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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 15, 1995
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Advanta Corp.
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(Exact name of registrant as specified in its charter)
Delaware 0-14120 23-1462070
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
<TABLE>
<S> <C>
Brandywine Corporate Center, 650 Naamans Road, Claymont, Delaware 19703
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (302) 791-4400
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Form 8-K Advanta Corp.
August 15, 1995
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
The exhibits listed in the accompanying Index to Exhibits relate to
the Registration Statement (No.33-60419) on Form S-3 of the
registrant and are filed herewith for incorporation by reference in
such Registration Statement.
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Form 8-K Advanta Corp.
August 15, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Advanta Corp.
By: /s/ Gene S. Schneyer
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(Gene S. Schneyer, Vice President
and General Counsel)
August 15, 1995
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Form 8-K Advanta Corp.
August 15, 1995
Index to Exhibits
Exhibit Number Per
Item 60l of
Regulation S-K Description of Document
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1.3 Underwriting Agreement, dated as of August 15,
1995, among Advanta Corp. and CS First Boston
Corporation, Salomon Brothers Inc, Merrill
Lynch, Pierce, Fenner & Smith Incorporated and
William Blair & Co.
4.2 Specimen of 6 3/4% Convertible Class B Preferred
Stock, Series 1995 (Stock Appreciation Income
Linked Securities (SAILS)) Certificate.
4.3 Certificate of Designations, Preferences,
Rights and Limitations of Advanta Corp.'s 6 3/4%
Convertible Class B Preferred Stock, Series
1995 (Stock Appreciation Income Linked
Securities (SAILS))
4.10 Form of Deposit Agreement, dated as of
August 15, 1995, among Advanta Corp. and
Mellon Securities Trust Company and the Holders
from Time to Time of the Depositary Receipts
Described Herein in Respect of the 6 3/4%
Convertible Class B Preferred Stock, Series
1995 (Stock Appreciation Income Linked
Securities (SAILS))(with form of Depositary
Receipt as an exhibit thereto).
8.1 Opinion of Wolf, Block, Schorr and Solis-Cohen
as to certain tax matters.
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Exhibit 1.3
ADVANTA CORP.
2,500,000 DEPOSITARY SHARES, EACH REPRESENTING A
ONE-HUNDREDTH INTEREST IN A SHARE OF
6 3/4% CONVERTIBLE CLASS B PREFERRED STOCK, SERIES 1995
(STOCK APPRECIATION INCOME LINKED SECURITIES (SAILS)SM)
UNDERWRITING AGREEMENT
August 15, 1995
CS FIRST BOSTON CORPORATION
SALOMON BROTHERS INC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WILLIAM BLAIR & COMPANY
as Representatives of the several Underwriters
c/o CS First Boston Corporation
Park Avenue Plaza
New York, New York 10055
1. Introductory. Advanta Corp., a Delaware corporation ("Company"),
proposes to issue and sell to the several Underwriters named in Schedule A
hereto 2,500,000 depositary shares ("Depositary Shares"), each representing a
one-hundredth interest in a share of the Company's 6 3/4% Convertible Class B
Preferred Stock, Series 1995 (Stock Appreciation Income Linked Securities
(SAILS)SM) ("Preferred Stock") (such 2,500,000 Depositary Shares being referred
to herein as the "Firm Securities") and also proposes to issue and sell to the
Underwriters, at the option of the Underwriters, 375,000 additional Depositary
Shares ("Optional Securities"). The Firm Securities and the Optional
Securities that may be sold to the Underwriters by the Company are herein
collectively called the "Offered Securities."
The Company will deposit up to 28,750 shares of the Preferred Stock by
or on behalf of the several Underwriters against delivery of Depositary
Receipts ("Depositary Receipts") to be issued under a deposit agreement dated
as of August 15, 1995 ("Deposit Agreement") among the Company, Mellon
Securities Trust Company, as the depositary ("Depositary") and the holders from
time to time of Depositary Receipts. The Depositary Receipts issued upon such
deposit or deposits of the Preferred Stock will evidence the Firm Securities
and, if the option described in Section 3 hereof is exercised, the Optional
Securities. Unless the context otherwise requires, references to the Offered
Securities shall include the Depositary Receipts evidencing such Offered
Securities.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to, and agrees with, each Underwriter that:
(a) A registration statement (No. 33-60419), including a
prospectus, relating to, among other things, the Offered Securities,
the Preferred Stock and the Class B Common Stock, par value $.01 per
share (the "Class B Common Stock") of the Company into which the
Offered Securities are convertible has been filed with the Securities
and Exchange Commission ("Commission") and has become effective. Such
registration statement, as amended at the date hereof, is hereinafter
referred to as the "Registration Statement", and the prospectus
included in such Registration Statement, as supplemented to reflect
the terms
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of the Offered Securities and the Preferred Stock and the terms of
offering thereof by a prospectus supplement dated August 15, 1995, as
filed in final form with the Commission pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Securities Act of 1933
("Act"), including all material incorporated by reference therein, is
hereinafter referred to as the "Prospectus".
(b) On the effective date of the Registration Statement,
such Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any 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 not misleading, and at the time of the filing of the
Prospectus pursuant to Rule 424(b), the Registration Statement and the
Prospectus will conform in all material respects to the requirements
of the Act and the Rules and Regulations, and neither of such
documents includes or will include any untrue statement of a material
fact or omits or will omit to state any 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 such
statements were made) not misleading, except that the foregoing does
not apply to statements in or omissions from any of such documents
based upon written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein,
it being understood and agreed that the only such information is that
described as such in Section 6(b) hereof.
(c) The documents incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied or when so filed will comply, as the case may be,
in all material respects with the requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and the Rules and Regulations.
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify and be in good standing would not have
a material adverse effect on the condition, financial or otherwise, or
the earnings or business affairs of the Company and its subsidiaries
considered as one enterprise.
(e) Each subsidiary of the Company which is a significant
subsidiary (each, a "Significant Subsidiary") as defined in Rule 405
of the Rules and Regulations has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and conduct its business as
described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify and be in good
standing would not have a material adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the
Company and its subsidiaries considered as one enterprise; and all of
the issued and outstanding capital stock of each Significant
Subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable (subject, in the case of the shares issued by
Colonial National Bank USA (the "Bank"), to the provisions of Section
55, Title 12, United States Code) and, except for directors'
qualifying shares, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(f) Each of the Deposit Agreement and the Offered
Securities have been duly authorized and, when the Offered Securities
have been delivered and paid for in accordance with this Agreement on
the Closing Date (as defined below), the Deposit Agreement will have
been duly executed and delivered as of
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the First Closing Date (as defined below), such Offered Securities
will have been validly issued, fully paid and nonassessable and will
conform to the description thereof contained in the Prospectus and the
Deposit Agreement, and such Offered Securities will be convertible
into Class B Common Stock in accordance with their terms; and the
stockholders of the Company have no preemptive rights with respect to
the Offered Securities.
(g) The Preferred Stock has been duly authorized and,
when the Preferred Stock has been deposited with the Depositary and
when the Offered Securities representing interests in such Preferred
Stock have been issued upon such deposit upon payment therefor by the
Underwriters in accordance with this Agreement on the Closing Date,
such Preferred Stock will have been validly issued, fully paid and
nonassessable, and will conform to the description thereof contained
in the Prospectus, and, when deposited, such Preferred Stock will be
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity, and neither such deposit nor such sale
of the Offered Securities will give rise to any preemptive or similar
rights of the holder of any securities of the Company.
(h) When the Preferred Stock has been deposited with the
Depositary on the Closing Date, such Preferred Stock will be
convertible into Class B Common Stock in accordance with its terms;
the shares of Class B Common Stock initially issuable upon conversion
of such Preferred Stock will have been duly authorized and reserved
for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; the
outstanding shares of Class B Common Stock have been duly authorized
and validly issued, are fully paid and nonassessable and conform to
the description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with respect to
such Class B Common Stock.
(i) This Agreement has been duly authorized, executed and
delivered by the Company.
(j) The Offered Securities have been approved for listing
on the Nasdaq National Market, subject to notice of issuance.
(k) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it or any of them or their properties may be bound, the
violation or default of which would have a material adverse effect on
the Company and its subsidiaries considered as one enterprise; the
execution and delivery of this Agreement and the Deposit Agreement,
and the consummation of the transactions contemplated herein and
therein have been duly authorized by all necessary corporate action
and will not conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
of its subsidiaries is a party or by which it or any of them may be
bound or to which any of the property or assets of the Company or any
such subsidiary is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company
or any law, administrative regulation or administrative or court order
or decree of any court or governmental agency, authority or body or
any arbitrator having jurisdiction over the Company; and no consent,
approval, authorization, order or decree of any court or governmental
agency or body is required for the consummation by the Company of the
transactions contemplated by this Agreement or the Deposit Agreement
or in connection with the sale of the Offered Securities hereunder,
except such as have been obtained or rendered, as the case may be, or
as may be required under the securities laws of any state or other
jurisdiction of the United States ("Blue Sky" laws).
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(l) No legal or governmental proceedings are pending to
which the Company or any of its subsidiaries is a party or to which
the property of the Company or any of its subsidiaries is subject that
would reasonably be expected to materially and adversely affect the
consummation of this Agreement or the Deposit Agreement or any
transaction contemplated hereby or thereby or which are required to be
described in the Registration Statement or the Prospectus and are not
described therein, and to the knowledge of the Company no proceedings
required to be so described have been threatened against the Company
or any of its subsidiaries or with respect to any of their respective
properties; and no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement by the Act or by the
Rules and Regulations which has not been so described or filed as
required.
(m) 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 on the Company and its subsidiaries taken as a
whole.
(n) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct
the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(o) The accountants who certified the financial
statements included or incorporated by reference in the Prospectus are
independent public accountants within the meaning of the Act and the
Rules and Regulations.
(p) The financial statements included in the Registration
Statement and Prospectus present fairly 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,
except as stated therein, such financial statements have been prepared
in conformity with the generally accepted accounting principles in the
United States applied on a consistent basis; and any schedules
included in the Registration Statement present fairly the information
required to be stated therein.
(q) The Company is a company described in Section 4(f)(1)
of the Bank Holding Company Act of 1956, as amended (the "BHCA"). The
Bank is validly existing as a national banking association in good
standing under the laws of the United States. The Bank (A) is in
compliance in all material respects with all regulations of the Office
of the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System and the Federal Deposit Insurance Corporation
(the "FDIC") the failure to comply with which would have a material
adverse effect on the Company and its subsidiaries considered as one
enterprise and (B) is in compliance with each of the limitations
contained in Section 4(f)(3) of the BHCA.
(r) Except as disclosed in the Prospectus, since the date
of the latest audited financial statements incorporated by reference
in the Prospectus there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or otherwise), 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 Prospectus,
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
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(s) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes and the Company agrees to comply with such Section if prior
to the completion of the distribution of the Offered Securities it
commences doing such business.
3. Purchase, Sale and Delivery of Securities. On the basis of the
representations, warranties and arrangements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, at a purchase price of $35.985 per share, the
respective numbers of Firm Securities set forth opposite the names of the
Underwriters in Schedule A hereto.
The Company will deliver the Firm Securities to the Representatives
for the accounts of the Underwriters, against payment of the purchase price by
certified or official bank check or checks in New York Clearing House (next
day) funds drawn to the order of the Company or as may otherwise be agreed by
the parties, at the office of Brown & Wood, at 10:00 A.M., New York time, on
August 21, 1995, or at such other time not later than seven full business days
thereafter as CS First Boston Corporation ("Lead Underwriter") and the Company
determine, such time being herein referred to as the "First Closing Date." The
certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as the Lead
Underwriter requests at least 48 hours prior to the First Closing Date and will
be made available for checking and packaging at the above office of Brown &
Wood at least 24 hours prior to the First Closing Date.
In addition, upon written notice from the Lead Underwriter given to
the Company from time to time not more than 30 days subsequent to the date of
the initial public offering of the Offered Securities, the Underwriters may
purchase from time to time all or less than all of the Optional Securities at
the purchase price per share (including any accumulated dividends thereon to
the related Optional Closing Date) to be paid for the Firm Securities. The
Company agrees to sell to the Underwriters the number of Optional Securities
specified in such notice to the Company and the Underwriters agree, severally
and not jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased for the account of each Underwriter in the same
proportion as the number of Firm Securities set forth opposite such
Underwriter's name in Schedule A hereto bears to the total number of Firm
Securities (subject to adjustment by the Lead Underwriter to eliminate
fractions) and may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by the Lead Underwriter on
behalf of the Underwriters to the Company.
Each time for delivery and payment for the Optional Securities, being
herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
herein referred to as a "Closing Date") shall be determined by the Lead
Underwriter but shall be not later than seven days after written notice of
election to purchase the Optional Securities is given. The Company will
deliver the Optional Securities being purchased on each Optional Closing Date
to the Representatives for the account of the several Underwriters, against
payment of the purchase price, therefore, by certified or official bank check
or checks in New York Clearing House (next day) funds drawn to the order of the
Company or as may otherwise be agreed by the parties, at the office of Brown &
Wood. The certificates for the Optional Securities will be in definitive form,
in such denominations and registered in such names as the Lead Underwriter
requests upon reasonable notice prior to such Optional Closing Date and will be
made available for checking and packaging at the above office of Brown & Wood
at a reasonable time in advance of such Optional Closing Date. If an Optional
Closing Date occurs after the First Closing Date, the Company shall deliver to
the Underwriters on the first such Optional Closing Date to occur after the
First Closing Date, and the obligation of the Underwriters to purchase the
Optional Securities shall
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be conditioned upon the receipt of, supplemental opinions, certificates and
letters confirming as of such date the opinions, certificates and letters
delivered on the First Closing Date pursuant to Section 5 hereof.
The several Underwriters shall offer the Offered Securities for sale
to the public as set forth in the Prospectus.
4. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) The Company will file the Prospectus with the Commission
pursuant to and in accordance with Rule 424(b)(2) (or, if applicable
and if consented to by the Lead Underwriter, subparagraph (5)) not
later than the second business day following the execution and
delivery hereof.
(b) The Company will advise the Lead Underwriter promptly of
any proposal to amend or supplement the Registration Statement or the
Prospectus at any time when the Prospectus is required by the Act to
be delivered in connection with the sale of the Offered Securities and
will afford the Lead Underwriter a reasonable opportunity to comment
on any such proposed amendment or supplement; and the Company will
also advise the Lead Underwriter promptly of the filing of any such
amendment or supplement and of the institution by the Commission of
any stop order proceedings in respect of the Registration Statement or
of any part thereof and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company promptly will notify the Lead Underwriter of such event and
will promptly prepare and file with the Commission, at its own expense,
an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither the
Lead Underwriter's consent to, nor the Underwriters delivery of, any
such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 5.
(d) As soon as practicable, but not later than 16 months,
after the date hereof, the Company will make generally available to
its securityholders an earnings statement covering a period of at
least 12 months beginning after the later of (i) the effective date of
the Registration Statement, (ii) the effective date of the most recent
post-effective amendment to the Registration Statement to become
effective prior to the date hereof and (iii) the date of the Company's
most recent Annual Report on Form 10-K filed with the Commission prior
to the date hereof, which will satisfy the provisions of Section 11(a)
of the Act.
(e) The Company will furnish to the Representatives copies of
the Registration Statement, including all exhibits, any related
preliminary prospectus, any related preliminary prospectus supplement,
the Prospectus and all amendments and supplements to such documents,
in each case as soon as available and in such quantities as the Lead
Underwriter reasonably requests. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Offered Securities and the Preferred Stock for sale under the laws of
such jurisdictions of the United States as the Lead Underwriter
designates and will continue such qualifications in effect so long as
required for the distribution; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in
any jurisdiction.
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(g) The Company will pay all expenses incident to the
performance of its obligations under this Agreement and will reimburse
the Underwriters (if and to the extent incurred by them) for any
filing fees or other out-of-pocket expenses (including reasonable fees
and disbursements of counsel) incurred by them in connection with
qualification of the Offered Securities, the Preferred Stock and the
Class B Common Stock for sale under the laws of such jurisdictions as
the Lead Underwriter may designate and the word processing of
memoranda relating thereto, for any fees charged by investment rating
agencies for the rating of the Offered Securities and the Preferred
Stock, for any applicable filing fee of the National Association of
Securities Dealers, Inc. relating to the Offered Securities, for any
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 Offered Securities and for
expenses incurred in distributing the Prospectus, any preliminary
prospectuses, any preliminary prospectus supplements or any other
amendments or supplements to the Prospectus to the Underwriters.
(h) The Company will not offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act relating to, any
additional shares of its Class A Common Stock, par value $.01 per share
("Class A Common Stock") or Class B Common Stock or securities
convertible into or exchangeable or exercisable for any shares of its
Class A Common Stock or Class B Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposal or filing,
without the prior written consent of the Lead Underwriter, until
November 15, 1995, except for issuances of Class A Common Stock or
Class B Common Stock made pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, grants of
employee stock options pursuant to the terms of a plan in effect on the
date hereof, issuances of Class B Common Stock pursuant to the exercise
of such options or issuances of Class B Common Stock pursuant to the
Company's employee stock purchase plans, 401(k) plan and AMIPWISE
plans, and up to 100,000 shares of Class B Common Stock to new
employees of the Company or any of its subsidiaries.
5. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters 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 Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date hereof, the Representatives
shall have received a letter, dated the date of delivery thereof
(which shall be on or prior to the date of this Agreement), of Arthur
Andersen LLP confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and
any schedules and any summary of earnings examined by them and
included in the Prospectus comply in form in all material
respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations;
(ii) they have performed the procedures specified
by the American Institute of Certified Public Accountants for
a review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on any unaudited financial statements included in
the Registration Statement;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Company, inquiries of officials of
the Company who
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have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements, if any, and
any summary of earnings included in the Prospectus do not
comply in form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations or any material modifications should be
made to such unaudited financial statements and summary of
earnings for them to be in conformity with generally accepted
accounting principles;
(B) if any unaudited "capsule" information is
contained in the Prospectus, the unaudited
consolidated net sales, net operating income, net
income and net income per share amounts or other
amounts constituting such "capsule" information and
described in such letter do not agree with the
corresponding amounts set forth in the unaudited
consolidated financial statements or were not
determined on a basis substantially consistent with
that of the corresponding amounts in the audited
statements of income;
(C) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than five days
prior to the date hereof, there was any change in the
capital stock or any increase in debt and other
borrowings 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 stockholders' equity, total
assets or managed receivables, as compared with
amounts shown on the latest balance sheet included in
the Prospectus; or
(D) for the period from the closing date of
the latest income statement included in the
Prospectus 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 and with
the period of corresponding length ended the date of
the latest income statement included in the
Prospectus, in consolidated net interest income or in
the total or per share amounts of consolidated income
before extraordinary items or net income or in the
ratio of earnings to fixed charges or in the ratio of
earnings to fixed charges and preferred stock
dividends combined;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Prospectus (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.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus
for purposes of this subsection.
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<PAGE> 9
(b) The Prospectus shall have been filed with the Commission
in accordance with Section 4(a) of this Agreement. No stop order
suspending the effectiveness of the Registration Statement or of any
part thereof shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company
or any Underwriter, shall be contemplated by the Commission.
(c) Subsequent to the execution hereof, there shall not have
occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or otherwise),
business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters including any Representatives, is material and adverse
and makes it impractical or inadvisable to proceed with completion of
the public offering or the sale of and payment for the Offered
Securities; (ii) 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 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); (iii) any
suspension or limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (iv) any
banking moratorium declared by U.S. Federal or, New York or Delaware
authorities; or (v) 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
Underwriters including any Representatives, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated
the Closing Date, of Gene S. Schneyer, General Counsel for the
Company, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus; and, to
the best of such counsel's knowledge, the Company is duly
qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure to so qualify and be in good standing would
not have a material adverse effect on the condition, financial
or otherwise, or the earnings or business affairs of the
Company and its subsidiaries considered as one enterprise;
(ii) Each Significant Subsidiary has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease
and operate its properties and conduct its business as
described in the Prospectus and, to the best of such counsel's
knowledge, is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of
business, except where the failure to so qualify and be in
good standing would not have a material adverse effect on the
condition, financial or otherwise, or the earnings or business
affairs of the Company and its subsidiaries considered as one
enterprise; and all of the issued and outstanding capital
stock of each Significant Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable (subject,
in the case of the shares issued by the Bank, to the
provisions of Section 55, Title 12, United States Code) and,
except for directors' qualifying
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<PAGE> 10
shares, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity;
(iii) The Deposit Agreement and the Offered
Securities have been duly authorized and, when the Offered
Securities have been delivered and paid for in accordance with
the terms hereof on the Closing Date, the Deposit Agreement
will have been duly executed and delivered as of the First
Closing Date, and such Offered Securities will be validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus and the
Deposit Agreement, and such Offered Securities will be
convertible into Class B Common Stock in accordance with their
terms; and the stockholders of the Company have no preemptive
rights with respect to the Offered Securities;
(iv) The Preferred Stock has been duly authorized and,
when the Preferred Stock has been deposited with the Depositary
and when the Offered Securities representing interests in such
Preferred Stock have been issued upon such deposit upon payment
therefor by the Underwriters in accordance with the terms
hereof on the Closing Date, such Preferred Stock will be
validly issued, fully paid and nonassessable, and will conform
to the description thereof contained in the Prospectus, and,
when deposited, such Preferred Stock will be free and clear of
any security interest, mortgage, pledge, lien, encumbrance,
claim or equity, and neither such deposit nor such sale of the
Offered Securities will give rise to any preemptive or similar
rights of the holder of any securities of the Company;
(v) When the Preferred Stock has been deposited with
the Depositary on the Closing Date, such Preferred Stock will
be convertible into Class B Common Stock in accordance with its
terms; the shares of Class B Common Stock initially issuable
upon conversion of such Preferred Stock will have been duly
authorized and reserved for issuance upon such conversion and,
when issued upon such conversion, will be validly issued, fully
paid and nonassessable; the outstanding shares of Class B
Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; and the stockholders of
the Company have no preemptive rights with respect to such
Class B Common Stock;
(vi) To the best of such counsel's knowledge, neither
the Company nor any of its Significant Subsidiaries is in
violation of its charter or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note or lease to which it is a party or by which it
or any of them or their properties may be bound, the violation
or default of which would have a material adverse effect on the
Company and its subsidiaries considered as one enterprise; and
the execution and delivery of this Agreement and the Deposit
Agreement, and the consummation of the transactions
contemplated herein and therein have been duly authorized by
all necessary corporate action and will not conflict with or
constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which it or
any of them may be bound or to which any of the property or
assets of the Company or any such subsidiary is subject, nor
will such action result in any violation of the provisions of
the charter or by-laws of the Company or any law,
administrative regulation or administrative or court order or
decree of any court or governmental agency, authority or body
or any arbitrator known to such counsel to have jurisdiction
over the Company;
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<PAGE> 11
(vii) To the best of such counsel's knowledge, there
are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments or documents required to be
described or referred to in the Registration Statement or to
be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as
exhibits thereto, the descriptions thereof or references
thereto are correct in all material respects, and no default
exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument so described, referred to, filed or
incorporated by reference which would have a material adverse
effect on the Company and its subsidiaries considered as one
enterprise;
(viii) To the best of such counsel's knowledge, no
legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the
property of the Company or any of its subsidiaries is subject
that would reasonably be expected to materially and adversely
affect the consummation of this Agreement or the Deposit
Agreement or any transaction contemplated hereby or thereby or
which are required to be described in the Registration
Statement or the Prospectus and are not described therein, and
to the best knowledge of such counsel no proceedings required
to be so described have been threatened against the Company or
any of its subsidiaries or with respect to any of their
respective properties; and no contract or other document is
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement by the Act or by the Rules and Regulations which has
not been so described or filed as required;
(ix) To the best of such counsel's knowledge, 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 on the Company and its subsidiaries taken as a whole;
(x) To the best of such counsel's knowledge, the
Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to
conduct the business now operated by them, or presently
employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others
with respect to any intellectual property rights that, if
determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
material adverse effect on the Company and its subsidiaries
taken as a whole;
(xi) The information contained in the Prospectus
under the caption "Regulation" and under the caption
"Government Regulation" in the Company's Annual Report on Form
10-K, to the extent that it constitutes matters of law or
legal conclusions, has been reviewed by such counsel and is
correct;
(xii) The Company is a company described in Section
4(f)(1) of the BHCA. The Bank is validly existing as a
national banking association in good standing under the laws
of the United States. The Bank (A) is in compliance in all
material respects with all regulations of the Office of the
Comptroller of the Currency, the Board of Governors of the
Federal Reserve System and the FDIC, the failure to comply
with which would have a material adverse effect on the Company
and its subsidiaries considered as one enterprise and (B) is
in compliance with each of the limitations contained in
Section 4(f)(3) of the BHCA; and
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<PAGE> 12
(xiii) This Agreement has been duly authorized,
executed and delivered by the Company.
