Registrant's Registration Statement on Form S-4, File No.
333-49679).
10.20 -- 1997 Amendment 1994 Directors' Stock Option Plan
(incorporated by reference to Exhibit 10.25 to the
Registrant's Registration Statement on Form S-4, File No.
333-49679).
10.21 -- Registration Rights Agreement dated as of June 19, 1998
between Budget Group Capital Trust, Budget Group, Inc. and
the several Purchasers named herein (incorporated by
reference to Exhibit 10.1 to the Registrant's Registration
Statement on Form S-3, as filed with the Commission on
August 13, 1998).
10.22 -- Remarketing Agreement dated as of June 19, 1998 between
Budget Group, Inc., Budget Group Capital Trust, The Bank of
New York, the Administrative Trustees named therein and the
Remarketing Agent named therein (incorporated by reference
to Exhibit 10.2 to the Registrant's Registration Statement
on Form S-3, as filed with the Commission on August 13,
1998).
10.23 -- Amended and Restated Credit Agreement dated as of June 19,
1998 among Budget Group, Inc., as the Borrower, Certain
Financial Institutions, as the Lenders, Credit Suisse First
Boston, as a Co-Syndication Agent and the Documentation
Agent. (incorporated by reference to
Exhibit 10.23 to the Registrant's Annual Report on Form
10-K, as filed with the Commission on March 31, 1999).
</TABLE>
II-6
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.24 -- First Amendment to Amended and Restated Credit Agreement
dated September 11, 1998 among Budget Group, Inc., as
Borrower, the Lenders and Credit Suisse First Boston, as
Administrative Agent (incorporated by reference to Exhibit
10,24 to the Registrant's Annual Report on Form 10-K, as
filed with the Commission on March 31, 1999).
10.25 -- Limited Waiver No. 1 to Amended and Restated Credit
Agreement dated as of December 31, 1998 among Budget Group,
Inc., as Borrower, the Lenders and Credit Suisse First
Boston (incorporated by reference to Exhibit 10.25 to the
Registrant's Annual Report on Form 10-K, as filed with the
Commission on March 31, 1999).
10.26 -- Assignment, Assumption and Amendment Agreement dated as of
June 19, 1998 among Budget Group, Inc., as New Borrower,
Budget Rent A Car Corporation, as Existing Borrower, the
Lenders, Credit Suisse First Boston, as Co-Syndication
Agent, Co-Arranger and Administrative Agent and Nationsbanc
Montgomery Securities LLC, as Co-Syndication Agent,
Co-Arranger and Documentation Agent (incorporated by
reference to Exhibit 10.26 to the Registrant's Annual Report
on Form 10-K, as filed with the Commission on March 31,
1999).
10.27 -- Form of Executive Severance Agreement dated October 1, 1998
between the Registrant and each of Messrs. Miller, Congdon,
Aprati and White (incorporated by reference to Exhibit 10.28
to the Registrant's Annual Report on Form 10-K, as filed
with the Commission on March 31, 1999).
10.28 -- Form of Executive Severance Agreement between the Registrant
and each of Messrs. Clauer, Sotir and Zorn (incorporated by
reference to Exhibit 10.28 to the Registrant's Annual Report
on Form 10-K, as filed with the Commission on March 31,
1999).
10.29 -- Transaction Guaranty dated December 15, 1998 by Budget
Group, Inc. in favor of KeyBank National Association
(incorporated by reference to Exhibit 10.29 to the
Registrant's Annual Report on Form 10-K, as filed with the
Commission on March 31, 1999).
10.30 -- Second Amendment to Amended and Restated Credit Agreement
dated March 18, 1999 among Budget Group, Inc., as Borrower,
the Lenders and Credit Suisse First Boston, as
Administrative Agent (incorporated by reference to Exhibit
10.30 to the Registrant's Annual Report on Form 10-K, as
filed with the Commission on March 31, 1999).
* 12.1 -- Ratio of Earnings to Fixed Charges.
* 23.1 -- Consent of King & Spalding (included as part of its opinion
filed as Exhibit 5.1).
* 23.2 -- Consent of Arthur Andersen LLP.
* 23.3 -- Consent of PricewaterhouseCoopers LLP.
* 25.1 -- Statement of Eligibility of Trustee on Form T-1.
* 99.1 -- Form of Letter of Transmittal for 9 1/8% Senior Notes Due
April 1, 2006.
* 99.2 -- Form of Notice of Guaranteed Delivery for 9 1/8% Senior
Notes Due April 1, 2006.
* 99.3 -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
* 99.4 -- Letter to Clients.
* 99.5 -- Letter to Nominees.
</TABLE>
- ---------------
* Filed herewith.
b. Financial Statement Schedules
None.
II-7
<PAGE> 80
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC 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 (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement of any material change to such information in the
registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(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.
The undersigned registrant hereby undertakes that (1) for purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective; and (2) for purposes of determining any liability under the
II-8
<PAGE> 81
Securities Act of 1933, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-9
<PAGE> 82
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
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 May 11, 1999.
BUDGET GROUP, INC.
By: /s/ ROBERT L. APRATI
------------------------------------
Robert L. Aprati
Executive Vice President,
General Counsel and Secretary
POWER OF ATTORNEY
We, the undersigned directors and officers of Budget Group, Inc. do hereby
constitute and appoint Robert L. Aprati our true and lawful attorney-in-fact and
agent, to do any and all acts and things in our names and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorney and
agent, or any of them, may deem necessary or advisable to enable said
Corporation to comply with the Securities Act of 1933 and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
this registration statement, or any registration statement for this offering
that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorney and agent shall do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ SANFORD MILLER Chairman of the Board, Chief Executive Officer
- ----------------------------------------------------- and Director
Sanford Miller
/s/ JEFFREY D. CONGDON Vice Chairman of the Board and Director
- -----------------------------------------------------
Jeffrey D. Congdon
/s/ MICHAEL B. CLAUER Executive Vice President and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial Officer)
Michael B. Clauer
/s/ THOMAS L. KRAM Vice President, Controller (Principal
- ----------------------------------------------------- Accounting Officer)
Thomas L. Kram
/s/ RONALD D. AGRONIN Director
- -----------------------------------------------------
Ronald D. Agronin
/s/ JAMES F. CALVANO Director
- -----------------------------------------------------
James F. Calvano
</TABLE>
II-10
<PAGE> 83
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ MARTIN P. GREGOR Director
- -----------------------------------------------------
Martin P. Gregor
/s/ F. PERKINS HIXON, JR. Director
- -----------------------------------------------------
F. Perkins Hixon, Jr.
/s/ JOHN P. KENNEDY Director
- -----------------------------------------------------
John P. Kennedy
/s/ DR. STEPHEN L. WEBER Director
- -----------------------------------------------------
Dr. Stephen L. Weber
</TABLE>
II-11
<PAGE> 1
EXHIBIT 1.1
$400,000,000
BUDGET GROUP, INC.
91/8% SENIOR NOTES DUE APRIL 1, 2006
PURCHASE AGREEMENT
April 8, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC,
As Representatives of the Several Purchasers,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Budget Group, Inc., a Delaware corporation (the
"COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several initial purchasers named in Schedule A hereto (the
"PURCHASERS") U.S.$400,000,000 principal amount of its 91/8% Senior Notes Due
April 1, 2006 (the "Offered Securities") to be issued under an indenture, dated
as of April 13, 1999 (the "INDENTURE"), between the Company and The Bank of New
York, as Trustee (the "TRUSTEE"). The Securities Act of 1933, as amended, is
herein referred to as the "SECURITIES ACT."
Holders (including subsequent transferees) of the Notes will be
entitled to the benefit of a Registration Rights Agreement (the "REGISTRATION
RIGHTS AGREEMENT") of even date hereof, among the Company and the Initial
Purchasers, pursuant to which the Company will be obligated to file with the
Securities and Exchange Commission (the "COMMISSION") (i) a registration
statement under the Securities Act (the "EXCHANGE OFFER REGISTRATION STATEMENT")
registering an issue of senior notes of the Company (the "EXCHANGE NOTES") which
shall be identical in all material respects to the Offered Securities (except
that the Exchange Notes will not contain terms with respect to transfer
restrictions or provisions for additional interest) and (ii) under certain
circumstances, a shelf registration statement (the "SHELF REGISTRATION
STATEMENT") pursuant to Rule 415 under the Securities Act.
The Company hereby agrees with the Purchasers as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Purchasers that:
(a) A preliminary offering circular and an offering circular
relating to the Offered Securities to be offered by the Purchasers have
been prepared by the Company. Such preliminary offering circular and
offering circular, as supplemented as of the date of this Agreement,
and any other document approved by the Company for use in connection
with the contemplated resale of the Offered Securities are hereinafter
collectively referred to as the "OFFERING DOCUMENT". On the date of
this Agreement, the Offering Document does not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
<PAGE> 2
The preceding sentence does not apply to statements in or omissions
from the Offering Document based upon written information furnished to
the Company by any Purchaser through Credit Suisse First Boston
Corporation ("CSFBC") specifically for use therein, it being understood
and agreed that the only such information is that described as such in
Section 7(b). Except as disclosed in the Offering Document, on the date
of this Agreement, the Company's Annual Report on Form 10-K most
recently filed with the Commission and all subsequent reports
(collectively, the "EXCHANGE ACT REPORTS") that have been filed by the
Company with the Commission or sent to stockholders pursuant to the
Securities Exchange Act of 1934 (as amended, the "EXCHANGE ACT") do not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Such
documents, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
(b) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Offering Document; and the
Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification except where the failure to so qualify would not have a
material adverse effect upon the condition (financial and other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole ("MATERIAL ADVERSE EFFECT").
(c) Each significant subsidiary (as defined in Rule 1-02(w) of
Regulation S-X of the Commission) (each of such corporations or other
legal entities hereinafter referred to as a "SUBSIDIARY" and all such
corporations or other legal entities being, collectively, the
"SUBSIDIARIES") of the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Offering Document; and each Subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification; all of the
issued and outstanding capital stock of each Subsidiary of the Company
has been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock of each Subsidiary owned by the
Company, is owned free from liens, encumbrances and defects. The
Subsidiaries are listed in Schedule B hereto.
(d) The Indenture has been duly authorized; the Offered
Securities have been duly authorized; and when the Offered Securities
are delivered and paid for pursuant to this Agreement on the Closing
Date (as defined below), the Indenture will have been duly executed and
delivered, such Offered Securities will have been duly executed,
authenticated, issued and delivered and will conform to the description
thereof contained in the Offering Document and the Indenture and such
Offered Securities will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(e) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company; and the Registration
Rights Agreement conforms in all material respects to the description
thereof contained in the Offering Document, and constitutes a valid and
legally binding obligation of the Company, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
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<PAGE> 3
(f) Except as disclosed in the Offering Document, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Purchaser for a brokerage commission, finder's fee or other like
payment.
(g) Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 of this Agreement,
no consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement and the
Registration Rights Agreement in connection with the issuance and sale
of the Offered Securities by the Company except for the order of the
Commission declaring the Exchange Offer Registration Statement or the
Shelf Registration Statement effective.
(h) The execution, delivery and performance of the Indenture,
the Registration Rights Agreement and this Agreement and the issuance
and sale of the Offered Securities and compliance with the terms and
provisions thereof will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their properties, or any agreement
or instrument to which the Company or any such Subsidiary is a party or
by which the Company or any such Subsidiary is bound or to which any of
the properties of the Company or any such Subsidiary is subject, or the
charter or by-laws of the Company or any such Subsidiary except such
breaches, violations or defaults that, individually or in the
aggregate, would not have a Material Adverse Effect and the Company has
full power and authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement.
(i) This Agreement has been duly authorized, executed and
delivered by the Company.
(j) The Company and the Subsidiaries have (i) such ownership
and possession rights with respect to their respective assets and
properties as are necessary for continuing conduct of their respective
business, as described in the Offering Document, except where the
failure to possess any such rights would not, individually or in the
aggregate, have a Material Adverse Effect, and (ii) peaceful and
undisturbed possession under all material leases to which the Company
or any such Subsidiary is a party as lessee; all material leases to
which the Company or any such Subsidiary is a party are in full force
and effect; none of the Company or any Subsidiary has been notified
that a lease is invalid or unenforceable; and no default by the Company
or such Subsidiary has occurred and is continuing thereunder, except
for any defaults that would not, individually or in the aggregate, have
a Material Adverse Effect.
(k) The Company and its Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(l) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(m) The Company and the Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks and trade names
necessary to conduct the business now operated by them and have not
received any notice of infringement of or conflict with asserted rights
of others with respect to such rights that, if determined adversely to
the Company or any such Subsidiary, would individually or in the
aggregate have a Material Adverse Effect.
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<PAGE> 4
(n) Except as disclosed in the Offering Document, neither the
Company nor any of the Subsidiaries is in violation of any statute, any
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates
any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect; and the Company is not aware
of any pending investigation which might lead to such a claim.
(o) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Company,
any Subsidiary or any of their respective properties that, if
determined adversely to the Company or any such Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to
perform its obligations under the Indenture or this Agreement, or which
are otherwise material in the context of the sale of the Offered
Securities; and no such actions, suits or proceedings are threatened
or, to the Company's knowledge, contemplated.
(p) The financial statements included in the Offering Document
present fairly in all material respects the financial position of the
Company and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied
on a consistent basis; and the assumptions used in preparing the pro
forma financial statements included in the Offering Document provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the
related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts.
(q) Except as disclosed in the Offering Document, since the
date of the latest audited financial statements included in the
Offering Document there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole,
and, except as disclosed in or contemplated by the Offering Document,
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(r) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act
of 1940 (the "INVESTMENT COMPANY ACT") ; and the Company is not and,
after giving effect to the offering and sale of the Offered Securities
and the application of the proceeds thereof as described in the
Offering Document, will not be an "investment company" as defined in
the Investment Company Act.
(s) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Offered Securities are
listed on any national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
(t) Assuming the accuracy of the representations of the
Purchasers set forth in Section 4 hereof, the offer and sale of the
Offered Securities in the manner contemplated by this Agreement will be
exempt from the registration requirements of the Securities Act by
reason of Section 4(2)
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<PAGE> 5
thereof and Regulation S thereunder; and it is not necessary to qualify
an indenture in respect of the Offered Securities under the Trust
Indenture Act of 1939 (the "TRUST INDENTURE ACT").
(u) Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf (i) has, within the six-month
period prior to the date hereof, offered or sold in the United States
or to any U.S. person (as such terms are defined in Regulation S under
the Securities Act) the Offered Securities, or any security of the same
class or series as the Offered Securities or (ii) has offered or will
offer or sell the Offered Securities (A) in the United States by means
of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act or (B) with respect to
any such securities sold in reliance on Rule 903 of Regulation S
("REGULATION S") under the Securities Act, by means of any directed
selling efforts within the meaning of Rule 902(b) of Regulation S. The
Company, its affiliates and any person acting on its or their behalf
have complied and will comply with the offering restrictions
requirement of Regulation S. The Company has not entered and will not
enter into any contractual arrangement with respect to the distribution
of the Offered Securities except for this Agreement and the
Registration Rights Agreement.
(v) The Company is subject to Section 13 or 15(d) of the
Exchange Act.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at a purchase price of 97.25% of the principal amount thereof
plus accrued interest from 13, 1999 to the Closing Date (as hereinafter defined)
the respective principal amounts of Offered Securities set forth opposite the
names of the several Purchasers in Schedule A hereto.
The Company will deliver against payment of the purchase price the
Offered Securities in the form of one or more permanent global certificates in
definitive form (the "GLOBAL SECURITIES") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent Global Securities
will be held only in book-entry form through DTC, except in the limited
circumstances described in the Offering Document. Payment for the Offered
Securities shall be made by the Purchasers in Federal (same day) funds by wire
transfer to an account designated by the Company at a bank acceptable to CSFBC
at the office of Cravath, Swaine & Moore at 10:00 a.m. (New York time), on April
13, 1999, or at such other time not later than seven full business days
thereafter as CSFBC and the Company determine, such time being herein referred
to as the "CLOSING DATE", against delivery to the Trustee as custodian for DTC
of the Global Securities representing all of the Offered Securities. The Global
Securities will be made available for checking at the above office of Cravath,
Swaine & Moore at least 24 hours prior to the Closing Date.
4. Representations by Purchasers; Resale by Purchasers. (a) Each
Purchaser severally represents and warrants to the Company that it is an
"accredited investor" within the meaning of Regulation D under the Securities
Act.
(b) Each Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may
not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with
Regulation S or pursuant to an exemption from the registration
requirements of the Securities Act. Each Purchaser severally represents
and agrees that it has offered and sold the Offered Securities, and
will offer and sell the Offered Securities as part of its distribution
at any time, only in accordance with Rule 903 or Rule 144A under the
Securities Act ("RULE 144A"). Accordingly, neither such Purchaser nor
its affiliates, nor any persons acting on its or their behalf, have
engaged or will engage in any directed selling efforts with respect to
the Offered Securities, and such Purchaser, its affiliates and all
persons acting on its or their behalf have complied and will comply
with the offering restrictions
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<PAGE> 6
requirement of Regulation S. Terms used in this subsection (b) have the
meanings given to them by Regulation S.
(c) Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for any such arrangements with the other Purchasers or
affiliates of the other Purchasers or with the prior written consent of
the Company.
(d) Each Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United
States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation
or general advertising. Each Purchaser severally agrees, with respect
to resales made in reliance on Rule 144A of any of the Offered
Securities, to deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect
that the resale of such Offered Securities has been made in reliance
upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A.
(e) Each of the Purchasers severally represents and agrees
that (i) it has not offered or sold and prior to the date six months
after the date of issue of the Offered Securities will not offer or
sell any Offered Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Offered Securities in, from
or otherwise involving the United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Offered
Securities to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
5. Certain Agreements of the Company. The Company agrees with the
several Purchasers that:
(a) The Company will advise CSFBC promptly of any proposal to
amend or supplement the Offering Document and will not effect such
amendment or supplementation without CSFBC's consent, which consent
shall not be unreasonably withheld. If, at any time prior to the
completion of the resale of the Offered Securities by the Purchasers,
any event occurs as a result of which the Offering Document as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, the Company promptly will notify CSFBC of
such event and promptly will prepare, at its own expense, an amendment
or supplement that will correct such statement or omission. Neither
CSFBC's consent to, nor the Purchasers' delivery to offerees or
investors of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(b) The Company will furnish to CSFBC copies of any
preliminary offering circular, the Offering Document and all amendments
and supplements to such documents, in each case as soon as available
and in such quantities as CSFBC reasonably requests, and the Company
will furnish to CSFBC on the date hereof four certificated copies of
the Offering Document signed by a duly authorized officer of the
Company, one of which will include the independent accountants' reports
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<PAGE> 7
therein manually signed by such independent accountants. At any time
when the Company is not subject to Section 13 or 15(d) of the Exchange
Act and any Offered Securities are outstanding, the Company will
promptly furnish or cause to be furnished to CSFBC (and, upon request,
to each of the other Purchasers) and, upon request of holders and
prospective purchasers of the Offered Securities, to such holders and
purchasers, copies of the information required to be delivered to
holders and prospective purchasers of the Offered Securities pursuant
to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection
with resales by such holders of the Offered Securities. The Company
will pay the expenses of printing and distributing to the Purchasers
all such documents.
(c) The Company will arrange for the qualification of the
Offered Securities for sale and the determination of their eligibility
for investment under the laws of such jurisdictions in the United
States and Canada as CSFBC designates and will continue such
qualifications in effect so long as required for the resale of the
Offered Securities by the Purchasers, provided that the Company will
not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such state.
(d) During the period of three years hereafter, the Company
will furnish to CSFBC and, upon request, to each of the other
Purchasers, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the
Company will furnish to CSFBC and, upon request, to each of the other
Purchasers (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission
under the Exchange Act or mailed to shareholders, and (ii) from time to
time, such other information concerning the Company as CSFBC may
reasonably request.
(e) During the period of two years after the Closing Date or,
if earlier, until such time as the Offered Securities are no longer
restricted securities (as defined in Rule 144 under the Securities
Act), the Company will, upon request, furnish to CSFBC, each of the
other Purchasers and any holder of Offered Securities a copy of the
restrictions on transfer applicable to the Offered Securities.
(f) During the period of two years after the Closing Date or,
if earlier, until such time as the Offered Securities are no longer
restricted securities (as defined in Rule 144 under the Securities
Act), the Company will not, and will not permit any of its affiliates
(as defined in Rule 144 under the Securities Act) to, resell any of the
Offered Securities that have been reacquired by any of them.
(g) During the period of two years after the Closing Date the
Company will not be or become an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act.
(h) The Company will pay all expenses incidental to the
performance of its obligations under this Agreement, the Registration
Rights Agreement and the Indenture, including: (i) the fees and
expenses of the Trustee and its professional advisers; (ii) all
expenses in connection with the execution, issue, authentication,
packaging and initial delivery of the Offered Securities, the
preparation and printing of this Agreement, the Registration Rights
Agreement, the Offered Securities, the Indenture, the Offering Document
and amendments and supplements thereto, and any other document relating
to the issuance, offer, sale and delivery of the Offered Securities;
(iii) the cost of qualifying the Offered Securities for trading in The
PortalSM Market ("PORTAL") and any expenses incidental thereto; (iv)
the cost of any advertising approved by the Company in connection with
the issue of the Offered Securities; (v) for any expenses (including
fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions in the United States and Canada as CSFBC designates and
the printing of memoranda relating thereto; (vi) for any fees charged
by investment rating agencies
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<PAGE> 8
for the rating of the Offered Securities and (vii) for expenses
incurred in distributing preliminary offering circulars and the
Offering Document (including any amendments and supplements thereto) to
the Purchasers. The Company will also pay or reimburse the Purchasers
(to the extent incurred by them) for all travel expenses of the
Company's officers and employees and any other expenses of the Company
in connection with attending or hosting meetings with prospective
purchasers of the Offered Securities from the Purchasers.
(i) In connection with the offering, until CSFBC shall have
notified the Company and the other Purchasers of the completion of the
resale of the Offered Securities, neither the Company nor any of its
affiliates has or will, either alone or with one or more other persons,
bid for or purchase for any account in which it or any of its
affiliates has a beneficial interest any Offered Securities or attempt
to induce any person to purchase any Offered Securities; and neither it
nor any of its affiliates will make bids or purchases for the purpose
of creating actual, or apparent, active trading in, or of raising the
price of, the Offered Securities.
6. Conditions of the Obligations of the Purchasers. The obligations of
the several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of officers of the Company
made pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the
date of this Agreement, of Arthur Andersen LLP in agreed form
confirming that they are independent public accountants within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder ("RULES AND REGULATIONS") and to the effect
that:
(i) in their opinion the financial statements
examined by them and included in the Offering Document and in
the Exchange Act Reports comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act and the related published Rules and
Regulations;
(ii) on the basis of a reading of the latest
available interim consolidated financial statements of the
Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that
caused them to believe that:
(A) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of this Agreement,
there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or,
at the date of the latest available balance sheet
read by such accountants, there was any decrease in
consolidated net current assets or stockholders'
equity, as compared with amounts shown on the latest
balance sheet included in the Offering Document; or
(B) for the period from the closing date of
the latest income statement included in the Offering
Document to the closing date of the latest available
income statement read by such accountants there were
any decreases, as compared with the corresponding
period of the previous year, in consolidated net
sales, net operating income, consolidated income
before extraordinary items or net income or in the
ratio of earnings to fixed charges;
8
<PAGE> 9
except in all cases set forth in clauses (A) and (B) above for
changes, increases or decreases which the Offering Document
disclose have occurred or may occur or which are described in
such letter;
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Offering Document and
the Exchange Act Reports (in each case to the extent that such
dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company
and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained
from inquiries, a reading of such general accounting records
and other procedures specified in such letter and have found
such dollar amounts, percentages and other financial
information to be in agreement with such results, except as
otherwise specified in such letter; and
(iv) on the basis of a reading of the pro forma
consolidated statement of operations, carrying out of certain
specified procedures, reading of minutes, inquiries of certain
officials the Company who have responsibility for financial
and accounting matters and proving the arithmetic accuracy of
the application of the pro forma adjustments to the historical
amounts in the pro forma consolidated statement of operations,
nothing came to their attention that caused them to believe
that the unaudited pro forma consolidated statement of
operations included in the Offering Document does not comply
as to form in all material respects with the applicable
accounting requirements of the Securities Act and the related
Rules and Regulations thereunder or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of that statement or on the pro
forma basis described in the notes thereto.
(b) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) a change in U.S. or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of a
majority in interest of the purchasers including CSFBC, be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market
or in respect of dealings in the secondary market, or (ii) (A) any
change, or any development or event involving a prospective change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole which,
in the judgment of a majority in interest of the Purchasers including
CSFBC, is material and adverse and makes it impractical or inadvisable
to proceed with completion of the offering or the sale of and payment
for the Offered Securities; (B) any downgrading in the rating of any
debt securities or preferred stock of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act), or any public announcement that
any such organization has under surveillance or review its rating of
any debt securities or preferred stock of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (C) any
material suspension or material limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange, or any suspension of trading of
any securities of the Company on any exchange or in the
over-the-counter market; (D) any banking moratorium declared by U.S.
Federal or New York authorities; or (E) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority
in interest of the Purchasers including CSFBC, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the offering
or sale of and payment for the Offered Securities.
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<PAGE> 10
(c) The Purchasers shall have received opinions, dated the
Closing Date, of King & Spalding, counsel for the Company, to the
effect of paragraphs (i) - (vi) below, and of Robert L. Aprati, general
counsel to the Company, to the effect of paragraph (vii) below, that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware with corporate power and authority to own
its properties and conduct its business as described in the
Offering Document and Exchange Act Reports; and the Company
has corporate power and authority to enter into and perform
its obligations under this Agreement, the Indenture and the
Registration Rights Agreement and to issue and sell the
Offered Securities as contemplated by this Agreement.
(ii) This Agreement, the Indenture and the
Registration Rights Agreement have been duly authorized,
executed and delivered by the Company, and the Offered
Securities have been duly authorized and executed by the
Company. This Agreement, the Indenture and the Registration
Rights Agreement constitute valid and binding obligations of
the Company, enforceable against the Company in accordance
with their terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity
(whether considered in a proceeding in equity or at law) and,
in the case of this Agreement and the Registration Rights
Agreement, except as rights to indemnity and contribution
thereunder may be limited by state or federal securities laws
or the public policy underlying such laws or other
considerations of public policy; the Offered Securities, when
executed, authenticated and paid for in accordance with the
terms of the Indenture, will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy,
insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other
similar laws as now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of
equity (whether considered in a proceeding in equity or at
law). The Offered Securities, this Agreement, the Indenture
and the Registration Rights Agreement conform to the
descriptions thereof contained in the Offering Document in all
material respects.
(iii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required for the performance by the Company of this
Agreement and the Registration Rights Agreement and the
issuance or sale of the Offered Securities by the Company,
except such, if any, as may be required under the Securities
Act and applicable blue sky laws in connection with the
issuance or sale of any such Offered Securities.