In rendering such opinion, Mr. Schneyer may rely on the
opinion of counsel for the Underwriters as to matters of New York law.
(e) The Representatives shall have received an opinion, dated
the Closing Date, of Wolf, Block, Schorr and Solis- Cohen, securities
counsel for the Company, to the effect that:
(i) 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 or the Deposit Agreement in
connection with the issuance or sale of the Offered Securities
by the Company, except such as have been obtained and made
under the Act and with the State of Delaware and such as may be
required under state securities laws;
(ii) The Registration Statement has become effective
under the Act, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) specified in such
opinion on the date specified therein, and, to the best
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the
Act, and the Registration Statement and the Prospectus and any
amendment or supplement thereto, as of their respective
effective or issue dates, complied as to form in all material
respects with the requirements of the Act and the Rules and
Regulations; the descriptions in the Registration Statement
and Prospectus of statutes, legal and governmental proceedings
and contracts and other documents (other than descriptions
under the caption "Regulation", as to which such counsel
need express no opinion) are accurate in all material respects
and fairly present the information required to be shown; and
such counsel do not know of any legal or governmental
proceedings required to be described in the Prospectus which
are not described as required or of any contracts or documents
of a character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required; it being understood that such counsel need express
no opinion as to the financial statements or other financial
data contained in the Registration Statement or the
Prospectus; and
(iii) The information contained in the Prospectus
under the caption "Certain Federal Income Tax Consequences,"
to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is correct.
In addition, such counsel shall state the following:
In connection with the preparation of the Registration
Statement and the Prospectus, such counsel advised the Company
as to certain requirements of the Act and the Rules and
Regulations. Such counsel participated in conferences with
representatives of the Company and the Underwriters and their
counsel, at which the Registration Statement and the
Prospectus were reviewed and discussed. Although such counsel
has not made any independent verification of factual matters
with respect to the Company or its subsidiaries and,
consequently, is not passing upon and does not assume
responsibility for the accuracy, completeness, or fairness of
statements or other information contained in the Registration
Statement or the Prospectus, such counsel advises you that
nothing has come to its attention that has caused it to
believe that the Registration Statement, at the date hereof
and at the Closing Date, or the Prospectus, as of its date and
at the Closing Date, contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which
they were made), not misleading.
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<PAGE> 13
(f) The Representatives shall have received from Brown &
Wood, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the incorporation of the Company,
the validity of the Offered Securities and the Preferred Stock, the
Registration Statement, the Prospectus and other related matters as
the Representatives 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. In rendering such opinion,
Brown & Wood may rely as to the incorporation of the Company and all
other matters governed by Delaware law upon the opinion of the General
Counsel of the Company referred to above.
(g) The Representatives shall have received an opinion, dated
the Closing Date, of the General Counsel for the Depositary to the
effect that:
(i) The Depositary has full power, authority and
legal right to execute, deliver and carry out the terms of the
Deposit Agreement;
(ii) The Deposit Agreement has been duly authorized,
executed and delivered by the Depositary and constitutes a
valid and binding agreement of the Depositary, enforceable in
accordance with its terms; and
(iii) Upon due issuance by the Depositary of Offered
Securities evidenced by Depositary Receipts in accordance with
the terms of the Deposit Agreement against the deposit in
accordance with the terms of the Deposit Agreement of validly
issued, fully paid and non-assessable Preferred Stock, the
Offered Securities evidenced by the Depositary Receipts will be
validly issued and will entitle the holders of the Depositary
Receipts to the rights specified therein and in the Deposit
Agreement.
(h) The Representatives shall have received a certificate,
dated the Closing Date, of the President or any 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, that no stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission and that, subsequent to the date of the most recent
financial statements in the Prospectus, there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or otherwise),
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 Prospectus or as described in such certificate.
(i) The Representatives 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 five days
prior to the Closing Date for the purposes of this subsection.
(j) In the event the Underwriters and the Representatives
exercise the option granted in Section 3 hereof to purchase all or any
portion of the Optional Securities, the representations and warranties
of the Company herein and the statements in any certificates furnished
by the Company shall be true and correct as of the Optional Closing
Date, and the Representatives shall have received:
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<PAGE> 14
(i) An opinion, dated the Optional Closing Date, of
the General Counsel of the Company relating to the Optional
Securities and otherwise to the same effect as the opinion
required by Section 5(d);
(ii) An opinion, dated the Optional Closing Date, of
Wolf, Block, Schorr and Solis-Cohen, counsel for the Company,
relating to the Optional Securities and otherwise to the same
effect as the opinion required by Section 5(e);
(iii) An opinion, dated the Optional Closing Date,
of Brown & Wood, counsel for the Underwriters, relating to the
Optional Securities and otherwise to the same effect as the
opinion required by Section 5(f);
(iv) An opinion, dated the Optional Closing Date, of
the General Counsel for the Depositary relating to the
Optional Securities and otherwise to the same effect as the
opinion required by Section 5(g); and
(v) A letter of Arthur Andersen LLP, dated the
Optional Closing Date, substantially the same in scope and
substance as the letter required by Section 5(a);
provided, however, that, in lieu of any such opinion or letter, a letter to the
effect that the Underwriters may rely on the opinion of such counsel or letter
of such party, as the case may be, delivered at the First Closing Date to the
same extent as though it were dated the date of such letter authorizing
reliance (except that statements in such opinion or letter delivered at the
First Closing Date shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to the date of the letter
authorizing such reliance).
The Company will furnish the Representatives with such conformed
copies of such opinions, certificates, letters and documents as the
Representatives reasonably request. The Lead Underwriter may in its sole
discretion waive on behalf of the Underwriters compliance with any conditions
to the obligations of the Underwriters under this Agreement.
6. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the 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 Registration Statement, the Prospectus, or any amendment or supplement
thereto (other than any such amendment or supplement relating solely to the
distribution of securities other than the Offered Securities), or any related
preliminary prospectus or preliminary prospectus supplement relating to the
Offered Securities, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter 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 Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below; provided further, that
such indemnity with respect to any preliminary prospectus supplement shall not
inure to the benefit of any Underwriter from whom the person asserting loss
purchased if such person did not receive a copy of the final
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<PAGE> 15
prospectus supplement at or prior to the confirmation of such sale in any case
where delivery is required under the Act and the Company shall have supplied
copies of such final prospectus supplement to the Underwriters.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the 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 Registration Statement, the Prospectus,
or any amendment or supplement thereto, or any related preliminary prospectus
or preliminary prospectus supplement, 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 to make the statements therein 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 Underwriter through the Representatives 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 Underwriter for use
in the Prospectus consists of the following information in the Prospectus
furnished on behalf of each Underwriter: the last paragraph at the bottom of
the prospectus supplement cover page concerning the terms of the offering by
the Underwriters, the legend concerning over-allotments and stabilizing on the
inside front cover page of the prospectus supplement and the concession and
discount figures appearing in the fourth paragraph under the caption
"Underwriting" in the prospectus supplement.
(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 6 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action.
(d) 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 Underwriters 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
Underwriters 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 Underwriters 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 underwriting
discounts and commissions received by the Underwriters. The relative fault
shall be
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<PAGE> 16
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
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other out-of-pocket 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 Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
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 Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company, to each officer of the
Company who has signed the Registration Statement and to each person, if any,
who controls the Company within the meaning of the Act.
7. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities hereunder and the
aggregate number of shares of Offered Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total number of shares of Offered Securities, the Lead Underwriter may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase. If any Underwriter or Underwriters so default
and the aggregate number of shares of Offered Securities with respect to which
such default or defaults occur exceeds 10% of the total number of shares of
Offered Securities and arrangements satisfactory to the Lead Underwriter 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 Underwriter or the Company,
except as provided in Section 8. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
8. 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 Underwriters 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 Underwriter, 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 7 or if for any reason the purchase
of the Offered Securities by the Underwriters is not consummated, the Company
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 4 and the respective obligations of the Company and the
Underwriters pursuant to Section 6 shall remain in effect. If the purchase of
the Offered Securities by the Underwriters is not consummated for any reason
other than solely because of the termination of this Agreement pursuant to
Section 7 or the occurrence of any event specified in clause (iii), (iv) or (v)
of Section 5(c), the Company will reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
16
<PAGE> 17
9. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to them at their address furnished to the Company in writing for the
purpose of communications hereunder or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Five Horsham Business Center,
300 Welsh Road, Horsham, Pennsylvania 19044, Attention: Gene S. Schneyer,
General Counsel.
10. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 6, and no
other person will have any right or obligation hereunder.
11. Representation of Underwriters. Any Representatives will act for
the several Underwriters in connection with this financing, and any action
under this Agreement taken by the Representatives jointly or by the Lead
Underwriter will be binding upon all the Underwriters.
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 thereby.
17
<PAGE> 18
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and
the several Underwriters in accordance with its terms.
Very truly yours,
Advanta Corp.
By /s/ David D. Wesselink
---------------------------------
Name: David D. Wesselink
Title: Senior Vice President and
Chief Financial Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
CS FIRST BOSTON CORPORATION
SALOMON BROTHERS INC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WILLIAM BLAIR & COMPANY
Acting on behalf of themselves
and as the Representatives of
the several Underwriters:
By CS FIRST BOSTON CORPORATION
By /s/ Jack D. McFadden Jr.
----------------------------
Name: Jack D. McFadden Jr.
Title: Managing Director
18
<PAGE> 19
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER FIRM
----------- SECURITIES
<S> <C>
CS First Boston Corporation . . . . . . . . . . . . . . . . . . . . . . 370,000
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . . . . . 370,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . 370,000
William Blair & Company . . . . . . . . . . . . . . . . . . . . . . . . 370,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . 60,000
Alex. Brown & Sons Incorporated . . . . . . . . . . . . . . . . . . . . 60,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc. . . . . . . . . . . . . . . 60,000
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . 60,000
A.G. Edwards & Sons, Inc. . . . . . . . . . . . . . . . . . . . . . . . 60,000
Fox-Pitt, Kelton Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Furman Selz Incorporated . . . . . . . . . . . . . . . . . . . . . . . 30,000
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Hambrecht & Quist LLC . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Keefe, Bruyette & Woods, Inc. . . . . . . . . . . . . . . . . . . . . . 60,000
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . . . . . 60,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . . . . 60,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . 60,000
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
UBS Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
S.G. Warburg & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Wheat, First Securities, Inc. . . . . . . . . . . . . . . . . . . . . . 60,000
---------
Total: 2,500,000
=========
</TABLE>
19
<PAGE> 1
EXHIBIT 4.2
6 3/4% CONVERTIBLE CLASS B [ADVANTA LOGO]
PREFERRED STOCK, SERIES 1995
(Stock Appreciation Income ADVANTA CORP.
Linked Securities (SAILS) SM*) (INCORPORATED UNDER THE LAWS
($.01 PAR VALUE) OF THE STATE OF DELAWARE)
CUSIP 007942 40 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF 6 3/4% CONVERTIBLE CLASS B PREFERRED
STOCK, SERIES 1995 (STOCK APPRECIATION INCOME LINKED SECURITIES (SALES)) OF
Advanta Corp. transferable on the books of the Company in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar. This Certificate and the shares represented
hereby are issued and shall be held subject to all of the provisions of the
Certificate of Incorporation and By-laws of the Company and all amendments
thereto (copies of which are on file at the office of the Transfer Agent) to
all of which the holder hereof by acceptance hereof expressly assents.
Witness the Seal of the Company and the signatures of its duly
authorized officers.
Dated
[ADVANTA CORP. CORPORATE SEAL]
[SIG]
COUNTERSIGNED AND REGISTERED
CHAIRMAN OF THE BOARD MELLON SECURITIES TRUST COMPANY
(NEW YORK) TRANSFER AGENT
AND REGISTRAR
[SIG] BY
SECRETARY AUTHORIZED SIGNATURE
*Application for Service Mark of CS First Boston, Inc. pending.
<PAGE> 2
[Reverse Side of Certificate]
ADVANTA CORP.
THE COMPANY WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT
CHARGE, A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF THE SHARES OF EACH CLASS
AND SERIES OF STOCK OF THE COMPANY AUTHORIZED TO BE ISSUED AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS
SO FAR AS THE SAME HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE
BOARD OF DIRECTORS TO FIX AND DETERMINE SUCH RIGHTS AND PREFERENCES OF
SUBSEQUENT CLASSES AND SERIES. SUCH REQUEST SHOULD BE ADDRESSED TO THE
TRANSFER AGENT NAMED ON THE FACE HEREOF.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED THE COMPANY WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE
ISSUANCE OF A REPLACEMENT CERTIFICATE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM --as tenants in common UNIF GIFT MIN ACT--..........Custodian..............
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act..............
in common (State)
</TABLE>
Additional abbreviation may also be used though not in the above list.
For value received, ________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
--------------------------------------
-------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
--------------------------------------------------------------------------shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
-----------------------------------------------------------------------Attorney
to transfer the said stock on the books of the within named Company with full
power of substitution in the premises.
Dated
-----------------
-----------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
THE SIGNATURE(S) SHOULD BE GUARANTEED BY A COMMERCIAL BANK OR
TRUST COMPANY, OR BY A BROKER MEMBER OF THE NEW YORK STOCK
EXCHANGE.
<PAGE> 1
EXHIBIT 4.3
CERTIFICATE OF DESIGNATIONS,
PREFERENCES, RIGHTS AND LIMITATIONS OF
6 3/4% Convertible Class B Preferred Stock, Series 1995
(Stock Appreciation Income Linked Securities (SAILS)(SM*))
of
Advanta Corp.
--------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
--------------------
Advanta Corp., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies that, under
(i) authority conferred upon the Board of Directors by the Amended and Restated
Certificate of Incorporation of the Corporation and (ii) the provisions of
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors at a meeting held on July 31, 1995 duly adopted the following
resolution:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Company in accordance with the provisions of the
Amended and Restated Certificate of Incorporation of the Company and
Section 151 of the Delaware General Corporation Law, a series of Class
B Preferred Stock of the Company, to be known as __% Convertible Class
B Preferred Stock, Series 1995 be and it hereby is created, and that
the amount thereof, and the voting powers, preferences and relative,
participating, optional or other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof,
be substantially as presented to the Board of Directors at this
meeting and as otherwise finally determined by the Pricing Committee.
The Corporation further certifies that under (i) the authority
conferred upon the Pricing Committee by resolutions of the Board of Directors
adopted at a meeting held on July 31, 1995 and (ii) the provisions of Sections
141 and 151 of the General Corporation Law of the State of Delaware, the
Pricing Committee of the Board of Directors duly adopted the following
resolution:
RESOLVED, that under (i) the authority conferred upon the
Pricing Committee by resolutions of the Board of Directors duly
adopted at a meeting held on July 31, 1995 and (ii) the provisions of
Sections 141 and 151 of the
--------------------------------
* Application for Service Mark of CS First Boston, Inc. pending.
1
<PAGE> 2
General Corporation Law of the State of Delaware, the Pricing
Committee hereby fixes the amount, voting powers, designations and
preferences and relative, participating, optional or other special
rights of the shares of the 6 3/4% Convertible Class B Preferred Stock,
Series 1995 (Stock Appreciation Income Linked Securities (SAILS)), and
the qualifications, limitations or restrictions thereof, as set
forth in Schedule A attached hereto, and the proper officers of the
Company are hereby authorized and directed to execute and file
a Certificate of Designations, Preferences, Rights and Limitations
containing such provisions with the Secretary of the State of Delaware
and with such other governmental agencies or authorities as any of
such officers may deem appropriate.
2
<PAGE> 3
SCHEDULE A
Section 1. Designation and Size of Issue; Ranking. (a)
The distinctive designation of the series of Class B Preferred Stock shall be
6 3/4% Convertible Class B Preferred Stock, Series 1995 (Stock Appreciation
Income Linked Securities (SAILS)) (hereinafter referred to as the "SAILS").
The number of shares constituting the SAILS shall be 28,750 shares.
(b) Any shares of SAILS that at any time have been redeemed
for, or converted into, Class B Common Stock, $ .01 par value, of the
Corporation (the "Class B Common Stock") or otherwise acquired by the
Corporation shall, after such redemption, conversion or other acquisition,
resume the status of authorized and unissued shares of Class B Preferred Stock,
par value $ .01, of the Corporation (the "Class B Preferred Stock"), without
further designation as to series until such shares are once more designated as
part of a particular series by the Board of Directors.
(c) The SAILS shall rank on a parity, both as to payment of
dividends and distribution of assets upon liquidation, with the Class A
Preferred Stock, par value $1,000 per share of the Corporation (the "Class A
Preferred Stock") and any other series of preferred stock issued by the
Corporation after the date of this Certificate of Designations that by its
terms rank pari passu with the SAILS.
Section 2. Dividends. (a) The holders of record of the
SAILS shall be entitled to receive, when, as and if declared by the Board of
Directors or the Dividend Committee thereof, out of funds legally available
therefor, cash dividends ("Preferred Dividends") from the date of the issuance
of the SAILS. Except as provided below, Preferred Dividends shall be payable at
the rate per annum of 6 3/4 percent of the Stated Value as defined herein
per share (equivalent to $249.75 per annum or $62.4375 per quarter for each
of the SAILS), and no more, payable quarterly in arrears, on each December 15,
March 15, June 15 and September 15 (each a "Dividend Payment Date") or, if
any such date is not a business day (as defined herein), the Preferred
Dividends due on such Dividend Payment Date shall be paid on the next
succeeding business day; provided, however, that, with respect to any dividend
period during which a redemption occurs, the Corporation may, at its option,
declare accrued Preferred Dividends to, and
3
<PAGE> 4
pay such Preferred Dividends on, the date fixed for redemption, in which case
such Preferred Dividends shall be payable to the holders of SAILS as of the
record date for such dividend payment and shall not be included in the
calculation of the related SAILS Call Price (as defined herein). The first
dividend period shall be from the date of initial issuance of the SAILS to but
excluding December 15, 1995 and the first Preferred Dividend shall be payable
on the first Dividend Payment Date thereafter. Preferred Dividends on the
SAILS shall be cumulative and shall accumulate from the date of original
issuance of the SAILS. Preferred Dividends on the SAILS shall cease to accrue
on and after the Mandatory Conversion Date (as defined herein) or on and after
the date of their earlier conversion or redemption, as the case may be.
Preferred Dividends shall be payable to holders of record as they appear on the
stock register of the Corporation on such record dates, not less than 10 nor
more than 60 days preceding the payment date thereof, as shall be fixed by the
Board of Directors or the Dividend Committee thereof. Preferred Dividends
payable on the SAILS for any period less than a full quarterly dividend period
shall be computed on the basis of a 360-day year of twelve 30-day months and
the actual number of days elapsed in any period less than one month. Preferred
Dividends shall accrue on a daily basis whether or not there are funds of the
Corporation legally available for the payment of such dividends and whether or
not such Preferred Dividends are declared. Accrued but unpaid Preferred
Dividends shall accumulate as of the Dividend Payment Date on which they first
become payable, but no interest shall accrue on accumulated but unpaid
Preferred Dividends.
(b) As long as any shares of the SAILS are outstanding, no
dividends (other than dividends payable in shares of, or warrants, rights or
options exercisable for or convertible into shares of, Class A Common Stock,
par value $0.01, of the Corporation (the "Class A Common Stock") or Class B
Common Stock or any other capital stock of the Corporation ranking junior to
the SAILS as to the payment of dividends and the distribution of assets upon
liquidation (collectively, the "Junior Stock") and cash in lieu of fractional
shares in connection with any such dividend) shall be paid or declared in cash
or otherwise on any Junior Stock, nor shall any other distribution be made
(other than a distribution payable in Junior Stock and cash in lieu of
fractional shares in connection with any such distribution), on any Junior
Stock, unless: (i) full dividends on preferred stock (including the SAILS)
that does not constitute Junior Stock ("Parity Preferred Stock") have been
paid, or declared and set aside for payment, for all dividend periods
terminating at or before the date of such Junior Stock dividend or distribution
to the extent such dividends are cumulative; (ii) dividends in full for the
current quarterly dividend period have been paid, or declared and set aside for
payment, on all Parity Preferred Stock to the extent such dividends are
cumulative; (iii) the Corporation has paid or set aside all amounts, if any,
then or theretofore required to be paid or set aside for all purchase,
retirement and sinking funds, if any, for any Parity Preferred Stock; and (iv)
the Corporation is not in default on any of its obligations to redeem any
Parity Preferred Stock.
(c) As long as any shares of the SAILS are outstanding, no
shares of any Junior Stock may be purchased, redeemed, or otherwise acquired by
the Corporation or
4
<PAGE> 5
any of its subsidiaries (except in connection with (i) a reclassification or
exchange of any Junior Stock through the issuance of other Junior Stock (and
cash in lieu of fractional shares in connection therewith), (ii) the purchase,
redemption or other acquisition of any Junior Stock with any Junior Stock (and
cash in lieu of fractional shares in connection therewith), or (iii) the
acquisition by the Corporation of shares of Junior Stock from former employees
of the Corporation or its subsidiaries, without payment to such individuals, as
the result of forfeiture of such shares of Junior Stock, which had been issued
to such individuals pursuant to incentive compensation programs or otherwise as
restricted shares subject to forfeiture upon termination), nor may any funds be
set aside or made available for any sinking fund for the purchase or redemption
of any Junior Stock, unless: (i) full dividends on Parity Preferred Stock have
been paid, or declared and set aside for payment, for all dividend periods
terminating at or before the date of such purchase, redemption or other
acquisition to the extent such dividends are cumulative; (ii) dividends in full
for the current quarterly dividend period have been paid, or declared and set
aside for payment, on all Parity Preferred Stock to the extent such dividends
are cumulative; (iii) the Corporation has paid or set aside all amounts, if
any, then or theretofore required to be paid or set aside for all purchase,
retirement and sinking funds, if any, for any Parity Preferred Stock; and (iv)
the Corporation is not in default on any of its obligations to redeem any
Parity Preferred Stock.
(d) As long as any shares of the SAILS are outstanding,
dividends or other distributions may not be declared or paid on any shares of
Parity Preferred Stock (other than dividends or other distributions payable in
Junior Stock and cash in lieu of fractional shares in connection therewith),
and the Corporation may not purchase, redeem or otherwise acquire any shares of
Parity Preferred Stock (except with any Junior Stock and cash in lieu of
fractional shares in connection therewith), unless either: (i) (A) full
dividends on all shares of Parity Preferred Stock have been paid, or declared
and set aside for payment, for all dividend periods terminating at or before
the date of such Parity Preferred Stock dividend, distribution, purchase,
redemption or other acquisition payment to the extent such dividends are
cumulative; (B) dividends in full for the current quarterly dividend period
have been paid, or declared and set aside for payment, on all shares of Parity
Preferred Stock to the extent such dividends are cumulative; (C) the
Corporation has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement and sinking
funds, if any, for any shares of Parity Preferred Stock; and (D) the
Corporation is not in default on any of its obligations to redeem any shares of
Parity Preferred Stock; or (ii) with respect to the payment of dividends only,
any such dividends shall be declared and paid pro rata so that the amounts of
any dividends declared and paid on each share of the SAILS and each other share
of Parity Preferred Stock shall in all cases bear to each other the same ratio
that accrued dividends (including any accumulation with respect to unpaid
dividends for prior dividend periods, if such dividends are cumulative) on each
of the SAILS and such other shares of Parity Preferred Stock bear to each
other.
Section 3. Conversion or Redemption. (a) Unless
previously either redeemed or converted at the option of the holder in
accordance with the provisions of
5
<PAGE> 6
Section 3(c), on September 15, 1999 (the "Mandatory Conversion Date"), each
share of the SAILS shall automatically convert ("Mandatory Conversion") into (i)
shares of authorized Class B Common Stock at the SAILS Common Equivalent Rate
(as defined herein) in effect on the Mandatory Conversion Date and (ii) the
right to receive, at the option of the Corporation, either (A) cash in an
amount equal to all accrued and unpaid Preferred Dividends on such SAILS or (B)
a number of shares of Class B Common Stock having a value (based on the Current
Market Price, (as defined herein) determined as of the second Trading Day (as
defined herein) immediately preceding the Mandatory Conversion Date) equal to
such accrued and unpaid Preferred Dividends (in each case other than previously
declared Preferred Dividends payable to a holder of record as of a prior date)
to, but excluding, the Mandatory Conversion Date, whether or not declared, out
of funds legally available for the payment of Preferred Dividends. Such
automatic conversion shall be subject to the right of the Corporation to redeem
the SAILS on or after September 15, 1998 (the "Initial Redemption Date") and
before the Mandatory Conversion Date and subject to the conversion of the
SAILS at the option of the holder on any business day before the Mandatory
Conversion Date. The "SAILS Common Equivalent Rate" shall initially be one
hundred shares of Class B Common Stock for each share of the SAILS and shall
be subject to adjustment as set forth in Sections 3(d) and 3(e). The SAILS
shall cease to be outstanding on the Mandatory Conversion Date. The
Corporation shall make such arrangements as it deems appropriate for the
issuance of certificates representing shares of Class B Common Stock and for
the payment of cash in respect of such accrued and unpaid Preferred Dividends,
if any, or cash in lieu of fractional shares, if any, in exchange for and
contingent upon surrender of certificates representing the SAILS, and the
Corporation may defer the payment of dividends on such shares of Class B
Common Stock and the voting thereof (if any) until, and make such payment and
voting contingent upon, the surrender of certificates representing the SAILS;
provided, however, that the Corporation shall give the holders of SAILS such
notice of any such actions as the Corporation deems appropriate, and upon
surrender, such holders shall be entitled to receive such dividends, if any,
paid on such shares of Class B Common Stock to holders thereof on any date
fixed for the determination of stockholders entitled to receive such
dividends, which date so fixed is subsequent to the Mandatory Conversion Date.
(b) (i) The SAILS are not redeemable by the Corporation
before the Initial Redemption Date. At any time and from time to time
on or after the Initial Redemption Date until the close of business on
the business day before the Mandatory Conversion Date, the Corporation
shall have the right to redeem the outstanding shares of SAILS, in
whole or in part (subject to the notice provisions set forth in
Section 3(b)(iii)). Upon any such redemption, the Corporation shall
deliver to each holder thereof in exchange for each share of the SAILS
so redeemed, the greater of:
(A) the number of shares of Class B Common Stock
determined by dividing the applicable SAILS Call Price (as defined
herein) in effect on the redemption date by the Current Market Price
of the Class B Common Stock,
6
<PAGE> 7
determined as of the second Trading Day immediately preceding the
Notice Date (as defined herein); and
(B) 81.97 shares of Class B Common Stock
(subject to adjustment as of the date fixed for the redemption of the
SAILS in the same manner as the SAILS Optional Conversion Rate (as
defined herein) is adjusted as set forth in Section 3(d)).
Preferred Dividends on the SAILS shall cease to accrue on and
after the date fixed for their redemption.
The "SAILS Call Price" of each of the SAILS shall be the sum
of (x) $3,762.44 on and after the Initial Redemption Date to and
including December 14, 1998; $3,746.83 on and after December 15, 1998
to and including March 14, 1999; $3,731.22 on and after March 15,
1999 to and including June 14, 1999; $3,715.61 on and after June 15,
1999 to and including August 14, 1999; and $3,700.00 on and after
August 15, 1999 to and including September 14, 1999 and (y) all
accrued and unpaid Preferred Dividends thereon to but not including
the date fixed for redemption (other than previously declared Preferred
Dividends payable to a holder of record as of a prior date). If
fewer than all the of outstanding shares of SAILS are to be called
for redemption, the shares of SAILS so called shall be selected by
the Corporation by lot or pro rata (as nearly as may be) or by any
other method determined by the Board of Directors in its sole
discretion to be equitable.
(ii) The term "Current Market Price" per share of the Class B
Common Stock on any date of determination means the lesser of (x) the
average of the Closing Prices (as defined herein) of the Class B
Common Stock for the 15 consecutive Trading Days ending on and
including such date of determination and (y) the Closing Price of the
Class B Common Stock for such date of determination; provided,
however, that, with respect to any redemption of SAILS, if any event
resulting in an adjustment pursuant to Section 3(d) occurs during the
period beginning on the first day of such 15-day period and ending on
the applicable redemption date, the Current Market Price as determined
pursuant to the foregoing shall be appropriately adjusted to reflect
the occurrence of such event.
(iii) The Corporation shall provide notice of any redemption
of SAILS to holders of record of the shares of SAILS to be called for
redemption not less than 15 nor more than 60 days before the date
fixed for redemption. Any such notice shall be provided by mail, sent
to the holders of record of the SAILS to be called at each such
holder's address as it appears on the stock register of the
Corporation, first class postage prepaid; provided, however, that
failure to give such notice or any defect therein shall not affect the
validity of the proceeding for redemption of any of the shares of
SAILS except those held by the holder to whom the Corporation has
failed to give such notice or whose notice was defective. A
7
<PAGE> 8
public announcement of any call for redemption shall be made by the
Corporation before, or at the time of, the mailing of such notice of
redemption. The term "Notice Date" with respect to any notice given
by the Corporation in connection with a redemption of the SAILS means
the date on which first occurs either the public announcement of such
redemption or the commencement of mailing of the notice to the holders
of the SAILS, in each case pursuant to this Section 3(b)(iii).
Each such notice shall state, as appropriate, the following
and may contain such other information as the Corporation deems
advisable:
(A) the redemption date;
(B) that all outstanding shares of SAILS are to be
redeemed or, in the case of a redemption of fewer than all outstanding
shares of SAILS, the number of such shares held by such holder to be
redeemed;
(C) (1) the SAILS Call Price, (2) the number of
shares of Class B Common Stock deliverable upon redemption of each
share of the SAILS to be so redeemed based upon the rate set forth in
section 3(b)(i)(A) and the Current Market Price used to calculate such
number of shares of Class B Common Stock, (3) the number of shares of
Class B Common Stock deliverable upon redemption of each of the SAILS
to be so redeemed based upon the rate set forth in Section 3(b)(i)(B),
and (4) the higher of the numbers of shares of Class B Common Stock
specified in clauses (2) and (3) above;
(D) the place or places where certificates for such
shares of SAILS are to be surrendered for redemption; and
(E) that dividends on the shares of SAILS to be
redeemed shall cease to accrue on and after such redemption date
(except as otherwise provided herein).
(iv) The Corporation's obligation to deliver shares of Class
B Common Stock and provide funds upon redemption in accordance with
this Section 3(b) shall be deemed fulfilled if, on or before a
redemption date, the Corporation shall deposit with a bank or trust
company having an office or agent in New York, New York (or an
affiliate of such bank or trust company) and having (or such affiliate
having) a combined capital and surplus of at least $50,000,000
according to its last published statement of condition, or shall set
aside or make other reasonable provision for the issuance of, such
number of shares of Class B Common Stock as are required to be
delivered by the Corporation pursuant to this Section 3(b) upon the
occurrence of the related redemption of shares of SAILS and for the
payment of cash in lieu of the issuance of fractional share amounts
and accrued and unpaid dividends payable in cash on the shares of
SAILS to be redeemed as required by this Section 3(b), in trust for
the account of the holders of such shares of SAILS to
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be redeemed (and so as to be and continue to be available therefor),
with irrevocable instructions and authority to such bank or trust
company that such shares and funds be delivered upon redemption of the
shares of SAILS so called for redemption. Any interest accrued on
such funds shall be paid to the Corporation from time to time. Any
shares of Class B Common Stock or funds so deposited and unclaimed at
the end of three years from such redemption date shall be repaid and
released to the Corporation, after which the holder or holders of
shares of SAILS so called for redemption shall look only to the
Corporation for delivery of shares of Class B Common Stock and the
payment of any other funds due in connection with the redemption of
the shares of SAILS.
(v) Each holder of shares of SAILS called for redemption must
surrender the certificates evidencing such shares of SAILS (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state) to the Corporation at the place
designated in the notice of such redemption and shall thereupon be
entitled to receive certificates evidencing shares of Class B Common
Stock and to receive any funds payable pursuant to this Section 3(b)
following such surrender and following the date of such redemption.
In case fewer than all the shares of SAILS represented by any such
surrendered certificate are called for redemption, a new certificate
shall be issued at the expense of the Corporation representing the
unredeemed shares of SAILS. If such notice of redemption shall have
been given, and if on the date fixed for redemption shares of Class B
Common Stock and funds necessary for the redemption shall have been
irrevocably either set aside by the Corporation separate and apart
from its other funds or assets in trust for the account of the holders
of the SAILS to be redeemed (and so as to be and continue to be
available therefor) or deposited with a bank or trust company or an
affiliate thereof as provided herein, or the Corporation shall have
made other reasonable provision therefor, then notwithstanding that
the certificates evidencing any shares of SAILS so called for
redemption shall not have been surrendered, the shares of SAILS
represented thereby so called for redemption shall, as of the close of
business on the redemption date, be deemed no longer outstanding and
Preferred Dividends with respect to the shares of SAILS so called for
redemption and all rights with respect to the shares of SAILS so
called for redemption shall forthwith on and after such date cease and
terminate (unless the Corporation defaults on the payment of the
redemption price), except for (i) the rights of the holders to receive
the shares of Class B Common Stock and funds, if any, payable pursuant
to this Section 3(b) without interest upon surrender of their
certificates therefor and (ii) the right of the holders, pursuant to
Section 3(c), to convert the SAILS called for redemption until
immediately before the close of business on any redemption date;
provided, however, that holders of shares of SAILS at the close of
business on a record date for any payment of Preferred Dividends shall
be entitled to receive the Preferred Dividends payable on such shares
of SAILS on the corresponding Dividend Payment Date notwithstanding
the redemption of such shares of SAILS following such record date and
before the Dividend Payment Date. Holders of shares of
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<PAGE> 10
SAILS that are redeemed shall not be entitled to receive dividends
declared and paid on the shares of Class B Common Stock issuable to
such holders in respect of such redemption, and such shares of Class B
Common Stock shall not be entitled to vote (to the limited extent they
are entitled to vote at all), until such shares of Class B Common
Stock are issued upon the surrender of the certificates representing
such shares of SAILS, and upon such surrender such holders shall be
entitled to receive such dividends paid on such shares of Class B
Common Stock to holders thereof on any date fixed for the
determination of stockholders entitled to receive such dividends,
which date so fixed is subsequent to such redemption date.
(c) The shares of SAILS are convertible, in whole or in part,
at the option of the holders thereof ("Optional Conversion"), at any time
before the Mandatory Conversion Date, unless previously redeemed, into shares
of Class B Common Stock at a rate of 81.97 shares of Class B Common Stock
for each share of the SAILS (the "SAILS Optional Conversion Rate"), subject to
adjustment as set forth in Section 3(d). The right of Optional Conversion of
SAILS called for redemption shall terminate immediately before the close of
business on the applicable redemption date with respect to such SAILS.
Optional Conversion of shares of SAILS may be effected by
delivering certificates evidencing such shares of SAILS, together with written
notice of conversion and a proper assignment of such certificates to the
Corporation or in blank, to the office of the transfer agent for the SAILS or
to any other office or agency maintained by the Corporation for that purpose
and otherwise in accordance with Optional Conversion procedures established by
the Corporation. Each Optional Conversion shall be deemed to have been
effected immediately before the close of business on the date on which the
foregoing requirements shall have been satisfied. The Optional Conversion
shall be at the SAILS Optional Conversion Rate in effect at such time and on
such date.
Holders of shares of SAILS at the close of business on a
record date for any payment of declared Preferred Dividends shall be entitled
to receive the Preferred Dividends payable on those shares of SAILS on the
corresponding Dividend Payment Date notwithstanding the Optional Conversion of
those shares of SAILS following such record date and before such Dividend
Payment Date. Except as provided above, upon any Optional Conversion of shares
of SAILS, the Corporation shall make no payment of or allowance of unpaid
Preferred Dividends, whether or not in arrears, on such shares of SAILS as to
which Optional Conversion has been effected or for previously declared
dividends or distributions on the shares of Class B Common Stock issued upon
Optional Conversion.
(d) The SAILS Common Equivalent Rate, the SAILS Optional
Conversion Rate and the SAILS Call Price are each subject to adjustment from
time to time as provided below in this paragraph (d).
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(i) If the Corporation shall pay a stock dividend or
make a distribution with respect to its Class B Common Stock in shares
of Class B Common Stock (including by way of reclassification of any
shares of its Class B Common Stock), the SAILS Common Equivalent Rate
and the SAILS Optional Conversion Rate in effect at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall each be increased by multiplying such SAILS Common Equivalent
Rate and SAILS Optional Conversion Rate by a fraction of which the
numerator shall be the sum of (x) the number of shares (including
fractional shares) of Class B Common Stock outstanding at the close of
business on the date fixed for such determination, immediately before
such dividend or distribution, and (y) the total number of shares of
Class B Common Stock constituting such dividend or other distribution,
and of which the denominator shall be the number of shares (including
fractional shares) of Class B Common Stock outstanding at the close of
business on the date fixed for such determination, immediately before
such dividend or distribution; such increase to become effective
immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this clause
(i), the number of shares of Class B Common Stock at any time
outstanding shall not include shares held in the treasury of the
Corporation.
(ii) In case outstanding shares of Class B Common
Stock shall be subdivided or split into a greater number of shares of
Class B Common Stock, the SAILS Common Equivalent Rate and the SAILS
Optional Conversion Rate in effect at the opening of business on the
day following the day upon which such subdivision or split becomes
effective shall each be proportionately increased, and, conversely, in
case outstanding shares of Class B Common Stock shall be combined into
a smaller number of shares of Class B Common Stock, the SAILS Common
Equivalent Rate and the SAILS Optional Conversion Rate in effect at
the opening of business of the day following the day upon which such
combination becomes effective shall each be proportionately reduced;
such increases or reductions as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iii) If the Corporation shall issue rights or
warrants to all holders of its Class B Common Stock entitling them
(for a period not exceeding 45 days from the date of such issuance) to
subscribe for or purchase shares of Class B Common Stock at a price
per share less than the Current Market Price of the Class B Common
Stock (determined pursuant to Section 3(b)(ii)) on the record date for
the determination of stockholders entitled to receive such rights or
warrants, then in each case the SAILS Common Equivalent Rate and the
SAILS Optional Conversion Rate shall each be adjusted by multiplying
the SAILS Common Equivalent Rate and the SAILS Optional Conversion
Rate in effect on such record date by a fraction of which the
numerator shall be the sum of (A) the number of
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<PAGE> 12
shares of Class B Common Stock outstanding on the date of issuance of
such rights or warrants, immediately before such issuance, and (B) the
number of additional shares of Class B Common Stock offered for
subscription or purchase pursuant to such rights or warrants, and of
which the denominator shall be the sum of (x) the number of shares of
Class B Common Stock outstanding on the date of issuance of such
rights or warrants, immediately before such issuance, and (y) the
number of shares of Class B Common Stock that the aggregate offering
price of the total number of shares of Class B Common Stock so offered
for subscription or purchase pursuant to such rights or warrants would
purchase at such Current Market Price (determined by multiplying such
total number of shares by the exercise price of such rights or
warrants and dividing the product so obtained by such Current Market
Price). For purposes of the computation set forth in this clause
(iii), the number of shares of Class B Common Stock at any time
outstanding shall not include shares held in the treasury of the
Corporation. Such adjustment shall become effective at the opening of
business on the business day following the record date for the
determination of stockholders entitled to receive such rights or
warrants. To the extent that shares of Class B Common Stock are not
delivered after the expiration of such rights or warrants, the SAILS
Common Equivalent Rate and the SAILS Optional Conversion Rate shall
each be readjusted to the SAILS Common Equivalent Rate and the SAILS
Optional Conversion Rate that would then be in effect had the
adjustments made after the issuance of such rights or warrants been
made upon the basis of issuance of rights or warrants in respect of
only the number of shares of Class B Common Stock actually delivered.
(iv) If the Corporation shall pay a dividend or make
a distribution to all holders of its Class B Common Stock consisting
of evidences of its indebtedness, cash or other assets (including
shares of capital stock of the Corporation other than Class B Common
Stock but excluding any cash dividends or distributions other than
Extraordinary Cash Distributions (as defined herein) and dividends
referred to in clauses (i) and (ii) above), or shall issue to all
holders of its Class B Common Stock rights or warrants to subscribe
for or purchase any of its securities (other than those referred to in
clause (iii) above), then in each such case the SAILS Common
Equivalent Rate and the SAILS Optional Conversion Rate shall each be
adjusted by multiplying the SAILS Common Equivalent Rate and the SAILS
Optional Conversion Rate in effect on the record date for such
dividend or distribution or for the determination of stockholders
entitled to receive such rights or warrants, as the case may be, by a
fraction of which the numerator shall be the Current Market Price per
share of the Class B Common Stock (determined pursuant to Section
3(b)(ii) on such record date) and of which the denominator shall be
such Current Market Price per share of Class B Common Stock less
either (i) the fair market value (as determined by the Board of
Directors whose determination shall be conclusive) on such record date
of the portion of the assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, applicable to
one share of Class B Common
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Stock, or (ii) if applicable, the amount of the Extraordinary Cash
Distributions. Such adjustment shall become effective on the opening
of business on the business day following the record date for such
dividend or distribution or for the determination of holders entitled
to receive such rights or warrants, as the case may be. The term
"Extraordinary Cash Distribution" means, with respect to any
consecutive 12-month period, all cash dividends and cash distributions
on the Class B Common Stock during such period (other than cash
dividends and cash distributions for which a prior adjustment to the
SAILS Common Equivalent Rate and SAILS Optional Conversion Rate was
previously made) to the extent such dividends and distributions
exceed, on a per share of Class B Common Stock basis, 10% of the
average daily Closing Price of the Class B Common Stock over such
period.
(v) Except as otherwise provided in Section 3(d)(i),
any shares of Class B Common Stock issuable in payment of a dividend
or other distribution shall be deemed to have been issued immediately
before the close of business on the record date for such dividend or
other distribution for purposes of calculating the number of
outstanding shares of Class B Common Stock under this Section 3(d).
(vi) Anything in this Section 3 notwithstanding, the
Corporation shall be entitled (but shall not be required) to make such
adjustments to the SAILS Common Equivalent Rate, the SAILS Optional
Conversion Rate and the SAILS Call Price, in addition to those set
forth by this Section 3(d), as the Corporation, in its sole
discretion, shall determine to be advisable, in order that any stock
dividends, subdivision of stock, distribution of rights to purchase
stock or securities exchangeable for stock (or any transaction that
could be treated as any of the foregoing transactions pursuant to
Section 305 of the Internal Revenue Code of 1986, as amended)
hereafter made by the Corporation to its stockholders shall not be
taxable.