(iv) The execution, delivery and performance of the
Indenture, the Registration Rights Agreement and this
Agreement and the issuance and sale of the Offered Securities
will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (a) any
statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over the
Company or any Subsidiary or any of their properties, that is
known to such counsel, (b) any agreement or instrument filed
as an exhibit to any of the Exchange Act Reports and to which
the Company is a party or to which any of the properties of
the Company is subject, or (c) the charter or bylaws of the
Company.
(v) The Company is not and, after giving effect to
the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Offering
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<PAGE> 11
Document, will not be an "investment company" as defined in
the Investment Company Act.
(vi) Assuming (a) the accuracy of the representations
and warranties of the Company set forth in Section 2 of this
Agreement (other than clauses (r), (s), (t) and (u) thereof)
and of the Purchasers set forth in Section 4 of this
Agreement, (b) the due performance by the Company of the
covenants and agreements set forth in Section 5 of this
Agreement and the due performance by the Purchasers of the
covenants and agreements set forth in Section 4 of this
Agreement, (c) compliance by the Purchasers with the offering
and transfer procedures and restrictions described in the
Offering Document and (d) the accuracy of the representations
and warranties made in accordance with the Offering Document
by buyers to whom the Purchasers initially resell the Offered
Securities, the offer, sale and delivery of the Offered
Securities to the Purchasers in the manner contemplated in
this Agreement and the Offering Document and the initial
resale of the Offered Securities in the manner contemplated by
this Agreement and the Offering Document do not require
registration under the Securities Act and the Indenture is not
required to be qualified under the Trust Indenture Act (it
being understood that we express no opinion in this paragraph
as to any subsequent resale of any Offered Securities).
In addition, such counsel shall state that, in their
capacity as counsel for the Company, they have participated in
conferences with officers and other representatives of the
Company, representatives of the independent public accountants
for the Company, and with representatives and counsel for the
Purchasers at which the contents of the Offering Document were
discussed, and, although such counsel is not passing on and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Offering Document, on the basis of the information that was
developed in the course of such counsel's performance of the
services referred to above, nothing has come to such counsel's
attention that causes such counsel to believe that the
Offering Document (taken together with the Exchange Act
Reports), as of its date and the Closing Date, contained or
contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that such counsel
need not express any opinion or belief with respect to the
financial statements, schedules and other financial data
included or incorporated by reference therein or omitted
therefrom.
(vii) There are no pending actions, suits or
proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations
under the Indenture, this Agreement or the Registration Rights
Agreement, or which are otherwise material in the context of
the sale of the Offered Securities; and no such actions, suits
or proceedings are threatened or, to such counsel's knowledge,
contemplated.
(d) The Purchasers shall have received from Cravath, Swaine &
Moore, counsel for the Purchasers, such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities, the Offering Document, the
exemption from registration for the offer and sale of the Offered
Securities by the Company to the several Purchasers and the resales by
the several Purchasers as contemplated hereby and other related matters
as CSFBC may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
11
<PAGE> 12
(e) The Purchasers shall have received a certificate, dated
the Closing Date, of the President, the Chief Executive Officer or any
Executive Vice President and a principal financial or accounting
officer of the Company in which such officers, to the best of their
knowledge after reasonable investigation, shall state that the
representations and warranties of the Company in this Agreement are
true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and that, subsequent to the
dates of the most recent financial statements in the Offering Document
or Exchange Act Reports there has been no material adverse change, nor
any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a
whole except as set forth in or contemplated by the Offering Document
and Exchange Act Reports or as described in such certificate.
(f) The Purchasers shall have received a letter, dated the
Closing Date, of Arthur Andersen LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
the Closing Date for the purposes of this subsection.
The Company will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as the Purchasers reasonably
request. CSFBC may in its sole discretion waive on behalf of the Purchasers
compliance with any conditions to the obligations of the Purchasers hereunder,
whether in respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Purchaser, its partners, directors and officers and each
person, if any, who controls such Purchaser within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such Purchaser may become subject, under the Securities Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Offering Document, or any amendment or supplement thereto, or any related
preliminary offering circular or the Exchange Act Reports, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, including any losses, claims, damages or liabilities arising out of
or based upon the Company's failure to perform its obligations under Section
5(a) of this Agreement, and will reimburse each Purchaser for any legal or other
expenses reasonably incurred by such Purchaser in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Purchaser
through CSFBC specifically for use therein, it being understood and agreed that
the only such information consists of the information described as such in
subsection (b) below; and provided, further, that with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
any preliminary offering circular the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Purchaser that sold Offered
Securities to the person asserting any such losses, claims, damages or
liabilities, to the extent that such sale was an initial resale by such
Purchaser and any such loss, claim, damage or liability of such Purchaser
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Offered Securities to such
person, a copy of the Offering Document (exclusive of any material included
therein but not attached thereto) if the Company had previously furnished copies
thereof to such Purchaser.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities to which the Company may
become
12
<PAGE> 13
subject, under the Securities Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Offering Document, or any amendment or
supplement thereto, or any related preliminary offering circular, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Purchaser through CSFBC specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Purchaser consists of
the following information in the Offering Document furnished on behalf of each
Purchaser: under the caption "Plan of Distribution" paragraphs three, six, nine
and ten, and the third sentence of paragraph eight; provided, however, that the
Purchasers shall not be liable for any losses, claims, damages or liabilities
arising out of or based upon the Company's failure to perform its obligations
under Section 5(a) of this Agreement.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action and does not include a statement as to and an admission of
fault, culpability or failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Purchasers on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Purchasers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total discounts and commissions received by the
Purchasers from the Company under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified
13
<PAGE> 14
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities purchased by it were
resold exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. The Purchasers' obligations in this subsection (d) to
contribute are several in proportion to their respective purchase obligations
and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Securities Act or the Exchange Act; and the
obligations of the Purchasers under this Section shall be in addition to any
liability which the respective Purchasers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act.
8. Default of Purchasers. If any Purchaser or Purchasers default in
their obligations to purchase Offered Securities hereunder and the aggregate
principal amount of Offered Securities that such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities, CSFBC may make arrangements satisfactory
to the Company for the purchase of such Offered Securities by other persons,
including any of the Purchasers, but if no such arrangements are made by the
Closing Date, the non-defaulting Purchasers shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Purchasers agreed but failed to purchase. If any
Purchaser or Purchasers so default and the aggregate principal amount of Offered
Securities with respect to which such default or defaults occur exceeds 10% of
the total principal amount of Offered Securities and arrangements satisfactory
to CSFBC and the Company for the purchase of such Offered Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Purchaser or the
Company, except as provided in Section 9. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
Nothing herein will relieve a defaulting Purchaser from liability for its
default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Purchaser, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Purchasers is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Purchasers pursuant to Section 7 shall remain
in effect. If the purchase of the Offered Securities by the Purchasers is not
consummated for any reason other than solely because of the occurrence of any
event specified in clause (C), (D) or (E) of Section 6(b)(ii), the Company will
reimburse the Purchasers for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) reasonably incurred by them in connection
with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered, telecopied or telegraphed and
confirmed to the Purchasers, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department--Transactions Advisory Group, or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at 125 Basin Street, Suite
210, Daytona Beach, FL 32114,
14
<PAGE> 15
Attention: General Counsel; provided, however, that any notice to a Purchaser
pursuant to Section 7 will be mailed, delivered, telecopied or telegraphed and
confirmed to such Purchaser.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Company as if such
holders were parties thereto.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
15
<PAGE> 16
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the several
Purchasers in accordance with its terms.
Very truly yours,
BUDGET GROUP, INC.
by /s/ Robert L. Aprati
----------------------------------------
Name: Robert L. Aprati
Title: Executive Vice President, General
Counsel and Secretary
The foregoing Purchase
Agreement is hereby
confirmed and accepted as
of the date first above
written.
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC
Acting on behalf of themselves and as the Representative of the several
Purchasers
CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ Scott E. Zoellner
----------------------------------------
Name: Scott E. Zoellner
Title: Director
16
<PAGE> 17
SCHEDULE A
<TABLE>
<CAPTION>
Purchaser Principal Amount
- --------- ----------------
<S> <C>
Credit Suisse First Boston Corporation.......................................... $270,000,000
Goldman, Sachs & Co............................................................. 70,000,000
NationsBanc Montgomery Securities LLC........................................... 60,000,000
------------
Total.................................................................. $400,000,000
============
</TABLE>
17
<PAGE> 18
SCHEDULE B
Significant Subsidiaries
Budget Rent a Car Corporation
Team Fleet Financing Corporation
Budget Rent a Car Systems, Inc.
Ryder TRS
Budget Car Sales, Inc.
18
<PAGE> 1
EXHIBIT 3.1
COMPOSITE
RESTATED
CERTIFICATE OF INCORPORATION
OF
BUDGET GROUP, INC.
* * * * * * *
FIRST: Name. The name of the corporation is Budget Group, Inc.
SECOND: Registered Office and Agent. The address of the registered
office of the Corporation in the State of Delaware is 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of the registered agent
at such address is The Corporation Trust Company.
THIRD: Purposes. The purposes for which the Corporation is formed are
to engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law and to possess and exercise all of
the powers and privileges granted by such law and any other law of Delaware.
FOURTH: A. Authorized Capital
The Corporation is authorized to issue 73,000,000 shares of capital
stock, consisting of 72,750,000 shares of common stock, par value $.01 per share
(the "Common Stock"), and 250,000 shares of preferred stock, par value $.01 per
share (the "Preferred Stock"). Of the shares of Common Stock, 70,000,000 shares
shall be designated "Budget Class A Common Stock" and 2,750,000 shares shall be
designated "Budget Class B Common Stock." The rights, preferences, privileges
and restrictions granted and imposed upon the Preferred Stock, Budget Class A
Common Stock and Budget Class B Common Stock are set out hereinbelow.
B. Preferred Stock
The Preferred Stock may be issued from time to time in one or more
series with such designations, preferences, and relative participating, optional
or other special rights and qualifications, limitations or restrictions adopted
by the Board of Directors providing for the issuance of such Preferred Stock or
series thereof; and the Board of Directors is hereby expressly granted the
authority to fix by resolution or resolutions such designations and powers,
preferences and rights and such qualifications, limitations or restrictions
which are permitted by Section 151 of the General Corporation Law of Delaware,
as amended from time to time, in respect of any class or classes of stock or any
series of any class of stock of the Corporation that may be desired, including,
but not by way of limitation, the number, distinctive name and serial
designation of such class or series; any dividends payable and the rate, time
for and priority of payment thereof; whether such dividends shall be cumulative
or not; any participating or other
<PAGE> 2
special rights with respect to the payment of dividends; any conversion,
exchange, purchase or other privilege to acquire shares of any other class or
series of the Preferred Stock or Common Stock of the Corporation; any voting
power; and any redemption and liquidation price or preference.
C. Class A Common Stock.
The shares of Class A Common Stock and shares of Class B
Common Stock shall be identical in all respects and shall have equal rights and
privileges except as expressly set forth in this paragraph C and in paragraph D
of this Article FOURTH. Upon dissolution of the Corporation, shares of Class A
Common Stock and Class B Common Stock are entitled to share ratably in the
assets thereof that may be available for distribution after satisfaction of
creditors and the payment of any liquidation preference of any outstanding
shares of Preferred Stock.
1. Dividends.
(a) Subject to the rights of the holders of the Preferred
Stock, if any, such dividends or distributions as may be determined by the Board
of Directors of the Corporation from time to time may be declared and paid or
made upon shares of Class A Common Stock out of any source at the time lawfully
available for the payment of dividends; provided that (subject to subparagraphs
(b) and (c) below of this paragraph C.1.) identical dividends or distributions
are declared and paid concurrently on shares of Class B Common Stock. If
dividends or distributions are declared and paid upon shares of Class B Common
Stock (subject to subparagraphs (b) and (c) below of this paragraph C.1.),
identical dividends or distributions shall be declared and paid concurrently on
shares of Class A Common Stock.
(b) No dividend may be declared and paid in shares of Class
A Common Stock unless (i) the dividend is payable only to holders of shares of
Class A Common Stock and (ii) a dividend payable to holders of shares of Class B
Common Stock is declared and paid concurrently in the same number of shares of
Class B Common Stock per outstanding share of Class B Common Stock as the number
of shares of Class A Common Stock declared and paid per outstanding share of
Class A Common Stock.
(c) No dividend may be declared and paid in Class B Common
Stock unless (i) the dividend is payable only to holders of Class B Common Stock
and (ii) a dividend payable to holders of shares of Class A Common Stock is
declared and paid concurrently in the same number of shares of Class A Common
Stock per outstanding share of Class A Common Stock as the number of shares of
Class B Common Stock declared and paid per outstanding share of Class B Common
Stock.
2. Stock Combinations and Subdivisions. Shares of Class A
Common Stock shall not be combined or subdivided unless at the same time there
is a proportionate combination or subdivision of shares of Class B Common Stock.
If shares of Class B Common Stock are
-2-
<PAGE> 3
combined or subdivided, a proportionate combination or subdivision of shares of
Class A Common Stock shall be made at the same time.
3. Voting. Except as may otherwise be required by law, the
holders of shares of Class A Common Stock shall vote together with the holders
of Class B Common Stock as a single class, provided that the holders of Class A
Common Stock will have one (1) vote per share and the holders of Class B Common
Stock shall have ten (10) votes per share.
D. Class B Common Stock.
1. Dividends and Distributions. Subject to the provisions of
paragraph C.1. of this Article FOURTH, dividends and distributions may be
declared and paid or made upon shares of Class B Common Stock as may be
permitted by applicable law.
2. Stock Combinations and Subdivisions. Subject to the
provisions of paragraph C.2. of this Article FOURTH, shares of Class B Common
Stock may be combined or subdivided in such manner as may be permitted by
applicable law.
3. Voting. Subject to the provisions of paragraph C.3. of this
Article FOURTH, shares of Class B Common Stock shall have ten (10) votes per
share on all matters that may be submitted to a vote or consent of the
shareholders.
4. Conversion.
(a) Each holder of record of shares of Class B Common Stock
may, in such holder's sole discretion, and at such holder's option, convert any
whole number or all of such holder's shares of Class B Common Stock into fully
paid and nonassessable shares of Class A Common Stock at the rate of one (1)
share of Class A Common Stock for each share of Class B Common Stock surrendered
for conversion. Any such conversion may be effected by any holder of Class B
Common Stock by surrendering such holder's certificate or certificates for the
shares of Class B Common Stock to be converted, duly endorsed, at the office of
the Corporation or any transfer agent for Class B Common Stock, together with a
written notice to the Corporation at such office that such holder elects to
convert all or a specified number of shares of Class B Common Stock and stating
the name or names in which such holder desires the certificate or certificates
for such shares of Class A Common Stock to be issued. Promptly thereafter,
unless otherwise prohibited by law, the Corporation shall issue and deliver to
such holder or such holder's nominee or nominees, a certificate or certificates
for the number of shares of Class A Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have been made at the
close of business on the day of such surrender and the person or persons
entitled to receive shares of Class A Common Stock issuable on such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Class A Common Stock on that date.
-3-
<PAGE> 4
(b) Each share of Class B Common Stock shall automatically
be converted into one share of Class A Common Stock in the event that the
beneficial or record ownership of such share of Class B Common Stock shall be
transferred (including, without limitation, by way of gift, settlement, will or
intestacy) to any person or entity that is not then a record or beneficial
holder of shares of Class B Common Stock. A pledge of shares of Class B Common
Stock as security for an obligation of a holder of such shares of Class B Common
Stock shall not be considered a transfer for purposes of this paragraph D.4(b),
unless and until beneficial ownership of such shares is transferred to the
pledgeholder. The conversion into Class A Common Stock shall be deemed to have
occurred (whether or not certificates representing such shares are surrendered)
as of the close of business on the date of transfer, and the person or persons
entitled to receive shares of Class A Common Stock issuable on such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Class A Common Stock on that date.
(c) Before any shares of Class A Common Stock shall be
delivered upon conversion, the holder of shares of Class B Common Stock whose
shares have been converted into shares of Class A Common Stock shall deliver the
certificate(s) representing such shares to the Corporation or its duly
authorized agent (or if such certificates have been lost, stolen or destroyed,
such holder shall execute an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
conversion), specifying the place where the Common Stock issued in conversion
thereof shall be sent. The endorsement of the share certificate shall be in form
satisfactory to the Corporation or such agent, as the case may be.
(d) The number of shares of Class A Common Stock into which
the shares of Class B Common Stock may be converted shall be subject to
adjustment from time to time in the event of any capital reorganization,
reclassification of stock of the Corporation, consolidation or merger of the
Corporation with or into another corporation, or sale or conveyance of all or
substantially all of the assets of the Corporation to another corporation or
other entity or person. Each share of Class B Common Stock shall thereafter be
convertible into such kind and amount of securities or other assets, or both, as
are issuable or distributable in respect of each share of Class A Common Stock.
In any such case, appropriate adjustments shall be made by the Board of
Directors of the Corporation in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the holders of
Class B Common Stock to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
securities or other assets thereafter deliverable on conversion of shares of
Class B Common Stock.
(e) The Corporation shall, at all times, reserve and keep
available out of the authorized and unissued shares of Class A Common Stock,
solely for the purpose of effecting the conversion of the outstanding shares of
Class B Common Stock, such number of shares of Class A Common Stock as shall
from time to time be sufficient to effect conversion of all outstanding shares
of Class B Common Stock and if, at any time, the number of authorized and
unissued shares of Class A Common Stock shall not be sufficient to effect
conversion of the then
-4-
<PAGE> 5
outstanding shares of Class B Common Stock, the Corporation shall take such
corporate action as may be necessary to increase the number of authorized and
unissued shares of Class A Common Stock to such number as shall be sufficient
for such purposes.
(f) The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of Class
A Common Stock on conversion of shares of Class B Common Stock pursuant hereto.
The Corporation shall not, however, be required to pay any tax which may be
payable in respect of the issue of any shares of Class A Common Stock in a name
other than that in which the shares of Class B Common Stock so converted was
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established, to the satisfaction of the Corporation, that such tax
has been paid.
(g) If any shares of capital stock to be reserved for the
purpose of conversion of shares of Class B Common Stock require registration or
listing with, or approval of, or inclusion in any governmental authority, stock
exchange or other regulatory body, or any automated quotation system of a
national securities association, under any federal or state law or regulation or
otherwise, before such shares may be validly issued or delivered upon
conversion, the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration, listing, approval or inclusion, as the
case may be.
(h) All shares of Class A Common Stock which may be issued
upon conversion of shares of Class B Common Stock will upon issuance by the
Corporation be validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issuance thereof.
(i) All certificates representing shares of Class B Common
Stock surrendered for conversion shall be appropriately canceled on the books of
the Corporation, and the number of authorized shares of Class B Common Stock
shall be reduced by the number of shares so converted.
(j) In case the Corporation shall take a record of the
holders of its shares of Class A Common Stock for the purpose of:
(1) entitling them to receive a dividend, or any other
distribution, payable otherwise than in cash; or
(2) entitling them to receive rights to acquire any
security issued by the Corporation; or
(3) any proposed reclassification, reorganization,
consolidation, merger, conveyance or voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
-5-
<PAGE> 6
then, and in any such case, the Corporation shall cause to be mailed to the
holders of record of the outstanding shares of Class B Common Stock at least ten
(10) days prior to the date hereinafter specified, a notice stating the date on
which (x) a record is to be taken for the purpose of such dividend, distribution
or rights, or (y) such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take place and the day,
if any is to be fixed, as of which record holders of shares of Class A Common
Stock shall be entitled to exchange their shares of Class A Common Stock for
securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(k) So long as any shares of Class B Common Stock are
outstanding, the Corporation shall not, without first obtaining the approval by
vote or written consent, in the manner provided by law, of the holders of (i) at
least a majority of the total number of shares of Class A Common Stock
outstanding, voting separately as a class, and (ii) at least sixty percent (60%)
of the total number of shares of Class B Common Stock outstanding, voting
separately as a class, (A) alter or change the rights or privileges of shares of
the Common Stock; (B) amend any provision of Section C or this Section D of this
Article FOURTH; or (C) effect any reclassification or recapitalization of the
Corporation's outstanding Common Stock.
FIFTH: Additional Powers of Board of Directors. The Board of
Directors shall have power, without shareholder action, to make by-laws for the
Corporation and to amend, alter or repeal any by-laws.
SIXTH: Voting by Ballot. Elections of Directors need not be by
ballot unless the by-laws of the Corporation provide otherwise.
SEVENTH: Limited Liability of Directors. The directors of the
Corporation shall be entitled to the full benefits of all limitations on the
liability of directors generally that are now or hereafter become available
under the Delaware General Corporation Law. Without limiting the generality of
the foregoing, no director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability: (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for any acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv)
for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article SEVENTH shall be prospective
only, and shall not affect, to the detriment of any director, any limitation on
the personal liability of a director of the Corporation existing at the time of
such repeal or modification.
EIGHTH: Classified Board of Directors. The number of directors of
the Corporation shall not be less than seven (7) nor more than twelve (12), with
the exact number of directors to be fixed from time to time by resolution of the
Board of Directors of the Corporation. The Board of Directors shall have the
exclusive right to fix the number of directors. The directors shall be
-6-
<PAGE> 7
divided into three classes, designated Class I, Class II and Class III. Each
Class shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The term of the
initial Class I Directors shall terminate on the date of the 2001 Annual Meeting
of Stockholders; the term of the initial Class II Directors shall terminate on
the date of the 2000 Annual Meeting of Stockholders; and the term of the initial
Class III Directors shall terminate on the date of the 1999 Annual Meeting of
Stockholders. At each Annual Meeting of Stockholders beginning in 1999,
successors to the Class of directors whose term expires at that Annual Meeting
of Stockholders shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease in directorship shall be
apportioned among the Classes so as to maintain the number of directors in each
Class as nearly equal as possible, and any additional directors of any Class
elected to fill a vacancy resulting from an increase in such class shall hold
office only until the next election of directors of that Class by the
stockholders of the Corporation, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. Directors shall hold
office until the Annual Meeting of Stockholders for the year in which their
terms expire and until their successors shall be duly elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of Preferred Stock issued by the corporation shall have the right,
voting separately by class or series, to elect directors at an Annual or Special
Meeting of Stockholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of this
Certificate of Incorporation, or the resolution or resolutions adopted by the
board of directors creating such class or series, as the case may be, applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article EIGHTH unless expressly provided by such terms.
* * * * * * *
-7-
<PAGE> 1
EXHIBIT 3.2
COMPOSITE
AMENDED AND RESTATED BY-LAWS
OF
BUDGET GROUP, INC.
<PAGE> 2
COMPOSITE
AMENDED AND RESTATED BY-LAWS
OF
BUDGET GROUP, INC.
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE I
OFFICES
1.01 Registered Office............................................... 1
1.02 Other Offices................................................... 1
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.01 Annual Meetings................................................. 1
2.02 Special Meetings................................................ 1
2.03 Notice of Meetings.............................................. 1
2.04 Waiver of Notice................................................ 2
2.05 Adjournments.................................................... 2
2.06 Quorum.......................................................... 2
2.07 Voting.......................................................... 2
2.08 Proxies......................................................... 2
2.09 Stockholders' Consent in Lieu of Meeting........................ 2
2.10 Notice of Stockholder Proposals................................. 2
ARTICLE III
BOARD OF DIRECTORS
3.01 General Powers.................................................. 3
3.02 Number and Term of Directors.................................... 3
3.03 Resignation..................................................... 4
3.04 Removal......................................................... 4
3.05 Vacancies....................................................... 4
3.06 Meetings........................................................ 4
3.07 Committees of the Board......................................... 5
3.08 Directors' Consent in Lieu of Meeting........................... 6
3.09 Action by Means of Telephone or Similar
Communications Equipment........................................ 6
3.10 Compensation.................................................... 6
3.11 Nomination of Directors......................................... 6
</TABLE>
i
<PAGE> 3
ARTICLE IV
OFFICERS
<TABLE>
<S> <C> <C>
4.01 Officers........................................................ 7
4.02 Authority and Duties............................................ 7
4.03 Term of Office, Resignation and Removal......................... 7
4.04 Vacancies....................................................... 7
4.05 The Chairman.................................................... 7
4.06 The Chief Executive Officer..................................... 7
4.07 The President................................................... 7
4.08 The Chief Operating Officer..................................... 8
4.09 Vice Presidents................................................. 8
4.10 The Secretary................................................... 8
4.11 Assistant Secretaries........................................... 8
4.12 The Chief Financial Officer..................................... 8
4.13 Other Officers.................................................. 8
ARTICLE V
CHECKS, DRAFTS, NOTES AND PROXIES
5.01 Checks, Drafts and Notes........................................ 9
5.02 Execution of Proxies............................................ 9
ARTICLE VI
SHARES AND TRANSFERS OF SHARES
6.01 Certificates Evidencing Shares.................................. 9
6.02 Stock Ledger.................................................... 9
6.03 Transfers of Shares............................................. 9
6.04 Addresses of Stockholders....................................... 9
6.05 Lost, Destroyed and Mutilated Certificates...................... 9
6.06 Regulations; Transfer Agent and Registrar....................... 10
6.07 Fixing Date for Determination of
Stockholders of Record.......................................... 10
ARTICLE VII
SEAL
7.01 Seal............................................................ 10
</TABLE>
ii
<PAGE> 4
ARTICLE VIII
FISCAL YEAR
<TABLE>
<S> <C> <C>
8.01 Fiscal Year..................................................... 10
ARTICLE IX
INDEMNIFICATION AND INSURANCE
9.01 Indemnification................................................. 10
9.02 Insurance for Indemnification................................... 12
ARTICLE X
AMENDMENTS
10.01 Amendments...................................................... 12
</TABLE>
iii
<PAGE> 5
BY-LAWS
OF
BUDGET GROUP, INC.
ARTICLE I
OFFICES
SECTION 1.01. Registered Office. The registered office of Budget Group,
Inc. (the "Corporation") in the State of Delaware shall be at the principal
office of The Corporation Trust Company in the City of Wilmington, County of New
Castle, and the registered agent in charge thereof shall be The Corporation
Trust Company.
SECTION 1.02. Other Offices. The Corporation may also have an office or
offices at any other place or places within or without the State of Delaware as
the Board of Directors of the Corporation (the "Board") may from time to time
determine or the business of the Corporation may from time to time require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Annual Meetings. The annual meeting of stockholders of
the Corporation for the election of directors of the Corporation ("Directors"),
and for the transaction of such other business as may properly come before such
meeting, shall be held at such place, date and time as shall be fixed by the
Board and designated in the notice or waiver of notice of such annual meeting;
provided, however, that no annual meeting of stockholders need be held if all
actions, including the election of Directors, required by the General
Corporation Law of the State of Delaware (the "General Corporation Law") to be
taken at such annual meeting are taken by written consent in lieu of meeting
pursuant to Section 2.09 hereof.
SECTION 2.02. Special Meetings. Special meetings of stockholders for
any purpose or purposes may be called by the Board or the Chairman of the Board,
the Chief Executive Officer, the President or the Secretary of the Corporation
or by the record holders of at least a majority of the combined voting power of
the shares of capital stock of the Corporation issued and outstanding and
entitled to vote thereat ("Shares"), to be held at such place, date and time as
shall be designated in the notice or waiver of notice thereof.
SECTION 2.03. Notice of Meetings. (a) Except as otherwise provided by
law, written notice of each annual or special meeting of stockholders stating
the place, date and time of such meeting and, in the case of a special meeting,
the purpose or purposes for which such meeting is to be held, shall be given
personally or by first-class mail (airmail in the case of international
communications) to each recordholder of Shares (a "Stockholder") entitled to
vote thereat, not less than 10 nor more than 60 days before the date of such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the Stockholder at such
Stockholder's address as it appears on the records of the Corporation. If, prior
to the time of mailing, the Secretary of the Corporation (the "Secretary") shall
have received from any Stockholder a written request that notices intended for
such Stockholder are to be mailed to some address other than the address that
appears on the records of the Corporation, notices intended for such Stockholder
shall be mailed to the address designated in such request.
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<PAGE> 6
(b) Notice of a special meeting of Stockholders may be given by the
person or persons calling the meeting, or, upon the written request of such
person or persons, such notice shall be given by the Secretary on behalf of such
person or persons. If the person or persons calling a special meeting of
Stockholders give notice thereof, such person or persons shall deliver a copy of
such notice to the Secretary. Each request to the Secretary for the giving of
notice of a special meeting of Stockholders shall state the purpose or purposes
of such meeting.
SECTION 2.04. Waiver of Notice. Notice of any annual or special meeting
of Stockholders need not be given to any Stockholder who files a written waiver
of notice with the Secretary, signed by the person entitled to notice, whether
before or after such meeting. Neither the business to be transacted at, nor the
purpose of, any meeting of Stockholders need be specified in any written waiver
of notice thereof. Attendance of a Stockholder at a meeting, in person or by
proxy, shall constitute a waiver of notice of such meeting, except when such
Stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the grounds that
the notice of such meeting was inadequate or improperly given.
SECTION 2.05. Adjournments. Whenever a meeting of Stockholders, annual
or special, is adjourned to another date, time or place, notice need not be
given of the adjourned meeting if the date, time and place thereof are announced
at the meeting at which the adjournment is taken. If the adjournment is for more
than 30 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
Stockholder entitled to vote thereat. At the adjourned meeting, any business may
be transacted which might have been transacted at the original meeting.
SECTION 2.06. Quorum. Except as otherwise provided by law or the
Certificate of Incorporation of the Corporation, including any amendment or
restatement thereof (the "Certificate of Incorporation"), the presence in person
or by proxy of the record holders of a majority of the combined voting power of
the Shares entitled to vote at a meeting of Stockholders shall constitute a
quorum for the transaction of business at such meeting. If, however, such quorum
shall not be present in person or by proxy at any meeting of Stockholders, the
Stockholders entitled to vote thereat may adjourn the meeting from time to time
in accordance with Section 2.05 hereof until a quorum shall be present in person
or by proxy.
SECTION 2.07. Voting. Each Stockholder shall be entitled to one vote
for every Share of Class A Common Stock held of record by such Stockholder and
each Stockholder shall be entitled to ten votes for every Share of Class B
Common Stock held of record by such Stockholder. The number of votes to which
Shares of other classes of capital stock that may from time to time be
authorized and issued by the Corporation shall be as set forth in the
Certificate of Incorporation. Except as otherwise provided by law or the
Certificate of Incorporation, the vote of a majority of the combined voting
power of the Shares represented in person or by proxy at any meeting at which a
quorum is present shall decide any question brought before such meeting.
SECTION 2.08. Proxies. Each Stockholder entitled to vote at a meeting
of Stockholders or to express, in writing, consent to or dissent from any action
of Stockholders without a meeting may authorize another person or persons to act
for such Stockholder by proxy. Such proxy shall be filed with the Secretary
before such meeting of Stockholders or such action of Stockholders without a
meeting, at such time as the Board may require. No proxy shall be voted or acted
upon more than three years from its date, unless the proxy provides for a longer
period.
SECTION 2.09. Stockholders' Consent in Lieu of Meeting. Any action
required by the General Corporation Law to be taken at any annual or special
meeting of Stockholders, and any action which may be taken at any annual or
special meeting of Stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the record holders of Shares having not less than the
minimum number of votes necessary to authorize or take such action at a meeting
at which the record holders of all Shares entitled to vote thereon were present
and voted.
SECTION 2.10. Notice of Stockholder Proposals. (a) At any meeting of
the stockholders of the Corporation, only such business shall be conducted, and
only such proposals shall be acted upon, as shall have been properly brought
before the meeting.
(b) To be properly brought before a meeting of the stockholders of the
Corporation, business and proposals must be:
2
<PAGE> 7
(i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors;
(ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors; or
(iii) otherwise properly brought before the meeting by a
stockholder who complies with the notice procedures set forth in this Section
2.10.
(c) For business or proposals to be properly brought before a meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of the Corporation not less than sixty (60) days nor more than ninety
(90) days prior to the scheduled date of the meeting, regardless of any
postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than seventy (70) days' notice or prior public
disclosure of the scheduled date of the meeting is given or made, notice by the
stockholder to be timely must be so delivered or received no later than the
close of business on the fifteenth (15th) day following the earlier of the day
on which such notice of the scheduled date of the meeting was mailed or such
public disclosure was made.
(d) A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the meeting:
(i) a brief description of the business or proposal desired to be
brought before the meeting and the reasons for conducting such business or
considering such proposal at the meeting;
(ii) the name and address, as they appear on the Corporation's
books, of the stockholder;
(iii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder; and
(iv) any financial or other material interest of the stockholder
in such business or proposal.
(e) No business shall be conducted and no proposal shall be considered
at a meeting of the stockholders unless proposed in accordance with the
procedures set forth in this Section 2.10. The Chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that business or a
proposal was not properly brought before the meeting in accordance with the
foregoing procedures and such business or proposal shall not be transacted or
considered.
(f) To the extent (but only to the extent) this Section 2.10 shall be
deemed by the Board of Directors or the Securities and Exchange Commission, or
finally adjudged by a court of competent jurisdiction, to be inconsistent with
the right of stockholders to request inclusion of a proposal in the
Corporation's proxy statement pursuant to Rule 14a-8 promulgated under the
Exchange Act, such rule shall prevail.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. General Powers. The business and affairs of the
Corporation shall be managed by the Board, which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by law, the
Certificate of Incorporation or these By-laws directed or required to be
exercised or done by Stockholders.
SECTION 3.02. Number and Term of Directors. Subject to the rights of
the holders of any series of Preferred Stock to elect additional directors, the
number of Directors shall be three or such other number as shall be fixed from
time to time by the Board. Directors need not be Stockholders. The Directors
shall be and are divided into three classes, designated Class I, Class II and
Class
3
<PAGE> 8
III. Each Class shall consist, as nearly as may be possible, of one-third of the
total number of Directors constituting the entire Board. The term of the initial
Class I Directors shall terminate on the date of the 2001 Annual Meeting of
Stockholders; the term of the initial Class II Directors shall terminate on the
date of the 2000 Annual Meeting of Stockholders; and the term of the initial
Class III Directors shall terminate on the date of the 1999 Annual Meeting of
Stockholders. At each annual meeting of Stockholders beginning in 1999,
successors to the Class of Directors whose term expires at that annual meeting
of Stockholders shall be elected for a three-year term. If the number of
Directors is changed, any increase or decrease in Directorship shall be
apportioned among the Classes so as to maintain the number of Directors in each
Class as nearly equal as possible, and any additional Directors of any Class
elected to fill a vacancy resulting from an increase in such class shall hold
office only until the next election of Directors of that Class by the
stockholders of the corporation, but in no case will a decrease in the number of
Directors shorten the term of any incumbent Director. Directors shall hold
office until the annual meeting of Stockholders for the year in which their
terms expire and until their successors shall be duly elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect Directors at an
annual or special meeting of Stockholders, the election, term of office, filling
of vacancies and other features of such Directorships shall be governed by the
terms of the Corporation's Certificate of Incorporation.
SECTION 3.03. Resignation. Any Director may resign at any time by
giving written notice to the Board, the Chairman of the Board of the Corporation
(the "Chairman") or the Secretary. Such resignation shall take effect at the
time specified in such notice or, if the time be not specified, upon receipt
thereof by the Board, the Chairman or the Secretary, as the case may be. Unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective.
SECTION 3.04. Removal. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any or all of the Directors may be
removed from office at any time for cause by vote of the recordholders of a
majority of the combined voting power of the Shares then entitled to vote at an
election of Directors, or by written consent of the recordholders of Shares
pursuant to Section 2.09 hereof.
SECTION 3.05. Vacancies. Subject to the rights of the holders of any
series of Preferred Stock then outstanding to fill Director vacancies, vacancies
occurring on the Board for any reason, including, without limitation, vacancies
occurring as a result of the creation of new directorships that increase the
number of Directors, may be filled by such vote or written consent or by vote of
the Board or by written consent of the Directors pursuant to Section 3.08
hereof. If the number of Directors then in office is less than a quorum, such
other vacancies may be filled by vote of a majority of the Directors then in
office or by written consent of all such Directors pursuant to Section 3.08
hereof. Unless earlier removed pursuant to Section 3.04 hereof, each Director
chosen in accordance with this Section 3.05 shall hold office until the next
annual election of Directors by the Stockholders and until his successor shall
be elected and qualified.
SECTION 3.06. Meetings. (a) Annual Meetings. As soon as practicable
after each annual election of Directors by the Stockholders, the Board shall
meet for the purpose of organization and the transaction of other business,
unless it shall have transacted all such business by written consent pursuant to
Section 3.08 hereof.
(b) Other Meetings. Other meetings of the Board shall be held at such
times as the Chairman, the President of the Corporation (the "President"), the
Secretary or a majority of the Board shall from time to time determine.
(c) Notice of Meetings. The Secretary shall give written notice to each
Director of each meeting of the Board, which notice shall state the place, date,
time and purpose of such meeting. Notice of each such meeting shall be given to
each Director, if by mail, addressed to him at his residence or usual place of
business, at least two days before the day on which such meeting is to be held,
or shall be sent to him at such place by telecopy, telegraph, cable, or other
form of recorded communication, or be delivered personally or by telephone not
later than the day before the day on which such meeting is to be held. A written
waiver of notice, signed by the Director entitled to notice, whether before of
after the time of the meeting referred to in such waiver, shall be deemed
equivalent to notice. Neither the business to be transacted at, nor the purpose
of any meeting of the Board need be specified in any written waiver of notice
thereof. Attendance of a Director at a meeting of the Board shall constitute a
waiver of notice of such meeting, except as provided by law.
4
<PAGE> 9
(d) Place of Meetings. The Board may hold its meetings at such
place or places within or without the State of Delaware as the Board or the
Chairman may from time to time determine, or as shall be designated in the
respective notices or waivers of notice of such meetings.
(e) Quorum and Manner of Acting. One-third of the total number of
Directors then in office (but in no event less than two if the total number of
directorships, including vacancies, is greater than one and in no event a number
less than one-third of the total number of directorships, including vacancies)
shall be present at any meeting of the Board in order to constitute a quorum for
the transaction of business at such meeting, and the vote of a majority of those
Directors present at any such meeting at which a quorum is present shall be
necessary for the passage of any resolution or act of the Board, except as
otherwise expressly required by law, the Certificate of Incorporation or these
By-laws. In the absence of a quorum for any such meeting, a majority of the
Directors present thereat may adjourn such meeting from time to time until a
quorum shall be present.
(f) Organization. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside, in the following order of
precedence:
(i) the Chairman;
(ii) Chief Executive Officer;
(iii) the President; or
(iv) any Director chosen by a majority of the Directors present.
The Secretary or, in the case of his absence, any person (who shall be an
Assistant Secretary, if an Assistant Secretary is present) whom the chairman of
the meeting shall appoint shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 3.07. Committees of the Board. The Board may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more Directors. The Board may designate one or
more Directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of such committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another Director to act at the
meeting in the place of any such absent or disqualified member. Any committee of
the Board, to the extent provided in the resolution of the Board designating
such committee, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; provided, however, that no such committee shall have such power or
authority in reference to amending the Certificate of Incorporation (except that
such a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board as provided
in Section 151(a) of the General Corporation Law, fix the designations and any
of the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
of stock of the Corporation or fix the number of shares of any series of stock
or authorize the increase or decrease of the shares of any series), adopting an
agreement of merger or consolidation under Section 251 or 252 of the General
Corporation Law, recommending to the Stockholders the sale, lease or exchange of
all or substantially all the Corporation's property and assets, recommending to
the Stockholders a dissolution of the Corporation or the revocation of a
dissolution, or amending these By-laws; provided further, however, that, unless
expressly so provided in the resolution of the Board designating such committee,
no such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law. Each committee of
the Board shall keep regular minutes of its proceedings and report the same to
the Board when so requested by the Board.
5
<PAGE> 10
SECTION 3.08. Directors' Consent in Lieu of Meeting. Any action
required or permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by all the members of the Board or such committee and such
consent is filed with the minutes of the proceedings of the Board or such
committee.
SECTION 3.09. Action by Means of Telephone or Similar Communications
Equipment. Any one or more members of the Board, or of any committee thereof,
may participate in a meeting of the Board or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
SECTION 3.10. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board may determine the compensation of
Directors. In addition, as determined by the Board, Directors may be reimbursed
by the Corporation for their expenses, if any, in the performance of their
duties as Directors. No such compensation or reimbursement shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 3.11 Nomination of Directors. (a) Only persons who are
nominated in accordance with the procedures specified in this Section 3.11 shall
be eligible for election as directors.
(b) Nominations of persons for election to the Board of Directors of
the Corporation may be made at a meeting of the stockholders by or at the
direction of the Board of Directors, by any nominating committee or person
appointed by the Board of Directors or by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 3.11. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to, or mailed and received at,
the principal executive offices of the Corporation not less than sixty (60) days
nor more than ninety (90) days prior to the scheduled date of the meeting,
regardless of any postponements, deferrals or adjournments of that meeting to a
later date; provided, however, that if less than seventy (70) days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received no
later than the close of business on the fifteenth (15th) day following the
earlier of the day on which such notice of the date of the meeting was mailed or
such public disclosure was made.
(c) A stockholder's notice to the Secretary shall set forth as to each
person which the stockholder proposes to nominate for election or re-election as
a director:
(i) the name, age, business address and residence address of the
person;
(ii) the principal occupation or employment of the person;
(iii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the person; and
(iv) any other information relating to the person that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
In addition, a stockholder's notice to the Secretary shall set forth as to the
stockholder giving the notice:
(i) the name and record address of the stockholder; and
(ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder.
6
<PAGE> 11
The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as director of the Corporation.
(d) No person shall be eligible for election as a director of the
Corporation unless such person has been nominated in accordance with the
procedures set forth herein. If the facts warrant, the Chairman of the meeting
shall determine and declare to the meeting that a nomination does not satisfy
the requirements set forth in the preceding sentence and the defective
nomination shall be disregarded.
(e) Nothing in this Section 3.11 shall be construed to affect the
requirement for proxy statements of the Corporation under Regulation 14A of the
Exchange Act.
ARTICLE IV
OFFICERS
SECTION 4.01. Officers. The officers of the Corporation shall be the
Chairman, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer and the Secretary and may include one or
more Vice Presidents and one or more Assistant Secretaries. Any two or more
offices may be held by the same person.
SECTION 4.02. Authority and Duties. All officers shall have such
authority and perform such duties in the management of the Corporation as may
provided in these By-laws or, to the extent not so provided, by resolution of
the Board.
SECTION 4.03. Term of Office, Resignation and Removal. (a) Each officer
shall hold office until his successor has been appointed and qualified or his
earlier death or resignation or removal in the manner hereinafter provided.
(b) Any officer may resign at any time by giving written notice to the
Board, the Chairman, the President or the Secretary. Such resignation shall take
effect at the time specified in such notice or, if the time be not specified,
upon receipt thereof by the Board, the Chairman, the President or the Secretary,
as the case may be. Unless otherwise specified therein, acceptance of such
resignation shall not be necessary to make it effective.
(c) All officers and agents appointed by the Board shall be subject to
removal, with or without cause, at any time by the Board or by the action of the
record holders of a majority of the combined voting power of the Shares entitled
to vote thereon.
SECTION 4.04. Vacancies. Any vacancy occurring in any office of the
Corporation, for any reason, shall be filled by action of the Board. Unless
earlier removed pursuant to Section 4.03 hereof, any officer appointed by the
Board to fill any such vacancy shall serve only until such time as the unexpired
term of his predecessor expires unless reappointed by the Board.
SECTION 4.05. The Chairman. The Chairman shall have the power to call
special meetings of Stockholders, to call special meetings of the Board and, if
present, to preside at all meetings of Stockholders and all meetings of the
Board. The Chairman shall perform all duties incident to the office of Chairman
of the Board and all such other duties as may from time to time be assigned to
him by the Board or these By-laws.
SECTION 4.06 The Chief Executive Officer. The chief executive officer
(the "Chief Executive Officer") shall be the most senior officer of the
Corporation and shall generally direct the business and affairs of the
Corporation, subject to supervision and direction by the Board, and shall see
that all orders and resolutions of the Board are carried into effect. The Chief
Executive Officer shall perform all duties incident to the office of Chief
Executive Officer and all such other duties as may from time to time be assigned
to him by the Board or these By-laws.
SECTION 4.07 The President. The President shall have general and active
management and control of the business and affairs of the Corporation, subject
to supervision and direction by the Chief Executive Officer and the Board, and
shall see that all orders
7
<PAGE> 12
and resolutions of the Board and orders of the Chief Executive Officer are
carried into effect. The President shall perform all duties incident to the
office of President and all such other duties as may from time to time be
assigned to him by the Chief Executive Officer or these By-laws.
SECTION 4.08 The Chief Operating Officer. The chief operating officer
(the "Chief Operating Officer") shall be generally responsible for the
day-to-day conduct of the Corporation's business, subject to supervision and
direction by the Chief Executive Officer and President, and shall see that all
orders of the Chief Executive Officer and President are carried into effect. The
Chief Operating Officer shall perform all duties incident to the office of Chief
Operating Officer and all such other duties as may from time to time be assigned
to him by the Chief Executive Officer, the President or these By-laws.
SECTION 4.09 Vice Presidents. Vice Presidents, if any, in order of
their seniority or in any other order determined by the Board, shall generally
assist the President and perform such other duties as the Board or the President
shall prescribe, and in the absence or disability of the President, shall
perform the duties and exercise the powers of the President.
SECTION 4.10. The Secretary. The Secretary shall, to the extent
practicable, attend all meetings of the Board and all meetings of Stockholders
and shall record all votes and the minutes of all proceedings in a book to be
kept for that purpose, and shall perform the same duties for any committee of
the Board when so requested by such committee. He shall give or cause to be
given notice of all meetings of Stockholders and of the Board, shall perform
such other duties as may be prescribed by the Board, the Chairman or the
President and shall act under the supervision of the Chairman. He shall keep in
safe custody the seal of the Corporation and affix the same to any instrument
that requires that the seal be affixed to it and which shall have been duly
authorized for signature in the name of the Corporation and, when so affixed,
the seal shall be attested by his signature or by the signature of the Chief
Financial Officer of the Corporation (the "Chief Financial Officer") or an
Assistant Secretary of the Corporation. He shall keep in safe custody the
certificate books and stockholder records and such other books and records of
the Corporation as the Board, the Chairman, the Chief Executive Officer or the
President may direct and shall perform all other duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
by the Board, the Chairman, the Chief Executive Officer or the President.
SECTION 4.11 Assistant Secretaries. Assistant Secretaries of the
Corporation ("Assistant Secretaries"), if any, in order of their seniority or in
any other order determined by the Board, shall generally assist the Secretary
and perform such other duties as the Board or the Secretary shall prescribe,
and, in the absence or disability of the Secretary, shall perform the duties and
exercise the powers of the Secretary.
SECTION 4.12 The Chief Financial Officer. The Chief Financial Officer
shall have the care and custody of all the funds of the Corporation and shall
deposit such funds in such banks or other depositories as the Board, or any
officer or officers, or any officer and agent jointly, duly authorized by the
Board, shall, from time to time, direct or approve. He shall disburse the funds
of the Corporation under the supervision and direction of the Board, the Chief
Executive Officer, the Chief Operating Officer and the President. He shall keep
a full and accurate account of all moneys received and paid on account of the
Corporation and shall render a statement of his accounts whenever the Board, the
Chairman, the Chief Executive Officer or the President shall so request. The
Chief Financial Officer shall also be the principal accounting officer of the
Corporation, unless the Board shall assign such duties to another officer. He
shall perform all other necessary actions and duties in connection with the
administration of the financial affairs of the Corporation and shall generally
perform all the duties usually appertaining to the office of treasurer of a
corporation. When required by the Board, he shall give bonds for the faithful
discharge of his duties in such sums and with such sureties as the Board shall
approve.
SECTION 4.13 Other Officers. The Board may designate and appoint by
resolution such other officers, including without limitation a treasurer,
assistant treasurers and a controller, as they determine to be in the best
interests of the Corporation. The duties and obligations of each such officer
shall be as set forth in the resolution designating and appointing such officer.
8
<PAGE> 13
ARTICLE V
CHECKS, DRAFTS, NOTES AND PROXIES
SECTION 5.01. Checks, Drafts and Notes. All checks, drafts and other
orders for the payment of money, notes and other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as shall be
determined, from time to time, by resolution of the Board.
SECTION 5.02. Execution of Proxies. The Chairman, the Chief Executive
Officer or the President, or, in the absence or disability of any of them, any
Vice President, may authorize, from time to time, the execution and issuance of
proxies to vote shares of stock or other securities of other corporations held
of record by the Corporation and the execution of consents to action taken or to
be taken by any such corporation. All such proxies and consents, unless
otherwise authorized by the Board, shall be signed in the name of the
Corporation by the Chairman, the Chief Executive Officer, the President or any
Vice President.
ARTICLE VI
SHARES AND TRANSFERS OF SHARES
SECTION 6.01. Certificates Evidencing Shares. Shares may, but need not
be, represented by certificates in such form or forms as shall be approved by
the Board. Certificates shall be issued in consecutive order and shall be
numbered in the order of their issue, and shall be signed by the Chairman, the
President or any Vice President and by the Secretary or any Assistant Secretary.
Any signature on the certificate may be a facsimile. In the event any such
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to hold such office or to be employed by the
Corporation before such certificate is issued, such certificate may be issued by
the Corporation with the same effect as if such officer had held such office on
the date of issue.
SECTION 6.02 Stock Ledger. A stock ledger in one or more counterparts
shall be kept by the Secretary or by a registrar duly appointed by the
Corporation, in which shall be recorded the name and address of each person,
firm or corporation owning the Shares evidenced by each certificate evidencing
Shares issued by the Corporation, the number of Shares evidenced by each such
certificate, the date of issuance thereof and, in the case of cancellation, the
date of cancellation. Except as otherwise expressly required by law, the person
in whose name Shares stand on the stock ledger of the Corporation shall be
deemed the owner and recordholder thereof for all purposes.
SECTION 6.03 Transfers of Shares. Registration of transfers of Shares
shall be made only in the stock ledger of the Corporation upon request of the
registered holder of such shares, of his attorney thereunto authorized by power
of attorney duly executed and filed with the Secretary or with the registrar of
the Corporation, and upon the surrender of the certificate or certificates
evidencing such Shares properly endorsed or accompanied by a stock power duly
executed, together with such proof of the authenticity of signatures as the
Corporation may reasonably require.
SECTION 6.04 Addresses of Stockholders. Each Stockholder shall
designate to the Secretary an address at which notices of meetings and all other
corporate notices may be served or mailed to such Stockholder, and, if any
Stockholder shall fail to so designate such an address, corporate notices may be
served upon such Stockholder by mail directed to the mailing address, if any, as
the same appears in the stock ledger of the Corporation or at the last known
mailing address of such Stockholder.
SECTION 6.05 Lost, Destroyed and Mutilated Certificates. Each
recordholder of Shares shall promptly notify the Corporation of any loss,
destruction or mutilation of any certificate or certificates evidencing any
Share or Shares of which he is the recordholder. The Board may, in its
discretion, cause the Corporation or its transfer agent to issue a new
certificate in place of any certificate theretofore issued by it and alleged to
have been mutilated, lost, stolen or destroyed, upon the surrender of the
mutilated certificate or, in the case of loss, theft or destruction of the
certificate, upon satisfactory proof of such loss, theft or destruction, and the
Board may, in its discretion, require the recordholder of the Shares evidenced
by the lost, stolen or destroyed certificate or his
9
<PAGE> 14
legal representative to give the Corporation a bond sufficient to indemnify the
Corporation against any claim made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
SECTION 6.06. Regulations; Transfer Agent and Registrar. The Board may
make such other rules and regulations as it may deem expedient, not inconsistent
with these By-laws, concerning the issue, transfer and registration of
certificates evidencing Shares including, without limitation, the appointment of
one or more transfer agents and one or more registrars.
SECTION 6.07. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the Stockholders entitled to notice
of or to vote at any meeting of Stockholders or any adjournment thereof, or to
express consent to, or to dissent from, corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than 60 nor less than 10 days before the date of such meeting, nor more than 60
days prior to any other such action. A determination of the Stockholders
entitled to notice of or to vote at a meeting of Stockholders shall apply to any
adjournment of such meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
ARTICLE VII
SEAL
SECTION 7.01 Seal. The Board may approve and adopt a corporate seal,
which shall be in the form of a circle and shall bear the full name of the
Corporation, the year of its incorporation and the words "Corporate Seal
Delaware".
ARTICLE VIII
FISCAL YEAR
SECTION 8.01 Fiscal Year. The fiscal year of the Corporation shall end
on the thirty-first day of December of each year unless changed by resolution of
the Board.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 9.01 Indemnification. (a) The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
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<PAGE> 15
(b) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 9.01 (a) and (b) of these
By-laws, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under Section 9.01 (a) and (b) of these By-laws
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 9.01 (a) and (b) of these
By-laws. Such determination shall be made (i) by the Board by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel in
a written opinion, or (iii) by the stockholders of the Corporation.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation pursuant to this Article IX. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, other Sections of this Article IX shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office.
(g) For purposes of this Article IX, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article IX with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(h) For purposes of this Article IX, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves service by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
IX.
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(i) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article IX shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 9.02. Insurance for Indemnification. The Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of Section 145 of the General Corporation Law.
ARTICLE X
AMENDMENTS
SECTION 10.01. Amendments. The Board may adopt, amend or repeal the
Corporation's By-laws unless (a) the Certificate of Incorporation or the General
Corporation Law reserves this power exclusively to the Stockholders in whole or
in part; or (b) the Stockholders in adopting, amending or repealing a particular
By-law expressly provide that the Board may not amend or repeal that By-law. The
Stockholders of the Corporation may adopt, amend or repeal the Corporation's
By-laws even though the By-laws may also be adopted, amended or repealed by its
Board.
12
<PAGE> 1
EXHIBIT 4.31
================================================================================
BUDGET GROUP, INC.
Issuer
9 1/8% Senior Notes Due 2006
--------------------
INDENTURE
Dated as of April 13, 1999
---------------------
THE BANK OF NEW YORK
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- -------
<S> <C> <C>
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.08; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.05
(b) .............................. N.A.