(vii) In any case in which this Section 3(d) shall
require that an adjustment as a result of any event become effective
at the opening of business on the business day next following a record
date, and the date fixed for conversion pursuant to Section 3(a) or
redemption pursuant to Section 3(b) is on or after such record date
but before the occurrence of such event, the Corporation may, in its
sole discretion, elect to defer the following until after the
occurrence of such event: (A) issuing to the holder of any shares of
SAILS surrendered for conversion or redemption the shares of Class B
Common Stock issuable before giving effect to such adjustment; and (B)
paying to such holder any amount in cash in lieu of a fractional share
of Class B Common Stock pursuant to Section 4.
(viii) All adjustments to the SAILS Common
Equivalent Rate and the SAILS Optional Conversion Rate shall be
calculated to the nearest 1/100th of a share of Class B Common Stock.
No adjustment in the SAILS Common
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<PAGE> 14
Equivalent Rate or in the SAILS Optional Conversion Rate shall be
required unless such adjustment would require an increase or decrease
of at least one percent therein; provided, however, that any
adjustments that by reason of this Section 3(d)(viii) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All adjustments to the SAILS Common Equivalent
Rate and SAILS Optional Conversion Rate shall be made successively.
(ix) At least 10 business days before taking any
action that could result in an adjustment affecting the SAILS Common
Equivalent Rate or the SAILS Optional Conversion Rate such that the
conversion price (for purposes of this Section 3(d)(ix), an amount
equal to the SAILS Call Price divided by the SAILS Common Equivalent
Rate or the SAILS Optional Conversion Rate, respectively, as in effect
from time to time) would be below the then par value of the Class B
Common Stock, the Corporation shall take any corporate action that
may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and nonassessable
shares of Class B Common Stock at the SAILS Common Equivalent Rate or
the SAILS Optional Conversion Rate as so adjusted.
(x) Before redeeming any shares of SAILS, the
Corporation shall take any corporate action that may, in the opinion
of its counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and nonassessable shares of Class B
Common Stock upon such redemption.
(e) In case of any consolidation or merger to which the
Corporation is a party (other than a consolidation or merger in which the
Corporation is the surviving or continuing corporation in which the shares of
Class B Common Stock outstanding immediately before the merger or consolidation
remain unchanged), or in the case of any sale or transfer to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety, or in the case of any statutory exchange of securities with
another corporation (other than in connection with a merger or acquisition),
the SAILS, after consummation of such transaction, shall be subject to (i)
conversion at the option of the holder into the kind and amount of securities,
cash or other property receivable upon consummation of such transaction by a
holder of the number of shares of Class B Common Stock into which such SAILS
might have been converted immediately before consummation of such transaction,
(ii) conversion on the Mandatory Conversion Date into the kind and amount of
securities, cash or other property receivable
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upon consummation of such transaction by a holder of the number of shares of
Class B Common Stock into which such SAILS would have been converted if the
conversion on the Mandatory Conversion Date had occurred immediately before the
date of consummation of such transaction, plus the right to receive cash in an
amount equal to all accrued and unpaid dividends on such SAILS (other than
previously declared dividends payable to a holder of record as of a prior
date), and (iii) redemption on any redemption date in exchange for the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Class B Common Stock
that would have been issuable at the SAILS Call Price in effect on such
redemption date upon a redemption of the SAILS immediately before consummation
of such transaction, assuming that, if the Notice Date for such redemption is
not before such transaction, the Notice Date had been the date of such
transaction; and assuming in each case that such holder of shares of Class B
Common Stock failed to exercise rights of election, if any, as to the kind or
amount of securities, cash or property receivable upon consummation of such
transaction (provided that, if the kind or amount of securities, cash or other
property receivable upon consummation of such transaction is not the same for
each non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction to each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares) . The kind and amount of securities into
or for which the SAILS shall be convertible or redeemable after consummation of
such transaction shall be subject to adjustment as described in Section 3(d)
following the date of consummation of such transaction. The Corporation may
not become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
(f) Whenever the SAILS Common Equivalent Rate, SAILS Optional
Conversion Rate and/or the SAILS Call Price are adjusted as provided in Section
3(d), the Corporation shall:
(i) forthwith compute the adjusted SAILS Common
Equivalent Rate and SAILS Optional Conversion Rate in accordance with
this Section 3 and prepare a certificate signed by the Chief Financial
Officer, any Vice President, the Treasurer or the Controller of the
Corporation setting forth the adjusted SAILS Common Equivalent Rate
and the SAILS Optional Conversion Rate, the method of calculation
thereof in reasonable detail and the facts requiring such adjustment
and upon which such adjustment is based, which certificate shall be
conclusive, final and binding evidence of the correctness of the
adjustment, and shall file such certificate forthwith with the
transfer agent for the SAILS and the Class B Common Stock;
(ii) make a prompt public announcement stating that
the SAILS Common Equivalent Rate and SAILS Optional Conversion Rate
have been adjusted and setting forth the adjusted SAILS Common
Equivalent Rate and SAILS Optional Conversion Rate; and
(iii) mail a notice stating that the SAILS Common
Equivalent Rate and the SAILS Optional Conversion Rate have been
adjusted, the facts requiring such adjustment and upon which such
adjustment is based and setting forth the adjusted SAILS Common
Equivalent Rate and SAILS Optional Conversion Rate, to the holders of
record of the outstanding SAILS at or prior to the time the
Corporation mails an interim statement, if any, to its stockholders
covering the
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fiscal quarter period during which the facts requiring such adjustment
occurred, but in any event within 45 days of the end of such fiscal
quarter period.
(g) In case, at any time while any shares of the SAILS are
outstanding,
(i) the Corporation shall declare a dividend (or any
other distribution) on the Class B Common Stock excluding any cash
dividends other than Extraordinary Cash Distributions; or
(ii) the Corporation shall authorize the issuance to
all holders of the Class B Common Stock of rights or warrants to
subscribe for or purchase shares of the Class B Common Stock or of any
other subscription rights or warrants; or
(iii) the Corporation shall authorize any
reclassification of the Class B Common Stock (other than a subdivision
or combination thereof) or any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of
the Corporation is required (except for a merger of the Corporation
into one of its subsidiaries solely for the purpose of changing the
corporate domicile of the Corporation to another state of the United
States and in connection with which there is no substantive change in
the rights or privileges of any securities of the Corporation other
than changes resulting from differences in the corporate statutes of
the state the Corporation was then domiciled in and the new state of
domicile), or the sale or transfer of all or substantially all of the
assets of the Corporation; or
(iv) the Corporation shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the
Corporation;
then the Corporation shall cause to be filed at each office or agency
maintained for the purpose of conversion of the SAILS, and shall cause to be
mailed to the holders of SAILS at their last addresses as they shall appear on
the stock register of the Corporation, at least 10 business days before the
date hereinafter specified in clause (A) or (B) below (or the earlier of the
dates hereinafter specified, in the event that more than one date is
specified), a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights or warrants, or, if a record
is not to be taken, the date as of which the holders of Class B Common Stock of
record to be entitled to such dividend, distribution, rights or warrants are to
be determined, or (B) the date on which any such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Class B Common Stock of record shall be entitled to exchange their
Class B Common Stock for securities or other property (including cash), if any,
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. The failure to give or receive the
notice required by this Section 3(g) or any defect
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<PAGE> 17
therein shall not affect the legality or validity of any such dividend,
distribution, right or warrant or other action.
Section 4. No Fractional Shares. No fractional
shares of Class B Common Stock shall be issued upon redemption or conversion of
shares of the SAILS. In lieu of any fractional share otherwise issuable in
respect of the aggregate number of shares of SAILS of any holder that are
redeemed or converted on any redemption date or upon Mandatory Conversion or
Optional Conversion, such holder shall be entitled to receive an amount in cash
(computed to the nearest cent) equal to the same fraction of (i) the Current
Market Price of the Class B Common Stock (determined as of the second Trading
Day immediately preceding the Notice Date) in the case of redemption, or (ii)
the Closing Price (as defined herein) of the Class B Common Stock determined
(A) as of the fifth Trading Day immediately preceding the Mandatory Conversion
Date, in the case of Mandatory Conversion, or (B) as of the second Trading Day
immediately preceding the effective date of conversion, in the case of an
Optional Conversion by a holder. If more than one share of the SAILS shall be
surrendered for conversion or redemption at one time by or for the same holder,
the number of full shares of Class B Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of SAILS so
surrendered or redeemed.
Section 5. Reservation of Class B Common Stock. The
Corporation shall at all times reserve and keep available out of its authorized
and unissued Class B Common Stock, solely for issuance upon the conversion or
redemption of SAILS as herein provided, free from preemptive rights, such
maximum number of shares of Class B Common Stock as shall from time to time be
issuable upon the Mandatory Conversion or Optional Conversion or redemption of
all the SAILS then outstanding.
Section 6. Certain Definitions. As used in this
Certificate of Designations:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the States of
Delaware or New York are authorized or obligated by law or executive order to
close;
(ii) the term "close of business" means 5:00 p.m. local New
York City time on a business day;
(iii) the term "Closing Price," on any day, shall mean the
last sale price as reported on the Nasdaq National Market on such day, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices of the Class B Common Stock on the Nasdaq National Market, or if
the Class B Common Stock is not then included for quotation on the Nasdaq
National Market, on the principal national securities exchange on which the
Class B Common Stock is listed or admitted to trading or, if not so available
in such manner, as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that purpose;
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(iv) the term "record date" shall be such date as from time
to time fixed by the Board of Directors with respect to the receipt of
dividends, the receipt of a redemption price upon redemption or the taking of
any action or exercise of any voting rights permitted hereby; and
(v) the term "Trading Day" shall mean any day on which the
closing bid and asked prices of the Class B Common Stock are reported by the
Nasdaq National Market (or any successor thereto) or, if the Class B Common
Stock is not then included for quotation on the Nasdaq National Market, a date
on which the principal national securities exchange on which the Class B Common
Stock is listed or admitted to trading is open for the transaction of business.
Section 7. Payment of Taxes. The Corporation shall pay
any and all documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of shares of Class B Common Stock on the
conversion of SAILS pursuant to Section 3; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any registration of transfer involved in the issue or delivery of shares of
Class B Common Stock in a name other than that of the registered holder of
SAILS redeemed or converted or to be redeemed or converted, 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.
Section 8. Liquidation Rights. In the event of any
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation and subject to the right of holders of any other series of Parity
Preferred Stock, the holders of outstanding shares of SAILS are entitled to
receive the sum of $3,700.00 (the "Stated Value") per share and an amount
equal to any accrued and unpaid Preferred Dividends thereon, out of the assets
of the Corporation available for distribution to stockholders, before any
distribution of assets is made to holders of Class A Common Stock, Class B
Common Stock or other Junior Stock upon liquidation, dissolution, or winding
up. If upon any voluntary or involuntary liquidation, dissolution, or winding
up of the Corporation, the assets of the Corporation are insufficient to permit
the payment of the full preferential amounts payable with respect to the SAILS
and all other series of Parity Preferred Stock, the holders of SAILS and of all
other series of Parity Preferred Stock shall share ratably in any distribution
of assets of the Corporation in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidating distribution to which they are entitled, the holders of SAILS shall
not be entitled to any further participation in any distribution of assets by
the Corporation. A consolidation or merger of the Corporation with or into one
or more other corporations (whether of not the Corporation is the corporation
surviving such consolidation or merger), or a sale, lease or exchange of all or
substantially all of the assets of the Corporation shall not be deemed to be a
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation.
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Section 9. Voting Rights. (a) The holders of shares of
SAILS shall not have any voting rights except as required by law and except as
set forth below in Sections 9(b) and 9(c).
(b) In the event that dividends on the SAILS or any other
series of preferred stock with like voting rights shall be in arrears and
unpaid for six quarterly dividend periods, the holders of the SAILS (voting
separately as a class with holders of all other series of preferred stock upon
which like voting rights have been conferred and are exercisable), with each
share of SAILS entitled to one hundred votes on this and other matters in which
such preferred stock votes as a group, shall be entitled to vote for the
election of two directors of the Corporation (the "Preferred Stock Directors"),
such directors to be in addition to the number of directors constituting the
Board of Directors immediately before the accrual of such right. Such right,
when vested, shall continue until all cumulative dividends accumulated and
payable on the SAILS and such other series of preferred stock shall have been
paid in full and the right of any other series of preferred stock to exercise
voting rights, separate from the Class B Common Stock, to elect Preferred Stock
Directors shall terminate or have terminated, and when so paid and any such
termination occurs or has occurred, such right of the holders of the SAILS
shall cease. The term of office of any director elected by the holders of the
SAILS and such other series of preferred stock shall terminate on the earlier
of (i) the next annual meeting of stockholders at which a successor shall have
been elected and qualified or (ii) the termination of the right of holders of
the SAILS and such other series of preferred stock to vote for such directors.
(c) The Corporation shall not, without the approval of the
holders of at least 66-2/3 percent of the shares of SAILS then outstanding:
(i) amend, alter, or repeal any of the provisions of the Amended and Restated
Certificate of Incorporation or By-Laws of the Corporation so as to affect
adversely the powers, preferences or rights of the holders of the shares of
SAILS then outstanding or reduce the minimum time for any required notice to
which the holders of the shares of SAILS then outstanding may be entitled (an
amendment of the Amended and Restated Certificate of Incorporation to authorize
or create, or to increase the authorized amount of, Junior Stock or any Parity
Preferred Stock (including "blank check" preferred stock) being deemed not to
affect adversely the powers, preferences, or rights of the holders of SAILS);
(ii) authorize or create, or increase the authorized amount of, any capital
stock, or any security convertible into capital stock of any class, ranking
prior to the SAILS either as to the payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up of the Corporation; or (iii)
merge or consolidate with or into any other corporation, unless each holder of
SAILS immediately preceding such merger or consolidation shall receive or
continue to hold in the resulting corporation the number of shares, with
substantially the same rights and preferences, as correspond to the shares of
SAILS so held.
(d) Notwithstanding the provisions set forth in Section 9(c),
no such approval described therein of the holders of SAILS shall be required
if, at or before the
19
<PAGE> 20
time when such amendment, alteration or repeal is to take effect or when the
authorization, creation, increase or issuance of any such prior ranking stock
or convertible security is to be made, or when such consolidation or merger is
to take effect, as the case may be, provision is made for the redemption of all
of the SAILS at the time outstanding.
20
<PAGE> 21
IN WITNESS WHEREOF, Advanta Corp. has caused this certificate
to be signed and attested this 15th day of August, 1995.
ADVANTA CORP.
By: /s/ DAVID D. WESSELINK
-----------------------------------
Name: David D. Wesselink
Title: Senior Vice President and
Chief Financial Officer
Attest:
/s/ GENE S. SCHNEYER
------------------------------------
Name: Gene S. Schneyer
Title: Vice President, Secretary and
General Counsel
21
<PAGE> 1
EXHIBIT 4.10
DEPOSIT AGREEMENT
among
ADVANTA CORP.
and
MELLON SECURITIES TRUST COMPANY
and
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
IN RESPECT OF THE
6 3/4% CONVERTIBLE CLASS B PREFERRED STOCK, SERIES 1995
(Stock Appreciation Income Linked Securities (SAILS)(SM*))
Dated as of August 15, 1995
*Application for Service Mark of CS First Boston, Inc. pending.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF PREFERRED STOCK,
EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
SECTION 2.1 Form and Transferability of Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Deposit of Preferred Stock, Execution and
Delivery of Receipts in Respect Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3 Redemption of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4 Transfer of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.5 Combination and Split-ups of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.6 Surrender of Receipts and Withdrawal of
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.7 Limitations on Execution and Delivery,
Transfer, Split-up, Combination, Surrender
and Exchange of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.8 Lost Receipts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.9 Cancellation and Destruction of Surrendered
Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.10 Optional Conversion of Preferred Stock into
Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.11 Mandatory Conversion of Preferred Stock into
Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.1 Filing Proofs, Certificates and Other
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.2 Payment of Taxes or Other Governmental Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.3 Representations and Warranties as to
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
THE PREFERRED STOCK, NOTICES
SECTION 4.1 Cash Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.2 Distributions Other Than Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.3 Subscription Rights, Preferences or Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.4 Notice of Dividends; Fixing of Record Date for
Holders of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4.5 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.6 Changes Affecting Preferred Stock and
Reclassifications, Recapitalizations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.7 Inspection of Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.8 List of Receipt Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V
THE DEPOSITARY AND THE COMPANY
SECTION 5.1 Maintenance of Offices, Agencies, Transfer Books
by the Depositary, the Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.2 Prevention of or Delay in Performance by the
Depositary, the Depositary's Agents or
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.3 Obligations of the Depositary, the Depositary's
Agents, and the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.4 Resignation and Removal of the Depositary;
Appointment of Successor Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.5 Corporate Notices and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.6 Deposit of Preferred Stock by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.7 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.8 Fees, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.2 Exclusive Benefits of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.3 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.5 Depositary's Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.6 Holders of Receipts Are Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
ii
<PAGE> 4
DEPOSIT AGREEMENT
This DEPOSIT AGREEMENT, dated as of August 15, 1995, is entered
into among ADVANTA CORP., a Delaware corporation (the "Company"), MELLON
SECURITIES TRUST COMPANY, as Depositary (including any successor, the
"Depositary"), and all holders from time to time of Depositary Receipts
executed and delivered hereunder.
WHEREAS, it is desired to provide, as hereinafter set forth in
this Deposit Agreement, for the deposit of up to 28,750 shares of 6 3/4%
Convertible Class B Preferred Stock, Series 1995(Stock Appreciation Income
Linked Securities (SAILS)), par value $0.01 per share (the "Preferred
Stock"), of the Company with the Depositary, as agent for the beneficial owners
of the Preferred Stock, for the purposes set forth in this Deposit Agreement
and for the execution and delivery hereunder of the Receipts (as defined below)
evidencing Depositary Shares (as defined below) in respect of the Preferred
Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of
the Depositary Receipt annexed as Exhibit A, with appropriate insertions,
modifications and omissions, as hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
All capitalized terms used but not defined herein shall have
the respective meanings assigned to such terms in the Certificate of
Designations (as defined below). The following definitions shall apply to the
respective terms (in the singular and plural forms of such terms) used in this
Agreement and the Depositary Receipts:
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the States of Delaware and New
York are authorized or obligated by law or executive order to close.
"Certificate of Designations" shall mean the Certificate of
Designations, Preferences, Rights and Limitations of the 6 3/4% Convertible
Class B Preferred Stock, Series 1995 (Stock Appreciation Income Linked
Securities (SAILS)), par value $0.01 per share, as filed with the Secretary
of State of the State of Delaware, establishing and setting forth the
<PAGE> 5
designations, rights, powers, qualifications, limitations and restrictions of
the Preferred Stock.
"Certificate of Incorporation" shall mean the Restated
Certificate of Incorporation, as amended from time to time, of the Company.
"Class B Common Stock" shall mean the Class B Common Stock,
par value $0.01 per share, of the Company.
"Company" shall mean Advanta Corp., a Delaware corporation,
and its successors.
"Deposit Agreement" shall mean this agreement, as the same may
be amended, modified or supplemented from time to time.
"Depositary" shall mean Mellon Securities Trust Company, as
Depositary hereunder, and any successor as Depositary hereunder.
"Depositary's Office" shall mean the office of the Depositary
in the City of New York, New York at which at any particular time its business
in respect of matters governed by this Deposit Agreement shall be administered,
which at the date of this Deposit Agreement is located at 120 Broadway, 13th
Floor, New York, New York 10274.
"Depositary Share" shall mean an interest in one-hundredth of
a share of the Preferred Stock deposited with the Depositary hereunder, as
evidenced by the Receipts executed and delivered hereunder, and the same
proportional interest in any and all other property received by the Depositary
in respect of such share of Preferred Stock and held under this Deposit
Agreement. Subject to the terms of this Deposit Agreement, each owner of a
Depositary Share is entitled, proportionately, to all the rights, preferences
and privileges of the Preferred Stock represented by such Depositary Share,
including the dividend, voting and liquidation rights contained in the
Certificate of Designations, and to the benefits of all obligations of the
Company under the Certificate of Designations.
"Depositary's Agent" shall mean an agent appointed by the
Depositary as provided, and for the purposes specified, in Section 7.5.
"Mandatory Conversion Date" shall have the meaning given in
Section 2.11.
"Preferred Stock" shall mean the 6 3/4% Convertible Class B
Preferred Stock, Series 1995 (Stock Appreciation Income Linked Securities
(SAILS)), par value $0.01 per share, of the Company. The shares of
Preferred Stock are
2
<PAGE> 6
sometimes referred to in the Certificate of Designations and herein as "Stock
Appreciation Income Linked Securities," or "SAILS".
"Receipt" or "Depositary Receipt" shall mean a Depositary
Receipt executed and delivered hereunder to evidence one or more Depositary
Shares, whether in definitive or temporary form.
"Record holder" as applied to a Receipt shall mean the person
in whose name a Receipt is registered on the books maintained by the Depositary
for such purpose.
"Registrar" shall mean any bank or trust company appointed to
register Receipts as herein provided.
"SAILS" shall mean the shares of Preferred Stock.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF PREFERRED STOCK,
EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
SECTION 2.1 Form and Transferability of Receipts. Definitive
Receipts shall be engraved or printed or lithographed with steel-engraved
borders and shall be substantially in the form set forth in Exhibit A annexed
to this Deposit Agreement, with appropriate insertions, modifications and
omissions, as hereinafter provided. Pending preparation of definitive
Receipts, the Depositary, upon the written order of the Company or any holder
of Preferred Stock, as the case may be, shall execute and deliver temporary
Receipts, delivered for deposit in compliance with Section 2.2, which are
printed, lithographed, typewritten, mimeographed or otherwise substantially of
the tenor of the definitive Receipts in lieu of which they are executed and
delivered and with such appropriate insertions, omissions, substitutions and
other variations as the persons executing such Receipts may determine, as
evidenced by their execution of such Receipts. If temporary Receipts are
executed and delivered, the Company and the Depositary will cause definitive
Receipts to be prepared without unreasonable delay. After the preparation of
definitive Receipts, the temporary Receipts shall be exchangeable for
definitive Receipts upon surrender of the temporary Receipts
3
<PAGE> 7
at an office described in the second to last paragraph of Section 2.2, without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Receipts, the Depositary shall execute and deliver in exchange
therefor definitive Receipts representing the same number of Depositary Shares
as represented by the surrendered temporary Receipt or Receipts. Such exchange
shall be made at the Company's expense and without any charge therefor. Until
so exchanged, the temporary Receipts shall in all respects be entitled to the
same benefits under this Agreement, and with respect to the Preferred Stock
deposited hereunder, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual
signature of a duly authorized signatory of the Depositary; provided, however,
that such signature may be a facsimile if a Registrar (other than the
Depositary) shall have countersigned the Receipts by the manual signature of a
duly authorized signatory of the Registrar. No Receipt shall be entitled to
any benefits under this Deposit Agreement or be valid or obligatory for any
purpose unless it shall have been executed as provided in the preceding
sentence. The Depositary shall record on its books each Receipt executed as
provided above and delivered as hereinafter provided.