(c) .............................. N.A.
313(a) .............................. 7.06
(b)(1) .............................. N.A.
(b)(2) .............................. 7.06
(c) .............................. N.A.
(d) .............................. 7.06
314(a) .............................. 4.02
(b) .............................. N.A.
(c)(1) .............................. N.A.
(c)(2) .............................. N.A.
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. N.A.
(f) .............................. N.A.
315(a) .............................. 7.01
(b) .............................. 7.05
(c) .............................. 7.01
(d) .............................. 7.01
(e) .............................. 6.11
316(a)(last sentence) ....................... N.A.
(a)(1)(A) .............................. 6.05
(a)(1)(B) .............................. 6.04
(a)(2) .............................. N.A.
(b) .............................. 6.07
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
318(a) .............................. N.A.
</TABLE>
N.A. means Not Applicable.
- -------------------
Note: This Cross-Reference Table shall not, for any
purpose, be deemed to be part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE 1 Page
----
Definitions and Incorporation by Reference
<S> <C> <C> <C>
SECTION 1.01. Definitions ............................ 1
SECTION 1.02. Other Definitions ...................... 29
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act ........................ 30
SECTION 1.04. Rules of Construction .................. 30
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating ........................ 31
SECTION 2.02. Execution and Authentication ........... 32
SECTION 2.03. Registrar and Paying Agent ............. 32
SECTION 2.04. Paying Agent To Hold Money in Trust..... 33
SECTION 2.05. Securityholder Lists ................... 33
SECTION 2.06. Transfer and Exchange .................. 33
SECTION 2.07. Replacement Securities ................. 34
SECTION 2.08. Outstanding Securities ................. 35
SECTION 2.09. Temporary Securities ................... 36
SECTION 2.10. Cancellation ........................... 36
SECTION 2.11. Defaulted Interest ..................... 36
SECTION 2.12. CUSIP Numbers .......................... 36
SECTION 2.13. Issuance of Additional Securities....... 36
ARTICLE 3
Reserved
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities .................. 37
SECTION 4.02. SEC Reports ............................ 38
SECTION 4.03. Limitation on Indebtedness ............. 38
SECTION 4.04. Limitation on Restricted Payments ...... 41
SECTION 4.05. Limitation on Restrictions on
Distributions from Restricted
</TABLE>
i
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<TABLE>
<S> <C> <C> <C>
Subsidiaries ......................... 46
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock ..................... 51
SECTION 4.07. Limitation on Affiliate
Transactions ........................ 52
SECTION 4.08. Limitation on the Sale or Issuance
of Capital Stock of Restricted
Subsidiaries.......................... 52
SECTION 4.09. Change of Control ...................... 52
SECTION 4.10. Limitation on Liens .................... 54
SECTION 4.11. Limitation on Sale/Leaseback
Transactions ......................... 54
SECTION 4.12. Limitation on Permitted Vehicle
Indebtedness ......................... 55
SECTION 4.13. Compliance Certificates ................ 56
SECTION 4.14. Further Instruments and Acts ........... 56
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets ............................... 56
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default ...................... 57
SECTION 6.02. Acceleration ........................... 60
SECTION 6.03. Other Remedies ......................... 60
SECTION 6.04. Waiver of Past Defaults ................ 60
SECTION 6.05. Control by Majority .................... 61
SECTION 6.06. Limitation on Suits .................... 61
SECTION 6.07. Rights of Holders To Receive Payment ... 62
SECTION 6.08. Collection Suit by Trustee ............. 62
SECTION 6.09. Trustee May File Proofs of Claim ....... 62
SECTION 6.10. Priorities ............................. 62
SECTION 6.11. Undertaking for Costs .................. 63
SECTION 6.12. Waiver of Stay or Extension Laws ....... 63
</TABLE>
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<PAGE> 5
ARTICLE 7
Trustee
<TABLE>
<S> <C> <C> <C>
SECTION 7.01. Duties of Trustee ...................... 63
SECTION 7.02. Rights of Trustee ...................... 65
SECTION 7.03. Individual Rights of Trustee ........... 66
SECTION 7.04. Trustee's Disclaimer ................... 66
SECTION 7.05. Notice of Defaults ..................... 67
SECTION 7.06. Reports by Trustee to Holders .......... 67
SECTION 7.07. Compensation and Indemnity ............. 68
SECTION 7.08. Replacement of Trustee ................. 69
SECTION 7.09. Successor Trustee by Merger ............ 69
SECTION 7.10. Eligibility; Disqualification .......... 69
SECTION 7.11. Preferential Collection of Claims
Against Company ...................... 70
SECTION 7.12. Trustee's Applications for Instructions
from the Company ..................... 70
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ........................... 70
SECTION 8.02. Conditions to Defeasance ............... 71
SECTION 8.03. Application of Trust Money ............. 73
SECTION 8.04. Repayment to Company ................... 73
SECTION 8.05. Indemnity for Government
Obligations........................... 73
SECTION 8.06. Reinstatement........................... 73
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders ............. 74
SECTION 9.02. With Consent of Holders ................ 74
SECTION 9.03. Compliance with Trust Indenture ........ 75
SECTION 9.04. Revocation and Effect of Consents
and Waivers .......................... 75
SECTION 9.05. Notation on or Exchange of
Securities ........................... 76
SECTION 9.06. Trustee To Sign Amendments............. 76
SECTION 9.07. Payment for Consent .................... 77
</TABLE>
iii
<PAGE> 6
ARTICLE 10
Miscellaneous
<TABLE>
<S> <C> <C> <C>
SECTION 10.01. Trust Indenture Act Controls .......... 77
SECTION 10.02. Notices ............................... 77
SECTION 10.03. Communication by Holders with Other
Holders ............................. 78
SECTION 10.04. Certificate and Opinion as to
Conditions Precedent ................ 78
SECTION 10.05. Statements Required in Certificate
or Opinion .......................... 78
SECTION 10.06. When Securities Disregarded ........... 79
SECTION 10.07. Rules by Trustee, Paying Agent and
Registrar ........................... 79
SECTION 10.08. Legal Holidays ........................ 79
SECTION 10.09. Governing Law ......................... 79
SECTION 10.10. No Recourse Against Others ............ 79
SECTION 10.11. Successors ............................ 80
SECTION 10.12. Multiple Originals .................... 80
SECTION 10.13. Table of Contents; Headings ........... 80
Rule 144A/Regulation S Appendix
Exhibit A - Form of Exchange Security or Private Exchange
Security
</TABLE>
iv
<PAGE> 7
INDENTURE dated as of April 13, 1999,
between BUDGET GROUP, INC. a Delaware corporation
(the "Company") and THE BANK OF NEW YORK, a New York
banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
91/8% Senior Notes Due 2006 (the "Initial Securities") and, if and when issued
pursuant to a registered exchange for Initial Securities, the Company's 91/8%
Senior Notes Due 2006 (the "Exchange Securities") and if and when issued
pursuant to a private exchange for Initial Securities, the Company's 91/8%
Senior Subordinated Notes Due 2006 (the "Private Exchange Securities", together
with the Exchange Securities and the Initial Securities, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary; or (iii) Capital Stock
constituting a minority interest in any Person that at such time is a Restricted
Subsidiary; provided, however, that any such Restricted Subsidiary described in
clauses (ii) or (iii) above is primarily engaged in a Related Business.
"Additional Securities" means, subject to the Company's
compliance with Section 4.03, 9-1/8% Senior Notes Due 2006 issued from time to
time after the Issue Date under the terms of this Indenture (other than pursuant
to Section 2.06, 2.07 or 2.09 of this Indenture and other than Exchange
Securities or Private Exchange Securities issued pursuant to an exchange offer
for other Securities outstanding under this Indenture).
"Adjusted EBITDA" for any period means the sum of Consolidated
Net Income plus the following to the extent deducted in calculating such
Consolidated Net Income:
<PAGE> 8
2
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) non-vehicle related depreciation and amortization expense
of the Company and its consolidated Restricted Subsidiaries (excluding
amortization expense attributable to a prepaid cash item that was paid
in a prior period); and
(4) all other non-vehicle related non-cash charges of the
Company and its Restricted Subsidiaries (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for
cash expenditures in any future period);
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the non-vehicle related
depreciation and amortization of, a Restricted Subsidiary shall be added to
Consolidated Net Income to compute Adjusted EBITDA only to the extent (and in
the same proportion) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any 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. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
<PAGE> 9
3
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of
(1) any shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a
Restricted Subsidiary);
(2) all or substantially all the assets of any division or
line of business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted
Subsidiary outside of the ordinary course of business of the Company or
such Restricted Subsidiary;
(other than, in the case of clauses (1), (2) and (3) above, (A) the sale of
inventory or Eligible Vehicles in the ordinary course of business, (B) a
disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Wholly Owned Subsidiary, (C) for purposes of Section
4.06 only, a disposition that constitutes a Restricted Payment permitted by
Section 4.04 and (D) disposition of assets with a fair market value of less than
$100,000).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (1) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of or redemption or similar
payment with respect to such Indebtedness multiplied by the amount of such
payment by (2) the sum of all such payments.
<PAGE> 10
4
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that such person shall be deemed
to have "beneficial ownership" of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than
35% of the total voting power of the Voting Stock of the Company;
provided, however, that the Permitted Holders beneficially own (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other person and do
not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors
(for the purposes of this clause (1), such other person shall be deemed
to beneficially own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the
<PAGE> 11
5
"parent corporation"), if such other person is the beneficial owner (as
first defined in this clause (1)), directly or indirectly, of more than
35% of the voting power of the Voting Stock of such parent corporation
and the Permitted Holders beneficially own (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock
of such parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election
a majority of the board of directors of such parent corporation);
(2) during any period of twenty-four consecutive months,
individuals who on the Issue Date 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 was approved by a vote of 66-2/3% of the directors of the
Company then still in office who were either directors on the Issue
Date 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; or
(3) the merger or consolidation of the Company with or into
another Person (other than a Person that is controlled by the Permitted
Holders) or the merger of another Person with or into the Company, or
the sale of all or substantially all the assets of the Company to
another Person (other than a Person that is controlled by the Permitted
Holders), and, in the case of any such merger or consolidation, the
securities of the Company that are outstanding immediately prior to
such transaction and that represent 100% of the aggregate voting power
of the Voting Stock of the Company are changed into or exchanged for
cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving Person that represent
immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving Person.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter,
<PAGE> 12
6
means the successor and, for purposes of any provision contained herein and
required by the TIA, each other obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (x) the aggregate amount of Adjusted EBITDA for the period of
the most recent four consecutive fiscal quarters ending at least 45 days prior
to the date of such determination to (y) Consolidated Interest Expense for such
four fiscal quarters; provided, however, that:
(1) if the Company or any Restricted Subsidiary has Incurred
any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
both, Adjusted EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day
of such period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the first day of
such period;
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, Adjusted EBITDA and Consolidated Interest
Expense for such period shall be calculated on a pro forma basis as if
such discharge had occurred on the first day of such period and as if
the Company or such Restricted Subsidiary has not earned the interest
income actually earned during such period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the
Adjusted EBITDA for such period shall be reduced by an amount equal to
the
<PAGE> 13
7
Adjusted EBITDA (if positive) directly attributable to the assets which
are the subject of such Asset Disposition for such period, or increased
by an amount equal to the Adjusted EBITDA (if negative), directly
attributable thereto for such period and Consolidated Interest Expense
for such period shall be reduced by an amount equal to the Consolidated
Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for
such period (or, if the Capital Stock of any Restricted Subsidiary is
sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
requiring a calculation to be made hereunder, which constitutes all or
substantially all of a product line or an operating unit of a business,
Adjusted EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period; and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition, any Investment or
acquisition of assets that would have required an adjustment pursuant
to clause (3) or (4) above if made by the Company or a Restricted
Subsidiary during such period, Adjusted EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro
forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period.
<PAGE> 14
8
For purposes of this definition, whenever pro forma effect is
to be given to an acquisition of assets, the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred in connection therewith, the pro forma calculations
shall be determined in good faith by a responsible financial or accounting
Officer of the Company. If any Indebtedness bears a floating rate of interest
and is being given pro forma effect, the interest of such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement has a
remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, excluding interest accruing on Permitted Vehicle Indebtedness and
interest accruing in respect of the Company's HIGH TIDES Debentures Due 2028,
plus, to the extent not included in such total interest expense, and to the
extent incurred by the Company or its Restricted Subsidiaries, without
duplication, (1) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a Sale/Leaseback
Transaction, (2) amortization of debt discount and debt issuance cost, (3)
capitalized interest, (4) non-cash interest expenses, (5) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (6) net costs associated with Hedging Obligations
(including amortization of fees), (7) Preferred Stock dividends in respect of
all Preferred Stock held by Persons other than the Company or a Wholly Owned
Subsidiary (other than dividends payable solely in Capital Stock (other than
disqualified stock) of the Issuer of such Preferred Stock), (8) interest
incurred in connection with Investments in discontinued operations, (9) interest
accruing on any Indebtedness of any other Person to the extent such Indebtedness
is Guaranteed by (or secured by the assets of) the Company or any Restricted
Subsidiary and (10) the cash contributions to any employee stock ownership plan
or similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Company) in connection
with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income:
<PAGE> 15
9
(1) any net income of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that (A) subject to
the exclusion contained in clause (4) below, the Company's equity in
the net income of any such Person for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause (3)
below) and (B) the Company's equity in a net loss of any such Person
for such period shall be included in determining such Consolidated Net
Income;
(2) any net income (or loss) of any Person acquired by the
Company or a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company,
except that (A) subject to the exclusion contained in clause (4) below,
the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been
distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
paid to another Restricted Subsidiary, to the limitation contained in
this clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining
such Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other
disposition of any assets of the Company or its consolidated
Subsidiaries or any other Person (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed
of in the ordinary course of business and any gain (but not loss)
realized upon the sale or other disposition of any Capital Stock of any
Person;
<PAGE> 16
10
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
Section pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being made,
as the sum of (1) the par or stated value of all outstanding Capital Stock of
the Company plus (2) paid-in capital or capital surplus relating to such Capital
Stock plus (3) any retained earnings or earned surplus less (A) any accumulated
deficit and (B) any amounts attributable to Disqualified Stock.
"Core Business" means the business of (a) renting worldwide
for general use passenger automobiles and trucks under the Budget and Ryder
brand names, (b) selling in the United States late model automobiles and
passenger vans under the Budget brand name and (c) franchising the foregoing
rental business to other Persons.
"Credit Facility" means the Amended and Restated Credit
Agreement dated as of June 19, 1998 among the Company, certain of its
Subsidiaries, the lenders referred to therein, Credit Suisse First Boston, as a
co-syndication agent and as Administrative Agent, and Nationsbanc Capital
Markets, Inc., as a co-syndication agent and as Documentation Agent, together
with the related documents thereto (including the revolving loans, letters of
credit and any term loans thereunder, any guarantees and security documents), as
amended, extended, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions) from time to time, and any agreement (and
related document) governing Indebtedness incurred to Refinance, in whole or in
part, the borrowings and commitments then outstanding or permitted to be
<PAGE> 17
11
outstanding under such Credit Facility or a successor Credit Facility, whether
by the same or any other lender or group of lenders.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event (1) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (2) is convertible or
exchangeable at the option of the holder for Indebtedness or Disqualified Stock
or (3) is mandatorily redeemable or must be purchased upon the occurrence of
certain events or otherwise, in whole or in part, in each case on or prior to
the first anniversary of the Stated Maturity of the Securities; provided,
however, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the first anniversary of the
Stated Maturity of the Securities shall not constitute Disqualified Stock if (1)
the "asset sale" or "change of control" provisions applicable to such Capital
Stock are not more favorable to the holders of such Capital Stock than the terms
applicable to the Securities in Sections 4.06 and 4.09 of this Indenture and (2)
any such requirement only becomes operative after compliance with such terms
applicable to the Securities, including the purchase of any Securities tendered
pursuant thereto.
"Eligible Vehicles" shall mean the motor vehicle inventory of
the Company and its Restricted Subsidiaries, consisting of (1) passenger
automobiles, light-duty and medium-duty trucks, trailers and vans and (2)
motorcycles, sport utility vehicles, buses, truck campers and motor homes, in
each case, whether held for sale, lease or rental purposes.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 18
12
"Exchange Securities" means the debt securities of the Company
issued pursuant to the Indenture in exchange for, and in an aggregate principal
amount at maturity equal to, the Securities, in compliance with the terms of the
Registration Rights Agreement.
"Foreign Subsidiary" means a Restricted Subsidiary that is
incorporated or formed in a jurisdiction other than the United States or a State
thereof or the District of Columbia and with respect to which more than 80% of
any of its sales, earnings or assets (determined on a consolidated basis in
accordance with GAAP) are located in, generated from or derived from operations
located in territories outside of the United States of America and jurisdictions
outside the United States of America.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in (1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (2) statements and
pronouncements of the Financial Accounting Standards Board and (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (2) entered into for the purpose
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning. The term
"Guarantor" shall mean any Person Guaranteeing any obligation.
<PAGE> 19
13
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. The accretion of principal
of a non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(1) the principal in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable, including, in each case, any
premium on such indebtedness to the extent such premium has become due
and payable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(3) 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), which purchase price is due more than
six months after the date of placing such property in service or taking
delivery and title thereto;
(4) 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 (1) through (3) above) entered
<PAGE> 20
14
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 tenth Business
Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of such Person, the
liquidation preference with respect to any Preferred Stock (but
excluding, in each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1)
through (5) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1)
through (6) 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; and
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness 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 at such date provided, however, that
(1) the amount outstanding at any time of any Indebtedness
issued with original issue discount is the face amount of such
Indebtedness less the unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity
with GAAP; and
(2) Indebtedness shall not include any liability for federal,
state, local or other taxes.
"Indenture" means this Indenture as amended or supplemented
from time to time.
<PAGE> 21
15
"Interest Payment Date" means each date on which interest is
payable on a Security.
"Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person. In determining the amount of
any Investment in respect of any property or assets other than cash, such
property or asset shall be valued at its fair market value at the time of such
Investment (unless otherwise specified in this definition) as determined in good
faith by the Board of Directors. For purposes of the definition of "Unrestricted
Subsidiary", the definition of "Restricted Payment" and Section 4.04, (1)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (A) the Company's "Investment" in such Subsidiary
at the time of such redesignation less (B) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (2) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors. In determining the amount of any
Investment in respect of any property or assets other than cash, such property
or asset shall be value at its fair market value at the time of such Investment
(unless otherwise specified in this definition), as determined in good faith by
the Board of Directors.
<PAGE> 22
16
"Issue Date" means the date on which the Securities are
originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a
liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by
any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable
law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made
to minority interest holders in Restricted Subsidiaries as a result of
such Asset Disposition;
(4) any portion of the purchase price from an Asset
Disposition required by the terms of such Asset Disposition to be
placed in escrow (whether as a reserve for a purchase price adjustment,
for satisfaction of indemnities or otherwise); provided, however, that
upon the termination of such escrow, Net Available Cash shall be
increased by any portion of the funds therein released to the Company
or any Restricted Subsidiary; and
<PAGE> 23
17
(5) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Restricted Subsidiary
after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, printing costs, underwriters' or placement
agents' fees, discounts or commissions and brokerage, stock exchange listing,
consultant and other fees actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"Non-Core Business" means any business other than a Core
Business.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, any Executive Vice President, any Vice President, the Treasurer or the
Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means each of Mr. Sanford Miller, Mr.
Jeffrey D. Congdon and Mr. John P. Kennedy.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (1) the Company, a Restricted Subsidiary or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (2) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (3) Temporary Cash Investments; (4) receivables owing to the
Company or any Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms;
<PAGE> 24
18
provided, however, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems reasonable under
the circumstances; (5) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary; (7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments; (8) any Person to the
extent such Investment represents the non-cash portion of the consideration
received for an Asset Disposition as permitted pursuant to Section 4.06; and (9)
additional Investments in an aggregate amount, which, together with all other
Investments made pursuant to this clause (9) that are outstanding, does not
exceed $25 million.
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under workers'
compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States
government bonds to secure surety or appeal bonds to which such Person
is a party, or deposits as security for contested taxes or import
duties or for the payment of rent, in each case Incurred in the
ordinary course of business;
(2) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other
proceedings for review;
(3) liens for property taxes not yet due or payable or subject
to penalties for non-payment or which are being contested in good faith
by appropriate proceedings;
<PAGE> 25
19
(4) Liens in favor of issuers of surety bonds or letters of
credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; provided, however, that
such letters of credit do not constitute Indebtedness;
(5) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real
property or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially
impair their use in the operation of the business of such Person;
(6) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or
additions to, property of such Person; provided, however, that the Lien
may not extend to any other property owned by such Person or any of its
Subsidiaries at the time the Lien is Incurred, and the Indebtedness
(other than any interest thereon) secured by the Lien may not be
Incurred more than 270 days after the later of the acquisition,
completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien;
(7) (A) Liens to secure Indebtedness (and related interest,
fees and other obligations) permitted under clause (b)(1) of Section
4.03 and (ii) Liens on property and assets of a Foreign Subsidiary to
secure Indebtedness (and related interest, fees and other obligations)
of such Foreign Subsidiary permitted under clause (b)(2) of Section
4.03;
(8) Liens existing on the Issue Date;
(9) Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of such
Person; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such other Person
becoming such a Subsidiary; provided further, however, that such Lien
may not extend to any other property owned by such Person or any of its
Subsidiaries;
<PAGE> 26
20
(10) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means
of a merger or consolidation with or into such Person or a Subsidiary
of such Person; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend
to any other property owned by such Person or any of its Subsidiaries;
(11) Liens securing Indebtedness or other obligations of a
Subsidiary of such Person owing to such Person or a wholly owned
Subsidiary of such Person;
(12) Liens securing Hedging Obligations so long as such
Hedging Obligations relate to Indebtedness that is, and is permitted to
be under this Indenture, secured by a Lien on the same property
securing such Hedging Obligations;
(13) Liens securing Permitted Vehicle Indebtedness and
covering cash collateral deposits, vehicles and assets attributable to,
or directly associated with, vehicles, such as rental receivables and
receivables arising on the disposition of vehicles, and any other
property of a type securing Permitted Vehicle Indebtedness under an
agreement as in effect on the Issue Date;
(14) Liens on claims against Persons renting vehicles, Persons
damaging vehicles or Persons issuing applicable insurance coverage for
such Persons arising under insurance policies entered into in the
ordinary course of business consistent with past practice;
(15) Liens securing vehicles held as inventory in the
Company's car sales business;
(16) Liens on any airport concession agreements or permits to
secure loans extended to finance tenant improvements used in connection
with the concession agreement or permit subject to such Lien;
(17) rights of set off which arise under contractual
arrangements in the ordinary course of business or which arise in
financing agreements in the ordinary course of business; and
<PAGE> 27
21
(18) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by
any Lien referred to in the foregoing clauses (6), (8), (9) and (10);
provided, however, that:
(A) such new Lien shall be limited to all or part of
the same property that secured the original Lien (plus
improvements to or on such property) and
(B) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of
(x) the outstanding principal amount or, if greater, committed
amount of the Indebtedness described under clauses (6), (8),
(9) or (10) at the time the original Lien became a Permitted
Lien and (y) an amount necessary to pay any fees and expenses,
including premiums, related to such refinancing, refunding,
extension, renewal or replacement.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clauses (6), (9) or (10) above to the extent such Lien applies to
any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to Section 4.06. For purposes of this definition, the term
"Indebtedness" shall be deemed to include interest on such Indebtedness.
"Permitted Vehicle Collateral" means, as of any
Determination Date:
(1) the collateral securing Permitted Vehicle Indebtedness and
consisting of cash collateral deposits, Eligible Vehicles and
receivables arising from the acquisition or disposition of Eligible
Vehicles; and
(2) Eligible Vehicles and receivables arising from the
acquisition or disposition of Eligible Vehicles that are not securing
any Indebtedness and that are of a type securing Permitted Vehicle
Indebtedness under an agreement as in effect on the Issue Date;
<PAGE> 28
22
provided, however, that, in each case, such acquisition or disposition
receivables shall be included as Permitted Vehicle Collateral only to the extent
that:
(A) such receivables arise pursuant to the acceptance
of vehicles for repurchase under a repurchase agreement with a
repurchase party (provided the debt of such repurchase party
has an investment grade rating or, if the debt of such
repurchase party does not have a rating, the debt of the
parent entity of such repurchase party has an investment grade
rating) as of such Determination Date providing for the
repurchase of such vehicles at a price substantially
equivalent to depreciated book value at the anticipated
disposition date;
(B) such receivables are secured by a first priority
lien under applicable law (except for liens arising under
applicable law) on the related vehicles;
(C) in the case of receivables securing Permitted
Vehicle Indebtedness, the collateral value of such receivables
does not exceed the value for such receivables determined in
accordance with the provisions of any applicable
investment-grade rated debt facility designed to finance
Eligible Vehicles and related receivables;
(D) such receivables have been outstanding not in
excess of 120 days; provided that in the case of this clause
(D), (1) the collateral value of such receivables shall be
valued at their net book value determined in accordance with
GAAP, (2) the collateral value of such receivables so valued
shall not exceed 10% of the total net book value of all
Permitted Vehicle Collateral and (3) the collateral value of
such receivables so valued arising from any Person (or Persons
which are Affiliates of such Person) shall not exceed 2% of
the total net book value of all Permitted Vehicle Collateral;
or
(E) such receivables are fully and unconditionally
insured, bonded or guaranteed by a Person with an investment
grade rating.
Permitted Vehicle Collateral shall be valued (except as set
forth in clause (D)(1) above) at the net book value determined in accordance
with GAAP of the relevant Eligible Vehicles and receivables.
<PAGE> 29
23
"Permitted Vehicle Indebtedness" means (1) Indebtedness
Incurred to finance or Refinance Eligible Vehicles and related receivables (but
only to the extent actually used to finance or Refinance Eligible Vehicles and
related receivables), (2) Indebtedness secured by Permitted Vehicle Collateral
and (3) any Indebtedness that Refinances Permitted Vehicle Indebtedness;
provided, however, that any Indebtedness redesignated pursuant to clause (2)(C)
of Section 4.12 shall not constitute Permitted Vehicle Indebtedness; and
provided, further, that the Securities (other than any Additional Securities)
shall be deemed not to constitute Permitted Vehicle Indebtedness when issued.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on the
Issue Date or Incurred in
<PAGE> 30
24
compliance with this Indenture, including Indebtedness that Refinances
Refinancing Indebtedness; provided, however, that (1) such Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being Refinanced, (2) such Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being Refinanced and (3) such
Refinancing Indebtedness has an aggregate principal amount (or if Incurred with
original issue discount, an aggregate issue price) that is equal to or less than
the aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the Indebtedness being
Refinanced; provided further, however, that Refinancing Indebtedness shall not
include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of the
Company or (B) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement dated April 8, 1999, among the Company, Credit Suisse First Boston
Corporation , Goldman, Sachs & Co. and NationsBanc Montgomery Securities LLC.
"Related Business" means any business conducted by the Company
and its Restricted Subsidiaries on the Issue Date and any business related,
ancillary or complementary to the businesses of the Company and the Restricted
Subsidiaries on the Issue Date.
"Restricted Payment" with respect to any Person means (1) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Company or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (2) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company held by any Person or
of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted
<PAGE> 31
25
Subsidiary), including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of the Company that is not Disqualified Stock),
(3) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations (other than the
purchase, repurchase, or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition)
or (4) the making of any Investment in any Person (other than a Permitted
Investment).
In determining the amount of any Restricted Payment made in
property other than cash, such amount shall be the fair market value of such
property at the time of such Restricted Payment, as determined in good faith by
the Board of Directors.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Ryder Merger Agreement" means the Agreement and Plan of
Merger, dated March 4, 1998 (as amended on March 16, 1998 and June 19, 1998), by
and among the Borrower, BDG Corporation, Ryder TRS, Inc., Ryder Questor Partners
Fund, L.P., Questor Side-by-Side Partners L.P. and Dearborn Capital Partners,
L.P.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" means (1) Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter Incurred, and (2) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the
<PAGE> 32
26
Company to the extent post-filing interest is allowed in such proceeding) in
respect of (A) indebtedness of the Company for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which the Company is responsible or liable unless, in the
case of clauses (1) and (2), in the instrument creating or evidencing the same
or pursuant to which the same is outstanding it is provided that such
obligations are subordinate in right of payment to the Securities; provided,
however, that Senior Indebtedness shall not include (1) any obligation of the
Company to any Subsidiary, (2) any liability for Federal, state, local or other
taxes owed or owing by the Company, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
guarantees thereof or instruments evidencing such liabilities), (4) any
Indebtedness of the Company (and any accrued and unpaid interest in respect
thereof) which is subordinate or junior in any respect to any other Indebtedness
or other obligation of the Company or (5) that portion of any Indebtedness which
at the time of Incurrence is Incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership, limited liability company or other business entity of
which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership interests) entitled (without regard to
the occurrence of any contingency) to
<PAGE> 33
27
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (1) such Person, (2) such Person
and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of
such Person.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States
of America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date
of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States of
America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50,000,000 (or the foreign
currency equivalent thereof) and has outstanding debt that is rated "A"
(or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in
clause (ii) above;
(4) investments in commercial paper, maturing not more than 90
days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws
of the United States of America or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard and
Poor's Ratings Group; and
(5) investments in securities with maturities of six months or
less from the date of acquisition issued
<PAGE> 34
28
or fully guaranteed by any state, commonwealth or territory of the
United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by Standard & Poor's Ratings
Group or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or owns or holds any Lien on any property
of, the Company or any other Subsidiary of the Company that is not a Subsidiary
of the Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.04. The Board of Directors may designate any
<PAGE> 35
29
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (A) the Company could Incur
$1.00 of additional Indebtedness under Section 4.03(a) and (B) no Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the resolution of the Board of Directors giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction" ................ 4.07
"Bankruptcy Law" ....................... 6.01
"covenant defeasance option" ........... 8.01(b)
"Custodian" ............................ 6.01
"Event of Default" ..................... 6.01
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 10.08
"Offer" ............................... 4.06(b)
"Offer Amount" ........................ 4.06(c)(2)
"Offer Period" ........................ 4.06(c)(2)
"Paying Agent" ......................... 2.03
"Purchase Date" ....................... 4.06(c)(1)
"Registrar"............................. 2.03
"Successor Company" .................... 5.01
</TABLE>
<PAGE> 36
30
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and
words in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be
<PAGE> 37
31
the principal amount thereof that would be shown on a balance sheet of
the issuer dated such date prepared in accordance with GAAP, and
accretion of principal on such security shall be deemed to be non-cash
interest expense;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater;
(9) all references to the date the Securities were originally
issued shall refer to the date the Initial Securities were originally
issued; and
(10) all references to any payment of principal, purchase
prices in connection with a purchase of the Securities and interest or
any other amount payable on or with respect to such Securities shall be
deemed to include payment of any additional cash interest pursuant to
any Registration Rights Agreement.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange Securities
are set forth in the Rule 144A/Regulation S Appendix attached hereto (the
"Appendix") which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities and the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibit A are part of
the terms of this Indenture.
<PAGE> 38
32
SECTION 2.02. Execution and Authentication. At least one
Officer shall sign the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver
$400.0 million of 9-1/8% Senior Notes Due 2006 and, at any time and from time to
time thereafter, the Trustee shall authenticate and deliver Securities for
original issue in an aggregate principal amount specified in such order, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and, in
the case of an issuance of Additional Securities pursuant to Section 2.13 after
the Issue Date, shall certify that such issuance is in compliance with Section
4.03.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
<PAGE> 39
33
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. On or prior
to each due date of the principal and interest on any Security, the Company
shall deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee in writing of any default by the Company in making any
such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be
<PAGE> 40
34
transferable only upon the surrender of a Security for registration of transfer.
When a Security is presented to the Registrar or a co-registrar with a request
to register a transfer, the Registrar and the Trustee may require a
Securityholder, among other things, to furnish appropriate endorsements and
transfer documents and the Registrar shall register the transfer as requested
upon certification to the Registrar that the requirements of Section 8-401(1) of
the Uniform Commercial Code have been met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if it has received certification that the same
requirements have been met and thereupon one or more new Securities in the same
aggregate principal amount shall be issued to the designated assignee or
transferee and the old Security shall be cancelled. To permit registration of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-registrar's request. The
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges in connection with any transfer or exchange pursuant
to this Section. The Company shall not be required to make and the Registrar
need not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost,
<PAGE> 41
35
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of Section 8-405 of the
Uniform Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss which any of them may suffer if a
Security is replaced. The Company and the Trustee may charge the Holder for
their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. Except as set forth in Section 10.06, a
Security does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
<PAGE> 42
36
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and dispose of (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer, exchange,
payment or cancellation in accordance with the Trustee's procedures for the
disposition of canceled securities in effect as of the date of such disposition
and deliver a certificate of such disposition to the Company unless the Company
directs the Trustee in writing to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.13. Issuance of Additional Securities. The Company
shall be entitled, subject to its compliance with Section 4.03, to issue
Additional Securities under this Indenture which shall have identical terms as
the Initial Securities issued on the Issue Date, other than with respect to the
date of issuance, issue price and amount of interest payable on the first
payment date applicable thereto. The Initial Securities issued on the Issue
Date, any Additional
<PAGE> 43
37
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor shall be treated as a single class for all purposes under this
Indenture.
With respect to any Additional Securities, the Company shall
set forth in a resolution of the Board of Directors and an Officers'
Certificate, a copy of each which shall be delivered to the Trustee, the
following information:
(1) the aggregate principal amount of such Additional
Securities to be authenticated and delivered pursuant to this
Indenture;
(2) the issue price, the issue date and the CUSIP number of
such Additional Securities and the amount of interest payable on the
first payment date applicable thereto; provided, however, that no
Additional Securities may be issued at a price that would cause such
Additional Securities to have "original issue discount" within the
meaning of Section 1273 of the Code; and
(3) whether such Additional Securities shall be transfer
restricted securities and issued in the form of Initial Securities as
set forth in the Appendix to this Indenture or shall be issued in the
form of Exchange Securities as set forth in Exhibit A.
ARTICLE 3
Reserved
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if by 10 a.m., New York City
time, on such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
<PAGE> 44
38
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC and provide the Trustee and
Securityholders with such annual reports and such information, documents and
other reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such information,
documents and reports to be so filed and provided at the times specified for the
filings of such information, documents and reports under such Sections. In
addition, whether or not required by the SEC, the Company shall file a copy of
all of the information and reports referred to above with the SEC for public
availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing). The Company also
shall comply with the other provisions of TIA ss. 314(a).
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company and its
Restricted Subsidiaries may Incur Indebtedness if, on the date of such
Incurrence and after giving effect thereto on a pro forma basis, the
Consolidated Coverage Ratio exceeds 2.25 to 1.
(b) Notwithstanding the foregoing paragraph (a), the Company
and the Restricted Subsidiaries may Incur any or all of the following
Indebtedness:
(1) Indebtedness Incurred pursuant to the Credit Facility;
provided, however, that, after giving effect to any such Incurrence,
the aggregate principal amount of such Indebtedness then outstanding
does not exceed $550 million less the sum of all principal payments
with respect to such Indebtedness pursuant to clause (3)(A) of Section
4.06(a);
<PAGE> 45
39
(2) Indebtedness of Foreign Subsidiaries in an aggregate
principal amount that, when taken together with the principal amount of
all other Indebtedness Incurred pursuant to this clause (2) (and any
Indebtedness Incurred by Foreign Subsidiaries prior to the Issue Date
to finance working capital) and then outstanding, does not exceed $125
million;
(3) Indebtedness owed to and held by the Company or a
Restricted Subsidiary; provided, however, that (A) any subsequent
issuance or transfer of any Capital Stock that results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
a Restricted Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the obligor thereon and (B) if
the Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the Notes;
(4) the Securities (other than Additional Securities);
(5) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2), (3) or (4) of this Section
4.03(b));
(6) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was
acquired by the Company or a Restricted Subsidiary (other than
Indebtedness Incurred in connection with, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary or was acquired by the Company or a
Restricted Subsidiary); provided, however, that on the date of such
acquisition and after giving effect thereto, the Company would have
been able to Incur at least $1.00 of Indebtedness pursuant to Section
4.03(a);
(7) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (4), (5) or
(6) of this Section 4.03(b) or this clause (7); provided, however,
<PAGE> 46
40
that to the extent such Refinancing Indebtedness directly or indirectly
Refinances Indebtedness of a Subsidiary Incurred pursuant to clause
(6), such Refinancing Indebtedness shall be Incurred only by such
Subsidiary;
(8) Hedging Obligations consisting of Currency Agreements or
Interest Rate Agreements directly related to Indebtedness permitted to
be Incurred by the Company pursuant to this Indenture;
(9) Permitted Vehicle Indebtedness;
(10) Indebtedness represented by Guarantees issued to airports
and airport and other governmental authorities for the construction of
airport rental or related facilities to be used by the Company or any
Restricted Subsidiary in the ordinary course of business that do not
exceed for the Company and all Restricted Subsidiaries in the aggregate
$50 million at any time outstanding;
(11) the Guarantee of any Indebtedness otherwise permitted to
be Incurred pursuant to this Indenture (other than Indebtedness
Incurred pursuant to clause (6) above or Refinancing Indebtedness
Incurred pursuant to clause (7) above in respect of Indebtedness
Incurred pursuant to clause (6) above);
(12) Indebtedness of the Company or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price or similar
obligations, in each case Incurred in connection with the disposition
of any assets of the Company or any Restricted Subsidiary in a
principal amount not to exceed the gross proceeds actually received by
the Company or any Restricted Subsidiary in connection with such
disposition; and
(13) Indebtedness in an aggregate principal amount which,
together with all other Indebtedness of the Company outstanding on the
date of such Incurrence (other than Indebtedness permitted by clauses
(1) through (12) of this Section 4.03(b) or Section 4.03(a)) does not
exceed $50 million.
(c) Notwithstanding the foregoing, the Company shall not Incur
any Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Subordinated Obligations unless such
<PAGE> 47
41
Indebtedness shall be subordinated to the Securities to at least the same extent
as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section
4.03, (1) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described herein, the Company, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses and
(2) an item of Indebtedness may be divided and classified in more than one of
the types of Indebtedness described herein.
(e) For the purpose of determining amounts of Indebtedness
outstanding under this Section 4.03 and for the purpose of avoiding duplication
only, Indebtedness of a Person resulting from the grant by such Person of
security interest with respect to, or from the issuance by such Person of
Guarantees (and security interests with respect thereof) of, or from the
assumption of obligations with respect to letters of credit supporting,
Indebtedness Incurred by such Person pursuant to the Indenture (or Indebtedness
which such Person is otherwise permitted to Incur under the Indenture) shall not
be deemed to be a separate Incurrence of Indebtedness by such Person.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of
(without duplication):
(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Issue Date occurs to the end
of the most recent fiscal quarter ending at least 45 days
prior to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit); plus
<PAGE> 48
42
(B) the aggregate Net Cash Proceeds received by the
Company from the issuance or sale of, or as a capital
contribution in respect of, its Capital Stock (other than
Disqualified Stock) subsequent to the Issue Date (other than
an issuance or sale to a Subsidiary of the Company and other
than an issuance or sale to an employee stock ownership plan
or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees); plus
(C) the amount by which Indebtedness of the Company
is reduced on the Company's balance sheet upon the conversion
or exchange (other than by a Subsidiary of the Company)
subsequent to the Issue Date of any Indebtedness of the
Company convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the amount of
any cash, or the fair value of any other property, distributed
by the Company upon such conversion or exchange); plus
(D) an amount equal to the sum of (x) the net
reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances or
other transfers of assets, in each case to the Company or any
Restricted Subsidiary from Unrestricted Subsidiaries, and (y)
the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of
an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case
of any Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by the
Company or any Restricted Subsidiary in such Unrestricted
Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made by exchange for, or out of the
proceeds of the substantially concurrent sale of, or capital
contribution in respect of, Capital Stock of the Company (other than
Disqualified Stock and
<PAGE> 49
43
other than Capital Stock issued or sold to a Subsidiary of the Company
or an employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their employees);
provided, however, that (A) such Restricted Payment shall be excluded
in the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale shall be excluded from the calculation of
amounts under clause (3)(B) of Section 4.04(a);
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Indebtedness of the Company which is permitted to be Incurred
pursuant to Section 4.03; provided, however, that such purchase,
repurchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded in the calculation of the amount of
Restricted Payments;
(3) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with Section 4.04(a); provided, however, that at the time
of payment of such dividend, no other Default shall have occurred and
be continuing (or result therefrom); provided further, however, that
such dividend shall be included in the calculation of the amount of
Restricted Payments;
(4) the payment of interest to Budget Group Capital Trust to
the extent required to pay non-deferrable scheduled cash dividends on
its HIGH TIDES 6 1/4% Convertible Preferred Securities; provided,
however, that (A) no Default shall have occurred and be continuing (or
would result therefrom) and (B) Budget Group Capital Trust shall
immediately apply any such interest payment to pay such scheduled cash
dividend; provided, further, however, that such interest payments shall
be included in the calculation of the amount of Restricted Payments;
(5) the repurchase or other acquisition of shares of, or
options to purchase shares of, common stock of the Company or any of
its Subsidiaries from employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including
employment agreements) or
<PAGE> 50
44
plans (or amendments thereto) approved by the Board of Directors under
which such individuals purchase or sell or are granted the option to
purchase or sell, shares of such common stock; provided, however, that
the aggregate amount of such repurchases and other acquisitions shall
not exceed $5 million in any calendar year; provided further, however,
that such repurchases and other acquisitions shall be excluded in the
calculation of the amount of Restricted Payments;
(6) any purchase or defeasance of Subordinated Obligations
upon a Change of Control to the extent required by this Indenture or
other agreement or instrument pursuant to which such Subordinated
Obligations were issued, but only if the Company has first complied
with all its obligations under Section 4.09; provided, however, that
the amount of such purchase or defeasance shall be excluded in the
calculation of Restricted Payments;
(7) the payment of Contingent Additional Consideration (as
defined in the Ryder Merger Agreement) in an aggregate amount not to
exceed the aggregate amount of Net Available Cash received by the
Company since the Issue Date as consideration from the sale of assets
of a Non-Core Business (or the Capital Stock of a Subsidiary of the
Company engaged in the conduct of a Non-Core Business) to the extent
such Net Available Cash is being applied pursuant to clause (3)(C) of
Section 4.06(a); provided, however, that the amount of such payment
shall be included in the calculation of the amount of Restricted
Payments; and
(8) Other Restricted Payments in an aggregate amount which,
when taken together with all other Restricted Payments made pursuant to
this clause (8) and then outstanding, does not exceed $35 million at
any time outstanding; provided, however, that the amount of such
Restricted Payments shall be included in the calculation of Restricted
Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the
<PAGE> 51
45
Company or (c) transfer any of its property or assets to the Company,
except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary on or prior to the
date on which such Restricted Subsidiary was acquired by the Company
(other than Indebtedness Incurred as consideration in, or to provide
all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (1) or (2) of this Section 4.05 or this
clause (3) or contained in any amendment to an agreement referred to in
clause (1) or (2) of this Section 4.05 or this clause (3); provided,
however, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any such refinancing agreement or
amendment are no less favorable in any material respect to the
Securityholders than encumbrances and restrictions with respect to such
Restricted Subsidiary contained in such predecessor agreements;
(4) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder;
(5) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages;
(6) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or
<PAGE> 52
46
substantially all the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition;
(7) any encumbrance or restriction arising under applicable
law;
(8) any encumbrance or restriction consisting of any
restriction on the sale or other disposition of assets or property
securing Indebtedness as a result of a Lien permitted to be Incurred
under the Indenture on such asset or property; and
(9) any encumbrance or restriction imposed solely upon a
Foreign Subsidiary, so long as there does not exist any Guarantee by
the Company of any Indebtedness of such Foreign Subsidiary or any of
such Foreign Subsidiary's Subsidiaries.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to
the fair market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of Directors,
of the shares and assets subject to such Asset Disposition;
(2) at least 75% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash or cash
equivalents; and
(3) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be):
(A) first, to the extent the Company elects (or is
required by the terms of any Indebtedness), to prepay, repay,
redeem or purchase Senior Indebtedness or Indebtedness (other
than any Disqualified Stock) of a Wholly Owned Subsidiary (in
each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within one year from the later of
the date of such Asset
<PAGE> 53
47
Disposition or the receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause
(A), to the extent the Company elects, to acquire Additional
Assets within one year from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses
(A) and (B), in the case of Net Available Cash received by the
Company as consideration from the sale of assets of or the
Capital Stock of a Subsidiary of the Company engaged in the
conduct of a Non-Core Business, to the extent the Company
elects, to make a payment of Contingent Additional
Consideration pursuant to clause (8) of Section 4.04(b) within
one year from the later of the date of such asset disposition
or the receipt of such Net Available Cash;
(D) fourth, to the extent of the balance of such Net
Available Cash after application in accordance with clauses
(A), (B) and (C), to make an Offer to the holders of the
Securities (and to holders of other Senior Indebtedness
designated by the Company) to purchase Securities (and such
other Senior Indebtedness) pursuant to and subject to the
conditions contained in this Indenture; and
(E) fifth, to the extent of the balance of such Net
Available Cash after application in accordance with clauses
(A), (B), (C) and (D), for any purpose not prohibited by this
Indenture;
provided, however, that in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A) or (D) above, the
Company or such Restricted Subsidiary shall permanently retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. In the event the terms of the Company's
Credit Facility require the Company to permanently reduce the available
credit under the facility in an amount equal to the amount of Net
Available Cash, such permanent reduction
<PAGE> 54
48
shall constitute application of such Net Available Cash pursuant to
clause (A) above.
Notwithstanding the foregoing provisions of this Section 4.06,
the Company and the Restricted Subsidiaries shall not be required to apply any
Net Available Cash in accordance with this Section 4.06(a) except to the extent
that the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this Section 4.06(a) exceeds $10 million. Pending
application of Net Available Cash pursuant to this Section 4.06(a), such Net
Available Cash shall be invested in Permitted Investments.
For the purposes of this Section 4.06, the following are
deemed to be cash or cash equivalents:
(1) the assumption of Indebtedness of the Company or any
Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with
such Asset Disposition (in which case the Company shall, without
further action, be deemed to have applied such assumed Indebtedness in
accordance with clause (A) of the preceding paragraph); and
(2) securities received by the Company or any Restricted
Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Indebtedness) pursuant to Section
4.06(a)(3)(D), the Company shall be required to purchase Securities tendered
pursuant to an offer by the Company for the Securities (and other Senior
Indebtedness) (the "Offer") at a purchase price of 100% of their principal
amount (without premium) plus accrued but unpaid interest (or, in respect of
such other Senior Indebtedness, such lesser price, if any, as may be provided
for by the terms of such Senior Indebtedness) in accordance with the procedures
(including prorating in the event of oversubscription) set forth in Section
4.06(c). If the aggregate purchase price of the Securities (and any other Senior
Indebtedness) tendered exceeds the Net Available Cash allotted to the purchase
thereof, the Company shall select the securities to be purchased on a pro rata
basis but in denominations of $1,000 or multiples thereof. The Company shall not
be required to make an Offer to purchase Securities (and other Senior
Indebtedness) pursuant
<PAGE> 55
49
to this Section 4.06 if the Net Available Cash available therefor is less than
$10 million (which lesser amount shall be carried forward for purposes of
determining whether such an Offer is required with respect to the Net Available
Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), and (ii) if material,
appropriate pro forma financial information) and all instructions and materials
necessary to tender Securities pursuant to the Offer, together with the
information contained in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (i) the amount of the Offer (the
"Offer Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably 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) in Temporary Cash Investments, maturing on the last day prior to the
Purchase Date or on the Purchase Date if funds are immediately available by open
of business, an amount equal to the Offer Amount to be held for payment in
accordance with the provisions of this Section. Upon the expiration of the
period for which the Offer remains open (the "Offer Period"), the
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50
Company shall deliver to the Trustee for cancellation the Securities or portions
thereof that have been properly tendered to and are to be accepted by the
Company. The Trustee shall, on the Purchase Date, mail or deliver payment to
each tendering Holder in the amount of the purchase price. In the event that the
aggregate purchase price of the Securities delivered by the Company to the
Trustee is less than the Offer Amount applicable to the Securities, the Trustee
shall deliver the excess to the Company promptly after the expiration of the
Offer Period for application in accordance with this Indenture.
(3) Holders shall be entitled to withdraw their election if
the Trustee or the Company receives not later than one Business Day prior to the
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered for purchase by
the Holder and a statement that such Holder is withdrawing his election to have
such Security purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities (and any other Senior Indebtedness included in
the Offer) surrendered by holders thereof exceeds the Offer Amount, the Company
shall select the Securities and the other Senior Indebtedness to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Securities and the other Senior Indebtedness in
denominations of $1,000, or integral multiples thereof, shall be purchased).
Holders whose Securities are purchased only in part shall be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this Section. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable
<PAGE> 57
51
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction") unless:
(1) the terms thereof are no less favorable to the Company or
such Restricted Subsidiary than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is
not an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess
of $2.5 million, (x) the terms thereof are set forth in writing and (y)
a majority of the non-employee members of the Board of Directors
disinterested with respect to such Affiliate Transaction have
determined in good faith that the criteria set forth in clause (1) are
satisfied and have approved the relevant Affiliate Transaction as
evidenced by a Board Resolution; and
(3) if such Affiliate Transaction involves an amount in excess
of $10 million, the Board of Directors shall also have received a
written opinion from a nationally recognized investment banking firm
that is not an Affiliate of the Company to the effect that such
Affiliate Transaction is fair, from a financial standpoint, to the
Company and its Restricted Subsidiaries.
(b) The provisions of Section 4.07(a) shall not prohibit (1)
any Investment (other than a Permitted Investment) or other Restricted Payment
in each case permitted to be made pursuant to Section 4.04, (2) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors, (3) the grant of stock
options or similar rights to employees and directors of the Company pursuant to
plans approved by the Board of Directors, (4) loans or advances to employees in
the ordinary course of business in accordance with the past
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52
practices of the Company or its Restricted Subsidiaries, but in any event not to
exceed $1 million in the aggregate outstanding at any one time, (5) the payment
of reasonable fees to directors of the Company and its Restricted Subsidiaries
who are not employees of the Company or its Restricted Subsidiaries, (6) any
Affiliate Transaction between the Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries, (7) the issuance or sale of any Capital Stock
(other than Disqualified Stock) of the Company; and (8) transactions currently
contemplated by and pursuant to agreements as in existence on the Issue Date.
SECTION 4.08. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries. The Company shall not sell or otherwise
dispose of any Capital Stock of a Restricted Subsidiary, and shall not permit
any Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any of its Capital Stock except (1) to the Company or a Wholly Owned
Subsidiary, (2) directors' qualifying shares, (3) if, immediately after giving
effect to such issuance, sale or other disposition, neither the Company nor any
of its Subsidiaries own any Capital Stock of such Restricted Subsidiary or (4)
if, immediately after giving effect to such issuance, sale or other disposition,
such Restricted Subsidiary would no longer constitute a Restricted Subsidiary
and any Investment in such Person remaining after giving effect thereto would
have been permitted to be made under the covenant described in Section 4.04 if
made on the date of such issuance, sale or other disposition.
Notwithstanding the foregoing, the issuance or sale of shares
of Capital Stock of any Restricted Subsidiary of the Company will not violate
the provisions of the immediately preceding sentence if such shares are issued
or sold in connection with (x) the formation or capitalization of a Restricted
Subsidiary or (y) a single transaction or a series of substantially
contemporaneous transactions whereby such Restricted Subsidiary becomes a
Restricted Subsidiary of the Company by reason of the acquisition of securities
or assets from another Person.
SECTION 4.09. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase all or any portion of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof on the date of purchase plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on the relevant record date to receive interest on
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53
the relevant interest payment date), in accordance with the terms contemplated
in Section 4.09(b).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee (the
"Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof on the date of purchase plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest on
the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and capitalization, each after giving effect to such
Change of Control);
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered by the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
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54
(e) Notwithstanding the foregoing provisions of this Section,
the Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
(f) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.10. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or
permit to exist any Lien (the "Initial Lien") of any nature whatsoever on any of
its properties (including Capital Stock of a Restricted Subsidiary), whether
owned at the Issue Date or thereafter acquired, other than Permitted Liens,
without effectively providing that the Securities shall be secured equally and
ratably with (or prior to) the obligations so secured for so long as such
obligations are so secured. Any Lien created for the benefit of the Holders of
the Securities pursuant to the preceding sentence shall provide by its terms
that such Lien shall be automatically and unconditionally released and
discharged upon the release and discharge of the Initial Lien.
SECTION 4.11. Limitation on Sale/Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
any Sale/Leaseback Transaction with respect to any property unless:
(i) the Company or such Subsidiary would be entitled to (A)
Incur Indebtedness in an amount equal to the Attributable Debt with
respect to such Sale/Leaseback Transaction pursuant to Section 4.03 and
(B) create a Lien on such property securing such Attributable Debt
without equally and ratably securing the Securities pursuant to Section
4.10;
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(ii) the net proceeds received by the Company or any
Restricted Subsidiary in connection with such Sale/Leaseback
Transaction are at least equal to the fair value (as determined by the
Board of Directors) of such property; and
(iii) the Company applies the proceeds of such transaction in
compliance with Section 4.06.
SECTION 4.12. Limitation on Permitted Vehicle Indebtedness.