Except as the Depositary may otherwise determine, Receipts
shall be in denominations of any number of whole Depositary Shares. All
Receipts shall be dated the date of their execution.
Receipts may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the
provisions of this Deposit Agreement as may be required by the Depositary or
required to comply with any applicable law or regulation or with the rules and
regulations of any securities exchange upon which the Preferred Stock or the
Depositary Shares may be listed to conform with any usage with respect thereto,
or to indicate any special limitations or restrictions to which any particular
receipts are subject by reason of the date of issuance of the Preferred Stock
or otherwise.
Ownership of any Receipt (and of the Depositary Shares
evidenced by such Receipt) that is properly endorsed or accompanied by a
properly executed instrument of transfer or endorsement, or other instrument
satisfactory to the Depositary, shall be transferable by delivery; provided,
however, that until a Receipt shall be transferred on the books of the
Depositary as provided in Section 2.4, the Depositary and the Company may,
notwithstanding any notice to the contrary, treat the record holder thereof at
such time as the absolute owner thereof for the purpose of determining the
person entitled to distribution of
4
<PAGE> 8
dividends or other distributions or to any notice provided for in this Deposit
Agreement and for all other purposes.
SECTION 2.2 Deposit of Preferred Stock, Execution and
Delivery of Receipts in Respect Thereof. Subject to the terms and conditions
of this Deposit Agreement, the Company or any holder of Preferred Stock may
deposit shares of Preferred Stock under this Deposit Agreement by delivery to
the Depositary of a certificate or certificates for the shares of Preferred
Stock to be deposited, properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement in form satisfactory to the Depositary,
together with (i) all such certifications as may be required by the Depositary
in accordance with the provisions of this Deposit Agreement and (ii) a written
order directing the Depositary to execute and deliver to or upon the written
order of the person or persons stated in such order a Receipt or Receipts for
the number of Depositary Shares representing such deposited Preferred Stock.
If required by the Depositary, Preferred Stock presented for
deposit at any time, whether or not the register of holders of Receipts is
closed, shall also be accompanied by an agreement or assignment, or other
instrument satisfactory to the Depositary, that will provide for the prompt
transfer to the Depositary or its nominee of any dividend or right to subscribe
for additional Preferred Stock or to receive other property that any person in
whose name the Preferred Stock is or has been registered may thereafter receive
upon or in respect of such deposited Preferred Stock, or in lieu thereof such
agreement of indemnity or other agreement as shall be satisfactory to the
Depositary.
Upon receipt by the Depositary of a certificate or
certificates for the shares of Preferred Stock to be deposited hereunder,
together with the other documents specified above, the Depositary shall, as
soon as transfer and registration can be accomplished, present such
certificates to the registrar and transfer agent of the Preferred Stock for
transfer and registration in the name of the Depositary or its nominee of the
shares of Preferred Stock being deposited. Deposited Preferred Stock shall be
held by the Depositary in an account to be established by the Depositary at the
Depositary's Office.
Upon receipt by the Depositary of a certificate or
certificates for Preferred Stock to be deposited hereunder, together with the
other documents specified above, the Depositary, subject to the terms and
conditions of this Deposit Agreement, shall execute and deliver to or upon the
order of the person or persons named in the written order delivered to the
Depositary referred to in the first paragraph of this Section 2.2 a Receipt or
Receipts for the number of whole Depositary Shares representing the Preferred
Stock so deposited and registered in
5
<PAGE> 9
such name or names as may be requested by such person or persons. The
Depositary shall execute and deliver such Receipt or Receipts at the
Depositary's Office, except that, at the request, risk and expense of any
person requesting such delivery, such delivery may be made at such other place
as may be designated by such person. In each case, delivery will be made only
upon payment by such person to the Depositary of all taxes and other
governmental charges and any fees payable in connection with such deposit and
the transfer of the deposited Preferred Stock.
The Company shall deliver to the Depositary from time to time
such quantities of Receipts as the Depositary may request to enable the
Depositary to perform its obligations under this Deposit Agreement.
SECTION 2.3 Redemption of Preferred Stock. Whenever the
Company shall elect to redeem shares of Preferred Stock in accordance with the
Certificate of Designations it shall (unless otherwise agreed in writing with
the Depositary) give the Depositary in its capacity as Depositary notice of the
date of such proposed redemption of the Preferred Stock, which notice shall (i)
be given not less than three (3) Business Days prior to the date the Depositary
is to mail notice of the redemption to the record holders of Receipts, in the
case of a redemption of all outstanding Depositary Shares, and not less than
ten (10) calendar days prior to the date the Depositary is to mail notice of
the redemption to the record holders of Receipts evidencing the Depositary
Shares to be redeemed, in the case of a partial redemption of outstanding
Depositary Shares, and (ii) be accompanied by a certificate from the Company
stating that such redemption of the Preferred Stock is in accordance with the
provisions of the Certificate of Designations. Such notice shall be in
addition to the notice required for redemption pursuant to the Certificate of
Designations. On the date of any such redemption of Preferred Stock, provided
that the Company shall then have deposited with the Depositary the shares of
Class B Common Stock as required pursuant to the Certificate of Designations to
be delivered in exchange for the Preferred Stock held by the Depositary to be
redeemed, the Depositary shall redeem (using such shares of Class B Common
Stock and any cash deposited with it) the number of Depositary Shares
representing such redeemed Preferred Stock. Subject to the penultimate
sentence of this Paragraph, the Depositary shall mail, first class postage
prepaid, notice of the redemption of Preferred Stock and the simultaneous
redemption of the Depositary Shares representing the Preferred Stock held by
the Depositary to be redeemed, not less than 15 and not more than 60 days prior
to the date fixed for redemption of such Preferred Stock and Depositary Shares
(the "Redemption Date"), to the record holders of the Receipts evidencing the
Depositary Shares to be so redeemed, at the addresses of such holders as they
appear on the records of the Depositary; but neither failure to mail any such
notice to
6
<PAGE> 10
one or more such holders nor any defect in any notice to one or more such
holders shall affect the sufficiency of the proceedings for redemption as to
other holders. Each such notice shall state: (i) the Redemption Date; (ii)
that all outstanding Depositary Shares are to be redeemed or, if less than all
the Depositary Shares held by any such holder are to be redeemed, the number of
such Depositary Shares held by such holder to be so redeemed; (iii) (A) the
number of shares of Class B Common Stock deliverable upon redemption of each
Depositary Share based on Section 3(b)(i)(A) of the Certificate of
Designations, and the Current Market Price used to calculate such number of
shares of Class B Common Stock, (B) the number of shares of Class B Common
Stock deliverable upon redemption of each Depositary Share based on Section
3(b)(i)(B) of the Certificate of Designations and (C) the higher of the numbers
of shares of Class B Common Stock specified in clauses (iii)(A) and (iii)(B);
(iv) the SAILS Call Price and the portion thereof applicable to each of the
Depositary Shares; (v) the SAILS Optional Conversion Rate (calculated in
accordance with section 3 of the Certificate of Designations) and the resulting
optional conversion rate applicable to the Depositary Shares, together with a
statement that all conversion rights with respect to Depositary Shares called
for redemption will terminate immediately prior to the close of business on the
date fixed for redemption; (vi) the place or places where Receipts evidencing
Depositary Shares are to be surrendered for redemption; and (vii) that
dividends in respect of the shares of Preferred Stock represented by the
Depositary Shares to be redeemed will cease to accumulate from and after such
Redemption Date. Any such notices shall be mailed in the same manner as
notices of redemption of the Preferred Stock are required to be mailed pursuant
to section 3 of the Certificate of Designations and published in the same
manner as notices of redemption of the Preferred Stock are required to be
published pursuant to said section, if so required. In case fewer than all the
outstanding Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed shall be selected by lot or pro rata (as nearly as may be) or by any
other equitable method determined by the Depositary to be consistent with the
method determined by the Board of Directors of the Company with respect to the
Preferred Stock.
Notice having been mailed and published by the Depositary as
aforesaid, from and after the Redemption Date (unless the Company shall have
failed to redeem the shares of Preferred Stock to be redeemed by it, as set
forth in the Company's notice provided for in the preceding paragraph), the
Depositary Shares called for redemption shall be deemed no longer to be
outstanding and all rights of the holders of Receipts evidencing such
Depositary Shares (except the right to receive the shares of Class B Common
Stock upon redemption and cash for any fractional share amount) shall, to the
extent of such Depositary Shares, cease and terminate. Upon surrender in
7
<PAGE> 11
accordance with said notice of the Receipts evidencing such Depositary Shares
(properly endorsed or assigned for transfer, if the Depositary shall so
require), such Depositary Shares shall be redeemed for shares of Class B Common
Stock and cash for any fractional share amount at a rate per Depositary Share
equal to one-hundredth of the number of shares of Class B Common Stock
(including fractional amounts) delivered upon redemption of a share of
Preferred Stock pursuant to the Certificate of Designations. The foregoing
shall be subject further to the terms and conditions of the Certificate of
Designations.
If fewer than all of the Depositary Shares evidenced by a
Receipt are called for redemption, the Depositary will deliver to the holder of
such Receipt upon its surrender to the Depositary, together with the shares of
Class B Common Stock for the Depositary Shares called for redemption, a new
Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption.
No fractional shares of Class B Common Stock shall be issuable
upon the redemption of Preferred Stock underlying the Depositary Shares. In
lieu of any fractional share otherwise issuable in respect of the aggregate
number of shares of Preferred Stock of any holder which are redeemed on any
redemption date, the Company shall cause to be delivered to such holder an
amount in cash for such fractional share as provided in the Certificate of
Designations.
Except with respect to a conversion of Depositary Shares which
may occur pursuant to section 3 of the Certificate of Designations, the
Depositary shall not be required (a) to execute and deliver, transfer or
exchange any Receipts for a period beginning at the opening of business 15 days
next preceding any selection of Depositary Shares and Preferred Stock to be
redeemed and ending at the close of business on the day of the mailing of
notice of redemption of Depositary Shares or (b) to transfer or exchange for
another Receipt any Receipt evidencing Depositary Shares called or being called
for redemption in whole or in part, except as provided in the third paragraph
of this Section 2.3.
SECTION 2.4 Transfer of Receipts. Subject to the terms and
conditions of this Deposit Agreement, the Depositary shall make transfers on
its books from time to time of Receipts upon any surrender thereof at the
Depositary's Office or such other office as the Depositary may designate for
such purpose, by the holder in person or by a duly authorized attorney,
properly endorsed or accompanied by a properly executed instrument of transfer
or endorsement, or other instrument satisfactory to the Depositary, together
with evidence of the payment of any transfer taxes as may be required by law.
Upon such surrender, the Depositary shall execute a new Receipt or Receipts and
deliver the same to or upon the order of the person or persons entitled
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thereto evidencing the same aggregate number of Depositary Shares evidenced by
the Receipt or Receipts surrendered.
SECTION 2.5 Combination and Split-ups of Receipts. Upon
surrender of a Receipt or Receipts at the Depositary's Office or such other
office as the Depositary may designate for the purpose of effecting a split-up
or combination of Receipts, subject to the terms and conditions of this Deposit
Agreement, the Depositary shall execute and deliver a new Receipt or Receipts
in the authorized denominations requested evidencing the same aggregate number
of Depositary Shares evidenced by the Receipt or Receipts surrendered;
provided, however, that the Depositary shall not execute and deliver any
Receipt evidencing a fractional Depositary Share.
SECTION 2.6 Surrender of Receipts and Withdrawal of Preferred
Stock. Any holder of a Receipt or Receipts may withdraw any or all of the
Preferred Stock (but only in whole shares of Preferred Stock) represented by
the Depositary Shares evidenced by such Receipts and all money and other
property, if any, represented by such Depositary Shares by surrendering such
Receipt or Receipts, properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement, or other instrument satisfactory to the
Depositary, at the Depositary's Office or such other office as the Depositary
may designate for such withdrawals. After such surrender, without unreasonable
delay, the Depositary shall deliver to such holder, or to the person or persons
designated by such holder as hereinafter provided, the whole number of shares
of Preferred Stock and other property, if any, represented by the Depositary
Shares evidenced by the Receipt or Receipts so surrendered for withdrawal. If
the Receipt or Receipts delivered by the holder to the Depositary in connection
with such withdrawal shall evidence a number of Depositary Shares in excess of
the number of whole Depositary Shares representing the whole number of shares
of Preferred Stock to be withdrawn, the Depositary shall at the same time, in
addition to such whole number of shares of Preferred Stock and such money and
other property, if any, to be withdrawn, deliver to such holder, or (subject to
Section 2.4) upon his order, a new Receipt or Receipts evidencing such excess
number of whole Depositary Shares. Delivery of the Preferred Stock and such
money and other property being withdrawn may be made by the delivery of such
certificates, documents of title, and other instruments as the Depositary may
deem appropriate, which, if required by the Depositary, shall be properly
endorsed or accompanied by proper instruments of transfer.
If the Preferred Stock and the money and other property being
withdrawn are to be delivered to a person or persons other than the record
holder of the Receipt or Receipts being surrendered for withdrawal of Preferred
Stock, such holder shall execute and deliver to the Depositary a written order
so directing the Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such holder for withdrawal of
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such shares of Preferred Stock be properly endorsed in blank or accompanied by
a properly executed instrument of transfer or endorsement in blank.
The Depositary shall deliver the Preferred Stock and the money
and other property, if any, represented by the Depositary Shares evidenced by
Receipts surrendered for withdrawal at the Depositary's Office, except that, at
the request, risk and expense of the holder surrendering such Receipt or
Receipts and for the account of the holder thereof, such delivery may be made
at such other place as may be designated by such holder.
SECTION 2.7 Limitations on Execution and Delivery, Transfer,
Split-up, Combination, Surrender and Exchange of Receipts. As a condition
precedent to the execution and delivery, transfer, split-up, combination,
surrender or exchange of any Receipt, the Depositary, the Depositary's Agent or
the Company may require any or all of the following: (i) payment to it of a sum
sufficient for the payment (or, in the event that the Depositary or the Company
shall have made such payment, the reimbursement to it) of any tax or other
governmental charge with respect thereto (including any such tax or charge with
respect to the Preferred Stock being deposited or withdrawn with respect to the
Class B Common Stock, or other securities or property of the Company being
issued upon conversion or redemption); (ii) the production of proof
satisfactory to it as to the identity and genuineness of any signature; and
(iii) compliance with such regulations, if any, as the Depositary or the
Company may establish not inconsistent with the provisions of the Deposit
Agreement.
The deposit of Preferred Stock may be refused, the delivery of
Receipts against Preferred Stock may be suspended, the transfer of Receipts may
be refused, and the transfer, split-up, combination, surrender or exchange of
outstanding Receipts may be suspended (i) during any period when the register
of holders of Receipts is closed, (ii) if any such action is deemed necessary
or advisable by the Depositary, any of the Depositary's Agents or the Company
at any time or from time to time because of any requirement of law or of any
government or governmental body or commission, or under any provision of this
Deposit Agreement, or (iii) except for the transfer of Receipts, with the
approval of the Company, for any other reason.
SECTION 2.8 Lost Receipts, etc. In case any Receipt shall be
mutilated or destroyed or lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt or in lieu of and in substitution for
such destroyed, lost or stolen Receipt; provided, however, that the holder
thereof provides the Depositary with (i) evidence satisfactory to the
Depositary of such destruction, loss or theft of such Receipt, of the
authenticity thereof and of his ownership thereof, (ii)
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reasonable indemnification satisfactory to the Depositary and (iii) payment of
any expense (including fees, charges and expenses of the Depositary) in
connection with such execution and delivery.
SECTION 2.9 Cancellation and Destruction of Surrendered
Receipts. All Receipts surrendered to the Depositary or any Depositary's Agent
shall be cancelled by the Depositary. Except as prohibited by applicable law
or regulation, the Depositary is authorized to destroy such Receipts so
cancelled.
SECTION 2.10 Optional Conversion of Preferred Stock into
Class B Common Stock. Receipts may be surrendered with written instructions to
the Depositary to instruct the Company to cause the conversion of any specified
number of shares, or fractions of shares, of Preferred Stock represented by
whole Depositary Shares evidenced by such Receipts into whole shares of Class B
Common Stock, and cash for any fractional share of Class B Common Stock, at the
conversion price then in effect for the Preferred Stock pursuant to the
Certificate of Designations as such conversion price may be adjusted by the
Company from time to time as provided in the Certificate of Designations.
Subject to the terms and conditions of this Deposit Agreement and the
Certificate of Designations, a holder of a Receipt or Receipts evidencing
Depositary Shares representing whole or fractional shares of Preferred Stock
may surrender such Receipt or Receipts at the Depositary's Office or at such
office or to such Depositary's Agent, as the Depositary may designate for such
purpose, together with a notice of conversion duly completed and executed,
thereby directing the Depositary to instruct the Company to cause the
conversion of the number of shares, or fractions of shares, of underlying
Preferred Stock specified in such notice of conversion into shares of Class B
Common Stock, and an assignment of such Receipt or Receipts to the Company or
in blank, duly completed and executed. To the extent that a holder delivers to
the Depositary for conversion a Receipt or Receipts which in the aggregate are
convertible into less than one whole share of Class B Common Stock, the holder
shall receive payment in cash in lieu of such fractional share of Class B
Common Stock otherwise issuable. If more than one Receipt shall be delivered
for conversion at one time by the same holder, the number of whole shares of
Class B Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of Depositary Shares represented by the Receipts
so delivered.
Upon receipt by the Depositary of a Receipt or Receipts,
together with notice of conversion, duly completed and executed, directing the
Depositary to instruct the Company to cause the conversion of a specified
number of shares of Preferred Stock, and an assignment of such Receipt or
Receipts to the Company or in blank, duly completed and executed, the
Depositary shall instruct the Company (i) to cause the conversion of the number
of shares, or fractions of shares, of Preferred Stock
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represented by the Depositary Shares evidenced by the Receipts so surrendered
for conversion as specified in the written notice to the Depositary and (ii) to
cause the delivery to the holders of such Receipts of a certificate or
certificates evidencing the number of whole shares of Class B Common Stock and
the amount of money, if any, to be delivered to the holders of Receipts
surrendered for conversion in lieu of fractional shares of Class B Common Stock
otherwise issuable. The Company shall as promptly as practicable after receipt
thereof cause the delivery of (i) a certificate or certificates evidencing the
number of whole shares of Class B Common Stock into which the Preferred Stock
represented by the Depositary Shares evidenced by such Receipt or Receipts has
been converted, and (ii) any money or other property to which the holder is
entitled by reason of such conversion. Upon such conversion, the Depositary
(i) shall deliver to the holder a Receipt evidencing the number of Depositary
Shares, if any, that equals that excess of the number of Depositary Shares
evidenced by the surrendered Receipt over the number of Depositary Shares
evidenced by such Receipt that has been so converted, (ii) shall cancel the
Depositary Shares evidenced by Receipts surrendered for conversion and (iii)
shall deliver to the Company or its transfer agent for the Preferred Stock for
cancellation the shares of Preferred Stock represented by the Depositary Shares
evidenced by the Receipts so surrendered and so converted. Upon the delivery
of the shares of Preferred Stock to be cancelled due to such conversion by the
Depositary to the Company, the Company shall deliver to the Depositary a
certificate or certificates evidencing the number of shares, or fractions of
shares, of Preferred Stock, if any, that equals the excess of the number of
shares of Preferred Stock evidenced by the surrendered certificate over the
number of shares of Preferred Stock evidenced by that certificate that has been
so converted.
If Preferred Stock shall be called by the Company for
redemption, the Depositary Shares representing such Preferred Stock may be
converted into Class B Common Stock as provided in this Deposit Agreement
until, but not after, the close of business on the Redemption Date unless the
Company shall fail to deposit with the Depositary the shares of Class B Common
Stock and cash for any fractional share amounts required to redeem the
Preferred Stock held by the Depositary, in which case the Depositary Shares
representing such Preferred Stock may continue to be converted into Class B
Common Stock until, but not after, the close of business on the date on which
the Company deposits with the Depositary such shares of Class B Common Stock
and cash for any fractional share amounts as are required by the Certificate of
Designations to make full payment of the amounts payable upon such redemption.
Upon receipt by the Depositary of a Receipt or Receipts, together with a
properly completed and executed notice of conversion, representing any
Preferred Stock called for redemption, the shares of Preferred Stock held by
the Depositary represented by such Depositary Shares for which conversion is
requested shall be deemed to have been received by
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the Company for conversion as of immediately prior to the close of business on
the date of such receipt by the Depositary.
The record holder of Depositary Shares on any dividend payment
record date established by the Depositary pursuant to Section 4.4 shall be
entitled to receive the dividend payable with respect to such Depositary Shares
on the corresponding dividend payment date notwithstanding the conversion
subsequent to such record date and before the corresponding dividend payment
date of the shares of Preferred Stock to which such Depositary Shares relate.
Upon the conversion of any share of Preferred Stock for which
a request for conversion has been made by the holder of Depositary Shares
representing such share, all dividends in respect of such Depositary Shares
shall cease to accrue, such Depositary Shares shall be deemed no longer
outstanding, all rights of the holder of the Receipt with respect to such
Depositary Shares (except the right to receive the Class B Common Stock, any
cash payable with respect to any fractional shares of Class B Common Stock as
provided herein and any cash payable on account of accrued dividends as
provided herein and any Receipts evidencing Depositary Shares not so converted)
shall terminate, and the Receipt evidencing such Depositary Shares shall be
cancelled in accordance with Section 2.9 hereof.
No fractional shares of Class B Common Stock shall be issuable
upon conversion of Preferred Stock underlying the Depositary Shares. If any
holder of Receipts surrendered with instructions to the Depositary for
conversion of the underlying Preferred Stock would be entitled to a fractional
share of Class B Common Stock upon such conversion, the Company shall cause to
be delivered to such holder an amount in cash for such fractional share as
provided in the Certificate of Designations.
SECTION 2.11 Mandatory Conversion of Preferred Stock into
Class B Common Stock. With respect to any Preferred Stock on deposit with the
Depositary as to which the Company has not exercised its right to redeem and
the record holder has not exercised its right of optional conversion pursuant
to the Certificate of Designations, the Depositary shall mail, first class
postage prepaid, notice of the mandatory conversion of Preferred Stock and the
simultaneous mandatory conversion of the Depositary Shares representing the
Preferred Stock to be automatically converted, not less than 5 and not more
than 15 days prior to the date fixed for mandatory conversion of such Preferred
Stock and Depositary Shares (the "Mandatory Conversion Date"), to all record
holders of Receipts evidencing Depositary Shares who are of record on the date
that is two Business Days prior to the date of mailing, at the addresses of
such holders as they appear on the records of the Depositary; but neither
failure to mail any such notice to one or more such holders nor any defect in
any notice to one or more such holders shall affect the sufficiency of the
proceedings for mandatory conversion as to any
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record holder (whether or not such failure or defect affects such record
holder). Each such notice shall state: (i) the Mandatory Conversion Date; (ii)
that all outstanding Depositary Shares on the Mandatory Conversion Date will be
automatically converted pursuant to the Certificate of Designations and this
Agreement; (iii) the SAILS Common Equivalent Rate (determined in accordance
with Section 3 of the Certificate of Designations) and the resulting common
equivalent rate applicable to the Depositary Shares; (iv) the place or places
where Receipts evidencing Depositary Shares are to be surrendered for payment
of the mandatory conversion price; and (v) that dividends in respect of the
shares of Preferred Stock represented by the Depositary Shares to be
automatically converted will cease to accumulate from and after the Mandatory
Conversion Date.
On the Mandatory Conversion Date, all then outstanding shares
of Preferred Stock and the Depositary Shares representing such shares of
Preferred Stock shall automatically convert into shares of Class B Common
Stock, cash for any fractional share amounts and the right to receive amounts
in cash equal to all accrued and unpaid dividends on such shares of Preferred
Stock to but not including the Mandatory Conversion Date (other than previously
declared dividends payable to a holder of record as of a prior date), all as
provided in and subject to Section 3 of the Certificate of Designations.
From and after the Mandatory Conversion Date, the Depositary
Shares representing the shares of Preferred Stock automatically converted shall
be deemed no longer to be outstanding and all rights of the record holders of
Receipts evidencing such Depositary Shares (except the right to receive the
shares of Class B Common Stock, any cash for accrued and unpaid dividends
(other than previously declared dividends payable to a holder of record as of a
prior date) and any cash for fractional share amounts deliverable or payable
upon mandatory conversion or in connection therewith) shall, to the extent of
such Depositary Shares, cease and terminate. Upon surrender, in accordance
with said notice, of the Receipts evidencing such Depositary Shares (properly
endorsed or assigned for transfer, if the Depositary shall so require), such
Depositary Shares shall be exchanged for shares of Class B Common Stock and
cash for any fractional share amount (and the right to receive cash for any
accrued and unpaid dividends payable in connection therewith) at a rate per
Depositary Share equal to one hundredth of the number (including fractional
amounts) of shares of Class B Common Stock (and one-hundredth of the amount of
cash paid in respect of accrued and unpaid dividends) exchanged for each share
of Preferred Stock pursuant to the Certificate of Designations. The foregoing
shall be subject further to the terms and conditions of the Certificate of
Designations.
On or prior to the Mandatory Conversion Date, the Company
shall deposit with the Depositary certificates for the shares of Class B Common
Stock and the cash for any fractional
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share amounts into which the shares of Preferred Stock held by the Depositary
shall automatically convert on the Mandatory Conversion Date, plus, subject to
the Certificate of Designations, an amount in cash equal to all accrued and
unpaid dividends on such shares of Preferred Stock (other than previously
declared dividends payable to a holder of record as of a prior date) to and
including the Mandatory Conversion Date. Using such shares of Class B Common
Stock and cash, the Depositary shall deliver certificates for the appropriate
number of shares of Class B Common Stock and the appropriate amount of cash,
without interest, to record holders who properly deliver their Receipts to the
Depositary.
No fractional shares of Class B Common Stock shall be issuable
upon mandatory conversion of Preferred Stock underlying the Depositary Shares.
If any holder of Receipts surrendered to the Depositary for mandatory
conversion of the underlying Preferred Stock shall be entitled to a fractional
share of Class B Common Stock upon such mandatory conversion, the Company shall
cause to be delivered to such holder an amount in cash for such fractional
share as provided in the Certificate of Designations.
ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.1 Filing Proofs, Certificates and Other
Information. Any person presenting Preferred Stock for deposit or any holder
of a Receipt may be required from time to time to file such proof of residence
or other information, to execute such certificates and to make such
representations and warranties as the Depositary or the Company may reasonably
deem necessary or proper. The Depositary or the Company, as the case may be,
may withhold or delay the delivery of any Receipt, the transfer, redemption,
conversion, or exchange of any Receipt, the withdrawal of the Preferred Stock
or money or other property, if any, represented by the Depositary Shares
evidenced by any Receipt or the distribution of any dividend or other
distribution until such proof or other information is filed, such certificates
are executed or such representations and warranties are made.
SECTION 3.2 Payment of Taxes or Other Governmental Changes.
If any tax or other governmental charge shall become payable by or on behalf of
the Depositary with respect to any Receipt, the Depositary Shares evidenced by
such Receipt, the Preferred Stock (or fractional interest therein) represented
by such Depositary Shares or any transaction referred to in Section 4.6, such
tax (including transfer, issuance or acquisition taxes, if any) or governmental
charge shall be payable by the holder of such Receipt. Until such payment is
made, transfer, redemption, conversion, or exchange of any Receipt or any
withdrawal of the
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Preferred Stock or money or other property, if any, represented by the
Depositary Shares evidenced by such Receipt may be refused, any dividend or
other distribution with respect to such Receipt or the Preferred Stock
represented by the Depositary Shares evidenced by such receipt may be withheld
and any part or all of the Preferred Stock or other property represented by the
Depositary Shares evidenced by such Receipt may be sold for the account of the
holder thereof (after attempting by reasonable means to notify such holder
prior to such sale). Any dividend or other distribution so withheld and the
proceeds of any such sale may be applied to payment of any such tax or other
governmental charge, the holder of such Receipt remaining liable for any
deficiency. The Depositary shall act as the withholding agent for any
payments, distributions, and exchanges made with respect to the Depositary
Shares and Receipts, and the Preferred Stock, Class B Common Stock or other
securities or assets represented thereby (collectively, the "Securities"). The
Depositary shall be responsible with respect to the Securities for the timely
(i) collection and deposit of any required withholding or backup withholding
tax, and (ii) filing of any information returns or other documents with federal
(and other applicable) taxing authorities. In the event the Depositary is
required to pay any such amounts, the Company shall reimburse the Depositary
for payment thereof upon the request of the Depositary and the Depositary
shall, upon the Company's request and as instructed by the Company, pursue its
rights against such holder at the Company's expense.
SECTION 3.3 Representations and Warranties as to Preferred
Stock. Each person depositing Preferred Stock under this Deposit Agreement
shall be deemed thereby to represent and warrant that such Preferred Stock and
each certificate therefor are valid and that the person making such deposit is
duly authorized to do so. Such representations and warranties shall survive
the deposit of the Preferred Stock and the execution and delivery of Receipts.
ARTICLE IV
THE PREFERRED STOCK, NOTICES
SECTION 4.1 Cash Distributions. Whenever the Depositary
shall receive any cash dividend or other cash distribution on the Preferred
Stock, the Depositary shall, subject to Section 3.2, distribute to record
holders of Receipts on the record date fixed pursuant to Section 4.4 such
portions of such sum as are, as nearly as practicable, proportionate to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders; provided, however, that in case the Company or the Depositary shall be
required to withhold from any cash dividend or other cash distribution in
respect of the Preferred Stock an amount on account of taxes or as otherwise
required by law, regulation or court order, the amount made available for
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distribution or distributed in respect of Depositary Shares shall be reduced
accordingly. The Depositary shall distribute or make available for
distribution, as the case may be, only such amount, however, as can be
distributed without attributing to any owner of Depositary Shares a fraction of
one cent and any balance not so distributable shall be held by the Depositary
(without liability for interest thereon) and shall be added to and be treated
as part of the next sum received by the Depositary for distribution to record
holders of Receipts then outstanding.
SECTION 4.2 Distributions Other Than Cash. Whenever the
Depositary shall receive any distribution other than cash on the Preferred
Stock, the Depositary shall, subject to Section 3.2, distribute to record
holders of Receipts on the record date fixed pursuant to Section 4.4 such
portions of the securities or property received by it as are, as nearly as
practicable, proportionate to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders, in any manner that the
Depositary and the Company may deem equitable and practicable for accomplishing
such distribution. If, in the opinion of the Company after consultation with
the Depositary, such distribution cannot be made proportionately among such
record holders, or if for any other reason (including any requirement that the
Company or the Depositary withhold an amount on account of taxes or as
otherwise required by law, regulation or court order) the Depositary deems,
after consultation with the Company, such distribution not to be feasible, the
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including the sale (at public or private sale) of the securities or property
thus received, or any part thereof, at such place or places and upon such terms
as it may deem proper. The net proceeds of any such sale shall, subject to
Section 3.2, be distributed or made available for distribution, as the case may
be, by the Depositary to record holders of Receipts as provided by Section 4.1
in the case of a distribution received in cash.
SECTION 4.3 Subscription Rights, Preferences or Privileges.
If the Company shall at any time offer or cause to be offered to the persons in
whose names Preferred Stock is registered on the books of the Company any
rights, preferences or privileges to subscribe for or to purchase any
securities or any rights, preferences or privileges of any other nature, such
rights, preferences or privileges shall in each such instance be made available
by the Depositary to the record holders of Receipts if the Company so directs
in such manner as the Company shall instruct (including by the execution and
delivery to such record holders of warrants representing such rights,
preferences or privileges); provided, however, that (a) if at the time of issue
or offer of any such rights, preferences or privileges the Company determines
that it is not lawful or feasible to make such rights, preferences or
privileges available to some or all holders of Receipts (by the execution and
delivery of warrants or
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otherwise) or (b) if and to the extent instructed by holders of Receipts who do
not desire to exercise such rights, preferences or privileges, the Depositary
shall then, if so instructed by the Company, and if applicable laws and the
terms of such rights, preferences or privileges so permit, sell such rights,
preferences or privileges of such holders at public or private sale, at such
place or places and upon such terms as it may deem proper, the net proceeds of
any such sale shall, subject to Section 3.2, be distributed by the Depositary
to the record holders of Receipts entitled thereto in accordance with the
withholding and fractional amount provisions of Section 4.1.
If registration under the Securities Act of the securities to
which any rights, preferences or privileges relate is required in order for
holders of Receipts to be offered or sold such securities, the Company shall
promptly file a registration statement pursuant to the Securities Act with
respect to such securities and use its best efforts and take all steps
available to it to cause such registration statement to become effective
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until notified by the Company in writing that such
registration statement has become effective or that the offering and sale of
such securities to such holders are exempt from registration under the
provisions of the Securities Act.
If any other action under the law of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to
holders of Receipts, the Company agrees with the Depositary that the Company
will use its best efforts to take such action or obtain such authorization,
consent or permit sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges.
SECTION 4.4 Notice of Dividends; Fixing of Record Date for
Holders of Receipts. Whenever any cash dividend or other cash distribution
shall become payable, or any distribution other than cash shall be made, or any
rights, preferences or privileges shall at any time be offered, with respect to
the Preferred Stock, or whenever the Depositary shall receive notice of (i) any
meeting at which holders of Preferred Stock are entitled to vote or of which
holders of Preferred Stock are entitled to notice or (ii) any election on the
part of the Company to call for redemption any shares of Preferred Stock, the
Depositary shall in each such instance fix a record date (which shall be the
same date as the record date fixed by the Company with respect to the Preferred
Stock) for the determination of the holders of Receipts (i) who shall be
entitled to receive such dividend, distribution,
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rights, preferences or privileges or the net proceeds of the sale thereof, or
to give instructions for the exercise of voting rights at any such meeting or
to receive notice of such meeting or (ii) whose Depositary Shares are to be so
redeemed.
SECTION 4.5 Voting Rights. Upon issuance of notice of any
meeting at which the holders of Preferred Stock are entitled to vote, the
Company shall direct the Depositary, as soon as practicable thereafter, to mail
to the record holders of Receipts a notice, which shall be provided by the
Company and which shall contain (i) such information as is contained in such
notice of meeting, (ii) a statement that the holders of Receipts at the close
of business on a specified record date fixed pursuant to Section 4.4 will be
entitled, subject to any applicable provision of law, the Certificate of
Incorporation or the Certificate of Designations, to instruct the Depositary as
to the exercise of the voting rights pertaining to the amount of Preferred
Stock represented by their respective Depositary Shares and (iii) a brief
statement as to the manner in which such instructions may be given. Upon the
written request of a holder of a Receipt on such record date, the Depositary
shall endeavor insofar as practicable to vote or cause to be voted the amount
of Preferred Stock represented by the Depositary Shares evidenced by such
Receipt in accordance with the instructions set forth in such request. The
Company hereby agrees to take all reasonable action that may be deemed
necessary by the Depositary in order to enable the Depositary to vote such
Preferred Stock or cause such Preferred Stock to be voted. In the absence of
specific instructions from the holder of a Receipt, the Depositary will abstain
from voting to the extent of the Preferred Stock represented by the Depositary
Shares evidenced by such Receipt. After aggregating all voting Depositary
Shares, the Depositary will disregard for voting purposes any fractional share
of Preferred Stock remaining.
SECTION 4.6 Changes Affecting Preferred Stock and
Reclassifications, Recapitalizations, etc. Upon any split-up, consolidation or
any other reclassification of Preferred Stock, or upon any recapitalization,
reorganization, merger, amalgamation or consolidation affecting the Company or
to which it is a party or sale of all or substantially all of the Company's
assets, the Depositary shall, upon the instructions of the Company, treat any
shares of stock or other securities or property (including cash) that shall be
received by the Depositary in exchange for or upon conversion of or in respect
of the Preferred Stock as new deposited property under this Deposit Agreement,
and Receipts then outstanding shall thenceforth represent the proportionate
interests of holders thereof in the new deposited shares of stock, other
securities or other property so received in exchange for or upon conversion or
in respect of such Preferred Stock. In any such case the Depositary may, in
its discretion, with the approval of the Company, execute and deliver
additional Receipts, or may call for the surrender of all outstanding Receipts
to be exchanged for new Receipts
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<PAGE> 23
specifically describing such new deposited shares, other securities or other
property.
SECTION 4.7 Inspection of Reports. The Depositary shall make
available for inspection by holders of Receipts at the Depositary's Office and
at such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that
are both received by the Depositary as the holder of Preferred Stock and made
generally available to the holders of Preferred Stock by the Company.
SECTION 4.8 List of Receipt Holders. Promptly upon request
from time to time by the Company and at the Company's expense, the Depositary
shall furnish to it a list, as of a recent date, of the names, addresses and
holdings of Depositary Shares of all persons in whose names Receipts are
registered on the books of the Depositary.
ARTICLE V
THE DEPOSITARY AND THE COMPANY
SECTION 5.1 Maintenance of Offices, Agencies, Transfer Books
by the Depositary, the Registrar. Upon execution of this Deposit Agreement in
accordance with its terms, the Depositary shall maintain at the Depositary's
Office and at the offices of the Depositary's Agents, if any, facilities for
the execution and delivery, transfer, surrender and exchange, split-up,
combination and redemption of Receipts and deposit and withdrawal of Preferred
Stock, all in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for
the registration and transfer of Receipts, which books during normal business
hours shall be open for inspection by the record holders of Receipts, as
provided by applicable law, and by the Company. The Depositary shall consult
with the Company upon receipt of any request for inspection. The Depositary
may close such books, at any time or from time to time, when deemed expedient
by it in connection with the performance of its duties hereunder.
If the Receipts or the Depositary Shares evidenced thereby or
the Preferred Stock represented by such Depositary Shares shall be listed on
the Nasdaq National Market, the Depositary may, with the approval of the
Company, appoint a Registrar for registry of such Receipts or Depositary Shares
in accordance with the requirements of the Nasdaq National Market. Such
Registrar (which may be the Depositary if so permitted by the requirements of
the Nasdaq National Market) may be removed and a substitute registrar appointed
by the Depositary upon the request or with the approval of the Company. If the
Receipts,
20
<PAGE> 24
such Depositary Shares or such Preferred Stock are listed on one or more other
stock exchanges, the Company will, with the assistance of the Depositary,
arrange such facilities for the delivery, transfer, surrender and exchange of
such Receipts, such Depositary Shares or Preferred Stock as may be required by
law or applicable stock exchange regulations.
SECTION 5.2 Prevention of or Delay in Performance by the
Depositary, the Depositary's Agents or the Company. Neither the Depositary nor
any Depositary's Agent nor the Company shall incur any liability to any holder
of any Receipt if, by reason of any provision of any present or future law or
regulation thereunder of the United States of America or of any other
governmental authority or, in the case of the Depositary or any Depositary's
Agent, by reason of any provision, present or future, of the Certificate of
Incorporation or the Certificate of Designations or, in the case of the
Company, the Depositary or any Depositary's Agent, by reason of any act of God
or war or other circumstance beyond the control of the relevant party, the
Depositary, any Depositary's Agent or the Company shall be prevented or
forbidden from doing or performing any act or thing that the terms of this
Deposit Agreement provide shall be done or performed; nor shall the Depositary,
any Depositary's Agent or the Company incur any liability to any holder of a
Receipt by reason of any nonperformance or delay, caused as aforesaid, in the
performance of any act or thing that the terms of this Deposit Agreement
provide shall or may be done or performed or by reason of any exercise of, or
failure to exercise, any discretion provided for in this Deposit Agreement.
SECTION 5.3 Obligations of the Depositary, the Depositary's
Agents, and the Company. Neither the Depositary nor any Depositary's Agent nor
the Company assumes any obligation or shall be subject to any liability under
this Deposit Agreement or any Receipt to holders of Receipts other than that
each of them agrees to use good faith in the performance of such duties as are
specifically set forth in this Deposit Agreement.
Neither the Depositary nor any Depositary's Agent nor the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to the Preferred Stock,
Depositary Shares, Receipts or Class B Common Stock that in its opinion may
involve it in expense or liability, unless indemnity satisfactory to it against
all expense and liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the
Company shall be liable for any action or any failure to act by it in reliance
upon the advice of, or information from, legal counsel, accountants, any person
presenting Preferred Stock for deposit, any holder of a Receipt or any other
person believed by it in good faith to be competent to give such advice or
information. The Depositary, any Depositary's Agent and the Company may each
rely and shall each be protected in acting upon
21
<PAGE> 25
any written notice, request, direction or other document believed by it to be
genuine and to have been signed or presented by the proper party or parties.
The Depositary, its parent, affiliates, subsidiaries,
officers, directors or employees and any Depositary's Agent may own, buy, sell
or deal in any class of securities of the Company and its affiliates and
Receipts or Depositary Shares, or become pecuniarily interested in any
transaction in which the Company or its officers may be interested, or contract
with or lend money to the Company or any of its affiliates or officers, or
otherwise act fully or as freely as if it were not the Depositary or the
Depositary's Agent hereunder. The Depositary may also act as transfer agent or
registrar of any of the securities of the Company and its affiliates.
It is intended that neither the Depositary nor any
Depositary's Agent shall be deemed to be an "issuer" of securities under the
federal securities laws or applicable state securities laws, it being expressly
understood and agreed that the Depositary and any Depositary's Agent are acting
only in a ministerial capacity as Depositary for the Preferred Stock; provided,
however, that the Depositary agrees to comply with all information reporting
and withholding requirements applicable to it under law or this Deposit
Agreement in its capacity as Depositary.
Neither the Depositary (or its officers, directors, employees
or agents) nor any Depositary's Agent makes any representation or has any
responsibility as to the validity of the Registration Statement pursuant to
which the Depositary Shares, the Preferred Stock and the Class B Common Stock
are registered under the Securities Act, the Preferred Stock, the Depositary
Shares, the Receipts (except for its countersignatures thereon) or any
instruments referred to therein or herein (other than an instrument executed by
the Depositary or Depositary's Agent), or as to the correctness of any
statement made therein or herein or for the failure of the Company to comply
with any covenants contained in this Agreement or the Receipts; provided,
however, that the Depositary is responsible for its representations in this
Deposit Agreement.
The Depositary assumes no responsibility for the correctness
of the description that appears in the Receipts, which can be taken as a
statement of the Company summarizing certain provisions of this Deposit
Agreement. Notwithstanding any other provision herein or in the Receipts, the
Depositary makes no warranties or representations as to the validity,
genuineness or sufficiency of any Preferred Stock at any time deposited with
the Depositary hereunder or of the Depositary Shares, as to the validity or
sufficiency of this Deposit Agreement, as to the value of the Depositary
Shares, or as to any right, title or interest of the record holders of Receipts
in and to the Depositary Shares, except that the Depositary hereby
22
<PAGE> 26
represents and warrants as follows: (i) the Depositary has been duly organized
and is validly existing and in good standing under the laws of the United
States with full power, authority and legal right under such laws to execute,
deliver and carry out the terms of this Deposit Agreement; (ii) this Deposit
Agreement has been duly authorized, executed and delivered by the Depositary;
and (iii) this Deposit Agreement constitutes a valid and binding obligation of
the Depositary, enforceable against the Depositary in accordance with its
terms, except as enforcement hereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting enforcement of creditors rights
generally and except as enforcement hereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law). The Depositary shall not be accountable for the use or
application by the Company of the Depositary Shares or the Receipts or the
proceeds of the sale thereof.
SECTION 5.4 Resignation and Removal of the Depositary;
Appointment of Successor Depositary. The Depositary may at any time resign as
Depositary hereunder by notice of its election to do so delivered to the
Company, such resignation to take effect upon the appointment of a successor
depositary and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by
notice of such removal delivered to the Depositary, such removal to take effect
upon the appointment of a successor depositary and its acceptance of such
appointment as hereinafter provided.