The aggregate principal amount of outstanding Permitted Vehicle Indebtedness as
of the last calendar day of each month (the "Determination Date") shall not
exceed the net book value of the Permitted Vehicle Collateral on such
Determination Date. Notwithstanding the foregoing, if the Company is not in
compliance with the preceding sentence on any Determination Date, the Company
shall not be in breach thereof so long as:
(1) within 25 days from the Determination Date (or if such day
is not a Business Day, on the next succeeding Business Day) the Company
repays sufficient Permitted Vehicle Indebtedness or deposits as
collateral additional Permitted Vehicle Collateral so that the Company
would have been in compliance as of the Determination Date assuming
such repayment or deposit had been made on such date; or
(2) the Company delivers to the Trustee an Officers'
Certificate setting forth the amount of the shortfall within 25 days of
such Determination Date (or if such day is not a Business Day, on the
next succeeding Business Day) and within 45 days from the Determination
Date (or if such day is not a Business Day, on the next succeeding
Business Day) the Company (A) repays sufficient Permitted Vehicle
Indebtedness, (B) deposits as collateral additional Permitted Vehicle
Collateral or (C) redesignates sufficient Permitted Vehicle
Indebtedness that is not secured by an actual Lien on Permitted Vehicle
Collateral to no longer constitute Permitted Vehicle Indebtedness, in
each case so that the Company would have been in compliance as of the
Determination Date assuming such repayment, deposit or redesignation
had been made on such date; provided, however, that, in the case of a
redesignation pursuant to clause (C) above, on the date of such
redesignation and after giving effect thereto as if such redesignated
Indebtedness were Incurred by the Company on such date, the Company
would have been able to Incur at least $1.00 of additional Indebtedness
pursuant to
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Section 4.03(a); provided further, however, that in determining whether
the Company would have been able to incur such $1.00 of additional
Indebtedness, the Company shall be entitled to exclude an amount of
such redesignated Indebtedness equal to the amount of Indebtedness the
Company could have incurred on such date pursuant to Section
4.03(b)(13), and such excluded amount shall be deemed to have been
Incurred pursuant to such Section 4.03(b)(13).
SECTION 4.13. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA ss. 314(a)(4).
SECTION 4.14. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. (a)
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the
laws of the United States of America, any State thereof or the District
of Columbia and the Successor Company (if not the Company) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture;
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(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a);
(4) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount that
is not less than the Consolidated Net Worth of the Company immediately
prior to such transaction; and
(5) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, but the predecessor Company in the
case of a conveyance, transfer or lease shall not be released from the
obligation to pay the principal of and interest on the Securities.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
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(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon required repurchase, upon declaration or otherwise, or
(ii) fails to redeem or purchase Securities when required pursuant to
this Indenture or the Securities;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 or 4.12 (other than a failure
to purchase Securities when required under Section 4.06 or 4.09) and
such failure continues for 30 days after the notice specified below;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clause (1), (2), (3) or (4) above) and such failure continues for 60
days after the notice specified below;
(6) Indebtedness of the Company or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $15.0
million, or its foreign currency equivalent at the time;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the
benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
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(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess
of $15.0 million (or its foreign currency equivalent at the time) is
entered against the Company or any Significant Subsidiary, remains
outstanding for a period of 60 days following the entry of such
judgment or decree and is not discharged, waived or the execution
thereof stayed within 10 days after the notice specified below.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is 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.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5), (6) or (9) is not an Event
of Default until the Trustee or the holders of at least 25% in principal amount
of the outstanding Securities notify the Company of the Default and the Company
does not cure such Default within the time specified after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the
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form of an Officers' Certificate of any Event of Default under clause (6) and
any event which with the giving of notice or the lapse of time would become an
Event of Default under clause (4), (5), (6) or (9), its status and what action
the Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the Securities by written notice
to the Company and the Trustee, may declare the principal of and accrued but
unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company occurs, the principal of and interest on all the Securities shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Securityholders. The Holders of a majority
in principal amount of the Securities by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by written notice to the Trustee
may waive an existing Default and its consequences except (i) a Default in the
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payment of the principal of or interest on a Security (ii) a Default arising
from the failure to redeem or purchase any Security when required pursuant to
this Indenture or (iii) a Default in respect of a provision that under Section
9.02 cannot be amended without the consent of each Securityholder affected. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
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A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
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SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. 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 or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this
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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.
(b) 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. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
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(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur 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 to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) 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 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may
conclusively rely and shall be protected in acting or refraining from acting on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the 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 at the sole cost of the Company and shall
incur no liability or additional liability of any kind by reason of such inquiry
or investigation.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of such counsel with
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respect to legal matters relating to this Indenture and the Securities shall be
full and complete authorization and protection from liability in respect to any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the corporate trust office of the Trustee,
and such notice references the Securities and this Indenture; and
(g) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is actually known to a Trust Officer of the Trustee, the
Trustee shall mail to each Securityholder notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of principal of or
interest on any Security (including payments pursuant to the mandatory
redemption provisions of such Security, if any), the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.
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SECTION 7.06. Reports by Trustee to Holders. Within sixty days
after each April 1 beginning with the April 1 following the date of this
Indenture, the Trustee shall mail to each Securityholder a brief report dated as
of such April 1 that complies with TIA ss. 313(a). The Trustee also shall comply
with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation as the Company and the
Trustee shall from time to time agree in writing. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall indemnify
the Trustee and any predecessor Trustee and their agents against any and all
loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder including the costs and expenses of defending itself against
any claim (whether asserted by the Company, or any Holder or any other Person)
or liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent that such loss, damage, claim,
liability or expense is due to the Trustee's own negligence or bad faith. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith.
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To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
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If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition at the expense
of the Company any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
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SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
SECTION 7.12. Trustee's Application for Instructions from the
Company. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and payable at
maturity and the Company irrevocably deposits with the Trustee funds sufficient
to pay at maturity all outstanding Securities, including interest thereon to
maturity (other than Securities replaced pursuant to Section 2.07), and if in
either case the Company pays all other sums payable hereunder by the Company,
then this Indenture shall, subject to Sections 8.01(c), cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
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(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and 4.12 and the
operation of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) and the limitations contained in Sections 5.01(a)(iii) and (iv)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Company to comply with Section
5.01(a)(iii) or (iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations
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plus any deposited money without investment will provide cash at such
times and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
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SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
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ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities or to
secure the Securities;
(5) 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;
(6) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in
<PAGE> 81
75
principal amount of the Securities then outstanding (including consents
obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder
affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) make any Security payable in money other than that stated
in the Security;
(5) impair the right of any holder of the Notes to receive
payment of principal of and interest on such holder's Notes on or after
the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such holder's Notes;
(6) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(7) make any change in the ranking or priority of any Note
that would adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent
<PAGE> 82
76
Holder of that Security or portion of the Security that evidences the same debt
as the consenting Holder's Security, even if notation of the consent or waiver
is not made on the Security. However, any such Holder or subsequent Holder may
revoke the consent or waiver as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Securityholder. An amendment or waiver becomes
effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall become
valid or effective more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
<PAGE> 83
77
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Budget Group, Inc.
125 Basin Street
Suite 210
Daytona Beach, Florida 32114
Attention: Chief Financial Officer
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust
Administration
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
<PAGE> 84
78
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read 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;
<PAGE> 85
79
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 10.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 10.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 10.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
<PAGE> 86
80
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 10.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE> 87
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
BUDGET GROUP, INC.,
by /s/ Michael B. Clauer
------------------------
Name: Michael B. Clauer
Title: Executive Vice
President, and Chief
Financial Officer
THE BANK OF NEW YORK,
by /s/ Mary La Gumina
------------------------
Name: Mary La Gumina
Title: Assistant Vice President
<PAGE> 88
EXECUTION COPY
RULE 144A/REGULATION S APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Exchange Securities" means (i) the 9 1/8% Senior Notes Due
2006 issued pursuant to the Indenture in connection with a Registered Exchange
Offer pursuant to a Registration Rights Agreement and (ii) Additional
Securities, if any, issued pursuant to a registration statement filed with the
SEC under the Securities Act.
"Initial Purchasers" means (i) with respect to the Initial
Securities issued on the Issue Date, Credit Suisse First Boston Corporation,
Goldman, Sachs & Co. and NationsBanc Montgomery Securities LLC and (ii) with
respect to each issuance of Additional Securities, the Persons purchasing such
Additional Securities under the related Purchase Agreement.
"Initial Securities" means (i) $400,000,000 aggregate
principal amount of 9 1/8% Senior Notes Due 2006 issued on the Issue Date and
(ii) Additional Securities, if any, issued in a transaction exempt from the
registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant
to the Registration Rights Agreement, to the Initial Purchasers to issue and
deliver to each Initial Purchaser, in exchange for the Initial Securities held
by the Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 9 1/8% Senior Notes
Due 2006 issued in connection with a Private Exchange.
"Purchase Agreement" means (i) with respect to the Initial
Securities issued on the Issue Date, the Purchase Agreement dated April 8,
1999, among the Company and the Initial Purchasers, and (ii) with respect to
each issuance
<PAGE> 89
2
of Additional Securities, the purchase agreement or underwriting agreement
among the Company and the Persons purchasing such Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to a Registration Rights Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the Initial
Securities, a like aggregate principal amount of Exchange Securities registered
under the Securities Act.
"Registration Rights Agreement" means (i) with respect to the
Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated April 8, 1999, among the Company and the Initial Purchasers, and (ii)
with respect to each issuance of Additional Securities issued in a transaction
exempt from the registration requirements of the Securities Act, the
registration rights agreement, if any, among the Company and the Persons
purchasing such Additional Securities under the related Purchase Agreement.
"Securities" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor person
thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the registration
statement issued by the Company, in connection with the offer and sale of
Initial Securities or Private Exchange Securities, pursuant to a Registration
Rights Agreement.
"Transfer Restricted Securities" means Securities that bear
or are required to bear the legend set forth in Section 2.3(b)hereto.
<PAGE> 90
3
1.2 Other Definitions
<TABLE>
<CAPTION>
Defined in
----------
Term Section:
---- -------
<S> <C>
"Agent Members"........................................................................... 2.1(b)
"Global Security"......................................................................... 2.1(a)
"Regulation S"............................................................................ 2.1(a)
"Rule 144A"............................................................................... 2.1(a)
</TABLE>
2. The Securities.
2.1 Form and Dating.
The Initial Securities are being offered and sold by the
Company pursuant to the Purchase Agreement.
(a) Global Securities. Initial Securities offered and sold
to a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") or in
reliance on Regulation S under the Securities Act ("Regulation S"), in each
case as provided in the Purchase Agreement, shall be issued initially in the
form of one or more permanent global Securities in definitive, fully registered
form without interest coupons with the global securities legend and restricted
securities legend set forth in Exhibit 1 hereto (each, a "Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Trustee, at its principal corporate trust office,
as custodian for the Depository (or with such other custodian as the Depository
may direct), and registered in the name of the Depository or a nominee of the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depository or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in
accordance with this Section 2.1(b), authenticate and deliver initially one or
more Global Securities that (a) shall be registered in the name of the
Depository for such Global Security or Global Securities or the nominee of such
Depository and (b) shall be delivered by the Trustee to such Depository or
pursuant to such Depository's instructions or held by the Trustee as custodian
for the Depository.
<PAGE> 91
4
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the
custodian of the Depository or under such Global Security, and the Depository
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices of such Depository governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this
Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities.
2.2 Authentication. The Trustee shall authenticate and deliver:
(1) on the Issue Date, an aggregate principal amount of $400.0 million 9 1/8%
Senior Notes Due 2006, (2) any Additional Securities for an original issue in
an aggregate principal amount specified in the written order of the Company
pursuant to Section 2.02 of the Indenture and (3) Exchange Securities or
Private Exchange Securities for issue only in a Registered Exchange Offer or a
Private Exchange, respectively, pursuant to a Registration Rights Agreement,
for a like principal amount of Initial Securities, in each case upon a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Company. Such order shall
specify the amount of the Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated and, in the case of any
issuance of Additional Securities pursuant to Section 2.13 of the Indenture,
shall certify that such issuance is in compliance with Section 4.03 of the
Indenture.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depository, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any) and
the procedures of the Depository therefor. A transferor of a beneficial
interest in a Global Security shall deliver to
<PAGE> 92
5
the Registrar a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to credited with a beneficial interest in the Global Security. The
Registrar shall, in accordance with such instructions instruct the Depositary
to credit to the account of the Person specified in such instructions a
beneficial interest in the Global Security and to debit the account of the
Person making the transfer the beneficial interest in the Global Security being
transferred.
(ii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4), a Global
Security may not be transferred as a whole except by the Depository to
a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository
or any such nominee to a successor Depository or a nominee of such
successor Depository.
(iii) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to Section 2.4 or
Section 2.09 of the Indenture, prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be
exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the Initial
Securities intended to ensure that such transfers comply with Rule
144A or Regulation S, as the case may be) and such other procedures as
may from time to time be adopted by the Company.
(b) Legend.
(i) Except as permitted by the following para graphs (ii),
(iii) and (iv), each Security certificate evidencing the Global
Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the
following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
OF THIS SECURITY MAY BE RELYING ON
<PAGE> 93
6
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act; the
Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Security for a certificated Security that does not bear the
legend set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security, if the Holder certifies in writing
to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth
on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities during the period of the effectiveness of a Shelf
Registration Statement with respect to such Initial Securities or
Private Exchange Securities, as the case may be, all requirements
pertaining to legends on such Initial Security or such Private
Exchange Security will cease to apply, the requirements requiring any
such Initial Security or such Private Exchange Security issued to
certain Holders be issued in global form will cease to apply, and a
certificated Initial Security or Private Exchange Security without
legends will be available to the transferee of the Holder of such
Initial Securities or Private Exchange Securities upon exchange of
such
<PAGE> 94
7
transferring Holder's certificated Initial Security or Private
Exchange Security or directions to transfer such Holder's interest in
the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer
with respect to the Initial Securities pursuant to which Holders of
such Initial Securities are offered Exchange Securities in exchange
for their Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders
be issued in global form will cease to apply and certificated Initial
Securities with the restricted securities legend set forth in Exhibit
1 hereto will be available to Holders of such Initial Securities that
do not exchange their Initial Securities, and Exchange Securities in
certificated or global form will be available to Holders that exchange
such Initial Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with
respect to the Initial Securities pursuant to which Holders of such
Initial Securities are offered Private Exchange Securities in exchange
for their Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders
be issued in global form will still apply, and Private Exchange
Securities in global form with the Restricted Securities Legend set
forth in Exhibit 1 hereto will be available to Holders that exchange
such Initial Securities in such Private Exchange.
(c) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been
exchanged for certificated Securities, redeemed, repurchased or canceled, such
Global Security shall be returned to the Depository for cancellation or
retained and canceled by the Trustee. At any time prior to such cancellation,
if any beneficial interest in a Global Security is exchanged for certificated
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such
reduction.
<PAGE> 95
8
(d) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate
certificated Securities and Global Securities at the Registrar's or
co-registrar's request.
(ii) No service charge shall be made for any registration
of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge
payable upon exchange or transfer pursuant to Sections 6.09 and 9.05
of the Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redeem Securities or 15 Business Days before an
interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the con trary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation
to any beneficial owner of a Global Security, a member of, or a
participant in the Depository or other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any
<PAGE> 96
9
participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments
to be made to Holders under the Securities shall be given or made only
to or upon the order of the registered Holders (which shall be the
Depository or its nominee in the case of a Global Security). The
rights of beneficial owners in any Global Security shall be exercised
only through the Depository subject to the applicable rules and
procedures of the Depository. The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with
respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions
on transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any
transfers between or among Depository participants, members or
beneficial owners in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required
by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
2.4 Certificated Securities.
(a) A Global Security deposited with the Depository or
with the Trustee as custodian for the Depository pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed
by the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be
<PAGE> 97
10
surrendered by the Depository to the Trustee located at its principal corporate
trust office in the Borough of Manhattan, The City of New York, to be so
transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such Global Security, an equal aggregate principal amount of certificated
Initial Securities of authorized denominations. Any portion of a Global
Security transferred pursuant to this Section shall be executed, authenticated
and delivered only in denominations of $1,000 and any integral multiple thereof
and registered in such names as the Depository shall direct. Any certificated
Initial Security delivered in exchange for an interest in the Global Security
shall, except as otherwise provided by Section 2.3(b), bear the restricted
securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
(d) In the event of the occurrence of either of the events
specified in Section 2.4(a), the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
<PAGE> 98
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
<PAGE> 99
2
No. ____________________ $__________________
9 1/8% Senior Notes Due 2006
Budget Group, Inc., a Delaware corporation, promises to pay
to _____________, or registered assigns, the principal sum of _________________
Dollars on April 1, 2006.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
BUDGET GROUP, INC.,
by
-----------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE> 100
3
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
9 1/8% Senior Note Due 2006
1. Interest
Budget Group, Inc., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above; provided, however,
that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Security at a rate
of 0.50% per annum (increasing by an additional 0.50% per annum after each
consecutive 90-day period that occurs after the date on which such Registration
default occurs up to a maximum additional interest rate of 2.00%) from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured. The
Company will pay interest semiannually on April 1 and October 1 of each year.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from [April 13, 1999]
[date of issuance of any Additional Securities]. Interest will be computed on
the basis of a 360-day year of twelve 30- day months.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the March 15 or September 15 next preceding the
interest payment date even if Securities are canceled after the record date and
on or before the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) will be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a certificated Security (including principal, premium
and interest) by mailing a check to the
<PAGE> 101
4
registered address of each Holder thereof; provided, however, that payments on
a certificated Security will be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of April 13, 1999 ("Indenture"), between the Company and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the
Company. The Company shall be entitled, subject to its compliance with Section
4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13
of the Indenture. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor will be treated as a single class for
all purposes under the Indenture. The Indenture contains covenants that limit
the ability of the Company and its subsidiaries to incur additional
indebtedness; pay dividends or distributions on, or redeem or repurchase
capital stock; make investments; issue or sell capital stock of subsidiaries;
engage in transactions with affiliates; create liens on assets to service debt;
transfer or sell assets; guarantee indebtedness; restrict
<PAGE> 102
5
dividends or other payments of subsidiaries; consolidate, merge or transfer all
or substantially all of its assets and the assets of its subsidiaries; and
engage in sale/leaseback transactions. These covenants are subject to important
exceptions and qualifications.
5. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued interest to the date of
repurchase (subject to the right of holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the Indenture.
6. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorse ments or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
7. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
8. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE> 103
6
9. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
10. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount outstanding of the Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company, or to comply with any
request of the SEC in connection with qualifying the Indenture under the Act,
or to make any change that does not adversely affect the rights of any
Securityholder.
11. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
for 30 days in payment of interest on the Securities; (ii) default in payment
of principal on the Securities at maturity, upon acceleration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (iii)
failure by the Company to comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and lapse of time; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Indebtedness of the Company if the amount accelerated (or so
unpaid) exceeds $15 million; (v) certain events of bankruptcy or insolvency
with respect to the Company and the Significant Subsidiaries; and (vi) certain
judgments or decrees for the payment of money in excess of $15 million. If an
Event of Default occurs and
<PAGE> 104
7
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the Securities may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or
security satisfactory to it. Subject to certain limitations, Holders of a
majority in principal amount of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in the interest of the
Holders.
12. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.
13. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
14. Authentication
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
<PAGE> 105
8
15. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
16. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
17. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written
request and without charge to the Security holder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
Budget Group, Inc.
125 Basin Street
Suite 210
Daytona Beach, Florida 32114
Attention: General Counsel
<PAGE> 106
9
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date: Your Signature:
----------------------------- -----------------------------
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original
issuance of such Securities and the last date, if any, on which such Securities
were owned by the Company or any Affiliate of the Company, the undersigned
confirms that such Securities are being transferred in accordance with its
terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer to
whom notice is given that such transfer is
being made in reliance on Rule 144A, in each
<PAGE> 107
10
case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(4) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the
Securities Act in compliance with Rule 904 under the
Securities Act of 1933; or
(5) [ ] pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the
name of any person other than the registered holder thereof; provided,
however, that if box (4) or (5) is checked, the Trustee may require,
prior to registering any such transfer of the Securities, such legal
opinions, certifications and other information as the Company has
reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
---------------------------------------
Signature
Signature Guarantee:
- ---------------------------- ---------------------------
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
- ------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account
<PAGE> 108
11
with respect to which it exercises sole investment discretion and that it and
any such account is a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act of 1933, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated:
-------------------------- ----------------------------------
NOTICE: To be executed by
an executive officer
<PAGE> 109
12
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 110
13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture,
check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount in principal amount: $
Date: Your Signature:
------------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Security.)
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
<PAGE> 111
EXECUTION COPY
EXHIBIT A
FORM OF FACE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY
[*/]
[**/]
No. _____ $______________
9 1/8% Senior Notes Due 2006
Budget Group, Inc., a Delaware corporation, promises to pay to
_________________, or registered assigns, the principal sum of_____________
Dollars on April 1, 2006.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Security are set forth on the other side
of this Security.
Dated:
BUDGET GROUP, INC.,
by
----------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE> 112
2
- ------------------
*/ [If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY".]
**/ [If the Security is a Private Exchange Security issued in a Private
Exchange to an Initial Purchaser holding an unsold portion of its initial
allotment, add the Restricted Securities Legend from Exhibit 1 to Appendix A
and replace the Assignment Form included in this Exhibit A with the Assignment
Form included in such Exhibit 1.]
<PAGE> 113
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE
SECURITY]
9 1/8% Senior Note Due 2006
1. Interest
Budget Group, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above [; provided, however, that
if a Registration Default (as defined in the Registration Rights Agreement)
occurs, additional interest will accrue on this Security at a rate of 0.50% per
annum (increasing by an additional 0.50% per annum after each consecutive
90-day period that occurs after the date on which such Registration default
occurs up to a maximum additional interest rate of 2.00%) from and including
the date on which any such Registration Default shall occur to but excluding
the date on which all Registration Defaults have been cured]***/. The Company
will pay interest semiannually on April 1 and October 1 of each year. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from [April 13, 1999] [date of
issuance of Additional Securities]. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
- --------------------
***/ Insert if at the time of issuance of the Exchange Security or Private
Exchange Security (as the case may be) neither the Registered Exchange Offer
has been consummated nor a Shelf Registration Statement has been declared
effective in accordance with the Registration Rights Agreement.
<PAGE> 114
4
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the March 15 or September 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of Securities
(including principal, premium and interest) will be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof
or, if no U.S. dollar account maintained by the payee with a bank in the United
States is designated by any holder to the Trustee or the Paying Agent at least
30 days prior to the relevant due date for payment (or such other date as the
Trustee may accept in its discretion), by mailing a check to the registered
address of such holder.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of April
13, 1999 ("Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.13 of the
<PAGE> 115
5
Indenture. The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor will be treated as a single class for all purposes under the
Indenture. The Indenture contains covenants that limit the ability of the
Company and its subsidiaries to incur additional indebtedness; pay dividends or
distributions on, or redeem or repurchase capital stock; make investments;
issue or sell capital stock of subsidiaries; engage in transactions with
affiliates; create liens on assets to service debt; transfer or sell assets;
guarantee indebtedness; restrict dividends or other payments of subsidiaries;
consolidate, merge or transfer all or substantially all of its assets and the
assets of its subsidiaries; and engage in sale/leaseback transactions. These
covenants are subject to important exceptions and qualifications.
5. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right
to cause the Company to repurchase all or any part of the Securities of such
Holder at a repurchase price equal to 101% of the principal amount of the
Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
6. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorse ments or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
7. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of
it for all purposes.
<PAGE> 116
6
8. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
9. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
10. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount outstanding of the Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company, or to comply with any
request of the SEC in connection with qualifying the Indenture under the Act,
or to make any change that does not adversely affect the rights of any
Securityholder.
11. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon acceleration or otherwise, or failure by
the Company to redeem or purchase Securities when required; (iii) failure by
the Company to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain
accelerations (including failure to pay within any grace
<PAGE> 117
7
period after final maturity) of other Indebtedness of the Company if the amount
accelerated (or so unpaid) exceeds $15 million; (v) certain events of
bankruptcy or insolvency with respect to the Company and the Significant
Subsidiaries; and (vi) certain judgments or decrees for the payment of money in
excess of $15 million. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities
may declare all the Securities to be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Securities being due and payable immediately upon the occurrence of such
Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
12. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
13. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
14. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
<PAGE> 118
8
15. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
16. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
17. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
18. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE SECURITY
<PAGE> 119
9
HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS
SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
BUDGET GROUP, INC.
125 BASIN STREET
SUITE 210
DAYTONA BEACH, FLORIDA 32114
ATTENTION: GENERAL COUNSEL
---------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
---------------------------------------------------------------
Date: Your Signature:
---------------- --------------------
-------------------------------------------------------------
Sign exactly as your name appears on the other side of this
Security.
<PAGE> 120
10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section [4.06] or [4.08] of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section [4.06] or [4.08] of the Indenture, state the
amount:
Date:_____________________ Your Signature: ________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee: _________________________________________________________
(Signature must be guaranteed by a
member firm of the New York Stock
Exchange or a commercial bank or trust company)
<PAGE> 1
EXHIBIT 4.32
$400,000,000
BUDGET GROUP, INC.
91/8% SENIOR NOTES DUE APRIL 1, 2006
REGISTRATION RIGHTS AGREEMENT
April 8, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
Budget Group, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to Credit Suisse First Boston Corporation, Goldman, Sachs & Co.
and NationsBanc Montgomery Securities LLC (collectively, the "INITIAL
PURCHASERS"), upon the terms set forth in a purchase agreement of even date
herewith (the "PURCHASE AGREEMENT"), $400,000,000 aggregate principal amount of
its 91/8% Senior Notes Due April 1, 2006 (the "INITIAL SECURITIES"). The Initial
Securities will be issued pursuant to an Indenture, dated as of April 13, 1999
(the "INDENTURE"), among the Company and The Bank of New York, as trustee (the
"TRUSTEE"). As an inducement to the Initial Purchasers to enter into the
Purchase Agreement, the Company agrees with the Initial Purchasers, for the
benefit of the holders of the Initial Securities (including, without limitation,
the Initial Purchasers), the Exchange Securities (as defined below) and the
Private Exchange Securities (as defined below) (collectively, the "HOLDERS"), as
follows:
1. Registered Exchange Offer. The Company shall, at its own cost,
prepare and, not later than 60 days after (or if the 60th day is not a business
day, the first business day thereafter) the date of original issue of the
Initial Securities (the "ISSUE DATE"), file with the Securities and Exchange
Commission (the "COMMISSION") a registration statement (the "EXCHANGE OFFER
REGISTRATION STATEMENT") on an appropriate form under the Securities Act of 1933
(the "SECURITIES ACT"), with respect to a proposed offer (the "REGISTERED
EXCHANGE OFFER") to the Holders of Transfer Restricted Securities (as defined in
Section 6 hereof), who are not prohibited by any law or policy of the Commission
from participating in the Registered Exchange Offer, to issue and deliver to
such Holders, in exchange for the Initial Securities, a like aggregate principal
amount of debt securities (the "EXCHANGE SECURITIES") of the Company issued
under the Indenture and identical in all material respects to the Initial
Securities (except for the transfer restrictions relating to the Initial
Securities and the provisions relating to the matters described in Section 6
hereof) that would be registered under the Securities Act. The Company shall use
its commercially reasonable efforts to cause such Exchange Offer Registration
Statement to become effective under the Securities Act within 150 days (or if
the 150th day is not a business day, the first business day thereafter) after
the Issue Date and shall keep the Exchange Offer Registration Statement
effective for not less than
<PAGE> 2
30 days (or longer, if required by applicable law) after the date notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"EXCHANGE OFFER REGISTRATION PERIOD").