In case at any time the Depositary acting hereunder shall
resign or be removed, the Company shall, within 45 days after the delivery of
the notice of resignation or removal, as the case may be, appoint a successor
depositary, which shall be a bank or trust company, or an affiliate of a bank
or trust company having its principal office in the United States of America
and having a combined capital and surplus of at least $50,000,000. If a
successor depositary shall not have been appointed in 45 days, the resigning
Depositary may petition a court of competent jurisdiction to appoint a
successor depositary. Every successor depositary shall execute and deliver to
its predecessor and to the Company an instrument in writing accepting its
appointment hereunder, and thereupon such successor depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor and for all purposes shall be the
Depositary under this Deposit Agreement, and such predecessor, upon payment of
all sums due it and on the written request of the Company, shall promptly
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all rights, title and interest in the Preferred Stock and any moneys or
property held hereunder to such successor and shall deliver to such successor a
list of the
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<PAGE> 27
record holders of all outstanding Receipts and such other records respecting
the Receipts, the Depositary Shares and the Preferred Stock as the successor
shall require in order to perform its duties. Any successor depositary shall
promptly mail notice of its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be
merged, consolidated or converted shall be the successor of such Depositary
without the execution or filing of any document or any further act. Such
successor depositary may execute the Receipts either in the name of the
predecessor depositary or in the name of the successor depositary.
SECTION 5.5 Corporate Notices and Reports. The Company
agrees that it will deliver to the Depositary, and the Depositary agrees that
it will, promptly after receipt thereof, and as directed by the Company
transmit to the record holders of Receipts, in each case at the most recent
address recorded in the Depositary's books, copies of all notices and reports
(including financial statements) required by law, by the rules of any national
securities exchange upon which the Preferred Stock, the Depositary Shares or
the Receipts are listed, or by the Certificate of Incorporation and the
Certificate of Designations to be furnished by the Company to holders of
Preferred Stock. Such transmission will be at the Company's expense and the
Company will provide the Depositary with such number of copies of such
documents as the Depositary may reasonably request. In addition, the
Depositary will transmit to the record holders of Receipts at the Company's
expense such other documents as may be requested by the Company.
SECTION 5.6 Deposit of Preferred Stock by the Company.
Neither the Company nor any company controlled by the Company will at any time
deposit any Preferred Stock if such Preferred Stock is required to be
registered under the provisions of the Securities Act and no registration
statement is at such time in effect as to such Preferred Stock.
SECTION 5.7 Indemnification by the Company. The Company
shall indemnify the Depositary, any Depositary's Agent and any Registrar for,
and hold each of them harmless against, any loss, liability or expense incurred
without gross negligence or intentional misconduct on the part of any such
person, arising out of or in connection with this Deposit Agreement and the
Receipts, including the costs and expenses of any of its duties under this
Deposit Agreement or the Receipts. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Depositary, any Depositary's Agent or
Registrar be liable for special, indirect or consequential loss or damage of
any kind whatsoever (including but not limited to lost profits) even if the
Depositary, any Depositary's Agent or Registrar has been advised of the
likelihood of such loss or damage and regardless of the form of the action.
The obligations of the Company to the
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<PAGE> 28
Depositary, any Depositary's Agent or Registrar shall survive the termination
of this Agreement.
SECTION 5.8 Fees, Charges and Expenses. No fees, charges and
expenses of the Depositary or any Depositary's Agent hereunder or of any
Registrar shall be payable by any person other than the Company, except for any
taxes and other governmental charges and except as provided in this Deposit
Agreement. If the Depositary incurs fees, charges or expenses for which it is
not otherwise liable hereunder at the election of a holder of a Receipt or
other person, such holder or other person will be liable for such fees, charges
and expenses. All other fees, charges and expenses of the Depositary and any
Depositary's Agent hereunder and of any Registrar (including, in each case,
reasonable fees and expenses of counsel) incident to the performance of their
respective obligations hereunder will be paid from time to time upon
consultation and agreement between the Depositary and the Company as to the
amount and nature of such fees, charges and expenses.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 Amendment. The form of the Receipts and any
provisions of this Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary in any respect that
they may deem necessary or desirable. Any amendment that shall impose any
fees, taxes or charges payable by holders of Receipts (other than taxes and
other governmental charges, fees and other expenses provided for herein or in
the Receipts), or that shall otherwise prejudice any substantial existing right
of holders of Receipts, shall not become effective as to outstanding Receipts
until the expiration of 90 days after notice of such amendment shall have been
given to the record holders of outstanding Receipts. Every holder of an
outstanding Receipt at the time any such amendment becomes effective shall be
deemed, by continuing to hold such Receipt, to consent and agree to such
amendment and to be bound by this Deposit Agreement as amended thereby. In no
event shall any amendment impair the right, subject to the provisions of
Sections 2.3, 2.6, 2.7, 2.10 and 2.11 and Article III, of any owner of any
Depositary Shares to surrender the Receipt evidencing such Depositary Shares
with instructions to the Depositary to deliver to the holder the Preferred
Stock and all money and other property, if any, represented thereby, or to
cause the conversion of the underlying Preferred Stock into Class B Common
Stock and cash for any fractional share amount, except in order to comply with
mandatory provisions of applicable law.
SECTION 6.2 Termination. Whenever so directed by the Company
upon at least five Business Days' prior notice, the Depositary will terminate
this Deposit Agreement, provided, that
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<PAGE> 29
notice of such termination has been given by mailing notice of such termination
to the record holders of all Receipts then outstanding at least 30 days prior
to the date fixed in such notice for such termination. The Depositary may
likewise terminate this Deposit Agreement if at any time 45 days shall have
expired after the Depositary shall have delivered to the Company a written
notice of its election to resign and a successor depositary shall not have been
appointed and accepted its appointment as provided in Section 5.4.
If any Receipts shall remain outstanding after the date of
termination of this Deposit Agreement, the Depositary thereafter shall
discontinue the transfer of Receipts, shall suspend the distribution of
dividends to the holders thereof and shall not give any further notices (other
than notice of such termination) or perform any further acts under this Deposit
Agreement, except as hereinafter provided in this paragraph and except that the
Depositary shall continue to collect dividends and other distributions
pertaining to Preferred Stock, shall sell rights, preferences, privileges or
other property as provided in this Deposit Agreement and shall continue to
deliver the Preferred Stock and any money and other property represented by
Receipts, without liability for interest thereon, upon surrender thereof by the
holders thereof. At any time after the expiration of two years from the date
of termination, the Depositary may sell Preferred Stock then held hereunder at
public or private sale, at such place or places and upon such terms as it deems
proper and may thereafter hold the net proceeds of any such sale, together with
any money and other property held by it hereunder, without liability for
interest, for the benefit, pro rata in accordance with their holdings, of the
holders of Receipts that have not theretofore been surrendered. After making
such sale, the Depositary shall be discharged from all obligations under this
Deposit Agreement except to account for such net proceeds and money and other
property. Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary Agent and any Registrar under
Sections 5.7 and 5.8. In the event this Deposit Agreement is terminated and a
sufficient number of shares of Preferred Stock remain outstanding, the Company
hereby agrees to use its best efforts to cause the shares of Preferred Stock to
be split 100 to one (so that each Depositary Share then represents one share of
Preferred Stock) and to have the Preferred Stock included for quotation on the
Nasdaq National Market (unless the holders of a majority of the outstanding
shares of Preferred Stock shall consent to the Company not effecting such
listing).
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Counterparts. This Deposit Agreement may be
executed by the Company and the Depositary in separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to
this Deposit Agreement by facsimile transmission shall be effective as delivery
of a manually executed counterpart of this Deposit Agreement. Copies of this
Deposit Agreement shall be filed with the Depositary and each Depositary's
Agent, if any, and shall be open to inspection during business hours at the
Depositary's Office and the respective offices of the Depositary's Agents, if
any, by any holder of a Receipt.
SECTION 7.2 Exclusive Benefits of Parties. This Deposit
Agreement is for the exclusive benefit of the parties hereto, and their
respective successors hereunder, and shall not be deemed to give any legal or
equitable right, remedy or claim to any other person whatsoever.
SECTION 7.3 Invalidity of Provisions. In case any one or
more of the provisions contained in this Deposit Agreement or in the Receipts
should be or become invalid, illegal, or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4 Notices. Any notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by first class mail, postage
prepaid or by facsimile transmission confirmed by letter, addressed to the
Company at Five Horsham Business Center, 300 Welsh Road, Horsham, Pennsylvania
19044, Attention: General Counsel, or at any other place to which the Company
may have transferred its principal operating or executive office.
Any notices to be given to the Depositary hereunder or under
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by first class mail, postage prepaid, or by
telegram or telex or telecopier confirmed by letter, addressed to the
Depositary at the Depositary's Office.
Any notices given to any record holder of a Receipt hereunder
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by first class mail, postage prepaid, or
by telegram or telex or
27
<PAGE> 31
telecopier confirmed by letter, addressed to such record holder at the most
recent address of such record holder as it appeared on the books of the
Depositary or, if such holder shall have timely filed with the Depositary a
written request that notices intended for such holder be mailed to some other
address, at the address designated in such request.
Delivery of a notice sent by mail, or by telegram or telex or
telecopier, shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a duly addressed letter confirming an earlier
notice in the case of a facsimile transmission, telegram or telex) is
deposited, postage prepaid, in a post office letter box. The Depositary or the
Company may, however, act upon any facsimile transmission received by it from
the other or from any holder of a Receipt, notwithstanding that such facsimile
transmission shall not subsequently be confirmed by letter as aforesaid.
SECTION 7.5 Depositary's Agents. The Depositary may from
time to time appoint Depositary's Agents to act in any respect for the
Depositary for the purposes of this Deposit Agreement and may at any time
appoint additional Depositary's Agents and vary or terminate the appointment of
such Depositary's Agents. The Depositary will notify the Company of any such
action.
SECTION 7.6 Holders of Receipts Are Parties.
Notwithstanding that holders of Receipts have not executed and delivered this
Deposit Agreement or any counterpart thereof, the holders of Receipts from time
to time shall be deemed to be parties to this Deposit Agreement and shall be
bound by all of the terms and conditions hereof and of the Receipts by
acceptance of delivery of Receipts.
SECTION 7.7 Governing Law. This Deposit Agreement and the
Receipts and all rights hereunder and thereunder and provisions hereof and
thereof shall be governed by, and construed in accordance with, the law of the
State of New York without giving effect to principles of conflict of laws.
SECTION 7.8 Headings. The headings of articles and sections
in this Deposit Agreement and in the form of the Receipt set forth in Exhibit A
hereto have been inserted for convenience only and are not to be regarded as a
part of this Deposit Agreement or the Receipts or to have any bearing upon the
meaning or interpretation of any provision contained herein or in the Receipts.
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<PAGE> 32
IN WITNESS WHEREOF, Advanta Corp. and Mellon Securities Trust
Company have duly executed this agreement as of the day and year first above
set forth and all holders of Receipts shall become parties hereto by and upon
acceptance by them of delivery of Receipts executed and delivered in accordance
with the terms hereof.
Advanta Corp.
By:
---------------------------
Name: Jeffrey D. Beck
Title: Vice President and
Treasurer
Mellon Securities Trust Company,
as Depositary
By:
----------------------------
Name:
Title:
29
<PAGE> 33
EXHIBIT A
DEPOSITARY RECEIPT
FOR
DEPOSITARY SHARES,
EACH REPRESENTING ONE-HUNDREDTH OF A SHARE OF
6 3/4% CONVERTIBLE CLASS B PREFERRED STOCK, SERIES 1995
(Stock Appreciation Income Linked Securities (SAILS)(SM))
OF
ADVANTA CORP.
(Incorporated under the Laws of the State of Delaware)
No. Depositary Shares
CUSIP 007942 30 3
Mellon Securities Trust Company, as Depositary (the
"Depositary"), hereby certifies that _______________ is the registered owner of
_______________ Depositary Shares (the "Depositary Shares"), each Depositary
Share representing one-hundredth of a share of 6 3/4% Convertible Class B
Preferred Stock, Series 1995 (Stock Appreciation Income Linked Securities
(SAILS)), par value $0.01 per share (the "Preferred Stock"), of Advanta Corp., a
corporation duly organized and existing under the laws of the State of Delaware
(the "Company"), and the same proportionate interest in any and all other
property received by the Depositary in respect of such shares of Preferred Stock
and held by the Depositary under the Deposit Agreement (as defined below).
Subject to the terms of the Deposit Agreement, each owner of a Depositary Share
is entitled, proportionately, to all the rights, preferences and privileges of
the Preferred Stock represented thereby, including the dividend, voting,
conversion, liquidation and other rights contained in the Certificate of
Designations, establishing the rights, preferences, privileges and limitations
of the Preferred Stock (the "Certificate of Designations"), copies of which are
on file at the office of the Depositary at which at any particular time its
business in respect of matters governed by the Deposit Agreement shall be
administered, which at the time of the execution of the Deposit Agreement is
located at 120 Broadway, 13th Floor, New York, New York 10274 (the
"Depositary's Office").
A-1
<PAGE> 34
THE DEPOSITARY IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY DEPOSITED STOCK. THE
DEPOSITARY ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE DESCRIPTION SET
FORTH IN THIS RECEIPT, WHICH CAN BE TAKEN AS A STATEMENT OF THE COMPANY
SUMMARIZING CERTAIN PROVISIONS OF THE DEPOSIT AGREEMENT. UNLESS EXPRESSLY SET
FORTH IN THE DEPOSIT AGREEMENT, THE DEPOSITARY MAKES NO WARRANTIES OR
REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR SUFFICIENCY OF ANY STOCK AT
ANY TIME DEPOSITED WITH THE DEPOSITARY UNDER THE DEPOSIT AGREEMENT OR OF THE
DEPOSITARY SHARES OR RECEIPTS (EXCEPT FOR ITS SIGNATURE THEREON), AS TO THE
VALIDITY OR SUFFICIENCY OF THE DEPOSIT AGREEMENT, AS TO THE VALUE OF THE
DEPOSITARY SHARES OR AS TO ANY RIGHT, TITLE OR INTEREST OF THE RECORD HOLDERS
OF THE RECEIPTS IN AND TO THE DEPOSITARY SHARES.
The Company will furnish to any holder of a Receipt without
charge, upon request addressed to its executive office or the office of its
transfer agent, a statement or summary of the powers, designations, preferences
and relative, participating optional or other special rights of each authorized
class of capital stock of the Company, and of each series of preferred stock of
the Company authorized to be issued, so far as the same may have been fixed,
and of the qualifications, limitations or restrictions of such preferences
and/or rights.
CS First Boston, Inc. has filed applications with the United
States Patent and Trademark Office for registration of the Stock Appreciation
Income Linked Securities (SAILS) servicemark.
This Depositary Receipt (the "Receipt") is continued on the
reverse hereof and the additional provisions therein set forth for all purposes
have the same effect as if set forth at this place.
Dated:
Mellon Securities Trust Company,
Depositary, Transfer Agent and
Registrar
By:
----------------------------
Authorized Signatory
A-2
<PAGE> 35
[FORM OF REVERSE
OF DEPOSITARY RECEIPT]
1. The Deposit Agreement. Depositary Receipts (the "Receipts"),
of which this Receipt is one, are made available upon the terms and conditions
set forth in the Deposit Agreement, dated as of August 15, 1995 (the "Deposit
Agreement") among the Company, the Depositary and all holders from time to time
of Receipts. The Deposit Agreement (copies of which are on file at the
Depositary's Office and at the office of any Depositary's Agent) sets forth the
rights of holders of Receipts and the rights and duties of the Depositary. The
statements made on the face and the reverse of this Receipt are summaries of
certain provisions of the Deposit Agreement and are subject to the detailed
provisions thereof, to which reference is hereby made. In the event of any
conflict between the provisions of this Receipt and the provisions of the
Deposit Agreement, the provisions of the Deposit Agreement will govern.
2. Definitions. Unless otherwise expressly herein provided, all
defined terms used herein shall have the meanings ascribed thereto in the
Deposit Agreement.
3. Redemption of Preferred Stock. Whenever the Company shall
elect to redeem shares of Preferred Stock for shares of its Class B Common
Stock, par value $0.01 per share ("Class B Common Stock"), in accordance with
the Certificate of Designations, it shall (unless otherwise agreed in writing
with the Depositary) give the Depositary in its capacity as Depositary the
notice required by the Deposit Agreement. The Depositary shall mail, first
class postage prepaid, notice of such redemption and the simultaneous
redemption of the number of Depositary Shares representing the Preferred Stock
held by the Depositary to be redeemed, not less than 15 and not more than 60
days prior to the date fixed for redemption of such Preferred Stock and
Depositary Shares (the "Redemption Date"), to the record holders of the
Receipts evidencing the Depositary Shares to be so redeemed, at the addresses
of such holders as they appear on the records of the Depositary; but neither
failure to mail any such notice to one or more such holders nor any defect in
any notice to one or more such holders shall affect the sufficiency of the
proceedings for redemption as to other holders. Each such notice shall state:
(i) the Redemption Date; (ii) that all outstanding Depositary Shares are to be
redeemed or, if less than all the Depositary Shares held by any such holder are
to be redeemed, the number of such Depositary Shares held by such holder to be
so redeemed; (iii)(A) the number of shares of Class B Common Stock deliverable
upon redemption of each Depositary Share based on Section 3(b)(i)(A) of the
Certificate of Designations, and the Current Market Price used to calculate
such number of shares of Class B Common Stock, (B) the number of shares of
Class B Common Stock deliverable upon redemption of each Depositary Share based
on Section 3(b)(i)(B) of the Certificate of Designations and (C)
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the higher of the numbers of shares of Class B Common Stock specified in
clauses (iii)(A) and (iii)(B); (iv) the SAILS Call Price and the portion
thereof applicable to each of the Depositary Shares; (v) the SAILS Optional
Conversion Rate (calculated in accordance with Section 3 of the Certificate of
Designations) and the resulting optional conversion rate applicable to the
Depositary Shares, together with a statement that all conversion rights with
respect to the Depositary Shares called for redemption will terminate
immediately prior to the close of business on the date fixed for redemption;
(vi) the place or places where Receipts evidencing Depositary Shares are to be
surrendered for redemption; and (vii) that dividends in respect of the shares
of Preferred Stock represented by the Depositary Shares to be redeemed will
cease to accumulate from and after such Redemption Date. Any such notices
shall be mailed in the same manner as notices of redemption of the Preferred
Stock are required to be mailed pursuant to Section 3 of the Certificate of
Designations and published in the same manner as notices of redemption of the
Preferred Stock are required to be published pursuant to said section, if so
required. In case fewer than all the outstanding Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed shall be selected by lot or pro
rata (as nearly as may be) or by any other equitable method determined by the
Depositary to be consistent with the method determined by the Board of
Directors of the Company with respect to the Preferred Stock.
Notice having been mailed and published by the Depositary as
aforesaid, from and after the Redemption Date (unless the Company shall have
failed to redeem the shares of Preferred Stock to be redeemed by it, as set
forth in the Company's notice provided for above), the Depositary Shares called
for redemption shall be deemed no longer to be outstanding and all rights of
the holders of Receipts evidencing such Depositary Shares (except the right to
receive the shares of Class B Common Stock upon redemption and cash for any
fractional share amount) shall, to the extent of such Depositary Shares, cease
and terminate. Upon surrender in accordance with said notice of the Receipts
evidencing such Depositary Shares (properly endorsed or assigned for transfer,
if the Depositary shall so require), such Depositary Shares shall be redeemed
for shares of Class B Common Stock and cash for any fractional share amount at
a rate per Depositary Share equal to one-hundredth of the number of shares of
Class B Common Stock (including fractional amounts) delivered upon redemption
of a share of Preferred Stock pursuant to the Certificate of Designations. The
foregoing shall be subject to the detailed terms and conditions of the
Certificate of Designations, to which reference is hereby made.
If fewer than all of the Depositary Shares evidenced by this Receipt
are called for redemption, the Depositary will deliver to the holder of this
Receipt upon its surrender to the Depositary, together with shares of Class B
Common Stock for the Depositary Shares called for redemption, a new receipt
evidencing the
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Depositary Shares evidenced by such prior Receipt and not called for
redemption.
4. Surrender of Receipts and Withdrawal of Preferred Stock. Upon
surrender of this Receipt to the Depositary at the Depositary's Office or such
other offices as the Depositary may designate, and subject to the provisions of
the Deposit Agreement, the holder hereof is entitled to withdraw, and to obtain
delivery of, to or upon the order of such holder, any or all of the Preferred
Stock (but only in whole shares of Preferred Stock) and any or all money and
other property, if any, at the time represented by the Depositary Shares
evidenced by this Receipt; provided, however, that, in the event this Receipt
shall evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the whole number of shares of Preferred Stock to
be withdrawn, the Depositary shall, in addition to such whole number of shares
of Preferred Stock and such money and other property, if any, to be withdrawn,
deliver, to or upon the order of such holder, a new Receipt or Receipts
evidencing such excess number of whole Depositary Shares.
5. Optional Conversion of Preferred Stock into Class B Common
Stock. Subject to the terms and conditions of the Deposit Agreement and the
Certificate of Designations, this Receipt may be surrendered with written
instructions to the Depositary to instruct the Company to cause the conversion
of any specified number of shares, or fractions of shares, of Preferred Stock
represented by whole Depositary Shares evidenced hereby into whole shares of
Class B Common Stock and cash for any fractional share of Class B Common Stock
at the conversion price then in effect for the Preferred Stock pursuant to the
Certificate of Designations as such conversion price may be adjusted by the
Company from time to time as provided in the Certificate of Designations.
Subject to the terms and conditions of the Deposit Agreement and the
Certificate of Designations, a holder of a Receipt or Receipts evidencing
Depositary Shares representing whole or fractional shares of Preferred Stock
may surrender such Receipt or Receipts at the Depositary's Office or at such
office or to such Depositary's Agents as the Depositary may designate for such
purpose, together with (i) a notice of conversion duly completed and executed,
thereby directing the Depositary to instruct the Company to cause the
conversion of the number of shares, or fractions of shares, of underlying
Preferred Stock specified in such notice of conversion into shares of Class B
Common Stock, and (ii) an assignment of such Receipt or Receipts to the Company
or in blank, duly completed and executed. To the extent that a holder delivers
to the Depositary for conversion a Receipt or Receipts which in the aggregate
are convertible into less than one whole share of Class B Common Stock, the
holder shall receive payment in cash in lieu of such fractional share of Class
B Common Stock otherwise issuable. If more than one Receipt shall be delivered
for conversion at one time by the same holder, the number of whole shares of
Class B Common Stock issuable upon conversion thereof shall be computed on the
basis
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of the aggregate number of Depositary Shares represented by the Receipts so
delivered.