If the Company effects the Registered Exchange Offer, the Company will
be entitled to close the Registered Exchange Offer 30 days after the
commencement thereof provided that the Company has accepted all the Initial
Securities theretofore validly tendered in accordance with the terms of the
Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall as soon as practicable commence the
Registered Exchange Offer, it being the objective of such Registered Exchange
Offer to enable each Holder of Transfer Restricted Securities (as defined in
Section 6 hereof) electing to exchange the Initial Securities for Exchange
Securities (assuming that such Holder is not an affiliate of the Company within
the meaning of the Securities Act, acquires the Exchange Securities in the
ordinary course of such Holder's business and has no arrangements with any
person to participate in the distribution of the Exchange Securities and is not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer) to trade such Exchange Securities from and after
their receipt without any limitations or restrictions under the Securities Act
and without material restrictions under the securities laws of the several
states of the United States.
The Company acknowledges that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and (c) Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer and (ii) an Initial Purchaser that elects to sell Securities (as
defined below) acquired in exchange for Initial Securities constituting any
portion of an unsold allotment, is required to deliver a prospectus containing
the information required by Items 507 or 508 of Regulation S-K under the
Securities Act, as applicable, in connection with such sale.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below) and (ii) the Company shall
make such prospectus and any amendment or supplement thereto available to any
broker-dealer for use in connection with any resale of any Exchange Securities
for a period of not less than 180 days after the consummation of the Registered
Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "PRIVATE EXCHANGE") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Company
issued under the Indenture and identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States, but excluding
provisions relating to the matters described in Section 6 hereof) to the Initial
Securities (the "PRIVATE EXCHANGE SECURITIES"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "Securities".
2
<PAGE> 3
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date
notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer
or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered
and not withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(y) deliver to the Trustee for cancelation all the Initial
Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to
each Holder of the Initial Securities, Exchange Securities or Private
Exchange Securities, as the case may be, equal in principal amount to
the Initial Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be
subject to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.
Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company in writing that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act, (iii) such Holder is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company or if
it is an affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Securities and (v) if such
Holder is a broker-dealer, that it will receive Exchange Securities for its own
account in exchange for Initial Securities that were acquired as a result of
market-making activities or other trading activities and that it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Securities.
3
<PAGE> 4
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not as of its date include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within
180 days of the Issue Date, (iii) any Initial Purchaser so requests within 10
business days following consummation of the Registered Exchange Offer with
respect to the Initial Securities (or the Private Exchange Securities) not
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by it following consummation of the Registered Exchange Offer or
(iv) any Holder (other than an Exchanging Dealer) shall notify the Company
within 10 business days following consummation of the Registered Exchange Offer
that it is not eligible to participate in the Registered Exchange Offer or, in
the case of any Holder (other than an Exchanging Dealer) that participates in
the Registered Exchange Offer, such Holder does not receive freely tradeable
Exchange Securities on the date of the exchange, the Company shall take the
following actions:
(a) The Company shall, at its cost, as promptly as practicable
(but in no event more than 60 days after so required or requested
pursuant to this Section 2) file with the Commission and thereafter
shall use its commercially reasonable efforts to cause to be declared
effective a registration statement (the "SHELF REGISTRATION STATEMENT"
and, together with the Exchange Offer Registration Statement, a
"Registration Statement") on an appropriate form under the Securities
Act relating to the offer and sale of the Transfer Restricted
Securities (as defined in Section 6 hereof) by the Holders thereof from
time to time in accordance with the methods of distribution set forth
in the Shelf Registration Statement and Rule 415 under the Securities
Act (hereinafter, the "SHELF REGISTRATION"); provided, however, that no
Holder (other than an Initial Purchaser) shall be entitled to have the
Securities held by it covered by such Shelf Registration Statement
unless such Holder (i) agrees in writing to be bound by all the
provisions of this Agreement applicable to such Holder and (ii)
provides the Company in writing with the information required by
Section 3(n).
(b) The Company shall use its commercially reasonable efforts
to keep the Shelf Registration Statement continuously effective in
order to permit the prospectus included therein to be lawfully
delivered by the Holders of the relevant Securities, for a period of
two years (or for such longer period if extended pursuant to Section
3(j) below) from the date of its effectiveness or such shorter period
that will terminate when all the Securities covered by the Shelf
Registration Statement (i) have been sold pursuant thereto or (ii) are
no longer restricted securities (as defined in Rule 144 under the
Securities Act, or any successor rule thereof). The Company shall be
deemed not to have used its commercially reasonable efforts to keep the
Shelf Registration Statement effective during the requisite period if
it voluntarily takes any action that would result in Holders of
Securities covered thereby not being able to offer and sell such
Securities during that period, unless (i) such action is required by
applicable law or (ii) such action is taken by the Company in good
faith and for valid business reasons (not including avoidance of the
Company's obligations hereunder), including the acquisition or
divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 3(j) hereof, if applicable.
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Company shall cause the Shelf Registration Statement
and the related prospectus and any amendment or supplement thereto, as
of the effective date of the Shelf Registration Statement, amendment or
4
<PAGE> 5
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall (i) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement,
if any, to the prospectus included therein and, in the event that an
Initial Purchaser (with respect to any portion of an unsold allotment
from the original offering) is participating in the Registered Exchange
Offer or the Shelf Registration Statement, the Company shall use its
best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Initial Purchaser reasonably may
propose; (ii) include the information set forth in Annex A hereto on
the cover, in Annex B hereto in the "Exchange Offer Procedures" section
and the "Purpose of the Exchange Offer" section and in Annex C hereto
in the "Plan of Distribution" section of the prospectus forming a part
of the Exchange Offer Registration Statement and include the
information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; (iii) if requested
by an Initial Purchaser, include the information required by Items 507
or 508 of Regulation S-K under the Securities Act, as applicable, in
the prospectus forming a part of the Exchange Offer Registration
Statement; (iv) include within the prospectus contained in the Exchange
Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a
summary statement of the positions taken or policies made by the staff
of the Commission with respect to the potential "underwriter" status of
any broker-dealer that is the beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) of Exchange Securities received by such broker-dealer
in the Registered Exchange Offer (a "PARTICIPATING BROKER-DEALER"),
whether such positions or policies have been publicly disseminated by
the staff of the Commission or such positions or policies, in the
reasonable judgment of the Initial Purchasers based upon advice of
counsel (which may be in-house counsel), represent the prevailing views
of the staff of the Commission; and (v) in the case of a Shelf
Registration Statement, include the names of the Holders who propose to
sell Securities pursuant to the Shelf Registration Statement as selling
securityholders.
(b) The Company shall give written notice to the Initial
Purchasers, the Holders of the Securities and any Participating
Broker-Dealer from whom the Company has received prior written notice
that it will be a Participating Broker-Dealer in the Registered
Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall
be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose;
5
<PAGE> 6
(iv) of the receipt by the Company or its legal
counsel of any notification with respect to the suspension of
the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the
Company to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the
prospectus do not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the
case of the prospectus, in light of the circumstances under
which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain
the withdrawal at the earliest possible time, of any order suspending
the effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration, without charge,
at least one copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits
thereto (including those, if any, incorporated by reference).
(e) The Company shall deliver to each Exchanging Dealer and
each Initial Purchaser, and to any other Holder who so requests,
without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if any Initial Purchaser or any such
Holder requests, all exhibits thereto (including those incorporated by
reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
the Shelf Registration, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in the
Shelf Registration Statement and any amendment or supplement thereto as
such person may reasonably request. The Company consents, subject to
the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by each of the selling Holders of the
Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto,
included in the Shelf Registration Statement.
(g) The Company shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other
persons required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement and any amendment
or supplement thereto as such persons may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the
use of the prospectus or any amendment or supplement thereto by any
Initial Purchaser, if necessary, any Participating Broker-Dealer and
such other persons required to deliver a prospectus following the
Registered Exchange Offer in connection with the offering and sale of
the Exchange Securities covered by the prospectus, or any amendment or
supplement thereto, included in such Exchange Offer Registration
Statement.
(h) Prior to any public offering of the Securities pursuant to
any Registration Statement the Company shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification
of the Securities for offer and sale under the securities or "blue sky"
laws of such states of the United States as any Holder of the
Securities reasonably requests in writing and do any and all other acts
or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it is not
then so qualified
6
<PAGE> 7
or (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so
subject.
(i) The Company shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request a
reasonable period of time prior to sales of the Securities pursuant to
such Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 3(b) above during the period for
which the Company is required to maintain an effective Registration
Statement, the Company shall promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter
delivered to Holders of the Securities or purchasers of Securities, the
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies the
Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphs (ii) through
(v) of Section 3(b) above to suspend the use of the prospectus until
the requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement
provided for in Section 2(b) above and the Exchange Offer Registration
Statement provided for in Section 1 above shall each be extended by the
number of days from and including the date of the giving of such notice
to and including the earlier of the date when the Initial Purchasers,
the Holders of the Securities and any known Participating Broker-Dealer
shall have received such amended or supplemented prospectus pursuant to
this Section 3(j) or the date when none of the Securities represent
Transfer Restricted Securities.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Initial Securities, the Exchange Securities or the Private Exchange
Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Initial Securities, the Exchange
Securities or the Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all rules and regulations of
the Commission to the extent and so long as they are applicable to the
Registered Exchange Offer or the Shelf Registration and will make
generally available to its security holders (or otherwise provide in
accordance with Section 11(a) of the Securities Act) an earnings
statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90
days, if such period is a fiscal year) beginning with the first month
of the Company's first fiscal quarter commencing after the effective
date of the Registration Statement, which statement shall cover such
12-month period.
(m) The Company shall cause the Indenture to be qualified
under the Trust Indenture Act of 1939, as amended, in a timely manner
and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable provisions
of the Indenture.
(n) The Company may require each Holder of Securities to be
sold pursuant to the Shelf Registration Statement to furnish to the
Company such information, including the information specified in Item
507 or 508 of Regulation S-K, as applicable, under the Securities Act,
regarding the Holder and the distribution of the Securities as the
Company may from time to time reasonably require for inclusion in the
Shelf Registration Statement, and the Company may exclude from such
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<PAGE> 8
registration the Securities of any Holder that unreasonably fails to
furnish such information within a reasonable time (not to exceed [10]
days) after receiving such request. The failure to include in the Shelf
Registration Statement any Holder who shall have not provided all such
information shall not constitute a Registration Default (as defined in
Section 6(a) hereof). The Company may require each Holder as to which a
Shelf Registration is effected to furnish, update or confirm promptly
to the Company information regarding the Holder and the distribution of
the Securities required to be disclosed in order to make the
information previously furnished to the Company by such Holder not
materially misleading.
(o) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form)
and take all such other action, if any, as any Holder of the Securities
shall reasonably request in order to facilitate the disposition of the
Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall
(i) make reasonably available for inspection by the Holders of the
Securities, any underwriter participating in any disposition pursuant
to the Shelf Registration Statement and any attorney, accountant or
other agent retained by the Holders of the Securities or any such
underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and (ii) cause the
Company's officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Holders of
the Securities or any such underwriter, attorney, accountant or agent
in connection with the Shelf Registration Statement, in each case, as
shall be reasonably necessary to enable such persons, to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that any information that is
designated in writing by the Company in good faith as confidential at
the time of delivery of such information shall be kept confidential by
such Holders or any such underwriter, attorney, accountant or agent,
unless such disclosure is made in the public generally or through a
third party without an accompanying obligation of confidentiality; and
provided, further, that the foregoing inspection and information
gathering shall be coordinated on behalf of the Initial Purchasers by
you and on behalf of the other parties, by one counsel designated by
and on behalf of such other parties as described in Section 4 hereof.
(q) In the case of any Shelf Registration, the Company, if
requested by any Holder of Securities covered thereby, shall cause (i)
its counsel to deliver an opinion and updates thereof relating to the
Securities in customary form and substance substantially similar to
that customarily delivered in public offerings of Securities addressed
to such Holders and the managing underwriters, if any, thereof and
dated, in the case of the initial opinion, the effective date of such
Shelf Registration Statement; (ii) its officers to execute and deliver
all customary documents and certificates and updates thereof requested
by any underwriters of the applicable Securities and (iii) its
independent public accountants and the independent public accountants
with respect to any other entity for which financial information is
provided in the Shelf Registration Statement to provide to the selling
Holders of the applicable Securities and any underwriter therefor a
comfort letter in customary form and covering matters of the type
customarily covered in comfort letters in connection with primary
underwritten offerings, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
(r) In the case of the Registered Exchange Offer, if requested
by any Initial Purchaser or any known Participating Broker-Dealer, the
Company shall cause (i) its counsel to deliver to such Initial
Purchaser or such Participating Broker-Dealer a signed opinion in the
form set forth in Section 6(c) of the Purchase Agreement with such
changes as are customary in connection with the preparation of a
Registration Statement and (ii) its independent public accountants to
deliver to such Initial Purchaser or such Participating Broker-Dealer a
comfort letter, in customary form, meeting the requirements as to the
substance thereof as set forth in Section 6(a) of the Purchase
Agreement, with appropriate date changes.
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<PAGE> 9
(s) If a Registered Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Initial Securities by Holders to
the Company (or to such other Person as directed by the Company) in
exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be, the Company shall mark, or caused to be
marked, on the Initial Securities so exchanged that such Initial
Securities are being canceled in exchange for the Exchange Securities
or the Private Exchange Securities, as the case may be; in no event
shall the Initial Securities be marked as paid or otherwise satisfied.
(t) The Company will use its best efforts to (a) if the
Initial Securities have been rated prior to the initial sale of such
Initial Securities, confirm such ratings will apply to the Securities
covered by a Registration Statement, or (b) if the Initial Securities
were not previously rated, cause the Securities covered by a
Registration Statement to be rated with the appropriate rating
agencies, if so requested by Holders of a majority in aggregate
principal amount of Securities covered by such Registration Statement,
or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member
of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Conduct Rules (the "RULES") of
the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or
otherwise, the Company will assist such broker-dealer in complying with
the requirements of such Rules, including, without limitation, by (i)
if such Rules, including Rule 2720, shall so require, engaging a
"qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement relating
to such Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by
such Registration Statement is an underwritten offering or is made
through a placement or sales agent, to recommend the yield of such
Securities, (ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 5 hereof and (iii) providing such information to
such broker-dealer as may be required in order for such broker-dealer
to comply with the requirements of the Rules.
(v) The Company shall use its best efforts to take all other
steps necessary to effect the registration of the Securities covered by
a Registration Statement contemplated hereby.
4. Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 1
through 3 hereof (including the reasonable fees and expenses, if any, of counsel
for the Initial Purchasers, incurred in connection with the Registered Exchange
Offer), whether or not the Registered Exchange Offer or a Shelf Registration is
filed or becomes effective, and, in the event of a Shelf Registration, shall
bear or reimburse the Holders of the Securities covered thereby for the
reasonable fees and disbursements of one firm of counsel designated by the
Holders of a majority in principal amount of the Securities covered thereby to
act as counsel for the Holders of the Securities in connection therewith.
5. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder of the Securities, any Participating Broker-Dealer and each
person, if any, who controls such Holder or such Participating Broker-Dealer
within the meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "INDEMNIFIED PARTIES") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the
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<PAGE> 10
statements therein not misleading, and shall reimburse, as incurred, the
Indemnified Parties for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) the Company
shall not be liable in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in a Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Shelf Registration in reliance upon and in
conformity with written information pertaining to such Holder and furnished to
the Company by or on behalf of such Holder specifically for inclusion therein
and (ii) with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus relating to a Shelf
Registration Statement, the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any Holder or Participating Broker-Dealer from
whom the person asserting any such losses, claims, damages or liabilities
purchased the Securities concerned, to the extent that a prospectus relating to
such Securities was required to be delivered by such Holder or Participating
Broker-Dealer under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder or Participating
Broker-Dealer results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the final prospectus if the Company had previously
furnished copies thereof to such Holder or Participating Broker-Dealer; provided
further, however, that this indemnity agreement will be in addition to any
liability which the Company may otherwise have to such Indemnified Party. The
Company shall also indemnify underwriters, their officers and directors and each
person who controls such underwriters within the meaning of the Securities Act
or the Exchange Act to the same extent as provided above with respect to the
indemnification of the Holders of the Securities if requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party (which consent shall
not be unreasonably withheld), be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in
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<PAGE> 11
connection with the defense thereof. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the exchange of the Securities,
pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by
the foregoing clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 5(d), the Holders of the Securities shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to a Registration Statement
exceeds the amount of damages which such Holders have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale
of the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to the Initial Securities and
the Private Exchange Securities shall be assessed as follows if any of the
following events occur (each such event in clauses (i) through (iii) below a
"Registration Default"):
(i) If by June 12, 1999 (60 days after the Issue Date),
neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement has been filed with the Commission;
(ii) If by October 11, 1999 (180 days after the Issue Date),
neither the Registered Exchange Offer is consummated nor, if required
in lieu thereof, the Shelf Registration Statement is declared effective
by the Commission; or
(iii) If after either the Exchange Offer Registration
Statement or the Shelf Registration Statement is declared effective (A)
such Registration Statement thereafter ceases to be effective or
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<PAGE> 12
(B) such Registration Statement or the related prospectus ceases to be
usable in connection with resales of Transfer Restricted Securities
during the periods specified herein because either (1) any event occurs
as a result of which the related prospectus forming part of such
Registration Statement would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or (2) it shall be necessary to amend such
Registration Statement or supplement the related prospectus, to comply
with the Securities Act or the Exchange Act or the respective rules
thereunder.
Additional Interest shall accrue on the Initial Securities and the Private
Exchange Notes over and above the interest set forth in the title of the
Securities from and including the date on which any such Registration Default
shall occur to but excluding the date on which all such Registration Defaults
have been cured, at a rate of 0.50% per annum (the "Additional Interest Rate")
for the first 90-day period immediately following the occurrence of such
Registration Default. The Additional Interest Rate shall increase by an
additional 0.50% per annum with respect to each subsequent 90-day period until
all Registration Defaults have been cured, up to a maximum Additional Interest
Rate of 2.0% per annum; provided, however, that (i) no holder of Initial
Securities who is not entitled to the benefits of a Shelf Registration Statement
shall be entitled to receive Additional Interest by reason of a Registration
Default that pertains to a Shelf Registration Statement; and (ii) no holder of
Initial Securities constituting an unsold allotment from the original sale of
the Initial Securities or any other holder of Initial Securities who is entitled
to the benefits of a Shelf Registration Statement shall be entitled to receive
Additional Interest by reason of a Registration Default that pertains to a
Registered Exchange Offer.
(b) A Registration Default referred to in Section 6(a)(iii) hereof
shall be deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
provided, however, that in any case if such Registration Default occurs for a
continuous period in excess of 30 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to clause (i), (ii)
or (iii) of Section 6(a) above will be payable in cash on the regular interest
payment dates with respect to the Securities. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Initial Securities or Private Exchange Notes, as the
case may be, multiplied by a fraction, the numerator of which is the number of
days such Additional Interest rate was applicable during such period (determined
on the basis of a 360-day year comprised of twelve 30-day months), and the
denominator of which is 360.
(d) "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the
date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered
Exchange Offer of an Initial Security for an Exchange Note, the date on which
such Exchange Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
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<PAGE> 13
7. Rules 144 and 144A. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the request of any Holder of Securities, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A. The Company covenants that it
will take such further action as any Holder of Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Initial Securities identified to the
Company by the Initial Purchasers upon request. Upon the request of any Holder
of Initial Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements. Notwithstanding
the foregoing, nothing in this Section 7 shall be deemed to require the Company
to register any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("MANAGING UNDERWRITERS") will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering (subject to the approval
(which approval shall not be unreasonably withheld) of the Company).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
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<PAGE> 14
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Fax No.: (212) 474-3700
Attention: Stephen L. Burns, Esq.
(3) if to the Company, at its address as follows:
125 Basin Street, Suite 210
Daytona Beach, FL 32114
Fax No.: (904) 238-7461
Attention: General Counsel
with a copy to:
King & Spalding
191 Peachtree Street
Suite 4900
Atlanta, GA 30303-1763
Fax No.: (404) 572-5100
Attention: Jeffrey M. Stein, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(d) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
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<PAGE> 15
(i) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
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<PAGE> 16
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
BUDGET GROUP, INC.
by /s/ Robert L. Aprati
----------------------------------------
Name: Robert L. Aprati
Title: Executive Vice President, General
Counsel and Secretary
The foregoing Registration
Rights Agreement is hereby
confirmed and accepted as
of the date first above
written.
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC
by: CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ Scott E. Zoellner
----------------------------------------
Name: Scott E. Zoellner
Title: Director
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<PAGE> 17
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
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<PAGE> 18
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Initial Securities, where such Initial Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities. See "Plan of
Distribution."
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<PAGE> 19
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until , 199 , all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- -------------------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
19
<PAGE> 20
ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
----------------------------------------------------
Address:
----------------------------------------------------
----------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
20
<PAGE> 1
EXHIBIT 5.1
May 11, 1999
Budget Group, Inc.
125 Basin Street
Suite 210
Daytona Beach, Florida 32114
Re: Budget Group, Inc.--Registration
Statement on Form S-4 (File No. 333- )
relating to $400,000,000 aggregate principal amount
of 9 1/8% Senior Notes Due April 1, 2006
Ladies and Gentlemen:
We have acted as counsel for Budget Group, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of a Registration Statement
on Form S-4 (the "Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933 relating to the proposed
exchange of up to $400,000,000 of 9 1/8% Senior Notes Due April 1, 2006 of the
Company (the "New Notes") for a like principal amount of the Company's issued
and outstanding 9 1/8% Senior Notes Due April 1, 2006 (the "Old Notes").
In our capacity as such counsel we have reviewed the Indenture (the
"Indenture") dated as of April 13, 1999 among the Company and The Bank of New
York, as trustee (the "Trustee"). We have also reviewed such matters of law and
examined original, certified, conformed or photographic copies of such other
documents, records, agreements and certificates as we have deemed necessary as a
basis for the opinions hereinafter expressed. In such review, we have assumed
the genuineness of signatures on all documents submitted to us as originals and
the conformity to original documents of all copies submitted to us as certified,
conformed or photographic copies, and, as to certificates of public officials,
we have assumed the same to have been properly given and to be accurate. As to
matters of fact material to this opinion, we have relied, without independent
investigation, upon statements and representations of representatives of the
Registrant and the Trustee and of public officials.
This opinion is limited in all respects to the federal laws of the United
States of America and the General Corporation law of the State of Delaware and
the law of the State of New York, and no opinion is expressed with respect to
the laws of any other jurisdiction or any effect which such laws may have on the
opinions expressed herein. This opinion is limited to the matters stated herein,
and no opinion is implied or may be inferred beyond the matters expressly stated
herein.
Based upon the foregoing, and the other limitations and qualifications set
forth herein, we are of the opinion that (x) the New Notes have been duly
authorized by the Company and, when executed by the Company and duly
authenticated by the Trustee in accordance with the terms of the Indenture and
delivered in exchange for the Old Notes in accordance with the terms of the
Indenture, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject, as to
<PAGE> 2
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies and (y)
the Indenture has been duly authorized, executed and delivered by the Company
and, assuming due execution and delivery thereof by the Trustee, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject, as to enforcement of remedies,
to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, general equitable principles and the discretion of
courts in granting equitable remedies.
Budget Group, Inc.
May 11, 1999
This opinion is given as of the date hereof, and we assume no obligation
to advise you after the date hereof of facts or circumstances that come to our
attention or changes in law that occur which could affect the opinions
contained herein. This opinion may not be furnished to or relied upon by any
person or entity for any purpose without our prior written consent.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under the caption "Validity
of the New Notes" in the Prospectus that is included in the Registration
Statement.
Very truly yours,
/s/ King & Spalding
---------------------------------
<PAGE> 1
EXHIBIT 12.1
BUDGET GROUP, INC.
STATEMENTS REGARDING COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
Pro Forma
1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings before interest 202,725 206,276 170,996 47,601 23,209 8,757
and taxes
Distributions on trust preferred
securities 18,690 9,957 -- -- -- --
ProForma adjustments 31,015 -- -- -- -- --
Interest portion of rent expense 39,349 38,865 27,493 5,653 2,907 2,357
------- ------- ------- ------ ------ ------
291,779 255,098 198,489 53,254 26,116 11,114
Fixed charges 261,061 239,739 142,890 40,402 22,937 11,768
------- ------- ------- ------ ------ ------
Ratio 1.12% 1.06% 1.39% 1.32% 1.14% 0.94%
======= ======= ======= ====== ====== ======
</TABLE>
<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 dated
February 23, 1999, included in Budget Group, Inc.'s Form 10-K for the year
ended December 31, 1998, and to all references to our firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
---------------------------------------
May 10, 1999,
Orlando, Florida
<PAGE> 1
EXHIBIT 23.3
May 10, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Budget Group, Inc. of our reports dated March 5, 1998
relating to the financial statements and financial statement schedule of Ryder
TRS, Inc., which appear in Ryder TRS, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
<PAGE> 1
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
---------------------------
BUDGET GROUP, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 59-3227576
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
125 Basin Street, Suite 210 32114
Daytona Beach, Florida (Zip code)
(Address of principal executive offices)
</TABLE>
---------------------------
9-1/8% Senior Notes Due April 1, 2006
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
Name Address
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street, New York, N.Y. 10006,
and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 3rd day of May, 1999.
THE BANK OF NEW YORK
By: /s/MICHELE L. RUSSO
-----------------------------------------
Name: MICHELE L. RUSSO
Title: ASSISTANT TREASURER
-3-
<PAGE> 4
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . $ 3,951,273
Interest-bearing balances .......................... 4,134,162
Securities:
Held-to-maturity securities ........................ 932,468
Available-for-sale securities ...................... 4,279,246
Federal funds sold and Securities purchased under
agreements to resell ............................... 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income .................................37,861,802
LESS: Allowance for loan and
lease losses ..............................619,791
LESS: Allocated transfer risk
reserve .....................................3,572
Loans and leases, net of unearned income,
allowance, and reserve ........................... 37,238,439
Trading Assets ........................................ 1,551,556
Premises and fixed assets (including capitalized
leases) ............................................ 684,181
Other real estate owned ............................... 10,404
Investments in unconsolidated subsidiaries and
associated companies ............................... 196,032
Customers' liability to this bank on acceptances
outstanding ........................................ 895,160
Intangible assets ..................................... 1,127,375
Other assets .......................................... 1,915,742
------------
Total assets .......................................... $ 60,077,664
============
LIABILITIES
Deposits:
In domestic offices ................................ $ 27,020,578
Noninterest-bearing ......................11,271,304
Interest-bearing .........................15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ........................... 17,197,743
Noninterest-bearing .........................103,007
Interest-bearing .........................17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase ........................... 1,761,170
Demand notes issued to the U.S.Treasury ............... 125,423
Trading liabilities ................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less ........ 1,903,700
With remaining maturity of more than one year
through three years .............................. 0
With remaining maturity of more than three years ... 31,639
Bank's liability on acceptances executed and
outstanding ........................................ 900,390
Subordinated notes and debentures ..................... 1,308,000
Other liabilities ..................................... 2,708,852
------------
Total liabilities ..................................... 54,583,127
------------
EQUITY CAPITAL
Common stock .......................................... 1,135,284
Surplus ............................................... 764,443
Undivided profits and capital reserves ................ 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities ...................... 82,367
Cumulative foreign currency translation adjustments
(29,725)
------------
Total equity capital .................................. 5,494,537
------------
Total liabilities and equity capital .................. $ 60,077,664
============
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni
Gerald L. Hassell Directors
Alan R. Griffith
- --------------------------------------------------------------------------------
<PAGE> 1
LETTER OF TRANSMITTAL
For
9 1/8% Senior Notes
of
BUDGET GROUP, INC.