If Preferred Stock shall be called by the Company for redemption, the
Depositary Shares representing such Preferred Stock may be converted into Class
B Common Stock as provided in the Deposit Agreement until, but not after, the
close of business on the Redemption Date unless the Company shall fail to
deposit with the Depositary the shares of Class B Common Stock and cash for any
fractional share amounts required to redeem the Preferred Stock held by the
Depositary, in which case the Depositary Shares representing such Preferred
Stock may continue to be converted into Class B Common Stock until, but not
after, the close of business on the date on which the Company deposits with the
Depositary such shares of Class B Common Stock and cash for any fractional
share amounts as are required by the Certificate of Designations to make full
payment of the amounts payable upon such redemption. Upon receipt by the
Depositary of a Receipt or Receipts, together with a properly completed and
executed notice of conversion, representing any Preferred Stock called for
redemption, the shares of Preferred Stock held by the Depositary represented by
such Depositary Shares for which conversion is requested shall be deemed to
have been received by the Company for conversion as of immediately prior to the
close of business on the date of such receipt by the Depositary.
6. Mandatory Conversion of Preferred Stock into Class B Common
Stock. With respect to any Preferred Stock on deposit with the Depositary as
to which the Company has not exercised its right to redeem and the record
holder has not exercised its right of optional conversion pursuant to the
Certificate of Designations, the Depositary shall mail, first class postage
prepaid, notice of the mandatory conversion of Preferred Stock and the
simultaneous mandatory conversion of the Depositary Shares representing the
Preferred Stock to be automatically converted, not less than 5 and not more
than 15 days prior to the date fixed for mandatory conversion of such Preferred
Stock and Depositary Shares (the "Mandatory Conversion Date"), to all record
holders of Receipts evidencing Depositary Shares who are of record on the date
that is two Business Days prior to the date of mailing, at the addresses of
such holders as they appear on the records of the Depositary; but neither
failure to mail any such notice to one or more such holders nor any defect in
any notice to one or more such holders shall affect the sufficiency of the
proceedings for mandatory conversion as to any record holder (whether or not
such failure or defect affects such record holder). Each such notice shall
state: (i) the Mandatory Conversion Date; (ii) that all outstanding Depositary
Shares on the Mandatory Conversion Date will be automatically converted
pursuant to the Certificate of Designations and the Deposit Agreement; (iii)
the Common Equivalent Rate (determined in accordance with Section 3 of the
Certificate of Designations); (iv) the place or places where Receipts
evidencing Depositary Shares are to be surrendered for payment of the mandatory
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conversion price; and (v) that dividends in respect of the shares of Preferred
Stock represented by the Depositary Shares to be automatically converted will
cease to accumulate from and after the Mandatory Conversion Date.
On the Mandatory Conversion Date, all then outstanding shares of
Preferred Stock and the Depositary Shares representing such shares of Preferred
Stock shall automatically convert into shares of Class B Common Stock, cash for
any fractional share amounts and the right to receive amounts in cash equal to
all accrued and unpaid dividends on such shares of Preferred Stock to and
including the Mandatory Conversion Date (other than previously declared
dividends payable to a holder of record as of a prior date), all as provided in
and subject to Section 3 of the Certificate of Designations.
From and after the Mandatory Conversion Date, the Depositary Shares
representing the shares of Preferred Stock automatically converted shall be
deemed no longer to be outstanding and all rights of the record holders of
Receipts evidencing such Depositary Shares (except the right to receive the
shares of Class B Common Stock, any cash for accrued and unpaid dividends
(other than previously declared dividends payable to a holder of record as of a
prior date) and any fractional share amount deliverable or payable upon
mandatory conversion or in connection therewith) shall, to the extent of such
Depositary Shares, cease and terminate. Upon surrender, in accordance with
said notice, of the Receipts evidencing such Depositary Shares (properly
endorsed or assigned for transfer, if the Depositary shall so require), such
Depositary Shares shall be exchanged for shares of Class B Common Stock and
cash for any fractional share amount (and the right to receive cash for any
accrued and unpaid dividends payable in connection therewith) at a rate per
Depositary Share equal to one-hundredth of the number (including fractional
amounts) of shares of Class B Common Stock (and one-hundredth of the right to
receive cash for any accrued and unpaid dividends) exchanged for each share of
Preferred Stock pursuant to the Certificate of Designations. The foregoing
shall be subject to the detailed terms and conditions of the Certificate of
Designations.
On or prior to the Mandatory Conversion Date, the Company shall
deposit with the Depositary certificates for the shares of Class B Common Stock
and the cash for any fractional share amounts into which the shares of
Preferred Stock held by the Depositary shall automatically convert on the
Mandatory Conversion Date, plus, subject to the Certificate of Designations, an
amount in cash equal to all accrued and unpaid dividends on such shares of
Preferred Stock (other than previously declared dividends payable to a holder
of record as of a prior date) to and including the Mandatory Conversion Date.
Using such shares of Class B Common Stock and cash, the Depositary shall
deliver certificates for the appropriate number of shares of Class B Common
Stock and the appropriate amount of
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cash, without interest, to record holders who properly deliver their Receipts
to the Depositary.
7. Transfers, Split-ups, Combinations. Subject to Paragraphs 8,
9 and 10 below, this Receipt is transferable on the books of the Depositary
upon surrender of this Receipt to the Depositary at the Depositary's Office or
such other offices as the Depositary may designate, properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement, and
upon such surrender the Depositary shall execute and deliver a Receipt to or
upon the order of the person entitled thereto, all as provided in and subject
to the Deposit Agreement. This Receipt may be split into other Receipts or
combined with other Receipts into one Receipt evidencing the same aggregate
number of Depositary Shares evidenced by the Receipt or Receipts surrendered;
provided, however, that the Depositary shall not execute and deliver any
Receipt evidencing a fractional Depositary Share.
8. Conditions to Signing and Delivery, Transfer, etc., of
Receipts. Prior to the execution and delivery, transfer, split-up,
combination, surrender or exchange of this Receipt, the Depositary, any of the
Depositary's Agents or the Company may require any or all of the following:
(i) payment to it of a sum sufficient for the payment (or, in the event that
the Depositary or the Company shall have made such payment, the reimbursement
to it) of any tax or other governmental charge with respect thereto (including
any such tax or charge with respect to Preferred Stock being deposited or
withdrawn or with respect to Class B Common Stock or other securities or
property of the Company being issued upon conversion or redemption); (ii) the
production of proof satisfactory to it as to the identity and genuineness of
any signature; and (iii) compliance with such regulations, if any, as the
Depositary or the Company may establish not inconsistent with the Deposit
Agreement. Any person presenting Preferred Stock for deposit, or any holder of
this Receipt, may be required to file such proof of information, to execute
such certificates and to make such representations and warranties as the
Depositary or the Company may reasonably deem necessary or proper. The
Depositary or the Company may withhold or delay the delivery of any Receipt,
the transfer, redemption, conversion or exchange of any Receipt, the withdrawal
of the Preferred Stock or money or other property, if any, represented by the
Depositary Shares evidenced by this Receipt or the distribution of any dividend
or other distribution until such proof or other information is filed, such
certificates are executed or such representations and warranties are made.
9. Suspension of Delivery, Transfer, etc. The deposit of
Preferred Stock may be refused, the delivery of Receipts against Preferred
Stock may be suspended, the transfer of Receipts may be refused and the
transfer, split-up, combination, surrender or exchange of this Receipt may be
suspended (i) during any period when the register of holders of Receipts is
closed; (ii) if any such action is deemed necessary or advisable by the
Depositary,
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any of the Depositary's Agents or the Company at any time or from time to time
because of any requirement of law or of any government or governmental body or
commission, or under any provision of the Deposit Agreement; or (iii) except
for the transfer of Receipts, with the approval of the Company, for any other
reason. Except with respect to a conversion of Depositary Shares which may
occur pursuant to Section 3 of the Certificate of Designations, the Depositary
shall not be required (a) to execute and deliver, transfer or exchange any
receipts for a period beginning at the opening of business 15 days next
preceding any selection of Depositary Shares and Preferred Stock to be redeemed
and ending at the close of business on the day of the mailing of notice of
redemption of Depositary Shares or (b) to transfer or exchange for another
Receipt any Receipt evidencing Depositary Shares called or being called for
redemption in whole or in part, except as provided in the last paragraph of
Paragraph 3 above.
10. Payment of Taxes or other Governmental Charges. If any tax or
other governmental charge shall become payable by or on behalf of the
Depositary with respect to this Receipt, the Depositary Shares evidenced by
this Receipt, the Preferred Stock (or any fractional interest therein)
represented by such Depositary Shares or any transaction referred to in Section
4.6 of the Deposit Agreement, such tax (including transfer, issuance or
acquisition taxes, if any) or governmental charge shall be payable by the
holder hereof. Until such payment is made, transfer, redemption, conversion or
exchange of this Receipt or any withdrawal of the Preferred Stock or money and
other property, if any, represented by the Depositary Shares evidenced by this
Receipt may be refused, any dividend or other distribution may be withheld and
any part or all of the Preferred Stock or other property represented by the
Depositary Shares evidenced by this Receipt may be sold for the account of the
holder hereof (after attempting by reasonable means to notify such holder prior
to such sale). Any dividend or other distribution so withheld and the proceeds
of any such sale may be applied to any payment of such tax or other
governmental charge, the holder of this Receipt remaining liable for any
deficiency.
11. Amendment. The form of the Receipts and any provision of the
Deposit Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect that they may deem
necessary or desirable. Any amendment that shall impose any fees, taxes or
charges payable by holders of Receipts (other than taxes and other governmental
charges, fees and other expenses provided for herein or in the Deposit
Agreement), or that shall otherwise prejudice any substantial existing right of
holders of Receipts, shall not become effective as to outstanding Receipts
until the expiration of 90 days after notice of such amendment shall have been
given to the record holders of outstanding Receipts. The holder of this
Receipt at the time any such amendment becomes effective shall be deemed, by
continuing to hold this Receipt, to consent
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and agree to such amendment and to be bound by the Deposit Agreement as amended
thereby. In no event shall any amendment impair the right, subject to the
provisions of Paragraphs 3, 4, 5, 6, 8, 9 and 10 hereof and of Sections 2.3,
2.6., 2.7., 2.10 and 2.11 and Article III of the Deposit Agreement, of the
owner of the Depositary Shares evidenced by this Receipt to surrender this
Receipt with instructions to the Depositary to deliver to the holder the
Preferred Stock and all money and other property, if any, represented hereby,
or to cause the conversion of the underlying Preferred Stock into Class B
Common Stock and cash for any fractional share amount, except in order to
comply with mandatory provisions of applicable law.
12. Fees, Charges and Expenses. The Company will pay all fees,
charges and expenses of the Depositary, except for taxes (including transfer
taxes, if any) and other governmental charges and such charges as are expressly
provided in the Deposit Agreement to be at the expense of persons depositing
Preferred Stock, holders of Receipts or other persons.
13. Ownership of Receipts. It is a condition of this Receipt, and
every successive holder hereof by accepting or holding the same consents and
agrees, that ownership of this Receipt (and of the Depositary Shares evidenced
hereby) when properly endorsed or accompanied by a properly executed instrument
of transfer or endorsement, is transferable by delivery; provided, however,
that until this Receipt shall be transferred on the books of the Depositary as
provided in Section 2.4 of the Deposit Agreement, the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the
person entitled to distribution of dividends or other distributions or to any
notice provided for in the Deposit Agreement and for all other purposes.
14. Dividends and Distributions. Whenever the Depositary receives
any cash dividend or other cash distribution on the Preferred Stock, the
Depositary will, subject to the provisions of the Deposit Agreement, distribute
such portions of such sum to record holders of Receipts as are, as nearly as
practicable, proportionate to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders; provided, however, that in case
the Company or the Depositary shall be required to withhold and does withhold
from any cash dividend or other cash distribution in respect of the Preferred
Stock an amount on account of taxes or as otherwise required by law, regulation
or court order, the amount made available for distribution or distributed in
respect of Depositary Shares shall be reduced accordingly. The Depositary
shall distribute or make available for distribution, as the case may be, only
such amount, however, as can be distributed without attributing to any owner of
Depositary Shares a fraction of one cent and any balance not so distributable
shall be held by the Depositary (without liability for interest thereon) and
shall be added to and be
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treated as part of the next sum received by the Depositary for distribution to
record holders of Receipts then outstanding.
15. Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Preferred Stock is registered on the books of the Company any rights,
preferences or privileges to subscribe for or to purchase any securities or any
rights, preferences or privileges of any other nature, such rights, preferences
or privileges shall in each such instance, subject to the provisions of the
Deposit Agreement, be made available by the Depositary to the record holders of
Receipts if the Company so directs in such manner as the Company shall
instruct.
16. Notice of Dividends; Fixing of Record Date. Whenever any cash
dividend or other cash distribution shall become payable, any distribution
other than cash shall be made, or any rights, preferences or privileges shall
at any time be offered, with respect to the Preferred Stock, or whenever the
Depositary shall receive notice of (i) any meeting at which holders of
Preferred Stock are entitled to vote or of which holders of Preferred Stock are
entitled to notice or (ii) any election on the part of the Company to call for
redemption any shares of Preferred Stock, the Depositary shall in each such
instance fix a record date (which shall be the same date as the record date
fixed by the Company with respect to the Preferred Stock) for the determination
of the holders of Receipts (i) who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, or to give instructions for the exercise of voting rights at any such
meeting or to receive notice of such meeting or (ii) whose Depositary Shares
are to be so redeemed.
17. Voting Rights. Upon issuance of notice of any meeting at
which the holders of Preferred Stock are entitled to vote, the Company shall
direct the Depositary, as soon as practicable thereafter, to mail to the record
holders of Receipts a notice, which shall contain (i) such information as is
contained in such notice of meeting, (ii) a statement that the holders of
Receipts at the close of business on a specified record date determined as
provided in Paragraph 15 will be entitled, subject to any applicable provision
of law, the Company's Certificate of Incorporation or the Certificate of
Designations, to instruct the Depositary as to the exercise of the voting
rights pertaining to the amount of Preferred Stock represented by their
respective Depositary Shares, and (iii) a brief statement as to the manner in
which such instructions may be given. Upon the written request of a holder of
a Receipt on such record date, the Depositary shall endeavor insofar as
practicable to vote or cause to be voted the amount of Preferred Stock
represented by the Depositary Shares evidenced by such Receipt in accordance
with the instructions set forth in such request. The Company has agreed to
take all reasonable action that may be deemed necessary by the Depositary in
order to enable the Depositary to vote such
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Preferred Stock or cause such Preferred Stock to be voted. In the absence of
specific instructions from the holder of a Receipt, the Depositary will abstain
from voting to the extent of the Preferred Stock represented by the Depositary
Shares evidenced by such Receipt. After aggregating all voting Depositary
Shares, the Depositary will disregard for voting purposes any fractional share
of Preferred Stock remaining.
18. Reports, Inspection of Transfer Books. The Depositary shall
make available for inspection by holders of Receipts at the Depositary's Office
and at such other places as it may from time to time deem advisable during
normal business hours any reports and communications received from the Company
that are both received by the Depositary as the holder of Preferred Stock and
made generally available to the holders of Preferred Stock by the Company. The
Depositary shall keep books at the Depositary's Office for the registration and
transfer of Receipts, which books during normal business hours will be open for
inspection by the record holders of Receipts as provided by applicable law.
19. Liability of the Depositary, the Depositary's Agents and the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
shall incur any liability to any holder of any Receipt, if by reason of any
provision of any present or future law or regulation of any governmental
authority or, in the case of the Depositary or any Depositary's Agent, by
reason of any provision, present or future, of the Certificate of Incorporation
or the Certificate of Designations or, in the case of the Company, the
Depositary or any Depositary's Agent, by reason of any act of God or war or
other circumstance beyond the control of the relevant party, the Depositary,
any Depositary's Agent or the Company shall be prevented or forbidden from
doing or performing any act or thing that the terms of the Deposit Agreement
provide shall or may be done or performed; nor shall the Depositary, any
Depositary's Agent or the Company incur any liability to any holder of a
Receipt by reason of any nonperformance or delay, caused as aforesaid, in the
performance of any act or thing that the terms of the Deposit Agreement provide
shall or may be done or performed or by reason of any exercise of, or failure
to exercise, any discretion provided for in the Deposit Agreement.
20. Obligations of the Depositary, the Depositary's Agents and the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
assumes any obligation or shall be subject to any liability hereunder or under
the Deposit Agreement to holders of Receipts other than that each of them
agrees to use good faith in the performance of such duties as are specifically
set forth in the Deposit Agreement. Neither the Depositary nor any
Depositary's Agent nor the Company shall be under any obligation to appear in,
prosecute or defend any action, suit or other proceeding with respect to
Preferred Stock, Depositary Shares, Receipts or Class B Common Stock that in
its opinion may involve it in expense or liability, unless indemnity
satisfactory
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to it against all expense and liability be furnished as often as may be
required.
Neither the Depositary nor any Depositary's Agent nor the Company will
be liable for any action or failure to act by it in reliance upon the advice of
or information from legal counsel, accountants, any person presenting Preferred
Stock for deposit, any holder of a Receipt or any other person believed by it
in good faith to be competent to give such advice or information.
21. Termination of Deposit Agreement. Whenever so directed by the
Company upon at least five Business Days prior notice, the Depositary will
terminate the Deposit Agreement, provided that notice of such termination has
been given by mailing notice of such termination to the record holders of all
Receipts then outstanding at least 30 days prior to the date fixed in such
notice for such termination. The Depositary may likewise terminate the Deposit
Agreement if at any time 45 days shall have expired after the Depositary shall
have delivered to the Company a written notice of its election to resign and a
successor Depositary shall not have been appointed and accepted its appointment
as provided in Section 5.4 of the Deposit Agreement. Upon the termination of
the Deposit Agreement, the Company shall be discharged from all obligations
thereunder except for its obligations to the Depositary, any Depositary's Agent
and any Registrar under Sections 5.7 and 5.8 of the Deposit Agreement.
If any Receipts remain outstanding after the date of termination, the
Depositary thereafter shall discontinue all functions and be discharged from
all obligations as provided in the Deposit Agreement, except as specifically
provided therein.
22. Governing Law. The Deposit Agreement and this Receipt and all
rights thereunder and hereunder and provisions thereof and hereof shall be
governed by, and construed in accordance with, the law of the State of New York
without giving effect to principles of conflict of laws.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose, unless this Receipt shall
have been executed on behalf of the Depositary by the manual or facsimile
signature of a duly authorized officer and executed manually or, if a Registrar
for the Receipts (other than the Depositary) shall have been appointed, by
facsimile by the Depositary by the signature of a duly authorized officer and,
if executed by facsimile signature of the Depositary, shall have been
countersigned manually by such Registrar by the signature of a duly authorized
officer.
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NOTICE OF CONVERSION
The undersigned holder of this Receipt for Depositary Shares hereby
irrevocably exercises the option to convert that number of shares, or fractions
of shares, of 6 3/4% Convertible Class B Preferred Stock, Series 1995 (Stock
Appreciation Income Linked Securities (SAILS)), of the Company represented
by ___________ Depositary Shares into shares of Class B Common Stock of the
Company and cash for any fraction of Class B Common Stock in accordance with
the terms of and subject to the conditions of the Preferred Stock, including
the Certificate of Designations in respect thereof, and the Deposit Agreement,
and directs the Depositary to instruct the Company that the shares of Class B
Common Stock deliverable upon such conversion be registered in the name of, and
delivered together with a check in payment for any fractional shares of Class B
Common Stock to, the undersigned unless a different name has been indicated
below. If the shares of Class B Common Stock are to be registered in the name
of a person other than the undersigned, the undersigned will pay all transfer
and similar taxes payable with respect thereto. If the number of shares of
Preferred Stock, represented by the number of Depositary Shares set forth above
is less than the number of shares of Preferred Stock on deposit in respect of
this Receipt, the undersigned directs that the Depositary execute and deliver
to the undersigned, unless a different name is indicated below, a new Receipt
evidencing Depositary Shares for the balance of such Preferred Stock not to be
converted.
Dated:
---------------------------
Signature: ___________________________________
NOTE: The signature on this notice of conversion must correspond with
the name as written upon the face of this Receipt in every particular
without alteration or enlargement or any change whatsoever, and must
be guaranteed by a commercial bank, trust company, securities broker
or dealer, credit union, savings association or other eligible
guarantor institution which is a member of or participant in a
signature guarantee program acceptable to the Depositary.
Name:
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Address:
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EXHIBIT 8.1
Law Offices
WOLF, BLOCK, SCHORR AND SOLIS-COHEN
Twelfth Floor Packard Building
S.E. Corner 15th and Chestnut Streets
Philadelphia, PA 19102-2678
(215) 977-2000
August 11, 1995
Advanta Corp.
5 Horsham Business Center
300 Welsh Road
Horsham, PA 19044
Re: Registration No. 33-60419
Registration Statement on Form S-3
Exhibit Number 8.1
Ladies & Gentlemen:
We have acted as counsel for Advanta Corp. (the "Company") in
connection with the above-captioned Registration Statement on Form S-3 filed
with the Securities and Exchange Commission for the purpose of registering,
among other securities, the Company's Class B Preferred Stock, par value $.01
per share, Class B Common Stock, par value $.01 per share and Depositary
Shares, each Depositary Share representing a fractional interest in a share of
the Class B Preferred Stock.
We hereby confirm, in all material respects, that the discussion in
the above-captioned Registration Statement under the heading "FEDERAL INCOME
TAX CONSIDERATIONS" is a fair and accurate summary of the matters addressed
therein, based upon current law and the assumptions stated or referred to
therein. It is possible that contrary positions may be taken by the Internal
Revenue Service and that a court may agree with such contrary positions.
We hereby consent to the use of our name in the above-captioned
Registration Statement under the heading "FEDERAL INCOME TAX CONSIDERATIONS"
and to the filing of this opinion as an exhibit to the Registration Statement.
In giving such consent, we do not thereby admit that we are in the category of
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Advanta Corp.
August 11, 1995
Page 2
persons whose consent is required under Section 7 of the Securities Act of
1933.
Very truly yours,
/s/WOLF, BLOCK, SCHORR and SOLIS-COHEN
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WOLF, BLOCK, SCHORR and SOLIS-COHEN
TJG/jf