Pursuant to the Exchange Offer in Respect of
All of its Outstanding Unregistered
9 1/8% Senior Notes Due April 1, 2006
For
Registered 9 1/8% Senior Notes Due April 1, 2008
Pursuant to the Prospectus Dated , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MAY 14, 1999
UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD
NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
TO: THE BANK OF NEW YORK, AS TRUSTEE
By Hand/Overnight Courier or Mail:
The Bank of New York
101 Barclay Street-7E
Corporate Trust Services Window
Ground Level
New York, NY 10286
Reorganization Section
Attention:
By facsimile: (212) . Call (212) for confirmation
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
TELEGRAM, TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated , 1999, of Budget Group, Inc., a
Delaware corporation (the "Company"), and this Letter of Transmittal and the
instructions hereto (the "Letter of Transmittal").
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its sole discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange Offer is
extended. The Company shall notify the holders of the Old Notes of any extension
by means of a press release or other public announcement prior to 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
This Letter of Transmittal is to be completed by a holder of Old Notes
either if certificates are to be forwarded herewith or if a tender of
certificates for Old Notes, if available, is to be made by book-entry transfer
to the account maintained by the Exchange Agent at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
"The Exchange Offer -- Book-Entry Transfer" section of the Prospectus. Holders
of Old Notes whose certificates are not readily available so you can meet the
Expiration Date deadline, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter of Transmittal to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this letter in its entirety.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
2
<PAGE> 3
TENDER OF NOTES
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE
AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-------------------------------------------------------------------------
DTC Book-Entry Account No.:
-------------------------------------------------------------------------
Transaction Code No.:
-----------------------------------------------------------------------------
If holders desire to tender Old Notes pursuant to the Exchange Offer and
(i) certificates representing such Old Notes are not lost but are not readily
available, (ii) time will not permit this Letter of Transmittal, certificates
representing such Old Notes or other required documents to reach the Exchange
Agent prior to the Expiration Date or (iii) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such holders may
effect a tender of such Old Notes in accordance with the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures."
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Holder(s) of Old Notes:
---------------------------------------------------------------
Window Ticket No. (if any):
---------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
------------------------------------------------
If Delivered by Book-Entry Transfer:
Name of Tendering Institution:
--------------------------------------------------------------------------
DTC Book-Entry Account No.:
-------------------------------------------------------------------------
Transaction Code No.:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO HOLDS OLD NOTES ACQUIRED FOR YOUR
OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND
WISH TO RECEIVE COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO FOR USE IN CONNECTION WITH RESALES OF NEW NOTES RECEIVED
FOR YOUR OWN ACCOUNT IN EXCHANGE FOR SUCH OLD NOTES.
Name:
-----------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
Aggregate Principal Amount of Old Notes so held: $---------------------------
3
<PAGE> 4
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Tenders of Old Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof.
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- -------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S)* AGGREGATE PRINCIPAL
NAME(S) AND ADDRESS(ES) OF HOLDER(S) (ATTACH SIGNED LIST IF AMOUNT TENDERED
(PLEASE FILL IN, IF BLANK) NECESSARY) (IF LESS THAN ALL)**
- -------------------------------------------------------------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL PRINCIPAL AMOUNT
OF OLD NOTES TENDERED
- -------------------------------------------------------------------------------------------------------
* Need not be completed if by book-entry transfer.
** Need not be completed by holders who wish to tender with respect to all Old Notes listed. See
Instruction 2.
- -------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Budget Group, Inc., a Delaware
corporation (the "Company"), the aggregate principal amount of Old Notes
indicated in this Letter of Transmittal, upon the terms and subject to the
conditions set forth in the Company's Prospectus dated , 1999 (the
"Prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal, which together constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its 9 1/8% Senior Notes due April
1, 2006, which have been registered under the Securities Act of 1933, as amended
(the "New Notes"), for each $1,000 principal amount of its issued and
outstanding 9 1/8% Senior Notes due April 1, 2006, of which $400,000,000
aggregate principal amount was outstanding on the date of the Prospectus (the
"Old Notes" and, together with the New Notes, the "Notes"). The capitalized
terms not defined herein are used herein as defined in the Prospectus.
Subject to, and effective upon, the acceptance for exchange of the Old
Notes tendered hereby, the undersigned hereby sells, assigns and transfers to,
or upon the order of, the Company all right, title and interest in and to such
Old Notes as are being tendered hereby and hereby irrevocably constitutes and
appoints the Exchange Agent as attorney-in-fact of the undersigned with respect
to such Old Notes, with full power of substitution (such power of attorney being
an irrevocable power coupled with an interest), to:
(a) deliver such Old Notes in registered certificated form, or
transfer ownership of such Old Notes through book-entry transfer at the
Book-Entry Transfer Facility, to or upon the order of the Company, upon
receipt by the Exchange Agent, as the undersigned's agent, of the same
aggregate principal amount of New Notes; and
(b) receive, for the account of the Company, all benefits and
otherwise exercise, for the account of the Company, all rights of
beneficial ownership of the Old Notes tendered hereby in accordance with
the terms of the Exchange Offer.
The undersigned hereby represents and warrants to the Company that the
undersigned has full power and authority to tender, sell, assign and transfer
the Old Notes tendered hereby and that the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sale agreements or other
obligations relating to their sale or transfer, and not subject to any adverse
claim when the same are accepted by the Company. The undersigned hereby further
represents that any New Notes acquired in exchange for Old Notes tendered hereby
will have been acquired in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the undersigned, that
neither the holder of such Old Notes nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and the undersigned acknowledges and agrees that any person
who is a broker-dealer registered under the Exchange Act or is participating in
the Exchange Offer for the purposes of distributing the New Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale of the New Notes acquired by such person
and cannot rely on the position of the staff of the Commission set forth in
certain no-action letters, and the undersigned further understands that such
secondary resale transaction and any resales of New Notes obtained by the
undersigned in exchange for Old Notes acquired by such holder directly from the
Company should be covered by an effective registration statement containing the
selling security holder information required by Item 507 or Item 508, as
applicable, of Regulation S-K of the Commission, and the undersigned further
represents that neither the holder of such Old Notes nor any such other person
is an "affiliate", as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company. The undersigned has read and
agrees to all of the terms of the Exchange Offer.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued in exchange for the Old Notes pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the provisions of the Securities
Act), provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders
5
<PAGE> 6
have no arrangement with any person to participate in the distribution of such
New Notes. However, the Company does not intend to request the SEC to consider,
and the SEC has not considered, the Exchange Offer in the context of a no-action
letter, and there can be no assurance that the staff of the SEC would make a
similar determination with respect to the Exchange Offer as in other
circumstances.
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes and has no arrangement or understanding to participate in a distribution
of New Notes. If any holder is an affiliate of the Company, is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holder (i) could not rely on the applicable interpretations of the staff of
the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. If
the undersigned is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes acquired as a result of market-making or other
trading activities (a "Participating Broker-Dealer"), it hereby represents and
warrants to the Company that the Old Notes to be exchanged for the New Notes
were acquired by it as a result of market-making or other trading activities and
agrees that it will deliver a prospectus in connection with any resale of such
New Notes; however, by so agreeing and by delivering a prospectus, such
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of New Notes received in exchange for Old Notes which were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities, for a period ending 180 days after the Expiration Date
or, earlier, when all such New Notes have been disposed of by such Participating
Broker-Dealer. In that regard, each Participating Broker-Dealer by tendering
such Old Notes and executing this Letter of Transmittal, agrees that, upon
receipt of notice from the Company of the occurrence of any event or the
discovery of any fact which makes any statement contained or incorporated by
reference in the Prospectus untrue in any material respect or which causes the
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference therein, in light of the
circumstances under which they were made, not misleading, such Participating
Broker-Dealer will suspend the sale of New Notes pursuant to the Prospectus
until the Company has amended or supplemented the Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to the Participating Broker-Dealer or the Company has given notice
that the sale of the New Notes may be resumed, as the case may be. If the
Company gives such notice to suspend the sale of the New Notes, it shall extend
the 180-day period referred to above during which Participating Broker-Dealers
are entitled to use the Prospectus in connection with the resale of New Notes by
the number of days during the period from and including the date of the giving
of such notice to and including the date when Participating Broker-Dealers shall
have received copies of the supplemented or amended Prospectus necessary to
permit resales of the New Notes or to and including the date on which the
Company has given notice that the sale of New Notes may be resumed, as the case
may be.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter of Transmittal and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal of Tenders" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
6
<PAGE> 7
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED
THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE.
7
<PAGE> 8
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF
OLD NOTES REGARDLESS OF WHETHER OLD NOTES ARE
BEING PHYSICALLY DELIVERED HEREWITH)
If a holder is tendering any Old Notes, this Letter of Transmittal must be
signed by the holder(s) as the name(s) appear(s) on the certificate(s) for the
Old Notes or on a securities position listing or by any person(s) authorized to
become (a) holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Signature(s) of Owner
Date:
- ---------------
Date:
- ---------------
Name(s):
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(Please Print)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Social Security No.:
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
- --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number (including area code) of
Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- --------------------------------------------------------------------------------
(Title)
Date:
- ---------------------------
8
<PAGE> 9
---------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be issued in the name of and sent to someone other
than the person or persons whose signature(s) appear(s) above on this
Letter of Transmittal, or if Old Notes delivered by book-entry transfer
which are not accepted for exchange are to be returned by credit to an
account maintained at the Book-Entry Transfer Facility other than the
account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s):
---------------------------------------------------
(Please Type or Print)
---------------------------------------------------------------
(Please Type or Print)
Address:
----------------------------------------------------
(Please Type or Print)
---------------------------------------------------------------
(Zip Code)
Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
---------------------------------------------------------------
(Book Entry Transfer Facility
Account Number, if applicable)
---------------------------------------------------------------
---------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be sent to someone other than the person or
persons whose signature(s) appear(s) above on this Letter of Transmittal
or to such person or persons at an address other than shown above in the
box entitled "Description of Old Notes" on this Letter of Transmittal.
Mail: New Notes and/or Old Notes to:
Name(s):
---------------------------------------------------
(Please Type or Print)
---------------------------------------------------------------
(Please Type or Print)
Address:
----------------------------------------------------
(Please Type or Print)
---------------------------------------------------------------
(Zip Code)
---------------------------------------------------------------
9
<PAGE> 10
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer of Budget Group, Inc.
to exchange $400,000,000 of its 9 1/8% Senior Notes due April 1, 2006 which have
been registered under the Securities Act of 1933 for all of its outstanding
unregistered 9 1/8% Senior Notes due April 1, 2006
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by holders of Old
Notes either if certificates are to be forwarded herewith or if tenders are to
be made pursuant to the procedures for delivery by book-entry transfer set forth
in "The Exchange Offer -- Book-Entry Transfer" section of the Prospectus.
Certificates for all physically tendered Old Notes, or Book-Entry Confirmation
of tendered Old Notes, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile hereof) and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below. Old Notes may only be tendered in a principal amount
of $1,000 and any integral multiple thereof.
Holders of Old Notes whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined below), (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by telegram, telex, facsimile transmission, mail or
hand delivery), setting forth the name and address of the holder of Old Notes
and the amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that within five New York Stock Exchange ("NYSE")
trading days after the Expiration Date, the certificates for all physically
tendered Old Notes, or a Book-Entry Confirmation of such Old Notes, and any
other documents required by this Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) a properly executed
Letter of Transmittal, as well as the certificates for all physically tendered
Old Notes in proper form for transfer or Book-Entry Confirmation of such Old
Notes, as the case may be, and all other documents required by this Letter of
Transmittal, must be received by the Exchange Agent within five NYSE trading
days after the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS,
BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY
THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. DO NOT SEND THIS
LETTER OF TRANSMITTAL OR ANY OLD NOTES TO THE COMPANY.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF OLD NOTES WHO TENDER BY
BOOK-ENTRY TRANSFER); WITHDRAWAL RIGHTS. Tenders of Old Notes will be accepted
only in the principal amount of $1,000 and integral multiples thereof. If less
than all of the Old Notes evidenced by a submitted certificate are to be
tendered, the tendering holder(s) should fill in the aggregate principal amount
of Old Notes to be tendered in the box above entitled "Description of Old
Notes -- Aggregate Principal Amount Tendered." A reissued certificate
representing the balance of nontendered Old Notes will be sent to such tendering
holder, unless otherwise provided in the appropriate box on this Letter of
Transmittal, promptly after the Expiration Date. ALL OF THE OLD NOTES DELIVERED
TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE
INDICATED.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to the Expiration Date. In order for a withdrawal to be
effective prior to that time, a written or facsimile transmission
10
<PAGE> 11
notice of withdrawal must be timely received by the Exchange Agent at one of its
addresses set forth above prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person having deposited the Old Notes to
be withdrawn, the aggregate principal amount of Old Notes to be withdrawn and
(if certificates for such Old Notes have been tendered) the name of the
registered holder of the Old Notes as set forth on the certificate for the Old
Notes, if different from that of the person who tendered such Old Notes. If
certificates for the Old Notes have been delivered or otherwise identified to
the Exchange Agent, then prior to the physical release of such certificates for
the Old Notes, the tendering holder must submit the serial numbers shown on the
particular certificates for the Old Notes to be withdrawn and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution, except
in the case of Old Notes tendered for the account of an Eligible Institution. If
Old Notes have been tendered pursuant to the procedures for book-entry transfer
set forth in "The Exchange Offer -- Book-Entry Transfer" section of the
Prospectus, the notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawal
of Old Notes, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written or facsimile transmission.
Withdrawals of tenders of Old Notes may not be rescinded. Old Notes properly
withdrawn will not be deemed to have been validly tendered for purposes of the
Exchange Offer, and no New Notes will be issued with respect thereto unless the
Old Notes so withdrawn are validly retendered. Properly withdrawn Old Notes may
be retendered at any subsequent time on or prior to the Expiration Date by
following the procedures described in the Prospectus under "The Exchange
Offer -- Procedures for Tendering."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any employees, agents, affiliates or assigns of the
Company, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give such notification. Any Old Notes which have been
tendered but which are withdrawn will be returned to the holder thereof without
cost to such holder as promptly as practicable after withdrawal.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the holder
of the Old Notes tendered hereby, the signature must correspond exactly with the
name as written on the face of the certificates or on a securities position
listing without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different names on several
certificates or securities positions listings, it will be necessary to complete,
sign and submit as many separate copies of this Letter as there are different
registrations.
When this Letter of Transmittal is signed by the holder or holders of the
Old Notes specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the New Notes are to be
issued, or any nontendered Old Notes are to be reissued, to a person other than
the holder, then endorsements of any certificates transmitted hereby or separate
bond powers are required. Signatures on such certificate(s) must be guaranteed
by an Eligible Institution.
In connection with any tender of Old Notes in definitive certificated form,
if this Letter of Transmittal is signed by a person other than the registered
holder or holders of any certificate(s) specified herein, such certificate(s)
must be endorsed or accompanied by appropriate bond powers, in either case
signed exactly as the name or names of the registered holder or holders
appear(s) on the certificate(s), and the signatures on such certificate(s) must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted.
11
<PAGE> 12
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY
HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A HOLDER OF
OLD NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY
PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON A
SECURITY POSITION LISTING AS THE HOLDER OF SUCH OLD NOTES) WHO HAS NOT COMPLETED
THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY
INSTRUCTIONS" ON THIS LETTER OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Old
Notes should indicate in the applicable box the name and address to which New
Notes issued pursuant to the Exchange Offer and/or substitute certificates
evidencing Old Notes not exchanged are to be issued or sent, if different from
the name or address of the person signing this Letter of Transmittal. In the
case of issuance in a different name, the Employer Identification or Social
Security Number of the person named must also be indicated. A holder of Old
Notes tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such holder may designate hereon. If no such instructions are given,
such Old Notes not exchanged will be returned to the name or address of the
person signing this Letter of Transmittal or credited to the account listed
beneath the box entitled "Description of Old Notes", as the case may be.
5. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the transfer of Old Notes to it or its order pursuant to the
Exchange Offer. If, however, New Notes and/or substitute Old Notes not exchanged
are to be delivered to, or are to be registered or issued in the name of, any
person other than the holder of the Old Notes tendered hereby, or if tendered
Old Notes are registered in the name of any person other than the person signing
this Letter of Transmittal, or if a transfer tax is imposed for any reason other
than the transfer of Old Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 5, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER OF
TRANSMITTAL.
6. DETERMINATION OF VALIDITY. The Company will determine, in its sole
discretion, all questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of Old
Notes, which determination shall be final and binding on all parties. The
Company reserves the absolute right to reject any and all tenders determined by
it not to be in proper form or the acceptance of which, or exchange for which,
may, in the view of counsel to the Company, be unlawful. The Company also
reserves the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer set forth in the Prospectus under the caption
"The Exchange Offer" or any conditions or irregularity in any tender of Old
Notes of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Old Notes, neither the Company, any
employees, agents, affiliates or assigns of the Company, the Exchange Agent, nor
any other
12
<PAGE> 13
person shall be under any duty to give notification of any irregularities in
tenders or incur any liability for failure to give such notification.
7. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter of Transmittal, hereby waive any right to receive
notice of the acceptance of their Old Notes for exchange.
8. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange
Agent, at the address and telephone number indicated above.
13
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
for
9 1/8% Senior Notes Due April 1, 2006
of
BUDGET GROUP, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Budget Group, Inc., a Delaware corporation (the "Company"),
made pursuant to the Prospectus, dated , 1999 (the "Prospectus"), if
certificates for the outstanding 9 1/8% Senior Notes due April 1, 2006 of the
Company (the "Old Notes") are not readily available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach The Bank of New York, as Trustee (the
"Exchange Agent") on or prior to 5:00 p.m., New York City time, on the
Expiration Date (as defined below) of the Exchange Offer. This Notice of
Guaranteed Delivery may be delivered or transmitted by telegram, telex,
facsimile transmission, mail or hand delivery to the Exchange Agent as set forth
below. See "The Exchange Offer -- Procedures for Tendering" in the Prospectus.
Capitalized terms used herein but not defined herein have the respective
meanings given to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999 UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS
OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
The Exchange Agent:
THE BANK OF NEW YORK, AS TRUSTEE
By Hand/Overnight Courier or Mail:
The Bank of New York
101 Barclay Street-7E
Corporate Trust Services Window
Ground Level
New York, NY 10286
Reorganization Section
Attention:
By facsimile: (212) . Call (212) for confirmation
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA TELEGRAM,
TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
14
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Old Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
- ------------------------------------------------------
Signature(s) of Owner(s) or Authorized Signatory:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Principal Amount of Old Notes Tendered:*
-----------------------------------------------------
Certificate No(s). of Old Notes (if available):
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Date:
-----------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
Name(s) of Holder(s):
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Address:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Area Code and Telephone No.:
-----------------------------------------------------
-----------------------------------------------------
If Old Notes will be delivered by book-entry transfer at The Depository Trust
Company, insert Depository Account No.:
-----------------------------------------------------
- ------------------------------------------------------
15
<PAGE> 3
- --------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
This Notice of Guaranteed Delivery must be signed by the holder(s) of Old
Notes exactly as its (their) name(s) appear on certificates for Old Notes
or on a security position listing as the owner of Old Notes, or by
person(s) authorized to become holder(s) by endorsements and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person
must provide the following information.
- --------------------------------------------------------------------------------
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Capacity:
--------------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Do not send Old Notes with this form. Notes should be sent to the Exchange
Agent together with a properly completed and duly executed Letter of
Transmittal.
- --------------------------------------------------------------------------------
16
<PAGE> 4
- --------------------------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or a correspondent in
the United States, hereby (a) represents that each holder of Old Notes on
whose behalf this tender is being made "own(s)" the Old Notes covered
hereby within the meaning of Rule 14e-4 under the Securities Exchange Act
of 1934, as amended, (b) represents that such tender of Old Notes complies
with such Rule 14e-4, and (c) guarantees that, within five New York Stock
Exchange trading days after the Expiration Date, a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof), together
with certificates representing the Old Notes covered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Old Notes
into the Exchange Agent's account at The Depository Trust Company,
pursuant to the procedure for book-entry transfer set forth in the
Prospectus) and required documents will be deposited by the undersigned
with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of
Transmittal and Old Notes tendered hereby to the Exchange Agent within the
time period set forth above and that failure to do so could result in
financial loss to the undersigned.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Name of Firm: --------------------------------------------
(Authorized Signature)
---------------------------------- Name:
Address: --------------------------------------------
(Please Print)
-----------------------------------------
Title:
----------------------------------------- --------------------------------------------
(Zip Code)
Area Code and Telephone No.: Date:
--------------------------------------------
----------------
</TABLE>
- --------------------------------------------------------------------------------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
17
<PAGE> 1
W9GUIDE MAY 11, 1999
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
<C> <S> <C>
- -----------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<C> <S> <C>
1. An individual's account. The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or valid
trust under State law
8. Sole proprietorship account The owner(4)
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C>
- -----------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate, or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
W9GUIDE2 ... P.U.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more, and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividends, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- If you falsify
certifications or affirmations, you are subject to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT 99.4
BUDGET GROUP, INC.
OFFER FOR ALL OUTSTANDING UNREGISTERED 9 1/8% SENIOR NOTES
DUE 2006 IN EXCHANGE FOR $400,000,000 PRINCIPAL
AMOUNT OF 9 1/8% SENIOR NOTES DUE 2006
REGISTERED UNDER THE SECURITIES ACT OF 1933
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
To Our Clients:
Enclosed for your consideration is a Prospectus dated 1999
(as the same may be amended or supplemented from time to time, the "Prospectus")
and a form of Letter of Transmittal (the "Letter of Transmittal") relating to
the offer (the "Exchange Offer") by Budget Group, Inc. (the "Company") to
exchange $400,000,000 in aggregate principal amount of its unregistered Senior
Notes due 2006 (the "Old Notes") for $400,000,000 in aggregate principal amount
of its Senior Notes due 2006 registered under the Securities Act of 1933 (the
"New Notes") upon the terms and conditions set forth in the Prospectus and the
Letter of Transmittal.
The material is being forwarded to you as the beneficial owner of Old Notes
held by us for your account or benefit but not registered in your name. A tender
of the Old Notes pursuant to the Exchange Offer may be made only by us as the
registered holder of the Old Notes, and pursuant to your instructions.
Therefore, the Company urges beneficial owners of Old Notes registered in the
name of a broker, dealer, commercial bank, trust company or other nominee to
contact such holder promptly if they wish to tender Old Notes in the Exchange
Offer.
Accordingly, we request instructions as to whether you wish us to tender
any or all Old Notes held by us for your account or benefit, pursuant to the
terms and conditions set forth in the Prospectus and Letter of Transmittal. We
urge you to read carefully the Prospectus and Letter of Transmittal before
instructing us to tender your Old Notes pursuant to the Exchange Offer.
Your instructions to us should be forwarded as promptly as practicable in
order to permit us to tender Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City Time, on , 1999, unless extended (the "Expiration
Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn,
subject to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
If you wish to have us tender any or all of your Old Notes held by us for
your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. The accompanying Letter
of Transmittal is furnished to you for informational purposes only and may not
be used by you to tender Old Notes held by us and registered in our name for
your account or benefit.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Budget
Group, Inc. with respect to their Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
AGGREGATE PRINCIPAL AMOUNT OF OLD
NOTES
--------------------------------------
[ ] Please DO NOT tender any Old Notes
held by you for my account
Dated:
- -------------------------------------- ,
1999
- --------------------------------------
- --------------------------------------
Signature(s)
- --------------------------------------
- --------------------------------------
Please Print Name(s) here
- --------------------------------------
- --------------------------------------
Address(es)
- --------------------------------------
Area Code(s) and Telephone Number(s)
- --------------------------------------
Tax Identification or Social Security
No(s)
None of the Old Notes held by us for your account will be tendered unless we
receive written instructions from you to do so. Unless a specific instruction is
given in the space provided, your signature(s) hereon shall constitute an
instruction to us to tender all the Old Notes held by us for your account.
<PAGE> 1
BUDGET GROUP, INC.
OFFER FOR ALL OUTSTANDING UNREGISTERED 9 1/8% SENIOR NOTES DUE 2006
IN EXCHANGE FOR $400,000,000 PRINCIPAL AMOUNT
OF 9 1/8% SENIOR NOTES DUE 2006 REGISTERED UNDER THE SECURITIES ACT OF 1933
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON 1999,
UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
To Brokers, Dealers, Commercial Banks
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated 1999 (as
the same may be amended or supplemented from time to time, the "Prospectus") and
a form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Budget Group, Inc. (the "Company") to exchange
$400,000,000 in aggregate principal amount of its unregistered Senior Notes due
2006 (the "New Notes") for $400,000,000 in aggregate principal amount of its
Senior Notes due 2006 registered under the Securities Act of 1933 (the "Old
Notes").
We are asking you to contact your clients for whom you hold Old Notes
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Old Notes registered in
their own name. The Company will not pay any fees or commissions to any broker,
dealer or other person in connection with the solicitation of tenders pursuant
to the Exchange Offer. You will, however, be reimbursed by the Company for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. The Company will pay all transfer taxes, if
any, applicable to the tender of Old Notes to it or its order, except as
otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the tender
of Old Notes and for the information of your clients;
3. A form of letter that may be sent to your clients for whose
accounts you hold Old Notes registered in your name or the name of your
nominee; with space provided for obtaining the clients' instructions with
regard to the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City Time, on , 1999, unless extended (the
"Expiration Date"). Old Notes tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Prospectus, at any time
prior to the Expiration Date.
In all cases, exchanges of Old Notes for New Notes accepted for exchange
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of (a) certificates representing such Old Notes or a confirmation
of a book-entry transfer of such Old Notes, as the case may be, (b) the Letter
of Transmittal (or a facsimile thereof) promptly completed and duly executed
with any required signature guarantees, and (c) any other documents required by
the Letter of Transmittal.
Holders who wish to tender their Old Notes and (a) whose Old Notes are not
immediately available, (b) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the
<PAGE> 2
Exchange Agent prior to the Expiration Date or (c) who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
by following the guaranteed delivery procedures described in the Prospectus
under "The Exchange Offer -- Guaranteed Delivery Procedures."
To tender Old Notes, certificates for Old Notes, a duly executed and
properly completed Letter of Transmittal or a facsimile thereof, together with
any other required documents, must be received by the Exchange Agent as provided
in the Prospectus and the Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
Exchange Agent, The Bank of New York, by calling (212) .
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO
THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
